SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Appliance Recycling Center of America, Inc.
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APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426
--------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2001
--------------------------
TO OUR SHAREHOLDERS:
The annual meeting of the shareholders of Appliance Recycling Centers
of America, Inc. will be held on Thursday, April 26, 2001 at 3:30 p.m., at the
Appliance Recycling Centers of America, Inc. corporate offices located at 7400
Excelsior Boulevard, Minneapolis, Minnesota 55426. At the meeting, shareholders
will act on the following matters:
* PROPOSAL ONE: The election of five directors to serve for a
term of one year expiring at the 2002 annual meeting of
shareholders.
* PROPOSAL TWO: The approval and adoption of the amendment to
the Company's Restated 1997 Stock Option Plan as described in
the accompanying proxy statement.
* PROPOSAL THREE: The ratification of the appointment of
McGladrey & Pullen, LLP as our independent auditors for our
fiscal year ending December 29, 2001.
* To transact such other business as may properly come before
the annual meeting or any adjournment or postponement of the
meeting.
Only shareholders of record at the close of business on March 16, 2001
are entitled to notice of and to vote at the annual meeting and any adjournment
or postponement of the meeting.
EACH OF YOU IS INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON
IF POSSIBLE. WHETHER OR NOT YOU ARE ABLE TO ATTEND IN PERSON, YOU ARE REQUESTED
TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE ENCLOSED
FOR YOUR CONVENIENCE.
By Order of the Board of Directors
Denis E. Grande, Secretary
March 23, 2001
TABLE OF CONTENTS
SOLICITATION OF PROXIES........................................................1
ABOUT THE MEETING..............................................................1
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?..................................1
WHO IS ENTITLED TO VOTE?....................................................1
WHO CAN ATTEND THE MEETING?.................................................1
WHAT CONSTITUTES A QUORUM?..................................................1
HOW DO I VOTE?..............................................................2
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?..........................2
WHAT ARE THE BOARD'S RECOMMENDATIONS?.......................................2
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?.............................2
WHO WILL COUNT THE VOTE?....................................................3
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?....................3
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?.........................3
WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING OF
SHAREHOLDERS DUE?...........................................................3
WHO PAYS FOR THE COST OF THIS PROXY SOLICITATION?...........................4
COMMON STOCK OWNERSHIP.........................................................5
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S COMMON STOCK?...................5
HOW MUCH COMMON STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE
OFFICERS OWN?...............................................................5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.....................6
PROPOSAL ONE -- ELECTION OF DIRECTORS..........................................7
GENERAL INFORMATION.........................................................7
NOMINEES....................................................................7
ACTIONS AND COMMITTEES OF THE BOARD OF DIRECTORS............................9
REPORT OF THE 2000 AUDIT COMMITTEE..........................................9
REPORT OF THE 2000 COMPENSATION AND BENEFITS COMMITTEE.....................10
NON-VOTING BOARD SEAT......................................................11
COMPENSATION OF DIRECTORS..................................................12
INFORMATION CONCERNING OFFICERS AND KEY EMPLOYEES WHO ARE NOT
DIRECTORS..................................................................12
EXECUTIVE COMPENSATION.....................................................13
STOCK OPTIONS GRANTED AND EXERCISED IN LAST FISCAL YEAR....................13
STOCK OPTION PLANS.........................................................14
CERTAIN RELATIONSHIPS AND TRANSACTIONS.....................................15
PERFORMANCE GRAPH..........................................................16
PROPOSAL TWO -- ADOPTION AND APPROVAL OF AMENDMENT TO 1997 STOCK OPTION
PLAN..........................................................................18
PROPOSAL THREE -- RATIFICATION AND APPOINTMENT OF INDEPENDENT AUDITORS........19
APPOINTMENT OF MCGLADRY & PULLEN...........................................19
FEES PAID TO AUDITORS BY THE COMPANY DURING LAST FISCAL YEAR...............19
OTHER MATTERS.................................................................20
APPENDIX A AUDIT COMMITTEE CHARTER............................................21
APPENDIX B APPLIANCE RECYCLING CENTERS OF AMERICA, INC. AMENDMENT TO
RESTATED 1997 STOCK OPTION PLAN...............................................23
i
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement contains information related to the annual meeting
of shareholders of Appliance Recycling Centers of America, Inc. (the "Company")
to be held on Thursday, April 26, 2001, beginning at 3:30 p.m., at the corporate
offices of the Company, located at 7400 Excelsior Boulevard, Minneapolis,
Minnesota 55426. The enclosed proxy is solicited by the Board of Directors for
use at the 2001 annual meeting of shareholders and any adjournment or
postponement of the meeting. The approximate date on which this proxy statement
and form of proxy will first be sent or given to shareholders is March 23, 2001.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting, shareholders will act upon the matters
described in the accompanying notice of annual meeting of shareholders. This
includes (1) the election of five directors, (2) the approval and adoption of
the amendment to the Company's Restated 1997 Stock Option Plan, which is
described in this proxy statement, and (3) the ratification of the Company's
independent auditors. In addition, the Company's management will report on the
performance of the Company during the 2000 Fiscal Year and respond to questions
from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record of outstanding common stock of the Company
at the close of business on the record date, March 16, 2001, are entitled to
receive notice of and to vote at the meeting, or any postponement or adjournment
of the meeting. Each outstanding share of common stock entitles its holder to
cast one vote on each matter to be voted upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed
proxies, may attend the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of the common stock of the Company outstanding on the
record date will constitute a quorum. A quorum is required for business to be
conducted at the meeting. As of the record date, 2,287,369 shares of common
stock of the Company were outstanding. If you submit a properly executed proxy
card, even if you abstain from voting, then you will be considered part of the
quorum. However,
1
abstentions are not counted in the tally of votes FOR or AGAINST a proposal. A
WITHHELD vote is the same as an abstention.
