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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
SIMPSON MANUFACTURING CO., INC.
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(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)(4)
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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Notes:
<PAGE>
SIMPSON MANUFACTURING CO., INC.
4637 Chabot Drive, Suite 200
Pleasanton, California 94588
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The annual meeting of shareholders of Simpson Manufacturing Co., Inc.
(the "Company"), a California Corporation, will be held at 3:00 p.m.,
Pacific Daylight Time, on May 20, 1998, at the Simpson Strong-Tie Company
Inc. training facility located at 1470 Doolittle Drive, San Leandro,
California, for the following purposes:
1. To elect seven directors to the Company's Board of Directors,
each to hold office until his or her successor is elected and qualifies or
until his or her earlier resignation or removal.
2. To consider and act upon a proposal to ratify the selection
of Coopers & Lybrand L.L.P. as the Company's independent auditors for the
current fiscal year.
3. To transact such other business as may properly come before
the meeting.
At the conclusion of the Annual Meeting of Shareholders, a tour of the
Company's San Leandro facility will be conducted for interested
shareholders.
Only shareholders of record as of March 23, 1998, are entitled to
notice of and will be entitled to vote at this meeting or any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen B. Lamson
Secretary
Pleasanton, California
April 15, 1998
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED
TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN
THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS
VOTED.
<PAGE>
SIMPSON MANUFACTURING CO., INC.
4637 Chabot Drive, Suite 200
Pleasanton, California 94588
April 15, 1998
PROXY STATEMENT
Solicitation and Voting of Proxies
The accompanying proxy is solicited on behalf of the Board of
Directors of Simpson Manufacturing Co., Inc., a California Corporation (the
"Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Simpson Strong-Tie Company Inc. ("Simpson Strong-Tie" or
"SST") training facility located at 1470 Doolittle Drive, San Leandro,
California, on May 20, 1998, at 3:00 p.m., Pacific Daylight Time, or any
adjournment (the "Meeting"). Only holders of record of the Company's Common
Stock at the close of business on March 23, 1998, will be entitled to vote
at the Meeting. At the close of business on that date, the Company had
11,544,823 shares of Common Stock outstanding and entitled to vote. A
majority, or 5,772,412, of these shares, present in person or by proxy,
will constitute a quorum for the transaction of business. This Proxy
Statement and the Company's Annual Report to Shareholders for the year
ended December 31, 1997, are being mailed to each shareholder on or about
April 15, 1998.
Revocability of Proxy
A shareholder who has given a proxy may revoke it at any time before
it is exercised at the Meeting, by (1) delivering to the Secretary of the
Company (by any means, including facsimile) a written notice stating that
the proxy is revoked, (2) signing and so delivering a proxy bearing a later
date or (3) attending the Meeting and voting in person (although attendance
at the Meeting will not, by itself, revoke a proxy). If, however, a
shareholder's shares are held of record by a broker, bank or other nominee
and that shareholder wishes to vote at the Meeting, the shareholder must
bring to the Meeting a letter from the broker, bank or other nominee
confirming the shareholder's beneficial ownership of the shares to be
voted.
Expenses of Proxy Solicitation
The expenses of this solicitation of proxies will be paid by the
Company. Following the original mailing of this Proxy Statement and other
soliciting materials, the Company or its agents may also solicit proxies by
mail, telephone or facsimile or in person.
Voting Rights
The holders of the Company's Common Stock are entitled to one vote per
share on any matter submitted to a vote of the shareholders, except that,
subject to certain conditions, shareholders may cumulate their votes in the
election of directors, and each shareholder may give one candidate a number
of votes equal to the number of directors to be elected multiplied by the
number of shares held by such shareholder or may distribute such
shareholder's votes on the same principle among as many candidates as such
shareholder thinks fit. No shareholder will be entitled, however, to cumulate
votes (that is, cast for any nominee a number of votes greater than the
number of votes that the shareholder normally is entitled to cast) unless the
nominees' names have been placed in nomination prior to the voting and the
shareholder gives notice at the Meeting prior to the voting of the
shareholder's intention to cumulate the shareholder's votes. If any one
shareholder gives such notice, all shareholders may cumulate their votes for
nominees. In the election of directors, the nominees receiving the highest
number of affirmative votes of the shares entitled to be voted for them up to
the number of directors to be elected by such shares are elected. Votes
against a nominee and votes withheld have no legal effect.
