[USANA LOGO]
3838 West Parkway Boulevard
Salt Lake City, Utah 84120-6336
(801) 954-7100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2000
To the Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of
USANA, Inc. will be held at the Hilton Hotel, 150 West 500 South, Salt Lake
City, Utah on Wednesday, May 24, 2000, at 10:00 a.m., Mountain Time, for the
following purposes:
1. To elect five directors to serve for one year each, until the next
Annual Meeting of Shareholders and until a successor is elected and
shall qualify;
2. To approve the Board of Directors' selection of Grant Thornton LLP as
the Company's independent public accountants;
3. To approve an amendment to the Company's Articles of Incorporation
increasing the par value of the Company's common stock from no par to
$.001 par value per share; and
4. To consider and act upon any other matters that properly may come
before the meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on April
12, 2000, as the record date for the determination of shareholders having the
right to receive notice of, and to vote at, the Annual Meeting of Shareholders
and any adjournment thereof. A list of such shareholders will be available for
examination by a shareholder for any purpose germane to the meeting during
ordinary business hours at the offices of the Company at 3838 West Parkway
Boulevard, Salt Lake City, Utah, during the ten days prior to the meeting.
You are requested to date, sign and promptly return the enclosed proxy
card. This proxy is solicited by the Board of Directors of the Company and will
be voted as indicated in the proxy card and the accompanying proxy statement.
Your vote is important. Please sign and date the proxy card and return it in the
enclosed return envelope whether or not you expect to attend the meeting. The
return envelope requires no postage if mailed in the United States. If mailed
elsewhere, appropriate postage must be affixed. Giving your proxy as requested
by the Board will not affect your right to vote in person should you decide to
attend the Annual Meeting. Your proxy is revocable at any time before the
meeting.
By Order of the Board of Directors,
/s/ Myron W. Wentz
-----------------------------------
Myron W. Wentz, Ph.D., Chairman
Salt Lake City, Utah
April 21, 2000
<PAGE>
[USANA LOGO]
3838 West Parkway Boulevard
Salt Lake City, Utah 84120-6336
(801) 954-7100
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of USANA, Inc.
("USANA" or the "Company") for use in voting at the Annual Meeting of
Shareholders to be held at the Hilton Hotel, 150 West 500 South, Salt Lake City,
Utah on Wednesday, May 24, 2000, at 10:00 a.m., Mountain Time, and at any
postponement or adjournment thereof, for the purposes set forth in the attached
notice.
When properly dated, executed and returned, the proxy and the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareholder completing the proxy. If no specific
instructions are given, the shares will be voted:
|X| FOR the election of the nominees for directors set forth herein, and
|X| FOR ratification of the selection of Grant Thornton LLP as the
independent public accountants
|X| FOR the adoption of the amendment to the Articles of Incorporation to
increase the par value of the Company's common stock
A shareholder giving a proxy has the power to revoke it at any time prior
to its exercise by voting in person at the Annual Meeting, by giving written
notice to the Company's Secretary prior to the Annual Meeting or by giving a
later dated proxy.
The presence at the meeting, in person or by proxy, of shareholders holding
in the aggregate a majority of the outstanding shares of the Company's common
stock entitled to vote shall constitute a quorum for the transaction of
business. The Company does not have cumulative voting for directors. A plurality
of the votes properly cast for the election of directors at the meeting by the
shareholders in person or by proxy will elect directors to office. A majority of
votes properly cast upon any question presented for consideration and
shareholder action at the meeting, other than the election of directors, shall
decide the question. Abstentions and broker non-votes will be counted for
purposes of establishing a quorum, but will not count as votes cast for the
election of directors or any other questions and accordingly will have no
effect. Votes cast by shareholders who attend and vote in person or by proxy at
the Annual Meeting will be counted by inspectors to be appointed by the Company.
The close of business on April 12, 2000 has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, the
Annual Meeting. Each share shall be entitled to one vote on all matters. As of
the record date, there were 9,796,037 shares of common stock outstanding and
entitled to vote at the Meeting. For a description of the principal shareholders
of the Company, see "Voting Securities and Principal Holders Thereof" below.
This Proxy Statement and the enclosed Proxy are being furnished to
shareholders on or about April 21, 2000.
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PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be
determined from time to time by the shareholders or the Board of Directors, but
that there shall be no less than three. Five directors will be elected at the
Annual Meeting. Each director elected at the Annual Meeting will hold office
until a successor is elected and qualified, or until the director resigns, is
removed or becomes disqualified. Unless marked otherwise, proxies received will
be voted FOR the election of each of the nominees named below. If any nominee is
unable or unwilling to serve as a director at the date of the Annual Meeting or
any postponement or adjournment thereof, the proxies may be voted for a
substitute nominee designated by the proxy holders or by the present Board of
Directors to fill such vacancy, or for the balance of those nominees named
without nomination of a substitute, or the size of the Board may be reduced
accordingly. The Board of Directors has no reason to believe that any of the
nominees for director will be unwilling or unable to serve if elected.
The Board of Directors recommends a vote FO each nominee director.
Directors and Executive Officers
The nominees for the Board of Directors in 2000 are Myron W. Wentz, Ph.D.,
Ronald S. Poelman, Robert Anciaux, Denis E. Waitley, Ph.D. and David A. Wentz.
All of these nominees, with the exception of Dr. Waitley, currently serve as
members of the Company's Board of Directors. The following information is
furnished with respect to the current directors and the nominees. Stock
ownership information is shown under the heading "Voting Securities and
Principal Holders Thereof" and is based upon information furnished by the
respective nominees.
