SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ____)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for use of
/x/ Definitive Proxy Statement the Commission only (as
/ / Definitive Additional Materials permitted by Rule 14a-6
/ / Soliciting Material Pursuant to (e) (2))
Rule 14a-11 (c) or Rule 14a-12
SUPREME INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per exchange Act Rules 14a-6 (i) (4) and
0-11.
(1) Title of each class of securities to which transaction applies.
(2) Aggregate number of securities to which transaction applies.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction.
(5) Total fee paid.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid.
(2) Form, Schedule or Registration Statement No.
(3) Filing Party.
(4) Date Filed.
SUPREME INDUSTRIES, INC.
16441 CR 38
P.O. Box 237
Goshen, IN 46528
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 2, 2001
To Shareholders of
SUPREME INDUSTRIES, INC.:
The annual meeting of shareholders of Supreme Industries, Inc. (the
"Company") will be held at the Courtyard by Marriott, 1930 Lincolnway East,
Goshen, Indiana on May 2, 2001 at 10:00 a.m. Eastern Standard Time for the
following purposes:
1. To elect nine directors to serve until the next annual meeting of
shareholders and until their respective successors shall be elected and
qualified;
2. To approve the Company's 2001 Stock Option Plan;
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors; and
4. To transact such other business as may properly come before the meeting
and any adjournment thereof.
Information regarding matters to be acted upon at this meeting is contained
in the accompanying Proxy Statement. Only shareholders of record at the
close of business on March 5, 2001 are entitled to notice of and to vote at
the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting. Whether or not
you plan to attend, please complete, sign, and return promptly the enclosed
proxy in the accompanying addressed envelope for which postage is prepaid.
You may revoke the proxy at any time before the commencement of the meeting.
By Order of the Board of Directors
Goshen, Indiana William J. Barrett
March 22, 2001 Secretary
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING, REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN, AND RETURN PROMPTLY
THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE MEETING.
1
SOLICITATION OF PROXIES
This Proxy Statement and accompanying Proxy are furnished to shareholders in
connection with the solicitation of proxies by the Board of Directors of
Supreme Industries, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held at the Courtyard by Marriott, 1930 Lincolnway East,
Goshen, Indiana, 10:00 a.m. Eastern Standard Time on May 2, 2001, or at any
adjournment thereof. The Notice of Meeting, the form of Proxy, and this
Proxy Statement are being mailed to the Company's shareholders on or about
March 22, 2001.
The expense of proxy solicitation will be borne by the Company. Although
solicitation is to be made primarily through the mails, the Company's
officers and/or employees and those of its transfer agent may solicit proxies
by telephone or personal contact, but in such event no additional
compensation will be paid by the Company for such solicitation. Further,
brokerage firms, fiduciaries, and others may be requested to forward
solicitation material regarding the meeting to beneficial owners of the
Company's common stock, and in such event the Company will reimburse them for
all accountable costs so incurred.
A copy of the Annual Report to Shareholders of the Company for its fiscal
year ended December 31, 2000, is being mailed with this Proxy Statement to
all such shareholders entitled to vote, but does not form any part of the
information for solicitation of proxies.
RECORD DATE AND VOTING SECURITIES
The Board of Directors of the Company has fixed the close of business on
March 5, 2001, as the record date for determination of shareholders entitled
to notice of and to vote at the Annual Meeting. As of the record date, there
were 8,889,934 shares of Class A Common Stock and 1,917,394 shares of Class B
Common Stock of the Company issued and outstanding. The presence, in person
or by proxy, of the holders of a majority of the issued and outstanding
shares of Common Stock as of the record date is necessary to constitute a
quorum at the Annual Meeting with respect to matters upon which both classes
of Common Stock are entitled to vote.
ACTION TO BE TAKEN AND VOTE REQUIRED
Action will be taken at the meeting to elect a Board of Directors, approve
the Company's 2001 Stock Option Plan and to ratify the selection of
PricewaterhouseCoopers LLP as independent auditors. The proxy will be voted
in accordance with the directions specified thereon, and otherwise in
accordance with the judgment of the persons designated as proxies. Any proxy
on which no directions are specified will be voted for the election of
directors named herein, and otherwise in accordance with the judgment of the
persons designated as proxies. Any person executing the enclosed proxy may
nevertheless revoke it at any time prior to the actual voting thereof by
filing with the Secretary of the Company either a written instrument
expressly revoking it or a duly executed proxy bearing a later date.
Furthermore, such person may nevertheless elect to attend the meeting and
vote in person, in which event, the proxy will be suspended.
2
The Company's Certificate of Incorporation authorizes two classes of $.10 par
value Common Stock (designated Class A and Class B) as well as one class of
$1.00 par value preferred stock. No shares of the preferred stock are
outstanding. In voting on all matters expected to come before the meeting,
a shareholder of either Class A or Class B Common Stock will be entitled to
one vote, in person or by proxy, for each share held in his name on the
record date, except that the holders of Class A Common Stock shall be
entitled to elect that number (rounded down) of directors equal to the total
number of directors to be elected divided by three, i.e., three directors,
and the holders of Class B Common Stock shall be entitled to elect the
remaining directors. The election of three directors by the holders of the
Class A Common Stock requires the affirmative vote of a majority of the
shares of Class A Common Stock represented in person or by proxy at a meeting
at which a majority of the outstanding Class A shares is present. The
Company's Certificate of Incorporation prohibits cumulative voting. The
ratification of the selection of auditors requires the affirmative vote of
the holders of a majority of the outstanding shares of the Common Stock
present, in person or by proxy, at the annual meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulation sets forth the names of those persons who are known
to Management to be the beneficial owners as of March 5, 2001 of more than
five percent of the Company's Class A or Class B Common Stock. Such
tabulation also sets forth the number of shares of the Company's Class A or
Class B Common Stock beneficially owned as of March 5, 2001 by all of the
Company's directors and nominees (naming them) and all directors and officers
of the Company as a group (without naming them). Persons having direct
beneficial ownership of the Company's Common Stock possess the sole voting
and dispositive power in regard to such stock. Class B Common Stock is freely
convertible on a one-for-one basis into an equal number of shares of Class A
Common Stock, and ownership of Class B shares is deemed to be beneficial
ownership of Class A shares under Rule 13d-3(d)(1) promulgated under the
Securities Exchange Act of 1934. As of March 5, 2001, there were 8,889,934
Class A shares and 1,917,394 Class B shares outstanding.
The following tabulation also includes Class A shares covered by options
granted under the Company's 1992 and 1998 Stock Option Plans, which options
are collectively referred to as "Stock Options". The Stock Options have no
voting or dividend rights.
