(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant __X__
Filed by a party other than the registrant ___
Check the appropriate box:
____ Preliminary proxy statement
__X_ Definitive proxy statement
____ Definitive additional materials
____ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KINARK CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
____ $125 per Exhcange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
____ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
____ Fee computed on table below per Exhcnage Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock - $.10 par value per share
(2) Aggregate number of securities to which transactions applies:
6,712,209 Shares of Common Stock
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
______________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________
____ Check box if any part of the fee is offset as provided by Exhange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
__________________________________________________________
(2) Form, schedule or registration statement no.:
__________________________________________________________
(3) Filing party:
__________________________________________________________
(4) Date filed:
__________________________________________________________
1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
Kinark Corporation
2250 East 73rd Street
Suite 300
Tulsa, Oklahoma 74136-6832
(918) 494-0964
Fax (918) 494-3999
April 11, 2001
ANNUAL MEETING - MAY 16, 2001
Dear Kinark Stockholder:
On behalf of the Board of Directors and management, you are cordially
invited to attend the Annual Meeting of Stockholders on Wednesday, May 16,
2001 in New York City.
Business matters expected to be acted upon at the meeting are presented
in the accompanying Notice of the Annual Meeting and Proxy Statement. Members
of management will report on the Company's operations, followed by a period
for questions and discussion. As customary, a report on the meeting will be
included in the Company's second quarter earnings announcement.
We hope you can attend the meeting. Please ensure that your shares will
be represented at the meeting by signing and returning your proxy now, even if
you plan to attend the meeting.
Thank you for your continued interest in the Company.
/s/ Ronald J. Evans
Ronald J. Evans
President &
Chief Executive Officer
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
Kinark Corporation
2250 East 73rd Street
Suite 300
Tulsa, Oklahoma 74136-6832
(918) 494-0964
Fax (918) 494-3999
NOTICE OF ANNUAL MEETING
TULSA, OKLAHOMA, MAY 16, 2001
To the Stockholders of KINARK CORPORATION:
The Annual Meeting of the Stockholders of KINARK CORPORATION (the
"Company"), will be held at the American Stock Exchange in the Boardroom --
14th Floor, 86 Trinity Place, New York, NY on Wednesday, May 16, 2001 at 11:00
A.M. local time, for the following purposes:
1. Election of Directors. To elect eight directors to serve for a term of
one year.
2. Other Business. To transact such other business as may properly come
before the meeting or any adjournment or adjournments thereof.
The Board of Directors fixed April 4, 2001 as the record date for
determining stockholders entitled to notice of and to vote at the meeting. A
list of those stockholders will be open for examination at the offices of the
Company for a period of ten (10) days prior to the meeting and also will be
available for inspection at the meeting. A copy of the Company's Annual
Report for the year ended December 31, 2000, is enclosed with this Notice.
Please sign and date the enclosed proxy card and return it promptly in
the enclosed postage-paid envelope. It is important that your shares be
represented at the meeting regardless of the number you may hold. If you do
attend, you may vote or change your vote in person at the meeting even through
you have previously signed and returned your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul R. Chastain
Paul R. Chastain,
Vice President & Secretary
April 11, 2001
KINARK CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 16, 2001
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Kinark Corporation ("Kinark" or the
"Company") for use at the Annual Meeting of Stockholders to be held May 16,
2001, at 11:00 a.m., local time, at the American Stock Exchange in New York
City, N.Y., or at any adjournments thereof (the "Annual Meeting"). On April
4, 2001, the record date for determination of stockholders of the Company
entitled to vote at the Annual Meeting (the "Record Date"), there were
6,712,209 shares of the Company's common stock outstanding (the "Common
Stock"), each share of which entitles the holder thereof to one vote on all
matters. The holders of a majority of the Common Stock present in person or
represented by proxy will constitute a quorum for transaction of business at
the Annual Meeting. Abstentions and broker non-votes are counted to determine
the presence or absence of a quorum at the Annual Meeting. No cumulative
voting rights are authorized and dissenters' rights are not applicable to the
matters being proposed.
This Proxy Statement and the accompanying Proxy are being mailed to the
Company's stockholders on or about April 11, 2001.
The Company's principal executive office is located at 2250 East 73rd
Street, Suite 300, Tulsa, Oklahoma 74136-6832.
The Company's Amended and Restated Bylaws (the "Bylaws") require the
affirmative vote of a majority of the shares of Common Stock represented at
the Annual Meeting and entitled to vote thereon to elect the directors
nominated for election at the Annual Meeting, as set forth in this Proxy
Statement.
Abstentions will have no effect with respect to the election of
directors. Under the rules of the American Stock Exchange, brokers who hold
shares of Common Stock in street name for customers have "discretionary"
authority to vote on certain items in their discretion, on behalf of their
clients, if they do not receive instructions within ten days of the Annual
Meeting. The brokers will have discretionary authority to vote on the
election of directors.
You may revoke your proxy at any time before it is voted by executing and
filing, with the Company or its proxy solicitor, a revocation of your proxy or
a subsequently dated proxy or by voting in person at the Annual Meeting.
