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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Universal Forest Products
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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)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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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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:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
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SEC 1913 (02-02)
UNIVERSAL FOREST PRODUCTS, INC.
2801 East Beltline NE
Grand Rapids, MI 49525
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of Universal Forest Products, Inc. will
be held at the Company's corporate headquarters, 2801 East Beltline NE, Grand
Rapids, Michigan, on Wednesday, April 21, 2004, at 8:30 a.m. LOCAL time
(registration begins at 8:00 a.m.) for the following purposes:
(1) Election of one director for a one year term expiring in 2005, and
election of two directors for three year terms expiring in 2007.
(2) The transaction of such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 1, 2004, are
entitled to notice of and to vote at the meeting. To vote by telephone,
shareholders of record (shareholders who possess a certificate representing
their shares) may call toll free on a touch-tone telephone 1-800-PROXIES
(1-800-776-9437), enter the control number located on the proxy card and follow
the recorded instructions. To vote on the Internet, go to the site
http://www.voteproxy.com, enter the control number located on the proxy card and
follow the instructions provided.
If your shares are held through a bank or broker (referred to as "street
name"), you may also be eligible to vote your shares electronically. Follow the
instructions on your voting form, using either the toll free telephone number or
the Internet address that is listed.
A copy of the Annual Report to Shareholders for the year ended December 27,
2003, is being mailed to you concurrently with this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
Matthew J. Missad, Secretary
March 18, 2004
Universal Forest Products, Inc.
2801 East Beltline NE
Grand Rapids, Michigan 49525
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY.
UNIVERSAL FOREST PRODUCTS, INC.
2801 East Beltline NE
Grand Rapids, Michigan 49525
ANNUAL MEETING OF SHAREHOLDERS
April 21, 2004
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement and the enclosed Proxy are being furnished to holders
of Common Stock, no par value, of Universal Forest Products, Inc. (the
"Company"). The Board of Directors is soliciting proxies for use at the Annual
Meeting of Shareholders to be held on April 21, 2004, and at any adjournment of
that meeting. The Annual Meeting will be held at the Company's corporate
headquarters, 2801 East Beltline NE, Grand Rapids, Michigan, at 8:30 a.m. local
time. Registration for the meeting begins at 8:00 a.m.
If the enclosed Proxy is properly signed and returned to the Company, the
shares represented by the Proxy will be voted at the Annual Meeting and at any
adjournment of the meeting. If a shareholder specifies a choice, the Proxy will
be voted as specified. If no choice is specified, the shares represented by the
Proxy will be voted for the election of all nominees named in the Proxy
Statement, and in accordance with the judgment of the persons named as proxies
with respect to any other matter which may come before the meeting.
Returning your completed Proxy will not prevent you from voting in person at
the Annual Meeting if you wish to do so. In addition, you may revoke your Proxy
at any time before it is voted, by written notice to the secretary of the
Company prior to the Annual Meeting, or by submission of a later-dated Proxy, or
by the withdrawal of your Proxy and voting in person at the Annual Meeting.
The cost of the solicitation of proxies will be paid by the Company. In
addition to the use of the mail, proxies may be solicited personally, by
telephone, by facsimile, or by electronic mail by regular employees of the
Company who will not receive additional compensation for soliciting proxies. The
Company does not intend to pay any compensation for the solicitation of proxies,
except that brokers, nominees, custodians, and other fiduciaries will be
reimbursed by the Company for their expenses in connection with sending proxy
materials to beneficial owners and obtaining their proxies.
VOTING SECURITIES
Holders of record of Common Stock at the close of business on March 1, 2004,
will be entitled to vote at the Annual Meeting. As of March 1, 2004, there were
17,876,927 shares of Common Stock outstanding. The presence in person or by
Proxy of at least 51% of such shares constitutes a quorum. A shareholder is
entitled to one vote for each share of Common Stock registered in the
shareholder's name at the close of business on March 1, 2004. Under Michigan
law, abstentions are treated as present and entitled to vote and therefore have
the effect of a vote against the matter. A broker non-vote on a matter is
considered not entitled to vote on that matter and, therefore, is not counted in
determining whether a matter requiring approval of a majority of the shares
present and entitled to vote has been approved. Votes cast at the meeting or
submitted by Proxy will be counted by inspectors of the meeting who will be
appointed by the Company. There is no right to cumulative voting on any matter.
1
ELECTION OF DIRECTORS
The Board of Directors consists of eight members and is divided into three
classes, as equal in number as possible, with the classes to hold office for
staggered terms of three years each. The Board nominated incumbent director
Philip M. Novell to a one year term expiring at the 2005 Annual Meeting, in
accordance with the Company's retirement policy which states that an outside
Director may not serve on the Board for more than twelve years. The Board also
nominated incumbent directors William G. Currie and John M. Engler to three year
terms expiring at the 2007 Annual Meeting.
The persons named as proxy holders in the accompanying Proxy will vote for
the above-named nominees, unless the shareholder directs them differently on the
proxy card. If a nominee is not available for election as a director at the time
of the Annual Meeting (a situation which is not now anticipated), the Board of
Directors may designate a substitute nominee, and the accompanying Proxy will be
voted for the substituted nominee.
A vote of the shareholders holding a plurality of the shares present in
person or represented by proxy is required to elect directors. Accordingly, the
three individuals who receive the greatest number of votes cast at the meeting
will be elected as directors.
The Board of Directors recommends a vote FOR the election of each person
nominated by the Board.