3
Name and Address Percent
of Beneficial Owner Title Class Beneficial Ownership of Class (1)
-----------------------------------------------------------------------------
Wachovia Corporation Class A 480,656 5.4%
P.O. Box 3099
Winston Salem, NC 27150
Bernie Holtgrieve Class A 525,278 5.9%
7777 Washington Village Drive
Suite 210
Dayton, OH 45459
Mark E. Brady, Ronald L. Eubel
and Robert J. Suttman Class A 564,072 6.3%
7777 Washington Village Drive
Suite 210
Dayton, OH 45459
Eubel Brady & Suttman Asset
Management, Inc. Class A 524,830 5.9%
7777 Washington Village Drive
Suite 210
Dayton, OH 45459
Wilen Management Corporation Class A 578,136 6.5%
2360 West Joppa Road
Lutherville, MD 21093
Wellington Management Company Class A 1,179,990 13.3%
75 State Street
Boston, MA 02109
Thomas Cantwell Class A 639,248 (2)(6) 6.7%
3949 Ann Arbor Dr. Class B 637,224 33.2%
Houston, TX 77063
Herbert M. Gardner Class A 822,314 (2)(3)(6) 8.7%
26 Broadway, Suite 815 Class B 496,285 (3) 25.9%
New York, NY 10004
4
Name and Address Percent
of Beneficial Owner Title Class Beneficial Ownership of Class (1)
------------------------------------------------------------------------------
William J. Barrett Class A 1,162,956 (2)(4)(6) 12.3%
26 Broadway, Suite 815 Class B 568,452 (4) 29.6%
New York, NY 10004
Omer G. Kropf Class A 544,549 (2) 6.1%
16441 County Road 38
Goshen, IN 46528
Robert J. Campbell Class A 121,107 (2)(5)(6) 1.4%
1304 Summit Avenue, Suite 2 Class B 40,040 2.1%
Plano, TX 75074
Rice M. Tilley, Jr. Class A 26,172 (2) *
3200 Bank One Tower
500 Throckmorton
Fort Worth, TX 76102
Robert W. Wilson Class A 47,854 (2) *
16441 County Road 38
Goshen, IN 46528
H. Douglas Schrock Class A 73,348 (2) *
P.O. Box 65
New Paris, IN 46553
Rick L. Horn Class A 41,694 (2) *
16441 County Road 38
Goshen, IN 46528
All directors and officers Class A 3,479,242 (2)(3)(4)(5)(6) 32.3%
as a group of (9) persons Class B 1,742,001 (3)(4) 90.9%
* Less than 1%
(1) The percentage calculations have been made in accordance with Rule
13d-3(d)(1) promulgated under the Securities Exchange Act of 1934. In
making these calculations, shares beneficially owned by a person as a result
of the ownership of Stock Options, or ownership of Class B Common Stock,
were deemed to be currently outstanding solely with respect to the holders of
such options or Class B shares.
(2) Includes the number of Class A Shares set forth opposite the persons
named in the following table which shares are beneficially owned as a result
of the ownership of Stock Options under the Company's 1992 and 1998 Stock
Option Plans.
5
Stock Options
-------------
Thomas Cantwell 2,024
Herbert M. Gardner 20,258
William J. Barrett 20,258
Omer G. Kropf 39,954
Robert J. Campbell 2,024
Rice M. Tilley, Jr. 2,024
Robert W. Wilson 27,289
H. Douglas Schrock 2,024
Rick L. Horn 20,258
-------------
All directors and officers as a group 136,113
(3) Includes 8,785 shares of Class A Common Stock and 51,447 shares of Class
B Common Stock owned by Mr. Gardner's wife. Mr. Gardner has disclaimed
beneficial ownership of these shares.
(4) Includes 74,260 shares of Class A Common Stock and 8,954 shares of Class
B Common Stock owned by Mr. Barrett's wife. Mr. Barrett has disclaimed
beneficial ownership of these shares.
(5) Includes 373 shares of Class A Common Stock owned beneficially by Mr.
Campbell's wife, as custodian for their children. Mr. Campbell has
disclaimed beneficial ownership of these shares.
(6) Includes the number of shares of Class A Common Stock which are deemed to
be beneficially owned as a result of ownership of shares of Class B
Common Stock, which Class B shares are freely convertible on a
one-for-one basis into Class A shares.
Depositories such as The Depository Trust Company (Cede & Company) as of
March 5, 2001 held, in the aggregate, more than 5% of the Company's then
outstanding Class A voting shares. The Company understands that such
depositories hold such shares for the benefit of various participating
brokers, banks, and other institutions which are entitled to vote such shares
according to the instructions of the beneficial owners thereof. The Company
has no reason to believe that any of such beneficial owners hold more than 5%
of the Company's outstanding voting securities.
6
ELECTION OF DIRECTORS
Nine directors are to be elected at the Annual Meeting of Shareholders.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the nominees shown below for the term of one year and until their
successors are duly elected and have qualified. The Company's Board of
Directors is currently comprised of nine members. Of the persons named
below, Messrs. Tilley, Schrock, and Horn have been nominated for election by
the holders of Class A Common Stock, and the remaining persons have been
nominated for election by the holders of Class B Common Stock.
Messrs. Gardner, Barrett, Kropf and Wilson were the executive officers of the
Company as of December 31, 2000. Officers are elected annually by the Board
of Directors at the Annual Meeting of Directors held immediately following
the Annual Meeting of Shareholders.
Although it is not contemplated that any nominee will be unable to serve as a
director, in such event the proxies will be voted by the holders thereof for
such other person as may be designated by the current Board of Directors.
The Management of the Company has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected to office, and to
the knowledge of Management, the nominees intend to serve the entire term for
which election is sought.
There are no family relationships by blood, marriage, or adoption between any
director or executive officer, except Mr. Schrock who is Mr. Barrett's
brother-in-law. Mr. Rice Tilley is a member of the law firm of Law, Snakard
& Gambill, a Professional Corporation, which performed legal services for the
Company during 2000.
Only nine nominees for director are named, even though the Company's bylaws
allow a maximum of fifteen, since the proposed size of the board is deemed
adequate to meet the requirements of the Board of Directors. The proxies
given by the Class A Shareholders cannot be voted for more than three persons
and the proxies given by Class B shareholders cannot be voted for more than
six persons. The information set forth below with respect to each of the
nominees has been furnished by each respective nominee.
7
Executive Positions With
Name, Age, and Business Experience Officer Since Company
-----------------------------------------------------------------------------
Herbert M. Gardner, 61 1979 Chairman of the
Senior Vice President of Janney Montgomery Board, President
Scott Inc., investment bankers, since 1978;
Chairman of the Board of the Company, since
1979 and President of the Company since
June 1992. Also a Director of: Nu Horizons
Electronics Corp., an electronic component
distributor; Transmedia Network, Inc., a
company that develops and markets
transaction-based dining and other consumer
savings programs; Hirsch International Corp.,
importer of computerized embroidery machines,
supplies, and developer of embroidery machine
application software; Co-Active Marketing
Group, Inc., a marketing and sales promotion
company; TGC Industries, Inc., a company
engaged in the geophysical services industry;
and Rumson-Fair Haven Bank and Trust Company,
a New Jersey state independent, commercial
bank and trust company.
Omer G. Kropf, 59 1984 Executive Vice
Executive Vice President of the Company since President
August 1984; President and Chief Executive
Officer of Supreme Corporation, a subsidiary
of the Company, from January 19, 1984 to
November 2, 2000, and co-holder of Office of
the President since November 2000.
William J. Barrett, 61 1979 Secretary and
Senior Vice President of Janney Montgomery Assistant
Scott Inc., investment bankers, since 1976; Treasurer
Secretary and Assistant Treasurer of the
Company and a Director since 1979. Also a
Director of: TGC Industries, Inc., a company
engaged in the geophysical services industry
and American Country Holdings, Inc., a
specialized property and casualty insurance
company with focus on transportation and
hospitality markets; and Rumson-Fair Haven
Bank and Trust Company, a New Jersey state
independent, commercial bank and trust company.
Robert W. Wilson, 56 1992 Executive Vice
Treasurer, Executive Vice President, and Chief President,
Financial Officer of the Company since Treasurer and
December 1992; Vice President of Finance since Chief Financial
1988 and co-holder of the Office of the Officer
President since November 2000, of Supreme
Corporation, a subsidiary of the Company.
8
Executive Positions With
Name, Age, and Business Experience Officer Since Company
-----------------------------------------------------------------------------
Robert J. Campbell, 69 n/a None
Retired Chief Executive Officer of TGC
Industries, Inc., from March 1996 to
December, 1998, a company engaged in the
geophysical services industry; Vice
Chairman of the Board and Chief Executive
Officer of TGC from July 1993 through
March 1996; Chairman of the Board and
Chief Executive Officer of TGC Industries,
Inc., from July 1986 to July 1993. Prior
to such time, President and Chief Executive
Officer of the Company for more than five years.