Shares represented by properly executed proxies will be voted at the Annual
Meeting as specified, unless such proxies are subsequently revoked as provided
above. If no choice is specified on a valid, unrevoked proxy, the shares will
be voted for election of the Directors as recommended by the Board. Proxies
will also authorize the shares represented thereby to be voted on any matters
not known as of the date of this Proxy Statement that may properly be
presented for action at the Annual Meeting.
2
ANNUAL REPORT
The Company's Annual Report to Stockholders and Form 10-K, covering the
fiscal year ended December 31, 2000, including audited financial statements
are enclosed with this Proxy Statement, but neither the report nor the
financial statements are incorporated in this Proxy Statement or are deemed to
be a part of the material for the solicitation of proxies.
ELECTION OF DIRECTORS
Eight directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting, in accordance with the Bylaws, to serve until
the 2002 Annual Meeting or until their respective successors have been
elected. All of the current directors, Linwood J. Bundy, Paul R. Chastain,
Ronald J. Evans, Gilbert L. Klemann, II, Patrick J. Lynch, Joseph J. Morrow,
John H. Sununu and Mark E. Walker have been nominated for reelection at the
Annual Meeting for a term expiring at the 2002 Annual Meeting, and each of
them has agreed to serve, if elected. The shares of Common Stock represented
by proxies at the Annual Meeting will be voted in favor of (unless otherwise
directed) the election of the nominees named below. While it is not
anticipated, if any nominee is unable or should decline to serve as a director
at the date of the Annual Meeting, such proxies will be voted for persons
proposed by the Board.
Nominees For Election as Directors to Serve Until Next Annual Meeting
The experience and background of each of the nominees are set forth
below.
Linwood J. Bundy (58), first elected to Kinark's Board in 2000. Since
1993 President, Chief Executive Officer and member of the Board of Directors
of Bundy, Inc., a privately-owned development, entertainment and investment
company located in Iowa. From 1978 to 1998, President and Chief Executive
Officer of Iowa State Ready Mix Concrete, Inc., a privately-owned concrete
company located in Ames, Iowa. Past owner of Hallet Materials, a sand and
gravel operation in Iowa and Texas (1986-1998). Mr. Bundy serves on the Board
of Directors of Firststar Bank in Ames, Iowa. He is a past member of the
Board of Trustees of Mary Greeley Medical Center, a member of the Order of the
Knoll, an Iowa State University Foundation, and past member of a number of
civic and professional organizations in Iowa. He is a member of the Audit and
Compensation Committees.
Paul R. Chastain (66), first elected to Kinark's Board in 1975, was
appointed Vice President and Chief Financial Officer of Kinark in February
1996 and Secretary in January 2000. Mr. Chastain served as President and
Chief Executive Officer of Kinark from July 1993 to February 1996. Chairman
and Chief Executive Officer of Kinark from June 1991 through July 1993; and
Co-Chairman and Co-Chief Executive Officer of Kinark from June 1990 through
June 1991. From 1976 until June 1990, Executive Vice President and Treasurer
of the Company. From 1973 until 1976, Vice President of Finance and Secretary
of the Company.
Ronald J. Evans (52), first elected to Kinark's Board in 1995, was
appointed President of Kinark in February 1996 and Chief Executive Officer in
November 1999. Private investor from May 1995 to February 1996. From July
1989 to May 1995, Vice President and General Manager of Deltech Corporation, a
privately-owned specialty chemicals producer. From January 1989 to July 1989,
Vice President of Sales and Marketing for Deltech Corporation. Manager from
1976 to 1989 for Hoechst Celanese Corporation. He is a member of the
Executive Committee.
3
Gilbert L. Klemann, II (50), Senior Vice President and General Counsel of
Avon Products Inc. since January 2001. During 2000, Mr. Klemann was of
Counsel for the international law firm of Chadbourne & Parke LLP, New York
City. From 1991 to 1999, Mr. Klemann was an Executive Officer and General
Counsel of Fortune Brands, Inc. (formerly American Brands, Inc.), a
publicly-owned consumer products holding company, where he also was a member
of the Board of Directors. Prior to 1990 he was a partner in the law firm of
Chadbourne & Parke LLP. Mr. Klemann was appointed to the Board of Directors
of Kinark Corporation in August 2000 and serves on the Company's Compensation
Committee.
Patrick J. Lynch (63), currently Senior Vice President and Chief
Financial Officer of Texaco Inc., a publicly-owned oil and petrochemicals
company, since 1997. For more than five years, Mr. Lynch has been actively
engaged in the business of Texaco Inc. or one of its subsidiaries or
affiliated companies. He is a member of the Board of Directors of The
American Petroleum Institute; a member of the Council of Financial Executives
for The Conference Board; a member of the CFO Advisory Council for the
Financial Executives Institute and serves as a trustee for Iona College in New
Rochelle, New York. Mr. Lynch was appointed to the Board of Directors of
Kinark Corporation in February 2001 and serves on the Company's Audit
Committee.
Joseph J. Morrow (61), first elected to Kinark's Board in 1996, was
appointed Non-Executive Chairman of the Board of Kinark in November 1999.
Chief Executive Officer of Morrow & Co., Inc., a privately-owned proxy
solicitation firm, since 1972. Chief Executive Officer of Proxy Services
Corporation from 1972 to 1992. Chairman of Proxy Services Corporation from
1992 to present. Currently a Director of U.S. Agents Holding Corp. He is a
member of the Executive Committee.
