<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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
/X/ Definitive Proxy Statement Commission Only
/ / Definitive Additional Materials (as permitted by Rule
/ / Soliciting Material Pursuant to 14a-6(e)(2))
Rule 14a-11(c) or Rule 14a-12
ZOLTEK COMPANIES,INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
- ------------------------------------------------------------------------------
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTIONS 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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<PAGE> 2
January 15, 1998
DEAR FELLOW SHAREHOLDERS:
Our Annual Meeting of Shareholders will be held at the St. Louis
Marriott West Hotel, located at 660 Maryville Centre Drive, St. Louis,
Missouri, at 10:00 A.M., local time, on Monday, February 16, 1998. The Notice
of Annual Meeting of Shareholders, Proxy Statement and Proxy Card which
accompany this letter outline fully matters on which action is expected to be
taken at the Annual Meeting.
We cordially invite you to attend the Annual Meeting. Please RSVP to
314-291-5110 if you plan to attend the meeting. Even if you plan to be
present at the meeting, you are requested to date, sign and return the
enclosed Proxy Card in the envelope provided so that your shares will be
represented. The mailing of an executed Proxy Card will not affect your right
to vote in person should you later decide to attend the Annual Meeting.
Sincerely,
ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 16, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of Zoltek Companies, Inc. (the
"Company") will be held at the St. Louis Marriott West Hotel, located at 660
Maryville Centre Drive, St. Louis, Missouri, on Monday, February 16, 1998, at
10:00 A.M., local time, for the following purposes:
1. To elect two Class II directors to hold office for a term of three
years.
2. To transact any and all other business that may properly come
before the meeting or any adjournment thereof.
These items are more fully described in the following Proxy Statement,
which is hereby made a part of this Notice. Only shareholders of record of
the Company at the close of business on December 30, 1997 are entitled to
notice of, and to vote at, the meeting or any adjournment thereof.
By order of the Board of Directors,
DANIEL D. GREENWELL
Chief Financial Officer and
Secretary
January 15, 1998
<PAGE> 4
ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 16, 1998
-----------------
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of ZOLTEK
COMPANIES, INC. (the "Company") in connection with the solicitation of proxies
for use at the Annual Meeting of Shareholders to be held at the St. Louis
Marriott West Hotel, St. Louis, Missouri, at 10:00 A.M., local time, on
Monday, February 16, 1998, and at all adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the preceding Notice of Annual
Meeting of Shareholders.
This Proxy Statement, the Notice of Annual Meeting and the accompanying
Proxy Card were first mailed to the shareholders of the Company on or about
January 15, 1998.
The proxy reflected on the accompanying Proxy Card is being solicited by
the Board of Directors of the Company. A proxy may be revoked at any time
before it is voted by filing a written notice of revocation or a later-dated
Proxy Card with the Secretary of the Company at the principal offices of the
Company or by attending the Annual Meeting and voting the shares in person.
Attendance alone at the Annual Meeting will not of itself revoke a proxy.
Proxy Cards that are properly executed, timely received and not revoked will
be voted in the manner indicated thereon at the Annual Meeting and any
adjournment thereof.
The Company will bear the entire expense of soliciting proxies. Proxies
will be solicited by mail initially. The directors, executive officers and
employees of the Company also may solicit proxies personally or by telephone
or other means but such persons will not be specially compensated for such
services. Certain holders of record, such as brokers, custodians and nominees,
are being requested to distribute proxy materials to beneficial owners and
will be reimbursed by the Company for their reasonable expenses incurred in
sending proxy materials to beneficial owners.
Only shareholders of record at the close of business on December 30,
1997 are entitled to notice of, and to vote at, the Annual Meeting. On such
date, there were 16,216,338 shares of the Company's common stock, $.01 par
value ("Common Stock"), issued and outstanding.
Each outstanding share of the Company's Common Stock is entitled to one
vote on each matter to be acted upon at the Annual Meeting. A quorum is
required for votes taken at the Annual Meeting to be deemed valid. A quorum
shall be attained if holders of a majority of the Common Stock issued and
outstanding are present at the Annual Meeting in person or by proxy. After a
quorum has been established, the vote of the holders of a majority of the
Common Stock present in person or by proxy shall be required for the election
of any director and, except as required by the Company's
<PAGE> 5
Restated Articles of Incorporation or applicable law, any other matter
submitted for a vote of the shareholders at the Annual Meeting requires the
vote of the holders of a majority of the Common Stock outstanding.