Myron W. Wentz, Ph.D., 59, founded the Company in 1992 and has served as
the President, Chief Executive Officer and Chairman of the Board of the Company
since its inception. In 1974, Dr. Wentz founded Gull Laboratories, Inc., a
developer and manufacturer of medical diagnostic test kits and the former parent
of USANA. Dr. Wentz served as Chairman of Gull from 1974 until 1998. Dr. Wentz
is also the Chairman of Wentz Clinic, Inc., which owns and operates the Wentz
Wellness Center for Women in Atlanta, Georgia, and has served in that position
since 1998. In 1998, Dr. Wentz founded Sanoviv, S.A. de C.V. ("Sanoviv"), a
health center located near Rosarito, Mexico. Dr. Wentz is the Sole Administrator
of Sanoviv, which is owned in equal shares by Dr. Wentz and his son, David A.
Wentz, a director and executive officer of the Company. From 1969 to 1973, Dr.
Wentz served as Director of Microbiology for Methodist Medical Center, Proctor
Community Hospital, and Pekin Memorial Hospital, all of which are located in
Peoria, Illinois. Dr. Wentz received a B.S. in Biology from North Central
College, Naperville, Illinois, a M.S. in Microbiology from the University of
North Dakota, and a Ph.D. in Microbiology with an emphasis in Immunology from
the University of Utah.
Ronald S. Poelman, 46, has served as a director of the Company since 1995.
Since 1994, he has been a partner in the Salt Lake City, Utah law firm of Jones,
Waldo, Holbrook & McDonough, where he is head of the Corporate Finance Group.
From 1990 to 1993, Mr. Poelman was a stockholder of the Salt Lake City law firm
of Parsons, Behle & Latimer. Mr. Poelman received a B.A. in English from Brigham
Young University and a J.D. from the University of California, Berkeley.
Robert Anciaux, 54, has served as a director of the Company since July
1996. Since 1990, he has been the Managing Director of Societe d'Etudes et
Investissements, a consulting and investment management firm in Brussels,
Belgium. From 1982 to 1990, Mr. Anciaux was self-employed as a venture
capitalist in Europe, investing in various commercial, industrial and real
estate venture companies. In some of these privately held companies Mr. Anciaux
also serves as a director. Mr. Anciaux received an Ingenieur Commercial degree
from Ecole de Commerce Solvay Universite Libre de Bruxelles.
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David A. Wentz, 29, joined the Company as a part-time employee in 1992. He
has been a full-time employee of the Company since March 1994 and a member of
the Company's Board of Directors since 1993. Mr. Wentz has served as the Senior
Vice President of Strategic Development since June 1999. He served as the Vice
President of Strategic Development from August 1996 to June 1999. From March
1994 to January 1996, he served as Executive Vice President of the Company.
During the period from 1992 through January 1, 2000, Mr. Wentz took one
six-month and one one-month leave of absence. Mr. Wentz received a B.S. degree
in Bioengineering from the University of California, San Diego. Mr. Wentz is the
son of Myron W. Wentz.
Ned M. Weinshenker, Ph.D., 57, served as a director of the Company from
June 1998. He will not stand for election at the Annual Meeting. Since 1998, Dr.
Weinshenker has been a principal and president of Churchill Oaks Consulting,
providing consulting services and assistance to pharmaceutical and biotechnology
companies. From 1992 until 1998, he was the President and CEO of IOMED, Inc.,
which develops, manufactures and commercializes controllable drug delivery
systems using iontophoretic technology. Before joining IOMED, Dr. Weinshenker's
experience included serving in executive management positions with various
entities, including MBW Management, a venture capital firm, Dynapol, Inc., a
chemical technology company, Alza, a drug delivery company, and Seqquus, Inc., a
drug delivery company. Dr. Weinshenker also serves on the Board of Directors of
CyDex, Inc., a drug delivery company. Dr. Weinshenker received a B.S. degree in
Chemistry from the Polytechnic Institute of Brooklyn and a Ph.D. in Organic
Chemistry from the Massachusetts Institute of Technology. Dr. Weinshenker also
spent a year at Harvard University as a National Institutes of Health
Postdoctoral Fellow.
Denis E. Waitley, Ph.D., 66, is a nominee for director. Dr. Waitley has
served as a consultant to and a spokesperson for the Company since September
1996. Since 1980, Dr. Waitley has been President of the Waitley Institute, a
corporate leadership training firm he founded to provide professional and
personal development skills for business executives. Dr. Waitley also serves as
President of International Learning Technologies, Inc., a company he founded in
1989 that produces educational audio/visual materials for companies and
individuals. During the 1980's, Dr. Waitley served as Chairman of Psychology for
the U.S. Olympic Committee's Sports' Medicine Council, responsible for the
performance enhancement of all American Olympic athletes. He is the author of
several national best selling non-fiction books and audio programs on personal
excellence. Dr. Waitley received a B.S. from the U.S. Naval Academy at
Annapolis, an M.A. in Organizational Development from the Naval Post Graduate
School in Monterrey, California and a Ph.D. in Human Behavior from La Jolla
University.
Board of Directors Meetings, Committees and Compensation
The Board of Directors has established an Executive Committee and an Audit
Committee. Subject to certain restrictions, the Executive Committee possesses
and exercises the powers of the Board of Directors during the intervals between
regular meetings of the Board. Among other things, the Executive Committee is
responsible for and reviews and recommends to the Board of Directors the
salaries, bonuses and other forms of compensation and benefit plans for
management of the Company and administers the Company's Distributor Stock
Purchase Plan. The members of the Company's Executive Committee are Dr. Myron
Wentz, David A. Wentz and Ronald S. Poelman. The Audit Committee has adopted a
written charter. Under its charter, the Audit Committee reviews the Company's
accounting practices, internal accounting controls and financial results, and
oversees the engagement of the Company's independent auditors. The members of
the Company's Audit Committee are Ronald S. Poelman and Robert Anciaux. The
Company's Bylaws provide that each member of the Board of Directors holds office
until the next annual meeting of stockholders and until a successor has been
duly elected and qualified.