The following table provides certain biographical information for each
person who is nominated for election as a director at the Annual Meeting and for
each person who is continuing as an incumbent director.
NAMES, (AGES), POSITIONS, AND BACKGROUNDS OF DIRECTORS AND NOMINEES SERVICE AS A DIRECTOR
------------------------------------------------------------------------------------------------------
NOMINEE FOR TERM EXPIRING IN 2005
PHILIP M. NOVELL (66) is a consultant with the Compass Group of Director since 1993.
Birmingham, Michigan. Mr. Novell retired as General Sales Manager Chairman of Nominating and
for the Ford Division of Ford Motor Company on December 31, 1998, Corporate Governance Committee.
with whom he had been affiliated since 1961. Member of Audit Committee.
NOMINEES FOR TERMS EXPIRING IN 2007
WILLIAM G. CURRIE (56) is the Vice Chairman of the Board and Chief Director since 1978.
Executive Officer of the Company. He joined the Company in 1971,
serving as a salesman, general manager, vice president, and
executive vice president. Since 1989, he has been the Chief
Executive Officer of the Company, and on January 1, 2000, also
became Vice Chairman of the Board.
JOHN M. ENGLER (54) is the President of State and Local Government Director since 2003.
Business and Vice President of Government Solutions for North Member of Nominating and
America for EDS in Herndon, Virginia. Mr. Engler served as Governor Corporate Governance Committee.
of the State of Michigan from 1991 through 2002. Mr. Engler also Member of Personnel and
serves on the boards of Munder Capital Management and Northwest Compensation Committee.
Airlines.
2
NAMES, (AGES), POSITIONS, AND BACKGROUNDS OF DIRECTORS AND NOMINEES SERVICE AS A DIRECTOR
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INCUMBENT DIRECTORS -- TERMS EXPIRING IN 2006
DAN M. DUTTON (56) is Chairman of the Board of Stimson Lumber Director since 2003.
Company of Portland, Oregon with whom he has been affiliated since
1988. Mr. Dutton also serves on the board of the American Forest
and Paper Association.
JOHN W. GARSIDE (64) is the President and Treasurer of Woodruff Director since 1993.
Coal Company of Kalamazoo, Michigan. Mr. Garside serves as a Chairman of Personnel and
commissioner for the Michigan Department of Transportation, and is Compensation Committee. Member
also a director and member of the compensation committee of PRAB, of Nominating and
Inc. Corporate Governance Committee.
AMBASSADOR PETER F. SECCHIA (66) is Managing Partner of SIBSCO, Director since 1967.
LLC, a private investment company. On December 31, 2002, he retired
from the Company with whom he has been affiliated since 1962. He
had been president, chief executive officer, and chairman of the
board from March 1971 until 1989. From 1989 until 1993, he served
as U.S. Ambassador to Italy. From January 1993 to the present time,
he has served as Chairman of the Board of the Company.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 2005
GARY F. GOODE (59) retired from Arthur Andersen LLP in March 2001. Director since 2003.
He joined Arthur Andersen in 1972, and was a partner for 19 years. Chairman of Audit Committee.
Mr. Goode currently works as an independent consultant, and serves
as a director of Gentex Corporation.
LOUIS A. SMITH (64) is President of the law firm of Smith and Director since 1993.
Johnson, Attorneys, P.C., of Traverse City, Michigan. Mr. Smith Member of Audit Committee.
also serves on the Advisory Board of the Huntington National Bank Member of Personnel and
of Traverse City, and serves as a member of the Advisory Council to Compensation Committee.
the University of Notre Dame Law School.
3
CORPORATE GOVERNANCE AND BOARD MATTERS
The Board of Directors of Universal Forest Products is committed to sound
and effective corporate governance practices. To assist in its governance, the
Board has appointed three standing committees: the Audit Committee, the
Nominating and Corporate Governance Committee, and the Personnel and
Compensation Committee. The Audit Committee and the Nominating and Corporate
Governance Committee have a written charter which is available for review on the
Company's website at www.ufpi.com.
CODE OF BUSINESS CONDUCT AND ETHICS AND CODE OF ETHICS FOR SENIOR FINANCIAL
OFFICERS
The Company has adopted a Code of Business Conduct and Ethics that applies
to the Company's employees, officers, and directors. The Company has also
adopted a Code of Ethics for Senior Financial Officers (including the Company's
principal executive officer, principal financial officer, and controller). Each
Code is posted on the Company's website at www.ufpi.com. Any changes or waivers
to either Code for the Company's principal executive officer, principal
financial officer, controller, or persons performing similar functions, will be
disclosed on the Company's website.
AFFIRMATIVE DETERMINATION REGARDING DIRECTOR INDEPENDENCE AND OTHER MATTERS
The Board of Directors has determined each of the following directors to be
an "independent director" as such term is defined in Marketplace Rule
4200(a)(15) of the National Association of Securities Dealers (the "NASD"): Dan
M. Dutton, John M. Engler, John W. Garside, Gary F. Goode, Philip M. Novell, and
Louis A. Smith. Moreover, there are no family relationships between or among the
directors and the Company's executive officers.
The Board of Directors has determined that each member of the three
committees of the Board meets the independence requirements applicable to those
committees prescribed by the Nasdaq Listing Standards, the Securities and
Exchange Commission, and the Internal Revenue Service.