Dr. Thomas Cantwell, 73 n/a None
1978 to present, independent oil and gas
consultant and personal investor; Paradigm
Entertainment, Inc., a company that produces
and sells entertainment software, Director
since 1997; September 1987 to present,
President of Technical Computer Graphics,
Inc., a software/hardware integrator in the
computer graphics field; October 1992 to
present, Director of Discreet Logic, Inc., a
software development company; and Director,
Locus Dialogue, Inc., a company in the voice
recognition and computer telephoning fields.
H. Douglas Schrock, 52 n/a None
President of Smoker Craft, Inc., a pleasure
boat manufacturer, since 1978; President of
Earthway Products, Inc. and Goshen Iron Metal
Company; Executive Vice President of Goshen
Sash and Door Co., Director of Key Bank of
Indiana.
Rice M. Tilley, Jr., 64 1981 Assistant
Member of the law firm of Law, Snakard & Secretary
Gambill, a Professional Corporation, since
1965.
Rick L. Horn, 48 n/a None
Vice President of Sales and Marketing of
Supreme Corporation since September 1994;
President and Chief Executive Officer of Iowa
Mold Tooling Company, a manufacturer of truck
mounted cranes from July 1991 to August 1994;
President of Stahl - A Scott Fetzer Company,
a manufacturer of utility and service truck
bodies from January 1988 to July 1991; and
various sales and marketing positions with
Holiday Rambler Corporation, a recreational
vehicle manufacturer, from June 1975 to
January 1980.
9
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee comprised of Dr. Cantwell
and Messrs. Gardner, Barrett, and Kropf, an Audit Committee comprised of Dr.
Cantwell and Messrs. Tilley and Campbell, and a Stock Option Committee
comprised of Dr. Cantwell and Messrs. Gardner and Barrett.
The Executive Committee, which met four times during the year ended December
31, 2000, is charged by the Company's bylaws with the responsibility of
exercising such authority of the Board of Directors as is specifically
delegated to it by the Board, subject to certain limitations contained in the
bylaws.
The Audit Committee met three times during the year ended December 31, 2000.
The purpose and functions of the Audit Committee are to recommend the
appointment of independent auditors; review the scope of the audit proposed
by the independent auditors; review year-end financial statements prior to
issuance; consult with the independent auditors on matters relating to
internal financial controls and procedures; and make appropriate reports and
recommendations to the Board of Directors.
The Stock Option Committee met twice during the year. The Committee is
responsible for awarding Stock Options to key employees or individuals who
provide substantial advice or other assistance to the Company so that they
will apply their best efforts for the benefit of the Company.
The Board of Directors does not have nominating or compensation committees.
During the year ended December 31, 2000, the Board of Directors held four
regularly scheduled meetings. All of the Directors listed herein attended
75% or more of the total meetings of the Board and of the committees on which
they serve.
SUPREME'S AUDIT COMMITTEE
The responsibilities of the Audit Committee, which are set forth in the Audit
Committee Charter adopted by the Board of Directors (a copy of which is
attached to this Proxy Statement as Appendix A), include providing oversight
to the Company's financial reporting process through periodic meetings with
the Company's independent accountants and management to review accounting,
auditing, internal controls and financial reporting matters. The members of
the Audit Committee are independent as defined in Section 121(A) of the
listing standards of the American Stock Exchange. The management of the
Company is responsible for the preparation and integrity of the financial
reporting information and related systems of internal controls. The Audit
Committee, in carrying out its role, relies on the Company's senior
management, including senior financial management, and its independent
accountants.
We have reviewed and discussed with senior management the Company's audited
financial statements included in the 2000 Annual Report to Shareholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of
management and, (ii) have been prepared in conformity with accounting
principles generally accepted in the United States of America.
10
We have discussed with PricewaterhouseCoopers LLP, the Company's independent
accountants, the matters required to be discussed by Statement of Auditing
Standards ("SAS") No. 61, "Communications with Audit Committees." SAS No. 61
requires the Company's independent accountants to provide us with additional
information regarding the scope and results of their audit of the Company's
financial statements, including with respect to (i) their responsibility
under auditing standards generally accepted in the United States of America,
(ii) significant accounting policies, (iii) management judgments and
estimates, (iv) any significant audit adjustments, (v) any disagreements with
management, and (vi) any difficulties encountered in performing the audit.
We have received from PricewaterhouseCoopers LLP a letter providing the
disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees", with respect to any
relationships between PricewaterhouseCoopers LLP and the Company that in
their professional judgment may reasonably be thought to bear on their
independence. PricewaterhouseCoopers LLP has discussed its independence with
us and has confirmed in such letter that, in its professional judgment, it
is independent of the Company within the meaning of the federal securities
laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2000 Annual
Report to Shareholders, we have recommended to the Board of Directors that
such financial statements be included in the Company's Annual Report on Form
10-K for filing with the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with
accounting principles generally accepted in the United States of America.
That is the responsibility of management and the Company's independent
accountants. In giving our recommendation to the Board of Directors, we have
relied on (i) management's representation that such financial statements have
been prepared with integrity and objectivity and in conformity with generally
accepted accounting principals, and (ii) the report of the Company's
independent accountants with respect to such financial statements.
The Audit Committee:
Rice M. Tilley, Jr. (Chair)
Robert J. Campbell
Thomas Cantwell
Audit Fees
The aggregate fees billed by the Company's independent accountants for
professional services rendered in connection with (i) the audit of the
Company's annual financial statements set forth in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, and (ii) the
review of the Company's quarterly financial statements set forth in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000, were approximately $108,000.
11
All Other Fees
The aggregate fees for all other services rendered by its independent
accountants for the Company's most recent fiscal year were approximately
$380,000. These fees include work performed by the independent accountants
with respect to preparation of corporate income tax returns, tax compliance
and planning projects and audits of employee benefit plans.
The Audit Committee has advised the Company that it has determined that the
non-audit services rendered by the Company's independent accountants during
the Company's most recent fiscal year are compatible with maintaining the
independence of such accountants.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company and its subsidiaries for services rendered during the last three
fiscal years to the Company's chief executive officer and each of the most
highly compensated executive officers of the Company whose cash compensation
exceeds $100,000.
Summary Compensation Table
Annual Compensation
Name and ----------------------- Long Term All Other
Principal Position Year Salary $ Bonus $ Compensation Compensation (4)
------------------------------------------------------------------------------
Herbert M. Gardner (1) 2000 $ 108,000 $ 106,500 $ -- $ --
Chairman of the Board 1999 108,000 126,000 -- --
and President 1998 108,000 109,000 -- --
William J. Barrett (1) 2000 108,000 106,500 -- --
Secretary and 1999 108,000 126,000 -- --
Assistant Treasurer 1998 108,000 109,000 -- --
Omer G. Kropf (2) 2000 240,000 568,500 -- 9,021
Executive Vice 1999 240,000 693,050 -- 7,784
President 1998 225,000 490,000 -- 7,786
Robert W. Wilson (3) 2000 116,230 130,000 -- 5,150
Treasurer, Executive 1999 113,000 145,000 -- 4,911
Vice President and 1998 110,000 120,000 -- 4,878
Chief Financial Officer
12
(1) On January 1, 1993, the Company entered into three-year consulting
agreements commencing on January 1, 1993 with Mr. Gardner and Mr. Barrett for
financial and advisory consulting services. On September 22, 1994, the Board
of Directors approved an amendment to the contracts so that on December 31st
of each year the contracts will be extended for an additional year. The
terms of the agreement call for Mr. Gardner and Mr. Barrett to receive annual
consulting fees of $108,000 annually, plus a cash incentive performance fee
in the amount of $36,000 if the pre-tax earnings of the Company exceed
$2,000,000 plus an amount equal to 0.6% of the amount by which such pre-tax
earnings exceed $2,000,000.