John H. Sununu (61), first elected to Kinark's Board in 1996, is
President of JHS Associates, Ltd. since June 1992 and a former partner in
Trinity International Partners, both private financial firms, and served as
co-host of CNN's "Crossfire", a news/public affairs discussion program, from
March 1992 until February 1998. From January 1989 until March 1992, Chief of
Staff to the President of the United States. From January 1983 to January
1989, Governor of the State of New Hampshire. From 1963 until his election as
Governor, President of JHS Engineering Company and Thermal Research Inc.
Helped establish and served as chief engineer for Astro Dynamics Inc. from
1960 until 1965. From 1968 until 1973, Governor Sununu was Associate Dean of
the College of Engineering at Tufts University and Associate Professor of
Mechanical Engineering. Served on the Advisory Board of the Technology and
Policy Program at MIT from 1984 until 1989. A member of the National Academy
of Engineering and the Board of Trustees for the George Bush Presidential
Library Foundation. He is a member of the Executive Committee.
Mark E. Walker (45), first elected to Kinark's Board in 1993, is
President and Director since 1991 of Ocean's Window, Inc., a privately-owned
recreation services firm and President and Director of Ocean's Window Travel
Services since 1995. Manager from 1985 until 1992 for DSC Communications
Corporation. Manager from 1978 until 1984 for Texas Instruments
Incorporated. He is a member of the Executive, Audit and Compensation
Committees.
With the exception of Messrs. Chastain and Evans, none of the directors
are, or have been, employed by any parent, subsidiary or other affiliate of
the Company. There are no family relationships between any directors or
executive officers.
The election of the nominees requires the affirmative vote of a majority
of the shares of Common Stock represented at the Annual Meeting and entitled
to vote thereon.
The Board recommends that you vote FOR the nominees listed above.
4
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board
of Directors. The Board of Directors presently consists of eight directors.
The Board meets on a regularly scheduled basis during the Company's fiscal
year to review significant developments affecting the Company and to act on
matters requiring Board approval. It also holds special meetings when
necessary between scheduled meetings.
The Board met nine times in 2000 (including regularly scheduled and
special telephonic meetings). All of the incumbent directors attended at
least 85 percent of the total meetings of the Board of Directors and the
committees on which they were members.
Director's Compensation
Directors who are also employees of the Company receive no compensation
beyond their normal salary for their Board and committee services. All
directors, including employee/Board members, are reimbursed by the Company for
travel expenses incurred by them in connection with their attendance at Board
or committee meetings or other business of the Company.
Non-employee directors receive an annual fee of $15,000, payable in
quarterly installments and receive no additional compensation for committee
services beyond their annual fee. In addition, under the Company's 1996 Stock
Option Plan, each non-employee director who is serving as such on July 1 of
each year receives a grant of options to purchase 5,000 shares of the
Company's Common Stock (the "Non-Employee Director Options"). Under the 1996
Stock Option Plan, the exercise price of Non-Employee Director Options is 100%
of the fair market value of the Company's Common Stock on the date of the
grant. Non-Employee Director Options are not exercisable until six months
following the date of the grant and such options cease to be exercisable ten
years after the date of the grant.
Committees of the Board
The Board of Directors has established standing Executive, Audit and
Compensation Committees. The membership of each of these committees is
determined from time to time by the Board.
Executive Committee. The Executive Committee is delegated authority to
act on behalf of the Board in certain operational and personnel matters, and
to approve capital expenditures within limits authorized by the Board. The
functions customarily attributable to a nominating committee are generally
performed by the Executive Committee, which evaluates the qualifications of
Board candidates for consideration of nomination by the Board of Directors.
Messrs. Evans, Morrow, Sununu, and Walker are the present members of the
Executive Committee and Mr. Sununu acts as Chairman. The Executive Committee
held eleven meetings in 2000.
Compensation Committee. The Compensation Committee considers
remuneration of the corporate and subsidiary officers of the Company, and
administers the Company's incentive compensation plans and its 1996 Stock
Option Plans. Messrs. Bundy, Klemann and Walker are the present members of
the Compensation Committee and Mr. Walker acts as Chairman. The Compensation
Committee held one meeting in 2000. Mr. Chastain was a member of the
Compensation Committee until March 6, 2001.
5
Audit Committee. The Audit Committee reviews the scope of the annual
audit and recommendations of the independent audit firm as well as reviewing
the internal audit and control functions of the Company. The Audit Committee
is composed entirely of directors who are not employees of the Company or any
of its subsidiaries. Messrs. Bundy, Lynch and Walker are the present members
of the Audit Committee and Mr. Walker acts as Chairman. The Audit Committee
held one meeting in 2000.