The Nominating and Corporate Governance Committee reviewed the applicable
legal standards for Board members and Board committee independence and the
criteria applied to determine "audit committee financial expert" status, as well
as the answers to annual questionnaires completed by each of the directors. On
the basis of this review, the Nominating and Corporate Governance Committee
delivered a report to the full Board of Directors, and the Board made its
independence and "audit committee financial expert" determinations based upon
the Nominating and Corporate Governance Committee's report and each member's
review of the information made available to the Nominating and Corporate
Governance Committee.
COMMITTEES
The Board of Directors has appointed an Audit Committee. Each member of the
Audit Committee is "independent" as that term is defined by Rule 4200(a)(15) of
the Nasdaq Listing Standards as well as the applicable rules of the Securities
Exchange Commission for audit committee membership. The Board of Directors has
determined that Mr. Goode qualifies as the "audit committee financial expert" as
defined in Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934
(the "Exchange Act"). The full responsibilities of the Audit Committee are set
forth in the Audit Committee Charter, which was recently amended in connection
with the Committee's annual review and assessment, and a copy of which is
attached as Appendix A to this Proxy Statement. In general, the primary purpose
of this Committee is to assist the Board in overseeing management's conduct of
the Company's financial reporting processes and its system of internal controls
regarding finance, accounting, legal compliance, and ethics. During 2003, the
Audit Committee held three formal meetings, and four special meetings via
telephone conference call.
The Board of Directors has a Personnel and Compensation Committee,
consisting entirely of independent directors, as currently defined by the Nasdaq
Listing Standards, that is responsible for reviewing and recommending to the
Board of Directors the timing and amount of compensation for key employees,
including salaries, bonuses, and other benefits. The Personnel and Compensation
Committee is also responsible for administering the Company's stock option and
other equity-based incentive plans, recommending retainer and attendance fees
for
4
non-employee directors, and reviewing compensation plans and awards as they
relate to key employees. During 2003, the Personnel and Compensation Committee
held one formal meeting.
The Board of Directors also has a Nominating and Corporate Governance
Committee. Each member of the Nominating and Corporate Governance Committee is
"independent" as that term is defined by Rule 4200(a)(15) of the Nasdaq Listing
Standards. The Nominating and Corporate Governance Committee considers and
proposes director nominees for election at the Annual Meeting, selects
candidates to fill Board vacancies as they may occur, makes recommendations to
the Board regarding Board committee memberships, generally monitors the
Company's corporate governance system, and performs any other functions or
duties deemed appropriate by the Board. The full responsibilities of the
Nominating and Corporate Governance Committee are set forth in the Nominating
and Corporate Governance Committee Charter. During 2003, the Nominating and
Corporate Governance Committee held one meeting.
The Company's Articles of Incorporation contain certain procedural
requirements applicable to shareholder nominations of directors. A shareholder
may nominate a person to serve as a director if they provide written notice to
the Company not later than thirty days prior to the annual meeting. The notice
must include (1) the name and address of the shareholder who intends to make the
nomination and of the person or persons nominated, (2) a representation that the
shareholder is a current record holder and will continue to hold those shares
through the date of the meeting, and intends to appear in person or by proxy at
the meeting, (3) a description of all arrangements between the shareholder and
each nominee, (4) the information regarding each nominee as would be required to
be included in a proxy statement filed under Regulation 14A of the Exchange Act
had the nominee been nominated by the Board of Directors, and (5) the consent of
each nominee to serve as director. The nominee's written consent to the
nomination and sufficient background information on the candidate must be
included to enable the Nominating and Corporate Governance Committee to make
proper assessments as to his or her qualifications. Nominations must be
addressed to the Chairman of the Nominating and Corporate Governance Committee
at the Company's headquarters, and must be received no later than the 30th day
prior to the Annual Meeting in order to be considered for the next annual
election of directors. The Nominating and Corporate Governance Committee may
also make its own search for potential candidates that may include candidates
identified by a variety of means as deemed appropriate by the Committee.
The Nominating and Corporate Governance Committee has not established
specific minimum age, education, years of business experience, or specific types
of skills for potential candidates, but, in general, expects qualified
candidates will have ample experience and a proven record of business success
and leadership. In general, the Committee requires that each member of the Board
of Directors will have the highest personal and professional ethics, integrity,
and values; and will consistently exercise sound and objective business
judgment. In addition, it is anticipated that the Board as a whole will have
individuals with significant appropriate senior management and leadership
experience, a comfort with technology, a long-term, strategic and global
perspective, and the ability to advance constructive debate. It will be
important for the Board as a whole to operate in an atmosphere where the
chemistry of the individuals is a key element.
Upon receipt of a shareholder proposed candidate, the Chairman of the
Nominating and Corporate Governance Committee assesses the Board's needs,
primarily whether there is a current or pending vacancy or a possible need to
fulfill by adding or replacing a director, and then develops a director profile
by comparing the current state of Board characteristics with the desired state
and the candidate's qualifications. The profile and the candidate's submitted
information are provided to the Chairman of the Board and Chief Executive
Officer for discussion. Following this discussion, the profile and the
candidate's materials are forwarded to all Nominating and Corporate Governance
Committee members, and consideration of the candidate is added as an agenda item
for the next Committee meeting.
Similarly, if at any time the Nominating and Corporate Governance Committee
or the Board determines there may be a need to add or replace a director, the
Nominating and Corporate Governance Committee or the Board develops a Director
profile by comparing the current state of Board characteristics with the desired
state. If no candidates are apparent from any source, the Committee will
determine the appropriate method to conduct a search.
