SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
COMMISSION FILE NO. 0-20614
THE ROTTLUND COMPANY, INC.
(Name of Registrant as Specified in Its Charter)
JOSEPH T. KINNING, ESQ.
BRIGGS AND MORGAN, P.A.
2400 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 334-8514
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
THE ROTTLUND COMPANY, INC.
2681 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
August 1, 1996
Dear Shareholder of The Rottlund Company, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders of The
Rottlund Company, Inc. (the "Company"), to be held at the Crowne Plaza Northstar
Hotel, 618 Second Avenue South, Minneapolis, Minnesota, on Tuesday, September
10, 1996 at 3:00 p.m.
At the Annual Meeting you will be asked to elect directors, to approve an
amendment to the Company's 1992 Stock Option Plan to increase the number of
shares reserved for issuance under the Plan from 600,000 to 1,000,000, and to
ratify the appointment by the Board of Directors of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending March 31,
1997.
I encourage you to vote FOR each of the nominees for director, FOR the amendment
to the Company's 1992 Stock Option Plan, and FOR ratification of the appointment
of Arthur Andersen LLP. Whether or not you are able to attend the Annual Meeting
in person, I urge you to complete, sign, and date the enclosed proxy card and
return it promptly in the enclosed envelope. If you do attend the meeting in
person, you may withdraw your proxy and vote personally on any matters brought
properly before the meeting.
Very truly yours,
THE ROTTLUND COMPANY, INC.
David H. Rotter
President
THE ROTTLUND COMPANY, INC.
2681 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
THE ROTTLUND COMPANY, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The Rottlund
Company, Inc. (the "Company") will be held at 3:00 p.m. on Tuesday, September
10, 1996 at the Crowne Plaza Northstar Hotel, 618 Second Avenue South,
Minneapolis, Minnesota, for the following purposes, as more fully
described in the accompanying proxy statement:
1. To elect seven directors of the Company, each for a term of one year
and until their successors shall be elected and duly qualified;
2. To approve an amendment to the Company's 1992 Stock Option Plan to
increase the number of shares reserved for issuance under the Plan
from 600,000 to 1,000,000;
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending March 31,
1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on July 19, 1996, are
entitled to notice of and to vote at the meeting.
Whether or not you expect to attend the meeting in person, please complete,
date, and sign the enclosed proxy exactly as your name appears thereon and
promptly return it in the envelope provided, which requires no postage if mailed
in the United States. Proxies may be revoked at any time and if you attend the
meeting in person, your executed proxy will be returned to you upon request.
By Order of the Board of Directors
David H. Rotter
President
Roseville, Minnesota
August 1, 1996
THE ROTTLUND COMPANY, INC.
2681 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 10, 1996
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of The Rottlund Company, Inc. (the "Company") for use
at the Annual Meeting of Shareholders to be held at the Crowne Plaza Northstar
Hotel, 618 Second Avenue South, Minneapolis, Minnesota, on Tuesday, September
10, 1996 at 3:00 p.m., and at any adjournment thereof.
All shares represented by properly executed proxies received in time will be
voted at the meeting as follows, unless otherwise specified by the shareholder
in the proxy: (i) in favor of the election as directors of all of the nominees
listed herein; (ii) in favor of the amendment to the Company's 1992 Stock Option
Plan; (iii) in favor of the selection of Arthur Andersen LLP as the independent
public accountants of the Company; and (iv) in accordance with the judgment of
the persons named in the proxy as to such other matters as may properly come
before the meeting. If an executed proxy card is returned and the shareholder
has abstained from voting on any matter, the shares represented by such proxy
will be considered present at the meeting for purposes of determining a quorum
and for purposes of calculating the vote, but will not be considered to have
been voted in favor of such matter. If an executed proxy is returned by a broker
holding shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote with respect to such matter.
Any shareholder who executes and returns a proxy may revoke it at any time prior
to the voting of the proxies by giving written notice to the Secretary of the
Company, by executing a later-dated proxy, or by attending the meeting and
giving oral notice to the Secretary of the Company.
