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 ss.240.14a-11(c) or ss.240.14a-12
Featherlite Mfg., Inc.
(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:
2) Aggregate number of securities to which transaction applies:
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:
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.:
3) Filing Party:
4) Date Filed:
<PAGE>
FEATHERLITE MFG., INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
May 6, 1998
The Annual Meeting of Shareholders of Featherlite Mfg., Inc. will be held
at the Company's offices, Highways 63 and 9, Cresco, Iowa, on Wednesday, May 6,
1998, at 7:00 p.m. (Central Daylight Time), for the following purposes:
1. To set the number of members of the Board of Directors at seven (7).
2. To elect directors of the Company for the ensuing year.
3. To amend the Articles of Incorporation to change the name of the Company
to Featherlite, Inc.
4. To amend the 1994 Stock Option Plan to increase the number of shares of
common stock reserved for issuance as options from 550,000 shares to
1,100,000 shares.
5. To take action upon any other business that may properly come before the
meeting or any adjournment thereof.
Only shareholders of record shown on the books of the Company at the close
of business on March 20, 1998, will be entitled to vote at the meeting or any
adjournment thereof. Each shareholder is entitled to one vote per share on all
matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing and
returning the Proxy will help avoid further solicitation expense to the Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you by
order of the Board of Directors.
Gary H. Ihrke,
Secretary
Dated: March 27, 1998
Cresco, Iowa
<PAGE>
FEATHERLITE MFG., INC.
---------------
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held May 6, 1998
------------------
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Featherlite Mfg., Inc.
(the "Company") for use at the Annual Meeting of Shareholders to be held on May
6, 1998, and at any adjournment thereof, for the purposes set forth in the
attached Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and mailing
the Proxies and soliciting material, will be borne by the Company. Directors,
officers and regular employees of the Company may, without compensation other
than their regular compensation, solicit Proxies personally or by telephone.
Any shareholder giving a Proxy may revoke it at any time prior to its use
at the meeting by giving written notice of such revocation to the Secretary or
other officer of the Company or by filing a new written Proxy with an officer of
the Company. Personal attendance at the meeting is not, by itself, sufficient to
revoke a Proxy unless written notice of the revocation or a subsequent Proxy is
delivered to an officer before the revoked or superseded Proxy is used at the
meeting.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders by means of the ballot provided on the Proxy for that purpose.
Proxies which are signed but which lack any such specification will, subject to
the following, be voted in favor of the proposals set forth in the Notice of
Meeting and in favor of the number and slate of directors proposed by the Board
of Directors and listed herein. If a shareholder abstains from voting as to any
matter, then the shares held by such shareholder shall be deemed present at the
meeting for purposes of determining a quorum and for purposes of calculating the
vote with respect to such matter, but shall not be deemed to have been voted in
favor of such matter. Abstentions, therefore, as to any proposal will have the
same effect as votes against such proposal. If a broker returns a "non-vote"
proxy, indicating a lack of voting instruction by the beneficial holder of the
shares and a lack of discretionary authority on the part of the broker to vote
on a particular matter, then the shares covered by such non-vote shall be deemed
present at the meeting for purposes of determining a quorum but shall not be
deemed to be represented at the meeting for purposes of calculating the vote
required for approval of such matter.
The mailing address of the Company's principal executive office is Highways
63 and 9, P.O. Box 320, Cresco, Iowa 52136. The Company expects that this Proxy
Statement and the related Proxy and Notice of Annual Meeting will first be
mailed to shareholders on or about March 27, 1998.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed March 20, 1998, as the
record date for determining shareholders entitled to vote at the Annual Meeting.
Persons who were not shareholders on such date will not be allowed to vote at
the Annual Meeting. At the close of business on March 20, 1998, 6,255,000 shares
of the Company's Common Stock were issued and outstanding. Such Common Stock is
the only outstanding class of stock of the Company. Each share of Common Stock
is entitled to one vote on each matter to be voted upon at the meeting. Holders
of the Common Stock are not entitled to cumulative voting rights in the election
of directors.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only persons known
to the Company to be the beneficial owners of more than five percent (5%) of the
Company's outstanding Common Stock as of March 20, 1998:
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conrad D. Clement(2) 1,600,000 25.6%
Tracy J. Clement(2) 1,000,000 16.0%
Larry D. Clement(2) 1,000,000 16.0%
Becker Capital Management, Inc. (3) 434,400 6.9%
Eric P. Clement(2) 400,000 6.4%
</TABLE>
(1) Unless otherwise indicated, the person listed as the beneficial owner
of the shares has sole voting and sole investment power over the
shares.
