SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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GENTEX CORPORATION
(Name of Registrant as Specified in its Charter)
----------
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:
(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:
[LOGO GENTEX CORPORATION]
600 N. Centennial Street
Zeeland, Michigan 49464
NOTICE OF 2006 ANNUAL MEETING
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The Annual Meeting of the Shareholders of Gentex Corporation ("the
Company"), a Michigan corporation, will be held at The Pinnacle Center, 3330
Highland Drive, Hudsonville, Michigan, on Thursday, May 11, 2006, at 4:30 p.m.
EDST, for the following purposes:
1. To elect three directors as set forth in the Proxy Statement.
2. To ratify the appointment of Ernst & Young LLP as the Company's
auditors for the fiscal year ended December 31, 2006.
3. To transact any other business that may properly come before the
meeting, or any adjournment thereof.
Shareholders of record as of the close of business on March 17, 2006,
are entitled to notice of, to attend, and to vote at the meeting. We are pleased
to offer multiple options for voting your shares. As detailed in the
"Solicitation of Proxies" section of this notice and Proxy Statement, you can
vote your shares via the Internet, by telephone, by mail or by written ballot at
the Annual Meeting. We encourage you to use the Internet to vote your shares as
it is the most cost-effective method.
Whether or not you expect to be present at the meeting, you are urged
to promptly vote your shares using one of the methods discussed above. If you do
attend the meeting and wish to vote in person, you may withdraw your
earlier-dated Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Connie Hamblin
Connie Hamblin
Secretary
March 29, 2006
[GRAPHIC OMITTED]
GENTEX CORPORATION
600 North Centennial Street
Zeeland, Michigan 49464
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 11, 2006
QUESTIONS & ANSWERS
PROXY STATEMENT
Why am I receiving this Proxy Statement?
The Company's Board of Directors is soliciting proxies for the 2006 Annual
Meeting of Shareholders. You are receiving a Proxy Statement because you owned
shares of Gentex common stock on March 17, 2006, which entitles you to notice
of, to attend, and to vote at the meeting. By use of a Proxy, you can vote
whether or not you plan to attend the meeting. The Proxy Statement describes the
matters on which the Board would like you to vote and provides information on
those matters so that you can make an informed decision.
The notice of the Annual Meeting, Proxy Statement and Proxy are being mailed to
shareholders on or about March 29, 2006.
What will I be voting on?
o Election of three directors (see pages 6-8).
o Ratify the appointment of Ernst & Young LLP as the Company's auditors
for the fiscal year ending December 31, 2006 (see page 22).
The Board of Directors recommends a vote FOR each of the nominees to the Board
of Directors, and FOR ratification of the appointment of Ernst & Young LLP as
the Company's auditors for the fiscal year ending December 31, 2006.
How do I vote?
You can vote either in person at the Annual Meeting or by Proxy without
attending the Annual Meeting. We urge you to vote by Proxy even if you plan to
attend the Annual Meeting so that we will know as soon as possible that enough
votes will be present for us to hold the meeting. If you attend the meeting in
person, you may vote at the meeting and your Proxy will not be counted.
Please note that there are separate telephone and Internet arrangements
depending upon whether you are a holder of record [that is, if your shares are
registered in your own name with our transfer agent and you have possession of
your stock certificate(s)] or whether you hold your shares in "street name"
(that is, if your shares are held for you by your bank, broker or other record
holder).
Shareholders of record voting by Proxy may use one of the following three
options:
o Voting by Internet (log on to https://www.proxyvote.com and follow the
directions there). We recommend you vote this way as it is the most
cost-effective method; or
o Voting by toll-free telephone (instructions are on the Proxy Card or
Voting Instruction Form); or
o Filling out the enclosed Proxy Card or Voting Instruction Form, signing
it, and mailing it in the enclosed postage paid envelope.
1
If you hold your shares in "street name," please refer to the information
forwarded by your bank, broker or other holder of record to see which options
are available to you.
The telephone and Internet voting facilities for shareholders of record will
close at 11:59 p.m. EDST on May 10, 2006. If you vote over the Internet, you may
incur costs, such as telephone and Internet access charges, for which you will
be responsible. The telephone and Internet voting procedures are designed to
authenticate shareholders by the use of control numbers and to allow you to
confirm that instructions have been properly recorded.
Can I change my vote?
Yes. At any time before your Proxy is voted at the meeting, you may change your
vote by:
o Revoking it by written notice to the Secretary of the Company at the
address on the cover of the Proxy Statement;
o Delivering a later-dated Proxy (including a telephone or Internet vote);
or
o Voting in person at the meeting.
If you hold your shares in "street name," please refer to the information
forwarded by your bank, broker or other holder of record for procedures on
revoking or changing your Proxy.
How many votes do I have?
You will have one vote for every share of common stock that you owned on March
17, 2006.
How many shares are entitled to vote?
There were 153,486,860 shares of Gentex common stock outstanding as of March 17,
2006, and entitled to vote at the meeting. Each share is entitled to one vote.
How many votes must be present to hold the meeting?
Under the Company's Bylaws, a majority of all of the voting shares of the
capital stock issued and outstanding as of March 17, 2006, must be present in
person or by Proxy to hold the Annual Meeting.
What if I do not vote for some or all the matters listed on my Proxy Card?
If you return a Proxy Card without indicating your vote for some or all of the
matters, your shares will be voted as follows for any matter you did not vote
on:
o For the approval of the director nominees to the Board listed on the
card.
o For ratification of Ernst & Young LLP as the Company's auditors for the
fiscal year ended December 31, 2006.
How many votes are needed for the proposals to pass?
o The three nominees for director will be elected by a plurality of the
votes cast.
o Ratification of the appointment of Ernst & Young LLP as the Company's
auditors for the fiscal year ended December 31, 2006, must be approved
by a majority of the votes cast.
What if I vote "abstain?"
A vote to "abstain" on the election of the directors or on the proposal will
have no effect on the outcome.
What if I do not return my Proxy Card and do not attend the Annual Meeting?
If you are a holder of record and you do not vote your shares, your shares will
not be voted. If you hold your shares in "street name," and you do not give your
bank, broker or other holder of record specific voting instructions for your
shares, your bank, broker or other holder of record may not be permitted to
exercise voting discretion with respect to certain matters to be acted upon.
If you do not give your record holder specific voting instructions and your
record holder does not vote on any of the proposals, the votes will be "broker
non-votes." "Broker non-votes" will have no effect on the vote for the election
of directors or the proposal.
2
Is my vote confidential?
Proxy instructions, ballots, and voting tabulations that identify individual
shareholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within the Company or to third parties,
except:
o as necessary to meet applicable legal requirements;
o to allow for the tabulation of votes and certification of the vote; or
o to facilitate successful Proxy solicitation by our Board.
Occasionally, shareholders provide written comments on their Proxy Cards which
are then forwarded to the Company's management.
ANNUAL REPORT
Will I receive a copy of the Company's Annual Report?
Unless you have previously elected to view the Company' Annual Report over the
Internet, we have mailed you the Annual Report for the year ended December 31,
2005, with this Proxy Statement. The Annual Report includes the Company's
audited financial statements, along with other financial and product
information. We urge you to read it carefully.
How can I receive a copy of the Company's Form 10-K?
You may obtain, free of charge, a copy of our Annual Report and/or Form 10-K for
the year ended December 31, 2005, which we recently filed with the Securities
and Exchange Commission, by writing to:
Corporate Secretary
Gentex Corporation
600 North Centennial Street
Zeeland, Michigan 49464
You may also obtain a copy of the Company's Annual Report, Form 10-K and other
periodic filings with the Securities and Exchange Commission (SEC) on the
Company's Internet web site at:
http://www.gentex.com/corp_investor.html
The Company's Form 10-K and other SEC filings mentioned above are also available
from the SEC's EDGAR database at http://www.sec.gov.
ELECTRONIC DELIVERY OF PROXY STATEMENT AND ANNUAL REPORT
Can I access the Company's proxy materials and Annual Report electronically?
This Proxy Statement and the 2005 Annual Report are available on the Company's
Internet web site at:
http://www.gentex.com/corp_investor.html
Most shareholders can elect to view future Proxy Statements and Annual Reports
and vote over the Internet instead of receiving paper copies in the mail.
If you are a holder of record, you can choose this option and save the Company
the cost of producing and mailing these documents by:
o Following the instructions provided when you vote over the Internet, or
o Going to https://www.icsdelivery.com/gntx and following the instructions
provided.