The Board of Directors of the Company has fixed the close of business on July
19, 1996 as the record date for determining the holders of outstanding shares of
common stock entitled to notice of, and to vote at, the Annual Meeting. On that
date, there were 5,707,860 shares of common stock issued and outstanding. Each
such share of common stock is entitled to one vote at the meeting. The Notice of
Annual Meeting, this proxy statement and the form of proxy are first being
mailed to shareholders of the Company on or about August 1, 1996.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of the
Company's common stock as of July 19, 1996, by (i) each person known to the
Company to own beneficially more than 5% of its common stock, (ii) each director
of the Company, (iii) each officer named in the executive compensation table of
this proxy statement, and (iv) all directors and officers as a group. Unless
otherwise indicated, each person in the table has sole voting and investment
power as to the shares shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- - ------------------------------------ ------------ --------
<S> <C> <C>
David H. Rotter 2,165,000(2)(3)(4) 36.9%
2681 Long Lake Road
Roseville, MN 55113
Bernard J. Rotter 2,141,000(3)(4) 36.4%
2681 Long Lake Road
Roseville, MN 55113
Todd M. Stutz 64,760(5) 1.1%
John J. Dierbeck, III 51,933(5) *
Lawrence B. Shapiro 60,689(5) 1.0%
Dennis J. Doyle 0(5) *
Scott D. Rued 7,000(5) *
All directors and officers as a group (7 persons) 4,489,986(2)(3)(5) 75.4%
</TABLE>
*Indicates ownership of less than 1% of the Company's outstanding common stock.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person as well as other securities as to
which the person has or shares voting or investment power or has the right
to acquire within 60 days after July 19, 1996. The same shares may be
beneficially owned by more than one person.
(2) Includes 816,500 shares held in constructive trust for the benefit of Mr.
David H. Rotter's former spouse, Shirley A. Rotter.
(3) Includes an aggregate of 522,000 shares held by children of Mr. David H.
Rotter and an aggregate of 537,000 shares held by the children of Mr.
Bernard J. Rotter and 50 shares held by the former spouse of Mr. David H.
Rotter and 100 shares held by the spouse of Mr. Bernard J. Rotter.
(4) Messrs. David H. Rotter and Bernard J. Rotter (the "Controlling
Shareholders") and their respective spouses, former spouses and children
have entered into a Shareholders' Agreement intended by them to preserve
continuity of ownership and control of the Company. Pursuant to a divorce
decree with respect to the divorce of Mr. David H. Rotter and his former
spouse, Ms. Shirley A. Rotter, 821,500 shares are being held in
constructive trust for Ms. Rotter. The divorce decree states that Mr. David
H. Rotter's rights pursuant to the Shareholders' Agreement are to remain in
full force and effect. The Shareholders' Agreement divides the Rotter
families who own shares into two groups, the "DR Group" and the "BR Group."
The members of the groups, who own collectively 4,306,000 shares of common
stock, so long as they own their respective shares, have agreed to vote
their shares in favor of the election of Messrs. David H. Rotter and
Bernard J. Rotter to the Board of Directors of the Company, and members of
the respective groups have further agreed to certain restrictions upon
their ability to transfer or otherwise dispose of their shares to third
parties in the event of certain voluntary lifetime transfers, upon death
and in the case of involuntary transfers. If any of the members in the DR
Group desire to dispose of their shares without the consent of Mr. David H.
Rotter, such member must first offer the shares to Mr. David H. Rotter, and
if he does not elect to acquire such shares, then to Mr. Bernard J. Rotter.
