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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the
Registrant ý
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Filed by a Party
other than the Registrant o
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive
Additional Materials
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Soliciting Material
Pursuant to §240.14a-12
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Appliance Recycling Centers of America, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
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Payment of
Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each
class of securities to which transaction applies:
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(2)
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Aggregate number
of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum
aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid
previously with preliminary materials.
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form, Schedule
or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Persons who are to respond to the collection of
information contained in this form are not required to respond unless the
form displays a currently valid OMB control number.
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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 MAY 5, 2005
TO OUR SHAREHOLDERS:
The annual meeting of the shareholders of Appliance
Recycling Centers of America, Inc. will be held on Thursday, May 5,
2005 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 three directors to serve for a
term of one year expiring at the 2006 annual meeting of shareholders.
• 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 18, 2005 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 or vote your proxy by using our internet voting service at “http://www.eproxy.com/arci/”.
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By Order of the Board of Directors
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Denis E. Grande, Secretary
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April 1, 2005
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426
PROXY STATEMENT
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, May 5, 2005, 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 on behalf of the Board of Directors of the Company for
use at the 2005 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 April 1, 2005.
At the Company’s annual meeting, shareholders will act
upon the matters described in the accompanying notice of annual meeting of
shareholders. This includes the election
of three directors. In addition, the
Company’s management will report on the performance of the Company during the
2004 Fiscal Year and respond to questions from shareholders.
Only shareholders of record of outstanding common
stock of the Company at the close of business on the record date, March 18,
2005, 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.
All shareholders as of the record date, or their duly
appointed proxies, may attend the meeting.
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, 4,161,277 shares of common stock of the Company were
outstanding. If you submit a properly
executed proxy card or vote your proxy by using the internet voting service,
even if you abstain from voting, then you will be considered part of the
quorum. However, abstentions are not
counted in the tally of votes FOR or AGAINST a proposal. A
WITHHELD vote is the same as an
abstention.
1
Sign and date each proxy card you receive and return
it in the prepaid envelope or vote using our internet voting service. If you return your signed proxy card or vote
using our internet voting service but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR all
directors in Proposal 1.
Yes. Even after
you have submitted your proxy or voted by internet, 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 or re-accessing the internet voting site listed
on your 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).
The Board’s recommendations are set forth after the
description of the 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 5).
Unless you give other instructions on your proxy card
or your internet vote, 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.
For Proposal 1, the election of directors, each shareholder
will be entitled to vote for three nominees and the three nominees with the
greatest number of votes will be elected.
With respect to any other matter that properly comes
before the meeting, the affirmative vote of the holders of a majority of the
shares of 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 the proposal to be acted upon. Thus, if you do not give your broker or
nominee specific instructions, your shares may not be voted on the proposal and
will not be counted in determining the number of shares necessary for approval
of the
2
proposal. Shares represented by
such “broker non-votes” will, however, be counted in determining whether there
is a quorum.
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.
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 or use the internet voting service for each
proxy card. 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.
Although we do not know of any business to be
considered at the 2005 annual meeting other than the proposal described in this
proxy statement, if any other business is presented at the annual meeting, your
proxy gives authority to Edward R. Cameron and Denis E. Grande to vote on such
matters at their discretion.
To be considered for inclusion in the Company’s proxy
statement for the 2006 annual meeting, shareholder proposals must be received
at the Company’s offices no later than December 2, 2005. 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 Centers
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 2006 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 15, 2006.
Failure to notify the Company by that date would allow the Company’s proxy
holders 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.
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.
3
The following table sets forth as of March 18,
2005 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.
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Beneficial
Owner
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Position
with Company
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Number of Shares Beneficially Owned (1)
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Percent of Outstanding (2)
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Directors and executive officers:
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Edward R. Cameron
7400 Excelsior Blvd.
Minneapolis, MN 55426
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Chairman of the Board,
President and Chief Executive Officer
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452,689
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(3)
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10.5
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%
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Duane S. Carlson
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Director
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46,875
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(4)
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1.1
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%
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Harry W. Spell
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Director
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42,500
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(4)
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1.0
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%
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All officers and directors as a group
(5 persons)
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556,713
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(4)
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12.6
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%
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Other 5% shareholders:
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Perkins Capital Mgmt. Inc.
