-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R7dN1UJtOUS4JX++M575sagWIIEU9Q4wl6uSlVd9npypt6j/9Xwv4CEkfFT1zhUc 7B1Du5EYrx4TdFisemz3Rg== 0000920371-98-000004.txt : 19980416 0000920371-98-000004.hdr.sgml : 19980416 ACCESSION NUMBER: 0000920371-98-000004 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980415 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMPSON MANUFACTURING CO INC /CA/ CENTRAL INDEX KEY: 0000920371 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 943196943 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-13429 FILM NUMBER: 98594073 BUSINESS ADDRESS: STREET 1: 4637 CHABOT DR STREET 2: STE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 5106099912 MAIL ADDRESS: STREET 1: 4637 CHABOT DR STREET 2: STE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 DEF 14A 1 1998 PROXY =========================================================================== SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 SIMPSON MANUFACTURING CO., INC. - --------------------------------------------------------------------------- (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: ------------------------------------------------------------------- =========================================================================== Notes: SIMPSON MANUFACTURING CO., INC. 4637 Chabot Drive, Suite 200 Pleasanton, California 94588 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Our Shareholders: The annual meeting of shareholders of Simpson Manufacturing Co., Inc. (the "Company"), a California Corporation, will be held at 3:00 p.m., Pacific Daylight Time, on May 20, 1998, at the Simpson Strong-Tie Company Inc. training facility located at 1470 Doolittle Drive, San Leandro, California, for the following purposes: 1. To elect seven directors to the Company's Board of Directors, each to hold office until his or her successor is elected and qualifies or until his or her earlier resignation or removal. 2. To consider and act upon a proposal to ratify the selection of Coopers & Lybrand L.L.P. as the Company's independent auditors for the current fiscal year. 3. To transact such other business as may properly come before the meeting. At the conclusion of the Annual Meeting of Shareholders, a tour of the Company's San Leandro facility will be conducted for interested shareholders. Only shareholders of record as of March 23, 1998, are entitled to notice of and will be entitled to vote at this meeting or any adjournment thereof. BY ORDER OF THE BOARD OF DIRECTORS Stephen B. Lamson Secretary Pleasanton, California April 15, 1998 TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED. SIMPSON MANUFACTURING CO., INC. 4637 Chabot Drive, Suite 200 Pleasanton, California 94588 April 15, 1998 PROXY STATEMENT Solicitation and Voting of Proxies The accompanying proxy is solicited on behalf of the Board of Directors of Simpson Manufacturing Co., Inc., a California Corporation (the "Company"), for use at the Annual Meeting of Shareholders of the Company to be held at the Simpson Strong-Tie Company Inc. ("Simpson Strong-Tie" or "SST") training facility located at 1470 Doolittle Drive, San Leandro, California, on May 20, 1998, at 3:00 p.m., Pacific Daylight Time, or any adjournment (the "Meeting"). Only holders of record of the Company's Common Stock at the close of business on March 23, 1998, will be entitled to vote at the Meeting. At the close of business on that date, the Company had 11,544,823 shares of Common Stock outstanding and entitled to vote. A majority, or 5,772,412, of these shares, present in person or by proxy, will constitute a quorum for the transaction of business. This Proxy Statement and the Company's Annual Report to Shareholders for the year ended December 31, 1997, are being mailed to each shareholder on or about April 15, 1998. Revocability of Proxy A shareholder who has given a proxy may revoke it at any time before it is exercised at the Meeting, by (1) delivering to the Secretary of the Company (by any means, including facsimile) a written notice stating that the proxy is revoked, (2) signing and so delivering a proxy bearing a later date or (3) attending the Meeting and voting in person (although attendance at the Meeting will not, by itself, revoke a proxy). If, however, a shareholder's shares are held of record by a broker, bank or other nominee and that shareholder wishes to vote at the Meeting, the shareholder must bring to the Meeting a letter from the broker, bank or other nominee confirming the shareholder's beneficial ownership of the shares to be voted. Expenses of Proxy Solicitation The expenses of this solicitation of proxies will be paid by the Company. Following the original mailing of this Proxy Statement and other soliciting materials, the Company or its agents may also solicit proxies by mail, telephone or facsimile or in person. Voting Rights The holders of the Company's Common Stock are entitled to one vote per share on any matter submitted to a vote of the shareholders, except that, subject to certain conditions, shareholders may cumulate their votes in the election of directors, and each shareholder may give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by such shareholder or may distribute such shareholder's votes on the same principle among as many candidates as such shareholder thinks fit. No shareholder will be entitled, however, to