If you are a holder of record and you choose to view future Proxy Statements and
Annual Reports over the Internet, you will receive an e-mail message next year
containing the Internet address to access the Company's Proxy Statement and
Annual Report. The e-mail also will include instructions for voting over the
Internet. Your choice will remain in effect until you tell us otherwise. You do
not have to elect Internet access each year.
If you hold your shares in "street name," and choose to view future Proxy
Statements and Annual Reports over the Internet and your bank, broker or other
holder of record participates in this service, you will receive an e-mail
message next year containing the Internet address to use to access the Company's
Proxy Statement and Annual Report.
3
HOUSEHOLDING INFORMATION
What is "householding?"
The Company has adopted a procedure called "householding," which has been
approved by the Securities and Exchange Commission. Under this procedure, a
single copy of the Annual Report and Proxy Statement will be sent to any
household at which two or more shareholders reside if they appear to be members
of the same family, unless one of the shareholders at the address notifies us
that they wish to receive individual copies. This procedure reduces our printing
and mailing costs, and fees.
Shareholders who participate in householding will continue to receive separate
Proxy Cards.
Householding will not affect dividend check mailings in any way.
If a single copy of the Annual Report and Proxy Statement was delivered to an
address that you share with another shareholder, at your request we will
promptly deliver a separate copy. Any such requests should be directed to:
Corporate Secretary
Gentex Corporation
600 North Centennial Street
Zeeland, Michigan 49464
How do I withhold my consent to the householding program?
If you are a holder of record and share an address and last name with one or
more holders of record, and you wish to continue to receive separate Annual
Reports, Proxy Statements and other disclosure documents, you must withhold your
consent by checking the appropriate box on the enclosed Proxy Card and returning
it by mail in the enclosed envelope. Even if you vote by telephone or Internet,
the enclosed Proxy Card must be returned and marked appropriately to withhold
your consent to householding. Please note that if you do not respond by
returning the enclosed Proxy Card that householding will start 60 days after the
mailing of this notice.
Even if you do not return the Proxy Card to withhold your consent to the
householding program, you may revoke your consent at a future date. Please
contact Automatic Data Processing, Inc. ("ADP"), either by calling toll free at
(800) 542-1061 or writing to ADP, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. You will be removed from the householding program
within 30 days of the receipt of the revocation of your consent.
If you are receiving multiple copies of the Annual Report and Proxy Statement at
an address shared with another shareholder, you may also contact ADP to
participate in the householding program.
A number of brokerage firms have instituted householding. If you hold shares in
"street name," please contact your bank, broker or other holder of record to
request information about householding.
4
SOLICITATION OF PROXIES
This Proxy Statement is being furnished by mail, or if shareholders
have consented, by electronic delivery, on or about March 29, 2006, to the
shareholders of Gentex Corporation as of the record date, in connection with the
solicitation by the Board of Directors of the Company, of Proxies to be used at
the Annual Meeting of Shareholders to be held on Thursday, May 11, 2006, at 4:30
p.m. EDST, at The Pinnacle Center, 3330 Highland Drive, Hudsonville, Michigan.
Each shareholder as of the record date, as an owner of the Company, is
entitled to vote on matters to come before the Annual Meeting. The use of
Proxies allows a shareholder of the Company to be represented at the Annual
Meeting if he or she is unable to attend in person.
There are four ways to vote your shares:
1) By Internet at https://www.proxyvote.com. We encourage you to
vote this way.
2) By toll-free telephone (refer to your Proxy Card or Voting
Instruction Form for the correct number).
3) By completing and mailing your Proxy Card or Voting Instruction
Form.
4) By written ballot at the Annual Meeting.
If the form of Proxy accompanying this Proxy Statement is properly
executed using any of the methods described above, the shares represented by the
Proxy will be voted at the Annual Meeting of Shareholders and at any adjournment
of the meeting. Where shareholders specify a choice, the Proxy will be voted as
specified. If no choice is specified, the shares represented by Proxy will be
voted for the election of all nominees named in the Proxy and to ratify Ernst &
Young LLP as the Company's auditors for the fiscal year ending December 31,
2006. These proposals are described in this Proxy Statement. A Proxy may be
revoked prior to its exercise by (1) delivering a written notice of revocation
to the Secretary of the Company, (2) delivery of a later-dated Proxy including a
telephone or Internet vote, or (3) attending the meeting and voting in person.
VOTING SECURITIES AND RECORD DATE
March 17, 2006, has been fixed by the Board of Directors as the record
date for determining shareholders entitled to vote at the Annual Meeting. On
that date, 153,486,860 shares of the Company's common stock, par value $.06 per
share, were issued and outstanding. Shareholders are entitled to one vote for
each share of the Company's common stock registered in their names at the close
of business on the record date. Abstentions and broker non-votes are counted for
the purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions and broker non-votes are not, however,
counted in tabulations of votes cast on proposals presented to shareholders.
5
ELECTION OF DIRECTORS
The Company's Articles of Incorporation specify that the Board of
Directors shall consist of at least six, but not more than nine members, with
the exact number to be determined by the Board. The Board has currently fixed
the number of directors at nine. The Articles of Incorporation also specify that
the Board be divided into three classes, with the classes to hold office for
staggered terms of three years each.
The majority of the members of the Company's Board of Directors qualify
as "independent directors" as determined in accordance with the current listing
standards of the NASDAQ National Market ("NASDAQ"). Based on the current NASDAQ
listing standards, the Company's Board of Directors has identified and
affirmatively determined the following individuals have no material
relationships with the Company other than as a director and are independent:
Gary Goode, John Mulder, Rande Somma, Frederick Sotok, Wallace Tsuha and Leo
Weber.
The terms of current board members Fred Bauer, Gary Goode and Leo Weber
expire upon the election of the directors to be elected at the Annual Meeting.
The Board has nominated Fred Bauer, Gary Goode and J. Terry Moran for election
as directors at the Annual Meeting, each to serve a three-year term expiring in
2009.
1) Messrs. Bauer and Goode were each previously elected as
directors by the Company's shareholders in 2003.
2) J. Terry Moran has been nominated for election as a director for
the first time. Based on information provided by Mr. Moran to
the Board of Directors, the Board has affirmatively determined
that Mr. Moran has no material relationships with the Company
and will qualify as an independent director under the current
NASDAQ listing standards, if elected. Prior to the current
year, Mr. Moran has provided legal services to the Company
through Varnum, Riddering, Schmidt & Howlett LLP ("VRSH").
Although Mr. Moran remains "of counsel" to VRSH, the Company's
outside legal counsel, since his retirement as a partner in
2000 he receives only those nominal benefits accorded to
retired partners under that firm's partnership agreement and
compensation for services rendered to the firm on an hourly
basis (less than $7,000 during 2005). The Board does not
believe these nominal benefits will have any impact on Mr.
Moran's independence if elected (especially since Mr. Moran has
not shared profits in VRSH since 2000). If elected, Mr. Moran
will not provide any legal services to the Company, and will
act solely in the capacity as a director. Mr. Goode, a member
of the Company's Nominating Committee, recommended Mr. Moran
to the Nominating Committee as a potential candidate for
nomination for election as a director.
Unless otherwise specifically directed by a shareholder's marking on
the Proxy Card, or in directions given either via the Internet or telephone, the
persons named as Proxy voters in the accompanying Proxy will vote for the
nominees described below. If any of these nominees becomes unavailable, which is
not now anticipated, the Board may designate a substitute nominee, under the
recommendation of the Nominating Committee, in which case the accompanying Proxy
will be voted for the substituted nominee. Proxies cannot be voted for a greater
number of persons than the number of nominees named.
6
A plurality of votes cast by shareholders at the meeting is required to
elect directors of the Company under Michigan law. Accordingly, the three
nominees who receive the largest number of affirmative votes will be elected,
regardless of the number of votes received. Broker non-votes, votes withheld,
and votes cast against any nominee will not have a bearing on the outcome of the
election. Votes will be counted by Inspectors of Election appointed by the
presiding officer at the Annual Meeting.
The Board of Directors recommends a vote FOR the election of all
persons nominated by the Board.
7
The content of the following table relating to age and business
experience is based upon information furnished to the Company by the nominees
and directors, as of March 1, 2006.