<PAGE>
The Board of Directors expects all nominees named below to be available
for election. In case any nominee is not available, the proxy holders may
vote for a substitute. The Company knows of no specific matter to be brought
before the Meeting that is not identified in the notice of the Meeting or
this Proxy Statement. If, however, proposals of shareholders that are not
included in this Proxy Statement are presented at the Meeting, the proxies
will be voted in the discretion of the proxy holders. Regulations of the
Securities and Exchange Commission permit the proxies solicited by this Proxy
Statement to confer discretionary authority with respect to matters of which
the Company is not aware a reasonable time before the Meeting. Accordingly,
the proxy holders may use their discretionary authority to vote with respect
to any such matter pursuant to the proxies solicited hereby.
Directors will be elected at the Meeting by a plurality of the votes
cast at the Meeting by the holders of shares represented in person or by
proxy. Approval of Proposal No. 2 will require the affirmative vote of a
majority of the votes cast at the Meeting by the holders of shares
represented in person or by proxy. Abstentions and broker nonvotes are
counted as shares present for determination of a quorum but are not counted
as affirmative or negative votes on any item to be voted upon and are not
counted in determining the number of shares voted on any item.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 28,
1998, unless otherwise indicated, with respect to the beneficial ownership
of the Company's Common Stock by (1) each shareholder known by the Company
to be the beneficial owner of more than 5% of the Company's Common Stock,
(2) each director of the Company, (3) each person currently serving as an
executive officer of the Company named in the Summary Compensation Table
(see "Executive Compensation" below), and (4) all current executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Name and, for Each 5% Amount and Nature of Percent
Beneficial Owner, Address Beneficial Ownership(1) of Class
- ------------------------------------ -------------------------- --------
<S> <C> <C>
Barclay Simpson(2) 3,700,872 32.1%
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588
Thomas J Fitzmyers(3) 733,242 6.2%
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588
Scudder Kemper Investments, Inc.(4) 695,100 6.0%
Two International Place
Boston, MA 02110-4103
Royce & Associates, Inc. and
Royce Management Company(5) 641,800 5.6%
1414 Avenue of the Americas
New York, NY 10019
Stephen B. Lamson(6) 251,000 2.2%
Donald M. Townsend(7) 118,947 1.0%
Alan R. McKay(8) 5,000 *
Earl F. Cheit(8) 3,000 *
Sunne Wright McPeak(8) 3,000 *
Barry Lawson Williams(9) 1,000 *
All current executive officers
and directors as a group(10) 4,516,061 38.0%
- ---------------------
* Less than 1%
</TABLE>
(1) The information in this table is based upon information supplied by
officers and directors, and, with respect to principal shareholders,
statements on Schedule 13D or 13G filed with the Securities and
Exchange Commission. Unless otherwise indicated below, the persons
named in the table had sole voting and sole investment power with
respect to all shares beneficially owned, subject to community
property laws where applicable.
<PAGE>
(2) Includes 150,000 shares owned by the Company's profit sharing trusts,
of which Messrs. Simpson, Fitzmyers and Lamson are the trustees and
share voting and dispositive power, as to which shares such trustees
disclaim beneficial ownership except to the extent of their
participation as beneficiaries of one of such trusts. Includes 500
shares subject to options granted under the 1994 Stock Option Plan
that are exercisable within 60 days.
(3) Includes 211,610 shares subject to options granted under the 1994
Stock Option Plan that are exercisable within 60 days. Includes
150,000 shares owned by the Company's profit sharing trusts, of which
Messrs. Simpson, Fitzmyers and Lamson are the trustees and share
voting and dispositive power, as to which shares such trustees
disclaim beneficial ownership except to the extent of their
participation as beneficiaries of one of such trusts.
(4) Scudder Kemper Investments, Inc. ("Scudder") Scudder beneficially
owned 695,100 shares of the Company's Common Stock as of December 31,
1997, and had investment power with respect to all 695,100 shares,
sole power to vote or to direct the vote of 217,900 shares and shared
power to vote or direct the vote of 323,200 shares.
(5) Royce & Associates, Inc. ("RAI") and Royce Management Company ("RMC")
beneficially owned an aggregate of 641,800 shares as of December 31,
1997, of which RAI had sole power to vote or direct the vote and to
dispose or direct the disposition of 611,800 shares and RMC had sole
power to vote or direct the vote and to dispose or direct the
disposition of 30,000 shares. Charles M. Royce may be deemed to be a
controlling person of RAI and RMC. Mr. Royce disclaimed beneficial
ownership of the shares beneficially owned by RAI and RMC.
(6) Includes 54,548 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days. Includes 150,000
shares owned by the Company's profit sharing trusts, of which Messrs.
Simpson, Fitzmyers and Lamson are the trustees and share voting and
dispositive power, as to which shares such trustees disclaim
beneficial ownership except to the extent of their participation as
beneficiaries of one of such trusts.
(7) Includes 51,169 shares subject to options granted under the 1994 Stock
Option Plan that are exercisable within 60 days.