cumulate votes (that is, cast for any nominee a number of votes greater than the number of votes that the shareholder normally is entitled to cast) unless the nominees' names have been placed in nomination prior to the voting and the shareholder gives notice at the Meeting prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one shareholder gives such notice, all shareholders may cumulate their votes for nominees. In the election of directors, the nominees receiving the highest number of affirmative votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares are elected. Votes against a nominee and votes withheld have no legal effect. The Board of Directors expects all nominees named below to be available for election. In case any nominee is not available, the proxy holders may vote for a substitute. The Company knows of no specific matter to be brought before the Meeting that is not identified in the notice of the Meeting or this Proxy Statement. If, however, proposals of shareholders that are not included in this Proxy Statement are presented at the Meeting, the proxies will be voted in the discretion of the proxy holders. Regulations of the Securities and Exchange Commission permit the proxies solicited by this Proxy Statement to confer discretionary authority with respect to matters of which the Company is not aware a reasonable time before the Meeting. Accordingly, the proxy holders may use their discretionary authority to vote with respect to any such matter pursuant to the proxies solicited hereby. Directors will be elected at the Meeting by a plurality of the votes cast at the Meeting by the holders of shares represented in person or by proxy. Approval of Proposal No. 2 will require the affirmative vote of a majority of the votes cast at the Meeting by the holders of shares represented in person or by proxy. Abstentions and broker nonvotes are counted as shares present for determination of a quorum but are not counted as affirmative or negative votes on any item to be voted upon and are not counted in determining the number of shares voted on any item. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, as of February 28, 1998, unless otherwise indicated, with respect to the beneficial ownership of the Company's Common Stock by (1) each shareholder known by the Company to be the beneficial owner of more than 5% of the Company's Common Stock, (2) each director of the Company, (3) each person currently serving as an executive officer of the Company named in the Summary Compensation Table (see "Executive Compensation" below), and (4) all current executive officers and directors of the Company as a group.
Name and, for Each 5% Amount and Nature of Percent Beneficial Owner, Address Beneficial Ownership(1) of Class - ------------------------------------ -------------------------- -------- Barclay Simpson(2) 3,700,872 32.1% 4637 Chabot Drive, Suite 200 Pleasanton, CA 94588 Thomas J Fitzmyers(3) 733,242 6.2% 4637 Chabot Drive, Suite 200 Pleasanton, CA 94588 Scudder Kemper Investments, Inc.(4) 695,100 6.0% Two International Place Boston, MA 02110-4103 Royce & Associates, Inc. and Royce Management Company(5) 641,800 5.6% 1414 Avenue of the Americas New York, NY 10019 Stephen B. Lamson(6) 251,000 2.2% Donald M. Townsend(7) 118,947 1.0% Alan R. McKay(8) 5,000 * Earl F. Cheit(8) 3,000 * Sunne Wright McPeak(8) 3,000 * Barry Lawson Williams(9) 1,000 * All current executive officers and directors as a group(10) 4,516,061 38.0% - --------------------- * Less than 1%
(1) The information in this table is based upon information supplied by officers and directors, and, with respect to principal shareholders, statements on Schedule 13D or 13G filed with the Securities and Exchange Commission. Unless otherwise indicated below, the persons named in the table had sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. (2) Includes 150,000 shares owned by the Company's profit sharing trusts, of which Messrs. Simpson, Fitzmyers and Lamson are the trustees and share voting and dispositive power, as to which shares such trustees disclaim beneficial ownership except to the extent of their participation as beneficiaries of one of such trusts. Includes 500 shares subject to options granted under the 1994 Stock Option Plan that are exercisable within 60 days. (3) Includes 211,610 shares subject to options granted under the 1994 Stock Option Plan that are exercisable within 60 days. Includes 150,000 shares owned by the Company's profit sharing trusts, of which Messrs. Simpson, Fitzmyers and Lamson are the trustees and share voting and dispositive power, as to which shares such trustees disclaim beneficial ownership except to the extent of their participation as beneficiaries of one of such trusts. (4) Scudder Kemper Investments, Inc. ("Scudder") Scudder beneficially owned 695,100 shares of the Company's Common Stock as of December 31, 1997, and had investment power with respect to all 695,100 shares, sole power to vote or to direct the vote of 217,900 shares and shared power to vote or direct the vote of 323,200 shares. (5) Royce & Associates, Inc. ("RAI") and Royce Management Company ("RMC") beneficially owned an aggregate of 641,800 shares as of December 31, 1997, of which RAI had sole power to vote or direct the vote and to dispose or direct the disposition of 611,800 shares and RMC had sole power to