<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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / 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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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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 19, 1999
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Monaco Coach Corporation (the "Company"), a Delaware corporation, will be held
on May 19, 1999 at 10:00 a.m., local time, at the Company's Indiana
headquarters, located at 606 Nelson's Parkway, Wakarusa, Indiana, for the
following purposes:
1. To elect three Class II directors to serve for two-year terms expiring
upon the 2001 Annual Meeting of Stockholders or until their successors
are elected.
2. To amend the Company's Certificate of Incorporation to increase the
authorized number of shares of Common Stock to 50,000,000 and to reduce
the authorized number of shares of Preferred Stock.
3. To approve the Company's Executive Variable Compensation Plan.
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending January 1, 2000.
5. 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, 1999 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 17, 1999
<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 1999 Annual Meeting of
Stockholders to be held May 19, 1999 at 10:00 a.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 Indiana headquarters, located at 606 Nelson's
Parkway, Wakarusa, Indiana. The Company's principal executive offices are
located at 91320 Industrial Way, Coburg, Oregon 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 2, 1999, including financial statements,
were mailed on or about April 17, 1999 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, 1999 are
entitled to notice of and to vote at the meeting. At the record date, 12,493,800
shares of the Company's Common Stock, $0.01 par value, 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 at the Company's principal executive offices 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.
<PAGE>
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 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.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company's Bylaws require that proposals of stockholders of the Company
which are intended to be presented by such stockholders at the Company's 2000
Annual Meeting must be received by the Company no later than December 18, 1999,
whether or not they are to be included in the Company's proxy statement and form
of proxy relating to that meeting.
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES
The authorized number of directors is currently established 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 each of Class I and Class II. Each
of the three Class I directors elected at the 1998 Annual Meeting will hold
office until the 2000 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. All information is as of the record date.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------------- --- ------------------------------------------------------------- -----------
<S> <C> <C> <C>
NOMINEES FOR CLASS II DIRECTORS:
Carl E. Ring, Jr................... 60 Managing Director of Liberty Capital Partners, Inc. 1993
Richard A. Rouse................... 52 Private Investor 1993
Roger A. Vandenberg................ 52 President of Cariad Capital, Inc. 1993
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------------- --- ------------------------------------------------------------- -----------
CONTINUING CLASS I DIRECTORS:
<S> <C> <C> <C>
Kay L. Toolson..................... 54 Chairman of the Board, Chief Executive Officer and President 1993
of the Company
Michael J. Kluger.................. 41 Managing Director of Liberty Capital Partners, Inc. 1993
Lee Posey.......................... 64 Chairman and Chief Executive Officer of Palm Harbor Homes 1997
</TABLE>
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 and Chief Executive Officer for Palm
Harbor Homes, 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 is
currently a private investor. From 1991 to 1998, Mr. Rouse served as Chairman of
Emergency Road Service, Inc., a privately-held nationwide roadside assistance
company. From 1988 to 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") and related venture capital funds. Mr. Vandenberg is
also a director of Wellman, Inc., a polyester fiber manufacturer, and general
partner of Monaco Capital Partners.
3
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings during
fiscal 1998. Other than Messrs. Kluger and Posey, 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 1998 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 90,000
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 18,000 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 3,600 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. Messrs. Rouse and
Posey were each granted a Subsequent Option of 3,600 shares (as adjusted for
stock splits) on September 30, 1998 at an exercise price of $16.83 per share. No
directors other than Messrs. Rouse and Posey were granted options under the
Director Plan in 1998.
VOTE REQUIRED
The three nominees receiving the highest number of 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.
4
<PAGE>
PROPOSAL 2--AMENDMENT OF CERTIFICATE OF INCORPORATION
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate"), as currently in effect, provides that the Company is authorized
to issue 20,000,000 shares of Common Stock, par value $.01, and 2,000,000 shares
of Preferred Stock, par value $.01. On February 16, 1999, the Board of Directors
authorized the amendment of the Certificate to increase the authorized number of
shares of Common Stock to 50,000,000 shares and is now soliciting the approval
by the stockholders of such amendment. Concurrently, the Company is seeking
stockholder approval to reduce its authorized number of shares of Preferred
Stock from 2,000,000 shares to 1,934,783 shares.