Similarly, if any member of the BR Group desires to dispose of his or her
shares without the consent of Mr. Bernard J. Rotter, such member must first
offer such shares to Mr. Bernard J. Rotter, and if he does not elect to
purchase such shares, then to Mr. David H. Rotter. Messrs. David H. Rotter
and Bernard J. Rotter have agreed that they will offer their respective
shares to the other in the event of as proposed lifetime transfers, and
each has given to the other the option to purchase his shares upon death,
disability or in the event of an involuntary transfer. The Shareholders'
Agreement will terminate upon: (i) the entry of an order of relief with
respect to the Company under the Federal Bankruptcy Code, the execution by
the Company of any assignment for the benefit of creditors or the
appointment of a receiver of the Company; (ii) voluntary or involuntary
dissolution of the Company; (iii) upon the written agreement or vote of the
Controlling Shareholders to dissolve the Company; (iv) upon the written
agreement of the Controlling Shareholders, or if there shall be only one
surviving Controlling Shareholder, upon notice by such Controlling
Shareholder to the remaining parties to the Shareholders' Agreement; or (v)
upon the deaths of the Controlling Shareholders.
(5) Includes the right to acquire the following shares within 60 days upon
exercise of stock options: Mr. Stutz, 60,074; Mr. Dierbeck, 51,532; Mr.
Shapiro, 51,165 and Mr. Rued 2,000.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for the
three fiscal years ended March 31, 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- - --------------------------- ---- ---------- --------- -----------
<S> <C> <C> <C> <C>
David H. Rotter 1996 250,000 103,726 32,634
President 1995 250,000 130,725 --
1994 250,000 134,543 --
Bernard J. Rotter 1996 250,000 103,726 32,634
Vice President, Treasurer 1995 250,000 130,725 --
1994 250,000 134,543 --
Todd M. Stutz 1996 85,000 140,703 15,612
Executive Vice President 1995 55,800 127,138 12,382
1994 52,800 108,895 6,000
John J. Dierbeck, III 1996 85,000 59,272 14,910
Executive Vice President 1995 55,000 118,953 13,875
1994 44,900 122,760 5,000
Lawrence B. Shapiro 1996 85,000 59,272 13,868
Chief Financial Officer 1995 55,000 106,795 13,465
1994 52,800 109,903 5,000
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants for the year ended
March 31, 1996 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE OPTION TERM(3)
GRANTED FISCAL PER SHARE EXPIRATION --------------------
NAME (#)(1) YEAR (%)(2) ($/SH) DATE 5% ($) 10% ($)
- - ---- ------ ----------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
David H. Rotter 32,634 25.4 8.53 9/12/2000 44,382 128,904
Bernard J. Rotter 32,634 25.4 8.53 9/12/2000 44,382 128,904
Todd M. Stutz 15,612 12.2 7.75 9/12/2005 76,030 193,808
John J. Dierbeck, III 14,910 11.6 7.75 9/12/2005 72,612 184,139
Lawrence B. Shapiro 13,875 10.8 7.75 9/12/2005 67,571 171,356
</TABLE>
(1) Such options become exercisable in equal amounts over a five-year period
from the date of grant.
(2) The Company granted options representing 128,468 shares to employees in
fiscal 1996.
(3) These amounts are based on the assumed rates of appreciation as permitted
by the rules of the Securities and Exchange Commission. Actual gains, if
any, on stock option exercises are dependant upon the future performance of
the Company's common stock.
AGGREGATED FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the named executive
officers and the value of such officers' unexercised options at March 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
------------------------------ -------------------------
NAME (EXERCISABLE) (UNEXERCISABLE) (EXERCISABLE) (UNEXERCISABLE)
- - ---- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
David H. Rotter -- 32,634 0 0
Bernard J. Rotter -- 32,634 0 0
Todd M. Stutz 41,076 53,918 47,520 31,680
John J. Dierbeck, III 34,775 49,010 39,600 26,400
Lawrence B. Shapiro 34,695 47,645 39,600 26,400
</TABLE>
(1) The average of the high and low price of the Company's common stock on
March 31, 1996 on NASDAQ/NMS was $6.75. The amounts shown reflect the value
of options accumulated over a 41 month period.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH
CONTAINED HEREIN SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
BOARD REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") determined the compensation
arrangements for the Company's executive officers for fiscal 1996 in June and
September of 1995. At that time Messrs. Rued and Tobin constituted the
Committee. The Committee is presently comprised of the two outside directors of
the Company, Messrs. Doyle and Rued.