The Company's Bylaws require that a stockholder who desires to nominate a
candidate for election to the Board at the Annual Meeting or present business
to be considered at the Annual Meeting must give the Board advance notice of
such nomination or proposed business. To be timely, a stockholder's notice
must be received at the principal executive offices of the Company not less
than 90 days prior to the meeting. However, in the event that the date of the
next annual meeting is advanced more than 30 days or delayed more than 60 days
from the date of the anniversary of the preceding year's annual meeting,
notice by the stockholder to be timely must be so delivered not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the date notice of such meeting is first given to
stockholders in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document filed by
the Company with the Securities and Exchange Commission ('SEC"). The
Company's Bylaws require that the notice contain certain information with
respect to the proposed nominee or business and the stockholder giving the
notice. The Executive Committee will consider nominees proposed by
stockholders in compliance with this procedure. The Company will furnish on
request to any stockholder a copy of the relevant section of the Bylaws.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 22, 2001,
regarding the beneficial ownership of the Company's Common Stock by (a) all
persons who are beneficial owners of five percent or more of the Common Stock,
(b) each director of the Company, (c) each executive officer of the Company,
(d) each person who was a director during 2000 and (e) all directors and
officers of the Company as a group. Unless otherwise noted, the persons named
below have sole voting and investment power with respect to such shares:
Amount and Nature Percentage of
Name of Stockholder of Beneficial Ownership CommonStock (1)
===============================================================================
Linwood J. Bundy 35,625 (2) 0.5
Paul R. Chastain 35,580 (3) 0.5
Ronald J. Evans 295,421 (4) 4.2
Gilbert L. Klemann, II 4,583 (5) 0.1
Patrick J. Lynch 3,125 (6) ---
Joseph J. Morrow 1,846,568 (7) 27.4
John H. Sununu 185,000 (8) 2.7
Mark E. Walker 429,530 (9) 6.4
Robert G. and Pauline B. Walker
Revocable Trust 345,724 (10) 5.2
Edmund A. Schwesinger, Jr. 360,200 (11) 5.4
Michael T. Crimmins 317,485 (12) 4.7
All Kinark Directors and
Officers as Group
(8 persons) 2,835,432 (13) 40.2
_____________________
6
Each person named above has sole voting and dispositive power with respect to
all the shares listed opposite such person's name, unless indicated otherwise.
(1) Based on 6,712,209 shares of the Company's Common Stock outstanding as of
April 4, 2001 plus any currently exercisable stock options or stock
options which become exercisable within 60 days.
(2) Information based on Form 5 of Mr. Bundy for February 2001 filed with the
SEC. Includes presently exercisable stock options to acquire 5,625
shares. The stockholder's address is 2250 East 73rd Street, Tulsa,
Oklahoma 74136.
(3) Information based on Form 5 of Mr. Chastain for February 2001 filed with
the SEC. Includes presently exercisable stock options to acquire 6,000
shares. The stockholder's address is 2250 East 73rd Street, Tulsa,
Oklahoma 74136.
(4) Information based on Form 5 of Mr. Evans for February 2001 filed with the
SEC. Includes presently exercisable stock options to acquire 250,000
shares. The stockholder's address is 2250 East 73rd Street, Tulsa,
Oklahoma 74136.
(5) Information based on Form 5 of Mr. Klemann for February 2001 filed with
the SEC. Includes presently exercisable stock options to acquire 4,583
shares. The stockholder's address is 2250 East 73rd Street, Tulsa,
Oklahoma 74136.
(6) Information based on Form 3 of Mr. Lynch for March 2001 filed with the
SEC. Includes presently exercisable stock options to acquire 3,125
shares. The stockholder's address is 2250 East 73rd Street, Tulsa,
Oklahoma 74136.
(7) Information based on Form 5 of Mr. Morrow for February 2001 filed with the
SEC. The shares listed for Mr. Morrow include 55,536 shares owned by his
wife. Mr. Morrow disclaims beneficial ownership of these shares. The
shares listed include 25,000 share of Kinark's Common Stock underlying
exercisable options held by him. The stockholder's address is 2250 East
73rd Street, Tulsa, Oklahoma 74136.
(8) Information based on Form 5 of Governor Sununu for February 2001 filed
with the SEC. The shares listed for Mr. Sununu include 25,000 shares of
Kinark's Common Stock underlying exercisable options held by him. The
stockholder's address is 2250 East 73rd Street, Tulsa, Oklahoma 74136.
(9) Information based on Form 5 of Mr. Walker for February 2001 filed with the
SEC. Includes 8,000 shares of Common Stock owned by a trust for
Mr. Walker's son, of which Mr. Walker is trustee, and 345,724 shares
owned by the Robert G. and Pauline B. Walker Revocable Trust.
Mr. Walker disclaims beneficial ownership of such shares and shares of
Common Stock owned by other members of the Walker family. The shares
listed include 25,000 shares of Kinark's Common Stock underlying
exercisable options held by Mr. Walker. The stockholder's address is
2250 East 73rd Street, Tulsa, Oklahoma 74136.
7
(10) Information based on Schedule 13D of the Robert G. and Pauline B. Walker
Revocable Trust, the Pauline B. Walker Revocable Trust A and the
Robert G. Walker Irrevocable Trust B filed with the SEC dated
December 14, 1996. The Robert G. and Pauline B. Walker Revocable Trust,
together with two affiliated trusts, the Pauline B. Walker Revocable
Trust A and the Robert G. Walker Irrevocable Trust B, beneficially own
345,724 shares. Pauline B. Walker is the sole trustee of all three
trusts. The address for the trusts is 2301 N. Central Expressway,
Suite 140, Plano, Texas 75075.
(11) Information based on Schedule 13G of Mr. Schwesinger, Jr. for January 2001
filed with the SEC.
