<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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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<PAGE>
MONACO COACH CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
------------------------
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
20, 1998 at 2:00 p.m., local time, at the Company's headquarters, located at
91320 Industrial Way, Coburg, OR 97408 for the following purposes:
1. To elect three Class I directors to serve for a two-year term expiring
upon the 2000 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 January 2, 1999.
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 March 25, 1998 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 13, 1998
<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 20, 1998 at 2:00 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 Company's headquarters, 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 January 3, 1998, including financial statements,
were mailed on or about April 13, 1998 to all stockholders entitled to vote at
the meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 25, 1998 are
entitled to notice of and to vote at the meeting. At the record date, 5,507,376*
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
- ------------------------
* The share and per share data set forth in this Proxy Statement have not been
adjusted to reflect the Company's pending 3-for-2 split of its Common Stock.
<PAGE>
(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 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 10, 1998 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 six. 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 three directors in Class I and three directors in
Class II. Each of the three Class II directors elected at the 1997 Annual
Meeting will hold office until the 1999 Annual Meeting or until his successor
has been duly elected and qualified. The three Class I 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 I nominees for director and certain information
about each of them are set forth below. The names of, and certain information
about, the current Class II directors with unexpired terms are also set forth
below. All information is as of the record date.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- --------------------------------------------- ----------- -------------------------------------------------- -----------
<S> <C> <C> <C>
NOMINEES FOR CLASS I DIRECTORS:
Kay L. Toolson............................... 54 Chairman of the Board, Chief Executive Officer and 1993
President of the Company
Michael J. Kluger............................ 40 Managing Director of Liberty Capital 1993
Partners, Inc.
Lee Posey.................................... 63 Chairman of Palm Harbor Homes, Inc. 1997
CONTINUING CLASS II DIRECTORS:
Carl E. Ring, Jr............................. 60 Managing Director of Liberty Capital 1993
Partners, Inc.
Richard A. Rouse............................. 52 Chairman of Emergency Road Service, Inc. 1993
Roger A. Vandenberg.......................... 50 President of Cariad Capital, Inc. 1993
</TABLE>
2
<PAGE>
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. POSEY has served as a director of the Company since July 1997. Mr. Posey
currently serves as Chairman of the Board for Palm Harbor Homes Inc., a Dallas,
Texas based producer of multi-section manufactured homes, a position he has held
since December 1977. Additionally, he was the President of Palm Harbor Homes
from December 1977 to December 1993. Mr. Posey is a graduate of Alma College in
Alma, Michigan.
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 Inc., 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.
3
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
fiscal 1997. 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
$25,000 in 1997 for service on the Board of Directors and any committee thereof.
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. or Cariad Capital, Inc. 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.
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, 1996 and 1997 with exercise
prices of $15.00, $12.625, 12.75 and $23.625 per share, respectively.
Mr. Posey was granted an Initial Option to purchase 8,000 shares of Common
Stock at an exercise price of $25.50 under the Director Plan on July 22, 1997.
No directors other than Messrs. Rouse and Posey 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
4
<PAGE>
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 January 2, 1999, 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.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
ratify Coopers & Lybrand, L.L.P. as the Company's independent auditors.
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 JANUARY 2, 1999.
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........................................................ 1997 $200,000 $877,939 5,000
Chief Executive Officer and President 1996 150,000 748,000 5,000
1995 150,000 352,101 5,000
John W. Nepute........................................................ 1997 $100,000 $205,607 3,000
Vice President of Finance and 1996 65,850 145,000 2,500
Chief Financial Officer 1995 59,800 78,000 2,500
D. Page Robertson..................................................... 1997 $120,000 $101,516 2,500
President of Monaco Division 1996 120,000 132,500 3,000
1995 81,230 171,069(1) 2,500
James V. Sheldon(2)................................................... 1997 $125,000 $315,198 3,500
President of Holiday Rambler and Chief 1996 80,769 196,000 2,500
Operating Officer, Indiana Operations
Richard E. Bond(3).................................................... 1997 $110,000 $107,370 2,400
Vice President, Secretary and General Counsel
</TABLE>
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(1) Includes sales commissions earned by Mr. Robertson in the amounts of $92,069
in fiscal 1995.
(2) Mr. Sheldon joined the Company in March 1996.
(3) Mr. Bond joined the Company in January 1997.
OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants during the fiscal year ended January 3, 1998. 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
<PAGE>
OPTION 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 APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION --------------------
NAME GRANTED (#) IN 1997 PRICE DATE 5% 10%
- -------------------------------------- --------------- --------------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson........................ 5,000 8.6% $ 19.66 4/1/02 $ 15,770 $ 45,640
John W. Nepute........................ 3,000 5.1 17.875 4/1/07 33,726 85,464
D. Page Robertson..................... 2,500 4.3 17.875 4/1/07 28,105 71,220
James V. Sheldon...................... 3,500 6.0 17.875 4/1/07 39,347 99,708
Richard E. Bond....................... 2,400 4.1 17.875 4/1/07 26,981 68,371
</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 January 3, 1998:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kay L. Toolson............................................ 6,000 14,000 $ 52,225 $ 106,300
John W. Nepute............................................ 12,120 9,780 228,001 117,147
D. Page Robertson......................................... 12,220 9,680 229,113 118,035
James V. Sheldon.......................................... 500 5,500 5,563 47,188
Richard E. Bond........................................... 240 3,360 2,670 27,780
</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 $25.00 per share on
January 2, 1998 (the last trading day for the fiscal year ended January 3,
1998) 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
7
<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. In 1997, the Company contributed 15% 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.) This compares to 27% of of its EBITDA in excess of $3 million in
1995 and 1996. 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 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 1997, the Committee set aside a pool of 58,325 shares, of
which options to purchase 16,400 shares were granted to the executive officers,
including 5,000 shares to the Company's Chief Executive Officer.
8
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 1997,
Mr. Toolson received a base salary of $200,000 for serving as the Chief
Executive Officer of the Company. As a participant in the Company's bonus pool
in fiscal 1997, Mr. Toolson was eligible to receive an annual bonus equal to 5%
of the Company's EBITDA in excess of $12 million, payable at the discretion of
the Committee after review of the Company's audited annual financial statements.
This compares to 10% of the Company's EBITDA in excess of $12 million in 1995
and 1996. Based on this formula, and on the Company's financial performance in
1997, Mr. Toolson received a bonus for 1997 of $877,939.
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 this 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 1997. 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>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 25, 1998 (except
as otherwise indicated), by: (i) each person who is known by the Company to own
beneficially more than five percent of the Common Stock, (ii) each of the
Company's directors, (iii) each of the Company's executive officers, and (iv)
all directors and executive officers as a group. Share data in the table and the
accompanying footnotes have not been adjusted to reflect the Company's pending
3-for-2 split of its Common Stock. Except as indicated in the footnotes to this
table, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIAL OWNER SHARES PERCENTAGE(1)
- --------------------------------------------------------------------------------------- ---------- ---------------
<S> <C> <C>
Liberty Partners Holdings 2, L.L.C.(2)................................................. 660,214 11.99%
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Michael J. Kluger(3)................................................................... 661,214 12.00
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Carl E. Ring, Jr.(4)................................................................... 660,214 11.99
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Kay L. Toolson(5)...................................................................... 476,107 8.63
c/o Monaco Coach Corporation
91320 Industrial Way
Coburg, OR 97408
The Equitable Companies Incorporated(6)................................................ 445,700 8.09
1290 Avenue of the Americas
New York, NY 10104
FMR Corp.(7)........................................................................... 399,500 7.25
82 Devonshire Street
Boston, MA 02109
Roger A. Vandenberg.................................................................... 221,683 4.03
Lee Posey.............................................................................. 108,000 1.96
D. Page Robertson(5)................................................................... 42,370 *
John W. Nepute(5)...................................................................... 34,255 *
Richard A. Rouse(5).................................................................... 16,580 *
James V. Sheldon(5).................................................................... 3,733 *
Richard E. Bond(5)..................................................................... 1,167 *
All directors and executive officers as a group (10 persons)(3)(4)(5).................. 1,564,109 28.13
</TABLE>
- ------------------------
* Less than one percent.
10
<PAGE>
(1) Applicable percentage of beneficial ownership is based on 5,507,376 shares
of Common Stock outstanding as of March 25, 1998 together with applicable
options for each stockholder. Beneficial ownership is determined in
accordance with the rules of the SEC, and includes voting and investment
power with respect to shares. Shares of Common Stock subject to options
currently exercisable or exercisable within 60 days after March 25, 1998 are
deemed outstanding for purposes of computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing
the percentage of any other stockholder.