The Committee's principal responsibility is to ensure the Company's executive
compensation plans are aligned with and support the Company's business
objectives. The Committee continually evaluates the overall design and
administration of the executive compensation plans in order to fulfill its
responsibility. To ensure the objectivity and independence of the Committee, it
is composed entirely of outside directors.
COMPENSATION PHILOSOPHY
Currently, the primary elements of the executives' total compensation program
are base salary, annual incentives, and long-term incentives. In general, the
compensation program promotes a pay-for-performance philosophy by placing a
significant portion of total compensation "at risk" while providing compensation
opportunities which are comparable to market levels.
The Company's executive compensation package consists of three main components:
(i) base salary; (ii) annual bonuses based on Company performance; and (iii)
stock options. The base salary of each of the named executive officers is
determined annually after considering the compensation levels of personnel with
similar responsibilities at other companies within the home construction
industry and after considering the responsibilities and performance of the
individual officer. Under the Company's annual bonus program, cash bonuses are
paid annually to the named executive officers and other officers and employees
from a bonus pool. The size of the bonus pool is derived from a pre-determined
formula of percentages of levels of pre-tax profits of the Company. The officers
and employees participating in the annual bonus program receive a percentage of
the bonus pool which is established based on the same considerations as were
used to determine the base salary of each such officer and employee. Under the
annual bonus program, each executive officer's compensation for fiscal 1996 was
tied directly to the financial performance of the Company, except for Mr. Todd
M. Stutz, whose bonus is tied directly to the financial performance of the
Company's Minnesota operations. For the annual bonus program in fiscal 1996, a
bonus of $103,726 was paid to Mr. David H. Rotter, Chief Executive Officer of
the Company, and the aggregate bonuses paid to all of the named executive
officers of the Company, as a group, including the Chief Executive Officer,
represents approximately 38.2% of the group's total fiscal 1996 compensation.
The purpose of the stock option program is to align the long-term interests of
the Company's executives and its shareholders and, through the use of vesting
periods, to assist in the retention of executives. In determining the
compensation package for Mr. David H. Rotter, the Committee applied the
compensation policies described above.
COMPENSATION COMMITTEE INTERLOCKS RIDER
As stated above, Messrs. Tobin and Rued comprised the Compensation Committee of
the Board of Directors for purposes of setting compensation levels for fiscal
1996. No member of the Compensation Committee of the Board of Directors was an
officer, former officer or employee of the Company or any of its subsidiaries
during fiscal 1996. No executive officer of the Company served as a member of
the compensation committee or board of directors of another entity, one of whose
executive officers served on the Company's Compensation Committee or Board of
Directors during fiscal 1996.
COMPANY STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on $100
invested on October 29, 1992, the effective date of the Company's initial public
offering, on the common stock of the Company through March 31, 1996 with the
cumulative total return on the same amount invested in the Dow Jones Equity
Market Index and Dow Jones Home Construction Index for the same periods.
[GRAPH]
RHOM DJEMI DJHCI
---- ----- -----
10/29/92 100.00 100.00 100.00
3/31/93 145.45 106.58 108.91
9/30/93 131.82 112.73 133.61
3/31/94 161.36 110.54 116.90
9/30/94 127.27 115.99 97.38
3/31/95 118.18 127.02 101.72
9/30/95 137.87 151.06 128.37
3/31/96 124.08 169.02 145.20
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
executive officers of the Company, and persons who own more than 10% of the
Company's common stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the
Company's common stock and to furnish the Company with copies of these reports.
Initial reports are required to be filed within ten days of an individual
becoming a director, executive officer or owner of 10% of the Company's common
stock and reports of changes in ownership are required to be filed within the
first ten days of the month succeeding the month in which such change occurred.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were timely made during fiscal 1996.