5
The Committee has, to date, not paid any third party fees to assist in
identifying and evaluating nominees. The Committee has not received any
recommended nominations from any of the Company's shareholders in connection
with the Annual Meeting. The nominees that are standing for election as
directors at the 2004 Annual Meeting are incumbent directors nominated by the
Committee.
COMMUNICATIONS WITH THE BOARD
Generally, shareholders who have questions or concerns regarding the Company
should contact the Investor Relations Department at 1-888-BUY-UFPI
(1-888-289-8374). However, any shareholder who wishes to address questions
regarding the business or affairs of the Company directly with the Board of
Directors, or any individual director, should direct his or her questions in
writing to the Secretary of the Board at 2801 East Beltline NE, Grand Rapids, MI
49525.
MEETING ATTENDANCE
Each director is expected to make a reasonable effort to attend all meetings
of the Board, applicable committee meetings, and the Annual Meeting of
Shareholders. All Directors attended the 2003 Annual Meeting. During the
Company's last fiscal year, there were four regular meetings of the Board of
Directors, and the Board took action by unanimous written consent on nine
occasions. Each of the incumbent directors attended 100% of the aggregate number
of meetings of the Board of Directors and meetings of committees which they were
eligible to attend. During fiscal 2003, the Board met in executive sessions,
without the presence of management, on two occasions.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no annual retainer
and are not compensated for attendance at Board or committee meetings. Other
than the fees due under the consulting and noncompete agreement that Chairman
Secchia has with the Company, he does not receive any additional compensation
for serving on the Board. Directors who are not employees of the Company receive
a $10,000.00 annual retainer fee, plus $500.00 for attendance at each regular
and special meeting of the Board of Directors. Each outside Director is granted
100 shares of stock for each Board meeting attended, up to a maximum of 400
shares per year. Also, each outside Director receives a $500.00 meeting fee for
each committee meeting they attend.
Each Director who is not a current or former employee of the Company may
participate in the Director Retainer Stock Plan. The Director Retainer Stock
Plan, approved by shareholders in April 1994, provides that each Director may
elect to receive Company stock, on a deferred basis, in lieu of cash
compensation for the Director's retainer and meeting fees.
Directors receive reimbursement of ordinary and necessary expenses to attend
meetings. The Chairmen of the Personnel and Compensation, and Nominating and
Corporate Governance Committees do not receive additional compensation for
serving as a Chairman. The Chairman of the Audit Committee receives an
additional $15,000.00 per year for serving as Chairman.
6
OWNERSHIP OF COMMON STOCK
The following table sets forth information as to each shareholder known to
the Company to have been the beneficial owner of more than five percent (5%) of
the Company's outstanding shares of Common Stock as of March 1, 2004:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(2)
------------------------------------------------------------------------------------------------------
Wellington Management Company, LLP 1,139,050 6.4%
75 State Street
Boston, MA 02109
Barclays Global Investors 1,022,121 5.7%
45 Fremont Street
San Francisco, CA 94105
NFJ Investment Group L.P. 961,500 5.4%
2121 San Jancinto Street, Suite 1840
Dallas, TX 75201
-------------------------
(1) Except as otherwise indicated by footnote, each named person has sole voting
and investment power with respect to the shares indicated.
(2) Shares outstanding for this calculation include 242,454 shares which are
subject to options exercisable in 60 days; 25,815 shares which are subject
to issuance under the Director Retainer Stock Plan; and 152,841 shares which
are subject to issuance under a Deferred Compensation Plan.
7
SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information with respect to ownership of the
Company's Common Stock by all directors, nominees for election as director,
executive officers named in the tables under the caption "Executive
Compensation," and all executive officers and directors as a group. The
information in this table was furnished by the Company's officers, directors,
and nominees for election of directors, and represents the Company's
understanding of circumstances in existence as of March 1, 2004.
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(2)
--------------------------------------------------------------------------------------------------------
Peter F. Secchia 892,759(3) 4.9%
William G. Currie 566,363(4)(5) 3.1%
Michael B. Glenn 211,947(4)(5) 1.1%
Robert K. Hill 122,303(4)(5) *
Matthew J. Missad 86,764(4)(5) *
C. Scott Greene 39,661(4)(5) *
John W. Garside 30,777(6) *
Louis A. Smith 26,096(6) *
Philip M. Novell 14,240(6) *
Dan M. Dutton 1,426(6) *
Gary F. Goode 1,126(6) *
John M. Engler 400 *
All directors and executive officers as a group (15
persons) 2,129,981(6) 11.6%
-------------------------
* Less than one percent (1%).
(1) Except as otherwise indicated by footnote, each named person has sole voting
and investment power with respect to the shares indicated.
(2) Shares outstanding for this calculation include 242,454 shares which are
subject to options exercisable in 60 days; 25,815 shares which are subject
to issuance under the Director Retainer Stock Plan; and 152,841 shares which
are subject to issuance under a Deferred Compensation Plan.
(3) Includes 50,000 shares owned by Mr. Secchia's wife; 434,374 shares held by
limited liability companies of which Mr. Secchia is a member; 105,000 shares
held by a family limited partnership of which Mr. Secchia is a partner; and
31,550 shares held by a family foundation.
(4) Includes shares which may be acquired by Mr. Currie, Mr. Glenn, Mr. Hill,
Mr. Missad, and Mr. Greene pursuant to options exercisable in 60 days in the
amount of 5,000 shares, 5,000 shares, 9,000 shares, 4,338 shares, and 3,133
shares, respectively.