Until 1998, all directors except Myron W. Wentz received an initial grant
of options to purchase 125,000 shares of common stock pursuant to the 1995
Directors' Stock Option Plan ("Directors' Plan"). The options vested at the rate
of 25,000 shares per year for five years, so long as the recipient remained a
director of the Company. The exercise price of the options was the fair market
price of the Company's common stock on the date of grant, determined as provided
in the Directors' Plan. Except for the grant of options under the Directors'
Plan and a $1,000 fee paid to Dr. Weinshenker for each Board meeting, the
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Company's directors do not receive a fee or other compensation for their service
on the Board or for participating in meetings of the Board or Committees of the
Board, whether in person or by telephone. The Company has a policy of
reimbursing directors for their out-of-pocket expenses incurred in connection
with their services as directors. In June 1998, the Board of Directors adopted
and the stockholders approved the combination of the Directors' Plan with the
Company's Incentive and Stock Option Plan into the Amended and Restated Stock
Incentive and Option Plan ("Stock Option Plan"). New directors elected
commencing in June 1998 receive options granted under the Stock Option Plan as
determined by the Executive Committee.
Executive Officers
The executive officers of the Company are as follows:
Name Position
Myron W. Wentz, Ph.D. President, Chief Executive Officer, and Chairman of
the Board
Gilbert A. Fuller Senior Vice President and Chief Financial Officer
Dallin A. Larsen Senior Vice President of Sales
John B. McCandless IV Senior Vice President and Chief Operating Officer
David A. Wentz Senior Vice President of Strategic Development
Biographical information for Myron W. Wentz and David A. Wentz is included
in the discussion concerning the nominees for director, above. The following
information is provided regarding the other executive officers of the Company:
Gilbert A. Fuller, 59, joined the Company in May 1996 as the Vice President
of Finance. Mr. Fuller served in this role from May 1996 to June 1999, when he
was appointed Senior Vice President. Mr. Fuller has been the Company's Chief
Financial Officer since October 1997. From January 1994 to May 1996, Mr. Fuller
was the Executive Vice President of Winder Dairy, Inc., a regional commercial
dairy operation. From May 1991 through October 1993, Mr. Fuller was Chief
Administrative Officer and Treasurer of Melaleuca, Inc., a manufacturer and
network marketer of personal care products. From July 1984 through January 1991,
Mr. Fuller was the Vice President and Treasurer of Norton Company, a
multinational manufacturer of ceramics and abrasives. Mr. Fuller is a Certified
Public Accountant and received a BS in Accounting and an MBA from the University
of Utah.
Dallin A. Larsen, 40, helped form the Company in July 1992 and served as
Vice President of Sales from inception to June 1999, when he was appointed
Senior Vice President of Sales. Mr. Larsen was directly responsible for
developing USANA's associate compensation plan, which he began working on in
March 1992, prior to the Company's spin-off from Gull Laboratories, Inc. From
January 1990 to March 1992, Mr. Larsen was Vice President of Sales of Natural
Solutions (formerly Gentle Earth), a network marketing company that sells
household cleaning products. Mr. Larsen received a B.S. in Finance from Brigham
Young University.
John B. McCandless IV, 52, joined the Company in October 1995 as the
Director of Scientific Operations and served as the Company's Vice President of
Operations from June 1996 to June 1999, when he was appointed Senior Vice
President. Mr. McCandless has been the Company's Chief Operating Officer since
October 1997. From October 1995 to June 1996, he was the Director of Scientific
Operations of the Company. From January 1994 to October 1995, he was a
consultant with Apogee Strategic Services. From September 1987 to December 1993,
Mr. McCandless was the President of Utah Biomedical Testing Laboratory, where he
supervised that company's business of contract research and scientific testing.
He also served in managerial positions in toxicology at both Atlantic Richfield
Company and Biodynamics, Inc. Mr. McCandless received a B.A. in Zoology from the
University of California, Santa Barbara, an M.S. in Pathology from the
University of Utah, and M.A. and M.B.A. degrees from The Claremont Graduate
School in California.
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Executive Compensation
The following table summarizes the compensation of the Chief Executive
Officer of the Company and the Company's four most highly paid executive
officers other than the Chief Executive Officer (collectively the "Named
Executive Officers") and the amounts earned by each of them during the past
three fiscal years:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------------------------------- ---------------------
Other Annual
Compensation Securities Underlying
Position Year Salary ($) Bonus (1) ($)(2) Options / SARs (#) (3
- ---------------------------------- --------- --------------- -------------- --------------- ---------------------
<S> <C> <C> <C> <C> <C>
Myron W. Wentz, PhD (4) 1997 $ - $ - $ - 0/0
CEO / President 1998 $ - $ - $ - 0/0
1999 $ - $ - $ - 0/0
Gilbert A. Fuller 1997 $ 117,885 $ - $ 5,447 160,000/0 (5)
Senior Vice President and 1998 $ 148,269 $ - $ 137,697 0/0
Chief Financial Officer 1999 $ 147,866 $ 25,478 $ 9,726 0/0
Dallin A. Larsen 1997 $ 150,031 $ - $ 212,168 0/0
Senior Vice President of Sales 1998 $ 166,154 $ - $ 425,350 0/0
1999 $ 170,769 $ 25,478 $ 11,916 0/0
John B. McCandless IV 1997 $ 108,669 $ - $ 4,873 0/0
Senior Vice President and 1998 $ 127,154 $ - $ 5,129 0/0
Chief Operating Officer 1999 $ 133,725 $ 25,478 $ 52,636 0/0
David A. Wentz 1997 $ 85,769 $ - $ 135,553 0/0
Senior Vice President of Strategic 1998 $ 98,679 $ - $ 38,776 60,000/0 (6)
Development 1999 $ 81,978 $ 25,478 $ 129,312 0/0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Bonuses were paid to the Named Executives Officers in 1999 based upon
the results of operations in 1998.