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Name, (Age) and Position Business Experience Past Five Years
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--------------------------------------------------------------------------------
Nominees for Terms to Expire in 2009
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----------------------------------- --------------------------------------------
Fred Bauer (63) Mr. Bauer is the Chairman and Chief
Director since 1981 Executive Officer of Gentex Corporation,
and he has held that position for more
than five years. Mr. Bauer serves on the
Board's Executive Committee.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Gary Goode (61) Mr. Goode is the Chairman of Titan
Director since 2003 Distribution LLC, a Granger, Indiana,
company that offers consulting and
distribution services related to structural
adhesives, and has held that position since
2004. He was previously employed at Arthur
Andersen LLP ("Andersen") for 29 years,
including 11 years as the managing partner
of its West Michigan practice, until his
retirement in March 2001. During his
public accounting career, Mr. Goode had
extensive experience working with suppliers
to the automotive industry. He has provided
consulting services since his retirement
from Andersen. Mr. Goode is the Audit
Committee Chairman and a director of
Universal Forest Products, Inc. He is the
Chairman of the Gentex Corporation Board's
Audit Committee, and serves on the Board's
Compensation and Nominating Committees.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
J. Terry Moran (64) Mr. Moran has been "of counsel" (essentially
a retired partner with no equity interest)
to the law firm of Varnum, Riddering,
Schmidt & Howlett, Grand Rapids, Michigan,
since his retirement in 2000. Prior to his
retirement, he was a partner in that firm
for more than 25 years, specializing in
general business, securities and antitrust
law matters, representing numerous publicly
and privately held clients, including
Gentex Corporation.
----------------------------------- --------------------------------------------
--------------------------------------------------------------------------------
Directors Whose Terms Expire in 2008
--------------------------------------------------------------------------------
----------------------------------- --------------------------------------------
Arlyn Lanting (65) Mr. Lanting is the Vice President-Finance
Director since 1981 of Aspen Enterprises,Ltd., Grand Rapids, MI
(investments), and he has held that position
for more than five years. Mr.Lanting serves
on the Board's Executive Committee.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Kenneth La Grand (65) Mr. La Grand was the Executive Vice
Director since 1987 President of Gentex Corporation from
September 1987 to January 2003. Mr. La
Grand is also a director of Clarion
Technologies, Inc. Mr La Grand serves on
the Board's Executive Committee.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Rande Somma (54) Mr. Somma was the President of Automotive
Director since 2005 Operations - Worldwide, at Johnson Controls
from 2002-2003, and was President of
Automotive Operations - North America
from 2000-2002. Prior to that date and since
1988, Mr. Somma held several different
managerial positions in the Automotive
Systems Group at Johnson Controls. Johnson
Controls is a global market leader in
automotive systems and facility management
and control. In the automotive market, it
is a major supplier of integrated seating
and interior systems and batteries.
----------------------------------- --------------------------------------------
Directors Whose Terms Expire in 2007
----------------------------------- --------------------------------------------
Frederick Sotok (71) Mr. Sotok was Executive Vice President and
Director since 2000 Chief Operating Officer of Prince
Corporation (manufacturer of automotive
interior parts that was acquired by Johnson
Controls in 1996) from October 1977 to
October 1996. Mr. Sotok is also a director
of Clarion Technologies, Inc. Mr. Sotok is
Chairman of the Board's Compensation and
Nominating Committees, and serves on the
Board's Audit Committee.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
John Mulder (69) Mr. Mulder was the Vice President-Customer
Director since 1992 Relations of Gentex Corporation from
February 2000 to June 2002. Previously, he
was Senior Vice President-Automotive
Marketing from September 1998 to February
2000. Prior to September 1998, he was
Vice President - Automotive Marketing of
Gentex Corporation for more than five years.
----------------------------------- --------------------------------------------
----------------------------------- --------------------------------------------
Wallace Tsuha (62) Mr. Tsuha is Chairman and Chief Executive
Director since 2003 Officer of Saturn Electronics & Engineering,
Inc. in Auburn Hills, Michigan, and he has
held that position for more than five years.
Saturn Electronics is a global supplier of
automotive electronics, electrical wiring,
and electro-mechanical products to original
equipment manufacturers (OEMs) and their
first tier suppliers. Mr. Tsuha serves on
the Board's Compensation Committee.
----------------------------------- --------------------------------------------
Arlyn Lanting and Kenneth La Grand are brothers-in-law. There are no
other family relationships between the nominees, directors and executive
officers of the Company. Kenneth La Grand and Frederick Sotok both sit on the
Board of Directors of Clarion Technologies, Inc.
8
CORPORATE GOVERNANCE
The Company operates within a comprehensive plan of corporate
governance for the purpose of defining responsibilities, setting high standards
of professionalism and personal conduct, and assuring compliance with such
responsibilities and standards. The Company regularly monitors developments in
the area of corporate governance.
The Board of Directors has an Executive Committee, an Audit Committee,
a Nominating Committee and a Compensation Committee, and may also appoint other
committees from time to time. Other than the Executive Committee, each committee
has a written charter. All such charters, as well as any documents marked with
an asterisk (*) in this "Corporate Governance" section of this Proxy Statement,
are available on the Company's internet web site at
http://www.gentex.com/corp_investor.html under "Corporate Governance". Any of
these documents will be provided in print to any shareholder who submits a
request in writing to the Corporate Secretary, Gentex Corporation, 600 North
Centennial Street, Zeeland, MI 49464.
Each member of the Board of Directors is expected to make a reasonable
effort to attend all meetings of the Board of Directors, all applicable
committee meetings, and each annual meeting of shareholders. While no formal
policy with respect to attendance has been adopted, attendance at these meetings
is encouraged and expected. All members of the Board of Directors attended the
2005 Annual Meeting of Shareholders, except Mr. La Grand, who was traveling in
Europe, including visiting the Company's office in Germany. Each of the current
members of the Board of Directors and Mr. Moran, a nominee for election as a
director, are expected to attend the 2006 Annual Meeting of Shareholders. During
2005, the Board of Directors met on five occasions. All incumbent directors
attended at least 75 percent of the aggregate number of meetings of the Board
and Board committees on which they served.
Independent Directors
o In accordance with NASDAQ's corporate governance rules, in order for
a director to qualify as "independent," the Board of Directors must
affirmatively determine that the director has no material relationship
with the Company that would impair the director's independence. The
Board of Directors has affirmatively determined a majority of its
members are independent, and they include Messrs. Goode, Mulder,
Somma, Sotok, Tsuha and Weber. Based on the information provided by
Mr. Moran to the Board, and as discussed above, the Board has
affirmatively determined that Mr. Moran will qualify as an independent
director under the current NASDAQ listing standards, if elected.
o A meeting of the independent directors, separate from management, is
an agenda item at each Board of Directors meeting. During 2005, the
independent directors met on five occasions.
9
Audit Committee
o During the entire fiscal year ending December 31, 2005, the Company's
Audit Committee included Messrs. Goode, Sotok and Weber, and met five
times during that period. Information regarding the functions
performed by the Committee is set forth in the following "Report of
the Audit Committee."
o The Board of Directors has affirmatively determined that all members
of the Audit Committee meet the appropriate tests for independence,
including those set forth in the NASDAQ corporate governance rules.
o All Audit Committee members possess the required level of financial
literacy and the Board of Directors has determined that at least one
member of the Audit Committee, Mr. Goode, meets the current standard
of audit committee financial expert as required by the Sarbanes-Oxley
Act.
o The Gentex Corporation Audit Committee Charter (*) is attached as
Appendix A to this Proxy Statement.
o The Company's independent auditors report directly to the Audit
Committee.
o The Audit Committee, consistent with the Sarbanes-Oxley Act and the
rules adopted thereunder, meets with management and the auditors prior
to the filing of officer certifications with the SEC to receive
information concerning, among other things, any significant
deficiencies in the design or operation of internal controls.
o The Audit Committee's policy regarding the pre-approval of audit and
non-audit services provided by the Company's independent auditors is
outlined in a document called "Revised Audit Committee Procedures for
Approval of Audit and Non-Audit Services by Independent Auditors,"
which is attached as Appendix B to this Proxy Statement.
o The Audit Committee has adopted a policy titled "Complaint Procedures
for Accounting and Auditing Matters" (*) to enable confidential and
anonymous reporting to the Audit Committee.
Compensation Committee
o During the fiscal year ended December 31, 2005, the Company's
Compensation Committee was comprised of Messrs. Sotok, Goode and
Tsuha, and met six times during that period. The Compensation
Committee is responsible for administering the Company's stock-based
incentive plans and supervising other compensation arrangements for
executive officers of the Company.
o The Board of Directors has affirmatively determined that all members
of the Compensation Committee meet the appropriate tests for
independence, including those set forth in the NASDAQ corporate
governance rules.