(5) Includes shares subject to issuance under a Deferred Compensation Plan for
Mr. Currie, Mr. Glenn, Mr. Hill, Mr. Missad, and Mr. Greene, in the amount
of 1,092 shares, 214 shares, 25,670 shares, 5,096 shares, and 13,656 shares,
respectively.
(6) Includes shares obtained through the Company's Director Retainer Stock Plan
for Mr. Dutton, Mr. Garside, Mr. Goode, Mr. Novell, and Mr. Smith who hold
1,026 shares, 1,827 shares, 826 shares, 10,740 shares, and 11,396 shares,
respectively, through such plan.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows certain information
concerning the compensation for the Chief Executive Officer and the Company's
four most highly compensated executive officers for fiscal 2003 (the "Named
Executives"), and their compensation for 2002 and 2001:
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) COMPENSATION OPTIONS/SAR'S COMPENSATION(3)
-------------------------------------------------------------------------------------------------------------
William G. Currie 2003 $479,250 $929,600 0 90,000 $6,273
Vice Chairman of the 2002 459,934 805,000 0 95,000 8,030
Board and Chief 2001 439,250 777,000 0 5,000 7,684
Executive Officer
Michael B. Glenn 2003 347,513 744,000 0 50,000 6,273
President and Chief 2002 330,271 645,000 0 55,000 8,030
Operating Officer 2001 313,750 625,000 0 5,000 7,684
Robert K. Hill 2003 276,209 609,000 0 0 6,273
President 2002 262,517 550,000 0 5,000 8,030
Universal Forest Products 2001 248,496 524,000 0 5,000 7,684
Western Division
C. Scott Greene 2003 229,625 420,003 0 0 3,688
President 2002 219,851 341,111 0 3,711 8,030
Universal Forest Products 2001 197,920 320,000 0 2,133 7,684
Eastern Division
Matthew J. Missad 2003 227,261 300,000 0 0 5,273
Executive Vice President, 2002 215,682 263,000 0 4,352 8,030
General Counsel and 2001 204,163 250,000 0 4,338 7,480
Secretary
-------------------------
(1) Includes amounts deferred by Named Executives under the Company's 401(k)
Plan and the Deferred Compensation Plan.
(2) Includes annual bonus payments under performance-based bonus plans tied to
the Company's operating profit and return on investment, which covers
substantially all salaried employees. The bonus amounts include the amounts
earned in each respective year, which are paid in the subsequent year.
(3) The amounts set forth in this column represent Company contributions to the
Company's Profit Sharing and 401(k) Plan. Subject to certain requirements,
including age and service requirements, all employees of the Company and its
subsidiaries are eligible to participate in the Plan.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
to the Named Executives during the preceding fiscal year:
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
NUMBER OF SECURITIES PERCENT OF OPTIONS
UNDERLYING OPTIONS GRANTED TO ALL EXERCISE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
EXECUTIVE (#)(1) FISCAL YEAR ($/SH) DATE (3)
-------------------------------------------------------------------------------------------------------------------
William G. Currie 30,000 21.43% $17.10(2) 03/01/2013 $124,781
30,000 21.43% $17.10(2) 03/01/2013 $183,132
30,000 21.43% $17.10(2) 03/01/2013 $226,331
Michael B. Glenn 12,500 8.93% $17.10(2) 03/01/2013 $ 51,992
12,500 8.93% $17.10(2) 03/01/2013 $ 76,305
12,500 8.93% $17.10(2) 03/01/2013 $ 94,305
12,500 8.93% $17.10(2) 03/01/2016 $108,404
Robert K. Hill 0 0.00%
C. Scott Greene 0 0.00%
Matthew J. Missad 0 0.00%
-------------------------
(1) The options granted under this plan may be exercised beginning in 2006.
(2) The exercise price equals or exceeds the fair market value of the Company
stock as of the grant date of March 1, 2003.
(3) Based on the Black-Scholes option valuation model assuming volatility is
28.25%, risk-free rate of return is 4.6%, dividend yield is 0.40%, and time
of exercise is 30 days prior to expiration of option. The Black-Scholes
option valuation model is an alternative suggested by the Securities and
Exchange Commission, and the Company neither endorses this particular model,
nor necessarily agrees with this method for valuing options. The actual
value of the options, if any, will depend on the market value of the
Company's Common Stock subsequent to the date the options become
exercisable.
AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END OPTION VALUES
The following table provides information on the number and value of options
exercised in the past year, as well as the number and value of unexercised
options held by the Named Executives at December 31, 2003:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED ON VALUE UNEXERCISED OPTIONS(#) OPTIONS($)(2)
EXECUTIVE EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------------
William G. Currie 0 0 0 190,000 0 2,235,775
Michael B. Glenn 0 0 6,000 142,000 119,400 2,077,975
Robert K. Hill 0 0 4,000 38,000 79,600 836,375
C. Scott Greene 0 0 5,000 33,844 98,812 317,719
Matthew J. Missad 0 0 0 28,690 0 658,235
-------------------------
(1) The value realized upon the exercise of options is equal to the difference
between the market value of the shares of Common Stock acquired at the time
of exercise and the aggregate exercise price paid by the Named Executives.
(2) The value of unexercised options is based on the difference between the
closing market price of the Company's stock on December 31, 2003 ($32.40)
and the exercise prices of the options.