vote or direct the vote and to dispose or direct the disposition of 30,000 shares. Charles M. Royce may be deemed to be a controlling person of RAI and RMC. Mr. Royce disclaimed beneficial ownership of the shares beneficially owned by RAI and RMC. (6) Includes 54,548 shares subject to options granted under the 1994 Stock Option Plan that are exercisable within 60 days. Includes 150,000 shares owned by the Company's profit sharing trusts, of which Messrs. Simpson, Fitzmyers and Lamson are the trustees and share voting and dispositive power, as to which shares such trustees disclaim beneficial ownership except to the extent of their participation as beneficiaries of one of such trusts. (7) Includes 51,169 shares subject to options granted under the 1994 Stock Option Plan that are exercisable within 60 days. (8) Includes 3,000 shares subject to options granted under the Company's 1995 Independent Director Stock Option Plan that are exercisable within 60 days. (9) Includes 1,000 shares subject to options granted under the Company's 1995 Independent Director Stock Option Plan that are exercisable within 60 days. (10) Includes 327,827 shares subject to options exercisable within 60 days, including the options described in the above notes, and 150,000 shares owned by the Company's profit sharing trusts as described in notes 2, 3 and 6 above. PROPOSAL NO. 1 ELECTION OF DIRECTORS Nominees The names of the Company's directors, all of whom will be nominated for re-election, and certain information about them are set forth below. It is intended that shares represented by proxies in the accompanying form will be voted for the election of the nominees listed below. Although the Board of Directors does not know whether any nominations will be made at the Meeting other than those set forth below, if any such nomination is made, or if votes are cast for any candidates other than those nominated by the Board of Directors, the persons authorized to vote shares represented by executed proxies in the enclosed form (if authority to vote for the election of directors or for any particular nominees is not withheld) will have full discretion and authority to vote cumulatively and allocate votes among any or all of the nominees of the Board of Directors in such order as they may determine.
Director Name Age Since Position - ----------------------------------- ----- -------- ------------------------------ Barclay Simpson(1)(4) 76 1956 Chairman of the Board and Director Thomas J Fitzmyers 57 1978 President, Chief Executive Officer and Director Stephen B. Lamson 45 1989 Chief Financial Officer, Treasurer, Secretary and Director Earl F. Cheit(2)(4) 71 1994 Director Alan R. McKay(2)(4) 72 1994 Director Sunne Wright McPeak(1)(3)(4) 49 1994 Director Barry Lawson Williams(1)(2)(3)(4) 53 1994 Director (1) Member of the Compensation Committee (2) Member of the Audit Committee (3) Member of 1994 Stock Option Plan Committee (4) Member of the Growth Committee
The Board of Directors has not established a nominating committee. Executive Officers Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson are the executive officers of the Company and are also directors and executive officers of subsidiaries of the Company. Donald M. Townsend, age 51, a director and the Chief Executive Officer of the Company's subsidiary, Simpson Dura-Vent Company, Inc. ("Simpson Dura-Vent" or "SDV"), is also regarded as an executive officer of the Company, because, by virtue of his role in management of SDV, he performs policy-making functions for the Company. Biographical Information Barclay Simpson has been the Chairman of the Board of Directors and a director of the Company since 1956. Since 1982, Mr. Simpson and his wife have owned Barclay Simpson Fine Arts Gallery, a commercial art gallery in Lafayette, California. Mr. Simpson is also a member of the Boards of Directors of Civic Bancorp, Calender Robinson Insurance, the University Art Museum of the University of California at Berkeley, the California College of Arts and Crafts and other charitable and educational institutions. Thomas J Fitzmyers has served as President and a director of the Company since 1978, as the President and a director of Simpson Strong-Tie since 1983 and as a director of Simpson Dura-Vent since 1982. He was appointed as the Company's Chief Executive Officer in 1994. Mr. Fitzmyers was employed by Union Bank from 1971 to 1978. He was a Regional Vice President when he left Union Bank to join the Company in 1978. Stephen B. Lamson has served as the Company's, Simpson Strong-Tie's and Simpson Dura-Vent's Chief Financial Officer and Treasurer since 1989, as the Company's and SDV's Secretary since 1989, as SST's Secretary since 1992, as a director of the Company since 1990, as a director of SST since 1992 and as a director of SDV since 1989. From 1980 to 1989, Mr. Lamson was with Coopers & Lybrand. He was an audit manager when he left that firm to join the Company in 1989. Earl F. Cheit has been a Senior Advisor to the Asia Foundation on Asia- Pacific Economic Affairs since 1984 and became Dean Emeritus of the Haas School of Business at the University of California, Berkeley, in 1992. He is currently a director of The Shaklee Corporation and CNF Transportation, Inc. and a Trustee of Mills College. Alan R. McKay has been the President of Alan R. McKay & Associates, an engineering