(2) On May 1, 1998, the Company's wholly-owned subsidary, Supreme
Corporation, entered into a four-year employment contract with Mr. Kropf
through April 30, 2002. The terms of this agreement provide for a minimum
base salary of $240,000 per year plus a bonus subject to approval by the
Board of Directors, based upon the Company's pre-tax operating performance.
(3) On January 1, 1998, the Company's wholly-owned subsidary, Supreme
Corporation, entered into a three-year employment contract with Mr. Wilson
through December 31, 2000. On July 1, 2000, amendment number one extended
the contract through December 31, 2003. The terms of the agreement provide
for a minimum base salary of $120,000 per year (subject to increase by the
determination of the Board of Directors) plus a bonus subject to approval by
the Board of Directors, based upon the Company's pre-tax operating
performance.
(4) Includes the Company's matching contribution to its Section 401 (k)
Retirement Plan and payment of premiums for disability and life insurance
coverage for the named executive.
Director Compensation
Outside directors are paid $1,000 per regular board meeting attended and an
additional $6,000 annually. Members of the Audit Committee are paid $1,000
per meeting. Non-employee members of the Executive Committee are paid $2,000
per month. Each Director is reimbursed for out-of-pocket expenses incurred
in attending Board or Committee meetings.
13
Aggregate Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
The following table sets forth certain information regarding the year-end
value of options held by the Company's executive officers during the fiscal
year ended December 31, 2000. There are no stock appreciation rights
outstanding.
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Value Options at Options at the
Acquired Realized the Year-End Year-End(1)
On At Exercisable/ Exercisable/
Name Exercise Exercise Unexercisable Unexercisable
------------------------------------------------------------------------------
Herbert M. Gardner -- $ -- 20,258 66,379 $ -- $ --
William J. Barrett -- -- 20,258 66,379 -- --
Omer G. Kropf -- -- 39,954 47,405 -- --
Robert W. Wilson -- -- 27,289 38,582 -- --
(1) The value of outstanding options is based on the December 31, 2000
closing stock price which was $2.81.
The Board of Directors Report on Executive Compensation
The Company's compensation policy and annual compensation applicable to the
Company's executive officers are the responsibility of the Board of
Directors. Executive officers of the Company who are also members of the
Board do not participate in setting their own compensation. The Board of
Directors reviews the individual performance of each executive officer and
the financial performance of the Company. The Board also takes into account
salary levels, bonus plans, stock incentive plans and other compensation
packages made available to executive officers of companies of similar size
and nature. The Board of Directors considers the Company's compensation
policy in light of Section 162(m) of the Internal Revenue Code of 1986 and
related regulations regarding the deductibility of certain compensation. No
executive has received compensation which is non-deductible under such
Section; however, the Board of Directors may determine to pay compensation
which is non-deductible in certain circumstances. In accordance with the
above compensation policy, the Board of Directors has established certain
compensation arrangements as set forth below.
The Board has approved Consulting Agreements between the Company and Mr.
Herbert M. Gardner, Chairman of the Board and President of the Company, and
Mr. William J. Barrett, Secretary and Assistant Treasurer of the Company.
These Consulting Agreements went into effect January 1, 1993, and, as
amended, continue through December 31, 2001. In consideration of services to
be provided to the Company, the Consulting Agreements provide for Messrs.
Gardner and Barrett to each receive (in addition to certain fringe benefits):
(1) a monthly fee of $7,000 during 1993, $8,000 during 1994, and $9,000
during 1995 and in each year thereafter (which monthly payments are to be
offset by all other fees paid to Messrs. Gardner and Barrett, respectively,
for serving as members of the Board of Directors and any committee of the
Company and it's subsidiaries): and (2) if the pre-tax earnings of the
Company exceed $2,000,000, an incentive bonus of $36,000, plus an amount
equal to 0.6% of the amount by which such pre-tax earnings exceed $2,000,000.
14
The Company's wholly-owned subsidiary, Supreme Corporation, has entered into
an Employment Contract with Mr. Omer G. Kropf employing Mr. Kropf as
President of Supreme Corporation (Mr. Kropf is also an Executive Vice
President of the Company). The Employment Contract is for a term of four
years beginning on May 1, 1998, and ending on April 30, 2002. In
consideration of his services rendered as President of Supreme Corporation,
the Employment Contract provides that Supreme Corporation will pay to Mr.
Kropf (in addition to certain fringe benefits) a minimum base salary of
$240,000 per year plus a pre-tax incentive bonus if earned under Supreme
Corporation's Bonus Payment Plan. Under this Plan, an amount equal to ten
percent (10%) of Supreme Corporation's pre-tax profits is (subject to Board
approval) placed into a bonus pool which is then allocated among, and is
distributed to, Supreme Corporation's key executives. The allocation of such
bonus pool is approved by the Board of Directors based upon an analysis of
the contributions of key executives to the Company's financial performance and
a consideration of Management's recommendation as to an appropriate allocation
to reward such contributions.
The Company's wholly-owned subsidiary, Supreme Corporation, has also entered
into an Employment Contract with Mr. Robert W. Wilson employing Mr. Wilson as
Vice President of Finance, Treasurer and Assistant Secretary of Supreme
Corporation (Mr. Wilson is also Executive Vice President, Treasurer and Chief
Financial Officer of the Company). The Employment Contract is for a term of
3 years beginning January 1, 1998 and ending December 31, 2000. On July 1,
2001 amendment number one extended the contract through December 31, 2003.
In consideration of his services rendered as Executive Vice President,
Treasurer and Chief Financial Officer of the Corporation, the Employment
Contract provides that Supreme Corporation will pay to Mr. Wilson (in
addition to certain fringe benefits) a minimum base salary of $120,000 per
year (subject to increase by the determination of the Board of Directors)
plus a pre-tax incentive bonus if earned under Supreme Corporation's Bonus
Payment Plan described in the preceding paragraph.
The Board of Directors
William J. Barrett Omer G. Kropf
Robert J. Campbell H. Douglas Schrock
Thomas Cantwell Rice M. Tilley, Jr.
Herbert M. Gardner Robert W. Wilson
Rick L. Horn
Stock Option Plans
2001 Stock Option Plan
On January 31, 2001, the Company's Board of Directors approved and adopted,
subject to shareholder approval, the Company's 2001 Stock Option Plan.
Shareholders will be asked to approve the 2001 Stock Option Plan at the
Annual Meeting to be held May 2, 2001. The following paragraphs summarize
certain provisions of the 2001 Stock Option Plan and are qualified in their
entirety by reference thereto.
15
The 2001 Stock Option Plan provides for the granting of options
(collectively, the "2001 Options") to purchase shares of the Company's Class
A Common Stock to certain key employees of the Company and/or its affiliates,
and certain individuals who are not employees of the Company or its
affiliates but who from time to time provide substantial advice or other
assistance or services to the Company and/or its affiliates. The 2001 Stock
Option Plan authorizes the granting of options to acquire up to 750,000
shares of Class A Common Stock, subject to certain adjustments described
below, to be outstanding at any time. Subject to such limitations, there is
no limit on the absolute number of awards that may be granted during the life
of the 2001 Stock Option Plan. At the present time, there are approximately
40 employees of the Company, including officers and directors of the Company,
who, in management's opinion, would be considered eligible to receive grants
under the 2001 Stock Option Plan, although fewer employees may actually
receive grants.
Authority to administer the 2001 Stock Option Plan has been delegated to a
committee (the "Committee") of the Board of Directors. Except as expressly
provided by the 2001 Stock Option Plan, the Committee has the authority, in
its discretion, to award 2001 Options and to determine the terms and
conditions (which need not be identical) of such 2001 Options, including the
persons to whom, and the time or times at which, 2001 Options will be
awarded, the number of 2001 Options to be awarded to each such person, the
exercise price of any such 2001 Options, and the form, terms and provisions
of any agreement pursuant to which such 2001 Options will be awarded. The
2001 Stock Option Plan also provides that the Committee may be authorized by
the Board of Directors to make cash awards as specified by the Board of
Directors to the holder of a 2001 Option ("Holder") in connection with the
exercise thereof. Subject to the limitation set forth below, the exercise
price of the shares of stock covered by each 2001 Option will be determined
by the Committee on the date of award.