Shares subject to abstentions will be treated as shares that are present
at the Annual Meeting for purposes of determining the presence of a quorum but
as unvoted for purposes of determining the base number of shares voting on a
particular proposal. Accordingly, abstentions will have the same effect as a
vote withheld on the election of directors or a vote against on other matters
submitted to the shareholders for a vote, as the case may be. If a broker or
other nominee holder indicates on the Proxy Card that it does not have
discretionary authority to vote the shares it holds of record on a proposal,
those shares will not be considered as voted for purposes of determining the
approval of the shareholders on a particular proposal.
VOTING SECURITIES AND PRINCIPAL HOLDER THEREOF
The following table includes information as to the persons who were
known to management of the Company to beneficially own five percent or more of
the Company's outstanding Common Stock as of December 30, 1997:
<TABLE>
<CAPTION>
Number of Shares Percent of Outstanding
Name and Address of Beneficial Owner Beneficially Owned Common Stock<F1>
- ------------------------------------ ------------------ ----------------
<S> <C> <C>
Zsolt Rumy 5,600,000<F2> 34.53%
3101 McKelvey Road
St. Louis, Missouri 63044
Pilgrim Baxter & Associates 1,219,600<F3> 7.52%
Harold J. Baxter
Gary L. Pilgrim
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087
<FN>
- ---------------------
<F1> The percentage calculation is based upon 16,216,338 shares of the
Company's Common Stock that were issued and outstanding as of
December 30, 1997.
<F2> Pursuant to the Company's supply agreement with BF Goodrich Aerospace,
Mr. Rumy has agreed, subject to certain exceptions, to negotiate
exclusively with BF Goodrich Aerospace for a specified period if he
determines to sell a significant amount of his shares of the Company's
Common Stock.
<F3> The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated February 14, 1997, filed with the
Securities and Exchange Commission. The Schedule 13G is a group filing
of Pilgrim Baxter & Associates, an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 ("Pilgrim"), and each
of Harold J. Baxter and Gary L. Pilgrim, the Chief Executive Officer and
Chief Investment Office of Pilgrim, respectively. Each of such persons
reported shared voting and sole investment power with respect to all
1,219,600 shares reported.
</TABLE>
-2-
<PAGE> 6
ITEM 1. ELECTION OF DIRECTORS
Two individuals will be elected at the Annual Meeting to serve as Class
II directors of the Company for a term of three years. The two nominees
receiving the vote of holders of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting will be elected.
Shareholders do not have the right to cumulate votes in the election of
directors.
The persons named as proxies on the accompanying Proxy Card intend to
vote all duly executed proxies received by the Board of Directors for the
election of James W. Betts and James Dorr as Class II directors, except as
otherwise directed by the shareholder on the Proxy Card. Messrs. Betts and
Dorr are currently directors of the Company. If for any reason Mr. Betts or
Mr. Dorr becomes unavailable for election, which is not now anticipated, the
persons named in the accompanying Proxy Card will vote for such substitute
nominee as is designated by the Board of Directors. The Board of Directors
recommends a vote "FOR" the election of James W. Betts and James Dorr as
Class II directors.
The name, age, principal occupation or position and other directorships
with respect to Messrs. Betts and Dorr and the other directors whose terms of
office will continue after the Annual Meeting is set forth below.
CLASS II - TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 2001
James W. Betts, age 60, has served as a Director of the Company since
August 1992. For more than the past five years, he has been Vice President
Raw Materials of Great Lakes Carbon Corp. (a producer of carbon products).
James Dorr, age 62, has served as a Director of the Company since August
1992. Since June 1995, he has been engaged in business as a consultant. For
more than five years prior to June 1995 when he retired, he served as
Director--Advanced Materials and Structures of McDonnell Douglas Corporation,
now a subsidiary of The Boeing Company (an aircraft manufacturer).
CLASS III - TO CONTINUE IN OFFICE UNTIL 1999
Zsolt Rumy, age 55, is the founder of the Company and has served as its
Chairman, President and Chief Executive Officer and as a Director since 1975.
Prior to founding the Company, Mr. Rumy served as Industrial Marketing Manager
and Process Engineer for Monsanto Company, Accounts Manager for General
Electric Company and Technical Sales Representative for W.R. Grace Company.
