<PAGE>
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
SHELDAHL, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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 transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF SHELDAHL, INC.]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 10, 1996
Notice is hereby given that the Annual Meeting of Shareholders of Sheldahl,
Inc. will be held at the Company's new production facility located at 1285
South Fordham Road, Longmont, Colorado, on Wednesday, January 10, 1996 at
10:00 a.m., Mountain Time, for the following purposes:
1. To elect eight directors to hold office until the next Annual Meeting
of Shareholders or until their successors are elected.
2. To ratify and approve the selection of independent public accountants
for the Company for the current fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on November 10, 1995
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors
Gerald E. Magnuson, Secretary
Northfield, Minnesota
November 27, 1995
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES
AND VOTE IN PERSON IF THEY SO DESIRE. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
<PAGE>
[LOGO OF SHELDAHL, INC.]
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Sheldahl, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to
be held on January 10, 1996 or any adjournment or adjournments thereof. The
cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in the Company's common stock registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by
revocation of a written proxy by request in person at the Annual Meeting; if
not so revoked, the shares represented by such proxy will be voted. The
Company's principal offices are located at 1150 Sheldahl Road, Northfield,
Minnesota 55057, and its telephone number is (507) 663-8000. The mailing of
this proxy statement to shareholders of the Company commenced on or about
November 27, 1995.
The total number of shares outstanding and entitled to vote at the meeting
as of November 10, 1995 consisted of 6,833,926 shares of $0.25 par value
common stock. Each share of common stock is entitled to one vote. Shareholders
have cumulative voting rights in connection with the election of directors by
giving written notice of intent to cumulate votes to any officer of the
Company before the meeting or to the presiding officer at the meeting. A
shareholder may cumulate votes for the election of directors by multiplying
the number of votes to which the shareholder may be entitled by eight (the
number of directors to be elected) and casting all such votes for one nominee
or distributing them among any two or more nominees. Only shareholders of
record at the close of business on November 10, 1995 will be entitled to vote
at the meeting. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at the Annual Meeting of Shareholders
constitutes a quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or
by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number
of shares that would constitute such a quorum. Votes cast by proxy or in
person at the Annual Meeting of Shareholders will determine whether or not a
quorum is present. Abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of the matter submitted to
the shareholders for a vote. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table includes information as of November 10, 1995 concerning
the beneficial ownership of common stock of the Company by (i) the only
shareholders known to the Company to hold more than five percent of the common
stock of the Company, (ii) each of the directors of the Company, (iii) each
executive officer named in the table on page 6 and (iv) all officers and
directors of the Company as a group. Unless otherwise indicated, all
beneficial owners have sole voting and investment power over the shares held.
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OF CLASS
------------------------------------ ------ --------
<S> <C> <C>
Peter B. Cannell and Co., Inc. 647,200(1) 9.47%
919 Third Avenue
New York, NY 10022
Sumitomo Bakelite Co., Ltd. 414,400(1) 6.07%
Mita-Nitto-Osaka Building
11-36, 3-Chome Mita
Minato-Ku, Tokyo 108, Japan
Regan Money Managers 371,600(1) 5.44%
7600 Parklawn Avenue
Suite 300
Edina, MN 55435
James E. Donaghy(2)(3) 86,237(4)(5) 1.26%
James S. Womack(2) 80,801(5) 1.18%
John G. Kassakian(2) 9,997(5) *
Gerald E. Magnuson(2) 18,188(5) *
William B. Miller(2) 9,000(5) *
Kenneth J. Roering(2) 18,000(5) *
Richard S. Wilcox(2) 106,155(5)(6) 1.55%
Beekman Winthrop(2) 273,800(5) 4.01%
Gregory D. Closser(3) 37,997(5) *
Edward L. Lundstrom(3) 32,155(5) *
John V. McManus(3) 52,037(5) *
Roger D. Quam(3) 51,225(5) *
All Officers and Directors as a Group (15 per-
sons) 820,715(4)(5)(6) 11.66%
</TABLE>
- - ---------------------
*Less than one percent.
(1) Based upon information contained in a Schedule 13G or Schedule 13D filed
with the Securities and Exchange Commission.
2
<PAGE>
(2) Serves as a director of the Company and has been nominated for re-
election.