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not mark the boxes showing
how you wish to vote, your shares will be voted FOR all directors in Proposal 1
and FOR Proposals 2 and 3.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised at the meeting. You may change it by:
1) Returning a later-dated signed proxy card;
2) Delivering a written notice of revocation to the Company's
Secretary at the Company's principal executive office at 7400
Excelsior Boulevard, Minneapolis, Minnesota 55426; or
3) Attending the meeting and voting in person at the meeting
(although attendance at the meeting without voting at the
meeting will not, in and of itself, constitute a revocation of
your proxy).
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board's recommendations are set forth after the description of each
proposal in this proxy statement. In summary, the Board recommends a vote:
* FOR the election of each of the nominated directors (see
Proposal 1 on page 7)
* FOR the approval and adoption of the amendment to the
Company's Restated 1997 Stock Option Plan as described in the
proxy statement (see Proposal 2 on page 18)
* FOR the ratification of the appointment of McGladrey & Pullen,
LLP, as the Company's independent auditors for fiscal year
2001 (see Proposal 3 on page 19)
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board.
With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the Board or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
For Proposals 1, 2, and 3, the affirmative vote of the holders of a
majority of the shares of
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common stock represented in person or by proxy and entitled to vote on the
proposal will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any proposal will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the proposals to be acted upon. Thus, if you
do not give your broker or nominee specific instructions, your shares may not be
voted on those proposals and will not be counted in determining the number of
shares necessary for approval of Proposals 1, 2, and 3. Shares represented by
such "broker non-votes" will, however, be counted in determining whether there
is a quorum.
WHO WILL COUNT THE VOTE?
An Inspector of Elections will be appointed for the annual meeting and
will work with a representative of Wells Fargo Shareowner Services, our
independent stock transfer agent, to count the votes.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
If your shares are registered differently and are in more than one
account, you will receive more than one proxy card. To ensure that all your
shares are voted, sign and return all proxy cards. We encourage you to have all
accounts registered in the same name and address (whenever possible). You can
accomplish this by contacting our stock transfer agent, Wells Fargo Shareowner
Services at 1-800-468-9716.
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
Although we do not know of any business to be considered at the 2001
annual meeting other than the proposals described in this proxy statement, if
any other business is presented at the annual meeting, your proxy gives
authority to Edward S. Cameron and Denis E. Grande to vote on such matters at
their discretion.
WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING OF SHAREHOLDERS DUE?
To be considered for inclusion in the Company's proxy statement for the
2002 annual meeting, shareholder proposals must be received at the Company's
offices no later than November 23, 2001. Proposals must be in compliance with
Rule 14a-8 under the Securities Exchange Act of 1934, and must be submitted in
writing and delivered or mailed to the Company's Secretary, at Appliance
Recycling Center of America, Inc., 7400 Excelsior Boulevard, Minneapolis,
Minnesota 55426.
Under Rule 14a-4(c)(1), any shareholder who wishes to have a proposal
considered at the 2002 annual meeting of shareholders, but not submitted for
inclusion in the Company's proxy statement, must set forth such proposal in
writing and file it with the Secretary of the Company no later than February 6,
2002, and failure to notify the Company by that date would allow the Company's
proxies to use their discretionary voting authority (to vote for or against the
proposal) when the proposal is raised at the annual meeting without any
discussion of the matter being included in the Company's proxy statement.
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WHO PAYS FOR THE COST OF THIS PROXY SOLICITATION?
The expense of the solicitation of proxies for this annual meeting,
including the cost of mailing, has been or will be borne by the Company.
Arrangements will be made with brokerage houses and other custodian nominees and
fiduciaries to send proxies and proxy materials to their principals and the
Company will reimburse them for their expense in so doing. In addition to
solicitation by mail, proxies may be solicited by telephone, telegraph or
personally by certain of the Company's directors, officers and regular
employees, without additional compensation. No proxy solicitors have been hired
in connection with the annual meeting.
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COMMON STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S COMMON STOCK?
The following persons or groups owned 5% or more of the Company's
shares of common stock of outstanding as of March 16, 2001:
Edward R. Cameron 13.7%
7400 Excelsior Boulevard
Minneapolis, MN 55426
Perkins Capital Management, Inc. 27.9%
730 East Lake Street
Wayzata, MN 55391-1769
HOW MUCH COMMON STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth as of March 16, 2001 the beneficial
ownership (which includes shares which may be acquired in the next 60 days
through options or warrants) `of common stock by each of the Company's
directors, including director nominees, each of the executive officers named in
the Summary Compensation Table on page 13, and all directors and executive
officers of the Company as a group, as well as information about beneficial
owners of 5% or more of the Company's common stock. Unless otherwise noted, each
person or group identified has sole voting and investment power with respect to
the shares shown.
POSITION NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER WITH COMPANY BENEFICIALLY OWNED (1) OUTSTANDING (2)
- ---------------- ------------ ---------------------- ---------------
Edward R. Cameron Chairman of the Board,
President and Chief
Executive Officer 315,189 (3) 13.7%
George B. Bonniwell Director 19,225 (4) *
Duane S. Carlson Director 20,625 (4) *
Marvin Goldstein Director 122,500 (4) 5.3%
Harry W. Spell Director 20,000 (4) *
All officers
and directors as a
group (7 persons) 500,539 (4) 21.1%
Perkins Capital Mgmt., Inc. 639,275 (5) 27.9%
Medallion Capital, Inc. 800,000 (6) 26.8%
- ---------------------------
* Represents less than 1%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares.
(2) Applicable percentage of ownership is based on 2,287,369 shares of common
stock outstanding as of March 16, 2001 plus, for each shareholder, all
options for such shareholder.
(3) Includes 12,500 shares which could be purchased within 60 days upon the
exercise of existing stock options, and excludes options to purchase 162,500
shares which are not currently exercisable. These
5
options were granted to Mr. Cameron under the Company's stock option plan,
25,000 in July 1999 in consideration of his outstanding guaranty of the
Company's current line of credit and 150,000 in May 2000 in consideration of
his performance for the Company.