(2) Address: Highways 63 and 9, P.O. Box 320, Cresco, Iowa 54136.
(3) Address: 1211 SW Fifth Avenue, Suite 2185, Portland, OR 97204.
Ownership is as reported in Schedule 13G filed February 12, 1998.
These securities are beneficially owned by advisory clients of
Becker Capital Management, Inc., an investment advisor. Becker
Capital Management, Inc. disclaims beneficial ownership of such
shares.
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of March 20, 1998, by each executive officer of the
Company named in the Summary Compensation Table, by each director who is a
nominee for reelection and by all directors and executive officers (including
the named individuals) as a group:
<TABLE>
<CAPTION>
Name of Director or Officer or Number of Shares Percent
Identity of Group Beneficially Owned(1) of Class(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conrad D. Clement 1,600,000 25.6%
Tracy J. Clement 1,000,000 16.0%
Eric P. Clement 400,000 6.4%
Jeffery A. Mason 80,000 (3) 1.3%
Gary H. Ihrke 80,000 (3) 1.3%
Donald R. Brattain 39,720 (4)(5) *
Thomas J. Winkel 10,720 (4)(5) *
Kenneth D. Larson 15,720 (4)(5) *
John H. Thomson 13,720 (4)(5) *
Officers and Directors as a group (12 persons) 4,257,380 (6) 65.7%
* Less than 1%
</TABLE>
<PAGE>
(1) See Note (1) to preceding table.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them as of March 20, 1998, or within sixty
days of such date are treated as outstanding only when determining the
percent owned by such individual and when determining the percent owned by
the group.
(3) Such shares are not currently outstanding but may be purchased upon
exercise of currently exercisable options.
(4) Includes 9,720 shares which may be purchased upon exercise of currently
exercisable options.
(5) Does not include shares subject to an option which will be granted to
and become purchasable by such individual on the date of the Annual
Meeting pursuant to an automatic grant under the Company's 1994 Stock
Option Plan.
(6) Includes 211,380 shares which may be purchased upon exercise of
currently exercisable options.
<PAGE>
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Bylaws of the Company provide that the number of directors shall be
determined by the shareholders at each annual meeting. The Board of Directors
recommends that the number of directors be set at seven. Under applicable
Minnesota law, approval of the proposal to set the number of directors at seven
requires the affirmative vote of the holders of the greater of (1) a majority of
the voting power of the shares represented in person or by proxy at the Annual
Meeting with authority to vote on such matter or (2) a majority of the voting
power of the minimum number of shares that would constitute a quorum for the
transaction of business at the Annual Meeting.
In the election of directors, each Proxy will be voted for each of the
nominees listed below unless the Proxy withholds a vote for one or more of the
nominees. Each person elected as a director shall serve for a term of one year
or until his successor is duly elected and qualified. All of the nominees are
members of the present Board of Directors. If any of the nominees should be
unable to serve as a director by reason of death, incapacity or other unexpected
occurrence, the Proxies solicited by the Board of Directors shall be voted by
the proxy representatives for such substitute nominee as is selected by the
Board, or, in the absence of such selection, for such fewer number of directors
as results from such death, incapacity or other unexpected occurrence. The
election of each nominee requires the affirmative vote of a majority of the
shares represented in person or by proxy at the Annual Meeting.
The following table provides certain information with respect to the
nominees for director.