PURPOSE AND EFFECT OF AMENDMENT
COMMON STOCK
The principal purpose of the proposed amendment to the Certificate is to
authorize additional shares of Common Stock which will be available in the event
that the Board of Directors determines that it is necessary or appropriate to
effect future stock dividends or stock splits, to raise additional capital
through the sale of securities, to acquire another company or its business or
assets through the issuance of securities, or to establish a strategic
relationship with a corporate partner through the exchange of securities. In
determining the appropriate level of authorized shares of Common Stock, the
Board of Directors considered, among other factors, (i) that as of March 25,
1999 approximately 13,800,000 shares of Common Stock were issued or reserved for
issuance, thereby effectively encumbering a significant portion of the
20,000,000 shares presently authorized, (ii) that in 1998 the Company effected
two three-for-two stock splits, each of which utilized a significant number of
the authorized shares, and (iii) the desirability of having available a
substantial number of authorized shares for use in connection with the
aforementioned potential strategic transactions. If the proposed amendment is
adopted, 30,000,000 additional shares of Common Stock will become available for
issuance by the Board of Directors without any further stockholder approval,
although certain issuances of shares may require stockholder approval in
accordance with the requirements of the New York Stock Exchange or the Delaware
General Corporation Law. The holders of Common Stock have no preemptive rights
to purchase any stock of the Company. The additional shares might be issued at
such times and under such circumstances as to have a dilutive effect on earnings
per share and on the equity ownership of the present common stockholders.
The flexibility of the Board of Directors to issue additional shares of
stock could enhance the Board's ability to negotiate on behalf of the
stockholders in a takeover situation. Although it is not the purpose of the
proposed amendment, the authorized but unissued shares of Common Stock (as well
as the authorized but unissued shares of Preferred Stock) also could be used by
the Board of Directors to discourage, delay or make more difficult a change in
the control of the Company. For example, such shares could be privately placed
with purchasers who might align themselves with the board in opposing a hostile
takeover bid. The issuance of additional shares might serve to dilute the stock
ownership of persons seeking to obtain control and thereby increase the cost of
acquiring a given percentage of the outstanding stock. The Company has
previously adopted certain measures that may have the effect of helping to
resist an unsolicited takeover attempt, including provisions of the Certificate
authorizing the Board to issue up to 2,000,000 shares of Preferred Stock with
terms, provisions and rights fixed by the Board, and provisions in the
Certificate providing for the Board of Directors to be classified into two
classes serving staggered two year terms. The Board of Directors is not aware of
any pending or proposed effort to acquire control of the Company.
PREFERRED STOCK
The amendment of the Certificate will also have the effect of decreasing the
authorized number of shares of the Company's Preferred Stock from 2,000,000
shares to 1,934,783 shares. The 65,217 shares
5
<PAGE>
which the amendment would eliminate from the authorized Preferred Stock were
designated as Series A Convertible Preferred Stock (the "Series A Preferred")
and issued to Harley-Davidson, Inc. in connection with the March 1996
acquisition by the Company of substantially all of the assets of Harley-
Davidson's Holiday Rambler RV division. Such 65,217 shares of Series A Preferred
were subsequently converted by Harley-Davidson into shares of the Company's
Common Stock and are no longer available for reissuance.
TEXT OF PROPOSED AMENDMENT
The proposed amendment will affect only the text of the first paragraph of
Article IV of the Certificate, which would as a result of the amendment read in
its entirety as follows (text to be deleted stricken through, text to be added
underlined):
"The Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock, par value $.01 per share, and
Preferred Stock, par value $.01 per share. The total number of shares of
Common Stock which the Corporation has the authority to issue is 50,000,000.