(12) Former Director of Kinark, 1993 to May 2000, and Chairman of the Board and
CEO of Kinark, May 1995 to November 1999. Information based on Schedule
13D of Mr. Crimmins for March 2001 filed with the SEC.
(13) All directors and officers as a group held in the aggregate presently
exercisable stock options to acquire 349,333 shares. On the Record Date,
directors and officers as a group owned 2,486,099 shares, or 37.0% of the
6,712,209 shares outstanding and entitled to vote, not including presently
exercisable stock options.
EXECUTIVE COMPENSATION
Summary Compensation Table
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
----------------------------- -------------------- ---------------------
Securities
Other Under- All Other
Annual Restricted lying Compen-
Name and Compen- Stock Options/ LTIP sation
Principal Position Year Salary Bonus sation Award(s) SARs(#) Payouts (A)
======================================================================================================
Paul R. Chastain, 2000 $141,600 ---- ---- ---- ---- ---- $8,921
Vice President; CFO 1999 141,600 ---- ---- ---- ---- ---- 8,921
and Secretary 1998 141,600 ---- ---- ---- ---- ---- 8,177
Ronald J. Evans 2000 $100,000 ---- ---- ---- ---- ---- $6,300
President and CEO 1999 100,000 ---- ---- ---- ---- ---- 6,300
1998 100,000 ---- ---- ---- ---- ---- 6,300
________________
(A) All compensation shown in this column represents the Company's matching
contributions to its 401(k) defined contribution retirement plan.
OPTION GRANTS IN LAST FISCAL YEAR
There were no option grants to Kinark's executive officers in 2000.
8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options at Fiscal Year-End In-The-Money Options at
on Exercise Realized (Shares) Fiscal Year-End ($)
-------------------------- --------------------------
Name (#) ($) (A) Exercisable Unexercisable Exercisable Unexercisable
=========================================================================================
Paul R. Chastain (B) 0 0 6,000 0 0 0
Ronald J. Evans (C ) 0 0 233,000 0 0 0
Ronald J. Evans (D) 0 0 17,000 0 0 0
(A) Market value of underlying securities at December 31, 2000 minus the
exercise price of "in-the-money" options.
(B) Option granted February 16, 1994 pursuant to the Company's 1988 Stock
Option Plan at an exercise price of $4.50 per share was not "in-the-money"
at December 31, 2000.
(C) Option granted April 3, 1996 pursuant to the Company's 1988 Stock Option
Plan at an exercise price of $2.50 per share was not "in-the-money" at
December 31, 2000.
(D) Option granted July 18, 1996 pursuant to the Company's 1996 Stock Option
Plan at an exercise price of $3.50 per share was not "in-the-money" at
December 31, 2000.
__________________
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board reviews the general compensation
policies of the Company and the compensation plans and specific compensation
levels for executive officers. All decisions by the Compensation Committee
relating to the compensation of the Company's executive officers are reviewed
by the full Board.
In accordance with SEC rules designed to enhance disclosure of companies'
policies toward executive compensation, the following is a report submitted by
the Compensation Committee members addressing the Company's compensation
policy as it related to the named executive officers for fiscal 2000.
The Company's objective is to ensure that executive compensation is
directly linked to ongoing improvement in corporate performance and increasing
shareholder value. The following objectives are guidelines for compensation
decisions:
Classification. The company assigns a job grade to each salaried
position, and each job grade has a salary range which is based on
national salary surveys. These salary ranges are reviewed annually to
determine parity with national compensation trends, and to ensure that
9
the Company maintains a competitive compensation structure.
Competitive Salary Base. Actual salaries are based on individual
performance contributions within a competitive salary range for each
position established through job evaluation and market comparisons.
The salary of each subsidiary key officer and senior managers and
corporate officer is reviewed annually by the president and chief
executive officer who may recommend an increase for approval by the
Compensation Committee. The president and chief executive officer's
salary is determined by the Board based on a review and recommendation
by the Compensation Committee.
Annual Incentive Compensation. The Company's officers and key subsidiary
personnel are eligible to participate in an annual incentive
compensation plan with awards based primarily on achievement of profit
performance targets. Awards are subject to decrease or increase on
the basis of the Company's performance and at the discretion of the
Compensation Committee. The Compensation Committee approved incentive
awards to the president and key managers of the galvanizing subsidiary
for achieving increased operating earnings in 2000 over the prior
year. There were no incentive awards to the Company's executive
officers for 2000.
Stock Option Program. The purpose of this program is to provide
additional incentives to employees to work to maximize growth of the
Company and shareholder value. The stock option program may utilize
vesting periods to encourage key employees to continue in the employ
of the Company. The number of options granted is determined by the
subjective evaluation of the executive's ability to influence the
Company's long-term growth and profitability. All options have been
granted at the current market price at the time of the grant. The
Compensation Committee works to achieve equitable compensation
objectives for key employees.
The Compensation Committee believes that its objectives of linking
executive compensation to corporate performance results in alignment of
compensation with corporate goals and shareholder interest. When performance
goals are met or exceeded, shareholders' value is increased and executives are
rewarded commensurately. The committee believes that compensation levels
during 2000 adequately reflect the Company's compensation goals and policies.