10
AUDIT COMMITTEE REPORT
On February 24, 2004, the Audit Committee (the "Committee") submitted to the
Board of Directors the following report:
The Committee has reviewed and discussed with management the Company's
audited financial statements as of and for the year ended December 27, 2003.
The Committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.
The Committee has received and reviewed the written disclosures from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and has discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, the Committee
recommends to the Board of Directors that the financial statements referred to
above be included in the Company's Annual Report on Form 10-K for the year ended
December 27, 2003.
Gary M. Goode, Audit Committee
Chairman
Philip M. Novell, Audit Committee
Member
Louis A. Smith, Audit Committee Member
PERSONNEL AND COMPENSATION COMMITTEE REPORT
The Personnel and Compensation Committee (the "Committee") of the Board of
Directors has furnished the following report on executive compensation:
During 2003, the Company maintained its compensation program in accordance
with the following Committee goals:
A. Reasonable and appropriate base salaries, based upon job duties.
B. Incentive compensation tied to return on investment ("ROI") with
appropriate adjustments for achievement of specified Company goals.
C. Stock options for executives which align interests of the employee with
interests of shareholders.
The Committee has determined that the following categories will best
motivate Company executives to achieve the Company goals:
BASE SALARIES. Annual base salaries are based on past and present corporate
and individual performance. The Committee considers base salary data of
similar-sized corporations and industry competitors to ensure that salaries are
competitive in the market place. Salary comparisons with peer group companies
are reviewed and analyzed to account for differences in size and business
complexity among peer companies.
The Committee has complete discretion in determining base salary amounts
(including the grant and amount of any annual discretionary incentive payments
or stock option awards), regardless of whether corporate or individual
performance goals are achieved. The Committee exercised its complete discretion
in setting base salaries for 2003.
Each year the Committee reviews, with the Chief Executive Officer, and
approves, with such modifications as it may deem appropriate, an annual salary
adjustment target for executives for the ensuing February 1 to January 31, based
on current available survey data, cost of living factors, and performance
judgments as to the past and expected future contributions of the individual
officers.
INCENTIVE COMPENSATION. The Company relies heavily on annual discretionary
incentive compensation to attract and retain Company officers and other key
employees of outstanding abilities, and to motivate them to
11
perform to the full extent of their abilities. The Company's incentive
compensation system in 2003 focused on ROI, and was also subject to additional
adjustment, up or down, based upon achievement of certain performance criteria
referred to as Key Performance Indicators ("KPI"). For Messrs. Greene and Hill,
2003 bonuses are based on the ROI and KPI of their respective operations. For
Messrs. Currie, Glenn, and Missad, incentive compensation is based entirely on
the ROI and KPI of the Company as a whole.
CHIEF EXECUTIVE. The Committee annually reviews and establishes the
discretionary component of the base salary of the Chief Executive Officer. His
salary is based on comparable compensation data, the Committee's assessment of
his past performance, and its expectation as to his future contributions in
leading the Company and its businesses. The Chief Executive Officer's base
salary fell within the middle-range of the salaries of comparable executives.
When compared with the peer group of the Company (as discussed under "Stock
Performance Graph"), the Chief Executive Officer's base salary fell in the upper
quartile of the peer group. The Committee has complete discretion in setting
base salary for Mr. Currie (who does not have an employment agreement with the
Company).
The Chief Executive Officer's incentive bonus amount for 2003 was based upon
performance determined under the Company's Performance Bonus Plan. The Chief
Executive Officer's bonus for 2003 reflects the Company's overall performance,
including record net sales and net earnings achieved in 2003, as compared to
2002.
INCENTIVE BONUS PROGRAM. For fiscal 2004, the Company will continue to use
the ROI based Performance Bonus Plan with KPI adjustments as described above. By
basing the individual's incentive compensation on the ROI generated by the
profit center, the individual is rewarded for properly managing assets,
increasing cash flow, and obtaining higher net margins. Participants who achieve
all of the KPI goals will receive a higher percentage of the ROI bonus than
those achieving fewer KPI goals. A discretionary bonus component is available
for salaried personnel at operations which have not yet hit the ROI target but
demonstrate improvement over the previous year.
For the Chief Executive Officer and the other Named Executives, incentive
compensation will be paid as provided in the Performance Bonus Plan, as approved
by the Committee. For 2004, bonus compensation as determined under the
Performance Bonus Plan may be adjusted depending on the Named Executive's
achievement of certain KPI targets.
Due to the changes in accounting for stock options, the Committee decided
not to grant broad-based stock options to its salaried employees for 2004.
The Company's policy is to pay all earned compensation regardless of whether
it exceeds the One Million Dollar ($1,000,000.00) limitation on compensation
deductions set forth in Section 162(m) of the Internal Revenue Code. To ensure
the maximum tax deductibility for the Company, the Company received shareholder
approval of its Performance Bonus Plan at its 1999 Annual Meeting of
Shareholders.
The Committee recognizes that as the strategic objectives of the Company are
modified and refined, the compensation formulas must also be refined to maintain
the direct correlation between individual compensation and Company performance.
John W. Garside, Chairman
John M. Engler
Louis A. Smith
The reports of the Audit Committee and the Personnel and Compensation
Committee shall not be deemed incorporated by reference in any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
12
STOCK PERFORMANCE GRAPH
The following graph depicts the cumulative total return on the Company's
Common Stock compared to the cumulative total return on the indices for The
Nasdaq Stock Market (all U.S. companies) and an industry peer group selected by
the Company. The graph assumes an investment of $100.00 on December 24, 1998 and
reinvestment of dividends in all cases.