consulting firm based in Lafayette, California, since 1959. He is a registered civil, structural and geotechnical engineer in the State of California with extensive experience in connector applications. Sunne Wright McPeak is the President and Chief Executive Officer of the Bay Area Council, a business sponsored organization founded in 1945 that promotes economic activity and environmental quality in the region. Prior to this position, she was the President and Chief Executive Officer of the Bay Area Economic Forum, a partnership of government, business, academic and foundation sectors of the nine San Francisco Bay Area counties. From 1979 through 1994, she served on the Board of Supervisors of Contra Costa County, including several terms as Chair. Her most recent term as Chair concluded in 1992. In addition, Ms. McPeak served as President of the California State Association of Counties and has been a member of the advisory boards of the Urban Land Institute and California State University, Hayward. She is currently a director of the California Foundation for the Environment and the Economy. Barry Lawson Williams has been President of Williams Pacific Ventures Inc., a venture capital and real estate consulting firm, since 1987. From 1989 until its sale in 1992, he was also Chief Executive Officer and owner of C.N. Flagg Power Inc. He is a director of PG&E Corporation, CH2M HILL Companies, Ltd., The U.S.A. Group, Inc., Newhall Land and Farming Co. Inc., Northwestern Mutual Life Insurance Co. and CompUSA, Inc. Donald M. Townsend (who is not a director nominee) has been employed by the Company since 1981 and has served as a director of Simpson Dura-Vent since 1984 and as its President and Chief Operating Officer since 1991. He was appointed as SDV's Chief Executive Officer in 1994. From 1984 to 1991, he was the Vice President and General Manager of SDV. Attendance at Meetings The Board of Directors held seven meetings and its committees held a total of five meetings in 1997. Each director attended 100% of the meetings of the Board of Directors and the committees on which he or she served in 1997. THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF EACH OF THE SEVEN NOMINATED DIRECTORS. PROPOSAL NO. 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS The Board of Directors has selected Coopers & Lybrand L.L.P. as its principal independent auditors to audit the Company's financial statements for 1998, and the shareholders will be asked to ratify such selection. Coopers & Lybrand L.L.P. has audited the Company's financial statements since prior to 1975. A representative from Coopers & Lybrand L.L.P. will be present at the Meeting, will be given an opportunity to make a statement at the Meeting if he or she desires to do so, and will be available to respond to appropriate questions. THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF SELECTION OF COOPERS & LYBRAND L.L.P. EXECUTIVE COMPENSATION Summary Compensation Table The table below provides information relating to compensation for the years ended December 31, 1997, 1996 and 1995, for the Chief Executive Officer and the other three most highly compensated executive officers of the Company and the Chief Executive Officer of SDV (determined as of the end of 1997) (collectively, the "Named Executive Officers"). The amounts shown include compensation for services in all capacities that were provided to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE Long-Term Compensation ------------------------------- Annual Compensation Awards (1) Payouts ------------------------------ ---------------------- ------- Other Securities Annual Restricted Underlying LTIP All Other Name and Compen- Stock Options/ Pay- Compen- Principal Position Year Salary($) Bonus($) sation($) Awards($) SARs(#)(1) outs($) sation($)(2) - ---------------------- ---- --------- -------- --------- ---------- ---------- ------- ----------- Thomas J Fitzmyers, 1997 248,832 871,575 - - 4,500 - 24,000 President and Chief 1996 230,818 664,180 12,782 - 4,500 - 22,500 Executive Officer of 1995 223,020 495,775 2,450 - - - 22,500 the Company Barclay Simpson, 1997 150,000 480,650 - - 500 - 22,500 Chairman of the Board 1996 150,000 334,502 - - 500 - 22,500 of the Company 1995 150,000 285,241 - - - - 22,500 Stephen B. Lamson, 1997 109,692 516,428 - - 2,500 - 16,454 Chief Financial 1996 105,984 393,541 2,568 - 2,500 - 16,283 Officer and Secretary 1995 102,396 293,766 - - - - 15,359 of the Company Donald M. Townsend, 1997 166,308 422,168 - - 2,500 - 24,000 President and Chief 1996 160,680 198,940 12,462 - 7,500 - 22,500 Executive Officer 1995 155,244 127,074 4,015 - - - 22,500 of SDV
(1) Shares subject to outstanding stock options, which have exercise prices of $23.00 to $36.64 per share. (2) Represents contributions to the Company's profit sharing plan trusts for the accounts of the Named Executive Officers. Employee Stock Options The tables below provide information regarding options to purchase shares of Common Stock granted and to be granted to the Named Executive Officers for the year ended December 31, 1997, under the Company's 1994 Stock Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR Potential Realizable Value at Number of % of Total Assumed Annual Rates of Securities Options/SARs Exercise Stock Price Appreciation Underlying Granted to or Base Expir- for Option Term Options/SARs Employees in Price ation -------------------------- Name Granted(#) Fiscal Year ($/share) Date(1) 0%($) 5%($) 10%($) - -------------------- ------------ ------------- --------- --------- ------- ------- -------- Thomas J Fitzmyers 4,500 3.7% 33.31 1/1/05 - 61,027 142,219 Barclay Simpson 500 0.4% 36.64 1/1/03 - 2,936 8,503 Stephen B. Lamson 2,500 2.1% 33.31 1/1/05 - 33,904 79,010 Donald M. Townsend 2,500 2.1% 33.31 1/1/05 - 33,904 79,010