The total number of shares of Preferred Stock which the Corporation has the
authority to issue is 1,934,783."
VOTE REQUIRED
The approval of the amendment to the Certificate requires the affirmative
vote of a majority of the outstanding shares of Common Stock of the Company. An
abstention or non-vote is not an affirmative vote and, therefore, will have the
same effect as a vote against the proposal.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE AMENDMENT OF
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK TO 50,000,000 SHARES AND TO REDUCE THE AUTHORIZED
PREFERRED STOCK TO 1,934,783 SHARES.
PROPOSAL 3--APPROVAL OF THE COMPANY'S
EXECUTIVE VARIABLE COMPENSATION PLAN
The Internal Revenue Code limits the Company's ability in its federal income
tax returns to deduct compensation paid to the Company's Chief Executive Officer
and to each of the other four most highly compensated executive officers.
However, certain performance-based compensation that has been approved by
stockholders is not subject to the deduction limit. In order to maximize the
amount of executive compensation that the Company can deduct under Section
162(m) of the Code, the Company is submitting the Executive Variable
Compensation Plan (the "Plan") for stockholder approval at the Annual Meeting.
The following summary description is qualified by reference to the text of the
Plan, attached hereto as Exhibit A.
PURPOSE
The purpose of the Plan is to (i) to motivate and reward eligible employees
by making a significant portion of their cash compensation directly dependent on
achieving key strategic, financial and operational objectives, and (ii) maximize
the Company's deductions on its federal income tax returns with respect to
executive compensation.
ADMINISTRATION
The Company's Compensation Committee of the Board of Directors will be
responsible for the general administration of the Plan and for carrying out its
provisions. All decisions of the Compensation Committee under the Plan are
subject to ratification by the full Board of Directors.
6
<PAGE>
ELIGIBILITY
All executive officers and other key employees of the Company designated by
the Compensation Committee who are or may reasonably be expected to become
"covered employees" within the meaning of Section 162(m) (i.e. the Named
Executive Officers, as defined in "Executive Compensation--Executive
Compensation Tables" below) are eligible to participate in the Plan. The
Compensation Committee has designated Kay L. Toolson, the Company's Chief
Executive Officer, as the sole participant in the Plan for fiscal 1999.
PERFORMANCE TARGETS
For each performance period under the Plan, the Compensation Committee shall
establish performance measures and objectives in writing in advance of such date
as is permitted by Section 162(m). The regulations under that section currently
require the objectives to be determined within the first 90 days of the
Company's fiscal year for which the bonus is to be paid. The primary measure of
Company performance shall be earnings before interest, taxes, depreciation and
amortization (EBITDA). Non-recurring expenses related to the impact of any
acquisitions or mergers shall be excluded in determining whether the performance
measures have been achieved.
The Compensation Committee has determined that fiscal 1999 (ending January
1, 2000) will be the initial performance period under the Plan and that Mr.
Toolson will be eligible to receive a bonus under the Plan equivalent to 3.14%
of the Company's fiscal 1999 EBITDA in excess of $12.0 million.
OTHER
The Compensation Committee shall certify in writing that all applicable
performance criteria have been met prior to any payments under the Plan. All
awards under the Plan shall be in cash. The Compensation Committee may not
increase, but may, in its sole discretion, decrease a participating employee's
award.
In the event a participating employee's employment with the Company
terminates by reason of retirement, disability or death, the Compensation
Committee may, in its discretion, pay all or a portion of the award for the
performance period in which such termination occurs.
Subject to certain limitations and any stockholder approval requirements,
the Compensation Committee has the power to amend or terminate the Plan.
NEW PLAN BENEFITS
For 1999, Mr. Toolson will be eligible to receive a bonus under the Plan
equivalent to 3.14% of the Company's fiscal 1999 EBITDA in excess of $12.0
million. If the Plan, and such formula, had been in effect with respect to
fiscal 1998, for which EBITDA was $53.3 million, Mr. Toolson would have been
eligible to receive a bonus of $1,297,000 for fiscal 1998. By comparison, Mr.