[PERFORMANCE GRAPH]
12/1998 12/1999 12/2000 12/2001 12/2002 12/2003
# Universal Forest Products, Inc. 100.0 65.9 67.0 105.3 107.6 158.9
* Nasdaq Stock Market (US Companies) 100.0 183.3 113.4 91.7 62.8 91.7
- Self-Determined Peer Group 100.0 147.3 99.2 90.8 57.5 113.1
-------------------------
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/24/1998.
The companies included in the Company's self-determined industry peer group
are as follows:
Building Materials Holding Corp. Louisiana Pacific Corp.
Georgia Pacific Corp. Patrick Industries Inc.
The returns of each company included in the self-determined peer group are
weighted according to each respective company's stock market capitalization at
the beginning of each period presented in the graph above.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, executive officers,
and greater than 10% beneficial owners to file reports of ownership and changes
in ownership of shares of Common Stock with the Securities and Exchange
Commission, and applicable regulations require them to furnish the Company with
copies of all Section 16(a) reports they file. Based solely upon review of the
copies of such reports furnished to the Company, or written representations that
no such reports were required, all Section 16(a) filing requirements applicable
to the reporting persons were complied with, except for Messrs. Cole, Coleman,
Greene, and James, who each filed one late report covering one transaction.
13
RELATED PARTY TRANSACTIONS
In 2003, the Company continued its engagement with OptiSave, a
telecommunications consulting firm, which is owned by inlaws of the Chief
Financial Officer. The Company paid $131,000.00 in 2003 for the services of
OptiSave, and expects to realize ongoing benefits well in excess of this amount.
Peter F. Secchia, Chairman of the Board, has agreed to provide certain
services to the Company, as set forth in a consulting and advisory services
agreement with SIBSCO, LLC, a company of which Mr. Secchia is managing
principal. These services include business and management consulting, public
relations counsel, government affairs coordination, and special project
services. The agreement has a remaining term of less than four years and
provides for monthly payments of $16,667.00. The Company has also agreed to
reimburse SIBSCO, LLC for certain business expenses, not to exceed $16,667.00
per month. At the discretion of the Board of Directors, Mr. Secchia is eligible
for incentives if his advisory services significantly improve the Company's
operating results. The incentive may not exceed $100,000.00 per year. In
addition to the consulting agreement, the Company entered into a seven year
non-compete agreement with Mr. Secchia which provides for monthly payments of
$12,500.00. The Agreement has less than six years remaining.
INDEPENDENT PUBLIC ACCOUNTANTS
Effective May 20, 2002, the Board of Directors elected to dismiss Arthur
Andersen LLP ("Arthur Andersen") as the Company's independent auditors and
engage the services of Ernst & Young LLP ("E&Y") as the Company's new
independent auditors for the year ended December 28, 2002.
Arthur Andersen's reports on the Company's consolidated financial statements
for the fiscal year ended December 29, 2001 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. During the fiscal year ended December 29,
2001, and through May 20, 2002 (the Relevant Period), (1) there were no
disagreements with Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Arthur Andersen's satisfaction, would have caused Arthur
Andersen to make reference to the subject matter of the disagreement(s) in
connection with its reports on the Company's consolidated financial statements
for such year; and (2) there were no reportable events as described in Item
304(a)(1)(v) (Reportable Events) of the Commission's Regulation S-K.
During the Relevant Period, neither the Company nor anyone acting on the
Company's behalf consulted with E&Y regarding (1) the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's consolidated financial
statements, or (2) any matters or reportable events as set forth in Items
304(a)(1)(iv) and (v), respectively, of Regulation S-K.
E&Y served as independent public accountants for the Company for the fiscal
years ended December 28, 2002 and December 27, 2003. Representatives of E&Y will
be present at the Annual Meeting of Shareholders and available to respond to
appropriate questions. The E&Y representatives will have the opportunity to make
a statement if they so desire.
AUDIT COMMITTEE PRE-APPROVAL POLICY. The Audit Committee has established a
pre-approval policy and procedures for audit, audit-related, and tax services
that can be performed by the auditors. The policy is attached to this Proxy
Statement as Appendix B. The policy sets out the specific services pre-approved
by the Audit Committee and the applicable limitations, while ensuring the
independence of the auditors to audit the Company's financial statements is not
impaired. The pre-approval policy does not include a delegation of the Audit
Committee responsibilities under the Securities Exchange Act to management.
14
SERVICE FEES PAID TO AUDITORS. The following set forth the fees paid to the
independent public accounts of the Company for the last two fiscal years:
2003 2002
---------------------------------------------------------------------------------------
Audit Fees $261,425 $198,400
Audit Related Fees(1) 39,500 17,750
Tax Fees(2) 167,552 88,683
All Other Fees 0 0
-------- --------
Total $468,477 $304,833
======== ========
-------------------------
(1) Consists primarily of financial statement audits of employee benefit plants
and review services for an affiliate.
(2) Consists primarily of U.S. Federal, State and local tax consulting and
compliance advice along with tax advice and assistance regarding statutory,
regulatory or administrative developments in the U.S., Canada or Mexico.