(2) Includes the approximate value of executive's use of a Company-owned
car, the Company's matching contribution to executive's 401(k) plan,
and gain realized upon the exercise of stock options.
(3) Shares subject to issuance upon exercise of options granted under a
compensation plan.
(4) Dr. Wentz does not take any compensation for services provided to the
Company.
(5) Reflects repricing of options granted in prior year.
(6) These options were issued to Mr. Wentz in his capacity as a vice
president of the Company.
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Stock Option Grants in Fiscal 1999
There were no stock option grants to either the Chief Executive Officer or
the Named Executive Officers during the fiscal year ended January 1, 2000.
Aggregated Option Exercises and Fiscal Year-end Option Value
The following table sets forth information with respect to the exercise of
stock options by the Company's Chief Executive Officer and Named Executive
Officers during the fiscal year ended January 1, 2000, as well as the aggregate
number and value of unexercised options held by all Named Executive Officers as
of such date.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
Number of Securities
Underlying Valuerof Unexercised
Unexercised Options In-the-Money Options /
Shares At 1/1/2000 (#) SARs At 1/1/200 ($)
Acquired on ValueeRealized Exercisable / Exercisable /
Name Exercise (#) ($) Unexercisable Unexercisable
- ----------------------- ------------- ------------------- ---------------------- ----------------------------
<S> <C> <C> <C> <C>
Gilbert A. Fuller - $ - 76,000 / 64,000 $ 0 / $ 0 (1)
Dallin A. Larsen - $ - 40,000 / 120,000 $139,000 / $417,000
John B. McCandless IV 20,000 $ 44,250 140,000 / 40,000 $ 21,000 / $ 6,000
David A. Wentz 22,000 $ 122,518 37,000 / 73,000 $ 86,875 / $ 86,875 (2)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options totaling 140,000 had an exercise price in excess of the market
price at 1/1/2000.
(2) Options totaling 60,000 had an exercise price in excess of the market
price at 1/1/2000.
Long-term Incentive Plans ("LTIP's")
The Company did not make any awards under any LTIP during the fiscal year
ended January 1, 2000.
Compensation Plans
At the Annual Meeting of Shareholders in 1998, the Company's shareholders
approved the combination of the Company's 1995 Long-term Stock Investment and
Incentive Plan and the Directors' Plan, into the Amended and Restated Plan. The
total number of shares of common stock that may be issued upon exercise of
awards granted under the plan is 4,000,000 shares. As of January 1, 2000, a
total of 1,457,000 shares were available under the plan.
Employees, officers and directors of the Company and its subsidiaries, as
well as consultants and other persons who contribute to the business of the
Company may participate as selected at the discretion of the committee
administering the plan ("Committee"). At this time, the Executive Committee of
the Board is the Committee that administers the plan. The Committee has broad
authority to select persons to receive awards under the plan and to establish
the terms and conditions applicable to the exercise of such awards and the
duration of the awards.
Employment Contracts and Other Arrangements
The Company has an employment agreement with Gilbert A. Fuller, Senior Vice
President and Chief Financial Officer of the Company. The term of the agreement
runs through May 31, 2000. In addition to matters involving Mr. Fuller's
compensation, the agreement contains covenants concerning non-competition and
confidentiality, termination with or without cause and, in the case of the
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latter, payment of a severance based on the remaining term of the agreement. Mr.
Fuller is also entitled to receive the benefits customarily afforded to
executives of the Company, including participating in retirement and other
plans.
Compensation Committee Report on Executive Compensation
[Preliminary Note: Notwithstanding anything to the contrary set forth in any of
the previous filings made by the Company under the Securities Act or the 1934
Act that might incorporate future filings, including, but not limited to, the
Company's Annual Report on Form 10-K for the year ended January 1, 2000, in
whole or in part, the following Executive Compensation Report and the Stock
Performance Graph appearing herein shall not be deemed to be incorporated by
reference into any such future filings.]
This Compensation Report discusses the Company's compensation policies and
the basis for the compensation paid to its executive officers (including the
Named Executive Officers), during the year ended January 1, 2000.
Compensation Policy
The Committee's policy with respect to executive compensation has been
designed to:
o Adequately and fairly compensate executive officers in relation to
their responsibilities, capabilities and contributions to the Company
and in a manner that is commensurate with compensation paid by
companies of comparable size or within the Company's industry;
o Reward executive officers for the achievement of key operating
objectives and for the enhancement of the long-term value of the
Company; and
o Align the interests of the executive officers with those of the
Company's shareholders.
The components of compensation paid to executive officers consist of: (a)
base salary, (b) incentive compensation in the form of stock options awarded by
the Company under the Company's Stock Option Plan and (c) certain other
benefits. In 1998, the Committee adopted a cash bonus program as an additional
component of executive compensation. A similar bonus program will be adopted in
2000. The Executive Committee of the Board of Directors functions as the
Compensation Committee and is responsible for reviewing and approving all
compensation paid by the Company to its executive officers and members of the
Company's senior management team.