Toolson in fact received a bonus of $1,245,000 for fiscal 1998. Nevertheless,
because the Company's EBITDA for fiscal 1999 cannot be known in advance, and
because the Compensation Committee has the discretion to reduce the amount of
any award under the Plan, the amount that will be paid in the future to Mr.
Toolson or any other eligible employee is not presently determinable.
VOTE REQUIRED
The approval of the proposal requires the affirmative vote of a majority of
the Votes Cast.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ADOPTION OF THE
COMPANY'S EXECUTIVE VARIABLE COMPENSATION PLAN.
7
<PAGE>
PROPOSAL 4--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending January 1, 2000, 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 PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers LLP as the Company's independent auditors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING JANUARY 1, 2000.
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.
8
<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 Executive 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 ................................................. 1998 $ 205,000 $ 1,245,000 11,252
Chief Executive Officer and President 1997 200,000 912,939 11,250
1996 150,000 748,000 11,250
James V. Sheldon(1) ............................................ 1998 $ 128,000 $ 397,000 7,875
President of Holiday Rambler and Chief Operating Officer, 1997 125,000 315,198 7,875
Indiana Operations 1996 80,769 196,000 5,625
John W. Nepute ................................................. 1998 $ 105,000 $ 340,000 7,200
Vice President of Finance and Chief Financial Officer 1997 100,000 205,607 6,750
1996 65,850 145,000 5,625
Richard E. Bond(1) ............................................. 1998 $ 113,000 $ 200,000 5,400
Vice President, Secretary and Chief Administrative Officer 1997 100,833 107,370 5,400
Irv Yoder(1) ................................................... 1998 $ 80,000 $ 225,000 4,725
Vice President and Director of Indiana Manufacturing 1997 70,000 98,590 4,500
1996 48,470 36,000 2,250
</TABLE>
- ------------------------
(1) Messrs. Sheldon and Yoder joined the Company in March 1996, and Mr. Bond
joined the Company in February 1997. Mr. Yoder became an executive officer
of the Company in August 1998.
OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants to the Named Executive Officers during the fiscal year ended
January 2, 1999. 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
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED (#) 1997 PRICE DATE 5% 10%
- --------------------------------------------------- ----------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kay L. Toolson..................................... 11,252 9.5 $ 17.44 4/1/08 $ 123,492 $ 312,876
James V. Sheldon................................... 7,875 6.7 17.44 4/1/08 86,429 218,974
John W. Nepute..................................... 7,200 6.1 17.44 4/1/08 79,021 200,205
Richard E. Bond.................................... 5,400 4.6 17.44 4/1/08 59,265 150,154
Irv Yoder.......................................... 4,725 4.0 17.44 4/1/08 51,857 131,385
</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 Executive Officers at January 2,
1999:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kay L. Toolson.................................................. 13,500 33,752 $ 254,813 $ 522,918
James V. Sheldon................................................ 1,575 17,550 29,232 256,923
John W. Nepute.................................................. 37,125 19,350 868,644 300,400
Richard E. Bond................................................. 2,160 11,340 42,012 162,054
Irv Yoder....................................................... 1,800 9,675 35,010 137,084
</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 $26.50 per share on
December 31, 1998 (the last trading day for the fiscal year ended January 2,
1999) 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
10
<PAGE>
practices, including executive salary levels and variable compensation programs,
both cash-based and 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 1998, 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 15% of its EBITDA in excess of $3 million in
1997 and 27% of its EBITDA in 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. At the discretion of the Committee, the participants,
other than the Chief Executive Officer, are eligible for the remainder to be
paid after the year-end, based on the Company's annual EBITDA from the Company's
audited annual financial statements. 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 administers 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
11
<PAGE>
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 1998, the Committee set aside a pool of 118,352 shares for grants to
management, of which options to purchase 45,677 shares were granted to the
executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 1998,
Mr. Toolson received a base salary of $205,000 for serving as the chief
executive officer of the Company. As a participant in the Company's bonus pool
in fiscal 1998, 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 5% of the Company's EBITDA in excess of $12 million in 1997 and
10% in 1996. Mr. Toolson received a bonus for 1998 of $1,245,000, of which
$795,000 was paid in February 1999 and the remainder deferred under an election
by Mr. Toolson. In 1998 the Compensation Committee also granted Mr. Toolson an
option to purchase 11,252 shares of the Company's Common Stock.