(4) Includes shares which could be purchased within 60 days upon the exercise of
existing stock options or warrants, as follows: Mr. Bonniwell, 16,250
shares; Mr. Carlson, 16,250 shares; Mr. Goldstein, 22,500 shares; Mr. Spell,
16,250 shares; and all directors and current officers as a group, 86,750
shares.
(5) According to a Schedule 13G filed January 22, 2001, Perkins Capital
Management, Inc. ("Perkins Capital") beneficially owned 639,275 shares of
Common Stock as a result of serving as investment advisor to various
clients. Perkins Capital has sole dispositive power as to all 639,275 shares
and sole voting power as to 623,700 shares.
(6) Includes 700,000 shares which could be purchased within 60 days upon
exercise of existing warrant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors, its executive officers and any persons holding
more than 10% of outstanding common stock are required to file reports
concerning their initial ownership of common stock and any subsequent changes in
that ownership. Except as follows, the Company believes that the filing
requirements for the last fiscal year were satisfied: Medallion Capital, Inc.,
holder of 100,000 shares of Common Stock and of currently exercisable warrants
to purchase 700,000 shares at a current exercise price of $0.60 per share
(collectively, approximately 26.8% of the outstanding stock if all warrants are
exercised), has not made filings with the SEC to the Company's knowledge.
In making the above disclosure, the Company has relied on the written
representations of its directors, executive officers and beneficial owners of
more than 10% of Common Stock and copies of the reports that they have filed
with the Securities and Exchange Commission.
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PROPOSAL ONE -- ELECTION OF DIRECTORS
GENERAL INFORMATION
The property, affairs and business of the Company are managed under the
direction of the Board of Directors. A board of five directors is to be elected
at the meeting. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for management's five nominees named below. The term of
office for each person elected as a director will continue until the next annual
meeting of the shareholders and until a successor has been elected and
qualified, or until such director is removed or resigns.
All of the nominees named below are presently directors of the Company
and have served continuously since the year indicated. All nominees have
indicated a willingness to serve if elected. The Company knows of no
arrangements or understandings between a nominee and any other person pursuant
to which the nominee has been selected as a director.
All shares represented by proxies which have been properly executed and
returned will be voted for the election of all of the nominees named below,
unless other instructions are indicated thereon. In the event any one or more of
such nominees should for any reason not be able to serve as a director, the
proxies will be voted for such other person or persons as may be designated by
the Board.
THE BOARD RECOMMENDS A VOTE FOR ALL OF THE NOMINEES.
NOMINEES
The names of the nominees, all of whom are currently serving as
directors of the Company, are set forth in the table below. Following the table
is certain information for at least the last five years regarding each nominee.
There are no family relationship between any of the nominees, directors or
executive officers of the Company.
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
------------------- ------------------------- --- -----
Edward R. Cameron Chairman of the Board, Director, 60 1976
President and Chief Executive
Officer
George B. Bonniwell Director 61 1993
Duane S. Carlson Director 65 1990
Marvin Goldstein Director 57 1998
Harry W. Spell Director 77 1991
7
EDWARD R. CAMERON is the founder and has been the President of the
Company since its inception in 1976. He has been a director and
Chairman of the Board of the Company since 1989 and prior to 1989 was a
director of a predecessor of the Company. Prior to founding the
Company, Mr. Cameron served as a district product manager and an
account manager for Burroughs Corporation (a predecessor of Unisys
Corporation) and served in executive positions for several small
businesses. Mr. Cameron has a bachelor of science degree in business
administration from Montana State University.
GEORGE B. BONNIWELL has been a director of the Company since 1993. From
1969 to 1993 when he retired, Mr. Bonniwell was employed by
Craig-Hallum, Inc., a regional investment banking and brokerage firm,
most recently as senior vice president/director of corporate finance.
He was president and chief executive officer of Craig-Hallum, Inc. from
1976 to 1985.
DUANE S. CARLSON has been a director of the Company since 1990. Mr.
Carlson is currently a self-employed business consultant, as he was
from 1988 to 1991. From 1991 to 1997, Mr. Carlson was executive vice
president and chief financial officer of NetStar, Inc., a company
engaged in the development, manufacturing and marketing of high-speed
computer communications equipment. He was a founder of NetStar, Inc.
and was a member of its board of directors. NetStar, Inc. became a
wholly-owned subsidiary of Ascend Communications, Inc. on August 15,
1996 and is now operated as the High Performance Networking Division of
Lucent Technologies which recently acquired Ascend. He was a founder of
Lee Data Corporation and from 1979 to 1988 was employed by Lee Data
Corporation (which became Carleton Corporation, and is now part of
Oracle, Inc.) in various capacities, most recently as chief financial
officer and executive vice president, and was also a member of the
board of directors. Mr. Carlson also currently serves as a director of
Astrocom Corporation (where he also serves on the Audit Committee) and
of several privately held companies.
MARVIN GOLDSTEIN has been a director of the Company since November
1998. Mr. Goldstein is a private investor. From April 1997 to August
1997, Mr. Goldstein served as Executive Vice President and COO of
Regis; from August 1995 to April 1997 as Chairman, CEO and President of
Pet Food Warehouse; and from February 1988 to September 1994 was
employed by Dayton Hudson, Department Store Division, in several
executive positions. Prior to that time, Mr. Goldstein was associated
with R.H. Macy (California) and Carter Hawley Hale. Mr. Goldstein also
serves as a member of the board of directors for Greenspring Company,
KBGear Interactive, Paper Warehouse, Inc., and Wilsons The Leather
Experts, Inc.
HARRY W. SPELL has been a director of the Company since 1991. Mr. Spell
has been retired since 1988. From 1949 to 1988, he was employed in
various capacities by Northern States Power Company, most recently as
senior vice president-finance and chief financial officer. Mr. Spell
serves as chairman of the board of directors and a member of the
executive committee for Eagle Pacific Industries, Inc. and Chairman of
Spell Capital Partners, LLC, a private equity and buyout firm.