Components of Compensation
The primary components of compensation paid by the Company to its executive
officers and senior management personnel, and the relationship of these
components of compensation to the Company's performance, are discussed below:
|X| Base Salary. The Compensation Committee periodically reviews and
approves the base salary paid by the Company to its executive officers
and members of the senior management team. Adjustments to base
salaries are determined based upon a number of factors, including the
Company's performance (to the extent such performance can fairly be
attributed or related to each executive's performance), as well as the
nature of each executive's responsibilities, capabilities and
contributions. In addition, the Compensation Committee periodically
reviews the base salaries of its senior management personnel in an
attempt to ascertain whether those salaries fairly reflect job
responsibilities and prevailing market conditions and rates of pay.
The Compensation Committee believes that base salaries for the
Company's executive officers have historically been reasonable, when
considered together with other elements of compensation (such as stock
options and the bonus plans) in relation to the Company's size and
performance and in comparison with the compensation paid by similarly
sized companies or companies within the Company's industry.
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|X| Incentive Compensation. As discussed above, a substantial portion of
each executive officer's compensation package is in the form of
incentive compensation designed to reward the achievement of key
operating objectives and long-term increases in shareholder value. The
Compensation Committee believes that the stock options granted under
the Stock Option Plan reward executive officers only to the extent
that shareholders have benefited from increases in the value of the
Company's common stock.
|X| Other Benefits. The Company maintains certain other plans and
arrangements for the benefit of its executive officers and members of
senior management. The Company believes these benefits are reasonable
in relation to the executive compensation practices of other similarly
sized companies or companies within the Company's industry.
Compensation of the Chief Executive Officer
Myron W. Wentz has served as the Chief Executive Officer of the Company
since its inception. Dr. Wentz does not receive any compensation from the
Company for his services and he has in the past declined to accept any options
or other awards under any stock option or stock incentive plan that he might
otherwise have been entitled to receive as an executive officer or director of
the Company.
Conclusion
The Compensation Committee believes that its policies further the
shareholders' interests because a significant part of executive compensation is
based upon the Company achieving its financial and other goals and objectives.
At the same time, the Compensation Committee believes that its policies
encourage responsible management of the Company in the short-term. The
Compensation Committee regularly considers executive compensation issues so that
its practices are as effective as possible in furthering shareholder interests.
The Compensation Committee bases its review on the experience of its own
members, on information requested from management personnel, and on discussions
with and information compiled by various independent consultants retained by the
Company.
Respectfully submitted,
Compensation Committee:
Myron W. Wentz, Ph.D.
Ronald S. Poelman
David A. Wentz
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Stock Performance Graph
The following graph compares the yearly cumulative total returns from the
Company's common stock, the Total Return Index for the Nasdaq Stock Market, and
ten companies selected in good faith by the Company from the Company's industry
(the "Peer Group"). Each of the companies included in the Peer Group markets or
manufactures products similar to the Company's products or markets its products
through a similar marketing channel. The Peer Group is comprised of the
following companies: Rexall Sundown, Inc., Amway Asia Pacific Ltd., NBTY, Inc.,
Nature's Sunshine Products, Inc., Avon Products, Inc., Herbalife International,
Inc., Natural Alternatives International, Inc., Celestial Seasonings, Inc.,
Perrigo Company and Reliv International, Inc.
The composition of the Company's Peer Group, as described above, has been
changed from the peer group used by the Company in its previous filing with the
Securities and Exchange Commission. General Nutrition Companies, Inc. has been
dropped because it has been acquired, and Perrigo Company has been added. Had
Perrigo Company been omitted from the above Peer Group, the performance graph
would have shown it to have attained a total return for the period of $200, as
compared to $187 attained with the current Peer Group.
The Company's shares commenced trading in May 1993. The graph assumes an
investment on December 30, 1994 of $100 and reinvestment of all dividends into
additional shares of the same class of equity, if applicable to the stock or
index.
[PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG USANA, INC., TOTAL
RETURN INDEX FOR THE NASDAQ STOCK MARKET AND PEER GROUP
Measurement
Period USANA, Inc. NASDAQ Index Peer Group
------------- ------------- ---------------- -------------
Dec 30, 1994 $ 100 $ 100 $ 100
Dec 95 $ 950 $ 141 $ 132
Dec 96 $ 1,800 $ 174 $ 198
Dec 97 $ 1,813 $ 213 $ 310
Dec 98 $ 2,025 $ 300 $ 232
Dec 99 $ 1,000 $ 556 $ 187
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Voting Securities and Principal Holders Thereof
The following table sets forth, as of March 21, 2000, the number of shares
of the Company's common stock, no par value, owned by (1) each person known to
the Company to be the beneficial owner of more than five percent of the
Company's outstanding common stock, (2) by the executive officers and directors
(including nominees for director) of the Company individually, and (3) by the
executive officers and directors (nominees) of the Company as a group. Except as
indicated in the footnotes below, each of the persons listed exercises sole
voting and investment power over the shares of the Company's common stock listed
for such person in the table. Unless otherwise indicated, the mailing address of
the shareholder is the address of the Company, 3838 West Parkway Blvd., Salt
Lake City, Utah 84120.