Compensation Committee
Linwood J. Bundy
Gilbert L. Klemann, II
Mark E. Walker
10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is presently comprised of Directors Messrs.
Bundy, Klemann and Walker, none of whom are employees of Kinark. Mr. Chastain
was a member of the Compensation Committee until March 6, 2001.
The Company's 1996 Stock Option Plan and Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, require that at least two of the
Compensation Committee members be non-employee directors. Mr. Chastain, who
served on the committee in 2000, currently serves as Vice President and Chief
Financial Officer of the Company, and has served the Company in various
executive positions and as a director since 1973. The Board of Directors
believes that Mr. Chastain's participation in the deliberations of the
committee provided a beneficial continuity and knowledge, and that no
conflicts of interest exist. Mr. Chastain did not participate in any option
grant decisions during 2000.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Kinark's Audit Committee is responsible for, among other things,
reviewing with our independent auditors the scope and results of their audit
engagement. In connection with the fiscal 2000 audit, the Audit Committee
has:
. reviewed and discussed with management Kinark's audited financial
statements to be included in our annual report on Form 10-K for the
year ended December 31, 2000,
. discussed with Deloitte & Touche, LLP, our independent auditors
("Deloitte & Touche"), the matters required by Statement of Accounting
Standards No. 61, and
. received from and discussed with Deloitte & Touche the written
disclosures and letter from Deloitte & Touche required by Independence
Standards Board Standard No. 1 as modified or supplemented, regarding
their independence.
Based on the review and the discussions described in the preceding bullet
points, the Audit Committee has recommended to the Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the SEC.
The Audit Committee has adopted a charter, a copy of which is attached to
this Proxy Statement as Annex A. The members of the Audit Committee have been
determined to be independent in accordance with the requirements of Section
121 of the American Stock Exchange requirements.
The Audit Committee
Mark E. Walker
Linwood J. Bundy
Patrick J. Lynch
11
The foregoing report shall not be deemed incorporated by reference by any
general statement or reference to this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act
of 1934, as amended, except to the extent that Kinark specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
Audit Fees
The aggregate fees billed by Deloitte & Touche for professional services
rendered for the audit of Kinark's annual financial statements for the fiscal
year ended December 31, 2000 and for the reviews of the financial statements
included in Kinark's Quarterly Reports on form 10-Q for same fiscal year were
$119,600.
Financial Information Systems Design and Implementation Fees
No professional services were rendered or fees billed by Deloitte &
Touche for information technology services relating to financial information
systems design and implementation for the fiscal year ended December 31, 2000.
All Other Fees
The aggregate fees billed by Deloitte & Touche for services rendered to
Kinark, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees", for the fiscal
year ended December 31, 2000 were $93,100.
The Audit Committee has considered whether the provision of non-audit
services by Deloitte & Touche is compatible with maintaining the independent
auditor's independence.
12
COMPANY PERFORMANCE
The following performance graph compares cumulative total stockholder
returns on the Company's Common Stock compared to the Dow Jones Diversified
Industrials Index and the Dow Jones Equity Market Index calculated at the end
of each fiscal year, December 31, 1995 through December 31, 2000. The graph
assumes $100 was invested December 31, 1995, in the Company's Common Stock and
in each of the referenced indices and assumes the reinvestment of dividends.
[DELETED STOCK PERFORMANCE GRAPH]
KINARK CORPORATION
STOCK RETURN CALCULATION
KINARK STOCK
SHARE WEIGHTED
DATE PRICE RETURN VALUE
31-DEC-95 2.938 0 100.00
31-DEC-96 3.813 29.8% 129.78
31-DEC-97 3.000 -21.3% 102.11
31-DEC-98 2.188 -27.1% 74.47
31-DEC-99 1.500 -31.4% 51.06
31-DEC-00 0.875 -41.7% 29.78
DOW JONES U.S. TOTAL MARKET
31-DEC-95 163.42 0 100.00
31-DEC-96 199.41 22.0% 122.00
31-DEC-97 262.84 31.8% 160.80
31-DEC-98 328.28 24.9% 200.90
31-DEC-99 402.88 22.7% 246.50
31-DEC-00 365.54 -9.3% 223.70
DOW JONES INDUSTRIAL - DIVERSIFIED
31-DEC-95 194.20 0 100.00
31-DEC-96 262.81 35.3% 135.30
31-DEC-97 372.42 41.7% 191.80
31-DEC-98 478.98 28.6% 246.60
31-DEC-99 648.89 35.5% 334.10
31-DEC-00 653.56 0.7% 336.50
13
RELATED PARTY TRANSACTIONS
Mr, Joseph J. Morrow, a director of the Company and a nominee for
reelection, is the chief executive officer of Morrow & Co., Inc., which
provides proxy solicitation and other stockholder related services to the
Company as described in the section titled "Other Matters" in this Proxy
Statement. In February 2001, Mr. Morrow participated in the Company's private
placement of subordinated debt and warrants (together, the "Private
Securities"). A trust of which Mr. Morrow is a trustee and an individual
retirement account for Mr. Morrow each received a 10% Subordinated Note due
February 17, 2006 for $100,000 and a warrant ("Warrant") to purchase 66,666
shares of Kinark's common stock (the "Common Stock") at an exercise price of
$.8565 a share. The exercise price for the Warrant was determined based on
the average closing market price for the Common Stock on the American Stock
Exchange for the 20 business day period beginning three business days after
February 17, 2001. The Company offered the Private Securities to certain of
its current accredited shareholders holding at least 100,000 shares of Common
Stock. A special committee of the Board of Directors approved the offering of
the Private Securities and the special committee received an opinion from The
Robinson-Humphrey Company, LLC that the consideration to be paid in the
offering was fair to the Company from a financial point of view. In addition
to Mr. Morrow, the following directors and nominees for reelection
participated in the offering as indicated:
Gilbert L. Klemann, II - Note for $100,000 and Warrant to purchase 66,666
shares of Common Stock
Linwood J. Bundy - Note for $100,000 and Warrant to purchase 66,666
shares of Common Stock
Ronald J. Evans (President) - Note for $50,000 and Warrant to purchase
33,333 shares of Common Stock
Patrick J. Lynch - Note for $50,000 and Warrant to purchase 33,333
shares of Common Stock
John H. Sununu - Note for $100,000 and Warrant to purchase 66,666 shares
of Common Stock
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of securities ownership and changes in such
ownership with the SEC. Officers, directors and greater than ten-percent
beneficial owners also are required by rules promulgated by the SEC to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company, the Company believes that, during the last fiscal year, its executive
officers, directors and greater than ten-percent beneficial owners complied
with all applicable Section 16(a) filing requirements.