730 East Lake Street
Wayzata, MN 55391
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778,525
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(5)
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18.7
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%
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Medallion Capital Inc.
3000 West County Rd. 42,
Suite 301 Burnsville, MN 55337
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632,000
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15.2
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%
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(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 4,161,277 shares of common stock
outstanding as of March 18, 2005 plus, for each shareholder, all shares
that such shareholder could purchase within 60 days upon the exercise of
existing stock options.
(3) Includes
150,000 shares, which could be purchased within 60 days upon the exercise of
existing stock options. These options
were granted to Mr. Cameron under the Company’s stock option plan 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. Carlson,
42,500 shares; Mr. Spell, 42,500 shares; and all directors and named
executive officers as a group, 248,000 shares.
(5) According
to a Schedule 13G filed February 10, 2005, Perkins Capital Management, Inc.
(“Perkins Capital”) beneficially owned 778,525 shares of common stock as a
result of serving as investment advisor to various clients. Perkins Capital has sole dispositive power as
to all 778,525 shares and sole voting power as to 696,050 shares.
4
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 632,000
shares of common stock, 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.
The property, affairs and business of the Company are
managed under the direction of the Board of Directors. A board of three directors is to be elected
at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for
management’s three nominees named below.
The term of office for each person elected as a director will continue
until the next annual meeting of 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 or
properly voted using the internet voting service 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.
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 relationships between any of the nominees, directors or executive
officers of the Company.
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Name
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Position with Company
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Director
Since
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Age
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Edward R. Cameron
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Chairman of the Board,
Director,
President and Chief Executive Officer
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1976
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64
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Duane S. Carlson
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Director
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1990
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69
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Harry W. Spell
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Director
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1991
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81
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5
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.
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 part of Lucent Technologies, which 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 several privately held companies.
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 Xcel Energy (formerly 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 PW Eagle, Inc.
and Chairman of Spell Capital Partners, LLC, a private equity and buyout firm.
In 2004, the Board of Directors met five times. The Board of Directors has two standing
committees, the Audit Committee and the Compensation and Benefits
Committee. In 2004, the Audit Committee
met five times and the Compensation and Benefits Committee met two times. The full Board serves as a nominating
committee, and met once in that capacity in 2004. The Board currently has no 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.
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 condition. The Audit Committee adopted, and the Board of
Directors approved, a written charter for the Audit Committee which was
attached as an appendix to the Company’s 2004 proxy statement. The Company’s non-employee directors serve on
the Audit Committee. For 2004, Duane S.
Carlson (Chairman) and Harry W. Spell served as such committee and are also
expected to serve for 2005. 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. Duane Carlson is the audit committee
financial expert, as that term is defined in the Sarbanes-Oxley Act of 2002 (“SOX”)
or any rules or regulations promulgated under SOX. All of the Company’s financial experts are
also independent as defined under SOX or any rules or regulations
promulgated thereunder.
6
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 standards of the Public Company
Accounting Oversight Board (United States), their judgments as to the Company’s
accounting principles and such other matters as are required to be discussed
with the committee under standards of the Public Company Accounting Oversight
Board (United States). In addition, the
Audit Committee has discussed with the independent auditors the auditor’s
independence from management and the Company, including the matters 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 five
meetings during fiscal 2004, one with the independent auditors and four without
the auditors present. In addition, at
the end of each quarter the chairman of the Audit Committee discussed with the
independent auditors their findings and procedures relative to the auditor’s
quarterly reviews.
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 January 1, 2005 for filing
with the Securities and Exchange Commission.