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. See Proposal No. 3
above, "Approval of the Company's Executive Variable Compensation Plan."
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, none of whom have
interlocking relationships as defined by the Securities and Exchange Commission.
12
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 31, 1999 (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 Named
Executive Officers, (iii) each of the Company's directors, and (iv) all
directors and executive officers as a group. 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(1) PERCENTAGE
- ---------------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Alliance Capital Management L.P.(2) .................................................... 1,219,725 9.8%
c/o The Equitable Companies Incorporated
1290 Avenue of the Americas
New York, New York 10104
Liberty Partners Holdings 2, L.L.C.(3) ................................................. 955,823 7.6%
1177 Avenue of the Americas
New York, New York 10036
Kay L. Toolson(4) ...................................................................... 1,077,892 8.6%
c/o Monaco Coach Corporation
91320 Industrial Way
Coburg, Oregon 97408
Michael J. Kluger(5).................................................................... 958,073 7.7%
Lee A. Posey(4)......................................................................... 282,100 2.3%
Carl E. Ring, Jr.(5).................................................................... 955,823 7.6%
Richard A. Rouse(4)..................................................................... 56,942 *
Roger A. Vandenberg..................................................................... 444,786 3.6%
James V. Sheldon(4)..................................................................... 13,724 *
John W. Nepute(4)....................................................................... 84,445 *
Richard E. Bond(4)...................................................................... 8,576 *
Irv Yoder(4)............................................................................ 5,220 *
All directors and executive officers as a group (12 persons)............................ 2,938,035 23.3%
</TABLE>
- ------------------------
* Less than one percent.
(1) Applicable percentage of beneficial ownership is based on 12,496,050 shares
of Common Stock outstanding as of March 31, 1999 together with applicable
options for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, 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 31, 1999 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) Information based solely on a joint Schedule 13G/A filed on February 16,
1999 by, inter alia, The Equitable Companies Incorporated. Alliance Capital
Management L.P. is a subsidiary of The Equitable Companies Incorporated. Of
the 1,219,725 shares, sole voting power is claimed as to 25,025 shares, and
shared voting power is claimed as to 1,194,700 shares.
13
<PAGE>
(3) Information based partly on a joint Schedule 13G/A (the "Liberty 13G") filed
on February 16, 1999 by, inter alia: Liberty Partners Holdings 2, L.L.C.
("LLC"); Liberty Partners, L.P. ("LP"), the manager of LLC; Liberty Capital
Partners, Inc. ("LCP"), LP's general partner; and Carl E. Ring, Jr. and
Michael J. Kluger, who are directors and stockholders of LCP. The reporting
persons in the Liberty 13G expressly disclaim any assertion or presumption
that one or more of such persons constitute a "group" for purposes of
Section 13(g) of the Exchange Act of 1934. Information also based on
correspondence between the Company and LCP.
(4) Includes the number of shares subject to options which are exercisable
within 60 days of March 31, 1999 by the following persons: Mr. Toolson
(22,502 shares), Mr. Posey (3,600 shares), Mr. Rouse (18,000 shares), Mr.
Sheldon (4,275 shares), Mr. Nepute (43,290 shares), Mr. Bond (4,860 shares),
and Mr. Yoder (4,095 shares).