8
ACTIONS AND COMMITTEES OF THE BOARD OF DIRECTORS
In 2000, the Board of Directors met six times. The Board of Directors
has two standing committees, the Audit Committee and the Compensation and
Benefits Committee. In 2000, the Audit Committee met three times and the
Compensation and Benefits Committee met once. The Board currently has no
nominating or other standing committees and has no current plans to establish
additional committees. All of the directors attended at least 75% of the total
number of meetings of the Board of Directors and of the committees on which the
Director served.
REPORT OF THE 2000 AUDIT COMMITTEE
The Audit Committee is responsible for relations with the Company's
independent auditors, for review of internal auditing functions (whether formal
or informal) and internal controls and for review of financial reporting
policies to assure full disclosure of financial conditions. The Audit Committee
has adopted, and the Board of Directors has approved, a written Charter for the
Audit Committee which is attached to this proxy statement as Appendix A. The
Company's non-employee directors serve on the Audit Committee. For 2000, George
B. Bonniwell, Duane S. Carlson (Chairman), Marvin Goldstein, and Harry W. Spell
served as such committee, and are also expected to serve for 2001. The members
of the Audit Committee are all "independent" directors, as that term is defined
in Rule 4200(a)(15) of the NASD listing standards.
The Audit Committee reviewed the audited financial statements in the
Annual Report with management including a discussion of the reasonableness of
significant judgments and accounting principles.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the Company's accounting principles and such other matters as
are required to be discussed with the committee under generally accepted
auditing standards. In addition, the Audit Committee has discussed with the
independent auditors the auditors' independence from management and the Company
including the matter in the written disclosures required by the Independence
Standards Board.
The Audit Committee discussed with the Company's independent auditors
the overall scope and plans for their audit. The committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
committee held three meetings during fiscal 2000, two with the independent
auditors and one without the auditors present.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 30, 2000 for
9
filing with the Securities and Exchange Commission. The Audit Committee and the
Board have also recommended, subject to shareholder approval, the selection of
the Company's independent auditors.
March 2, 2001
The 2000 Audit Committee
George B. Bonniwell
Duane S. Carlson
Marvin Goldstein
Harry W. Spell
The information set forth above in the Audit Committee Report is not to
be considered "filed" with the SEC for any purpose or "incorporated by
reference" into any Securities Act or Exchange Act document of the Company for
any purpose.
REPORT OF THE 2000 COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee of the Board of Directors (the
"Compensation Committee") is composed entirely of non-employee directors. For
2000, George B. Bonniwell, Duane S. Carlson, Marvin Goldstein, and Harry W.
Spell (Chairman) served on such committee, and are also expected to serve for
2001. The Compensation Committee is responsible for review and approval of
officer salaries and other compensation and benefit programs and determination
of officer bonuses. The Compensation Committee also administers the Company's
1989 Stock Option Plan and either the Compensation Committee or the entire Board
may administer and make grants under the Company's 1997 Stock Option Plan.
Annual compensation for the Company's executive officers, other than
the President, is recommended by the President and approved by the Compensation
Committee. The individual salary recommendations may vary based on the
President's perception of the value of that position to the Company, the
executive's individual performance and the President's views as to comparative
compensation for like positions at other companies. The annual compensation for
the President is recommended by the Compensation Committee and approved by the
Board of Directors.
The Company believes that compensation of the Company's key executives
should be sufficient to attract and retain highly-qualified personnel, and
should also provide meaningful incentives for superior performance. The Company
seeks to reward achievement of long-term and short-term performance goals
including the development of new customers, increasing sales volume, meeting or
exceeding financial targets and other factors.
Compensation of the Company's executives generally consists of a base
salary, a cash bonus and long-term incentive compensation in the form of stock
options. The Company does not utilize a formulaic approach to executive base
compensation. In principle, the Company's executive compensation approach is to
place each officer's salary compensation, excluding bonus, in the mid range of
executive compensation levels for companies of a similar size. The Company
currently provides no retirement benefits to its executive officers except for
the 401(k) Plan.
10
The amount of any bonus awarded under the Company's bonus plan for all
officers is based on the successful and timely achievement of Company goals,
including financial performance and positioning for future results.
Salaries for certain officers of the Company were increased by 5% for
2000. Bonuses of between 10% and 30% of annual base salary were granted to
officers for 2000, payable in March 2001. General managers receive a bonus based
on a formula which considers both profit at their center and individual merit.
Bonuses paid to general managers for 2000 ranged between approximately 4%-34% of
annual base salary.
Stock options are awarded to provide incentives to the officers to
promote improved long-term performance of the Company. Option grants for all
officers other than the President are recommended by the President. No such
options were granted in 2000 to officers. The President, Edward R. Cameron, was
granted options to purchase 150,000 shares as part of his compensation package.
The compensation for Edward R. Cameron, the Company's President and
Chief Executive Officer, is determined by using a process and philosophy similar
to that used for all other officers. The Compensation Committee considers its
members' views as to comparative compensation for like positions at other
companies together with its own assessment of Mr. Cameron's performance and
contributions to the Company, recommending a salary, bonus and stock options for
the Board of Directors' approval. There is no specific formulaic tie between the
Company's goals and performance and the Compensation Committee's recommendation;
instead, the Compensation Committee's judgment and discretion is used in its
recommendations to the Board of Directors.
The Compensation Committee has reviewed the provisions of Internal
Revenue Code Section 162(m) relating to the deductibility of annual executive
compensation in excess of $1,000,000. The Compensation Committee currently does
not have a policy with respect to Section 162(m) because it is unlikely that
such limit will apply to compensation paid by the Company to any of the
Company's executive officers in the near future.
March 2, 2001
The 2000 Compensation and Benefits Committee
George B. Bonniwell
Duane S. Carlson
Marvin Goldstein
Harry W. Spell
NON-VOTING BOARD SEAT
In connection with a loan in 1998, Medallion Capital, Inc. was granted
non-voting attendance rights at all Board meetings and warrants to purchase
700,000 shares. Medallion's current Board attendee is Dean Pickerell.