14
INDEPENDENT AUDITORS
Deloitte & Touche, LLP audited the Company's financial statements for the
fiscal year ended December 31, 2000, and it is the intention of the Board of
Directors to approve the engagement of that firm to serve as the Company's
auditors for 2001. Representatives of Deloitte & Touche are expected to be
present at the Annual Meeting and will be afforded the opportunity to make a
statement if they desire to do so and to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be considered by the Company
for inclusion in the proxy materials for the 2002 Annual Meeting of
Stockholders must be received by the Company by February 18, 2002. Such
proposals should be directed to Kinark Corporation, Attention: Secretary, 2250
East 73rd Street, Suite 300, Tulsa, Oklahoma 74136. No stockholder proposals
were received for inclusion in this Proxy Statement.
15
OTHER MATTERS
Management is not aware of any other business to be presented at the
meeting. However, should any additional matters properly come before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment. The enclosed
proxy confers discretionary authority to take action with respect to any
additional matters which may come before the meeting.
All expenses in connection with solicitation of proxies will be borne by
the Company. In addition to solicitation by mail, proxies may be solicited
personally by telephone, telecopy or telegraph by Company officers and
employees. The Company has also retained Morrow & Co., Inc., 445 Park Avenue,
New York, New York 10022, to assist in such solicitation for a fee of $7,500
plus customary out-of-pocket expenses. Brokers, banks, nominees, fiduciaries
and other custodians will be requested to solicit beneficial owners of shares
and will be reimbursed for their expenses.
Mellon Investor Services LLC has been retained to receive and tabulate
proxies and to provide a representative to act as inspector of election for
this Annual Meeting of Stockholders.
By order of the Board of Directors
/s/ Paul R. Chastain
Paul R. Chastain
Vice President & Secretary
Tulsa, Oklahoma
April 11, 2001
16
ANNEX A
KINARK CORPORATION
AUDIT COMMITTEE CHARTER
I. Purpose
The Audit Committee ("the Committee"), under delegation of authority by
the Board of Directors, shall be responsible for:
1. Assisting the Board of Directors in the discharge of its fiduciary
responsibilities relating to the Company's accounting policies,
reporting practices and internal controls;
2. Maintaining a direct line of communication with the Company's external
auditors, and assessing their performance; and
3. Recommending engagement of the independent audit firm for
consideration by the Board of Directors.
As a statement of policy, the Board recognizes that an informed Audit
Committee will be an effective influence for insuring adequate internal
controls and fair and complete financial reporting.
II. Scope
The entire company.
III. Membership
The Committee shall consist of at least three members, with Board
approval or proxy disclosure, all of whom are independent directors and
one of whom has accounting or related financial management expertise.
One Committee member shall be selected chairman by the members of the
Committee. Membership on the Committee shall be rotated periodically
to provide new perspectives for deliberation by the Committee.
17
IV. Duties and Responsibilities
1. Recommend to the Board of Directors selection of an outside audit
firm to examine the consolidated financial statements of the
Company; evaluate and where appropriate, recommend replacement of
the audit firm.
2. Review and approve the fee for the annual audit of the Company's
consolidated financial statements.
3. Meet with the audit firm prior to the commencement of the annual
audit each year and discuss;
a. The adequacy of the scope of the audit.
b. Developments in accounting principles or reporting practices
which may materially affect the Company.
4. Review the highlights of significant audit findings and management's
responses thereto.
5. Review annually (a) the expense reports of the Chairman of the Board
and the Chief Executive Officer and (b) a summary report of expenses
incurred by other executive officers.
6. Review and approve the financial sections of the annual report to
stockholders, SEC Forms 10-K and 10-Q, and other filings as applicable.