Name Age Positions Held
- ------------------------------------------------
Conrad D. Clement 54 President, Chief Executive Officer and Director
Jeffery A. Mason 57 Chief Financial Officer and Director
Tracy J. Clement 31 Executive Vice President and Director
Donald R. Brattain 57 Director
Thomas J. Winkel 55 Director
Kenneth D. Larson 57 Director
John H. Thomson 70 Director
Conrad D. Clement has been the Chairman, President and Chief Executive
Officer and a director of the Company since its inception in 1988. From 1969 to
1988, Mr. Clement was the President and principal owner of several farm
equipment and agricultural businesses. Mr. Clement is also the President and
Chief Executive Officer and a shareholder of Featherlite Credit Corporation, an
affiliate of the Company ("Featherlite Credit"). See "Certain Transactions". Mr.
Clement is the brother of Larry D. Clement and the father of Tracy J. Clement
and Eric P. Clement.
Jeffery A. Mason has been the Chief Financial Officer and Controller of the
Company since August 1989 and has been a director of the Company since June
1993. From 1969 to 1989, Mr. Mason served in various financial management
capacities with several companies, including Arthur Andersen & Co. and Carlson
Companies. Mr. Mason is a certified public accountant.
Tracy J. Clement has been Executive Vice President and a director of the
Company since 1988. Prior to 1988, Mr. Clement was a shareholder and manager of
several farm equipment and agricultural businesses with his father, Conrad D.
Clement. Mr. Clement is also an officer and shareholder of Featherlite Credit.
See "Certain Transactions."
<PAGE>
Donald R. Brattain, a director of the Company since August 1994, is the
President of Brattain & Associates, LLC, a private investment company
established in 1981. In addition, Mr. Brattain currently serves as a director of
the following companies: Everest Medical, Inc., Harmony Brook, Inc. (merger with
Culligan is to be effective March 13, 1998) and Sunrise International Leasing
Corporation.
Thomas J. Winkel, a director of the Company since August 1994, has been a
financial and management consultant in St. Paul, Minnesota since January 1,
1994. Mr. Winkel also serves as the interim President and CEO of Advanced
Bionics, Inc., a start-up medical device company. From 1990 to 1994, Mr. Winkel
was Chairman, President and Chief Executive Officer of Road Rescue, Inc., a
manufacturer of emergency response vehicles. From 1967 to 1990, Mr. Winkel
served in various professional capacities with Arthur Andersen & Co., the last
five years as Managing Partner of its St. Paul office. Mr. Winkel also serves as
a director of Marten Transport.
Kenneth D. Larson, a director of the Company since August 1994, joined
Polaris Industries in September 1988 as Executive Vice President/Operating
Officer and was named President and Chief Operating Officer in July 1989. Mr.
Larson was formerly Executive Vice President of The Toro Company. Prior to
starting with Toro in 1975, he held a number of positions with Allis-Chalmers
Corp., General Electric Co. and the Gehl Company. Mr. Larson is a director of
Polaris Industries, Inc., Destron-Fearing Corporation and MVE Holdings, Inc.
John H. Thomson, a director of the Company since August 1994, is the
Chairman of Cresco Union Savings Bank. See "Certain Transactions." Mr. Thomson
has 41 years of experience in the banking industry.
Committee and Board Meetings
The Company's Board of Directors has two standing Committees, the Audit
Committee and the Compensation Committee. The Audit Committee, whose members are
Messrs. Winkel, Brattain, Thomson and Larson, is responsible for reviewing the
Company's internal audit procedures, the quarterly and annual financial
statements of the Company and, with the Company's independent accountants, the
results of the annual audit. The Audit Committee met twice during fiscal 1997.
The Compensation Committee, whose members are Messrs. Brattain, Winkel, Larson
and Thomson, recommends compensation of officers of the Company. The
Compensation Committee met once during fiscal year 1997. The Board does not have
a nominating committee.
During fiscal 1997, the Board held four meetings. Each director attended
75% or more of the total number of meetings of the Board and of Committees of
which he was a member.