11
COMPENSATION OF DIRECTORS
The Company will have five directors in 2001, one of whom (Mr. Cameron)
is an executive officer of the Company and does not receive any additional
compensation for serving as a director of the Company. Non-employee directors of
the Company receive an annual fee of $5,000 for their service as directors, as
well as stock options under the Restated 1997 Stock Option Plan. The Chairman of
the Audit Committee receives an additional $1,000 per year of service.
INFORMATION CONCERNING OFFICERS AND KEY EMPLOYEES WHO ARE NOT DIRECTORS
BRUCE J. WALL, 47, is the Vice President of Resource Efficiency
Programs, a position he has held since October 2000. Previously, Mr.
Wall was employed by the Company as a National Account Manager from
1993 to 1997. From 1997 until rejoining the Company, Mr. Wall worked
for the Northeast Energy Efficiency Partnerships, Inc. At Northeast
Energy Efficiency Partnerships, Inc, Mr. Wall facilitated and managed
groups to develop, implement and evaluate regional market
transformation strategies. Currently as Vice President of Resource
Efficiency Programs, Mr. Wall is responsible for expanding the scope of
services offered to utility companies and developing programs to
provide resource efficiency benefits.
LINDA KOENIG, 39, has been the Controller of the Company since
September 1999. During 1999 the Company eliminated the position of
Chief Financial Officer. The functions previously undertaken by that
position are now handled by the controller. Prior to her promotion to
Controller, Ms. Koenig was General Accounting Manager for the Company,
a position she held for approximately three and one half years, from
February 1996 to September 1999. From August 1994 to February 1996, Ms.
Koenig was employed by WTC Industries as Accounting Manager. As
Controller, Ms. Koenig is responsible for all accounting for the
Company, including general ledger, accounts payable, accounts
receivable, inventory and systems.
JIM KIRWAN is the General Manager of the Company's California retail
and recycling operations, a position he has held since October 1996.
From October 1993 to September 1996, Mr. Kirwan served as the
transportation manager for the California facility.
THOMAS B. OWEN is the General Manager of the Ohio retail and recycling
operations, a position he has held since December 1997. Prior to that
time Mr. Owen worked for Jacobson Warehouse Company, from September
1995 to June 1997. At Jacobson he was Regional Operations Manager for a
third party warehousing company.
MORGAN WOLF is the General Manager of the Minnesota retail and
recycling operations. Mr. Wolf served in this position during 1997 and
again since January 1, 1999. He served as Vice President of Operations
during 1998. Mr. Wolf joined the Company in 1995 as National Quality
Control Manager.
12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation
earned by the Chief Executive Officer for each of the last three fiscal years.
No other officer of the Company received salary and bonus for any such year in
excess of $100,000.
ANNUAL COMPENSATION LONG-TERM COMPENSATION(1)
------------------------------------------ -------------------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) COMP. ($) OPTIONS(#) COMP. ($)
- --------------------------- ---- ---------- -------- --------- ---------- ---------
Edward R. Cameron 2000 $150,000 $45,000(2) $24,299(3) 150,000 $0
Chairman of the Board, President 1999 150,000 10,000 1,200(3) 25,000 0
and Chief Executive Officer 1998 155,817 (2) 1,050(3) (2) 0
- --------------------
(1) The Company has no Long-Term Incentive Plan as defined by Item
402(a)(7)(iii) of SEC Regulation S-K.
(2) The bonus for 2000 was paid in 2001. No bonuses or stock options were
granted in 1998 to Mr. Cameron.
(3) Includes $23,084 for payment of unused vacation in 2000 and premiums on car
insurance for each year.
STOCK OPTIONS GRANTED AND EXERCISED IN LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted and exercised under the Company's stock option Plans in fiscal
2000 by the named executive officer and the value of such officer's unexercised
options at January 1, 2001.
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL STOCK
NUMBER OF SECURITIES OPTIONS GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE
---- ---------- ----------- --------- ----
Edward R. Cameron 150,000(1) 100% $2.20(2) 05/1/05
- --------------------
(1) Exercisable 25% per year over four years
(2) 110% of fair market value on date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Edward R. Cameron -- -- 12,500 162,500 $7,460 $7,460
13
STOCK OPTION PLANS
The Company currently has two stock option plans: The Restated 1997
Stock Option Plan (the "1997 Plan") and the Restated 1989 Stock Option Plan (the
"1989 Plan"). No further shares may be granted under the 1989 Plan; however,
options currently outstanding may remain exercisable until their individual
termination or expiration date.
Under the 1989 Plan, there are currently outstanding and exercisable
options to purchase an aggregate of 46,612 shares held by 12 employees of the
Company and an aggregate of 11,250 shares held by three non-employee directors
of the Company. The exercise prices for options under 1989 Plan range from $.625
per share to $17.50 per share.
The 1997 Plan may be administered by the Compensation and Benefits
Committee of the Board of Directors or the full Board of Directors acting as the
Committee (the "Committee"). In May 2000, the Board of Directors adopted an
amendment (the "Amendment") to the 1997 Plan, which is being presented to the
shareholders at the annual meeting for approval. See Proposal Two.
Under the 1997 Plan, as amended in May 2000, the Company has reserved
an aggregate of 400,000 shares of its common stock for option grants under the
plan. As of March 1, 2001, options to purchase an aggregate of 247,500 shares
had been granted to employees and were outstanding under the 1997 Plan, and
options to purchase an aggregate of 60,000 shares had been granted to the
Company's four non-employee directors. No options under the 1997 Plan have been
exercised.
Under the 1997 Plan, as amended in May 2000, each non-employee director
receives, upon initial election to the Board, an automatic, nondiscretionary
award of options to purchase 7,500 shares of common stock. In addition, on the
date of each annual meeting of shareholders (beginning with the annual meeting
in 2001) each non-employee director receives an annual automatic,
nondiscretionary grant of options to purchase 7,500 shares of common stock.
The Amendment adopted by the Board in May 2000 and being presented to
the shareholders for approval at the annual meeting added 200,000 shares to the
1997 Plan, bringing the total number of shares subject to the 1997 Plan to
400,000. Also, the 1997 Plan was amended to increase the number of options to be
received by the current and future non-employee directors of the Company. A copy
of the Amendment is attached to this proxy statement as Appendix B.