(3) Serves as an executive officer of the Company and appears in the table on
page 6 hereof.
(4) Includes shares held by the Company's Employee Savings Plan for the
benefit of the person or group named herein.
(5) Includes shares which may be purchased within sixty days from the date
hereof upon exercise of outstanding stock options in the amount of 22,548
shares for Mr. Donaghy, 11,143 shares for Mr. Womack, 24,391 shares for
Mr. Closser, 27,322 shares for Mr. Lundstrom, 27,906 shares for Mr. Quam,
23,147 shares for Mr. McManus, 5,000 shares for each of Messrs. Kassakian,
Magnuson, Roering and Wilcox, 4,000 shares for Mr. Miller, 3,000 shares
for Mr. Winthrop and 202,138 shares for all officers and directors as a
group.
(6) Includes 35,400 shares held by a trust for the benefit of Mr. Wilcox's
daughter, for which he is trustee. Mr. Wilcox disclaims beneficial
ownership of the 35,400 shares.
3
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
Eight directors will be elected at the Annual Meeting to serve until the
next Annual Meeting of Shareholders or until a successor is elected. The Board
of Directors has nominated for election the eight persons named below. All of
the nominees are currently directors and all were elected by the shareholders.
It is intended that proxies will be voted for the named nominees. Unless
otherwise indicated, each nominee has been engaged in his present occupation
as set forth below, or has been an officer with the organization indicated,
for more than the past five years. The Board of Directors believes that each
nominee named below will be able to serve, but should any nominee be unable to
serve as a director, the persons named in the proxies have advised that they
will vote for the election of such substitute nominee as the Board of
Directors may propose.
The names of the nominees, their principal occupations and other information
is set forth below, based upon information furnished to the Company by the
nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE AND OTHER DIRECTORSHIPS SINCE
- - ------------ ----------------------- --------
<S> <C> <C>
James E. Donaghy (61) President and Chief Executive Officer of the Company; 1988
prior to 1988, Director of Planning and Development for
Dupont Electronics, Wilmington, Delaware (electronics
manufacturer);
Director of Hutchinson Technology, Inc.
John G. Kassakian (52) Professor of Electrical Engineering and Director, 1985
Laboratory for Electromagnetic and Electronic Systems,
Massachusetts Institute of Technology, Cambridge,
Massachusetts; Director of Ault Incorporated.
Gerald E. Magnuson (65) Of Counsel, Lindquist & Vennum P.L.L.P., Minneapolis, 1975
Minnesota (law firm); Secretary of the Company; Director
of Munsingwear, Inc., Research, Incorporated and
Washington Scientific Industries, Inc.
William B. Miller (63) Consultant, Miller & Company, Ayr, Scotland (business 1991
consulting);
prior to 1991, Managing Director and Chairman, Prestwick
Holdings plc, Ayr, Scotland (electronic component
manufacturer).
Kenneth J. Roering (53) Professor, School of Management, University of Minnesota, 1988
Minneapolis, Minnesota; Director of TSI, Inc., Mountain
Parks Financial Group, Inc. and Transport Corporation of
America, Inc.
Richard S. Wilcox (66) Private Investor; Director of Computer Identics 1972
Corporation.
Beekman Winthrop (54) Private Investor; President of Woodwin Management, Inc. 1992
(investment advisor); President and Director of Central
Coal & Coke Corporation, Kansas City, Missouri
(management of interests in coal, gas and oil
properties).
James S. Womack (67) Chairman of the Board of the Company; Prior to 1992, 1968
Chief Executive Officer of the Company; Director of
General Securities, Inc. and Zytec Corp.
</TABLE>
4
<PAGE>
The Board of Directors met eleven times during fiscal year 1995. Each
director attended more than 75% of the meetings of the Board of Directors and
Board committees on which he served.
The Compensation Committee, which is currently comprised of Messrs. Roering
(Chairman), Magnuson and Womack, met three times during fiscal year 1995. The
Compensation Committee reviews and makes recommendations to the Board of
Directors regarding salaries, compensation and benefits of officers and key
employees.
The Audit Committee, which is currently comprised of Messrs. Wilcox
(Chairman), Kassakian, Magnuson, Miller, Roering, Winthrop and Womack, met two
times during fiscal year 1995. Among other duties, the Committee reviews and
evaluates significant matters relating to the audit and internal controls of
the Company, reviews the scope and results of audits by, and the
recommendations of, the Company's independent auditors and approves additional
services to be provided by the auditors. The Committee reviews the activities
of the Company's internal audit staff and reviews audited financial statements
of the Company.