Since May 1996, Mr. Rumy has served as a director of Southwest Bank of St.
Louis, with which the Company maintains its primary banking relationships.
Charles A. Dill, age 57, has served as a Director of the Company since
August 1992. Since October 1995, he has been a managing partner of Gateway
Venture Partners, a venture capital firm. He served as President of Bridge
Information Systems, Inc. (a provider of databases and systems to
institutional investors) from 1991 to October 1992 and as Chief Executive
Officer from October 1992 to April 1995. Mr. Dill serves as a director of
Stifel Financial Corp., the parent of Stifel, Nicolaus & Company, Incorporated
(a securities brokerage, investment management and investment banking firm),
and DT Industries, Inc. (a developer and manufacturer of automated production
equipment and systems).
-3-
<PAGE> 7
CLASS I - TO CONTINUE IN OFFICE UNTIL 2000
John L. Kardos, age 58, has served as a Director of the Company since
August 1992. For more than the past five years he has been Professor of
Chemical Engineering of Washington University, St. Louis, Missouri, where he
has been Chairman of the Department of Chemical Engineering since July 1991.
From June 1971 to July 1991, he was Chairman of the Graduate Program in
Materials Science and Engineering and Director of the Materials Research
Laboratory of Washington University.
Linn Bealke, age 53, has served as a Director of the Company since
August 1992. For more than the past five years he has been President and
Director of Mississippi Valley Bancshares, Inc. (a bank holding company) and
Vice Chairman of Southwest Bank of St. Louis (a commercial bank).
BOARD OF DIRECTORS AND COMMITTEES
During fiscal 1997, the Board of Directors of the Company met four times
and acted two times by unanimous written consent. Each of the directors and
nominees attended not less than 75% of the meetings of the Board of Directors
and committees of which such director or nominee was a member during fiscal
1997.
The Board of Directors has a standing Audit Committee and Compensation
Committee.
The members of the Audit Committee are Messrs. Bealke and Dorr. The
Audit Committee reviews the scope of the Company's engagement of its
independent public accountant and their reports. The Audit Committee also
meets with the financial staff of the Company to review accounting procedures
and reports. The Audit Committee met two times in fiscal 1997.
The Compensation Committee is composed of Messrs. Betts and Dill. The
Compensation Committee is authorized to review and make recommendations to the
Board of Directors regarding the salaries and bonuses to be paid executive
officers and to administer the Company's Long Term Incentive Plan. The
Compensation Committee met two times during fiscal 1997.
DIRECTORS' FEES
Directors who are not also employees of the Company are paid $750 per
board meeting attended. In addition, each of the directors who is not also an
employee of the Company (an "Eligible Director") participates in the Zoltek
Directors Stock Option Plan (the "Directors Plan"). The Directors Plan
provides for the granting of non-qualified stock options to Eligible
Directors. Under the Directors Plan, each person who is an Eligible Director
on the first business day after the date of the Company's annual meeting of
shareholders is granted options to acquire 7,500 shares of Common Stock,
provided, however, that no grant shall be made to any Eligible Director who is
first elected a director of the Company at the annual meeting of shareholders
immediately preceding the date of such grant. The Directors Plan otherwise
does not establish a limit on the aggregate number of options that may be
granted thereunder. Options granted pursuant to the Directors Plan entitle
the director to purchase the Company's Common Stock at a price equal to the
Fair Market Value (as defined in the Directors Plan) on the date of grant.
The option by its terms is not transferable by the director except by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order. The option is exercisable during the director's lifetime
solely by the director. Each option is immediately exercisable as to any or
all shares and may be exercised at any time or from time to time. Options
that are outstanding and
-4-
<PAGE> 8
unexercised at the time the holder ceases to be a director of the Company for
any reason terminate on the first to occur of the expiration date of the
option or the expiration of 24 months after the date the holder ceases to be a
director. Unless exercised or terminated sooner, each option expires on the
tenth anniversary of the date of grant.