Each option to a non-employee director becomes exercisable six months
after the date of grant, provides for the forfeiture of any nonexercisable
portion if an optionee ceases to be a director for certain reasons, provides
that the exercisable portion may be exercised for a period of 10 years from the
date of grant, and expires on the tenth anniversary of the date of grant. The
exercise price of an option is the fair market value of the common stock on the
date the option is granted.
Employees of the Company, including employee directors, are eligible to
receive awards of options to purchase common stock pursuant to the 1997 Plan.
The Committee has the discretion to select eligible employees to whom awards
will be granted and establish the type, price, amount, size and terms of awards,
subject in all cases to the provisions of the 1997 Plan and the applicable
provisions of the Internal Revenue Code.
14
The exercise price of an incentive stock option cannot be less than
100% of the fair market value of the Common Stock on the date the option is
granted, except that if the optionee owns 10% or more of the voting rights of
all of the Company's stock ("10% Holder"), the exercise price of an incentive
stock option cannot be less than 110% of the fair market value of the common
stock on the date the option is granted.
Options granted to employees cannot be exercised prior to a set period
after their date of grant, which cannot be less than one year during which time
the optionee must remain employed by the Company. Each option specifies the
expiration date, which may not exceed 10 years from the date the option is
granted, provided, however, that if the optionee is a 10% Holder, the exercise
period with respect to incentive stock options may not exceed five years.
Unless otherwise specifically provided in an optionee's agreement,
options cannot be exercised prior to the first anniversary of the date of grant
and provide for the forfeiture of any nonexercisable portion if an optionee
ceases to be an employee of the Company for any reason and that the exercisable
portion may be exercised for a period of three months after termination (or one
year in the case of death, disability or normal retirement).
CERTAIN RELATIONSHIPS AND TRANSACTIONS
PRIVATE PLACEMENT OF STOCK. In February 1999, the Company completed a
private placement of 1,030,000 shares of Common Stock at $.50 per
share. As part of this offering, Marvin Goldstein, a member of the
Board of Directors of the Company, purchased 100,000 shares; a client
of Perkins Capital Management, Inc. (which currently controls
approximately 27.9% of the common stock of the Company) purchased
400,000 shares; and Medallion Capital, Inc. ("Medallion Capital"), one
of the Company's current lenders (which holds non-voting attendance
rights at board meetings) purchased 100,000 shares. In addition, the
February 1999 issuance of shares triggered an adjustment in the
exercise price under the warrant held by Medallion Capital to $0.60 per
share.
WARRANTS. In addition to stock options granted to non-employee
directors under the Company's 1997 Plan, Marvin Goldstein, a member of
the Board of Directors, received warrants in March 1999 to purchase
5,000 shares of common stock, subject to customary antidilution
adjustments. Mr. Goldstein was awarded such warrants in consideration
for certain general business consulting services provided to the
Company since his initial election to the Board in November 1998 and
which he has agreed to continue to provide during his tenure on the
Board. The warrants are exercisable, beginning September 6, 1999, for a
period of ten years, at an exercise price of $0.625 per share. If Mr.
Goldstein ceases to be a director of the Company, the warrants
terminate if they have not become exercisable, and otherwise remain
exercisable for the full ten year term.
In connection with a private placement in July 1998 by the
Company of 12% subordinated promissory notes and warrants, certain
employees of the Company invested. All notes were repaid in September
1998. The warrants are currently exercisable to purchase 68,750 shares
at $2.25 per share and expire July 20, 2001.
In connection with a loan in September 1998, Medallion Capital
received a
15
warrant to purchase 700,000 shares of Common Stock and a non-voting
attendance right at the board meeting. The current exercise price of
the warrant is $0.60 per share.
PERFORMANCE GRAPH
The following graph compares cumulative total shareholder returns on
the Company's Common Stock over the last five fiscal years with the Nasdaq Stock
Market (U.S. Companies) Index and the revised Dow Jones Pollution Control Index,
assuming an initial investment of $100 at the beginning of the period and the
reinvestment of all dividends. The following graph has been revised for all
periods to give effect to the Company's one-for-four reverse stock split,
effective February 21, 1997.
[GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
-----------------------------------------------------------------
YEAR ENDING
-----------------------------------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
- ---------------------------------------------------------------------------------------------------------------
Appliance Recycling Centers of America, Inc. $100.00 $13.51 $12.16 $4.05 $6.08 $6.76
- ---------------------------------------------------------------------------------------------------------------
NASDAQ Stock Market (U.S. Companies) $100.00 $122.97 $150.86 $212.08 $386.28 $237.70
- ---------------------------------------------------------------------------------------------------------------
DOW Jones Industrial Average $100.00 $110.72 $122.17 $127.18 $70.63 $99.24
- ---------------------------------------------------------------------------------------------------------------
Effective September 8, 1998, the Company was delisted from the Nasdaq
SmallCap Market for failure to meet continued listing requirements, specifically
the net worth requirement. The Company's Common Stock is currently traded on the
OTC Bulletin Board under the symbol ARCI.
16
The Common Stock was traded on the Nasdaq SmallCap Market from February
26, 1997 to September 7, 1998, and the Nasdaq National Market System from
January 8, 1993 to February 25, 1997, and the Nasdaq SmallCap Market from
November 7, 1991 until January 7, 1993. Prior to November 7, 1991, the Common
Stock traded on the local over-the-counter market in the Minneapolis - St. Paul,
Minnesota area.
The closing price on March 13, 2001 was $1.625 per share.
17
PROPOSAL TWO -- ADOPTION AND APPROVAL OF AMENDMENT TO 1997 STOCK
OPTION PLAN
In May 2000, the Board of Directors adopted an amendment (the
"Amendment") to the Company's Restated 1997 Stock Option Plan ("1997 Plan"),
which is being presented to the shareholders at the annual meeting for approval
and adoption. After approval, the 1997 Plan will be restated to include the
Amendment.