10
Nominating Committee
o During the fiscal year ended December 31, 2005, the Company's
Nominating Committee was comprised of Messrs. Sotok and Goode, and met
two times during that period. The Nominating Committee is responsible
for identifying and recommending qualified individuals to serve as
members of the Company's Board of Directors.
o The Board of Directors has affirmatively determined that all members
of the Nominating Committee meet the appropriate tests for independence,
including those set forth in the NASDAQ corporate governance rules.
o The Nominating Committee has adopted certain procedures contained in a
document called "Selection Process for New Board Candidates" (*) to
consider candidates for director nominees.
o The Nominating Committee's process for identifying and considering
candidates to be nominated as directors and minimum qualifications for
candidates is contained in a document called "Position Profile: Member
of the Board of Directors" (*).
o The Nominating Committee has not yet paid any third party a fee to
assist in identifying and evaluating nominees, but has the authority to
do so.
o The Nominating Committee has not, to date, received any potential
director candidates for nomination from any shareholder that
beneficially owns more than five (5) percent of the Company's common
stock.
o The Nominating Committee considers suggestions from many sources,
including shareholders, regarding possible candidates for the Board of
Directors. If you want to recommend a director candidate, you may
do so in accordance with the Company's procedures or the Company's
Articles of Incorporation. If a shareholder desires to recommend a
candidate for consideration by the Nominating Committee for inclusion
in the Company's 2007 Proxy Statement as a Board nominee, that
recommendation should be submitted in writing, together with
appropriate biographical information, to the Chairman of the
Nominating Committee, c/o Corporate Secretary's Office, Gentex
Corporation, 600 North Centennial Street, Zeeland, Michigan 49464. Any
such nominations must be received by the Chairman of the Nominating
Committee by no later than November 30, 2006, to allow adequate time for
consideration of the nominee. Other nominations by shareholders for
any directorship may be submitted to the Board of Directors by written
notice within the time periods set forth in the Company's Articles of
Incorporation, which must include certain biographical information.
In general, a written notice must be timely received and contain
all information required to be disclosed in a solicitation of proxies
for elections of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, in addition to other information.
o In accordance with the above-referenced Selection Process for New Board
Candidates and the Position Profile, the independent directors approved
the slate of nominees standing for election at the 2006 Annual Meeting
of Shareholders, including Mr. Moran, who has not previously been
nominated for election, and recommended the same to the entire Board of
Directors.
11
Executive Committee
o The Company has an Executive Committee comprised of Messrs. Bauer,
Lanting and La Grand. The Executive Committee is authorized to act on
behalf of the Board on all corporate actions for which applicable law
does not require participation by the full Board. In practice, the
Executive Committee acts in place of the full Board only when emergency
issues or scheduling make it difficult or impracticable to assemble the
full Board. All actions taken by the Executive Committee must be
reported at the next Board meeting. This committee met once during the
fiscal year ended December 31, 2005.
o The Executive Committee does not take any action which must be approved
by the independent directors or a committee made up of only independent
directors under applicable laws, rules and regulations.
Codes
o The Board of Directors has adopted a "Code of Ethics for Certain Senior
Officers" (*) that applies to the Company's chief executive officer,
principal financial officer and treasurer. Information concerning any
alleged violations is to be reported to the Audit Committee.
o The Company has also adopted a "Code of Business Conduct and Ethics"
(*). This Code applies to all directors, officers and employees of the
Company.
o No waivers of either of the foregoing codes has occurred to date.
Shareholder Communication with Members of the Board of Directors
o You may contact any of our directors by writing them: Board of
Directors, c/o Corporate Secretary's Office, Gentex Corporation, 600
North Centennial, Zeeland, Michigan 49464. Employees and others who
wish to contact the Board or any member of the Audit Committee may do
so anonymously, if they wish, by using this address. Such
correspondence will not be screened and will be forwarded in its
entirety.
Personal Loans to Executive Officers and Directors
o The Company complies with and will operate in a manner consistent with
an act of legislation outlawing extensions of credit in the form of
personal loans to or for its directors and executive officers.
Director and Executive Officer Stock Transactions
o Under the regulations of the Securities and Exchange Commission (SEC),
directors and executive officers are required to file notice with the
SEC within two (2) business days of any purchase or sale of the
Company's stock. Information on filings made by any of our directors
or executive officers can be found on the Company's web site at
http://www.gentex.com/corp_investor.html under "SEC Filings."
12
Report of the Audit Committee
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities for management's conduct
of the Company's accounting and financial reporting processes and the Company's
system of internal controls regarding finance, accounting, legal compliance, and
ethics. The Audit Committee's function is more fully described in its Charter,
which the Board has adopted and is attached as Appendix A to this Proxy
Statement. The Audit Committee reviews this Charter on an annual basis. The
Board annually reviews the NASDAQ listing standards' definition of independence
for audit committee members and has determined that each member of the Audit
Committee meets that standard.
Management is responsible for the preparation, presentation, and
integrity of the Company's financial statements, and financial reporting
principles, internal controls, and procedures designed to ensure compliance with
accounting standards, applicable laws, and regulations. The Company's
independent auditors, Ernst & Young, LLP, are responsible for performing an
independent audit of the consolidated financial statements and expressing an
opinion on the conformity of those financial statements with generally accepted
accounting principles.
Pursuant to a meeting of the Audit Committee on February 15, 2006, the
Audit Committee reports that it has: (i) reviewed and discussed the Company's
audited financial statements with management; (ii) discussed with the
independent auditors the matters required to be discussed by Statement of
Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU
ss. 380); and (iii) received written disclosures and the letter from Ernst &
Young LLP required by Independence Standards No. 1, Independence Discussions
with Audit Committees, and discussed with the auditors the auditor's
independence. Based on the review and discussions referred to in Items (i)-(iii)
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2005, for filing with the Securities and
Exchange Commission.
The Audit Committee has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2006, and has submitted
the same to the shareholders for ratification at the Annual Meeting.
This report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any of
the other Company filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically requests
that the information be treated as soliciting material or specifically
incorporates this report by reference therein.
Audit Committee: Gary Goode, Chairman
Fred Sotok
Leo Weber
February 15, 2006
13
SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information with respect to ownership of
the Company's common stock by all directors, nominees for election as directors,
executive officers named in the tables under the caption "Executive
Compensation," and all directors and executive officers as a group. The content
of this table is based upon information supplied by the Company's executive
officers, directors and nominees for election as directors, and represents the
Company's understanding of circumstances in existence as of March 1, 2006.
Amount and Nature of Ownership
------------------------------------------- --------------------------------------------- ------------------
Shares Beneficially Exercisable Percent
Name of Beneficial Owner Owned (1) Options (2) of Class
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Dennis Alexejun 168,400 132,010 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Fred Bauer 6,488,612 867,000 4.2%
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
John Carter 171,352 124,664 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Garth Deur 148,200 113,000 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Gary Goode 41,176 34,176 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Enoch Jen 241,754 134,882 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Arlyn Lanting 1,224,000 (3) 152,000 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Kenneth La Grand 508,608 (4) 30,000 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
J. Terry Moran 32,000 0 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
John Mulder 191,920 41,212 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Rande Somma 9,013 6,000 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Frederick Sotok 60,668 (5) 45,500 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Wallace Tsuha 25,852 23,852 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
Leo Weber 157,600 112,000 *
------------------------------------------- ------------------------ -------------------- ------------------
------------------------------------------- ------------------------ -------------------- ------------------
All directors and executive officers
as a group (14 persons) 9,469,155 1,816,296 6.1%
------------------------------------------- ------------------------ -------------------- ------------------
*Less than one percent.
(1) Except as otherwise indicated by footnote, each named person claims
sole voting and investment power with respect to the shares indicated.
(2) This column reflects shares subject to options exercisable within
60 days, and these shares are included in the column captioned
"Shares Beneficially Owned."
(3) Includes 800,000 shares owned of record by Aspen Enterprises,
Ltd., of which Mr. Lanting is a director, officer and substantial
shareholder, and Mr. Lanting disclaims beneficial ownership of
those shares.
(4) Includes 66,000 shares held in a trust established by Mr. La
Grand's spouse, and Mr. La Grand disclaims beneficial ownership of
those shares. Also includes 43,033 shares held in trust by Mr. La
Grand's spouse for Mr. La Grand's grandchildren, and Mr. La Grand
disclaims beneficial ownership of these shares.
(5) Includes 174 shares owned by Mr. Sotok's spouse through a partnership,
and Mr. Sotok disclaims beneficial ownership of these shares.
14
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information with respect to ownership of
the Company's common stock by persons or entities that are beneficial owners of
more than five percent of the Company's voting securities. The information
contained in this table is based on information contained in Schedule 13G
furnished to the Company.
