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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 Section240.14a-11(c) or
Section240.14a-12
MONACO COACH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MONACO COACH CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Monaco
Coach Corporation (the "Company"), a Delaware corporation, will be held on May
15, 1997 at 1:30 p.m., local time, at the Varsity Club International, located at
3800 North Main Street, Mishawaka, IN 46545 for the following purposes:
1. To elect three Class II directors to serve for a two-year term expiring
upon the 1999 Annual Meeting of Stockholders or until their successors
are elected.
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the fiscal year ending December 27, 1997.
3. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 25, 1997 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
RICHARD E. BOND
SECRETARY
Coburg, Oregon
April 29, 1997
<PAGE>
MONACO COACH CORPORATION
----------------
PROXY STATEMENT
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Monaco Coach Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held May 15, 1997 at 1:30 p.m., local time (the "Annual
Meeting"), or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Varsity Club International, located at 3800 North Main
Street, Mishawaka, IN 46545. The Company's principal executive offices are
located at 91320 Industrial Way, Coburg, OR 97408, and its telephone number at
that location is (541) 686-8011.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended December 28, 1996, including financial
statements, were mailed on or about April 29, 1997 to all stockholders entitled
to vote at the meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on April 25, 1997 are
entitled to notice of and to vote at the meeting. At the record date, 4,438,217
shares of the Company's Common Stock, $0.01 par value per share, were issued and
outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the record date. Shares that are voted "FOR",
"AGAINST" or "WITHHOLD AUTHORITY" with respect to a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling
<PAGE>
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against the
proposal.
In a 1988 Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not affect the outcome of the
voting on a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting must be received by
the Company no later than December 24, 1997 in order that they may be included
in the proxy statement and form of proxy relating to that meeting.
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES
The number of directors authorized by the Company's Bylaws is a range from
three to seven, with the exact number currently fixed by the Board at five. The
Company's Certificate of Incorporation provides that the directors shall be
divided into two classes, with the classes serving for staggered, two-year
terms. Currently there are two directors in Class I and three directors in Class
II. Each of the two Class I directors elected at the 1996 Annual Meeting will
hold office until the 1998 Annual Meeting or until his successor has been duly
elected and qualified. The three Class II directors are to be elected at the
Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named below, each of whom is
currently a director of the Company. In the event that any nominee of the
Company becomes unable or declines to serve as a director at the time of the
Annual Meeting, the proxy holders will vote the proxies for any substitute
nominee who is designated by the current Board of Directors to fill the vacancy.
It is not expected that any nominee listed below will be unable or will decline
to serve as a director.
The names of the three Class II nominees for director and certain
information about each of them are set forth below. The names of, and certain
information about, the current Class I directors with unexpired terms are also
set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- --------------------------------------------- ----------- -------------------------------------------------- -----------
<S> <C> <C> <C>
CONTINUING CLASS I DIRECTORS
Kay L. Toolson............................... 52 Chairman of the Board, Chief Executive 1993
Officer and President of the
Company
Michael J. Kluger............................ 39 Managing Director of Liberty Capital 1993
Partners, Inc.
NOMINEES FOR CLASS II DIRECTORS
Carl E. Ring, Jr............................. 58 Managing Director of Liberty Capital 1993
Partners, Inc.
Richard A. Rouse............................. 50 Chairman of Emergency Road Service, Inc. 1993
Roger A. Vandenberg.......................... 49 President of Cariad Capital, Inc. 1993
</TABLE>
2
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Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers of
the Company.
MR. TOOLSON has served as President and Chief Executive Officer of the
Company and its predecessor in interest (the "Predecessor") since 1986 and as
Chairman of the Company since July 1993. From September 1982 to August 1986, Mr.
Toolson served as Executive Vice President of Executive Industries, Inc., a
motor coach manufacturer. Prior to joining Executive Industries, Mr. Toolson
served from 1973 until 1982 as Vice President of Kings Highway Mobile
Industries, Inc., a motor coach manufacturer. He holds a B.S. degree in Business
Administration and Computer Science and an M.B.A. degree, both from Utah State
University.