1. ELECTION OF DIRECTORS
Each of the seven nominees for director is currently a member of the Board of
Directors and was elected by the shareholders, except for Dennis J. Doyle who
was appointed by the Board of Directors in April 1996 to fill a vacancy created
by the resignation of William C. Tobin. All nominees have agreed to stand for
election at the Annual Meeting. If, prior to the Annual Meeting, the Board of
Directors learns that any nominee will be unable to serve by reason of death,
incapacity, or other unexpected occurrence, the proxies which would have
otherwise been voted for such nominee will be voted for a substitute nominee, if
any, elected by the Board.
BUSINESS EXPERIENCE
DAVID H. ROTTER, age 49, is a founder of the Company and has been a member of
its Board of Directors since its inception. He served as the Company's Vice
President from 1973 through March 1990 and has served as its President from
April 1990 through the present. He has also served as the Company's Secretary
since its inception. He is the brother of Bernard J. Rotter.
BERNARD J. ROTTER, age 53, has served as a Director of the Company since July
1984 and as Vice President and Treasurer since July 1984. He is the brother
of David H. Rotter.
TODD M. STUTZ, age 38, was elected a Director of the Company in August 1992 and
has served as Executive Vice President since June 1991. He joined the Company in
April 1989 and served as its Land Development Manager until June 1991. Between
April 1980 and March 1989 he was employed by the Housing and Redevelopment
Authority of the City of Columbia Heights, Minnesota as Executive Director.
JOHN J. DIERBECK, III, age 50, was elected Executive Vice President in May
1996. Prior to becoming an Executive Vice President he served as Vice
President of Sales and Marketing of the Company since August 1992. He served
as the Company's sales manager since March 1990. Mr. Dierbeck was elected a
director of the Company in August 1992.
LAWRENCE B. SHAPIRO, age 40, was elected Chief Financial Officer and a
Director of the Company in August 1992. He has served as the Company's
Controller since January 1989.
SCOTT D. RUED, age 39, was elected as a Director of the Company effective
December 10, 1993. Mr. Rued has served as Executive Vice President and Chief
Financial Officer of Hidden Creek Industries (a management company) since
January 1, 1994, as Vice President -- Finance and Corporate Development of
Hidden Creek from June 1989 to December 1993 and as Vice President and Director
of Tower Automotive, Inc. (a producer of automotive parts) since April 1993.
DENNIS J. DOYLE, age 44, was elected as a Director of the Company on April
23, 1996. For more than the last five years Mr. Doyle has been President and
Chief Executive Officer of Welsh Companies, Inc. (a full service real estate
company). Mr. Doyle is also a director of Grow Biz International.
REQUIRED VOTE
Election of each nominee requires the affirmative vote of the holders of a
majority of the shares of common stock represented at the meeting.
COMMITTEES
The Board of Directors held three meetings in fiscal 1996. Each of the incumbent
directors attended at least 75% of the meetings of the Board and each Committee
of which he is a member held during fiscal 1996, except that Messrs. David H.
Rotter and Bernard J. Rotter attended 66.6% of such meetings.
The members of the Audit Committee are Dennis J. Doyle and Scott D. Rued. The
Audit Committee is empowered by the Board of Directors to review the financial
books and records of the Company in consultation with the Company's accounting
and auditing staff and its independent auditors and to review with the
accounting staff and independent auditors any questions raised with respect to
accounting and auditing policy and procedure. The Audit Committee held one
meeting during fiscal 1996.
The members of the Compensation Committee are Dennis J. Doyle and Scott D. Rued.
The Compensation Committee is authorized by the Board of Directors to establish
general levels of compensation for all employees of the Company, to set the
annual salary of each of the executive officers of the Company, to grant options
to employees under the Company's option plans, and to review and approve
compensation and benefit plans of the Company. The Compensation Committee held
two meetings during fiscal 1996.