<TABLE>
<CAPTION>
Name / Address Number of Shares (1) Percent of Class (2)
- -------------------------------------------------------------- -------------------- -----------------
5% Beneficial Owners
<S> <C> <C>
Gull Holdings, Ltd. 4,648,882 47.00%
4 Finch Road
Douglas, Isle of Man
Directors (Nominees) and Executive Officers
Myron W. Wentz, Ph.D. (3) 4,648,882 47.00%
President and Chief Executive Officer
Chairman of the Board
Ronald S. Poelman, Director (4) 100,000 1.00%
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Robert Anciaux, Director (5) 75,000 *
Societe d'Etude et D'Investissements
Av Du Manoir 30
1410 Waterloo, Belgium
Ned M. Weinshenker, Ph.D., Director (6) 14,000 *
2088 East Sierra Ridge Court
Salt Lake City, Utah 84109
Denis E. Waitley, Ph.D. (7) 48,000 *
14740 Caminito Barbuda
Del Mar, California 92067
Gilbert A. Fuller (8) 78,025 *
Senior Vice President and Chief Financial Officer
John B. McCandless IV (9) 140,993 1.41%
Senior Vice President and Chief Operating Officer
Dallin A. Larsen (10) 82,086 *
Senior Vice President of Sales
David A. Wentz, Director and (11) 125,456 1.26%
Senior Vice President of Strategic Development
Officers and Directors as a group (9 persons) 5,312,442 50.61%
</TABLE>
* Less than one percent. Officer and Director group total does not include
duplicate entries.
[Footnotes on following pages.]
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(1) All entries exclude beneficial ownership of shares issuable pursuant
to options that have not vested or that are not otherwise exercisable
as of the date hereof and which will not become vested or exercisable
within 60 days of the date of this Proxy Statement.
(2) Percentages rounded to nearest one-tenth of one percent.
(3) All shares shown are held of record by Gull Holdings, Ltd., an Isle of
Man company owned 100% by Myron W. Wentz. Because of his control of
Gull Holdings, Dr. Wentz is deemed to be the beneficial owner of the
shares owned of record by Gull Holdings.
(4) All shares shown are issuable pursuant to exercise of stock options
which are presently exercisable or which become exercisable within 60
days of the date of this proxy statement.
(5) All shares shown are issuable pursuant to exercise of stock options
which are presently exercisable or which become exercisable within 60
days of the date of this proxy statement.
(6) All shares shown are issuable pursuant to exercise of stock options
which are presently exercisable or which become exercisable within 60
days of the date of this proxy statement. Dr. Weinshenker will not
stand for election at the Annual Meeting.
(7) Dr. Waitley is a nominee for director. All shares shown are issuable
pursuant to exercise of stock options which are presently exercisable
or which become exercisable within 60 days of the date of this proxy
statement.
(8) Includes 76,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of
the date of this proxy statement, 800 shares held of record and 1,225
shares held in the executive's 401(k) account.
(9) Includes 140,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of
the date of this proxy statement and 993 shares held in the
executive's 401(k) account.
(10) Includes 80,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of
the date of this proxy statement and 2,086 shares held in the
executive's 401(k) account.
(11) Includes 74,000 shares issuable pursuant to options which are
presently exercisable or which become exercisable within 60 days of
the date of this proxy statement, 50,000 shares held of record and
1,456 shares held in the executive's 401(k) account.
The Company is not aware of any arrangements, including any pledge of the
Company's securities, the operation of which may at a subsequent date result in
a change in control of the Company. In February 2000, the Board of Directors
approved a stock repurchase program under which the Company has stated that it
may purchase up to 1,000,000 shares of common stock in the public market. As of
March 21, 2000, the Company had purchased a total of 278,801 shares under this
plan. If the maximum number of shares are repurchased under this program, the
percentage ownership of the persons included in the table above would be as
follows: Gull Holdings, Ltd. - 50.70%, Myron W. Wentz - 50.70%, Ronald S.
Poelman - 1.08%, John B. McCandless IV - 1.51%, David A. Wentz - 1.36%, and all
directors and officers as a group - 54.20%. Robert Anciaux, Denis E. Waitley,
Gilbert A. Fuller and Dallin A. Larsen would each continue to own less than one
percent.
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Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than ten percent
of the Company's common stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are also required by regulation of the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms which they file.
Based solely upon a review of the forms and amendments thereto furnished to
the Company under Rule 16a-3(e) during the fiscal year ended January 1, 2000,
and with respect to such year, as well as certain representations of the
officers and directors specified by such rule, the Company believes that all
reports required to be filed pursuant to Section 16(a) were filed. The filing of
all such reports was timely, with the exception of a report of Gull Holdings
Ltd. in connection with the repurchase of certain shares of common stock by the
Company, which was filed one month late.
Certain Relationships and Related Transactions
The Company's President, CEO and Chairman, Myron W. Wentz, is also the sole
beneficial owner of the single largest shareholder of the Company, Gull
Holdings, Ltd. Dr. Wentz has devoted much of his personal time, expertise and
resources to a number of business and professional activities.
The most significant activity outside USANA in which Dr. Wentz is involved
is the operation of Sanoviv, which Dr. Wentz describes as a unique, fully
integrated health and healing center. Sanoviv is located near Rosarito, Mexico,
and is owned in equal shares by Myron W. Wentz and his son, David A. Wentz, an
executive officer and director of the Company. Dr. Wentz is Sole Administrator
of Sanoviv. The Company has from time to time advanced funds to pay expenses
incurred by Dr. Wentz for Sanoviv and has provided certain services for Sanoviv.
These expenses and the value of the services rendered by the Company totaled
$445,000 in 1999 have been accrued and billed to Dr. Wentz for reimbursement. As
of January 1, 2000, outstanding amounts totaling $41,000 were due to the
Company. The Company has no commitment or obligation to continue to provide
additional funding or support to Sanoviv.