Directors' Fees
Directors who are not employees of the Company are compensated at the rate
of $2,000 per Board meeting plus $1,000 per quarter. In addition, pursuant to
the Company's 1994 Stock Option Plan, as amended, nonemployee directors will
receive automatic grants of 3,000 shares of nonqualified stock options upon
their initial election to the Board and upon their re-election by the
shareholders. The exercise price shall be 100% of the Common Stock's current
fair market value as of the date of grant. Each nonqualified stock option
granted to nonemployee directors shall be immediately exercisable and shall
expire five (5) years after the date of grant. As of May 7, 1997, the date of
the 1997 Annual Meeting, Messrs. Donald R. Brattain, Thomas J. Winkel, Kenneth
D. Larson and John H. Thomson each received an option for the purchase of 3,000
shares at an exercise price of $6.875 per share.
CERTAIN TRANSACTIONS
Featherlite Credit Corporation ("Featherlite Credit"), which provides
retail financing to customers of the Company's dealers, is wholly-owned by the
following officers and directors of the Company: Conrad D. Clement (40%), Tracy
J. Clement (25%), Larry D. Clement (25%), and Eric P. Clement (10%).
<PAGE>
In 1997, 1996 and 1995 the Company entered into agreements with Featherlite
Credit Corporation (Credit) to pay Credit a fee for services Credit provides in
connection with financing transactions related to the sale or lease of
Featherlite trailers and other related matters such as development of the
Featherlite Master Lease program. Credit agreed to reimburse the Company for
costs and expenses directly related to Credit which are paid by the Company,
such as wages and related costs of Credit employees. The Company paid or accrued
$42,000 for Credit in 1997 and Credit paid or accrued $96,000 for the Company.
This Program was terminated in May, 1997.
Featherlite Credit leases trailers and coaches to outside parties under
operating leases with terms varying from three to six years. It buys trailers
and coaches from Featherlite dealers and in some cases, directly from the
Company at normal selling prices and pays for the trailers at the time the lease
is signed. Aggregate trailer sales of $1,080,000 were made by the Company to
Credit in 1997.
Clement Auto and Truck, Inc. ("CATI"), which is wholly-owned by Larry D.
Clement, is an authorized FEATHERLITE(R) dealer located in Fort Dodge, Iowa.
Sales to CATI were $1,246,000 in 1997. All such sales were on terms and
conditions comparable to those available to other Company dealers. CATI was
indebted to the Company for transactions related to such sales in the amount of
$38,000 at December 31, 1997.
During March 1993, the Company entered into a four-year lease agreement
with Conrad D. Clement, Tracy J. Clement and Eric P. Clement for three truck
tractors, each owned one-third by such individuals. Such lease requires monthly
payments of $5,625 over the lease term, which expired in February 1997. In 1997,
payments under this lease totaled $33,750.
During May 1994, the Company entered into a five-year lease agreement with
Conrad D. Clement, Tracy J. Clement and Eric P. Clement, each equal owners of a
loader. Aggregate payments under this lease will total $118,500 over the lease
term. In addition, the Company insures the loader and pays all ordinary
maintenance and expenses related to the loader. In 1997, payments under this
lease totaled $23,712.
John H. Thomson, a director of the Company, is the Chairman and President
of Cresco Union Savings Bank in Cresco, Iowa. At December 31, 1996 the Company
was indebted to Cresco Union Savings Bank in the aggregate amount of $385,000.
During 1997, this indebtedness was repaid as part of new financing provided by
Firstar Bank, N.A.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors of the Company is composed of
directors Donald R. Brattain, Thomas J. Winkel, Kenneth D. Larson and John H.
Thomson. None of the members of the Committee is or ever has been an employee or
an officer of the Company and none is affiliated with any entity (other than the
Company) with which an executive officer of the Company is affiliated.
Compensation Plan. The executive compensation plan adopted by the
Compensation Committee is comprised of base salaries, annual performance
bonuses, long-term incentive compensation in the form of stock options (at least
for officers who are not already principal shareholders of the Company), and
various benefits in which all qualified employees of the Company participate. In
addition, the Compensation Committee from time to time may award special cash
bonuses or stock options related to non-recurring, extraordinary performance.
The Compensation Committee adopted an approach of paying annual base
salaries which are on the moderate side of being competitive in its industry,
taking into account particular positive and negative aspects of the Company's
location in rural Iowa, and of awarding cash bonuses based on achievement of
specific annual goals. The goals are established annually by the Compensation
Committee. Options are currently being determined on an individual basis.