Unless a Holder's option agreement provides otherwise, the following
provisions will apply to exercises by the Holder of his or her option: No
options may be exercised during the first twelve months following grant.
During the second year following the date of grant, options covering up to
one-third of the shares covered thereby may be exercised, and during the
third year options covering up to two-thirds of such shares may be exercised.
Thereafter, and until the options expire, the optionee may exercise options
covering all of the shares. Persons over sixty-five on the date of grant may
exercise options covering up to one-half of the shares during the first year
and thereafter may exercise all optioned shares. Subject to the limitations
just described, options may be exercised as to all or any part of the shares
covered thereby on one or more occasions, but, as a general rule, options
cannot be exercised as to less than one hundred shares at any one time.
The exercise price of the shares of stock covered by each incentive stock
option ("ISO"), within the meaning of Sec. 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), will not be less than the fair market value
of stock on the date of award of such ISO, except that an ISO may not be
awarded to any person who owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company,
unless the exercise price is at least one hundred ten percent (110%) of the
fair market value of the stock at the time the ISO is awarded, and the ISO is
not exercisable after the expiration of five years from the date it is
awarded.
The exercise price of the shares of Class A Common Stock covered by each 2001
Option that is not an ISO ("NSO") will not be less than fifty percent (50%)
of the fair market value of the stock on the date of award of such NSO.
16
Payment for Class A Common Stock issued upon the exercise of a 2001 Option
may be made in cash or, with the consent of the Committee, in whole shares of
Class A Common Stock owned by the holder of the 2001 Option for at least six
months prior to the date of exercise or, with the consent of the Committee,
partly in cash and partly in such shares of Class A Common Stock. If payment
is made, in whole or in part, with previously owned shares of Class A Common
Stock, the Committee may issue to such Holder a new 2001 Option for a number
of shares equal to the number of shares delivered by such Holder to pay the
exercise price of the previous 2001 Option. The new 2001 Option shall have
an exercise price equal to not less than one hundred percent (100%) of the
fair market value of the Class A Common Stock on the date of the exercise of
such previous 2001 Option. A new 2001 Option so issued will not be
exercisable until the later of the date specified in an individual option
agreement or six months after the date of grant.
In addition, the 2001 Stock Option Plan allows for the cashless exercise of
options via the Sale Method. Under the Sale Method, with the consent of the
Committee, payment in full of the exercise price of the option may be made
through the Company's receipt of a copy of instructions to a broker directing
such broker to sell the stock for which the option is being exercised, to
remit to the Company an amount equal to the aggregate exercise price of such
option, with balance being remitted to the holder.
The duration of each 2001 Option will be for such period as the Committee
determines at the time of award, but not for more than ten years from the
date of the award (or not more than five years from the date of award if the
Holder owns stock representing more than 10% of the total combined voting
power of all classes of stock) in the case of an ISO, and in either case may
be exercised in whole or in part at any time or only after a period of time
or in installments, as determined by the Committee at the time of award,
except that after the date of award, the Committee may accelerate the time or
times at which a 2001 Option may be exercised.
In the event of any change in the number of outstanding shares of Class A
Common Stock effected without receipt of consideration therefor by the
Company, by reason of a stock dividend, or split, combination, exchange of
shares or other recapitalization, merger, or otherwise, in which the Company
is the surviving corporation, the aggregate number and class of reserved
shares, the number and the class of shares subject to each outstanding 2001
Option, and the exercise price of each outstanding 2001 Option shall be
automatically adjusted accurately and equitably to reflect the effect
thereon of such change. Unless a Holder's option agreement provides
otherwise, a dissolution or liquidation of the Company, certain mergers or
consolidations in which the Company is not the surviving corporation, or
certain transactions in which another corporation becomes the owner of fifty
percent (50%) or more of the total combined voting power of all classes of
stock of the Company, shall cause such Holder's 2001 Options then outstanding
to terminate, but such Holder shall have the right, immediately prior to such
transaction, to exercise such 2001 Options without regard to the
determination as to the periods and installments of exercisability made
pursuant to such Holder's option agreement if (and only if) such options have
not at that time expired or been terminated.
The 2001 Stock Option Plan, as amended, will terminate on January 30, 2011 or
on such earlier date as the Board of Directors may determine. Any stock
options outstanding at the termination date will remain outstanding until
they have been exercised, terminated, or have expired.
17
The 2001 Stock Option Plan may be terminated, modified, or amended by the
Board of Directors at any time without further shareholder approval, except
that shareholder approval is required for any amendment that: (a) changes
the number of shares of Class A Common Stock subject to the 2001 Stock Option
Plan, (b) changes the designation of the class of employees eligible to
receive 2001 Options, (c) decreases the price at which ISO's may be granted,
(d) removes the administration of the 2001 Stock Option Plan from the
Committee, or (e) without the consent of the affected holder, causes the
ISO's granted under the 2001 Stock Option Plan and outstanding at such time
that satisfied the requirements of Sec. 422 of the Code to no longer satisfy
such requirements.
The Company's Board of Directors recommends that you vote FOR approval of
the Company's 2001 Stock Option Plan.
1998 Stock Option Plan
On October 29, 1998, the Company's Board of Directors approved and adopted,
subject to shareholder approval, the Company's 1998 Stock Option Plan. The
plan was approved by shareholders at the annual meeting held on April 29,
1999. The following paragraphs summarize certain provisions of the 1998
Stock Option Plan and are qualified in their entirety by reference thereto.
The 1998 Stock Option Plan provides for the granting of options
(collectively, the "1998 Options") to purchase shares of the Company's Class
A Common Stock to certain key employees of the Company and/or its affiliates,
and certain individuals who are not employees of the Company or its
affiliates but who from time to time provide substantial advice or other
assistance or services to the Company and/or its affiliates. The 1998 Stock
Option Plan authorizes the granting of options to acquire up to 650,000
(790,079 as adjusted for all subsequent stock dividends) shares of Class A
Common Stock, subject to certain adjustments described below, to be
outstanding at any time. Subject to such limitations, there is no limit on
the absolute number of awards that may be granted during the life of the 1998
Stock Option Plan. At the present time, there are approximately 40 employees
of the Company, including officers and directors of the Company, who, in
management's opinion, would be considered eligible to receive grants under
the 1998 Stock Option Plan, although fewer employees may actually receive
grants. At December 31, 2000, there were 760,314 options outstanding under
this plan, of which 25,136 were exercisable.
Authority to administer the 1998 Stock Option Plan has been delegated to a
committee (the "Committee") of the Board of Directors. Except as expressly
provided by the 1998 Stock Option Plan, the Committee has the authority, in
its discretion, to award 1998 Options and to determine the terms and
conditions (which need not be identical) of such 1998 Options, including the
persons to whom, and the time or times at which, 1998 Options will be
awarded, the number of 1998 Options to be awarded to each such person, the
exercise price of any such 1998 Options, and the form, terms and provisions
of any agreement pursuant to which such 1998 Options will be awarded. The
1998 Stock Option Plan also provides that the Committee may be authorized by
the Board of Directors to make cash awards as specified by the Board of
Directors to the holder of a 1998 Option ("Holder") in connection with the
exercise thereof. Subject to the limitation set forth below, the exercise
price of the shares of stock covered by each 1998 Option will be determined
by the Committee on the date of award.
18
Unless a Holder's option agreement provides otherwise, the following
provisions will apply to exercises by the Holder of his or her option: No
options may be exercised during the first twelve months following grant.
During the second year following the date of grant, options covering up to
one-third of the shares covered thereby may be exercised, and during the
third year options covering up to two-thirds of such shares may be exercised.