On September 21, 1999, the Company completed the repurchase of 2,650,000
shares of its common stock from Gull Holdings, Ltd. An earlier purchase of
300,000 shares was made on May 24, 1999, pursuant to an agreement entered into
on April 28, 1999. The series of related transactions reduced the ownership of
Gull Holdings, Ltd. from 58.2% to 45.7% as of January 1, 2000 of the issued and
outstanding capital stock of the Company. Gull Holdings, Ltd. is an Isle of Man
company owned and controlled by Myron W. Wentz, Ph.D., the founder, Chairman,
President and CEO of the Company. The transactions were privately negotiated and
approved by the independent directors of the Company. The aggregate purchase
price of the 300,000 shares and the 2.65 million shares was $24,047,500.
Several immediate family members of Dallin A. Larsen, Senior Vice President
of Sales, are associates of the Company. In the fiscal year ended January 1,
2000, associate incentives paid to these members of Mr. Larsen's family as a
group totaled $1,115,462, representing approximately 2% of total associate
incentives paid by the Company for the year. Of this sum, the Company paid
$775,379 to N.R.G. Group, an entity owned by a sister, brother and
brother-in-law of Mr. Larsen, and $154,913 to JAMCO, Inc., owned by a brother of
Mr. Larsen. In addition to associate incentives that were paid to members or Mr.
Larsen's family during 1999, the Company employed Randy Larsen, one of Mr.
Larsen's brothers, who was paid compensation of $100,441 during the year.
Denis E. Waitley, Ph.D., director nominee, has served as a consultant to
and spokesperson for the Company since September 1996. During 1999, the Company
paid $151,218 to Dr. Waitley for consulting fees and royalties. The consulting
contract between the Company and Dr. Waitley pays him $12,500 per month and
expires in September 2001.
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<PAGE>
During the last fiscal year, the Company paid associate incentives to an
entity owned and controlled by Susan Waitley totaling $425,373. Susan Waitley is
the former spouse of Dr. Waitley. Dr. Waitley has several immediate family
members who also are associates of the Company. During the fiscal year ended
January 1, 2000, associate incentives paid to these members of Dr. Waitley's
family as a group totaled $216,760, representing approximately 0.4% of total
associate incentives paid by the Company for the year. During1999, none of these
members of Dr. Waitley's immediate family received more than $60,000 in
associate incentives from the Company.
There are no agreements or understandings between the Company and any of
Mr. Larsen's or Dr. Waitley's family members pursuant to which anything more
than the ordinary compensation otherwise payable under the associate
compensation plan is paid to them or pursuant to which any other preferential
treatment is afforded them. Neither Mr. Larsen nor Dr. Waitley receives any
portion of the associate incentives paid to family members or their affiliates
and neither of them has a beneficial ownership interest in any of these
businesses.
PROPOSAL 2 - APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Grant Thornton LLP as
the independent public accountant to audit the financial statements of the
Company and its subsidiaries for the fiscal year ending December 30, 2000. Grant
Thornton LLP has served as the Company's independent public accountant since the
fiscal year ended December 31, 1995.
At the Annual Meeting, shareholders will be asked to ratify the selection
by the Board of Directors of Grant Thornton LLP as the Company's independent
accountant.
The Board of Directors recommends a vote FOR approval
of the selection of auditors.
Representatives of Grant Thornton LLP are expected to attend the 2000
Annual Meeting and will have an opportunity to make a statement if they desire
to do so, and they will be available to answer appropriate questions from
shareholders.
PROPOSAL 3 - AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE THE PAR
VALUE OF COMMON STOCK
The Articles of Incorporation of the Company as currently in effect provide
that the Company's common stock has no par value. The proposed amendment would
increase the par value of the common stock to $.001 per share. The proposed
amendment is intended to provide the Company with additional flexibility in
expanding its operations into other states and jurisdictions. Several states,
such as Nevada, base the corporate franchise taxes charged to foreign
(non-Nevada) corporations authorized to conduct business in the state on the par
value of the authorized capital stock of the corporation. If the corporation's
articles of incorporation do not assign a par value or if the par value is zero,
then the state imputes a par value of $1.00 per share for purposes of
calculating the tax. The change of the Company's par value to $.001 per share
from the current no par value would result in a significant annual savings if
the Company were required or chose to seek authority to do business in Nevada or
other states where the calculation of annual franchise or other taxes is based
on par value. The change of the par value will not affect the ownership
interests of the shareholders and is not expected to have any impact on the
market value of the Company's shares. Other than the change in par value, the
Articles of Incorporation will not be modified.
The affirmative vote of a majority of the shares of common stock
outstanding on the Record Date is required to approve Proposal 3. If the
proposed amendment to the Articles of Incorporation is approved by the
shareholders, the amendment will become effective upon filing an amendment to
the Articles of Incorporation with the Department of Commerce, Division of
13
<PAGE>
Corporations, State of Utah. If the amendment is authorized and the Articles of
Incorporation are amended, the text of Article III of the Articles of
Incorporation will be amended to read as follows:
The aggregate number of shares the Corporation is authorized to issue shall
be Fifty Million (50,000,000) shares of common stock. All such shares shall
have a par value of $.001 per share and shall be offered and sold at such
price and on such terms as the directors of the Corporation may, in their
sole discretion and consistent with applicable laws, deem appropriate. Each
share shall entitle the holder thereof to one (1) vote on each matter
submitted to a vote at a meeting of shareholders or otherwise requiring the
approval of the Corporation's shareholders. All stock of the Corporation
shall be of the same class and shall have the same rights and preferences.
The capital stock of the Corporation shall be issued as fully paid and the
private property of the shareholders shall not be liable for the debts,
obligations or liabilities of the Corporation. Fully paid stock of this
Corporation shall not be liable to any further call or assessment.