A COPY OF THE AMENDMENT TO THE PLAN IS ATTACHED TO THIS PROXY STATEMENT
AS APPENDIX B.
The Amendment increased the number of shares of Common Stock reserved
for issuance under the 1997 Plan from 200,000 to 400,000. The Amendment also
increased the number of options granted to both current and future non-employee
directors.
Prior to the Amendment, each non-employee director was to receive an
initial automatic grant of options to purchase 5,000 shares of common stock and
an automatic annual grant of 5,000 options upon election to each subsequent
one-year term. The Amendment increased the automatic grant to 7,500 upon initial
election and 7,500 upon election to each subsequent term. The Amendment also
granted to each current non-employee director an additional option to purchase
2,500 shares effective May 1, 2000. The exercise price of the 2,500 options
granted in May 2000 was $2.00 per share.
After giving effect to the Amendment, each current non-employee
director has options to purchase 7,500 shares of Common Stock under the 1997
Plan, all of which are vested. The exercise prices for such options were fair
market value on the date of grant and range from $2.00 per share to $2.437 per
share. Each such director will also receive an annual grant of 7,500 options
upon their reelection in April 2001. All of the non-employee directors, other
than Mr. Goldstein, also hold options under the 1989 Stock Option Plan.
The Board of Directors determined in May 2000, after discussion, that
its grant of options to non-employee directors should be increased as part of a
plan to attract and retain qualified non-employee Board members. In addition,
the Compensation and Benefits Committee of the Board determined in May 2000 that
Edward Cameron, President of the Company, should be granted additional options
to purchase 150,000 shares of Common Stock as part of his compensation package.
Consequently, the number of shares reserved under the 1997 Plan was required to
be increased.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION AND APPROVAL OF THE
AMENDMENT.
18
PROPOSAL THREE -- RATIFICATION AND APPOINTMENT OF INDEPENDENT
AUDITORS
APPOINTMENT OF MCGLADRY & PULLEN
Subject to shareholder approval, the Board of Directors has selected
McGladrey & Pullen, LLP, a firm of independent public accountants, to audit the
accounts of the Company for the fiscal year ending December 29, 2001. If the
shareholders do not ratify the appointment of McGladrey & Pullen, LLP, the
appointment will be reconsidered by the Board of Directors.
A representative of McGladrey & Pullen will be present at the annual
meeting, will have an opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions by shareholders.
THE BOARD RECOMMENDS A VOTE FOR SUCH APPOINTMENT.
FEES PAID TO AUDITORS BY THE COMPANY DURING LAST FISCAL YEAR
AUDIT FEES. Aggregate fees by McGladrey & Pullen, LLP for professional
services rendered for the audit of the Company's annual consolidated financial
statements for the most recent fiscal year, review of the Company's quarterly
reports on Form 10-Q for the most recent fiscal year, assistance with annual
report and Form 10-K filings, attendance at audit committee meetings and
consultation on audit and accounting matters were approximately $56,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There
were no fees by McGladrey & Pullen, LLP or associated entities for services
provided with respect to the design and implementation of financial information
systems during the most recent fiscal year.
OTHER FEES. Aggregate fees by McGladrey & Pullen, LLP and associated
entities for all other professional services (principally tax return
preparation, Section 382 limitation and 401(k) plan) rendered to the Company
during the most recent fiscal year were approximately $36,000.
The Audit Committee of the Board of Directors did consider the
services provided by McGladrey & Pullen, LLP and associated entities, other
than with respect to the audit fees, in considering the independence of the
auditors.
19
OTHER MATTERS
At the date of this proxy statement the Company's management knows of
no other matters which may come before the annual meeting. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy form to vote such proxies received by the Company in
accordance with their judgment on such matters.
A COPY OF THE COMPANY'S 2000 ANNUAL REPORT TO SHAREHOLDERS, IS BEING
MAILED TO YOU WITH THIS PROXY STATEMENT. THE ANNUAL REPORT INCLUDES, AMONG OTHER
THINGS, THE BALANCE SHEETS OF THE COMPANY AS OF DECEMBER 30, 2000 AND JANUARY 1,
2000 AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS, SHAREHOLDERS' EQUITY
AND CASH FLOWS FOR THE TWO YEARS ENDED DECEMBER 30, 2000. IF YOU DESIRE AN
ADDITIONAL COPY OF THE ANNUAL REPORT OR A COPY OF OUR FORM 10-K FILED WITH THE
SEC, YOU MAY OBTAIN ONE (EXCLUDING EXHIBITS) WITHOUT CHARGE BY ADDRESSING A
REQUEST TO INVESTOR RELATIONS, APPLIANCE RECYCLING CENTERS OF AMERICA, INC.,
7400 EXCELSIOR BOULEVARD, MINNEAPOLIS, MINNESOTA 55426. YOU MAY ALSO ACCESS A
COPY OF OUR FORM 10-K ON THE SEC'S WEBSITE AT WWW.SEC.GOV.
By Order of the Board of Directors
Denis E. Grande, Secretary
March 23, 2001
20
APPENDIX A
AUDIT COMMITTEE
CHARTER
The Audit Committee ("Committee") of Appliance Recycling Centers of America,
Inc. is a standing committee of the Board of Directors and is appointed by and
responsible to the Board. The primary objective of the Committee is to provide
oversight and additional assurance concerning the safeguarding of the Company's
assets and the integrity of financial information produced by the Company both
for Board and management decision making as well as for any outside
dissemination and publication.
The Audit Committee shall consist of a least three members of the Board of
Directors, all of whom shall be independent non-management directors and where
possible and otherwise appropriate in the judgment of the Board, knowledgeable
in basic financial matters. For this purpose an independent director shall be
free from any relationship which could influence such director's judgment as a
committee member. In any case, where there is any significant doubt as to such
independence (as determined by such director or other members of the committee),
such director should excuse himself/herself from any decisions which might be
influenced by a lack of independence. The Chairperson of the Committee (as well
as the members) shall be appointed by the Board of Directors.