Thereafter, and until the options expire, the optionee may exercise options
covering all of the shares. Persons over sixty-five on the date of grant may
exercise options covering up to one-half of the shares during the first year
and thereafter may exercise all optioned shares. Subject to the limitations
just described, options may be exercised as to all or any part of the shares
covered thereby on one or more occasions, but, as a general rule, options
cannot be exercised as to less than one hundred shares at any one time.
The exercise price of the shares of stock covered by each incentive stock
option ("ISO"), within the meaning of Sec. 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), will not be less than the fair market value
of stock on the date of award of such ISO, except that an ISO may not be
awarded to any person who owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company,
unless the exercise price is at least one hundred ten percent (110%) of the
fair market value of the stock at the time the ISO is awarded, and the ISO is
not exercisable after the expiration of five years from the date it is
awarded.
The exercise price of the shares of Class A Common Stock covered by each 1998
Option that is not an ISO ("NSO") will not be less than fifty percent (50%)
of the fair market value of the stock on the date of award of such NSO.
Payment for Class A Common Stock issued upon the exercise of a 1998 Option
may be made in cash or, with the consent of the Committee, in whole shares of
Class A Common Stock owned by the holder of the 1998 Option for at least six
months prior to the date of exercise or, with the consent of the Committee,
partly in cash and partly in such shares of Class A Common Stock. If payment
is made, in whole or in part, with previously owned shares of Class A Common
Stock, the Committee may issue to such Holder a new 1998 Option for a number
of shares equal to the number of shares delivered by such Holder to pay the
exercise price of the previous 1998 Option. The new 1998 Option shall have
an exercise price equal to not less than one hundred percent (100%) of the
fair market value of the Class A Common Stock on the date of the exercise of
such previous 1998 Option. A new 1998 Option so issued will not be
exercisable until the later of the date specified in an individual option
agreement or six months after the date of grant.
In addition, the 1998 Stock Option Plan originally provided for two methods
for the cashless exercise of options, the Sales Method and the Net Method.
The Board of Directors of the Company amended the 1998 Stock Option Plan on
November 11, 1999 to delete the Net Method of cashless exercise (no options
were ever exercised using the net method). Under the Sale Method, with the
consent of the Committee, payment in full of the exercise price of the option
may be made through the Company's receipt of a copy of instructions to a
broker directing such broker to sell the stock for which the option is being
exercised, to remit to the Company an amount equal to the aggregate exercise
price of such option, with balance being remitted to the holder.
19
The duration of each 1998 Option will be for such period as the Committee
determines at the time of award, but not for more than ten years from the
date of the award (or not more than five years from the date of award if the
Holder owns stock representing more than 10% of the total combined voting
power of all classes of stock) in the case of an ISO, and in either case may
be exercised in whole or in part at any time or only after a period of time
or in installments, as determined by the Committee at the time of award,
except that after the date of award, the Committee may accelerate the time or
times at which a 1998 Option may be exercised.
In the event of any change in the number of outstanding shares of Class A
Common Stock effected without receipt of consideration therefor by the
Company, by reason of a stock dividend, or split, combination, exchange of
shares or other recapitalization, merger, or otherwise, in which the Company
is the surviving corporation, the aggregate number and class of reserved
shares, the number and the class of shares subject to each outstanding 1998
Option, and the exercise price of each outstanding 1998 Option shall be
automatically adjusted accurately and equitably to reflect the effect thereon
of such change. Unless a Holder's option agreement provides otherwise, a
dissolution or liquidation of the Company, certain mergers or consolidations
in which the Company is not the surviving corporation, or certain
transactions in which another corporation becomes the owner of fifty percent
(50%) or more of the total combined voting power of all classes of stock of
the Company, shall cause such Holder's 1998 Options then outstanding to
terminate, but such Holder shall have the right, immediately prior to such
transaction, to exercise such 1998 Options without regard to the
determination as to the periods and installments of exercisability made
pursuant to such Holder's option agreement if (and only if) such options have
not at that time expired or been terminated.
The 1998 Stock Option Plan, as amended, will terminate on October 29, 2008,
or on such earlier date as the Board of Directors may determine. Any stock
options outstanding at the termination date will remain outstanding until
they have been exercised, terminated, or have expired.
The 1998 Stock Option Plan may be terminated, modified, or amended by the
Board of Directors at any time without further shareholder approval, except
that shareholder approval is required for any amendment that: (a) changes
the number of shares of Class A Common Stock subject to the 1998 Stock Option
Plan, (b) changes the designation of the class of employees eligible to
receive 1998 Options, (c) decreases the price at which ISOs may be granted,
(d) removes the administration of the 1998 Stock Option Plan from the
Committee, or (e) without the consent of the affected holder, causes the
ISO's granted under the 1998 Stock Option Plan and outstanding at such time
that satisfied the requirements of Sec. 422 of the Code to no longer satisfy
such requirements.
20
1992 Stock Option Plan
On April 7, 1992, the Company's Board of Directors approved and adopted,
subject to shareholder approval, the Company's 1992 Stock Option Plan. The
plan was approved by the shareholders at the annual meeting held on June 11,
1992. The following paragraphs summarize certain provisions of the 1992
Stock Option Plan and are qualified in their entirety by reference thereto.
The 1992 Stock Option Plan provides for the granting of options
(collectively, the "1992 Options") to purchase shares of the Company's Class
A Common Stock to certain key employees of the Company and/or its affiliates,
and certain individuals who are not employees of the Company or its
affiliates but who from time to time provide substantial advice or other
assistance or services to the Company and/or its affiliates. The 1992 Stock
Option Plan authorizes the granting of options to acquire up to 401,117
(adjusted for all subsequent stock dividends through December 31, 1998)
shares of Class A Common Stock, subject to certain adjustments described
below. Subject to such limitations, there is no limit on the absolute number
of awards that may be granted during the life of the 1992 Stock Option Plan.
At the present time, there are approximately 40 employees of the Company,
including 16 officers of the Company (5 of whom are also directors), who, in
management's opinion, would be considered eligible to receive grants under
the 1992 Stock Option Plan, although fewer employees may actually receive
grants. At December 31, 2000, there were 261,445 options outstanding under
this plan, of which 192,567 were exercisable.
Authority to administer the 1992 Stock Option Plan has been delegated to a
committee (the "Committee") of the Board of Directors. Except as expressly
provided by the 1992 Stock Option Plan, the Committee has the authority, in
its discretion, to award 1992 Options and to determine the terms and
conditions (which need not be identical) of such 1992 Options, including the
persons to whom, and the time or times at which, 1992 Options will be
awarded, the number of 1992 Options to be awarded to each such person, the
exercise price of any such 1992 Options, and the form, terms and provisions
of any agreement pursuant to which such 1992 Options will be awarded. The
1992 Stock Option Plan also provides that the Committee may be authorized by
the Board of Directors to make cash awards as specified by the Board of
Directors to the holder of a 1992 Option in connection with the exercise
thereof. Subject to the limitation set forth below, the exercise price of
the shares of stock covered by each 1992 Option will be determined by the
Committee on the date of award.
Unless a Holder's option agreement provides otherwise, the following
provisions will apply to exercises by the Holder of his or her option: No
options may be exercised during the first twelve months following grant.
During the second year following the date of grant, options covering up to
one-third of the shares covered thereby may be exercised, and during the
third year options covering up to two-thirds of such shares may be exercised.
Thereafter, and until the options expire, the optionee may exercise options
covering all of the shares. Persons over sixty-five on the date of grant may
exercise options covering up to one-half of the shares during the first year
and thereafter may exercise all optioned shares. Subject to the limitations
just described, options may be exercised as to all or any part of the shares
covered thereby on one or more occasions, but, as a general rule, options
cannot be exercised as to less than one hundred shares at any one time.