(8) Includes 3,000 shares subject to options granted under the Company's
1995 Independent Director Stock Option Plan that are exercisable
within 60 days.
(9) Includes 1,000 shares subject to options granted under the Company's
1995 Independent Director Stock Option Plan that are exercisable
within 60 days.
(10) Includes 327,827 shares subject to options exercisable within 60
days, including the options described in the above notes, and 150,000
shares owned by the Company's profit sharing trusts as described in
notes 2, 3 and 6 above.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The names of the Company's directors, all of whom will be nominated
for re-election, and certain information about them are set forth below. It
is intended that shares represented by proxies in the accompanying form will
be voted for the election of the nominees listed below. Although the Board of
Directors does not know whether any nominations will be made at the Meeting
other than those set forth below, if any such nomination is made, or if votes
are cast for any candidates other than those nominated by the Board of
Directors, the persons authorized to vote shares represented by executed
proxies in the enclosed form (if authority to vote for the election of
directors or for any particular nominees is not withheld) will have full
discretion and authority to vote cumulatively and allocate votes among any or
all of the nominees of the Board of Directors in such order as they may
determine.
<TABLE>
<CAPTION>
Director
Name Age Since Position
- ----------------------------------- ----- -------- ------------------------------
<S> <C> <C> <C>
Barclay Simpson(1)(4) 76 1956 Chairman of the Board and
Director
Thomas J Fitzmyers 57 1978 President, Chief Executive
Officer and Director
Stephen B. Lamson 45 1989 Chief Financial Officer,
Treasurer, Secretary and
Director
Earl F. Cheit(2)(4) 71 1994 Director
Alan R. McKay(2)(4) 72 1994 Director
Sunne Wright McPeak(1)(3)(4) 49 1994 Director
Barry Lawson Williams(1)(2)(3)(4) 53 1994 Director
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of 1994 Stock Option Plan Committee
(4) Member of the Growth Committee
</TABLE>
The Board of Directors has not established a nominating committee.
Executive Officers
Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson are the
executive officers of the Company and are also directors and executive
officers of subsidiaries of the Company. Donald M. Townsend, age 51, a
director and the Chief Executive Officer of the Company's subsidiary, Simpson
Dura-Vent Company, Inc. ("Simpson Dura-Vent" or "SDV"), is also regarded as
an executive officer of the Company, because, by virtue of his role in
management of SDV, he performs policy-making functions for the Company.
<PAGE>
Biographical Information
Barclay Simpson has been the Chairman of the Board of Directors and a
director of the Company since 1956. Since 1982, Mr. Simpson and his wife
have owned Barclay Simpson Fine Arts Gallery, a commercial art gallery in
Lafayette, California. Mr. Simpson is also a member of the Boards of
Directors of Civic Bancorp, Calender Robinson Insurance, the University Art
Museum of the University of California at Berkeley, the California College
of Arts and Crafts and other charitable and educational institutions.
Thomas J Fitzmyers has served as President and a director of the Company
since 1978, as the President and a director of Simpson Strong-Tie since
1983 and as a director of Simpson Dura-Vent since 1982. He was appointed as
the Company's Chief Executive Officer in 1994. Mr. Fitzmyers was employed
by Union Bank from 1971 to 1978. He was a Regional Vice President when he
left Union Bank to join the Company in 1978.
Stephen B. Lamson has served as the Company's, Simpson Strong-Tie's and
Simpson Dura-Vent's Chief Financial Officer and Treasurer since 1989, as
the Company's and SDV's Secretary since 1989, as SST's Secretary since
1992, as a director of the Company since 1990, as a director of SST since
1992 and as a director of SDV since 1989. From 1980 to 1989, Mr. Lamson was
with Coopers & Lybrand. He was an audit manager when he left that firm to
join the Company in 1989.
Earl F. Cheit has been a Senior Advisor to the Asia Foundation on Asia-
Pacific Economic Affairs since 1984 and became Dean Emeritus of the Haas
School of Business at the University of California, Berkeley, in 1992. He
is currently a director of The Shaklee Corporation and CNF Transportation,
Inc. and a Trustee of Mills College.
Alan R. McKay has been the President of Alan R. McKay & Associates, an
engineering consulting firm based in Lafayette, California, since 1959. He
is a registered civil, structural and geotechnical engineer in the State of
California with extensive experience in connector applications.