The Nominating Committee, which is currently comprised of Messrs. Kassakian
(Chairman), Winthrop and Roering, did not meet during fiscal 1995. The
Nominating Committee was established at the end of fiscal 1995 to consider
nominees for election to the Board of Directors and to evaluate the
performance of the Board of Directors and individual directors. The Nominating
Committee will consider a nomination by a shareholder of a candidate for
election as a director of the Company. The Company's Bylaws provide that a
notice of proposed shareholder nominations for the election of directors must
be timely given in writing to the Secretary of the Company prior to the
meeting at which directors are to be elected. To be timely, the notice must be
given by such shareholder to the Secretary of the Company not less than 45
days nor more than 60 days prior to a meeting date corresponding to the
previous year's Annual Meeting. The Company's Bylaws provide that the Annual
Meeting shall be held on the second Wednesday in January of each year. The
notice to the Company from a shareholder who intends to nominate a person at
the meeting for election as a director must contain certain information about
such shareholder and the person(s) nominated by such shareholder, including,
among other things, the name and address of record of such shareholder, a
representation that the shareholder is entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting, the name, age,
business and residence addresses and principal occupation of each nominee,
such other information as would be required to be included in a proxy
statement soliciting proxies for the election of the proposed nominee(s), and
the consent of each nominee to serve as a director if so elected. The Company
may also require any proposed nominee to furnish other information reasonably
required by the Company to determine the proposed nominee's eligibility to
serve as director. If the presiding officer of a meeting of shareholders
determines that a person was not nominated in accordance with the foregoing
procedure, such person will not be eligible for election as a director.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending September 1, 1995,
September 2, 1994 and August 27, 1993, the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those years,
to James E. Donaghy, the Company's President and Chief Executive Officer, and
to each of the four other most highly compensated executive officers of the
Company in office at the end of fiscal year 1995, whose total cash compensation
exceeded $100,000 during fiscal year 1995 (together with Mr. Donaghy, the
"Named Executive Officers") in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------------
NAME AND SECURITIES ALL OTHER
PRINCIPAL POSITION UNDERLYING COMPEN-
- - ------------------ YEAR SALARY BONUS OPTIONS SATION(1)
---- -------- ----- ------------ ---------
<S> <C> <C> <C> <C> <C>
James E. Donaghy 1995 $256,203 $ 0 7,719 $ 8,998
President and Chief 1994 247,722 0 10,548 10,718
Executive Officer 1993 231,014 0 0 8,680
Edward L. Lundstrom 1995 131,053 0 3,985 6,348
Vice President 1994 122,324 0 11,134 6,116
1993 106,538 0 10,654 4,433
Roger D. Quam 1995 124,577 0 3,762 6,071
Vice President 1994 121,540 0 11,267 5,470
1993 109,512 0 10,951 4,340
Gregory D. Closser 1995 113,278 0 3,428 5,630
Vice President 1994 108,161 0 9,972 5,341
1993 96,325 0 9,633 4,009
John V. McManus 1995 121,378 0 3,671 5,172
Vice President 1994 107,272 0 9,830 4,817
1993 94,557 0 9,456 3,935
</TABLE>
- - ---------------------
(1) These amounts represent Company basic and matching contributions to the
Company's 401(k) plan on behalf of such employees.
6
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's stock option plans to the Named Executive Officers
during the last fiscal year:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM(1)
- - --------------------------------------------------------------- ----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDER- GRANTED TO
LYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED YEAR PER SHARE DATE 5% 10%
- - ---- ---------- ---------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
James E. Donaghy... 7,719 9.9% $16.50 08/24/05 $80,098 $202,985
Edward L.