(1) The date of grant is to be determined by the Committee. Each option has a term of seven years from the date of grant except for Barclay Simpson's, which has a term of five years from the date of grant. The exercise price of each of these options is based on the market price of the Company's Common Stock on December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 1997, OPTION/SAR VALUES Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs Options/SARs Shares at December 31, at December 31, Acquired on Value 1997,(#) Exercisable/ 1997,($) Exercisable/ Name Exercise(#) Realized($) Unexercisable Unexercisable - -------------------- ------------- ------------- ----------------------- ----------------------- Thomas J Fitzmyers - - 210,485/10,125 4,581,079/86,695 Stephen B. Lamson - - 53,923/5,625 1,418,160/48,164 Donald M. Townsend - - 49,294/11,875 1,119,454/144,492 Barclay Simpson - - 375/1,125 6,510/8,513
Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Boards of Directors of the Company comprises Barclay Simpson, the Chairman of the Board of the Company, and Sunne Wright McPeak and Barry Lawson Williams, both independent directors of the Company. Ms. McPeak and Mr. Williams have no relationships with the Company or any of its subsidiaries other than as members of the Company's Board of Directors and certain committees of the Company's Board of Directors. Certain transactions to which Mr. Simpson, his affiliates and members of his family have been parties are described below. Real Estate Transactions The Company, directly and through its subsidiaries, leases certain of its facilities from general partnerships (the "Partnerships") wholly or partly comprising current or former directors, officers, employees and shareholders of the Company and its subsidiaries. The Partnerships, their partners, the percentage interests of such partners in the Partnerships and the properties that the Partnerships lease, or previously leased and sold, to the Company or a subsidiary, are as follows:
Partnership Partners (percentage interests) Property Location - --------------------- ----------------------------------------------- ----------------- Simpson Investment Barclay Simpson (77%), John B. Simpson (5%), San Leandro, Company ("SIC") Anne Simpson Gattis (5%), Jean D. Simpson California (5%), Jeffrey P. Gainsborough (2%), Julie Marie Simpson (2%), Elizabeth Simpson Murray (2%) and Amy Simpson (2%) Doolittle Investors Everett H. Johnston Family Trust (23.13%), San Leandro, Barclay and Sharon Simpson (25.51%), Thomas California J Fitzmyers (5.24%), Judy F. Oliphant, Successor Trustee of the Oliphant Family Revocable Trust Agreement Dated January 27, 1993 (Survivors Trust) ("Oliphant Trust") (20.61%), and SIC (25.51%) Columbus-Westbelt Everett H. Johnston Family Trust (5.54%), Investment Co. Thomas J Fitzmyers (1.10%), Oliphant Trust Columbus, Ohio (5.54%), Barclay and Sharon Simpson (13.31%), Richard C. Perkins Trust (5.48%), Stephen B. Lamson (3.32%), Tyrell T. Gilb Trust (5.54%), Doyle E. Norman (5.54%), Stephen P. Eberhard (5.05%), Robert J. Phelan (5.54%), Jeffrey P. Gainsborough (11.01%), Julie Marie Simpson (11.01%), Elizabeth Simpson Murray (11.01%) and Amy Simpson (11.01%) Vacaville Investors Everett H. Johnston Family Trust (49.90%), Vacaville, Thomas J Fitzmyers (1.13%), Oliphant Trust California (12.47%), Barclay and Sharon Simpson (4.57%), SIC (27.50%), Richard C. Perkins Trust (4.43%) Vicksburg Investors Everett H. Johnston Family Trust (41.17%), Vicksburg, Thomas J Fitzmyers (6.02%), Oliphant Trust Mississippi (12.61%), Barclay and Sharon Simpson (33.92%) and Richard C. Perkins Trust (6.28%)
Barclay Simpson is the managing partner of SIC, a general partnership of Mr. Simpson and his seven children. Everett H. Johnston, formerly a director and executive officer of the Company (now retired), is the managing partner of each Partnership other than SIC. Richard C. Perkins, Stephen P. Eberhard and Robert J. Phelan are officers of SST and Doyle E. Norman and Tyrell T. Gilb (both now retired) are consultants to the Company. Sharon Simpson is Barclay Simpson's wife; and John B. Simpson, Anne Simpson Gattis, Jean D. Simpson, Jeffrey P. Gainsborough, Julie Marie Simpson, Elizabeth Simpson Murray and Amy Simpson are his children. Aggregate lease payments by the Company and its subsidiaries to the Partnerships in 1997, 1996 and 1995 were, and the terms of the leases will expire, as follows:
Lease Payments Lease ---------------------------------- Expiration Partnership 1997 1996 1995 Date - --------------------------------- ---------- ---------- ---------- ---------- SIC $ 185,100 $ 185,100 $ 185,100 12/31/01 Doolittle Investors 239,400 231,096 230,438 12/31/01 Columbus Westbelt Investment Co. 581,064 581,064 418,525 9/30/05 Vacaville Investors 437,640 437,640 437,640 11/30/07 Vicksburg Investors 334,279 329,017 322,289 11/30/03