Name and Address Amount and Nature of
Of Beneficial Owner Beneficial Ownership Percent of Class
------------------- -------------------- ----------------
Capital Research and Management Company 15,430,000 9.9%
333 South Hope Street
Los Angeles, CA 90071
T. Rowe Price Associates, Inc.* 8,972,160 5.7%
100 E. Pratt Street
Baltimore, MD 21202
*These securities are owned by various individual and institutional investors
which T. Rowe Price Associates, Inc. (Price Associates) serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
--------------------------------------------
EXECUTIVE COMPENSATION
The following table contains information regarding compensation paid by
the Company for each of the last three fiscal years to its chief executive
officer and the Company's four most highly compensated executive officers other
than the chief executive officer.
Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------
------------------- -------- --------------------------- ----------------------------------------- -----------------
Long-Term
Compensation
------------------- -------- --------------------------- ----------------------------------------- -----------------
------------------- -------- --------------------------- ------------------------------ ---------- -----------------
Annual Compensation Awards Payouts All Other
Compensation
($)(2)(3)
------------------- -------- --------------------------- ------------------------------ ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
Restricted Securities
Executive Year Salary Bonus Other Stock Underlying LTP
($) ($) ($) Award($)(1) Options (#) ($)
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
Fred Bauer 2005 364,000 69,231 -- 98,000 9,438
Chairman and CEO 2004 357,105 75,523 -- 189,000 7,638
2003 334,072 76,461 -- 180,000 6,684
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
Garth Deur 2005 226,098 77,754 -- 26,000 20,920
Executive Vice 2004 215,818 83,329 -- 49,440 18,384
President 2003 201,202 80,579 464,400 46,200 6,954
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
Dennis Alexejun 2005 181,649 47,550 -- 17,000 12,492
Vice President, 2004 177,530 37,578 191,070 32,380 8,889
North American 2003 166,322 48,076 -- 31,120 5,481
Automotive
Marketing
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
John Carter 2005 195,810 43,242 -- 17,020 15,552
Vice President, 2004 189,955 66,113 -- 32,420 13,840
Mechanical 2003 177,402 64,721 286,578 30,880 6,754
Engineering
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
Enoch Jen 2005 159,495 45,335 -- 40,400 20,571
Vice President, 2004 151,440 48,660 379,800 38,400 13,510
Finance 2003 132,095 59,923 -- 36,600 7,581
------------------- -------- ---------- -------- ------- --------------- -------------- ---------- -----------------
15
(1) Represents the aggregate market value at the date of grant for shares
of common stock awarded under the Company's Restricted Stock Plan.
Assuming continued employment with the Company, restrictions on shares
lapse upon the expiration of five years from the date of grant.
Dividends are and will be paid on these shares if, and to the same
extent, paid on the Company's common stock. At the close of the
Company's fiscal year, the following officers held the following number
of restricted shares with the corresponding net market values: Garth
Deur - 21,600 shares for $421,200; Dennis Alexejun - 21,000 shares for
$409,500, John Carter - 18,700 shares for $364,650, and Enoch Jen -
33,000 shares for $643,500.
(2) These amounts represent the sum of restricted stock dividends,
"matching" contributions by the Company pursuant to its 401(k) Plan and
annual premiums for term life insurance attributed to each named
executive officer.
(3) These amounts exclude the personal use of Company automobiles by
Messrs. Bauer, Deur, Alexejun and Carter, pursuant to the Company's
policy for use of such vehicles, and membership fees at two local
country clubs for Messrs. Deur and Alexejun. Such amounts are below the
threshold set forth in Item 402(b)(2)(iii)(C) of Regulation S-K.
Amounts for the personal use of Company automobiles are, however,
included in the named executives' taxable compensation to the extent
applicable. Also excluded is personal use of Company aircraft, which
the Company makes available to its executives when personal use does
not conflict with any business purpose for the aircraft. However, the
executive is required to reimburse the Company for its incremental cost
for such use.
---------------------------------------------
The following table contains information regarding stock options
granted to the above-named executive officers during the preceding fiscal year.
Option Grants in Last Fiscal Year
------------------------------------------------------------------------------------------------------
------------------ -----------------------------------------------------------------------------------
Individual Grants
-----------------------------------------------------------------------------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
Number of Percent of Options Exercise Expiration Grant Date
Securities, to Price Date Present Value
Underlying All Employees ($/sh)(2) ($)(3)
Options
Executive (#)(1)
------------------ ------------- ------------------- --------------- ---------------- ----------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
Fred Bauer 98,000 5.0% 18.03 8/11/12 415,226
------------------ ------------- ------------------- --------------- ---------------- ----------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
Garth Deur 26,000 1.3% 19.50 12/27/12 128,895
------------------ ------------- ------------------- --------------- ---------------- ----------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
Dennis Alexejun 17,000 0.9% 17.13 9/29/12 66,633
------------------ ------------- ------------------- --------------- ---------------- ----------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
John Carter 17,020 0.9% 18.20 6/30/12 104,995
------------------ ------------- ------------------- --------------- ---------------- ----------------
------------------ ------------- ------------------- --------------- ---------------- ----------------
Enoch Jen 40,400 2.0% 15.93 3/30/12 220,544
------------------ ------------- ------------------- --------------- ---------------- ----------------
(1) These options become exercisable, so long as employment with the
Company continues, for twenty percent of the shares on each anniversary
of the grant date commencing with the first anniversary of the grant
date.
16
(2) The exercise price may be paid in cash, in shares of the Company's
common stock, and/or by the surrender of exercisable options valued at
the difference between the exercise price and the market value of the
underlying shares.
(3) Based on the Black-Scholes option valuation model, assuming volatility
of 36 percent, a risk-free rate of return equal to seven-year treasury
bonds, a dividend yield, where applicable, of 2.0%, and an exercise
date of seven years after grant. This model is an alternative suggested
by the Securities and Exchange Commission, and the Company neither
endorses this particular model, nor necessarily agrees with this method
for valuing options. The ultimate value of options will depend on the
Company's success, as reflected by an increase in the price of its
shares, which will inure to the benefit of all shareholders.
---------------------------------------------
The following table contains information regarding the exercise of
options during the preceding fiscal year by the above-named executives, as well
as unexercised options held by them at fiscal year-end.
Aggregated Option Exercises in Last Fiscal Year and Year-end Values
--------------------------------------------------------------------------------------------------------------------
-------------------------------------------- ---------------------- ------------------ -----------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at Fiscal In-the-Money Options at
Exercise (#) Realized Year-End (#) Fiscal Year-End ($)
------------ -------------------
Executive ($)
--------------------- ------------- ------------- ---------------------------- -------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
Fred Bauer 100,000 1,125,250 867,000 194,000 4,104,100 648,860
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
Garth Deur 68,640 332,350 113,000 33,200 220,474 43,308
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
Dennis Alexejun 8,000 78,176 132,010 34,396 616,709 144,805
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
John Carter 7,148 31,076 124,664 52,908 492,692 205,189
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
Enoch Jen 34,400 223,131 105,922 82,880 227,988 403,241
--------------------- ------------- ------------- ------------- -------------- ------------------- -----------------
The following table summarizes securities issued and to be issued under
the Company's equity compensation plans as of December 31, 2005:
Equity Compensation Plan Summary
--------------------------------------------------------------------------------------------------------------------
-------------------------------------------- ---------------------- ------------------ -----------------------------
Plan Category Number of securities
Weighted average available for future
Number of securities exercise price issuance under equity
to be issued upon of outstanding compensation plans
exercise of options, (excluding securities
outstanding options, warrants and reflected in the first
warrants and rights rights column)
-------------------------------------------- ---------------------- ------------------ -----------------------------
-------------------------------------------- ---------------------- ------------------ -----------------------------
11,465,615 $15.688 15,813,463
Equity compensation Plans approved by
Shareholders
-------------------------------------------- ---------------------- ------------------ -----------------------------
-------------------------------------------- ---------------------- ------------------ -----------------------------
-- -- --
Equity Compensation Plans not approved by
Shareholders
-------------------------------------------- ---------------------- ------------------ -----------------------------
-------------------------------------------- ---------------------- ------------------ -----------------------------
Total 11,465,615 $15.668 15,813,463
-------------------------------------------- ---------------------- ------------------ -----------------------------
17
Executive Compensation Report
Responsibility. Responsibility for the Company's executive compensation
program has been delegated by the Board of Directors to the Compensation
Committee. The Compensation Committee is currently comprised of three members,
each of whom the Board has determined meets the appropriate tests for
independence for Compensation Committee members under the NASDAQ listing
standards. The Compensation Committee operates under and in accordance with its
Charter and is appointed by the Board to help the Board discharge its
responsibilities related to compensation of the Company's executives.