Sunne Wright McPeak is the President and Chief Executive Officer of the Bay
Area Council, a business sponsored organization founded in 1945 that
promotes economic activity and environmental quality in the region. Prior
to this position, she was the President and Chief Executive Officer of the
Bay Area Economic Forum, a partnership of government, business, academic
and foundation sectors of the nine San Francisco Bay Area counties. From
1979 through 1994, she served on the Board of Supervisors of Contra Costa
County, including several terms as Chair. Her most recent term as Chair
concluded in 1992. In addition, Ms. McPeak served as President of the
California State Association of Counties and has been a member of the
advisory boards of the Urban Land Institute and California State
University, Hayward. She is currently a director of the California
Foundation for the Environment and the Economy.
Barry Lawson Williams has been President of Williams Pacific Ventures Inc.,
a venture capital and real estate consulting firm, since 1987. From 1989
until its sale in 1992, he was also Chief Executive Officer and owner of
C.N. Flagg Power Inc. He is a director of PG&E Corporation, CH2M HILL
Companies, Ltd., The U.S.A. Group, Inc., Newhall Land and Farming Co. Inc.,
Northwestern Mutual Life Insurance Co. and CompUSA, Inc.
Donald M. Townsend (who is not a director nominee) has been employed by the
Company since 1981 and has served as a director of Simpson Dura-Vent since
1984 and as its President and Chief Operating Officer since 1991. He was
appointed as SDV's Chief Executive Officer in 1994. From 1984 to 1991, he
was the Vice President and General Manager of SDV.
<PAGE>
Attendance at Meetings
The Board of Directors held seven meetings and its committees held a
total of five meetings in 1997. Each director attended 100% of the meetings
of the Board of Directors and the committees on which he or she served in
1997.
THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF EACH OF THE SEVEN NOMINATED
DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. as its
principal independent auditors to audit the Company's financial statements
for 1998, and the shareholders will be asked to ratify such selection.
Coopers & Lybrand L.L.P. has audited the Company's financial statements
since prior to 1975. A representative from Coopers & Lybrand L.L.P. will be
present at the Meeting, will be given an opportunity to make a statement at
the Meeting if he or she desires to do so, and will be available to respond
to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF SELECTION OF COOPERS &
LYBRAND L.L.P.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below provides information relating to compensation for the
years ended December 31, 1997, 1996 and 1995, for the Chief Executive
Officer and the other three most highly compensated executive officers of
the Company and the Chief Executive Officer of SDV (determined as of the
end of 1997) (collectively, the "Named Executive Officers"). The amounts
shown include compensation for services in all capacities that were
provided to the Company and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-------------------------------
Annual Compensation Awards (1) Payouts
------------------------------ ---------------------- -------
Other Securities
Annual Restricted Underlying LTIP All Other
Name and Compen- Stock Options/ Pay- Compen-
Principal Position Year Salary($) Bonus($) sation($) Awards($) SARs(#)(1) outs($) sation($)(2)
- ---------------------- ---- --------- -------- --------- ---------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas J Fitzmyers, 1997 248,832 871,575 - - 4,500 - 24,000
President and Chief 1996 230,818 664,180 12,782 - 4,500 - 22,500
Executive Officer of 1995 223,020 495,775 2,450 - - - 22,500
the Company
Barclay Simpson, 1997 150,000 480,650 - - 500 - 22,500
Chairman of the Board 1996 150,000 334,502 - - 500 - 22,500
of the Company 1995 150,000 285,241 - - - - 22,500
Stephen B. Lamson, 1997 109,692 516,428 - - 2,500 - 16,454
Chief Financial 1996 105,984 393,541 2,568 - 2,500 - 16,283
Officer and Secretary 1995 102,396 293,766 - - - - 15,359
of the Company
Donald M. Townsend, 1997 166,308 422,168 - - 2,500 - 24,000
President and Chief 1996 160,680 198,940 12,462 - 7,500 - 22,500
Executive Officer 1995 155,244 127,074 4,015 - - - 22,500
of SDV
</TABLE>
(1) Shares subject to outstanding stock options, which have exercise
prices of $23.00 to $36.64 per share.
(2) Represents contributions to the Company's profit sharing plan trusts
for the accounts of the Named Executive Officers.