SECURITY OWNERSHIP BY MANAGEMENT
The following table indicates, as of December 30, 1997, the beneficial
ownership of the Company's Common Stock by each person who is a director or
nominee for director and the executive officer named in the Summary
Compensation Table, individually, and all directors and executive officers as
a group:
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class<F1>
- ------------------------ ------------------ --------------------
<S> <C> <C>
Zsolt Rumy<F2> 5,600,000 34.53%
Linn Bealke 20,000<F3> <F*>
James W. Betts 46,500<F4> <F*>
Charles A. Dill 28,900<F4> <F*>
James Dorr 22,500<F5> <F*>
John L. Kardos 22,500<F4> <F*>
Daniel D. Greenwell 1,342<F6> <F*>
All directors and executive officers as a group (8 persons) 5,741,742<F7> 35.16%
<FN>
- ---------------------
<F*> Less than one percent
<F1> Based upon 16,216,338 shares of the Company's Common Stock issued and
outstanding as of December 30, 1997 and, for each director or executive
officer or the group, the number of shares subject to options that may
be acquired upon exercise thereof by such director or executive officer
or the group within 60 days of December 30, 1997.
<F2> Mr. Rumy's address is 3101 McKelvey Road, St. Louis, Missouri 63044.
Pursuant to the Company's supply agreement with BF Goodrich Aerospace,
Mr. Rumy has agreed, subject to certain exceptions, to negotiate
exclusively with BF Goodrich Aerospace for a specified period if he
determines to sell a significant amount of his shares of the Company's
Common Stock.
<F3> Includes 15,000 shares subject to presently exercisable stock options.
<F4> Includes 28,500 shares subject to presently exercisable options.
<F5> Includes 22,500 shares subject to presently exercisable stock options.
<F6> Includes 342 shares held jointly with spouse.
<F7> Includes 117,000 shares subject to presently exercisable stock options.
</TABLE>
-5-
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the executive
officers of the Company whose annual salary exceeded $100,000 for fiscal 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Compensation
------------
All Other
Name and Principal Position Year Salary($) Bonus Compensation<F1>
--------------------------- ---- --------- ----- ----------------
<S> <C> <C> <C> <C>
Zsolt Rumy 1997 $150,000 $200,000 $16,152
Chairman of the Board, President 1996 150,000 100,000 11,565
and Chief Executive Officer 1995 150,000 2,194
Daniel D. Greenwell 1997 $100,000 -- --
Chief Financial Officer and
Secretary<F2>
<FN>
- -----------------------
<F1> Total includes amounts allocated to the named executive officer's
account pursuant to the Company's defined contribution profit sharing
plan.
<F2> Mr. Greenwell was appointed Chief Financial Officer and Secretary of
the Company in December 1996.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option
grants made in fiscal 1997 to the individuals named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS VALUE FOR OPTION TERM
-------------------------------------------------------- ---------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS
OPTION GRANTED EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Zsolt Rumy -- -- -- -- -- --
Daniel D. Greenwell 60,000<F1> 51.07% $27.75 9/30/2006 $1,047,074 $2,653,548
<FN>
- ---------------------------
<F1> Options become exercisable October 1, 2000, provided optionee continues
to be employed by the Company. Options terminate on the earlier of (i)
September 30, 2006, (ii) twelve months after termination of employment
as a result of death, retirement or disability, or (iii) three months
after any other termination of optionee's employment.
</TABLE>
-6-
<PAGE> 10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning the number of
exercisable and unexercisable stock options at September 30, 1997, as well as
the value of such stock options having an exercise price lower than the last
reported trading price on September 30, 1997 ("in-the-money" options) held by
the executive officers named in the Summary Compensation Table. No stock
options were exercised by such individuals during the 1997 fiscal year.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at Fiscal
Fiscal Year-End (#) Year-End($)<F1>
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---------------------------------------------------------------------------------------
<S> <C> <C>
Zsolt Rumy 0/150,000 $0/$8,606,250
Daniel D. Greenwell 0/60,000 $0/$2,152,500
<FN>
- -----------------------
<F1> Based on a price per share of $63.625 being the last reported trading
price before the fiscal year end.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The Company's executive compensation program is administered under the
direction of the Compensation Committee of the Board of Directors. The
Committee's compensation policies are based upon the principle that the
financial rewards of the Company's executives should be aligned with the
financial interests of its shareholders. In this manner, the Company seeks to
meet its ultimate responsibility to its shareholders by striving to create
superior long-term return on their investment through earnings growth and
prudent management of the Company's business.
In determining the appropriate level of executive compensation in fiscal
1997, the Committee considered management's continuing success in achieving
numerous quantitative and qualitative accomplishments over the past several
years. The Committee did not assign specific weights to individual factors,
but rather considered all such factors as a whole.