Directors of the Company who are not employees of the Company receive $8,000 per
year of service, reimbursement of the out-of-pocket expenses incurred on behalf
of the Company and they participate in the Company's Director Stock Option Plan.
2. AMENDMENT TO THE 1992 STOCK OPTION PLAN
BACKGROUND AND SUMMARY OF PLAN
On June 7, 1996, the Board of Directors, subject to shareholder approval,
amended the Company's 1992 Stock Option Plan (the "Plan") to increase the number
of shares of common stock reserved for issuance pursuant to the Plan from
600,000 to 1,000,000. The purpose of the Plan is to strengthen the Company's
ability to attract and retain key employees and to furnish additional incentives
to such persons by encouraging them to become owners of common stock. The Plan
provides for the granting of options to designated employees, non-employees and
consultants of the Company. A proposal to approve the amendment will be
presented to shareholders at the Annual Meeting of Shareholders.
Copies of the Plan are available for examination at the corporate headquarters
of the Company in Roseville, Minnesota, and will be mailed at no charge to any
shareholder who requests a copy. A copy of the Plan will also be available for
examination at the meeting.
The closing price per share of the Company's common stock on July 23, 1996 as
reported on the Nasdaq National Market, was $5.50.
PROPOSED PLAN AMENDMENT
Of the 600,000 shares reserved by the Company for grant pursuant to the Plan,
428,340 were subject to options as of the date of this proxy statement. Because
few additional options to purchase shares may be granted under the Plan, the
Board of Directors recommends that the shareholders approve the amendment to
increase the shares available for issuance pursuant to the Plan.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors, which consists exclusively of non-employee directors. The
Compensation Committee has the authority to grant options, determine the terms
of options, select the employees to whom options are granted, promulgate rules
relating to the Plan and to take other actions necessary or advisable for the
administration of the Plan. Under the Plan, options may be granted at not less
than 100% (110% in the case of incentive stock options granted to shareholders
owning 10% or more of the Company's common stock) of the fair market value of
the Company's common stock on the date of grant. Options may be granted under
the Plan no later than August 30, 2002, the Plan's termination date. Options
granted under the Plan may not exceed 10 years in duration (five years for 10%
or more shareholders). Options may not be transferred except by will or the laws
of descent and distribution and must be exercised, if at all, within three
months after termination of employment for any reason other than death or
disability, and within six months after termination of employment due to death
or disability.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under the Plan, stock options may be issued (1) as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, (2) as non-statutory stock options that do not qualify as incentive
stock options, or (3) a combination of both. There is no taxable income to a
participant as a result of the grant of an incentive stock option or the
exercise of an incentive stock option if the participant does not dispose of the
acquired stock for certain time periods. However, the difference between the
fair market value of the shares under the option at the time of exercise and the
option price will generate a tax preference item that could result in an
alternative minimum tax liability for the employee. Upon sale of the shares, the
difference between the sale price and the option price will generally be taxable
income. The Company is not entitled to a federal income tax deduction upon the
grant or exercise of incentive stock options. Generally, there is no taxable
income to a participant as a result of the grant of a non-statutory stock
option. However, upon exercise, the participant will realize taxable income
equal to the difference between the fair market value of the common stock at the
time of exercise and the option price. The Company is not entitled to a tax
deduction upon the grant of a non-statutory stock option, but is entitled to a
tax deduction equal to the participant's taxable income realized upon the
exercise of the stock option. The foregoing statements are based on current
federal income tax laws and regulations and are subject to changes in such tax
laws and regulations, or interpretations thereof.
REQUIRED VOTE
Approval of the amendment requires the affirmative vote of the holders of a
majority of the shares of common stock represented at the meeting. The Board of
Directors recommends that you vote in favor of the proposal.
3. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent public
accountants for the Company for the year ending March 31, 1997. A proposal to
ratify that appointment will be presented to shareholders at the Annual Meeting.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions from shareholders in
attendance. The Board of Directors recommends that you vote in favor of the
proposal.