Generally, if the Company achieves its sales, income before taxes and
return on assets objectives for the year, each executive officer will accrue a
bonus which is equal to 50 percent of the officer's base pay. If the Company's
performance is no more than 10 percent below its objectives, each officer will
<PAGE>
accrue a bonus equal to 25 percent of base pay and if the performance is 105
percent or more of each objective, each officer accrues a bonus of 55 percent of
base pay. Bonuses are prorated for Company performance which falls between these
achievement percentages. Each of the objectives is weighted as a percentage of
the total and may be achieved on a stand-alone basis. Bonuses are paid in the
calendar year following the year in which they are earned by the officers.
In 1997, the Company achieved 92 percent of the sales objective, 101
percent of the income before tax objective and 107 percent of the return on
assets objective, so each executive officer accrued a bonus equal to 44 percent
of base pay. Bonuses accrued in 1997 for each named officer appear under the
caption "Bonus" in the Summary Compensation table.
Compensation in 1997. The Compensation Committee made adjustments in the
base annual salaries of officers to reflect changes in levels of
responsibilities and individual performance. Bonuses of $399,942 were earned for
achievement of the goals established under the compensation plan. For 1998, base
salaries for executive officers named in the compensation table below are as
follows: Conrad D. Clement - $339,000; Tracy J. Clement - $212,000; Jeffery A.
Mason - $140,000; Gary Ihrke - $140,000; and Eric Clement - $121,000.
Chief Executive Officer Compensation. Conrad D. Clement served as the
Company's Chief Executive Officer in 1997. His compensation was $295,000 and he
earned a bonus of $130,390 for achieving the defined goals under the
compensation plan. For 1998, the Compensation Committee has established a base
salary of $339,000 and Mr. Clement is eligible for a cash bonus on the same
basis as other officers as described above.
Donald R. Brattain
Thomas J. Winkel
John H. Thomson
Kenneth D. Larson
Members of the
Compensation Committee
<PAGE>
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's
Executive Officer and to the Company's other executive officers whose salary and
bonus for fiscal 1997 exceeded $100,000:
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
- -------------------------------------------------------------------------------------------------------------------
Securities All
Underlying Other
Name and Fiscal Options/ Compen-
Principal Position Year Salary ($) Bonus($) Other ($) SARs(#) sation ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conrad D. Clement, 1997 285,500 130,390 1,141(1) -0- 9,500(2)
President and Chief 1996 286,000 61,950 3,649(1) -0- 9,000
Executive Officer 1995 286,000 -0- 3,638(1) -0- 9,000
- -------------------------------------------------------------------------------------------------------------------
Tracy J. Clement, 1997 175,500 82,212 10,141(1) -0- 9,500(2)
Executive Vice President 1996 176,000 38,850 2,191(1) -0- 9,000
1995 176,000 -0- 9,678(1) -0- 9,000
- -------------------------------------------------------------------------------------------------------------------
Jeffery A. Mason, Chief 1997 114,680 53,924 5,655(1) -0- 7,320(2)
Financial Officer 1996 114,680 25,620 7,320(1) 40,000 7,320
1995 114,680 -0- 5,723(1) -0- 7,320
- -------------------------------------------------------------------------------------------------------------------
Gary H. Ihrke 1997 108,100 50,830 -0- -0- 6,900(2)
Vice President of Operations 1996 107,723 24,150 -0- 40,000 6,865
& Secretary 1995 79,996 -0- -0- -0- 5,100
- -------------------------------------------------------------------------------------------------------------------
Eric P. Clement 1997 90,240 42,432 7,822(1) -0- 5,760(2)
Vice President of Sales 1996 89,951 20,160 4,929(1) -0- 5,742
1995 75,200 -0- 7,248(1) -0- 4,800
(1) Related to automobiles only.
(2) Company contribution to 401(k) Plan.