MR. KLUGER has served as a director of the Company since March 1993. He is a
founding partner of Liberty Partners, L.P., whose general partner is Liberty
Capital Partners, Inc., a New York investment management firm, where he has
served as a Managing Director since September 1992. For five years prior
thereto, Mr. Kluger was a Director and Senior Vice President of Merrill Lynch
Interfunding Inc., a subsidiary of Merrill Lynch & Co., an investment banking
and brokerage firm. Mr. Kluger is also a director and stockholder of Liberty
Capital Partners, Inc.
MR. RING has served as a director of the Company since March 1993. He is a
founding partner of Liberty Partners, L.P., whose general partner is Liberty
Capital Partners, Inc., a New York investment management firm, where he has
served as a Managing Director since September 1992. From June 1991 to September
1992, he was President of Eden, Miller & Co., Incorporated, an investment
banking firm. For more than five years prior thereto, Mr. Ring was a Managing
Director of Lehman Brothers, an investment banking and brokerage firm. Mr. Ring
is also a director and stockholder of Liberty Capital Partners, Inc.
MR. ROUSE has served as a director of the Company since July 1993. He
currently serves as Chairman of Emergency Road Service, Inc., a privately-held
nationwide roadside assistance company, which position he has held since July
1991. From July 1988 to July 1991, he was President of Trailer Life Enterprises,
Inc., a publisher and sponsor of recreational vehicle publications and clubs.
MR. VANDENBERG has served as a director of the Company since March 1993. He
currently serves as the President of Cariad Capital, Inc., which he founded in
January 1992, and as a Managing Director of Narragansett Capital, Inc., a
private investment firm, a position he has held since 1986. Mr. Vandenberg is
also a general partner of the general partner of Narragansett Capital Partners
- -A and -B, L.P. ("NCPAB"), related venture capital funds, and a general partner
of the general partner of Narragansett First Fund, a venture capital fund. One
of the portfolio companies with which NCPAB is affiliated filed for protection
under Federal bankruptcy laws in 1993, although it has subsequently emerged from
bankruptcy and is operating profitably. Mr. Vandenberg served as the President
and a director of this portfolio company Glasstech Industries, Inc., and as a
director and vice chairman of its operating company subsidiary, Glasstech, Inc.
("Glasstech"), from 1989 to December 1994. Glasstech manufactures equipment for
bending and tempering glass. Mr. Vandenberg is also a director of Wellman, Inc.,
a polyester fiber manufacturer, and general partner of Monaco Capital Partners.
STOCKHOLDERS AGREEMENT
Pursuant to the terms of an August 1993 agreement among certain stockholders
that purchased the Common Stock of the Company prior to the Company's initial
public offering (the "Stockholders Agreement"), such stockholders are obligated
to vote for two nominees for the Board of Directors presented by Liberty
Investment Partners II, L.P., two nominees presented by Monaco Capital Partners,
and one nominee chosen by the Company's executive officers from among such
executive officers, which shall be Kay L. Toolson so long as he is the Chief
Executive Officer of the Company. Currently, Directors Toolson and Kluger serve
as representatives of the Company's executive officers and Liberty Investment
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Partners II, L.P., respectively. Director Ring is nominated by Liberty
Investment Partners II, L.P. and Director Vandenberg is nominated by Monaco
Capital Partners.
The number of directors Liberty Investment Partners II, L.P. or Monaco
Capital Partners or their permitted transferees may designate shall be reduced
to one nominee if such party owns less than 50% of the shares of Common Stock
which it owned on the date of the Stockholders Agreement. The executive officers
will no longer be able to designate a nominee at such time as they own in the
aggregate less than 50% of the Common Stock which they owned on the date of the
Stockholders Agreement, Liberty Investment Partners II, L.P. and Monaco Capital
Partners will lose the right to designate any nominees at such time as such
party (or their permitted transferees) owns less than 10% of the shares of
Common Stock which it owned on the date of the Stockholders Agreement. In the
case of Liberty Investment Partners II, L.P., shares owned by the State Board of
Administration of Florida will be combined with those owned by Liberty
Investment Partners II, L.P. in determining the number of shares held.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of nine meetings during
fiscal 1996. No director attended fewer than 75% of the meetings of the Board of
Directors and its committees upon which such director served. The Board of
Directors has an Audit Committee and a Compensation Committee. The Board of
Directors has no nominating committee or any committee performing similar
functions.