Compensation Philosophy and Practice. The executive compensation
program is composed of three elements: base salary, annual bonus, and
stock-based incentives. These elements are utilized to accomplish several
objectives:
o Provide the means to attract motivate and retain management personnel.
o Provide long-term success by focusing on continued technical development
and improving customer satisfaction.
o Provide base salary compensation that is competitive in the market for
managerial talent.
o Provide annual bonus compensation reflective of both individual
achievement and overall Company performance.
o Provide stock-based incentive compensation that focuses on long-term
Company performance and aligning the interests of management with the
interests of shareholders.
Base Pay Levels. Base compensation for executive officers is predicated
primarily on competitive circumstances for managerial talent and positions
reflecting comparable responsibility. Historically, base salaries for executive
officers have been relatively low, and stock-based incentives have received more
emphasis reflecting the entrepreneurial, high-growth rate stage of the Company's
development. The Compensation Committee reviews compensation survey information,
textual materials regarding executive compensation strategies, the past and
expected contributions of the executive officers, comparisons of management
compensation to nonmanagement compensation, and other available data in
determining recommendations for base salary. With respect to the CEO, the
performance of the management team assembled and led by him is also a factor.
Bonuses. Annual bonus compensation for executive officers is composed
of two elements: payments under the Company's Profit-Sharing Bonus Plan and
discretionary, performance bonuses. All employees of the Company, including the
CEO and executive officers, are eligible to share in the Company's
Profit-Sharing Bonus Plan after the first three months of employment. A
percentage of pretax income, in excess of an established threshold for
shareholder return on equity, is distributed quarterly to eligible employees. In
addition, discretionary, performance bonuses are paid to various managerial
employees, including the executive officers, based upon individual performance
during the year and overall performance of the Company during the year.
Stock-Based Incentives. The stock-based incentive compensation is
intended to align the interests of shareholders and management by making the
managers shareholders in a significant amount, and providing them appropriate
incentives to achieve Company successes which will hopefully lead to increases
in the price of the Company's shares.
CEO and Executive Officers. The Compensation Committee has reviewed all
aspects of the Chief Executive Officer's ("CEO") compensation and the executive
officers' compensation, including base pay levels, bonuses, and stock-based
incentives, as well as perquisites (as described in the footnotes to the Summary
Compensation Table above). A summary sheet is prepared for the
18
Compensation Committee with respect to CEO and executive officers each year
showing for each such officer their annual review quarter, annual base pay,
profit-sharing bonus, discretionary bonus, stock option grants, and restricted
stock grants. With respect to the CEO, each director completes a CEO evaluation
form and the CEO completes a self-evaluation form. The Compensation Committee
and the full Board of Directors then review those forms, discuss the review with
the CEO, establish CEO compensation, and establish objectives for the next year
based on the Company's compensation philosophy and practices. With respect to
executive officers, the CEO provides input concerning base pay levels, bonuses
(predicted approximately one-half on the executive officer's achievement and
contributions to the Company's success and one-half on overall Company
performance),and stock-based incentive awards.
Based on the foregoing, the Compensation Committee finds the CEO's and
the executive officers' total compensation in the aggregate to be reasonable and
not excessive. The Compensation Committee has approved the CEO's and executive
officers' compensation, and will recommend and/or approve all such future
compensation in accordance with the Compensation Committee Charter.
Compensation Committee Members: Fred Sotok, Chairman
Gary Goode
Wallace Tsuha
February 16, 2006
19
Stock Performance Graph
The following graph depicts the cumulative total return on the
Company's common stock compared to the cumulative total return on The
NASDAQ Stock Market(R) index (all U.S. companies) and the Dow Jones
Index for Automobile Parts and Equipment Companies (excluding tire and
rubber makers). assumes an investment of $100 on the last trading day
of 2000, and The graph reinvestment of dividends in all cases.
[GRAPH]
DOW JONES AUTO
THE NASDAQ PARTS & EQUIPMENT
GENTEX STOCK MARKET COMPANIES (EXCLUDING)
CORPORATION (U.S. COMPANIES) TIRE AND RUBBER MARKERS)
----------- ---------------- ------------------------
12/29/00 $100 $100 $100
01/31/01 $130 $112 $116
02/28/01 $131 $ 87 $118
03/30/01 $121 $ 75 $114
04/30/01 $141 $ 86 $126
05/31/01 $164 $ 86 $130
06/29/01 $146 $ 88 $135
07/31/01 $172 $ 82 $148
08/31/01 $156 $ 73 $131
09/28/01 $125 $ 61 $110
10/31/01 $125 $ 69 $111
11/30/01 $125 $ 79 $126
12/31/01 $140 $ 79 $131
01/31/02 $156 $ 79 $136
02/28/02 $159 $ 71 $150
03/28/02 $155 $ 75 $157
04/30/02 $166 $ 69 $157
05/31/02 $162 $ 66 $156
06/28/02 $144 $ 60 $146
07/31/02 $153 $ 54 $130
08/30/02 $156 $ 54 $137
09/30/02 $142 $ 48 $124
10/31/02 $154 $ 55 $113
11/29/02 $157 $ 61 $122
12/31/02 $166 $ 55 $118
01/31/03 $154 $ 54 $119
02/28/03 $141 $ 55 $112
03/31/03 $133 $ 55 $105
04/30/03 $158 $ 60 $121
05/30/03 $162 $ 65 $124
06/30/03 $160 $ 67 $129
07/31/03 $186 $ 71 $138
08/29/03 $196 $ 74 $144
09/30/03 $182 $ 73 $140
10/31/03 $205 $ 79 $150
11/28/03 $221 $ 80 $154
12/31/03 $232 $ 82 $168
01/30/04 $230 $ 84 $172
02/27/04 $215 $ 83 $169
03/31/04 $229 $ 81 $166
04/30/04 $208 $ 79 $165
05/28/04 $201 $ 81 $163
06/30/04 $210 $ 84 $168
07/30/04 $190 $ 77 $164
08/31/04 $182 $ 76 $161
09/30/04 $187 $ 78 $160
10/29/04 $176 $ 81 $157
11/30/04 $173 $ 86 $169
12/31/04 $198 $ 89 $177
01/31/05 $181 $ 85 $162
02/28/05 $182 $ 84 $159
03/31/05 $171 $ 82 $145
04/29/05 $175 $ 79 $134
05/31/05 $193 $ 85 $146
06/30/05 $196 $ 85 $148
07/29/05 $193 $ 90 $160
08/31/05 $186 $ 89 $159
09/30/05 $189 $ 89 $149
10/31/05 $205 $ 88 $147
11/30/05 $205 $ 92 $146
12/30/05 $212 $ 91 $149
-------------------------
The Company has not adopted any long-term incentive plan or any defined
benefit or actuarial plan, as those terms are defined in the applicable
regulations promulgated by the Securities and Exchange Commission. Neither does
the Company have any contracts with its executive officers assuring them of
continued employment, nor any compensatory arrangement for executives linked to
a change in control of the Company.
Directors who are employees of the Company receive no compensation for
services as directors. Directors who are not employees of the Company receive a
director's retainer in the amount of $9,000 per year plus $1,200 for each
meeting of the Board attended and $900 for each committee meeting attended.
Directors who are chairman of the Compensation and Audit Committees receive a
retainer in the amount of $3,000 per year. In addition, each nonemployee person
who is a director immediately following each Annual Meeting of Shareholders is
entitled to receive an option to purchase 6,000 shares of the Company's common
stock at a price per share equal to the fair market value on that date. Each
option has a term of ten years and becomes exercisable in full six months after
the date of the grant. The Company also makes Company aircraft available to
directors for personal use if such use does not conflict with any business
purpose for the aircraft. However, the director is required to reimburse the
Company for its incremental cost for such use.
20
The Company has entered into consulting agreements with John Mulder and
Ken La Grand, subsequent to each gentleman's retirement in June 2002 and January
2003, respectively. During 2005, the Company paid Mr. Mulder $5,000 in
consulting fees, plus reimbursement of business expenses. Mr. La Grand did not
provide, and was not paid for, any consulting services or business expenses
during 2005.
Compensation Committee Interlocks and
Insider Participation in Compensation Decisions
The Compensation Committee is comprised solely of members of the
Company's Board of Directors who are independent under the applicable NASDAQ
listing standards. For the fiscal year ended December 31, 2005, that Committee
was responsible for supervising the Company's executive compensation
arrangements, including the making of decisions with respect to the award of
stock-based incentives for executive officers during that year. The independent
directors have approved CEO and executive officer compensation as required by
applicable laws, rules and regulations.