The leases with the Partnerships are expected to continue until the expiration of the respective terms of the leases, and they may hereafter be renewed. The Company's future rent obligations under the continuing leases are expected to be consistent with the rents paid in 1997, subject to adjustments as provided in certain of the leases. If and when any lease is proposed to be amended or renewed or any property subject to any lease is proposed to be purchased by the Company, the Company will enter into such transaction only with the approval of a majority of the directors of the Company who are not employees or officers of the Company and who are not partners of any of the Partnerships and only after such directors satisfy themselves that such transaction will be fair, just and reasonable as to the Company, beneficial to the Company and on terms reasonably consistent with the terms available from unrelated parties in similar transactions negotiated at arm's length. The Company does not intend in the future to lease from any of the Partnerships or any other entities controlled by any of its directors, officers or employees any facilities that are not on or adjacent to the property subject to the existing leases. Cash Profit Sharing Bonus Plan The Company maintains a cash profit sharing bonus plan for the benefit of employees of the Company and its subsidiaries. The Company may change, amend or terminate its bonus plan at any time. Under the bonus plan as currently in effect, the Compensation Committee of the Board of Directors determines a "qualifying level" for the coming fiscal year for the Company, SDV and each branch of SST. The qualifying level is equal to the value of the net operating assets (as defined) of the Company, SDV or the respective branch of SST, multiplied by a rate of return on those assets. If profits exceed the qualifying level in any fiscal quarter, a portion of such excess profits is distributed to the eligible employees as cash bonuses. An acceptable range of participation in the excess profits distributed as cash bonuses and the specific amounts distributed to the Named Executive Officers are determined by the Compensation Committee of the Board of Directors, while the percentage of excess profits distributed and the amounts distributed to all other participants are determined by the executive officers. The failure to earn a cash bonus in any given quarter does not affect the ability to earn a cash bonus in any other quarter. Amounts paid under these programs aggregated $12.5 million, $9.3 million and $6.6 million in 1997, 1996 and 1995, respectively, the amounts of which paid to Named Executive Officers in 1997, 1996 and 1995 are shown in the Summary Compensation Table above. 1994 Stock Option Plan By affording selected employees and directors of and consultants to the Company and its subsidiaries the opportunity to buy shares of Common Stock of the Company, the 1994 Stock Option Plan (the "Option Plan") is intended to enhance the ability of the Company and its subsidiaries to retain the services of persons who are now employees, directors or consultants, to secure and retain the services of new employees, directors and consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its subsidiaries. The Option Plan was adopted by the Company's Board of Directors and approved by the Company's shareholders prior to the Company's initial public offering in 1994. It was amended in 1997 with shareholder approval. No more than 1,500,000 shares of Common Stock may be sold pursuant to all options granted under the Option Plan. Common Stock sold on exercise of options granted under the Option Plan may be previously unissued shares or reacquired shares, bought on the market or otherwise. Options to purchase 117,750 and 92,250 shares of Common Stock were granted pursuant to commitments made related to the preceding fiscal years under the Option Plan in 1997 and 1996, respectively, and options to purchase 120,250 shares of Common Stock were committed to be granted in 1997. Options committed to be granted under the Option Plan to Named Executive Officers in 1997 and 1996 are shown in the Summary Compensation Table above. Profit Sharing Plans The Company's subsidiaries maintain defined contribution profit sharing plans for their U.S. based salaried employees (the "Salaried Plan") and for U.S. based nonunion hourly employees (the "Hourly Plan"). An employee is eligible for participation in a given year if he or she is an employee on the first and last days of that calendar year and completes at least 750 hours of service during that calendar year. As of December 31, 1997, there were 293 employees participating in the Salaried Plan and 402 employees participating in the Hourly Plan. Under the Salaried Plan and the Hourly Plan, the Board of Directors may authorize contributions to the plan trusts in their exclusive discretion. Contributions to the plan trusts by the Company's subsidiaries are limited by the amount deductible for federal income tax purposes under section 404(a) of the Internal Revenue Code. Barclay Simpson, Thomas J Fitzmyers and Stephen B. Lamson, who are Named Executive Officers of the Company, are the trustees of the plan trusts and are also participants in the salaried plan. The amounts contributed by the Company for their accounts in 1997, 1996 and 1995 are shown in the Summary Compensation