The Audit Committee of the Board of Directors currently consists of
Directors Ring and Rouse, and held one meeting during the last fiscal year. The
Audit Committee recommends engagement of the Company's independent accountants,
and is primarily responsible for approving the services performed by the
Company's independent accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently consists of
Directors Ring, Rouse and Vandenberg, and held two meetings during the last
fiscal year. The Compensation Committee establishes the policies upon which
compensation of and incentives for the Company's executive officers will be
based, reviews and approves the compensation of the Company's executive
officers, and administers the Company's stock option and stock purchase plans.
COMPENSATION OF DIRECTORS
The Company's directors who are not employees of the Company received
$20,000 in 1996 for service on the Board of Directors and any committee thereof.
For 1997, the annual compensation for such services has been increased to
$25,000. The Company's directors are also reimbursed for certain expenses in
connection with attendance at board and committee meetings.
Each non-employee director of the Company, other than directors affiliated
with Liberty Investment Partners II, L.P., Cariad Capital, Inc. or Monaco
Capital Partners, is entitled to participate in the Company's 1993 Director
Option Plan (the "Director Plan"). The Board of Directors and the stockholders
have authorized a total of 40,000 shares of Common Stock for issuance pursuant
to the Director Plan. Under the terms of the Director Plan, each eligible
non-employee director is automatically granted an option to purchase 8,000
shares of Common Stock (the "Initial Option") on the later of the effective date
of the Company's initial public offering or the date on which the optionee first
becomes a director of the Company. Thereafter, each optionee is automatically
granted an additional option to purchase 1,600 shares of Common Stock (a
"Subsequent Option") on September 30 of each year if, on such date, the optionee
has served as a director of the Company for at least six months. Each Initial
Option vests over five years at the rate of 20% of the shares subject to the
Initial Option at the end of each anniversary following the date of grant. Each
Subsequent Option vests in full on the fifth anniversary of its date of grant.
The exercise price of each option is the fair market value of the Common Stock
as determined by the closing price reported by the Nasdaq National Market on the
date of grant.
4
<PAGE>
Mr. Rouse was granted an Initial Option to purchase 8,000 shares of Common
Stock at an exercise price of $13.00 per share, under the Director Plan on
September 23, 1993, the effective date of the Company's initial public offering
and was granted Subsequent Options in 1994, 1995 and 1996 with exercise prices
of $15.00, $12.625 and 12.75 per share, respectively. No directors other than
Mr. Rouse have been granted options under the Director Plan.
VOTE REQUIRED
The three nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the meeting,
but have no other legal effect upon election of directors under Delaware law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
PROPOSAL 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P., independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 27, 1997, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
Annual Meeting of Stockholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 27, 1997.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
5
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The table below sets forth information for the three most recently completed
fiscal years concerning the compensation of the Chief Executive Officer of the
Company and the four other most highly compensated executive officers of the
Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
OPTIONS (#)
------------
ANNUAL COMPENSATION LONG-TERM
--------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS
- ---------------------------------------------------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Kay L. Toolson........................................................ 1996 $150,000 $748,000 5,000
Chief Executive Officer and President 1995 150,000 352,101 5,000
1994 150,000 562,625 5,000
John W. Nepute........................................................ 1996 65,850 145,000 2,500
Vice President of Finance and 1995 59,800 78,000 2,500
Chief Financial Officer 1994 55,088 125,750 2,500
D. Page Robertson..................................................... 1996 120,000 132,500 3,000
President of Monaco Division 1995 81,230 171,069(1) 2,500
1994 80,000 234,750(1) 2,500
James V. Sheldon(2)................................................... 1996 80,769 196,000 2,500
President of Holiday Rambler and Chief
Operating Officer, Indiana Operations
B. Ray Mehaffey....................................................... 1996 89,500 65,500 2,500
Vice President of Operations 1995 84,816 73,000 2,500
1994 83,092 119,300 2,500
</TABLE>
- ------------------------
(1) Includes sales commissions earned by Mr. Robertson in the amounts of $92,069
in fiscal 1995 and $106,000 in fiscal 1994.