The Company's executive compensation policy in fiscal 1997 consisted of
base salary, non-cash benefits and long- and short-term compensation. In
determining its policy, the Committee also considered significant strategic
accomplishments of management in fiscal 1997. Management has developed and
begun to execute plans for greatly accelerated growth in the Company's carbon
fibers manufacturing capacity. During the year, the Company acquired a new
U.S. manufacturing facility and installed a total of five continuous
carbonization lines at its U.S. and Hungarian facilities. As a result, the
Company has developed the largest rated carbon fiber production capacity in
the industry.
-7-
<PAGE> 11
The Company's incentive compensation program consists of long-term and
short-term components. The long-term component is in the form of stock option
grants to the Company's executives, which grants have been linked to the
Company's ZOLTEK 2000 five-year strategic plan to become the world's leading
carbon fiber producer by the year 2000. Each of such grants include
provisions pursuant to which such options vest and become exercisable in
October 2000 upon the planned completion of the ZOLTEK 2000 plan.
The Company's short-term incentive compensation program consists of cash
bonuses paid based upon the Company's actual results and progress toward its
strategic plans, and an evaluation of each individual's contributions thereto.
In determining the level of cash bonuses paid to the Company's executives in
fiscal 1997, the Committee considered, among other factors, the Company's
record financial performance and substantial increases in the Company's
overall carbon fibers manufacturing capacity during fiscal 1997, on a timely
basis, in accordance with its strategic business plans.
In fiscal 1997, the Company reported record financial performance and
continued its trend of substantial growth in sales, net income and earnings
per share. Compared to fiscal 1996, net sales increased 31%, net income
increased 107% and net income per share from continuing operations increased
73%. Shareholder wealth also increased, as the market price of the Company's
Common Stock grew from $38.00 at September 30, 1996 to $63.625 at September
30, 1997.
Mr. Rumy's base salary was $150,000 in fiscal 1997, the same as that
paid to him in the prior year. Mr. Rumy's base salary was set at such level
at his suggestion in order to minimize the Company's administrative overhead,
despite the Committee's view that such amount is below the level which the
Company could expect to pay for an executive of Mr. Rumy's background and
responsibilities. In light of such the Committees evaluation of the factors
deemed relevant by the Committee, in particular, Mr. Rumy's contributions to
the Company's record financial performance and increase in carbon fibers
manufacturing capacity, Mr. Rumy's bonus for fiscal 1997 was set at $200,000.
Based upon his ownership of the Company's Common Stock and prior year stock
option grants, Mr. Rumy was not granted any stock options in fiscal 1997.
Although the foregoing describes the Committee's current compensation
policies applicable to the Company's executive officers, the Committee
reserves the right to amend these policies at such times in the future and in
such manner as the Committee deems necessary or advisable.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally limits federal income tax deductions for compensation paid after
1993 to the chief executive officer and the four other most highly compensated
officers of the Company to $1 million per year, but contains an exception for
performance-based compensation that satisfies certain conditions. In making
compensation decisions, the Committee will consider the net cost of
compensation to the Company and whether it is practicable and consistent with
other compensation objectives to qualify the Company's incentive compensation
under the applicable exemption of Section 162(m). The Committee anticipates
that deductibility of compensation payments will be one among a number of
factors used by the Committee in ascertaining appropriate levels or modes of
compensation, and the Committee will make its compensation decisions based
upon an overall determination of what it believes to be in the best interests
of the Company and its shareholders.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
CHARLES A. DILL JAMES W. BETTS
-8-
<PAGE> 12
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total
shareholder return, including the reinvestment of dividends, on the Company's
Common Stock with the cumulative return of the NASDAQ Industrial Index for the
five-year period from November 6, 1992 to September 30, 1997.