7. Prior to submitting the annual consolidated financial statements to
the Board of Directors for final approval, review and discuss with
the outside auditor and financial management:
a. The results of the completed annual audit.
b. The auditor's overall evaluation of the financial statements.
c. Adequacy of the Company's financial and auditing personnel.
d. Significant transactions outside of normal company business.
e. The Company's response to the audit firm's management letter.
f. Cooperation received during the audit.
18
8. Discuss with the outside auditors and financial management annually:
a. The adequacy of the Company's accounting principles, policies,
and internal accounting controls, and any contemplated changes
thereto.
b. Suggestions for improvement in accounting, data processing,
financial and operating controls as expressed in the outside
auditor's annual letter to management.
c. The extent to which any previously identified control and
procedural deficiencies have not been corrected.
d. The adequacy of the company's annual and interim reporting
practices and the outside auditor's views concerning the quality
of reports to the stockholders.
9. Review with financial management the status of tax returns and
tax audits.
10. Perform any special investigations which may be assigned to it by
the Board of Directors concerning matters relating to the company's
financial statements, internal controls, compliance wit the law or
business ethics.
11. Receive from the audit firm a formal written statement containing the
relationships between the auditor and the Company. Discuss with the
auditors such relationships and their impact on the auditors'
independence. When necessary, recommend that the full Board take
appropriate action to ensure the independence of the auditors.
V. Lines of Communication
The internal and outside auditors shall have direct access to the
Committee and may bypass management if deemed necessary. The committee
may contact directly any employee of the Company as it deems necessary.
VI. Meetings
The Committee will hold quarterly discussions with the outside auditors
prior to the Company filing Form 10-Q with the SEC. The Committee shall
hold a minimum of three meetings each year. One meeting shall be held
after completion of the annual year-end audit and before the annual report
is released. A second regular meeting should be held mid-year to discuss
internal audit activities and other matters. The third regular meeting
shall be held in the fourth quarter to discuss preparations for the
annual audit. Additional meetings may be scheduled as required at any
time during the year upon the call of the Committee Chairman.
VII. Reports to the Board of Directors
The Chairman of the Committee will report to the full Board at the next
regular Board meeting following any meeting of the Committee. Normally, the
Chairman will make a verbal report. Minutes of each meeting are to be
prepared in draft form by a member of financial management for review and
approval of the Chairman of the Committee. The approved minutes shall be
distributed to all directors within 20 days after the meeting. The Corporate
Secretary will retain the minutes for permanent filing.
19
KINARK CORPORAITON
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE DIRECTORS
For the Annual Meeting of Stockholders on May 16, 2001
The undersigned, a stockholder of record of Kinark Corporation (the
"Company") on April 4, 2001 (the "Record Date"), hereby appoints Ronald J.
Evans and Paul R. Chastain, or either of them with full power of substitution,
as proxies for the undersigned, to vote all shares of common stock, $.10 par
value per share (the "Common Stock"), of the Company, which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on
May 16, 2001, and at any adjournments or postponements thereof, on the
following matters.
(Continued, and to be marked, dated and signed, on the reverse side)
The invalidity, illegality or unenforceability of any particular provision
of this Proxy shall be construed in all respects as if such invalid, illegal
or unenforceable provision were omitted without affecting the validity,
legality or enforceability of the remaining provisions hereof.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL
MEETING OF
STOCKHOLDERS
KINARK CORPORAITON
May 16, 2001, 11:00 a.m.
American Stock Exchange
Boardroom - 14th Floor
86 Trinity Place
New York, NY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW.
---
Please mark
your votes as
indicated in
this example __X__
1. Election of the following nominees as Directors: Linwood J. Bundy,
Paul R. Chastain, Ronald J. Evans, Gilbert L. Klemann,II, Patrick J.
Lynch, Joseph J. Morrow, John H. Sununu, Mark E. Walker.
FOR all nominees WITHHOLD INSTRUCTIONS: To vote FOR or WITHHOLD
listed (except as AUTHORITY AUTHORITY to vote for the election of all
marked to the for all candidates, check the appropriate box
contrary) nominees hereon. To withhold authority to the
listed election of any candidate(s), write the
________ ______ name(s) of such condidate(s) in the
following space:
_______________________________________
If no box is marked hereon, the underisgned
will be deemed to vote FOR each candidate
except that the undersigned will not be
deemed to consent to the election of any
candidate whose name is written in the space
provided above.
2. In their discretion, upon such other matters as
may properly come before the Annual Meeting.
Please sign below exactly as name appears on this Proxy. If
shares are registered in more than one name, all such persons
should sign. A corporation should sign in its full corporate name
by a duly authorized officer, stating his title. Trustees,
guardians, executors and administrators should sign in their
official capacity, giving their full title as such. If a partnership,
please sign in the partnership name by authorized persons.
Make sure that the name on your stock certificate(s) is exactly
as you indicate below.
Dated: ___________________________________________________, 2001
_________________________________________________________________
(Signature)
_________________________________________________________________
(Signture if held jointly)
__________________________________________________________________
(Title or authority (if applicalbe))
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
**THIS IS YOUR PROXY CARD**
-----------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual Meeting
of
Kinark Corporation Stockholders
Wednesday, May 16, 2001
11:00 a.m.
American Stock Exchange
Boardroom - 14th Floor
86 Trinity Place
New York, NY