(2) Liberty Partners Holdings 2, L.L.C., a Delaware limited liability company,
holds 660,214 shares of Common Stock. The members of Liberty Partners
Holdings 2, L.L.C. are Liberty Investments 5, Inc., which is beneficially
owned by the State Board of Administration of Florida, and Liberty
Investment Partners II, which is beneficially owned by, among others,
Directors Michael J. Kluger and Carl E. Ring, Jr., as well as Peter E.
Bennet and Paul J. Huston. The Manager of Liberty Partners Holdings 2,
L.L.C., which has sole voting and investment power over the shares of Common
Stock, is Liberty Partners, L.P. Liberty Capital Partners, Inc. is the
general partner of Liberty Partners, L.P. Michael J. Kluger and Carl E.
Ring, Jr., among others, are directors and stockholders of Liberty Capital
Partners, Inc.
(3) Includes the shares held of record by Liberty Partners Holdings 2, L.L.C.
See Note (2) above. Also includes 1,000 shares held by Mr. Kluger directly.
(4) Includes the shares held of record by Liberty Partners Holdings 2, L.L.C.
See Note (2) above.
(5) Includes the number of shares subject to options which are exercisable
within 60 days of March 25, 1998 by the following persons: Mr. Toolson
(10,000 shares), Mr. Rouse (7,680 shares), Mr. Nepute (16,500 shares), Mr.
Robertson (16,600 shares), Mr. Sheldon (1,700 shares) and Mr. Bond (960
shares).
(6) Based on a Schedule 13G filed with the SEC on February 10, 1998. Includes
445,700 shares beneficially owned by Alliance Capital Management L.P., an
investment company registered under Section 203 of the Investment Advisers
Act of 1940 and subsidiary of the Equitable Companies Incorporated, a parent
holding company. Alliance Capital Management L.P. may be deemed to have the
sole power to vote or to direct the vote of 1,000 shares, the shared power
to vote or to direct the vote of 444,700 shares, and the sole power to
dispose of 445,700 shares.
(7) Based on a Schedule 13G filed with the SEC on February 13, 1998. Includes
399,500 shares beneficially owned by Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. and an investment
Adviser registered under Section 203 of the Investment Advisers Act of 1940,
as a result of acting as investment Adviser to various investment companies
registered under Section 8 of the Investment Company Act of 1940. The
ownership of one investment company, Fidelity Low-Priced Stock Fund,
amounted to 386,900 shares. Edward C. Johnson 3d, the Chairman of FMR Corp.,
FMR. Corp., through its control of Fidelity, and the funds each has neither
sole nor shared voting power with respect to the shares, and sole
dispositive power over all 399,500 shares owned by the funds.
11
<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>
DOLLAR VALUE MONACO COACH CORPORATION PEER GROUP NASDAQ NATIONAL COMPOSITE
<S> <C> <C> <C>
9/93 $100.0 $100.0 $100.0
9/93 $117.3 $100.4 $101.4
12/93 $103.8 $113.8 $103.3
3/94 $115.4 $108.0 $98.8
6/94 $109.6 $94.0 $93.8
9/94 $115.4 $112.6 $101.6
12/94 $117.3 $96.6 $100.0
3/95 $123.1 $112.2 $108.6
6/95 $123.1 $98.9 $124.1
9/95 $97.1 $98.4 $138.7
12/95 $69.2 $120.0 $139.9
3/96 $109.6 $122.5 $146.4
6/96 $96.2 $149.8 $157.5
9/96 $98.1 $163.7 $163.1
12/96 $125.0 $158.6 $171.6
3/97 $137.5 $134.7 $162.4
6/97 $186.5 $150.2 $191.7
9/97 $181.7 $171.7 $224.1
12/97 $196.2 $206.8 $208.8
</TABLE>
12
<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 January 3, 1998, all filing requirements
applicable to its officers, directors and ten percent stockholders were met.
FOR THE BOARD OF DIRECTORS
RICHARD E. BOND
SECRETARY
Dated: April 13, 1998
13
<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 13, 1998, and the
1997 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 20, 1998, at 2:00 p.m. local time, at the
Company's Headquarters, located at 91320 Industrial Way, Coburg, OR 97408, 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 I DIRECTORS / / FOR all nominees / / WITHHOLD AUTHORITY
(EXCEPT AS INDICATED TO THE CONTRARY BELOW)
Kay L. Toolson; Michael J. Kluger; Lee Posey
/ /
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 I
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 _______________________, 1998
(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.