The Audit Committee shall meet at least two times annually on a schedule the
Committee shall establish. A special meeting may be called on not less than
twenty-four hours notice (which may be waived by a majority of the Committee),
at any time, by any member of the Committee. Telephone meetings are permitted.
The Audit Committee shall as it considers necessary maintain unrestricted
communication with the Company's independent auditors, the Company's internal
auditors, if any, and the Company's legal counsel to assure that each
understands and accepts its responsibilities for direct communication with the
Audit Committee as appropriate. The Audit Committee shall have the authority to
direct the internal auditor, if any, or the independent auditors, to carry out
such special audit projects as, in the Committee's judgment, are warranted.
In the discharge of its general responsibilities, the Audit Committee shall:
1. Recommend to the Board for approval the selection of the independent
auditors.
2. Review the arrangements (including fee estimates) for and scope of
independent audits.
3. Review the annual report and accompanying opinion of the independent
auditors/accountants and report thereon to the Board of Directors;
similarly, review annual, quarterly and other filings made to financial
regulatory bodies such as the SEC.
4. Review the process for preparation and issuance of interim financial
reports and any outside auditor review of such reports.
5. Review matters of concern to the Audit Committee, the independent
auditors, or management relating to the Company's financial statements
or other results of the independent audit. Such matters may include but
not be limited to proposed/actual audit
21
adjustments, risk exposures and minimization thereof, valuation of
assets and liabilities (real and potential) and identification and
assessment of commitments and contingencies.
6. Review the activities and recommendation of the Company's internal
auditors, if any.
7. Review non-audit services (including fee estimates) performed or
proposed to be performed for the Company by the independent auditors.
8. Review and consider comments from the independent auditors with respect
to weaknesses in internal accounting controls and the consideration
given or corrective action taken or proposed to be taken by management.
9. Review with Company management and the Company's independent auditors
material changes in accounting principles and their applicability to
the Company; review and approve the application of accounting policies
and procedures and any proposed changes thereof relative to the
Company's financial statements.
10. Take responsibility for review and oversight of such other matters as
may be referred to the Committee by the Board of Directors, such as
senior corporate executive perquisites and travel and entertainment
expenses.
11. Report periodically to the Board of Directors, not less than annually,
concerning the foregoing, which report shall contain recommendations as
appropriate, including recommendations for changes in the Charter of
the Committee.
Date Adopted by the Board of Directors: December 4, 2000
----------------
22
APPENDIX B
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
AMENDMENT TO
RESTATED 1997 STOCK OPTION PLAN
("1997 PLAN")
I. Section 2 of the 1997 Plan was amended, effective May 1, 2000
subject to shareholder approval, to add 200,000 shares to the 1997 Plan,
bringing the total number of shares of Common Stock subject to the 1997 Plan to
400,000. To the extent that this amendment is not approved by the shareholders
of the Company prior to April 30, 2001, these additional 200,000 shares may only
be used for the grant of nonqualified options (whether pursuant to Section 4 or
Section 6 of the 1997 Plan).
II. Section 6 of the 1997 Plan was amended to read in it entirety as
follows:
"6. GRANT OF INDEPENDENT DIRECTOR OPTIONS. Each Independent
Director who is an Independent Director on May 1, 2000 [the effective
date of the amendment to the Plan] shall be granted, in addition to the
options to purchase shares under the Plan currently outstanding, a
stock option under the Plan to purchase 2,500 shares of Common Stock
effective on May 1, 2000.
Each Independent Director, upon his or her initial election to a first
term on the Board of Directors, shall, on the date of such initial
election, automatically be granted an option to purchase 7,500 shares
of Common Stock. In addition, on the date of each annual meeting of
shareholders of the Company, beginning with the annual meeting to be
held in 2001, each Independent Director shall automatically be granted
options to purchase 7,500 shares of Common Stock upon the re-election
of such Independent Director to the Board by the shareholders of the
Company."
23
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For Annual Meeting of Shareholders
April 26, 2001
3:30 p.m.
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Blvd.
Minneapolis, MN 55426
- --------------------------------------------------------------------------------
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 EXCELSIOR BLVD., MINNEAPOLIS, MN 55426 PROXY
- --------------------------------------------------------------------------------
The undersigned, revoking all prior proxies, hereby appoints Edward R.
Cameron and Denis E. Grande, or either of them, as Proxy or Proxies, with full
power of substitution and revocation, to vote all shares of stock of Appliance
Recycling Centers of America, Inc. standing of record in the name of the
undersigned at the close of business on March 16, 2001 at the Annual Meeting of
Shareholders to be held on April 26, 2001, or at any adjournment or postponement
of the meeting.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders of Appliance Recycling Centers of America, Inc. and the
proxy statement dated March 23, 2001 furnished with the Notice.
SEE REVERSE FOR VOTING INSTRUCTIONS.
-1-
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to Appliance Recycling Centers of America,
Inc., c/o Shareowner Services(TM), P.O. Box 64873, St. Paul, MN 55164-0873.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of the following 01 Edward R. Cameron 04 Marvin Goldstein |_| Vote FOR |_| Vote WITHHELD
nominees as directors: 02 George B. Bonniwell 05 Harry W. Spell all nominees from all nominees
03 Duane S. Carlson
______________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |______________________________________|
2. Approval and adoption of the Amendment to the 1997 Stock
Option Plan. |_| For |_| Against |_| Abstain
3. Ratification of appointment of McGladrey & Pullen, LLP as independent
auditors for fiscal year ending December 29, 2001. |_| For |_| Against |_| Abstain
In their discretion the Proxies are authorized to vote upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR ON PROPOSAL 1 AND FOR
PROPOSALS 2 AND 3.
Address Change? Mark Box |_| Indicate changes below:
______________________________________
| |
|______________________________________|
Signature(s) in Box
Please sign your name exactly as it
appears at left. In the case of shares
owned in joint tenancy or as tenants in
common, all should sign. Fiduciaries
should indicate their title and
authority.
-2-