March 7, 2005
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The 2004 Audit Committee
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Duane S. Carlson
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Harry W. Spell
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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.
McGladrey & Pullen,
LLP, independent certified public accountants, served as the independent auditors
for the Company for fiscal 2003 and 2004.
The Audit Committee is in the process of obtaining and reviewing audit
proposals and therefore has not selected independent auditors for fiscal 2005. A representative of McGladrey &
Pullen, LLP is expected to be present at the annual meeting, will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
7
During the period covering
the fiscal years ended January 1, 2005 and January 3, 2004, McGladrey &
Pullen, LLP and RSM McGladrey, Inc. performed the following professional
services:
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Description
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January 1,
2005
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January 3,
2004
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Audit fees (1)
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$
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110,700
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$
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73,400
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Audit-related fees (2)
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$
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7,000
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$
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12,500
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Tax fees (3)
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$
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35,000
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$
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23,900
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All other fees
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—
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—
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(1) Audit fees consist of fees for professional services rendered in connection with the audit of the
Company’s year-end financial statements, quarterly reviews of financial
statements included in the Company’s quarterly reports, services rendered relative to
regulatory filings, and attendance at Audit Committee meetings.
(2) Audit-related fees are fees principally for professional services
rendered for the audit of the Company’s 401(k) employee benefit plan and
technical accounting consulting and research.
(3) Tax fees consist of compliance fees for the preparation of income tax
returns and preparation of refund claims, tax estimates and extensions. Tax fees in 2004 also included tax consulting
related to a carryback claim and a change in accounting method and in 2003
included tax consulting related to an IRS examination of the Company.
The Audit Committee of the
Board of Directors has considered whether the provision of the services
described above was and is compatible with maintaining the independence of McGladrey &
Pullen, LLP.
The Audit Committee
pre-approves all audit and permissible non-audit services provided by the
independent auditors. All the fees for
fiscal 2003 and 2004 were approved by the Audit Committee.
The Board as a whole
performs functions equivalent to that of a nominating committee. In that capacity, the Board has no charter. Duane Carlson and Harry Spell are “independent”
directors, as that term is defined in Rule 4200(a)(15) of the NASD listing standards.
The Board will consider
director candidates recommended by shareholders. The criteria applied by the Board in the
selection of director candidates is the same whether the candidate was
recommended by a Board member, an executive officer, a shareholder, or a third
party, and accordingly, the Board has not deemed it necessary to adopt a formal
policy regarding consideration of candidates recommended by shareholders. Shareholders wishing to recommend candidates
for Board membership should submit the recommendations in writing to the
Secretary of the Company.
The Board identifies
director candidates primarily by considering recommendations made by directors,
management, and shareholders. The Board
also has the authority to retain third parties to identify and evaluate
director candidates and to approve any associated fees or expenses. The Board did not retain any such third party
with respect to the director candidates described in this Proxy Statement. Board candidates are evaluated on the basis
of a number of factors, including the candidate’s background,
8
skills, judgment, diversity, experience with companies of comparable
complexity and size, the interplay of the candidate’s experience with the
experience of other Board members, the candidate’s independence or lack of
independence, and the candidate’s qualifications for committee membership. The Board does not assign any particular
weighting or priority to any of these factors, and considers each director
candidate in the context of the current needs of the Board as a whole. Director candidates recommended by shareholders
are evaluated in the same manner as candidates recommended by other persons.
The
Compensation and Benefits Committee of the Board of Directors (the “Compensation
Committee”) is composed entirely of non-employee directors. For 2004, Duane S. Carlson and Harry W. Spell
(Chairman) served
on such committee and are also expected to serve for 2005. 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 base salary in the midrange 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.
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 15.9% for 2004. Bonuses of approximately 3.75% of annual base
salary were granted to officers for 2004, payable in March 2005. General managers receive a bonus based on a
formula, which considers both profit at their center and individual merit. Bonuses of between 4.3% and 15% of annual
base salary were granted to general managers for 2004, payable in March 2005.