21
The exercise price of the shares of stock covered by each incentive stock
option ("ISO"), within the meaning of Sec. 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), will not be less than the fair market value
of stock on the date of award of such ISO, except that an ISO may not be
awarded to any person who owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company,
unless the exercise price is at least one hundred ten percent (110%) of the
fair market value of the stock at the time the ISO is awarded, and the ISO is
not exercisable after the expiration of five years from the date it is
awarded.
The exercise price of the shares of Class A Common Stock covered by each 1992
Option that is not an ISO ("NSO") will not be less than fifty percent (50%)
of the fair market value of the stock on the date of award.
Payment for Class A Common Stock issued upon the exercise of a 1992 Option
may be made in cash or, with the consent of the Committee, in whole shares of
Class A Common Stock owned by the holder of the 1992 Option for at least six
months prior to the date of exercise or, with the consent of the Committee,
partly in cash and partly in such shares of Class A Common Stock. If payment
is made, in whole or in part, with previously owned shares of Class A Common
Stock, the Committee may issue to such holder a new 1992 Option for a number
of shares equal to the number of shares delivered by such holder to pay the
exercise price of the previous 1992 Option having an exercise price equal to
not less than one hundred percent (100%) of the fair market value of the
Class A Common Stock on the date of such exercise. A 1992 Option so issued
will not be exercisable until the later of the date specified in an
individual option agreement or six months after the date of grant.
The duration of each 1992 Option will be for such period as the Committee
determines at the time of award, but not for more than ten years from the
date of the award in the case of an ISO, and in either case may be exercised
in whole or in part at any time or only after a period of time or in
installments, as determined by the Committee at the time of award, except
that after the date of award, the Committee may accelerate the time or times
at which a 1992 Option may be exercised.
In the event of any change in the number of outstanding shares of Class A
Common Stock effected without receipt of consideration therefor by the
Company, by reason of a stock dividend, or split, combination, exchange of
shares or other recapitalization, merger, or otherwise, in which the Company
is the surviving corporation, the aggregate number and class of reserved
shares, the number and the class of shares subject to each outstanding 1992
Option, and the exercise price of each outstanding 1992 Option shall be
automatically adjusted accurately and equitably to reflect the effect
thereon of such change. Unless a holder's option agreement provides
otherwise, a dissolution or liquidation of the Company, certain mergers of
consolidations in which the Company is not the surviving corporation, or
certain transactions in which another corporation becomes the owner of fifty
percent (50%) or more of the total combined voting power of all classes of
stock of the Company, shall cause such holder's 1992 Options then outstanding
to terminate, but such holder shall have the right, immediately prior to such
transaction, to exercise such 1992 Options without regard to the
determination as to the periods and installments of exercisability made
pursuant to such holder's option agreement if (and only if) such options have
not at that time expired or been terminated.
The 1992 Stock Option Plan will terminate on April 7, 2002, or on such
earlier date as the Board of Directors may determine. Any stock options
outstanding at the termination date will remain outstanding until they have
been exercised, terminated, or have expired.
22
The 1992 Stock Option Plan may be terminated, modified, or amended by the
Board of Directors at any time without further shareholder approval, except
that shareholder approval is required for any amendment that: (a) changes
the number of shares of Class A Common Stock subject to the 1992 Stock
Option Plan, (b) changes the designation of the class of employees eligible
to receive 1992 Options, (c) decreases the price at which ISOs may be
granted, (d) removes the administration of the 1992 Stock Option Plan from
the Committee, or (e) without the consent of the affected holder, causes the
ISO's granted under the 1992 Stock Option Plan and outstanding at such time
that satisfied the requirements of Sec. 422 of the Code to no longer satisfy
such requirements.
401 (k) Retirement Plan
The Company has a Section 401 (k) Retirement Plan (the "Retirement Plan")
which offers employees tax advantages pursuant to Section 401 (k) of the
Internal Revenue Code. During the year ended December 31, 2000, all of the
employees of the Company and one of its subsidiaries (collectively, the
"Employer") were eligible to participate in the Retirement Plan if they had
reached the age of 21 and had been employed by the Employer for at least one
full calendar year. Under the terms of the Retirement Plan, a participant
may elect to defer up to 15% of his compensation. Through February 1994, the
Company contributed ten cents on each dollar of the first 6% of compensation
contributed by participants. On February 4, 1994, the Board of Directors
approved an increase to fifteen cents on each dollar of the first 6% of
compensation contributed by participants effective March 1, 1994. On August
29, 1997, the Board of Directors approved an increase to twenty-five cents on
each dollar of the first 6% of compensation contributed by participants
effective December 1, 1997. On February 11, 1999 the Board of Directors
approved an increase to thirty cents on each dollar of the first 7% of
compensation contributed by participants effective March 1, 1999. Payments
are made by the Company and the Participants, the latter by means of a
payroll deduction program. Within specified limits, a participant has the
right to direct his or her savings into certain kinds of investments. The
total aggregate amount of the Company's contribution for Messrs. Kropf and
Wilson was $2,752, respectively, and for all executive officers as a group
was $5,504.
23
Stock Price Performance
The following Stock Performance Graph shows the changes over the past five
year period in the value of $100 invested in: (1) the Company's Class A
Common Stock, (2) the American Stock Exchange Total Return Index, and (3) the
common stock of the peer group of companies comprising the Dow Jones -
Transportation Equipment Sector. The Transportation Equipment Sector is
principally comprised of manufacturers of rail cars, buses and commercial
land vehicles, including trucks and truck parts. The year-end values of each
investment are based on share price appreciation and the reinvestment of
dividends. The stock price performance shown below is not necessarily
indicative of future performance.
Comparison of 5-Year Comulative Total Return
Performance Table for Supreme Industries, Inc.
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------
Supreme
Industries, Inc. $100 $ 68 $118 $140 $ 99 $ 47
Dow Jones-
Transportation $100 $123 $157 $122 $133 $118
American Stock
Exchange Total
Return Index $100 $102 $127 $137 $179 $168
Assumes $100 invested on December 31, 1995 in Supreme Industries, Inc. Stock,
the Dow-Jones Transportation Equipment Sector and the AMEX (US) Total Return
Index.
Transactions With Management
As part of its original acquisition on January 19, 1984 of the specialized
vehicle manufacturing business now being operated by it, Supreme Corporation
acquired an option to purchase certain real estate and improvements, at its
Goshen, Indiana, and Griffin, Georgia facilities, leased to it by lessors
controlled by the sellers of such business (one of whom is Omer G. Kropf).
The option agreement provided that the option would expire on January 8,
1989, and that, prior to that time, it could be assigned to either or both of
William J. Barrett and Herbert M. Gardner, members of the Company's Board of
Directors.
On July 25, 1988, Supreme Corporation assigned the option (with the consent
of the grantors of the option) to a limited partnership (the "Partnership").
The general partner of the Partnership is Supreme Corporation, and the
limited partnership interests therein are owned (directly or indirectly) by
individuals including Mr. Barrett, Mr. Gardner, Mr. Kropf, Dr. Cantwell, and
Mr. Campbell, all of whom are members of the Company's Board of Directors.
24
In a transaction consummated on July 25, 1988, the Partnership exercised the
option and purchased all of the subject real estate and improvements. Also
on July 25, 1988, the Partnership and Supreme Corporation entered into new
leases covering Supreme facilities in Goshen, Indiana and Griffin, Georgia at
initial rental rates equivalent to those paid pursuant to the lease
agreements with the prior lessors. The leases granted to Supreme Corporation
contain options to purchase the properties for an aggregate initial price of
$2,765,000 (subject to increases after the first year based upon increases in
the Consumer Price Index). During the current year ending December 31, 2001,
Supreme Corporation is obligated to pay approximately $592,000 in minimum
lease payments to the Partnership under lease agreements which expire July
2005.