CERTAIN TRANSACTIONS
Since 1978, prior to the time the Company became a publicly held
corporation, the Company has leased a building that previously housed its main
office, manufacturing and warehouse facilities, and currently houses production
operations for the Company's fire protection products. The lessor for that
building is G & C Associates, a general partnership, and nearly all of the
partnership interests in G & C Associates are held by persons related to Fred
Bauer. The lease is a "net" lease, obligating the Company to pay all expenses
for maintenance, taxes, and insurance, in addition to rent. During 2005, the
rent paid to this partnership was $52,153, and the rent for the current fiscal
year is the same. The Board of Directors believes that the terms of this lease
are at least as favorable to the Company as could have been obtained from
unrelated parties.
Jeremy Fogg, Director of Mechanical Program Management, is the
son-in-law of Fred Bauer, the Company's Chairman of the Board and Chief
Executive Officer. In 2005, Jeremy Fogg earned $122,779, including
profit-sharing and performance-based bonuses. Jeremy Fogg also received options
to purchase 5,470 shares of Gentex common stock at an exercise price of $17.13.
All of Mr. Fogg's compensation is determined under and in accordance with the
Company's existing compensation plans and policies applicable to all salaried
employees.
Bruce Los, Vice President, Human Resources, is the brother-in-law of
Garth Deur, the Company's Executive Vice President. In 2005, Bruce Los earned
$164,243, including profit-sharing and performance-based bonuses. Bruce Los also
received options to purchase 9,000 shares of Gentex common stock at an exercise
price of $19.50. All of Mr. Los' compensation is determined under and in
accordance with the Company's existing compensation plans and policies
applicable to all salaried employees.
21
Marc Keizer, Manager of Business Planning, is the son-in-law of Kenneth
La Grand, a member of the Company's Board of Directors. In 2005, Marc Keizer
earned $86,004, including profit-sharing and performance-based bonuses. Marc
Keizer also received options to purchase 3,300 shares of Gentex common stock at
an exercise price of $19.50. All of Mr. Keizer's compensation is determined
under and in accordance with the Company's compensation plans and policies
applicable to all salaried employees.
The Company is highly selective, and hires new employees based upon
merit. Employees may also be eligible for certain other benefits which are
similarly available on no less favorable terms to other employees of the Company
at the same level and pay rate. Family members of any employee are not
discouraged from seeking employment.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS - PRINCIPAL ACCOUNTING
FEES AND SERVICES
The Audit Committee and Board of Directors have selected, and submits
to shareholders for ratification, Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 2006. The following
fees were billed by Ernst & Young LLP, the Company's independent auditors, for
the services provided to the Company during the fiscal years ended December 31:
2005 2004
---------------------------------
Audit Fees $182,700 $225,477
Audit-Related - -
Tax Services 57,370 64,420
All Other - -
---------------------------------
Total $240,070 $289,897
---------------------------------
Audit fees include the annual audit of the Company's consolidated
financial statements, the audit of internal control over financial reporting,
timely quarterly reviews, foreign statutory audits and consultations concerning
accounting matters associated with the annual audit. Tax services primarily
include amounts billed for assistance with the calculation of the
extra-territorial exclusion and consultations on other tax matters. All
non-audit services were pre-approved by the Audit Committee pursuant to the
Revised Audit Committee Procedures for Approval of Audit and Non-audit Services
by Independent Auditors, which is attached as Appendix B to this Proxy
Statement.
Although ratification of the independent auditors by the Company's
shareholders is not legally required, our Audit Committee and Board of Directors
believes that submission of this matter to the shareholders follows sound
business practice and is in the best interest of shareholders in the current
environment. If the shareholders do not approve the selection of Ernst & Young
LLP, the selection of such firm as our independent auditors will be reconsidered
by the Audit Committee.
Representatives of Ernst & Young are expected to be present at the
Annual Meeting to respond to appropriate questions and will have an opportunity
to make a statement if they desire.
22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3, 4, and 5 furnished to the Company
during or with respect to the preceding fiscal year and written representations
from certain reporting persons, the Company is not aware of any failure by any
reporting person to make timely filings of those Forms as required by Section
16(a) of the Securities Exchange Act of 1934.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the 2005
Annual Meeting of the Company must be received by the Company at its
headquarters, c/o Corporate Secretary's Office, 600 North Centennial Street,
Zeeland, Michigan 49464, no later than November 30, 2006, if the shareholder
wishes the proposal to be included in the Company's Proxy Statement relating to
that meeting. In addition, the Company's Bylaws contain certain notice and
procedural requirements applicable to shareholder proposals, irrespective of
whether the proposal is to be included in the Company's Proxy materials. A copy
of the Company's Bylaws is filed with the Securities and Exchange Commission and
can be obtained from the Public Reference Section of the Commission or the
Company.
MISCELLANEOUS
The Company's Annual Report to Shareholders, including financial
statements, is being mailed to shareholders with this Proxy Statement.
Management is not aware of any matters to be presented for action at
the Annual Meeting other than as set forth in this Proxy Statement. If other
business should come before the meeting, it is the intention of the persons
named as Proxy holders in the accompanying Proxy to vote the shares in
accordance with their judgment. Discretionary authority to do so is included in
the Proxy.
The cost of the solicitation of Proxies will be borne by the Company.
In addition to the use of the mail and e-mail, Proxies may be solicited
personally or by telephone or facsimile by a few regular employees of the
Company without additional compensation. The Company does not intend to pay any
compensation for the solicitation of Proxies, except that brokers, nominees,
custodians, and other fiduciaries will be reimbursed by the Company for their
expenses in connection with sending Proxy materials to registered and beneficial
owners and obtaining their Proxies.
Shareholders are urged to promptly vote your shares either on the
Internet (preferred method), via telephone, or by dating, signing, and returning
the accompanying Proxy in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Connie Hamblin
Connie Hamblin
Secretary
March 29, 2006
23
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Appendix A
[LOGO GENTEX CORPORATION]
AUDIT COMMITTEE CHARTER
Effective February 16, 2006
I. ROLE:
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities for: (a)
management's conduct of the Company's accounting and financial
reporting processes; (b) the audits of the Company's financial
statements; and (c) the Company's system of disclosure controls and
internal controls regarding finance, accounting, legal compliance and
ethics.
II. MEMBERSHIP:
A. Independence/Composition. The Audit Committee shall be comprised
of not less than three (3) members of the Board of Directors. Each
member of the Audit Committee shall meet independence and experience
requirements of NASDAQ, the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange
Commission (the "Commission"). Accordingly, the members of the Audit
Committee will consist of directors:
o None of whom has any relationship to the Company that would
interfere with the exercise of his or her independent judgment
as a member of the Audit Committee; and
o All of whom, as determined by the Board of Directors in its
business judgment, are financially literate and have a working
familiarity with basic financial and accounting practices and at
least one member of the Audit Committee shall (barring a
vacancy) meet the NASDAQ standard for financial sophistication
and one member shall (barring a vacancy) be an "audit committee
financial expert" in compliance with the criteria established
by the Commission.
B. Appointment. The members of the Audit Committee shall be
nominated and appointed annually to one year terms by the Board of
Directors. The Board shall designate one member of the Audit Committee
as Chair. Audit Committee members may be replaced by the Board. A
member of the Audit Committee shall not simultaneously serve on the
audit committees of more than two other public companies.
III. MEETINGS:
A. Schedule. The Audit Committee shall hold regular meetings at
least quarterly each fiscal year. The meeting schedule shall include
sessions with management, and the independent auditor. Each regularly
scheduled meeting of the Audit Committee shall, however, conclude with
an executive session of the Audit Committee, absent members of
management and on such terms and conditions as the Audit Committee may
elect. Special meetings of the Audit Committee may be called pursuant
to any procedures established by the Audit Committee. Pre-meeting
materials are expected to be distributed to Audit Committee members in
sufficient time prior to meetings to permit review by members before
such meetings.
B. Minutes/Reports. The Audit Committee shall keep written minutes
of its meetings, including a report of all actions taken by the Audit
Committee. Such minutes shall be delivered to the Board of Directors
and shall be maintained with the books and records of the Company.
IV. RESPONSIBILITIES:
The Company's management is responsible for preparing the Company's
financial statements, and the independent auditor is responsible for
auditing the Company's financial statements. Consequently, the Audit
Committee's role is one of oversight and does not provide any expert
assurance or certification as to the Company's financial statements or
the work of the independent auditor. The independent auditor, however,
is directly accountable to the Audit Committee as set forth below.