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. There were no options granted
in 2004.
9
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 21, 2005
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The 2004 Compensation and Benefits Committee
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|
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Duane S. Carlson
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Harry W. Spell
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The Company
will have three directors in 2005, 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 $15,000 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 annual fee of $3,000 and the Chairman of the Compensation and
Benefits Committee receives an additional annual fee of $1,500.
If you would
like to contact the Board or any committee of the Board, you can send an email
to board@arcainc.com, or write to the Company, c/o Secretary, 7400 Excelsior
Boulevard, Minneapolis, MN 55426. All
communications will be compiled by the Secretary of the Company and submitted
to the Board or the applicable committee or director on a periodic basis.
Linda Koenig, 43, was promoted to the position of Chief Financial
Officer in February 2005. She had
previously served as Vice President of Finance from March 2003 to February 2005,
and as Controller from September 1999 to March 2003. Ms. Koenig was General Accounting Manager
for the Company from February 1996 to September 1999. From August 1994 to February 1996, she
was employed by WTC Industries as accounting manager.
Bruce J. Wall, 51, is the Vice President
of Resource Efficiency Programs, a position he has held since October 2000. Mr. Wall is responsible for expanding
the scope of services offered to utility companies and developing programs to
provide resource efficiency benefits. Previously,
Mr. Wall was employed by the Company as a National Account Manager from
1993 to 1997. From 1997 until rejoining
the Company in 2000, Mr. Wall worked for Northeast Energy Efficiency
Partnerships, Inc.,
10
where he facilitated and managed groups to develop, implement and
evaluate regional market transformation strategies.
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 $100,000.
Summary
Compensation Table
|
|
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Annual Compensation
|
|
Long-Term Compensation(1)
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|
Name
and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)(2)
|
|
Other
Annual
Comp. ($)(3)
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|
Securities
Underlying
Options (#)
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|
All
Other
Comp. ($)
|
|
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Edward R. Cameron
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2004
|
|
$
|
160,000
|
|
$
|
—
|
|
$
|
3,031
|
|
0
|
(2)
|
$
|
0
|
|
|
Chairman of the Board, President
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2003
|
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160,000
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25,000
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|
2,942
|
|
0
|
(2)
|
0
|
|
|
and Chief Executive Officer
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2002
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160,000
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48,000
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|
2,220
|
|
0
|
(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 2003 was paid in 2004. The
bonus for 2002 was paid in 2003. No
stock options were granted in 2004, 2003 or 2002 to Mr. Cameron.
(3) Includes
premiums on car insurance for each year.
The following table provides certain information with
respect to stock options granted and exercised under the Company’s stock option
plans in fiscal 2004 by the named executive officer and the value of such
officer’s unexercised options at January 1, 2005.
Option
Grants in Last Fiscal Year
|
Name
|
|
Number of Securities Underlying Options
Granted(#)
|
|
% of Total Stock
Options Granted to
Employees in
Fiscal Year
|
|
Exercise Price
($/Share)
|
|
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
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Edward R. Cameron
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0
|
|
—
|
|
$
|
0
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregated
Option Exercises in Last Fiscal Year and FY-End Option Values
|
|
|
Shares
Acquired on
|
|
Value
|
|
Number of
Securities Underlying
Unexercised Options
At FY-End(#)
|
|
Value of Unexercised
In-the-Money Options
At FY-End($)
|
|
|
Name
|
|
Exercise(#)
|
|
Realized($)
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward R. Cameron
|
|
—
|
|
—
|
|
120,000
|
|
30,000
|
|
$
|
288,000
|
|
$
|
72,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
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 7,500 shares held by five employees
of the Company. The exercise price for these
options under the 1989 Plan is $0.625 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.