In order to carry out the purchase of the subject real estate and
improvements, the Partnership borrowed from a bank $2,363,000 collateralized
by mortgages on such real estate, a security interest in specified personal
properties, and the assignments of the leases. The initial capital
contribution of the Partnership's limited partners covered the balance of the
purchase price.
Mr. Kropf, Executive Vice President and Director of the Company, is
secretary-treasurer of Quality Transportation. In addition, Mr. Kropf is the
sole shareholder of Quality Transportation. The Company's subsidiary,
Supreme Corporation, purchases delivery services from Quality in the ordinary
course of business. During the year ended December 31, 2000, Supreme
Corporation purchased delivery services of $3,723,000 from Quality
Transportation. All purchases were without special terms or conditions and
were as favorable as those that the Company could have obtained from non
affiliated third parties.
On April 28, 2000, Supreme Corporation entered into a Lease Agreement with
Mr. Kropf for the lease from Mr. Kropf of a warehouse facility located on
approximately 10 acres of land close to Supreme Corporation's FRP
manufacturing facility in Ligonier, Indiana. The lease is for an initial term
of three (3) years terminating April 30, 2003 for a rental amount of $402,660
for the term, payable in equal monthly installments of $11,185. The rental
amount was based on an independent third party appraisal. Supreme
Corporation has two (2) renewal options of three (3) years each at a rental
rate equal to the rental amount for the initial term, adjusted upward for any
increase in the Consumer Price Index.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP to serve as
auditors for the Company during the ensuing year. The Firm of
PricewaterhouseCoopers LLP has served as auditors for the Company since
October 1990. It is expected that a representative of PricewaterhouseCoopers
LLP will be present at the shareholders' annual meeting with the opportunity
to make a statement if he desires to do so and also will be available to
respond to appropriate questions at the meeting.
The Company's Board of Directors recommends that you vote FOR ratification of
the selection of PricewaterhouseCoopers LLP as the Company's auditors for the
fiscal year ending December 31, 2001.
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OTHER MATTERS
The Company's management knows of no other matters that may properly be, or
which are likely to be, brought before the meeting. However, if any other
matters are properly brought before the meeting, the persons named in the
enclosed proxy, or their substitutes, will vote in accordance with their best
judgment on such matters.
SHAREHOLDER PROPOSALS
A shareholder proposal intended to be presented at the Company's Annual
Meeting of Shareholders in 2002 must be received by the Company at its
principal executive offices in Goshen, Indiana, on or before December 1, 2001
in order to be included in the Company's proxy statement and form of proxy
relating to that meeting.
FINANCIAL STATEMENTS
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 2000, is enclosed herewith.
A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K IS AVAILABLE,
WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE TREASURER, SUPREME INDUSTRIES,
INC., P.O. BOX 237, 16441 CR 38, GOSHEN, INDIANA 46528
By Order of the Board of Directors
Goshen, Indiana
March 22, 2001 /s/William J. Barrett
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INDEX TO APPENDICES
Appendix Description
-------- -----------
A Supreme Industries, Inc. Audit Committee Charter
27
Appendix A
----------
AUDIT COMMITTEE CHARTER
OF
SUPREME INDUSTRIES, INC.
I. PURPOSE
The Audit Committee shall provide assistance to the Corporation's
directors in fulfilling their responsibility to the shareholders, potential
shareholders, and the investment community relating to corporate accounting,
reporting practices of the Corporation, and the quality and integrity of the
financial reports of the Corporation. The Audit Committee's primary duties
and responsibilities are to:
* Oversee that management has maintained the reliability
and integrity of the accounting policies and financial
reporting and disclosure practices of the Corporation.
* Oversee that management has established and maintained
processes to assure that an adequate system of internal
control is functioning within the Corporation.
* Oversee that management has established and maintained
processes to assure compliance by the Corporation with
all applicable laws, regulations, and corporate policy.
The Audit Committee will fulfill these responsibilities primarily by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the Audit
Committee. All members of the Audit Committee shall have a working
familiarity with basic finance and accounting practices, and at least one
member of the Audit Committee shall have accounting or related financial
management expertise.
The members of the Audit Committee shall be elected by the Board at the
annual meeting of the Board or until their successors have been duly elected
and qualified. Unless a Chairperson is elected by the full Board, the
members of the Audit Committee may designate a Chairperson by majority vote
of the full Audit Committee membership.
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III. MEETINGS
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee plans to meet at least annually with
management and the independent accountants to discuss any matters that the
Audit Committee or each of these groups believes should be discussed
privately. In addition, the Audit Committee, or its Chairperson, plans to
meet with management and the independent accountants quarterly to review the
Corporation's financials consistent with Section IV.D below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
A. Review and reassess, at least annually, the adequacy of
this Charter; and make recommendations to the Board, as
conditions dictate, to update this Charter.
B. Review with management, and the independent accountants,
the Corporation's annual financial statements, including
a discussion with the independent accountants of the
matters required to be discussed by Statement of
Auditing Standards No. 61 ("SAS No. 61"), as amended.
C. Review with management and the independent accountants
the Corporation's quarterly financial statements on Form
10-Q prior to their filing or prior to the release of
earnings, including a discussion with the independent
accountants of the matters to be discussed by SAS No.
61. The Chairperson of the Audit Committee may
represent the entire Audit Committee for purposes of
this review.
Independent Accountants
-----------------------
D. Review the performance of the independent accountants
and make recommendations to the Board regarding the
appointment or termination of the independent
accountants. The Audit Committee and the Board have
the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside
auditor. The independent accountants are ultimately
accountable to the Audit Committee and the entire
Board for such accountants' audit of the financial
statements of the Corporation. On an annual basis,
the Audit Committee expects to review and discuss
with the accountants all significant relationships
the accountants have with the Corporation to
determine the accountants' independence.
E. Oversee independence of the accountants by:
* receiving from the accountants, on a periodic basis, a
formal written statement delineating all relationships
between the accountants and the Corporation consistent
with the Independence Standards Board Standard 1
("ISB No. 1");
* reviewing, and actively discussing with the Board, if
necessary, and the accountants, on a periodic basis, any
disclosed relationships or services between the accountants
and the Corporation or any other disclosed relationships
or services that may impact the objectivity and
independence of the accountants; and
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* recommending, if necessary, that the Board take certain
action to satisfy itself of the auditor's independence.
F. Based on the review and discussions referred to in
paragraph IV.B. and IV.E. above, the Audit Committee
shall determine whether to recommend to the Board that
the Corporation's audited financial statements be
included in the Corporation's Annual Report on Form
10-K for the last fiscal year for filing with the
Securities and Exchange Commission.
Financial Reporting Process
---------------------------
G. In conjunction with the independent accountants, review
the integrity of the Corporation's financial reporting
processes, both internal and external.
H. Consider and approve, if appropriate, major changes to
the Corporation's auditing and accounting principles
and practices proposed by management. Discuss with the
independent accountants any significant changes in
auditing standards or their audit scope.
I. Establish regular systems of reporting to the Audit
Committee by each of management and the independent
accountants regarding any significant judgments made in
management's preparation of the financial statements
and any significant difficulties encountered during the
course of the review or audit, including any restriction
on the scope of the work or access to required information.
J. Review any significant disagreement among management and
the independent accountants in connection with the
preparation of the financial statements.
Legal Compliance/General
------------------------
K. Review, with the Corporation's counsel, any legal matter
that could have a significant impact on the
Corporation's financial statements.
L. Ensure that a Code of Conduct is formalized in writing
and that all employees have knowledge of it.
M. Report through its Chairperson to the Board following
meetings of the Audit Committee.
N. Maintain minutes or other records of meetings and
activities of the Audit Committee.
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Limitation of Responsibilities and Duties
-----------------------------------------
O. 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 that the Corporation's
financial statements are complete and accurate and
are in accordance with generally accepted accounting
principles. This is the responsibility of
management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any,
between management and the independent auditor or
to assure compliance with laws and regulations and
the Corporation's Code of Conduct.
31