The following functions are the common recurring activities of the
Audit Committee in carrying out its oversight function:
A. Document and Report Review
1. Review, assess the adequacy of, and update this
Charter periodically or as conditions dictate (no
less often than annually).
2. Review and discuss with management the Company's
annual financial statements and any reports or other
financial information submitted to the Securities and
Exchange Commission or to the public, including any
report issued by the independent auditor, and
including matters required to be reviewed under
applicable legal, regulatory, or NASDAQ requirements.
In lieu of the entire Audit Committee undertaking
such review and discussion, the Chair may review and
discuss with management if the entire Audit
Committee's involvement is not required by any
applicable law, rule, or regulation.
3. Review any management letters or other reports from
the independent auditor, management's responses
thereto, other communications between management and
the independent auditor, and any subsequent updates
on actions taken, as appropriate.
4. Recommend to the Board of Directors whether the
financial statements should be included in the Annual
Report on Form 10-K.
5. Review and discuss with management and the
independent auditor the quarterly report on Form 10-Q
prior to its filing, including matters required to be
reviewed under applicable legal, regulatory, or
NASDAQ requirements.
6. Discuss with management earnings press releases prior
to dissemination, and financial information and
earnings guidance provided to analysts and rating
agencies. In lieu of the entire Audit Committee
undertaking such discussions, the Chair may hold such
discussions with management if the entire Audit
Committee's involvement is not required by any
applicable law, rule, or regulation.
7. Review management's assessment and report on the
effectiveness of the Company's internal controls over
financial reporting.
B. Independent Auditors
1. Select and appoint, determine the compensation of and
funding for, evaluate, and provide oversight of the
Company's independent auditor (engaged for the
purpose of preparing or issuing an audit report or
performing other audit, review or attest services),
including the removal of the Company's independent
auditor, all within the Audit Committee's sole
authority. The independent auditor shall report and
be accountable directly to the Audit Committee, and
the Audit Committee shall oversee the resolution of
any disagreements between management and the
independent auditor.
2. On an annual basis, receive from the independent
auditor a formal written statement delineating, and
review and discuss with the independent auditor, all
relationships the auditor has with the Company
(consistent with Independence Standards Board
Standard 1) to determine the auditor's objectivity
and independence, undertaking or recommending
appropriate action to ensure and continue that
independence.
3. Implement and administer the Company's Policy
Regarding the Approval of Audit and Permissible
Non-Audit Services Provided by the Independent
Auditor.
4. Review the independent auditor's attestation and
report on management's assessment and report on the
effectiveness of the Company's internal controls over
financial reporting, and hold timely discussions with
the independent auditor regarding the content of that
attestation and report.
5. At least annually, obtain and review a report by the
independent auditor regarding:
(a) The firm's internal quality control procedures;
(b) Any material issues raised by the most
recent internal quality-control review, peer
review of the firm, or by any inquiry or
investigation by governmental or
professional authorities, within the
preceding five years, respecting one or more
independent audits carried out by the firm,
and any steps taken to deal with any such
issues; and
(c) All relationships between the independent
auditor and its related entities and the
Company and its related entities (with a
confirmation that in the professional
judgment the auditor is independent of the
Company under all applicable laws, rules,
and regulations).
C. Financial Reporting Processes
1. Review the integrity of the Company's financial
reporting process, both internal and external, giving
consideration to consultation with management and the
independent auditors.
2. Review the Company's critical accounting policies and
practices, and alternative treatments, as well as
consider and approve, as appropriate, major changes
to the Company's accounting policies and practices or
internal controls over financial reporting as
suggested by the independent auditor and/or
management. Discuss with the independent auditor an
analysis of the auditor's judgment as to the quality
of the Company's accounting policies and practices.
3. Review and approve all related party transactions.
4. Establish and maintain procedures for the receipt,
retention and treatment of complaints regarding
accounting, internal accounting controls, or auditing
matters, including procedures necessary to receive
and respond to confidential and anonymous submissions
by Company employees regarding questionable
accounting or auditing matters.
D. Internal Audit
1. Discuss with management and the independent auditor
the necessity of an internal audit function.
2. To the extent an internal audit function is
considered necessary, to oversee the organization,
objectivity, responsibilities, plans, budgets, and
staffing of such a function.
E. Ethical and Legal Compliance
1. Review the Company's Code of Conduct and Code of
Ethics for Senior Officers to ensure that management
has maintained a system to comply with expected
ethical and legal requirements.
2. Review, with the Company's counsel, legal compliance
matters including corporate securities trading
policies.
3. Review, with the Company's counsel, any legal matter
that could have a significant impact on the Company's
financial statements.
4. Discuss the Company's risk assessment and risk
management, any steps taken by management to control
or mitigate risk exposure, as well as any audit
problems or difficulties and management's response.
F. Other
1. Prepare the Audit Committee report, in accordance
with all applicable rules and regulations, to be
included in the Company's annual proxy statement to
shareholders.
2. Perform an annual self-assessment relative to the
Audit Committee's purpose, duties and
responsibilities set forth in this Charter.
3. Obtain advice and assistance from outside legal,
accounting or other advisors as deemed appropriate to
perform the Audit Committee's duties and
responsibilities. The Audit Committee has the sole
authority to retain and determine the funding for
such advisors and shall be given the necessary
resources to retain such advisors and to otherwise
fulfill its functions as set forth in this Charter.
4. Perform any other activities consistent with this
Charter, the Company's Bylaws and governing law, as
the Audit Committee or the Board of Directors deems
necessary or appropriate.
V. LIMITATIONS:
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine if the Company's financial statements
and disclosures are complete and accurate and are in accordance with
generally accepted accounting principles and applicable rules and
regulations. These are the responsibilities of management and the
independent auditor.
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Appendix B
[LOGO GENTEX CORPORATION]
Revised Audit Committee
Procedures for Approval of Audit and Non-Audit
Services by Independent Auditors
The following procedure is adopted by the Audit Committee relating to the
approval of audit and non-audit services provided by the Company's independent
auditors.
1. The Committee has reviewed and approved work to be performed
by the independent auditors in the areas of tax, audit and
advisory services and subcategories within each category as
designated on the attached schedule.
2. Any additional audit and non-audit work performed by the
independent auditors that is not included on the attached
schedule must be specifically pre-approved as follows:
a. If the proposed independent auditors' engagement is
equal to or less than $25,000, the Chairman of the
Audit C ommittee must pre-approve the work and will
communicate his approval to the full Audit Committee
at the next regularly scheduled meeting of the Audit
Committee.
b. If the proposed independent auditors' engagement is
greater than $25,000, the full Audit Committee must
pre-approve the work.
3. The independent auditors may not conduct any work that is
prohibited by applicable SEC rules or regulations
Effective October 30, 2003
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The shareholder(s) signing on the reverse side hereby appoint(s) Connie Hamblin
and Enoch Jen as Proxies, each with the power to appoint a substitute, and
hereby authorizes them to represent and to vote, as designated herein, all of
the shares of common stock of Gentex Corporation held of record by such
shareholder(s) on March 17, 2006, at the Annual Meeting of Shareholders to be
held on May 11, 2006, or any adjournment thereof.
The Board of Directors recommends a vote FOR
Proposals 1 and 2.
1. Election of Directors (except where marked to the contrary) for 2. Ratify the appointment of Ernst & Young LLP
a three-year term. as the Company's auditors for the fiscal year ended
December 31,2006.
_____ FOR _____ WITHHELD _______FOR _______ AGAINST ________ ABSTAIN
Nominees: Fred Bauer, Gary Goode, J. Terry Moran
(INSTRUCTION: To withhold authority to vote for an individual In their discretion, the Proxies are authorized to
nominee, strike a line through the nominee's name listed above.) vote upon such other business as may properly come
before the meeting.
______ I plan to attend the meeting.
______ I do not plan to attend the meeting.
I wish to receive only one annual report, proxy statement, prospectus or other
disclosure document at the address shown on this proxy card.
_______YES _______ NO
(To be Signed on Reverse Side)
--------------------------------------------------------------------------------
When properly executed, this proxy will be voted in the manner directed by the
shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED FOR A THREE-YEAR TERM, AND FOR THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS FOR THE YEAR
ENDED DECEMBER 31, 2006.
SIGNATURE ------------------------------------------------------ DATE -----------------------------------
SIGNATURE ------------------------------------------------------ DATE ----------------------------------
NOTE: Please sign as your name appears hereon. When shares are held jointly,
each holder should sign. When signing for an estate, trust, or
corporation, the title and capacity should be stated. Persons signing
as attorney-in-fact should submit powers of attorney.