<PAGE>
Employee Stock Options
The tables below provide information regarding options to purchase shares
of Common Stock granted and to be granted to the Named Executive Officers
for the year ended December 31, 1997, under the Company's 1994 Stock Option
Plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options/SARs Exercise Stock Price Appreciation
Underlying Granted to or Base Expir- for Option Term
Options/SARs Employees in Price ation --------------------------
Name Granted(#) Fiscal Year ($/share) Date(1) 0%($) 5%($) 10%($)
- -------------------- ------------ ------------- --------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J Fitzmyers 4,500 3.7% 33.31 1/1/05 - 61,027 142,219
Barclay Simpson 500 0.4% 36.64 1/1/03 - 2,936 8,503
Stephen B. Lamson 2,500 2.1% 33.31 1/1/05 - 33,904 79,010
Donald M. Townsend 2,500 2.1% 33.31 1/1/05 - 33,904 79,010
</TABLE>
(1) The date of grant is to be determined by the Committee. Each option
has a term of seven years from the date of grant except for Barclay
Simpson's, which has a term of five years from the date of grant. The
exercise price of each of these options is based on the market price
of the Company's Common Stock on December 31, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1997, OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at December 31, at December 31,
Acquired on Value 1997,(#) Exercisable/ 1997,($) Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- -------------------- ------------- ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Thomas J Fitzmyers - - 210,485/10,125 4,581,079/86,695
Stephen B. Lamson - - 53,923/5,625 1,418,160/48,164
Donald M. Townsend - - 49,294/11,875 1,119,454/144,492
Barclay Simpson - - 375/1,125 6,510/8,513
</TABLE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Boards of Directors of the Company
comprises Barclay Simpson, the Chairman of the Board of the Company, and
Sunne Wright McPeak and Barry Lawson Williams, both independent directors of
the Company. Ms. McPeak and Mr. Williams have no relationships with the
Company or any of its subsidiaries other than as members of the Company's
Board of Directors and certain committees of the Company's Board of
Directors. Certain transactions to which Mr. Simpson, his affiliates and
members of his family have been parties are described below.
<PAGE>
Real Estate Transactions
The Company, directly and through its subsidiaries, leases certain of
its facilities from general partnerships (the "Partnerships") wholly or
partly comprising current or former directors, officers, employees and
shareholders of the Company and its subsidiaries. The Partnerships, their
partners, the percentage interests of such partners in the Partnerships and
the properties that the Partnerships lease, or previously leased and sold,
to the Company or a subsidiary, are as follows:
<TABLE>
<CAPTION>
Partnership Partners (percentage interests) Property Location
- --------------------- ----------------------------------------------- -----------------
<S> <C> <C>
Simpson Investment Barclay Simpson (77%), John B. Simpson (5%), San Leandro,
Company ("SIC") Anne Simpson Gattis (5%), Jean D. Simpson California
(5%), Jeffrey P. Gainsborough (2%), Julie
Marie Simpson (2%), Elizabeth Simpson Murray
(2%) and Amy Simpson (2%)
Doolittle Investors Everett H. Johnston Family Trust (23.13%), San Leandro,
Barclay and Sharon Simpson (25.51%), Thomas California
J Fitzmyers (5.24%), Judy F. Oliphant,
Successor Trustee of the Oliphant Family
Revocable Trust Agreement Dated January 27,
1993 (Survivors Trust) ("Oliphant Trust")
(20.61%), and SIC (25.51%)
Columbus-Westbelt Everett H. Johnston Family Trust (5.54%),
Investment Co. Thomas J Fitzmyers (1.10%), Oliphant Trust Columbus, Ohio
(5.54%), Barclay and Sharon Simpson
(13.31%), Richard C. Perkins Trust (5.48%),
Stephen B. Lamson (3.32%), Tyrell T. Gilb
Trust (5.54%), Doyle E. Norman (5.54%),
Stephen P. Eberhard (5.05%), Robert J.
Phelan (5.54%), Jeffrey P. Gainsborough
(11.01%), Julie Marie Simpson (11.01%),
Elizabeth Simpson Murray (11.01%) and Amy
Simpson (11.01%)
Vacaville Investors Everett H. Johnston Family Trust (49.90%), Vacaville,
Thomas J Fitzmyers (1.13%), Oliphant Trust California
(12.47%), Barclay and Sharon Simpson
(4.57%), SIC (27.50%), Richard C. Perkins
Trust (4.43%)
Vicksburg Investors Everett H. Johnston Family Trust (41.17%), Vicksburg,
Thomas J Fitzmyers (6.02%), Oliphant Trust Mississippi
(12.61%), Barclay and Sharon Simpson
(33.92%) and Richard C. Perkins Trust (6.28%)
</TABLE>
Barclay Simpson is the managing partner of SIC, a general partnership
of Mr. Simpson and his seven children. Everett H. Johnston, formerly a
director and executive officer of the Company (now retired), is the
managing partner of each Partnership other than SIC. Richard C. Perkins,
Stephen P. Eberhard and Robert J. Phelan are officers of SST and Doyle E.
Norman and Tyrell T. Gilb (both now retired) are consultants to the
Company. Sharon Simpson is Barclay Simpson's wife; and John B. Simpson,
Anne Simpson Gattis, Jean D. Simpson, Jeffrey P. Gainsborough, Julie Marie
Simpson, Elizabeth Simpson Murray and Amy Simpson are his children.