</TABLE>
<PAGE>
Option/SAR Grants During 1997 Fiscal Year
There were no options granted to the named executive officers during fiscal
1997. The Company has not granted any stock appreciation rights.
Option/SAR Exercises During 1997 Fiscal Year and Fiscal Year End Option/SAR
Values
The following table provides information related to options exercised by
the named executive officers during the 1997 fiscal year and the number and
value of options held at fiscal year end.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the Money
Options/SARs at Options/SARs at
Shares FY-End (#) FY-End ($)(1)
Aquired on Value Exercisable/ Exercisable/
Name Exercise ($) Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Conrad D. Clement -0- -0- -0- --
Tracy J. Clement -0- -0- -0- --
Jeffery A. Mason -0- -0- 80,000/20,000 131,250/37,500
Gary H. Ihrke -0- -0- 80,000/20,000 131,250/37,500
Eric P. Clement -0- -0- -0- --
</TABLE>
(1) Based on the difference between $7.875 (the closing price of the Company's
Common Stock on December 31, 1997 as reported by Nasdaq) and the option exercise
price.
Stock Performance Chart
The following chart compares the cumulative total shareholder return on the
Company's Common Stock with the S&P 500 Index and an index of peer companies
selected by the Company (the "Peer Group Index"). The comparison assumes $100
was invested on September 28, 1994 (the date the Company's Common Stock began
trading) in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
9/28/94 12/31/94 12/31/95 12/31/96 12/31/97
Featherlite $100.00 $162.50 $ 93.75 $102.08 $131.25
Peer Group 100.00 110.04 100.07 146.26 107.88
S&P 500 100.00 98.80 132.51 159.35 205.53
The Peer Group Index includes the following companies: Arctco, Inc., Harley
Davidson, Inc., Miller Industries, Inc., Polaris Industries, Inc., Spartan
Motors, Inc., Dorsey Trailers, Inc. and Wabash National Corp.
<PAGE>
AMENDMENT OF ARTICLES OF INCORPORATION
TO CHANGE CORPORATION NAME
(Proposal # 3)
At the Annual Meeting, shareholders will be asked to approve an amendment
to the Company's Articles of Incorporation to change the name of the Company
from "Featherlite Mfg., Inc." to "Featherlite, Inc." "Featherlite, Inc." more
broadly describes the scope of the Company's business. Accordingly, the Board of
Directors has adopted and recommends for shareholder approval an amendment to
the Articles of Incorporation of the Company which would change the name of the
Company to "Featherlite, Inc."
Vote Required
Adoption of the amendment to the Company's Articles of Incorporation to
change the Company's name requires the affirmative vote of the holders of the
greater of (1) a majority of the voting power of the shares represented in
person or by proxy at the Annual Meeting with authority to vote on such matter
or (2) a majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the Annual Meeting.
APPROVAL OF INCREASE IN SHARES RESERVED FOR 1994 STOCK OPTION
PLAN
(Proposal No. 4)
General
The Board of Directors has adopted, subject to shareholder approval, an
increase in the number of shares of the Company's Common Stock reserved for
issuance under the Company's 1994 Stock Option Plan (the "Plan") from 550,000 to
1,100,000.
A general description of the Plan is set forth below, but such description
is qualified in its entirety by reference to the full text of the Plan, a copy
of which may be obtained without charge upon written request to the Company's
Chief Financial Officer.
Description of Plan
Purpose. The purpose of the Plan is to promote the success of the Company
by facilitating the employment and retention of competent personnel and by
furnishing incentive to directors, officers, employees and key consultants upon
whose efforts the success of the Company will depend to a large degree.
Term. Incentive stock options may be granted under the Plan for a period
of ten years from the date of adoption of the Plan by the Board of Directors.
Nonqualified stock options, may be granted pursuant to the Plan until the Plan
is discontinued or terminated by the Board.
Administration. The Plan may be administered by the Board of Directors or
a Committee of the Board of Directors (the "Committee"). The Plan gives broad
powers to the Committee to administer and interpret the Plan, including the
authority to select the individuals to be granted options and to prescribe the
particular form and conditions of each option granted.
<PAGE>
Eligibility. All employees of the Company or any subsidiary are eligible
to receive incentive stock options pursuant to the Plan. All employees,
directors and officers of, and consultants and advisors to, the Company or any
subsidiary are eligible to receive nonqualified stock options. As of March 9,
1998, the Company had approximately 1,431 employees (of which eight are
officers) and four directors who are not employees.