(2) Mr. Sheldon joined the Company in March 1996.
OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants during the fiscal year ended December 28, 1996. In accordance with
the rules of the Securities and Exchange Commission (the "SEC"), also shown
below is the potential realizable value over the term of the option (the period
from the grant date to the expiration date) based on assumed rates of stock
appreciation from the option exercise price of 5% and 10%, compounded annually.
These amounts are based on certain assumed rates of appreciation and do not
represent the Company's estimate of future stock price. Actual gains, if any, on
stock option exercises will be dependent on the future performance of the Common
Stock.
6
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS/SARS EMPLOYEES EXERCISE EXPIRATION --------------------
NAME GRANTED (#) IN 1996 PRICE DATE 5% 10%
- -------------------------------------- --------------- ------------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson........................ 5,000 9.62% $ 15.260 4/01/01 $ 12,217 $ 35,404
John W. Nepute........................ 2,500 4.81 13.875 4/01/06 21,815 55,283
D. Page Robertson..................... 3,000 5.77 13.875 4/01/06 26,178 66,340
James V. Sheldon...................... 2,500 4.81 13.875 4/01/06 21,815 55,283
B. Ray Mehaffey....................... 2,500 4.81 13.875 4/01/06 21,815 55,283
</TABLE>
- ------------------------
(1) These options were granted pursuant to the Company's 1993 Incentive Stock
Option Plan. These options vest over five years at the rate of 20% of the
shares subject to the options at the end of each anniversary following the
date of grant of such options.
OPTION VALUES
The following table sets forth information with respect to the value of
unexercised options held by each of the Named Officers at December 28, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR END AT FISCAL YEAR END (1)
SHARES ACQUIRED ON ---------------------------- --------------------------
NAME EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ------------------- --------------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson......... -- -- 3,000 12,000 460 4,365
John W. Nepute......... -- -- 8,340 10,560 88,186 65,487
D. Page Robertson...... -- -- 8,340 11,060 88,186 66,549
James V. Sheldon....... -- -- -- 2,500 -- 5,313
B. Ray Mehaffey........ -- -- 8,340 10,560 88,186 65,487
</TABLE>
- ------------------------
(1) Value of unexercised options is based on the last reported sale price of the
Company's Common Stock on the Nasdaq National Market of $16.00 per share on
December 27, 1996 (the last trading day for the fiscal year ended December
28, 1996) minus the exercise price.
COMPENSATION COMMITTEE REPORT
The information contained in the following report shall not be deemed to be
"soliciting material" or to be filed with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
INTRODUCTION
The Compensation Committee of the Board of Directors (the "Committee") was
established in July 1993 and is comprised solely of outside directors. In
general, the Committee is responsible for reviewing and recommending for
approval by the Board of Directors the Company's compensation practices,
including executive salary levels and variable compensation programs, both
cash-based and
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<PAGE>
equity-based. With respect to the compensation of the Company's Chief Executive
Officer, the Committee reviews and approves the various elements of the Chief
Executive Officer's compensation. With respect to other executive officers, the
Committee reviews the recommendations for such individuals presented by the
Chief Executive Officer and the bases therefor and approves or modifies the
compensation packages for such individuals. Base salary levels for executive
officers of the Company are generally established at or near the start of each
fiscal year, and final bonuses for executive officers are determined at the end
of each fiscal year based upon such individual's performance and the performance
of the Company.
EXECUTIVE COMPENSATION
The Company's compensation program consists of two principal components:
cash-based compensation, both fixed and variable, and equity-based compensation.
These two principal components are intended to attract, retain, motivate and
reward executives who are expected to manage both the short-term and long-term
success of the Company.