<PAGE>
Aggregate lease payments by the Company and its subsidiaries to the
Partnerships in 1997, 1996 and 1995 were, and the terms of the leases will
expire, as follows:
<TABLE>
<CAPTION>
Lease Payments Lease
---------------------------------- Expiration
Partnership 1997 1996 1995 Date
- --------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SIC $ 185,100 $ 185,100 $ 185,100 12/31/01
Doolittle Investors 239,400 231,096 230,438 12/31/01
Columbus Westbelt Investment Co. 581,064 581,064 418,525 9/30/05
Vacaville Investors 437,640 437,640 437,640 11/30/07
Vicksburg Investors 334,279 329,017 322,289 11/30/03
</TABLE>
The leases with the Partnerships are expected to continue until the
expiration of the respective terms of the leases, and they may hereafter be
renewed. The Company's future rent obligations under the continuing leases
are expected to be consistent with the rents paid in 1997, subject to
adjustments as provided in certain of the leases.
If and when any lease is proposed to be amended or renewed or any
property subject to any lease is proposed to be purchased by the Company,
the Company will enter into such transaction only with the approval of a
majority of the directors of the Company who are not employees or officers of
the Company and who are not partners of any of the Partnerships and only
after such directors satisfy themselves that such transaction will be fair,
just and reasonable as to the Company, beneficial to the Company and on terms
reasonably consistent with the terms available from unrelated parties in
similar transactions negotiated at arm's length.
The Company does not intend in the future to lease from any of the
Partnerships or any other entities controlled by any of its directors,
officers or employees any facilities that are not on or adjacent to the
property subject to the existing leases.
Cash Profit Sharing Bonus Plan
The Company maintains a cash profit sharing bonus plan for the benefit
of employees of the Company and its subsidiaries. The Company may change,
amend or terminate its bonus plan at any time. Under the bonus plan as
currently in effect, the Compensation Committee of the Board of Directors
determines a "qualifying level" for the coming fiscal year for the Company,
SDV and each branch of SST. The qualifying level is equal to the value of
the net operating assets (as defined) of the Company, SDV or the respective
branch of SST, multiplied by a rate of return on those assets. If profits
exceed the qualifying level in any fiscal quarter, a portion of such excess
profits is distributed to the eligible employees as cash bonuses. An
acceptable range of participation in the excess profits distributed as cash
bonuses and the specific amounts distributed to the Named Executive
Officers are determined by the Compensation Committee of the Board of
Directors, while the percentage of excess profits distributed and the
amounts distributed to all other participants are determined by the
executive officers. The failure to earn a cash bonus in any given quarter
does not affect the ability to earn a cash bonus in any other quarter.
Amounts paid under these programs aggregated $12.5 million, $9.3 million
and $6.6 million in 1997, 1996 and 1995, respectively, the amounts of which
paid to Named Executive Officers in 1997, 1996 and 1995 are shown in the
Summary Compensation Table above.
<PAGE>
1994 Stock Option Plan
By affording selected employees and directors of and consultants to the
Company and its subsidiaries the opportunity to buy shares of Common Stock of
the Company, the 1994 Stock Option Plan (the "Option Plan") is intended to
enhance the ability of the Company and its subsidiaries to retain the
services of persons who are now employees, directors or consultants, to
secure and retain the services of new employees, directors and consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its subsidiaries. The Option Plan was adopted by
the Company's Board of Directors and approved by the Company's shareholders
prior to the Company's initial public offering in 1994. It was amended in
1997 with shareholder approval. No more than 1,500,000 shares of Common Stock
may be sold pursuant to all options granted under the Option Plan. Common
Stock sold on exercise of options granted under the Option Plan may be
previously unissued shares or reacquired shares, bought on the market or
otherwise. Options to purchase 117,750 and 92,250 shares of Common Stock were
granted pursuant to commitments made related to the preceding fiscal years
under the Option Plan in 1997 and 1996, respectively, and options to purchase
120,250 shares of Common Stock were committed to be granted in 1997. Options
committed to be granted under the Option Plan to Named Executive Officers
in 1997 and 1996 are shown in the Summary Compensation Table above.
Profit Sharing Plans
The Company's subsidiaries maintain defined contribution profit
sharing plans for their U.S. based salaried employees (the "Salaried Plan")
and for U.S. based nonunion hourly employees (the "Hourly Plan"). An
employee is eligible for participation in a given year if he or she is an
employee on the first and last days of that calendar year and completes at
least 750 hours of service during that calendar year. As of December 31,
1997, there were 293 employees participating in the Salaried Plan and 402
employees participating in the Hourly Plan. Under the Salaried Plan and the
Hourly Plan, the Board of Directors may authorize contributions to the plan
trusts in their exclusive discretion. Contributions to the plan trusts by
the Company's subsidiaries are limited by the amount deductible for federal
income tax purposes under section 404(a) of the Internal Revenue Code.
Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson, who are Named
Executive Officers of the Company, are the trustees of the plan trusts and
are also participants in the salaried plan. The amounts contributed by the
Company for their accounts in 1997, 1996 and 1995 are shown in the Summary
Compensation Table above. Certain of the Company's foreign subsidiaries
maintain similar plans for their employees.
Compensation of Directors
The Company's directors who do not receive compensation as officers or
employees of the Company are each paid an annual retainer of $10,000 and a
fee of $1,000 for attending in person each meeting of the Board of
Directors and for attending in person each meeting of any committee held on
a day when the Board of Directors does not meet. Each outside director is
also paid $500 for each committee meeting he or she attends in person on
the same day as a Board of Directors meeting and for Board of Directors
meetings attended by telephone conference. Directors are also reimbursed
for expenses incurred in connection with their attendance at Board of
Directors and committee meetings.
1995 Independent Director Stock Option Plan
The Simpson Manufacturing Co., Inc. 1995 Independent Director Stock
Option Plan (the "Independent Director Plan") was adopted by the Board of
Directors and approved by the shareholders in 1995 and was amended by the
Board of Directors in 1997. The purpose of the Independent Director Plan is
to give independent directors of the Company an opportunity to buy shares of
Common Stock of the Company, to encourage independent directors in their
efforts on behalf of the Company and to secure their continued service to the
Company. Options to purchase 2,000 shares of Common Stock were committed to
be granted under the Independent Director Plan in 1997.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE, 1994 STOCK OPTION PLAN COMMITTEE AND
BOARD ON EXECUTIVE COMPENSATION
The Compensation Committee and the 1994 Stock Option Plan Committee of
the Board of Directors are responsible for the development and review of
the Company's compensation policy for all the salaried employees. The
overall philosophy of the Company's compensation program is to provide a
high degree of incentive to employees by creating programs that reward
achievement of specific profit goals. The Company believes that these
incentive programs based on profit targets are best suited to align the
interests of employees and shareholders. In addition, the Company does not
have any special plans for the Chief Executive Officer or other executive
officers of the Company. The absence of special plans for the executive
officers is intended to create a sense of unity and cooperation among the
Company's employees. The four elements of the Company's compensation plan
for most salaried employees and all officers are base salary, a profit
sharing retirement plan, a cash profit sharing bonus plan and the Option
Plan.
The Compensation Committee has not performed any recent salary
surveys, but based on surveys in prior years and recent raises, it believes
the base salaries for the Chief Executive Officer and other executive
officers are about average as compared to similar companies. Raises for the
officers in 1997 were 3.5% for each of Thomas J Fitzmyers, President and
Chief Executive Officer, Stephen B. Lamson, Chief Financial Officer and
Secretary, and Donald M. Townsend, President and Chief Executive Officer of
SDV. Barclay Simpson, Chairman, did not receive an increase in salary in
1997.
All U.S. based salaried employees, including the Chief Executive
Officer and other executive officers, participate in the profit sharing
plan in proportion to their salary. For 1997, 15% of all U.S. based
salaried employees' base pay will be contributed to the plan subject to the
limitations of applicable law. In 1997, Thomas J Fitzmyers, President and
Chief Executive Officer, and Donald M. Townsend, President and Chief
Executive Officer of SDV, were subject to a contribution limit under
applicable law; the Company's contribution to the profit sharing plan for
their accounts is $24,000 each.
All salaried employees except those on commission programs,
participate in the Company's quarterly cash profit sharing bonus plan.
Annually, the Compensation Committee establishes an acceptable range of
participation in the profits in excess of the qualifying level to be
distributed as cash bonuses for each profit center. The Compensation
Committee also approves the specific percentages to be distributed to the
Chief Executive Officer and other executive officers. The executive
officers determine the specific percentages for distributions to all other
participating employees. Historically the percentage of profits in excess
of the qualifying level distributed under these plans has not changed
substantially from year to year. Employees with higher levels of
responsibility typically receive higher proportions of the cash profit
sharing for their profit center. Barclay Simpson's participation rate
decreased in 1995, Thomas J Fitzmyers' and Stephen B. Lamson's
participation rates decreased slightly in 1996 and were decreased by
approximately 10% in 1997 and Donald M. Townsend's participation rate has
not changed for ten years. In 1997, the Chief Executive Officer received
350% of his base salary in cash profit sharing bonuses. Because the cash
profit sharing bonus plan is based upon a return on net operating assets,
and not subjectively determined, the Compensation Committee believes the
plan provides substantial incentive to all participating employees, not
only the Company's officers.