Lundstrom......... 3,985 5.1% 16.50 08/24/05 41,351 104,793
Roger D. Quam...... 3,762 4.8% 16.50 08/24/05 39,037 98,928
Gregory D. Closser. 3,428 4.4% 16.50 08/24/05 35,572 90,145
John V. McManus.... 3,671 4.7% 16.50 08/24/05 38,093 96,535
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
- - ---------------------
(1) Gains are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the common stock, overall stock
market conditions, as well as the optionholder's continued employment
through the vesting period. The amounts reflected in this table may not
necessarily be achieved.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year:
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
------------------------- -------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE(2)
- - ---- ----------- ----------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James E. Donaghy........ 27,090(3) $253,969 22,548 107,719 $202,110 $1,119,298
Edward L. Lundstrom..... 12,353 72,574 27,322 3,985 304,177 9,963
Roger D. Quam........... 12,959 89,093 27,906 3,762 311,329 9,405
Gregory D. Closser...... 9,962 75,960 24,391 3,428 272,084 8,570
John V. McManus......... 9,482 65,189 23,148 3,671 258,824 9,178
</TABLE>
- - ---------------------
(1) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.
(2) Based on a per share price of $19.00, which is the average of the bid and
asked prices for the Company's Common Stock on September 1, 1995, the last
day of the Company's fiscal year. Value is calculated on the difference
between the option exercise price and $19.00 multiplied by the number of
shares of common stock underlying the options, but before taxes associated
with exercise.
(3) The net number of shares acquired upon exercise of options taking into
account shares transferred to the Company in payment of the option
exercise price and taxes associated with such exercise was 8,556 shares.
7
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executives are generally made by
the three member Compensation Committee of the Board consisting of Messrs.
Roering (Chairman), Womack and Magnuson. All decisions by the Compensation
Committee relating to the compensation of the Company's executive officers are
reviewed by the full Board. Pursuant to rules designed to enhance disclosure
of companies' policies toward executive compensation, set forth below is a
report submitted by Messrs. Roering, Womack and Magnuson in their capacity as
the Board's Compensation Committee addressing the Company's compensation
policies for fiscal year 1995 as they affected the executive officers. The
following report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing
under the Securities Act of 1933 (the "1933 Act") or the Securities Exchange
Act of 1934 (the "1934 Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the 1933 Act or the 1934 Act.
Compensation Philosophy. The Company's primary objective is to enhance long-
term shareholder value by safely and profitably providing products of the
highest value and quality for key markets. In furtherance of this objective,
the Company is committed to a strong, positive link between its business and
strategic goals and its compensation programs. The financial goals for
compensation plans are reviewed and approved by the Board in conjunction with
its approval of the Company's strategic and operating plans.
The Company's total compensation philosophy is designed to support its
overall objective of creating value for its shareholders. Key objectives of
this philosophy are:
. Attract and retain key executives critical to the long-term success of the
Company.
. Support a performance-oriented environment that rewards performance with
respect to Company short and long-term financial goals.
. Emphasize pay for performance by having a significant portion of
compensation "at-risk," particularly for senior executives.
. Encourage maximum performance through the use of appropriate incentive
programs.
. Encourage employee stock ownership to enhance a mutuality of interest with
other shareholders.
The Company has designed its executive compensation programs around these
objectives. The Compensation Committee believes the Company's programs
consistently meet these goals. Following is a description of the Company's
current programs and how each design element relates to the objectives
outlined above.
Base Salary. The Compensation Committee annually reviews each officer's
salary, including those of the Named Executive Officers. In determining
appropriate salary levels, the Compensation Committee considers level of
responsibility, experience, individual performance, internal equity, as well
as external pay practices. In August 1994, the Board approved salary increases
for key managers which became effective at the beginning of fiscal year 1995.
Annual Incentives. Annual incentive (performance bonus) award opportunities
are made to managerial and executive employees to recognize and reward
corporate and individual performance. Each year, the Compensation Committee
will approve the performance measures selected, as well as specific financial
targets used. The Compensation Committee believes these goals drive the future
success of the Company's business and enhance shareholder value.
8
<PAGE>
The amount individual executives may earn (target awards) is directly
dependent upon the individual's position, responsibility and ability to impact
the Company's financial success. Additionally, external market data is
reviewed annually to determine competitive incentive opportunities. Awarded
amounts are related to performance.
The short-term incentive plan is dependent on measured financial
performance. Every payout depends on results, not on efforts. Bonuses are paid
based upon attainment of financial goals for earnings growth. No bonuses were
paid to management in fiscal year 1995.