(5) Includes, solely for purposes of this table, 955,823 shares owned by Liberty
Partners Holdings 2, L.L.C. and covered by the Liberty 13G. See footnote 3
above. For Mr. Kluger, also includes 2,250 shares held directly. The address
for Messrs. Kluger and Ring is c/o Liberty Capital Partners, Inc., 1177
Avenue of the Americas, New York, New York 10036.
14
<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 December 31, 1993 at the closing price
for the Company's stock on such date, 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.
<TABLE>
<CAPTION>
MONACO PEER GROUP NASDAQ
----------- ------------- -----------
<S> <C> <C> <C>
31-Dec-93 100.0 100.0 100.0
31-Mar-94 111.1 94.9 95.7
30-Jun-94 105.6 82.6 90.9
30-Sep-94 111.1 98.9 98.4
30-Dec-94 113.0 84.5 96.8
31-Mar-95 118.5 98.5 105.2
30-Jun-95 118.5 86.8 120.2
29-Sep-95 93.5 86.4 134.3
29-Dec-95 66.7 105.4 135.4
29-Mar-96 105.6 107.5 141.8
28-Jun-96 92.6 131.5 152.6
30-Sep-96 94.5 143.7 157.9
31-Dec-96 120.4 139.4 166.2
31-Mar-97 132.4 118.4 157.3
30-Jun-97 179.6 131.9 185.6
30-Sep-97 175.0 150.8 217.0
31-Dec-97 188.9 181.6 202.2
31-Mar-98 290.7 208.5 236.3
30-Jun-98 325.0 192.1 243.9
30-Sep-98 280.6 149.4 218.1
31-Dec-98 441.7 181.1 282.3
</TABLE>
15
<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 2, 1999, all filing requirements
applicable to its officers, directors and ten percent stockholders were met,
except as follows. Each of Pat Carroll, Marty Garriott and Irv Yoder did not
timely file a Form 3 during 1998 after becoming subject to the reporting
requirements of Section 16(a). The Company is not aware of any transactions by
Messrs. Carroll, Garriott or Yoder which would have required the filing of a
Form 4. Lee Posey did not timely file one Form 4 during 1998, covering one
transaction.
FOR THE BOARD OF DIRECTORS
Richard E. Bond
SECRETARY
April 17, 1999
16
<PAGE>
[EXHIBIT A]
MONACO COACH CORPORATION
EXECUTIVE VARIABLE COMPENSATION PLAN
1. PURPOSES OF THE PLAN. The purpose of the Monaco Coach Corporation
Executive Variable Compensation Plan (the "Plan") is to motivate and reward
eligible executives of the Company by making a significant portion of their cash
compensation directly dependent upon achieving key strategic, financial, and
operational objectives. It is the Company's intention that the compensation paid
hereunder will qualify as "performance-based" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended, and will thereby be
deductible by the Company.
2. DEFINITIONS.
(a) "AWARD" means, with respect to each Participant, the award
determined for a Performance Period. Each Award is determined by a formula
for a Performance Period, subject to the Committee's authority under 6(e) to
reduce the Award otherwise payable.
(b) "BOARD" means the Board of Directors of the Company.
(c) "COMMITTEE" means the Compensation Committee of the Board, or a
sub-committee of the Compensation Committee, which shall consist solely of
two or more members of the Board who are not employees of the Company and
who otherwise qualify as "outside directors" within the meaning of Section
162(m).
(d) "COMPANY" means Monaco Coach Corporation.
(e) "COVERED EMPLOYEE" means a "covered employee" within the meaning of
Section 162(m).
(f) "PARTICIPANT" means an eligible executive of the Company
participating in the Plan for a Performance Period.
(g) "PERFORMANCE-BASED COMPENSATION" means compensation that is intended
to qualify as "performance-based compensation" within the meaning of Section
162(m).
(h) "PERFORMANCE PERIOD" means the time period with respect to which an
Award is earned and paid. Performance Periods under the Plan shall be
annual, semi-annual and/or quarterly periods.
(i) "PLAN" means this Executive Variable Compensation Plan.