The Board of Directors recommends a vote FOR approval of the Amendment to
the Company's Articles of Incorporation.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present and has not been informed that any other
person intends to present a matter for action at the 2000 Annual Meeting other
than as set forth herein and in the Notice of Annual Meeting. If any other
matter properly comes before the meeting, it is intended that the holders of
proxies will act in accordance with their best judgment.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. In addition to the solicitation of proxies by mail,
certain of the officers and employees of the Company, without extra
compensation, may solicit proxies personally or by telephone, and, if deemed
necessary, third party solicitation agents may be engaged by the Company to
solicit proxies by means of telephone, facsimile or telegram, although no such
third party has been engaged by the Company as of the date hereof. The Company
will also request brokerage houses, nominees, custodians and fiduciaries to
forward soliciting materials to the beneficial owners of common stock held of
record and will reimburse such persons for forwarding such material. The cost of
this solicitation of proxies will be borne by the Company.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report Summary to Shareholders and the
Company's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission are being mailed with this Proxy Statement, but are not deemed a part
of the proxy soliciting material.
Additional copies of the Company's Annual Report on Form 10-K (including
financial statements and financial statements schedules) filed with the
Securities and Exchange Commission may be obtained without charge by writing to
the Company - Attention: Investor Relations, 3838 West Parkway Blvd., Salt Lake
City, Utah 84120-6336. The reports and other filings of the Company also may be
obtained from the Commission's on-line database, located at www.sec.gov.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented
by the shareholders at the Company's 2001 annual meeting and that the proposing
shareholders desire to have included in the Company's proxy materials relating
to the meeting must be received by the Company no later than December 20, 2000,
14
<PAGE>
which is 120 calendar days prior to the anniversary of this year's mailing date.
All proposals must be in compliance with applicable laws and regulations in
order to be considered for possible inclusion in the proxy statement and form of
proxy for that meeting.
If a shareholder wishes to present a proposal at the annual meeting in 2001
and the proposal is not intended to be included in the Company's proxy statement
relating to that meeting, the shareholder must give advance notice to the
Company before the deadline for that meeting determined in accordance with the
bylaws of the Company as described in the section captioned "Other Matters,"
above. If a shareholder gives notice of such a proposal after the bylaw
deadline, the shareholder will not be permitted to present the proposal to the
shareholders for a vote at the meeting.
Securities and Exchange Commission rules establish a different deadline for
submission of shareholder proposals that are not intended to be included in the
Company's proxy statement with respect to discretionary voting. The deadline for
these proposals for the year 2001 annual meeting is March 6, 2001 (45 calendar
days prior to the anniversary of the mailing date of this proxy statement). If a
shareholder gives notice of such a proposal after this deadline, the Company's
proxy holders will be allowed to use their discretionary voting authority to
vote against the shareholder proposal when and if the proposal is raised at the
Company's year 2001 annual meeting. Because the bylaw deadline above is not
capable of being determined until the Company publicly announces the date for
its next annual meeting, it is possible that the bylaw deadline may occur after
the discretionary vote deadline described above. In such a case, a proposal
received after the discretionary vote deadline but before the bylaw deadline
would be eligible to be presented at next year's annual meeting and the
discretionary authority granted by the proxy card to vote against the proposal
at the meeting without including any disclosure of the proposal in the proxy
statement relating to the meeting.
The Company has not been notified by any shareholder of the shareholder's
intent to present a shareholder proposal from the floor at this year's Annual
Meeting. The enclosed proxy card grants the proxy holders discretionary
authority to vote on any matter properly brought before the Annual Meeting,
including any shareholder proposals received between the date of this proxy
statement and the bylaw deadline for this year's Annual Meeting, which is April
30, 2000
The enclosed Proxy is furnished for you to specify your choices with
respect to the matters referred to in the accompanying notice and described in
this Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed envelope
which requires no postage if mailed in the United States. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors,
/s/ Myron W. Wentz
-----------------------------------
Myron W. Wentz, Ph.D., Chairman
Salt Lake City, Utah
April 21, 2000
15
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Myron W. Wentz, Ph.D. and Gilbert A. Fuller
and each of them as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated below, all shares of common
stock of the Company held of record by the undersigned as of April 12, 2000, at
the Annual Meeting of Shareholders to be held at the Hilton Hotel, 150 West 500
South, Salt Lake City, Utah on Wednesday, May 24, 2000, at 10:00 a.m., Mountain
Time or at any adjournment thereof.
1. Election of Directors.
FOR WITHHOLD AS TO ALL FOR ALL EXCEPT
/ / / / / /
(INSTRUCTIONS: IF YOU MARK THE "FOR ALL EXCEPT" CATEGORY ABOVE, INDICATE THE
NOMINEE(S) AS TO WHICH YOU DESIRE TO WITHHOLD AUTHORITY BY STRIKING A LINE
THROUGH SUCH NOMINEE(S) NAME IN THE LIST BELOW:)
Myron W. Wentz, Ph.D. David A. Wentz Ronald S. Poelman
Robert Anciaux Denis E. Waitley, Ph.D.
2. To approve and ratify the selection of Grant Thornton LLP as the
Company's independent accountants.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve an amendment to the Articles of Incorporation of the Company
to increase the par value of the common stock of the Company from no
par to $.001 par value per share.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
DATE:
--------------- ---------------------------------------
Signature
---------------------------------------
Signature of co-tenant holder, if any
PLEASE SIGN EXACTLY AS THE SHARES ARE ISSUED. WHEN CO-TENANTS HOLD SHARES, BOTH
SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS 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 AUTHORIZED PERSON. PLEASE DATE, SIGN AND
RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