CASH-BASED COMPENSATION
Executive officers of the Company receive cash compensation in the form of
annual salaries and bonus payments. A principal goal of the Committee is to tie
a substantial part of each executive officer's cash compensation to the
Company's performance, and to reward executive officers for the Company's
success. Accordingly, the Committee has approved only modest increases in the
base salaries of the Company's executive officers, with the exception of a
substantial increase in 1996 in the base salary paid to D. Page Robertson, then
the Company's Vice President of Sales and Marketing, as part of a new
compensation package for Mr. Robertson in connection with his promotion to
President of the Monaco Division. In 1995, total cash compensation for each of
the executive officers declined relative to their 1994 compensation levels. In
1996, two of the Company's executive officers received an increase in their
total cash compensation, while one of the officers' total cash compensation was
decreased and one of the officer's total cash compensation remained
approximately constant. The Company contributed 27% of its EBITDA in excess of
$3 million each quarter to the bonus pool. (EBITDA is defined as the Company's
net income before interest expense, taxes, management fees, and depreciation and
amortization.) One half of each quarterly allocation, other than the amount
allocated to the Chief Executive Officer (as described below), was paid to
participants in the pool other than the Chief Executive Officer, at the end of
each quarter. The balance is paid after the year end, based on the Company's
annual EBITDA. The allocation of the bonus pool, other than the amount allocated
to the Chief Executive Officer, is recommended by the Chief Executive Officer,
for approval by the Committee, and is based on subjective factors, including the
achievement by each participant in the pool of specifically defined objectives
and the particular contributions of each participant to the Company's revenue
and profitability. The Committee also considers the compensation of similarly
situated executives in the Company's peer group in the recreational vehicle
industry. The Chief Executive Officer also recommends to the Committee the
performance objectives for each executive officer for the ensuing year.
EQUITY-BASED COMPENSATION
The Committee has created an option program pursuant to which members of
management, including the Company's executive officers, may receive annual
option grants as of March 31 each year from a pool of shares set aside by the
Committee. The purpose of the option program is to provide additional incentive
to executives and other key employees of the Company to work to maximize
long-term return to the Company's stockholders. The allocation of the option
pool, other than the shares allocated to the Chief Executive Officer, is
recommended by the Chief Executive Officer for approval by the Committee. The
allocation of shares from the option pool to the Chief Executive Officer is
determined by the Committee. In granting stock options to the executive
officers, the Chief Executive Officer and the Committee consider a number of
subjective factors, including the executive's position and responsibilities at
the Company, such executive's individual performance, the number of options held
(if any) and other factors that they may deem relevant. Options generally vest
over a five-year period to encourage optionholders to continue in
8
<PAGE>
the employ of the Company. The exercise price of options is the market price on
the date of grant, ensuring that the option will acquire value only to the
extent that the price of the Company's Common Stock increases relative to the
market price at the date of grant. In 1996, the Committee set aside a pool of
52,000 shares, of which options to purchase 15,500 shares were granted to the
executive officers, including 5,000 shares to the Company's Chief Executive
Officer.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 1996,
Mr. Toolson received a base salary of $150,000 for serving as the chief
executive officer of the Company, which was the same amount he received in each
of the preceding five years. As a participant in the Company's bonus pool in
fiscal 1996, Mr. Toolson was eligible to receive an annual bonus equal to 10% of
the Company's EBITDA in excess of $12.0 million, payable at the discretion of
the Committee after review of the Company's audited annual financial statements.
Based on this formula, which remained the same in 1994, 1995 and 1996, and on
the Company's financial performance in 1996, Mr. Toolson received a bonus for
1996 of $748,000.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. Under the new legislation, the Company may deduct
such compensation with respect to any of these individuals only to the extent
that during any fiscal year such compensation does not exceed $1 million or
meets certain other conditions (such as shareholder approval). The Company's
policy is to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax laws. However, the Committee
believes that its primary responsibility is to provide a compensation program
that will attract, retain and reward the executive talent necessary to the
Company's success. Consequently, the Committee recognizes that the loss of a tax
deduction may be necessary in some circumstances.
SUMMARY
The Committee believes that its compensation program to date has been fair
and motivating, and has been successful in attracting and retaining qualified
employees and in linking compensation directly to the Company's success. The
Committee intends to review this program on an ongoing basis to evaluate its
continued effectiveness.
THE COMPENSATION COMMITTEE
Carl E. Ring, Jr.
Richard A. Rouse
Roger A. Vandenberg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was established in July
1993 and consists of Directors Ring, Rouse and Vandenberg. Director Vandenberg
is affiliated with Cariad Capital, Inc., which is a party to a Management
Agreement with the Company that will terminate September 30, 1998. Pursuant to
this agreement, Cariad received management fees of $72,000 in fiscal 1996. No
executive officer of the Company served on the compensation committee of another
entity or on any other committee of the board of directors of another entity
performing similar functions during the last fiscal year.