Table above. Certain of the Company's foreign subsidiaries maintain similar plans for their employees. Compensation of Directors The Company's directors who do not receive compensation as officers or employees of the Company are each paid an annual retainer of $10,000 and a fee of $1,000 for attending in person each meeting of the Board of Directors and for attending in person each meeting of any committee held on a day when the Board of Directors does not meet. Each outside director is also paid $500 for each committee meeting he or she attends in person on the same day as a Board of Directors meeting and for Board of Directors meetings attended by telephone conference. Directors are also reimbursed for expenses incurred in connection with their attendance at Board of Directors and committee meetings. 1995 Independent Director Stock Option Plan The Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the "Independent Director Plan") was adopted by the Board of Directors and approved by the shareholders in 1995 and was amended by the Board of Directors in 1997. The purpose of the Independent Director Plan is to give independent directors of the Company an opportunity to buy shares of Common Stock of the Company, to encourage independent directors in their efforts on behalf of the Company and to secure their continued service to the Company. Options to purchase 2,000 shares of Common Stock were committed to be granted under the Independent Director Plan in 1997. REPORT OF THE COMPENSATION COMMITTEE, 1994 STOCK OPTION PLAN COMMITTEE AND BOARD ON EXECUTIVE COMPENSATION The Compensation Committee and the 1994 Stock Option Plan Committee of the Board of Directors are responsible for the development and review of the Company's compensation policy for all the salaried employees. The overall philosophy of the Company's compensation program is to provide a high degree of incentive to employees by creating programs that reward achievement of specific profit goals. The Company believes that these incentive programs based on profit targets are best suited to align the interests of employees and shareholders. In addition, the Company does not have any special plans for the Chief Executive Officer or other executive officers of the Company. The absence of special plans for the executive officers is intended to create a sense of unity and cooperation among the Company's employees. The four elements of the Company's compensation plan for most salaried employees and all officers are base salary, a profit sharing retirement plan, a cash profit sharing bonus plan and the Option Plan. The Compensation Committee has not performed any recent salary surveys, but based on surveys in prior years and recent raises, it believes the base salaries for the Chief Executive Officer and other executive officers are about average as compared to similar companies. Raises for the officers in 1997 were 3.5% for each of Thomas J Fitzmyers, President and Chief Executive Officer, Stephen B. Lamson, Chief Financial Officer and Secretary, and Donald M. Townsend, President and Chief Executive Officer of SDV. Barclay Simpson, Chairman, did not receive an increase in salary in 1997. All U.S. based salaried employees, including the Chief Executive Officer and other executive officers, participate in the profit sharing plan in proportion to their salary. For 1997, 15% of all U.S. based salaried employees' base pay will be contributed to the plan subject to the limitations of applicable law. In 1997, Thomas J Fitzmyers, President and Chief Executive Officer, and Donald M. Townsend, President and Chief Executive Officer of SDV, were subject to a contribution limit under applicable law; the Company's contribution to the profit sharing plan for their accounts is $24,000 each. All salaried employees except those on commission programs, participate in the Company's quarterly cash profit sharing bonus plan. Annually, the Compensation Committee establishes an acceptable range of participation in the profits in excess of the qualifying level to be distributed as cash bonuses for each profit center. The Compensation Committee also approves the specific percentages to be distributed to the Chief Executive Officer and other executive officers. The executive officers determine the specific percentages for distributions to all other participating employees. Historically the percentage of profits in excess of the qualifying level distributed under these plans has not changed substantially from year to year. Employees with higher levels of responsibility typically receive higher proportions of the cash profit sharing for their profit center. Barclay Simpson's participation rate decreased in 1995, Thomas J Fitzmyers' and Stephen B. Lamson's participation rates decreased slightly in 1996 and were decreased by approximately 10% in 1997 and Donald M. Townsend's participation rate has not changed for ten years. In 1997, the Chief Executive Officer received 350% of his base salary in cash profit sharing bonuses. Because the cash profit sharing bonus plan is based upon a return on net operating assets, and not subjectively determined, the Compensation Committee believes the plan provides substantial incentive to all participating employees, not only the Company's officers. The 1994 Stock Option Plan Committee believes an option plan is most effective