(j) "PLAN YEAR" means the Company's fiscal year, which is currently the
twelve (12) month period that ends on the Saturday closest to December 31.
(k) "SECTION 162(m)" means Section 162(m) of the Internal Revenue Code
of 1986, as amended, or any successor to Section 162(m), as that Section may
be interpreted from time to time by the Internal Revenue Service, whether by
regulation, notice or otherwise.
3. ADMINISTRATION OF THE PLAN.
(a) The Committee shall be responsible for the general administration
and interpretation of the Plan and for carrying out its provisions. The
Committee may delegate specific administrative tasks to Company employees or
others as appropriate for proper administration of the Plan. Subject to the
limitations on Committee discretion imposed under Section 162(m), the
Committee
A-1
<PAGE>
shall have such powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation, the following powers and
duties, but subject to the terms of the Plan:
(i) discretionary authority to construe and interpret the terms of
the Plan, and to determine eligibility, Awards and the amount, manner and
time of payment of any Awards hereunder;
(ii) to prescribe forms and procedures for purposes of Plan
participation and distribution of Awards; and
(iii) to adopt rules, regulations and bylaws and to take such actions
as it deems necessary or desirable for the proper administration of the
Plan.
(b) All decisions of the Committee are subject to ratification by the
Board.
(c) Any rule or decision by the Committee that is not inconsistent with
the provisions of the Plan shall be conclusive and binding.
4. ELIGIBILITY. The employees eligible to participate in the Plan for a
given Performance Period shall be all executive officers and other key employees
of the Company designated by the Committee who are or may reasonably be expected
to become Covered Employees, as determined by the Committee in its sole
discretion. No person shall be automatically entitled to participate in the
Plan.
5. PERFORMANCE TARGETS. For each Performance Period the Committee shall
establish Company performance measures and objectives as provided herein. Such
performance measures and objectives shall be established in writing in advance
of such date as is permitted by Section 162(m). A Participant's bonus
opportunity shall become payable as an Award based upon the extent to which the
Company meets or exceeds such pre-established performance measures.
(a) PERFORMANCE MEASURES. The primary measure of Company performance
shall be earnings before interest, taxes, depreciation and amortization
(EBITDA).
(b) EFFECTS OF MERGER AND ACQUISITIONS. Non-recurring expenses related
to the impact of any acquisitions or mergers shall be excluded in
determining whether the performance measures described above have been
achieved.
6. AWARD PAYMENT
(a) CERTIFICATION. The Committee shall certify in writing that all of
the applicable performance criteria have been met prior to any payments
under this Plan.
(b) FORM OF DISTRIBUTIONS. The Company shall distribute all Awards to
the Participant in cash.
(c) TIMING OF DISTRIBUTIONS. Subject to Sections 6(d) and (e) below,
the Company shall distribute amounts payable to Participants as soon as is
practicable following the determination of the Award for a Performance
Period.
(d) DEFERRAL. The Committee may defer payment of Awards, or any
portion thereof, to Covered Employees as the Committee, in its discretion,
determines to be necessary or desirable to preserve the deductibility of
such amounts under Section 162(m). In addition, a Participant may, subject
to such terms and conditions as the Committee may prescribe, elect to defer
payment of all or a portion of his or her Award.
(e) LIMITATIONS. The Committee may not increase a Covered Employee's
Award(s), but may, in its sole discretion, decrease a Covered Employee's
Award(s).
7. TERM OF PLAN. The Plan shall first apply to the Company's 1999 Plan
Year. The Plan shall continue until terminated under Section 8 of the Plan.