Options. When an option is granted under the Plan, the Committee at its
discretion specifies the option price, the type of option (either "incentive" or
"nonqualified") to be granted, and the number of shares of Common Stock which
may be purchased upon exercise of the option. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of the Company's
Common Stock and, unless otherwise determined by the Committee, the option price
of a nonqualified option will not be less than 100% of the fair market value of
the Company's Common Stock on the date of grant. The market value per share of
the Company's Common Stock on March 9, 1998 was $8.19. The term during which the
Option, may be exercised and whether the option will be exercisable immediately,
in stages or otherwise are set by the Committee, but the term of an incentive
stock option may not exceed ten years from the date of grant. Optionees may pay
for shares upon exercise of options with cash, certified check or Common Stock
of the Company valued at the stock's then fair market value. Each incentive
stock option granted under the Plan is nontransferable during the lifetime of
the optionee. Each outstanding option under the Plan may terminate earlier than
its stated expiration date in the event of the optionee's termination of
employment or other relationship with the Company.
Automatic Grants to Directors. The Plan provides for the automatic grant
of a nonqualified stock option to each nonemployee director upon his or her
initial election to the Board and upon each re-election by the shareholders. The
exercise price of each such option must be 100% of the Common Stock's fair
market value as of the date of grant. Each nonqualified stock option granted to
nonemployee directors is immediately exercisable and expires five years after
the date of grant. If the nonemployee director's membership on the Board
terminates for any reason other than death, the nonemployee director will have
thirty days to exercise the options, unless the options otherwise expire prior
to the end of that thirty day period. In the event of the nonemployee director's
death, his or her estate will have six months from the date of death to exercise
the options, unless the options expire prior to the end of that six-month
period.
Amendment. The Board of Directors may from time to time suspend or
discontinue the Plan or revise or amend it in any respect provided, (i) no such
revision or amendment may impair the terms and conditions of any outstanding
option to the material detriment of the optionee without the consent of the
optionee except as authorized in the event of merger, consolidation or
liquidation of the Company, (ii) the Plan may not, without the approval of the
shareholders, be amended in any manner that will (a) materially increase the
number of shares subject to the Plan except as provided in the case of stock
splits, consolidations, stock dividends or similar events; (b) change the
designation of the class of employees eligible to receive options; (c) decrease
the price at which options will be granted; or (d) materially increase the
benefits accruing to optionees under the Plan, and (iii) the provisions relating
to the nonqualified stock options granted to nonemployee directors may not be
amended more frequently than once every six months, unless the amendment is
required to comply with changes in the Internal Revenue Code or the Employee
Retirement Income Security Act of 1974, as amended.
Federal Income Tax Consequences of the Plan. Under present law, an
optionee will not realize any taxable income on the date a nonqualified option
is granted pursuant to the Plan. Upon exercise of the option, however, the
optionee must recognize, in the year of exercise, ordinary income equal to the
difference between the option price and the fair market value of the Company's
Common Stock on the date of exercise. Upon the sale of the shares, any resulting
gain or loss will be treated as capital gain or loss. The Company will receive
an income tax deduction in its fiscal year in which nonqualified options are
exercised, equal to the amount of ordinary income recognized by those optionees
exercising options, and must withhold income and other employment-related taxes
on such ordinary income.
<PAGE>
Incentive stock options granted under the Plan are intended to qualify for
favorable tax treatment under Section 422 of the Internal Revenue Code. Under
Section 422, an optionee recognizes no taxable income when the option is
granted. Further, the optionee generally will not recognize any taxable income
when the option is exercised if he or she has at all times from the date of the
option's grant until three months before the date of exercise been an employee
of the Company. The Company ordinarily is not entitled to any income tax
deduction upon the grant or exercise of an incentive stock option. Certain other
favorable tax consequences may be available to the optionee if he or she does
not dispose of the shares acquired upon the exercise of an incentive stock
option for a period of two years from the granting of the option and one year
from the receipt of the shares.