Long-Term Incentives. The Company's overall long-term compensation
philosophy is that long-term incentives should be related to improvement in
the creation of long-term shareholder value. In furtherance of this objective,
the Company awards to its executive officers stock options.
Stock Options. Stock options encourage and reward effective management that
results in long-term corporate financial success, as measured by stock price
appreciation. Stock options only have value for the executive officers if the
price of the Company's stock appreciates in value from the date the stock
options are granted. Shareholders also benefit from such stock price
appreciation.
Stock options are awarded annually consistent with the Company's objectives
to more heavily weigh total compensation toward a long-term equity interest
for executive officers, with greater opportunity for reward if long-term
performance is sustained. Grants are not made at an option price less than
market value on the date of grant.
The number of shares granted is based on the employee's position and level
of responsibility within the Company and other relevant factors. The Chief
Executive Officer was granted an option for 100,000 shares in 1992. In fiscal
year 1995, the Chief Executive Officer and each of the remaining members of
the Company's key management team, currently seven executives, were granted a
number of options equal to 50% of their current annual salary divided by the
fair market value of the Company's stock on the date of the option grant.
Other significant employees, currently thirty-four in number, were granted
options during fiscal year 1995 using the same formula but applied to 25% of
their annual salaries.
Chief Executive Officer Compensation. The salary and bonus of the Chief
Executive Officer is set by and subject to the discretion of the Compensation
Committee with Board approval. The compensation for James E. Donaghy, the
Chief Executive Officer, was determined by using a process and philosophy
similar to that used for all executives. For fiscal year 1995, Mr. Donaghy
received no bonus but was awarded options to purchase 7,719 shares.
Submitted by the Compensation Committee of the
Company's Board of Directors
Kenneth J. Roering Gerald E. Magnuson James S. Womack
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Magnuson, a Director and a member of the Compensation Committee and the
Company's Secretary, is Of Counsel to the law firm of Lindquist & Vennum
P.L.L.P. which was paid for legal services rendered to the Company during the
last fiscal year. It is anticipated that Lindquist & Vennum P.L.L.P. will
continue to perform legal services for the Company during the current fiscal
year. Mr. Womack, Chairman of the Board and a member of the Compensation
Committee, served as an employee and the Chief Executive Officer of the
Company prior to his resignation in January 1992.
9
<PAGE>
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by the Company. The Company has chosen the use of the NASDAQ Stock Market
(U.S. Companies) Index as its broad market index and the NASDAQ Electronic
Component Stock Index as its peer group index. The table below compares the
cumulative total return as of the end of each of the Company's last five
fiscal years on $100 invested as of August 31, 1990 in the common stock of the
Company, the NASDAQ Stock Market Index and the NASDAQ Electronic Component
Stock Index, assuming the reinvestment of all dividends:
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Aug. 31, 1990 Aug. 30, 1991 Aug. 28, 1992 Aug. 27, 1993 Sept. 2, 1994 Sept. 1, 1995
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sheldahl, Inc........... $100 $143.14 $ 78.43 $125.48 $184.31 $294.10
- - --------------------------------------------------------------------------------------------------------------
NASDAQ Stock Market
Index (U.S.)........... $100 $141.88 $154.01 $200.41 $209.52 $283.70
- - --------------------------------------------------------------------------------------------------------------
Electronic Component
Stocks Index).......... $100 $148.45 $164.24 $323.28 $337.37 $683.10
</TABLE>
DIRECTOR COMPENSATION
Directors who are not employees of the Company (currently all directors
except Mr. Donaghy) were paid during fiscal year 1995 an annual retainer of
$12,000 and a fee of $800 for each day of meetings of the Board of Directors
or any committee. Mr. Wilcox has elected to defer his director fees pursuant
to the Company's Supplemental Executive Retirement Plan that allows the
deferral of directors fees. Each non-employee member of the Board of Directors
receives at the time of election or re-election to the Board by the
shareholders an option to purchase 1,000 shares of the Company's Common Stock
at a purchase price equal to the fair market value of the Company's Common
Stock on the date of such election or re-election. Each director option is
exercisable as to all or part of the shares subject to the option during a
term of five years but will expire 30 days after a director's departure from
the Board.