A-2
<PAGE>
8. AMENDMENT AND TERMINATION OF THE PLAN. The Committee may amend, modify,
suspend or terminate the Plan, in whole or in part, at any time, including the
adoption of amendments deemed necessary or desirable to correct any defect or to
supply omitted data or to reconcile any inconsistency in the Plan or in any
Award granted hereunder; provided, however, that no amendment, alteration,
suspension or discontinuation shall be made which would (i) impair any payments
to Participants made prior to such amendment, modification, suspension or
termination, unless the Committee has made a determination that such amendment
or modification is in the best interests of all persons to whom Awards have
theretofore been granted; provided further, however, that in no event may such
an amendment or modification result in an increase in the amount of compensation
payable pursuant to such Award or (ii) cause compensation that is, or may
become, payable hereunder to fail to qualify as Performance-Based Compensation.
To the extent necessary or advisable under applicable law, including Section
162(m), Plan amendments shall be subject to shareholder approval. At no time
before the actual distribution of funds to Participants under the Plan shall any
Participant accrue any vested interest or right whatsoever under the Plan except
as otherwise stated in this Plan.
9. TERMINATION OF EMPLOYMENT.
(a) In the event that a Participant's employment with the Company
terminates by reason of the Participant's retirement, total and permanent
disability or death, the Committee may, in its discretion, pay to the
Participant or the Participant's representative, as the case may be, all or
a portion of the Award for the Performance Period in which such termination
occurs.
(b) No Award shall be paid to a Participant whose employment terminates
during a Performance Period except as provided in Section 9(a) above.
10. WITHHOLDING. Distributions pursuant to this Plan shall be subject to
all applicable federal and state tax and withholding requirements.
11. EMPLOYMENT. This Plan does not constitute a contract of employment or
compensation or impose on either the Participant or the Company any obligation
to retain the Participant as an employee. This Plan does not change the status
of the Participant as an employee at will, the policies of the Company regarding
termination of employment, nor guarantee further continuing participation in the
Plan.
12. SUCCESSORS. The provisions of this Plan shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. The Plan replaces any other variable
compensation plan for the Participants.
13. NONASSIGNMENT. The rights of a Participant under this Plan shall not
be assignable or transferable by the Participant except by will or the laws of
intestacy.
14. GOVERNING LAW. The Plan shall be governed by the laws of the State of
Oregon.
A-3
<PAGE>
<TABLE>
<S><C>
- PLEASE DETACH HERE -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, AND 4.
1. Election of directors: 01 Carl E. Ring, Jr. 02 Richard A. Rouse / / FOR / / WITHHOLD
03 Roger A. Vandenberg all nominees AUTHORITY
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) / /
2. Proposal to amend the Company's Certificate of Incorporation to / / For / / Against / / Abstain
increase the authorized number of shares of Common Stock to
50,000,000 and to reduce the authorized number of shares of
Preferred Stock to 1,934,783:
3. Proposal to approve the Company's Executive Variable Compensation / / For / / Against / / Abstain
Plan:
4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP / / For / / Against / / Abstain
as the independent accountants of the Company:
And in their discretion, upon such other matter or matters which
may properly come before the meeting, and any adjournment(s) thereof.
Address Change? Mark Box / / Dated: _________________________, 1999
Indicate changes below:
/ /
Signature(s) in Box
(If there are co-owners both must sign)
(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.)
</TABLE>
<PAGE>
MONACO COACH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 19, 1999
10:00 A.M.
MONACO COACH CORPORATION INDIANA HEADQUARTERS
606 NELSON'S PARKWAY
WAKARUSA, IN
MONACO COACH CORPORATION
606 NELSON'S PARKWAY, WAKARUSA, IN PROXY
- --------------------------------------------------------------------------------
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 17,
1999, and the 1998 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 19, 1999, at 10:00
a.m. local time, at the Company's Indiana headquarters, located at 606
Nelson's Parkway, Wakarusa, Indiana, 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.
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
directors, for the amendment to the Company's Certificate of Incorporation to
increase the authorized number of shares of Common Stock to 50,000,000 and to
reduce the authorized number of shares of Preferred Stock to 1,934,783, for
approval of the Company's Executive Variable Compensation Plan, for the
ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants, and as said proxies deem advisable on such other matters as may
come before the meeting.
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. See reverse
for voting instructions
SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