<PAGE>
The 1994 Stock Option Plan Committee believes an option plan is most
effective if options are granted to all participants on an objective rather
than subjective basis. Therefore, under the Option Plan, participants are
granted options if Company-wide and profit center operating goals are met.
The Compensation Committee establishes these goals at the beginning of the
year. The 1994 Stock Option Plan Committee also believes that option plans
with broad based participation are most effective. The 1994 Stock Option
Plan Committee determines each year the employees who are eligible to
participate in the Option Plan, based on job responsibilities and
contributions made to the Company. At present, over one quarter of the
Company's salaried employees participate in the Option Plan. The 1994 Stock
Option Plan Committee determines the number of options to be granted under
the Option Plan. In determining the potential grants, the 1994 Stock Option
Plan Committee considers previous stock and option awards, current options
owned, job responsibilities and contributions to the Company. These same
considerations apply to option grants to the Chief Executive Officer and
other executive officers. Because of the responsibilities of the Chief
Executive Officer and the other executive officers, their stock option
grants are higher than those of other participants who also achieve their
goals.
In 1995, the Company adopted the Independent Director Plan to give the
outside members of the Board of Directors an opportunity to buy shares of
Common Stock of the Company. The Independent Director Plan is administered
by the Board of Directors (as its manager and not as its trustee) and
determines which persons are eligible to be granted options. The Board of
Directors believes this kind of option plan is most effective if options
are granted to outside directors on an objective basis. Therefore, the
Board of Directors determines the number of shares subject to options that
they believe will be an appropriate incentive to be granted when an outside
director becomes a member of the Board of Directors and if Company-wide
operating goals, established by the Compensation Committee at the beginning
of the year, are met. These operating goals were met in 1997 and
accordingly, an option to purchase 500 shares was committed to be granted
to each outside director.
1994 Stock
Compensation Committee Option Plan Committee
------------------------- -------------------------
Barclay Simpson, Chair Sunne Wright McPeak, Chair
Sunne Wright McPeak Barry Lawson Williams
Barry Lawson Williams
<PAGE>
Company Stock Price Performance
The graph below compares the cumulative total shareholder return on
the Company's Common Stock from May 31, 1994, through December 31, 1997,
with the cumulative total return on the S & P 500 Index, The Nasdaq Stock
Market U.S. Index and the Dow Jones Building Materials Index over the same
period (assuming the investment of $100 in the Company's Common Stock and
in each of the indices on May 31, 1994, and reinvestment of all dividends).
In October 1997, the Company listed its Common Stock on the New York Stock
Exchange. As a result, the Company has selected the S & P 500 Index to
replace The Nasdaq Stock Market U.S. Index in 1997. Both indices are
included in the Company's comparison of cumulative total return as follows:
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC.
Comparison of Cumulative Total Return
May 31, 1994, to December 31, 1997
Nasdaq Dow Jones
Simpson Stock Building
Manufacturing S & P 500 Market - Materials
Co., Inc. Index U.S. Index Index
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
May-1994 $100 $100 $100 $100
Dec-1994 89 102 104 95
Dec-1995 111 141 147 130
Dec-1996 190 173 180 155
Dec-1997 275 231 221 189
</TABLE>
The Company's initial public offering commenced on May 26, 1994. Data is
shown beginning May 31, 1994, because data for cumulative returns on the
S & P 500 Index, The Nasdaq Stock Market U.S. Index and the Dow Jones
Building Materials Index are available only at month end.
Historical returns are not necessarily indicative of future performance.
<PAGE>
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Meeting and, so far as is known to the Board of
Directors, no matters are to be brought before the Meeting except as
specified in the notice of the Meeting. As to any business that may
properly come before the Meeting, however, it is intended that proxies, in
the form enclosed, will be voted in respect thereof in accordance with the
judgment of the persons voting such proxies.
DISCLAIMER REGARDING INCORPORATION BY REFERENCE OF THE REPORT OF THE
COMPENSATION COMMITTEE AND THE STOCK PRICE PERFORMANCE GRAPH
THE INFORMATION SHOWN IN THE SECTIONS ENTITLED "REPORT OF THE
COMPENSATION COMMITTEE AND BOARD ON EXECUTIVE COMPENSATION" AND "COMPANY
STOCK PRICE PERFORMANCE" SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY
INCORPORATES THIS INFORMATION BY SPECIFIC REFERENCE, AND SUCH INFORMATION
SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the proxy statement and form of
proxy relating to the Company's 1999 Annual Meeting of Shareholders must be
received by the Company a reasonable time before the Company's solicitation
is made, and in any event not later than December 15, 1998.
BY ORDER OF THE BOARD
Stephen B. Lamson
Secretary
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED.