OTHER MATTERS
The Board of Directors knows of no other matters that may be brought before the
meeting which require submission to a vote of the shareholders. If any other
matters are properly brought before the meeting, however, the persons named in
the enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
Expenses incurred in connection with the solicitation of proxies will be paid by
the Company. The proxies are being solicited principally by mail. In addition,
directors, officers and regular employees of the Company may solicit proxies
personally or by telephone, for which they will receive no consideration other
than their regular compensation. The Company will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting material to the
beneficial owners of common stock of the Company and will reimburse such persons
for their expenses so incurred.
SHAREHOLDER PROPOSALS
Shareholders wishing to present proposals for action by the shareholders at the
next Annual Meeting must present such proposals at the principal offices of the
Company not later than May 3, 1997. Due to the complexity of the respective
rights of the shareholders and the Company in this area, any shareholder
desiring to propose such an action is advised to consult with his or her legal
counsel with respect to such rights. It is suggested that any such proposals be
submitted by certified mail, return receipt requested.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's Annual Report to shareholders for the fiscal year ended
March 31, 1996, which contains the Company's Form 10-K, accompanies this Notice
of Annual Meeting, proxy statement and Proxy Card. No part of the Annual Report
is incorporated herein and no part thereof is to be considered proxy soliciting
material.
BY ORDER OF THE BOARD OF DIRECTORS
David H. Rotter
President
Roseville, Minnesota
August 1, 1996
AMENDMENT NO. 1
TO THE
ROTTLUND COMPANY, INC.
1992 STOCK OPTION PLAN
The 1992 Stock Option Plan shall be amended as follows:
1. Section 4.1 shall be amended by deleting the first sentence and
replacing it with the following sentence:
NUMBER. The total number of shares of stock reserved for issuance upon
exercise of options under the Plan is 1,000,000.
The remainder of that paragraph 4.1 shall remain in its current form.
2. This amendment shall be effective as of June 7, 1996.
Dated:______________________________ ROTTLUND COMPANY, INC.
By ______________________________
President
THE ROTTLUND COMPANY, INC.
2681 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting of
Shareholders and the Proxy Statement, dated August 1, 1996, hereby appoints
David H. Rotter and Bernard J. Rotter as proxies (each with the power to act
alone and with the power of substitution and revocation), to represent the
undersigned and to vote, as designated below, all common shares of The Rottlund
Company, Inc. held of record by the undersigned on July 19, 1996, at the Annual
Meeting of Shareholders to be held on September 10, 1996 at 3:00 p.m. at the
Crowne Plaza Northstar Hotel, 618 Second Avenue South, Minneapolis, Minnesota,
and at any adjournments thereof.
i. To elect seven directors of the Company, each for a term of one year and
until their successors shall be elected and duly qualified.
|_| FOR all nominees listed below
(except as marked to the contrary below)
|_| WITHHOLD AUTHORITY
to vote for all nominees listed below
DAVID H. ROTTER, BERNARD J. ROTTER, TODD M. STUTZ, JOHN J. DIERBECK, III
LAWRENCE B. SHAPIRO, SCOTT D. RUED, DENNIS J. DOYLE
INSTRUCTION: To withhold authority to vote for any individual, write that
nominee's name in the space provided below.
- - --------------------------------------------------------------------------------
ii. To approve an amendment to the Company's 1992 Stock Option Plan to increase
the number of shares reserved for issuance under the Plan from 600,000 to
1,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
iii. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending March 31, 1997.
|_| FOR |_| AGAINST |_| ABSTAIN
iv. To transact such other business as may properly come before the meeting or
any adjournment thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
PROXY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 THROUGH 4. ABSTENTIONS WILL BE COUNTED TOWARDS
THE EXISTENCE OF A QUORUM.
Please sign exactly as name appears
on this proxy. When shares are held
by joint tenants, both should sign.
If signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by an authorized
person.
Dated: ____________________________
___________________________________
___________________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