[GRAPH]
<TABLE>
<CAPTION>
ASSUMES $100 INVESTED ON NOVEMBER 6, 1992 IN
ZOLTEK COMPANIES, INC. COMMON STOCK,
THE NASDAQ INDUSTRIAL INDEX AND
THE RUSSELL 2000 INDEX
- -----------------------------------------------------------------------------------------------------------------------
Nov. 6, 1992 Sep. 30, 1993 Sep. 30, 1994 Sep. 30, 1995 Sep. 30, 1996 Sep. 30, 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Zoltek Companies, Inc. 100 168.75 281.26 618.77 2850.07 4668.87
- -----------------------------------------------------------------------------------------------------------------------
NASDAQ Industrial Index 100 122.37 121.69 169.61 198.03 265.90
- -----------------------------------------------------------------------------------------------------------------------
The Russell 2000 Index 100 127.31 130.64 161.21 182.39 242.92
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTAIN TRANSACTIONS
Mr. Bealke, who is a director of the Company, also is Vice Chairman of
Southwest Bank of St. Louis ("Southwest Bank") which is the Company's bank
lender. Mr. Rumy, the Chairman, President and Chief Executive Officer of the
Company and a director, has served as a director of Southwest Bank since May
1996. As of September 30, 1997, the Company's borrowings from Southwest Bank
aggregated $3,584,845. During the fiscal year ended September 30, 1997, the
Company's interest payments to Southwest Bank aggregated $171,537.
During fiscal 1997, in connection with the Company's operations, the
Company occasionally chartered an airplane from Twin Springs Aviation, Inc., a
corporation wholly owned by Mr. Rumy, the Chairman, President and Chief
Executive Officer of the Company. The total of all such charter payments made
by the Company during fiscal 1997 was $215,340.
-9-
<PAGE> 13
The Company believes that all of the transactions set forth above were
made on terms not less favorable to the Company than would have been obtained
from unaffiliated third parties. All future transactions (including loans)
between the Company and its officers, directors, principal shareholders and
affiliates, are required to be approved by a majority of the Board of
Directors, including a majority of the independent and disinterested outside
directors and must be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
APPOINTMENT OF AUDITORS
Price Waterhouse LLP served as the Company's independent accountants for
fiscal 1997. The Board of Directors anticipates that representatives of Price
Waterhouse LLP will be present at the Annual Meeting of Shareholders to
respond to appropriate questions and to make a statement if they desire. The
Board of Directors has not yet appointed independent accountants to be the
Company's auditors for fiscal 1998. The Company expects that the Company's
auditors for fiscal 1998 will be appointed by the end of the second quarter of
fiscal 1998.
PROPOSALS OF SHAREHOLDERS
Under applicable regulations of the Securities and Exchange Commission,
all proposals of shareholders to be considered for inclusion in the proxy
statement for, and to be considered at, the 1998 Annual Meeting of
Shareholders must be received at the offices of the Company, c/o Daniel D.
Greenwell, Chief Financial Officer and Corporate Secretary, 3101 McKelvey
Road, St. Louis, Missouri 63044 by not later than September 17, 1998. The
Company's By-Laws also prescribe certain time limitations and procedures
regarding prior written notice to the Company by shareholders, which
limitations and procedures must be complied with for proposals of shareholders
to be included in the Company's proxy statement for, and to be considered at,
such annual meeting. Any shareholder who wishes to make such a proposal
should request a copy of the applicable provisions of the Company's By-Laws
from the Secretary of the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present, nor has it been informed that other
persons intend to present, any matters for action at the Annual Meeting, other
than those specifically referred to herein. If, however, any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named on the Proxy Card to vote the shares represented thereby in
accordance with their judgment as to the best interest of the Company on such
matters.
ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer
January 15, 1998
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<PAGE> 14
ZOLTEK COMPANIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Zsolt Rumy and Daniel D. Greenwell, and
each of them, with or without the other, proxies, with full power of
substitution to vote, as designated below, all shares of stock that the
signatory hereof is entitled to vote at the Annual Meeting of Shareholders of
Zoltek Companies, Inc. to be held at the St. Louis Marriott West Hotel, 660
Maryville Centre Drive, St. Louis, Missouri, on Monday, February 16, 1998, at
10:00 A.M., local time, and all adjournments thereof, all in accordance with
and as more fully described in the Notice and accompanying Proxy Statement for
such meeting, receipt of which is hereby acknowledged.
1. ELECTION OF CLASS I DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as written to the contrary below) to vote for nominees
as listed below
JAMES W. BETTS and JAMES DORR
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
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2. IN THEIR DISCRETION UPON ANY BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
[Reverse]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE
NOMINEES LISTED.
Dated this ----- day of ----------------------------, 1998.
PLEASE DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
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Signature
Please date and sign in the exact name
in which you own the Company's Common
Stock. Executors, administrators,
trustees and others acting in a
representative or fiduciary capacity
should so indicate when signing.