Under the 1997 Plan, as amended in March 2002,
the Company has reserved an aggregate of 600,000 shares of its common stock for
option grants under the plan. As of March 1,
2005, options to purchase an aggregate of 205,000 shares had been granted to
employees and were outstanding under the 1997 Plan, and options to purchase an
aggregate of 138,000 shares had been granted to the Company’s non-employee
directors. Under the 1997 Plan, 17,250 options
have been exercised.
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.
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).
12
Private Placement of Stock. In
December 2004, the Company completed a private placement of 1,150,000
shares of common stock at $3.00 per share.
Clients of Perkins Capital Management, Inc. (which currently
controls approximately 18.7% of the common stock of the Company) purchased 150,000
shares. Pursuant to the terms of the
private placement, the Company has filed a registration statement with the Securities
and Exchange Commission relating to the resale of the shares by the investors.
Warrants. In connection with a
loan in September 1998, Medallion Capital received a warrant to purchase
700,000 shares of common stock and the right to designate a non-voting attendee
at all Board meetings. The exercise
price of the warrant is $0.60 per share.
The warrant was exercised in 2004 resulting in the issuance of 532,000
shares of common stock.
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.
|
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|
AT YEAR END
|
|
|
|
|
12/99
|
|
12/00
|
|
12/01
|
|
12/02
|
|
12/03
|
|
12/04
|
|
|
Appliance Recycling Centers of America, Inc.
|
|
$
|
100.00
|
|
$
|
111.11
|
|
$
|
355.56
|
|
$
|
173.33
|
|
$
|
244.44
|
|
$
|
408.89
|
|
|
NASDAQ Stock Market (U.S. Companies)
|
|
$
|
100.00
|
|
$
|
60.38
|
|
$
|
47.84
|
|
$
|
33.07
|
|
$
|
49.45
|
|
$
|
53.81
|
|
|
Dow Jones Pollution Control Index
|
|
$
|
100.00
|
|
$
|
140.51
|
|
$
|
157.65
|
|
$
|
123.83
|
|
$
|
164.65
|
|
$
|
170.32
|
|
The Company’s common
stock is currently traded on the OTC Bulletin Board under the symbol ARCI. It was previously traded on the Nasdaq
SmallCap Market. 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 closing price of the Company’s common stock on March 18,
2005 was $3.25 per share.
13
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 2004 Annual Report to Shareholders is being mailed to you with
this proxy statement. The Annual Report
includes, among other things, the consolidated balance sheet of the Company as
of January 1, 2005 and January 3, 2004 and the related consolidated
statements of operations, shareholders’ equity and cash flows for the three
years ended January 1, 2005. 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
|
April 1, 2005
14
VOTE BY INTERNET — http://www.eproxy.com/arcl/ — QUICK *** EASY ***
IMMEDIATE
• Use the Internet
to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on
May 4, 2005.
• Please have your
proxy card and the last four digits of the U.S. Social Security Number
available. Follow the instructions to obtain your records and create an electronic
ballot.
VOTE BY MAIL
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™, P.O. Box
64873, St. Paul, MN 55164-0873.
Note: Your Internet vote authorizes the Named Proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card.
If you vote by Internet, please do not mail
your Proxy Card.
Please detach here
|
|
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|
|
|
The Board of Directors Recommends a Vote
FOR Proposal 1.
|
|
|
1. Election of the following
|
|
01 Edward R. Cameron
|
|
03 Harry W. Spell
|
|
o
|
Vote FOR
|
|
o
|
Vote WITHHELD
|
|
nominees as directors:
|
|
02 Duane S. Carlson
|
|
|
|
|
all nominees
|
|
|
from all nominees
|
|
(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.)
|
|
|
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.
|
Address Change? Mark Box
|
o
|
Date
|
|
|
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.
|
APPLIANCE RECYCLING CENTERS OF
AMERICA, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For Annual Meeting of Shareholders
May 5, 2005
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 18, 2005 at the Annual
Meeting of Shareholders to be held on May 5, 2005, 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 April 1, 2005 furnished with the Notice.
See reverse for voting instructions.