Mr. Womack, who retired as an employee of the Company during fiscal year
1992, receives, in addition to the director fees noted above, a $10,000 annual
retainer for serving as the Chairman of the Board. Mr. Womack also received
health insurance benefits through the Company until he reached age 65, and the
terms of certain options to purchase 94,911 shares granted to Mr. Womack as an
employee under the 1987 Stock Option Plan
10
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(13,750 of which have since expired and 74,018 of which were subsequently
exercised) were extended to their original expiration dates. Finally, the
Company and Mr. Womack entered into a Consulting Agreement during fiscal year
1988 which provides that the Company will retain Mr. Womack as an independent
consultant from the date immediately following his termination of employment
until his 75th birthday, unless another date is agreed upon by the parties.
Mr. Womack is to receive as annual compensation under the Consulting Agreement
50% of the average of his annual cash compensation for the five calendar years
preceding termination of employment (but not less than $125,000), less an
amount equal to an annual annuity that could be purchased with the principal
in his retirement accounts at the date of retirement provided from all
retirement contributions by the Company. The Consulting Agreement also
restricts Mr. Womack from competitive employment and disclosure of trade
secrets and confidential information.
Mr. Miller received $12,863 during fiscal year 1995 representing fees
relating to international consulting work performed on behalf of the Company.
Mr. Roering received $2,193 during fiscal year 1995 representing fees relating
to certain management consulting work performed on behalf of the Company. Mr.
Magnuson received $5,000 during fiscal year 1995 for his services as Secretary
of the Company. Lindquist & Vennum P.L.L.P., of which Mr. Magnuson is Of
Counsel, was paid for legal services rendered to the Company during fiscal
year 1995. It is anticipated that Lindquist & Vennum P.L.L.P. will continue to
perform legal services for the Company.
In fiscal year 1982, the Company established a retirement program for
directors not covered by another retirement plan of the Company which provides
for the payment of an annual benefit equal to the annual retainer paid to
directors during the full fiscal year preceding retirement. The retirement
benefit, which is payable to directors who have served five years or more,
will commence at the later of the time of retirement or when the director
becomes 65 years old and will be subject to proportionate reduction if the
director has served the Company less than 15 years. The maximum number of
years that the benefit is payable is ten years.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of its
executive officers, including each of the Named Executive Officers. The
employment agreements provide, among other things, for a lump sum cash
severance payment to such individuals equal to approximately three times the
individual's average annual compensation over the preceding five years plus
certain fringe benefits under certain circumstances following a "change in
control" of the Company. In general, a change in control would occur when
there has been any change in the controlling persons reported in the Company's
proxy statements, when 20% or more of the Company's outstanding voting stock
is acquired by any person, or when current members of the Board of Directors
or their successors elected or nominated by such members cease to be a
majority of the Board of Directors. However, a "change in control" would not
occur if any of these events is authorized, approved, or recommended by the
Board of Directors. If a change in control had occurred at the end of fiscal
year 1995, the following individuals would have received the approximate
payment indicated pursuant to the employment agreements: Mr. Donaghy,
$683,857; Mr. Lundstrom, $327,781; Mr. Quam, $332,992; Mr. Closser, $240,055;
Mr. McManus, $280,407; all current executive officers as a group, $2,497,158.
The employment agreement referred to above with Mr. Donaghy also requires
the Company to pay Mr. Donaghy a salary of not less than $185,600 annually,
certain portions of which may be deferred. In addition, if Mr. Donaghy's
employment is terminated other than voluntarily by him or for cause by the
Company and no change in control has occurred, Mr. Donaghy will receive as a
severance payment an amount equal to one and one-half times his annual cash
compensation for the preceding year.
11
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. These insiders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file, including Forms 3, 4 and 5.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended
September 1, 1995, all Section 16(a) filing requirements applicable to its
insiders were complied with.
APPROVAL OF AUDITORS
(PROPOSAL 2)
Arthur Andersen LLP, independent public accountants, have been auditors for
the Company since 1955. They have been reappointed by the Board of Directors,
upon recommendation of its Audit Committee, as the Company's auditors for the
current fiscal year, and shareholder approval of the appointment is requested.