if options are granted to all participants on an objective rather than subjective basis. Therefore, under the Option Plan, participants are granted options if Company-wide and profit center operating goals are met. The Compensation Committee establishes these goals at the beginning of the year. The 1994 Stock Option Plan Committee also believes that option plans with broad based participation are most effective. The 1994 Stock Option Plan Committee determines each year the employees who are eligible to participate in the Option Plan, based on job responsibilities and contributions made to the Company. At present, over one quarter of the Company's salaried employees participate in the Option Plan. The 1994 Stock Option Plan Committee determines the number of options to be granted under the Option Plan. In determining the potential grants, the 1994 Stock Option Plan Committee considers previous stock and option awards, current options owned, job responsibilities and contributions to the Company. These same considerations apply to option grants to the Chief Executive Officer and other executive officers. Because of the responsibilities of the Chief Executive Officer and the other executive officers, their stock option grants are higher than those of other participants who also achieve their goals. In 1995, the Company adopted the Independent Director Plan to give the outside members of the Board of Directors an opportunity to buy shares of Common Stock of the Company. The Independent Director Plan is administered by the Board of Directors (as its manager and not as its trustee) and determines which persons are eligible to be granted options. The Board of Directors believes this kind of option plan is most effective if options are granted to outside directors on an objective basis. Therefore, the Board of Directors determines the number of shares subject to options that they believe will be an appropriate incentive to be granted when an outside director becomes a member of the Board of Directors and if Company-wide operating goals, established by the Compensation Committee at the beginning of the year, are met. These operating goals were met in 1997 and accordingly, an option to purchase 500 shares was committed to be granted to each outside director. 1994 Stock Compensation Committee Option Plan Committee ------------------------- ------------------------- Barclay Simpson, Chair Sunne Wright McPeak, Chair Sunne Wright McPeak Barry Lawson Williams Barry Lawson Williams Company Stock Price Performance The graph below compares the cumulative total shareholder return on the Company's Common Stock from May 31, 1994, through December 31, 1997, with the cumulative total return on the S & P 500 Index, The Nasdaq Stock Market U.S. Index and the Dow Jones Building Materials Index over the same period (assuming the investment of $100 in the Company's Common Stock and in each of the indices on May 31, 1994, and reinvestment of all dividends). In October 1997, the Company listed its Common Stock on the New York Stock Exchange. As a result, the Company has selected the S & P 500 Index to replace The Nasdaq Stock Market U.S. Index in 1997. Both indices are included in the Company's comparison of cumulative total return as follows:
SIMPSON MANUFACTURING CO., INC. Comparison of Cumulative Total Return May 31, 1994, to December 31, 1997 Nasdaq Dow Jones Simpson Stock Building Manufacturing S & P 500 Market - Materials Co., Inc. Index U.S. Index Index ------------- ------------- ------------- ------------- May-1994 $100 $100 $100 $100 Dec-1994 89 102 104 95 Dec-1995 111 141 147 130 Dec-1996 190 173 180 155 Dec-1997 275 231 221 189
The Company's initial public offering commenced on May 26, 1994. Data is shown beginning May 31, 1994, because data for cumulative returns on the S & P 500 Index, The Nasdaq Stock Market U.S. Index and the Dow Jones Building Materials Index are available only at month end. Historical returns are not necessarily indicative of future performance. OTHER BUSINESS The Board of Directors does not presently intend to bring any other business before the Meeting and, so far as is known to the Board of Directors, no matters are to be brought before the Meeting except as specified in the notice of the Meeting. As to any business that may properly come before the Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies. DISCLAIMER REGARDING INCORPORATION BY REFERENCE OF THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PRICE PERFORMANCE GRAPH THE INFORMATION SHOWN IN THE SECTIONS ENTITLED "REPORT OF THE COMPENSATION COMMITTEE AND BOARD ON EXECUTIVE COMPENSATION" AND "COMPANY STOCK PRICE PERFORMANCE" SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY INCORPORATES THIS INFORMATION BY SPECIFIC REFERENCE, AND SUCH INFORMATION SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS. SHAREHOLDER PROPOSALS Shareholder proposals for inclusion in the proxy statement and form of proxy relating to the Company's 1999 Annual Meeting of Shareholders must be received by the Company a reasonable time before the Company's solicitation is made, and in any event not later than December 15, 1998. BY ORDER OF THE BOARD Stephen B. Lamson Secretary TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR PROXY CAN BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED. -----END PRIVACY-ENHANCED MESSAGE-----