Plan Benefits. The table below shows the total number of stock options
that have been received by the following individuals and groups under the Plan:
Total Number of
Name and Position/Group Options Received(1)
Conrad D. Clement, President and Chief
Executive Officer 0
Tracy J. Clement, Executive Vice President 0
Jeffery A. Mason, Chief Financial Officer 100,000
Gary H. Ihrke, Vice President of Operations 100,000
Eric P. Clement, Vice President of Sales 0
Current Executive Officer Group 212,500
Current Non-executive Officer Director Group 38,880
Current Non-executive Officer Employee Group 60,000
(1) This table reflects only the total stock options granted as of March
9, 1998, without taking into account exercises or cancellations.
Because future grants of stock options are subject to the
discretion of the Committee, the future benefits that may be
received by these individuals or groups under the Plan cannot be
determined at this time, except for the automatic grants to
nonemployee directors as described above.
Vote Required; Recommendation
The Board of Directors recommends that the shareholders approve the increase in
the shares reserved for the 1994 Stock Option Plan. Approval of the increase
requires the affirmative vote of the greater of (i) a majority of the shares
represented at the meeting with authority to vote on such matter or (ii) a
majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the meeting.
<PAGE>
INDEPENDENT AUDITORS
McGladrey & Pullen, LLP acted as the Company's independent auditors for the
1997 fiscal year, and the Company has selected McGladrey & Pullen, LLP as its
independent auditors for the current fiscal year ending December 31, 1998.
A representative of McGladrey & Pullen, LLP is expected to be present at
the Annual Meeting, will have the opportunity to make any desired comments, and
will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10 percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% shareholders ("Insiders") are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company, during fiscal year ended December 31, 1997 all Section
16(a) filing requirements applicable to Insiders were complied with.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1998 Annual Meeting must be received by the
Company at its offices by November 28, 1998 to be considered for inclusion in
the Company's proxy statement and related proxy for the 1999 Annual Meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, including financial statements, accompanies this Notice
of Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy soliciting material.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST. REQUESTS SHOULD BE SENT TO CHIEF FINANCIAL
OFFICER, FEATHERLITE MFG., INC., HIGHWAYS 63 AND 9, BOX 320, CRESCO, IOWA 52136.
Dated: March 27, 1998
Cresco, Iowa
<PAGE>
FEATHERLITE MFG., INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Conrad D. Clement and Tracy J. Clement, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of
Featherlite Mfg., Inc. registered in the name of the undersigned, at the Annual
Meeting of the Shareholders to be held on Wednesday, May 6, 1998, at 7:00 p.m.
Central Daylight Time, at the Company's offices, Highway 63 and 9, Cresco, Iowa,
and at all adjournments of such meeting. The undersigned hereby revokes all
proxies previously granted with respect to such meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
<TABLE>
<S><C>
FEATHERLITE MFG., INC. ANNUAL MEETING
The Board of Directors recommends that you vote "FOR" the following proposals:
1. SET NUMBER OF DIRECTORS AT SEVEN: [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS:
1-Conrad D. Clement 2-Jeffery A. Mason 3-Tracy J. Clement [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
4-Donald R. Brattain 5-Thomas J. Winkel 6-Kenneth D. Larson listed to the left (except) to vote for all nominees
7-John H. Thomson as specified below). listed to the left.
(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.) -----------------------------------
3. To amend the Articles of Incorporation to change the name of the Company to
Featherlite, Inc. [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To amend the 1994 Stock Option Plan to increase the number of shares of Common
Stock reserved for issuances as options from 550,000 shares to 1,100,000 shares. [ ] FOR [ ] AGAINST [ ] ABSTAIN
5. OTHER MATERS: In their discretion, the appointed proxies are authorized to vote upon such other business as may properly come
before the Meeting or any adjournment.
Check appropriate box Date NO. OF SHARES
Indicate changes below: -----------------
Address Change? [ ] Name Change? [ ]
-------------------------------------------
Signature(s) in Box
PLEASE DATE AND SIGN ABOVE exactly as name appears
at the left, indicating, where appropriate, official
position or representative capacity. If stock is
held in joint tenancy, each joint owner should sign.
</TABLE>