In the event the appointment of Arthur Andersen LLP is not approved by the
shareholders, the Board of Directors will make another appointment to be
effective at the earliest feasible time.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting of Shareholders, will have an opportunity to make a statement if he or
she desires to do so, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF ARTHUR
ANDERSEN LLP.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the company, to present
proposals for shareholder action in the company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by company action in
accordance with the proxy rules. The Sheldahl, Inc. 1997 Annual Meeting of
Shareholders is expected to be held on or about January 8, 1997, and proxy
materials in connection with that meeting are expected to be mailed on or
about November 23, 1996. Shareholder proposals prepared in accordance with the
proxy rules must be received by the Company on or before July 26, 1996.
12
<PAGE>
GENERAL
The Board of Directors of the Company knows of no matters other than the
foregoing to be brought before the meeting. However, the enclosed proxy gives
discretionary authority in the event that any additional matters should be
presented.
The Company's Annual Report to Shareholders for the fiscal year ended
September 1, 1995 is being mailed to shareholders with this Proxy Statement.
Shareholders may receive without charge a copy of the Company's Annual Report
on Form 10-K, including financial statements and schedules thereto, as filed
with the Securities and Exchange Commission, by writing to: Sheldahl, Inc.,
1150 Sheldahl Road, Northfield, Minnesota 55057, Attention: John V. McManus, or
by calling the Company at (507) 663-8000.
By the Order of the Board of
Directors
Gerald E. Magnuson, Secretary
13
<PAGE>
[LOGO OF SHELDAHL, INC.]
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS JANUARY 10, 1996
The undersigned hereby appoints James E. Donaghy, Kenneth J. Roering and
James S. Womack, or any one or more of them, proxies with full power of
substitution to vote in their discretion cumulatively all shares of stock of
Sheldahl, Inc. of record in the name of the undersigned at the close of
business on November 10, 1995, at the Annual Meeting of Shareholders to be held
in Longmont, Colorado on January 10, 1996, or at any adjournment or
adjournments, hereby revoking all former proxies.
1. ELECTION OF DIRECTORS:
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as indicated to the for all nominees listed below
contrary)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE FOR BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
James E. Donaghy, John G. Kassakian, Gerald E. Magnuson,
William B. Miller, Kenneth J. Roering, Richard S. Wilcox,
Beekman Winthrop, James S. Womack
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
FOR [_] AGAINST [_] ABSTAIN [_]
3. IN THEIR DISCRETION UPON ANY OTHER MATTERS COMING BEFORE THE MEETING.
(CONTINUED FROM OTHER SIDE)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1) AND (2)
IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH PROPOSALS IF THERE IS
NO SPECIFICATION.
Dated: _______________________, 19
------------------------------------
------------------------------------
Please sign name(s) exactly as
shown at left. When signing as
executor, administrator, trustee or
guardian, give full title as such;
when shares have been issued in
names of two or more persons, all
should sign.
<PAGE>
[LOGO OF SHELDAHL, INC.]
SHELDAHL, INC. EMPLOYEE SAVINGS PLAN CONFIDENTIAL VOTING INSTRUCTIONS TO
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, TRUSTEE
I hereby direct that the voting rights pertaining to the stock of Sheldahl,
Inc. held by the Trust and allocable to my accounts under the above Plan, as of
October 31, 1995 shall be exercised at the Annual Meeting of Shareholders of
said Corporation to be held in Longmont, Colorado on January 10, 1996 and at
any adjournment thereof, as specified below and also on any other business as
may properly come before said meeting or adjournment thereof.
1. ELECTION OF DIRECTORS:
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as indicated to the contrary) for all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE FOR BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
James E. Donaghy, John G. Kassakian, Gerald E. Magnuson, William B. Miller,
Kenneth J. Roering, Richard S. Wilcox, Beekman Winthrop, James S. Womack
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
FOR [_] AGAINST [_] ABSTAIN [_]
3. IN THEIR DISCRETION UPON ANY OTHER MATTERS COMING BEFORE THE MEETING.
(CONTINUED FROM OTHER SIDE)
This instruction card must be returned to Norwest Bank Minnesota, National
Association, Trustee, by Wednesday, January 3, 1996, if your instructions are
to be honored. The Trustee will tabulate the instructions from all Participants
received by the deadline and will determine the ratio of votes for and against
each proposition. The Trustee will then vote all shares held in the Trust
according to the ratios so determined.
Dated: _______________________, 19
__________________________________
(Signature of Participant)
__________________________________
PLEASE DATE, SIGN AND MAIL this
instruction card promptly using the
enclosed envelope.