9
<PAGE>
PERFORMANCE GRAPH
The following line graph shows a comparison of cumulative total stockholder
return for the Company's Common Stock, the Nasdaq Composite Index and a peer
group of companies selected by the Company (the "Peer Group"), whose primary
business is recreational vehicles. The Peer Group consists of Coachmen
Industries, Inc., Collins Industries, Inc., Fleetwood Enterprises, Inc., Kit
Manufacturing Company, Thor Industries, Inc. and Winnebago Industries, Inc. The
graph assumes that $100 was invested on the date of the Company's initial public
offering, September 23, 1993, and that all dividends are reinvested. In
accordance with the guidelines of the SEC, the stockholder return for each
entity in the Peer Group has been weighted on the basis of market capitalization
as of each measurement date set forth in the graph. Historic stock price
performance should not be considered indicative of future stock price
performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MONACO COACH CORPORATION COMPARABLES NASDAQ COMPOSITE INDEX
<S> <C> <C> <C>
9/23/93 $100.00 $100.00 $100.00
9/30/93 117.00 100.00 101.00
12/31/93 104.00 113.00 103.00
3/31/94 115.00 107.00 99.00
6/30/94 110.00 93.00 94.00
9/30/94 115.00 111.00 102.00
12/31/94 117.00 94.00 100.00
3/31/95 123.00 109.00 109.00
6/30/95 123.00 96.00 124.00
9/30/95 94.00 93.00 137.00
12/31/95 69.00 114.00 140.00
3/31/96 107.00 117.00 147.00
6/30/96 92.00 141.00 159.00
9/30/96 98.00 152.00 163.00
12/31/96 125.00 145.00 172.00
</TABLE>
10
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors and persons who own more
than ten percent of a registered class of the Company's equity securities to
file an initial report of ownership on Form 3 and changes in ownership on Form 4
or Form 5 with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. Such persons are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 28, 1996, all filing requirements
applicable to its officers, directors and ten percent stockholders were complied
with, except for one delayed Form 5 filing on behalf of John W. Nepute with
respect to two transactions and one delayed Form 3 filing on behalf of James V.
Sheldon with respect to the amount of Mr. Sheldon's initial holdings.
FOR THE BOARD OF DIRECTORS
RICHARD E. BOND
SECRETARY
Dated: April 29, 1997
11
<PAGE>
MONACO COACH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Monaco Coach Corporation, a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 29, 1996, and the
1996 Annual Report to Stockholders, and hereby appoints Kay L. Toolson and John
W. Nepute, or either of them, proxies and attorneys-in-fact, with full power to
each of substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the Annual Meeting of Stockholders of Monaco Coach
Corporation to be held on May 15, 1997, at 1:30 p.m. local time, at the Varsity
Club International, located at 3800 North Main Street, Mishawaka, IN 46545, and
at any adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below, and, in their discretion, upon such other matter or
matters which may properly come before the meeting and any adjournment(s)
thereof.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF CLASS II DIRECTORS / / FOR all nominees / / WITHHOLD AUTHORITY
(EXCEPT AS INDICATED TO THE CONTRARY BELOW)
Nominees: Carl E. Ring, Jr.; Richard A.
Rouse; Roger A. Vandenberg
/ /
For all nominees except as noted.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY:
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, upon such other matter or matters which may properly
come before the meeting, and any adjournment(s) thereof.
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS CLASS II
DIRECTORS, FOR THE RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P.
AS INDEPENDENT ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING.
/ / MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT
___________________________________
(Print Stockholder(s) name)
___________________________________
(Signature of Stockholder or
Authorized Signatory)
___________________________________
(Signature of Stockholder or
Authorized Signatory)
Dated _______________________, 1997
(This Proxy should be marked,
dated, signed by the stockholder(s)
exactly as his or her name appears
hereon, and returned promptly in
the enclosed envelope. Persons
signing in a fiduciary capacity
should so indicate. If shares are
held by joint tenants or as
community property, both should
sign.)
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