AVAILABILITY OF FORM 10-K
Shares of the Company's stock are traded under the symbol UFPI on The Nasdaq
Stock Market. The Company's Form 10-K filed with the Securities and Exchange
Commission will be provided free of charge to any shareholder upon written
request. Significant financial information is available on the Company's web
site at http://www.ufpi.com. For more information, contact the Investor
Relations Department, 2801 East Beltline NE, Grand Rapids, Michigan 49525.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit a proposal for inclusion in the Company's
proxy materials for the Annual Meeting of Shareholders in 2005 may do so by
following the procedures described in SEC Rule 14a-8. To be eligible for
inclusion, shareholder proposals must be received by the Company's Secretary no
later than November 18, 2004. Proposals of shareholders should be addressed to
the attention of Secretary, 2801 East Beltline NE, Grand Rapids, Michigan 49525.
In addition, under the Company's Bylaws, no business may be brought before an
annual meeting unless it is specified in a notice of the meeting or is otherwise
brought before the meeting by or at the direction of the Board or by a
shareholder who has delivered written notice to the Company's Secretary
(containing certain information specified in the Bylaws about the shareholder
and the proposed action), not less than 30 days prior to the date of the
originally scheduled meeting. This requirement is separate from and in addition
to the Securities and Exchange Commission's requirements that a shareholder must
meet in order to have a shareholder proposal included in the Company's proxy
materials. If the Company receives notice of a shareholder proposal after
February 1, 2005, the persons named as proxies for the 2005 Annual Meeting of
Shareholders will have discretionary voting authority to vote on that proposal
at the meeting.
HOUSEHOLDING OF PROXY MATERIALS
Effective with the 2002 Annual Meeting of Shareholders, only one annual
report and proxy statement are sent to multiple shareholders sharing a single
address, unless the Company has received instructions to the contrary from one
or more of such shareholders. If you prefer to receive individual copies of the
proxy materials, send your request in writing to the attention of Investor
Relations, 2801 East Beltline NE, Grand Rapids, MI 49525, or call 888-BUY-UFPI.
15
FUTURE PROXY SOLICITATION
The Company has expanded its use of the Internet to solicit proxies from its
shareholders. As stated on the Notice of Annual Meeting, the Company will also
accept voting by telephone or via electronic mail. If, in the future, you are
interested in accepting proxy solicitations via the Internet, visit the
Company's web site at http://www.ufpi.com, and request to be put on the e-mail
list by clicking on the "Information Request" icon and follow the instructions
to have the proxy notification sent to you via e-mail.
March 18, 2004
By Order of the Board of Directors,
/s/ MATTHEW J. MISSAD
Matthew J. Missad, Secretary
16
APPENDIX A
UNIVERSAL FOREST PRODUCTS, INC.
AUDIT COMMITTEE CHARTER
EFFECTIVE FEBRUARY 24, 2004
I. ROLE. The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities for management's
conduct of the Company's financial reporting processes and the Company's
system of internal controls regarding finance, accounting, legal compliance,
and ethics.
II. MEMBERSHIP AND MEETINGS. The Audit Committee shall be comprised of not less
than three (3) members of the Board of Directors. Each member of the
Committee must qualify as an independent director under the listing
requirements of The Nasdaq Stock Market, and shall be free from any
relationship to the Company that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. Accordingly, the members of the Audit Committee will be
directors:
A. None of whom has any relationship to the Company that would interfere
with the exercise of his or her independent judgment as a member of the
Committee; and
B. All of whom, as determined by the Board of Directors in its business
judgment, are financially literate and have a working familiarity with
basic financial and accounting practices and, as soon as possible
following the effective date of this Charter, at least one (1) member of
the Committee shall be a "financial expert" in compliance with the
criteria established by the Securities and Exchange Commission.
The Audit Committee will establish its meeting schedule, including executive
sessions with management, internal auditors, and the independent auditors.
Each regularly scheduled meeting of the Committee shall conclude with an
executive session of the Committee, absent members of management and on such
terms and conditions as the Committee may elect.
III.RESPONSIBILITIES. The Company's management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible
for auditing the Company's financial statements. Additionally, the Company's
financial management, including the internal audit staff as well as the
independent auditors, have more time, knowledge and more detailed
information of the Company than does the Audit Committee. Consequently, the
Audit Committee's role is one of oversight and does not provide any expert
assurance or certification as to the Company's financial statements or the
work of the independent auditors or that of the internal audit staff.
However, the independent auditors and internal auditors are directly
accountable to the Audit Committee.
The following functions are the common recurring activities of the Audit
Committee in carrying out its oversight function:
A. DOCUMENT AND REPORT REVIEW.
(1) Review and update this Charter periodically or as conditions dictate
(at least, annually).
(2) Review the Company's annual financial statements and any reports or
other financial information submitted to any governmental body or to
the public, including any report issued by the independent
accountants.
(3) Review the summary report of the internal auditor and management's
response to such report.
(4) Undertake the required reviews and discussions and receive the
requisite materials for purposes of recommending to the Board
whether the financial statements should be included in the Annual
Report on Form 10-K as required under Item 306 of S-K.
(5) Review with financial management and the independent auditors the
quarterly report on Form 10-Q prior to its filing.
17
(6) Review earnings press releases with management prior to
dissemination.
(7) Discuss with management financial information and earnings guidance
provided to analysts and rating agencies.
B. INDEPENDENT AUDITORS.
(1) Appoint, approve the compensation of, and provide oversight of the
Company's independent auditor, including the removal of the
Company's independent auditors. The independent auditors shall
report directly to the Committee, and the Committee shall oversee
the resolution of any disagreements between management and the
independent auditors.
(2) On an annual basis, review and discuss with the independent auditors
all significant relationships the auditors have with the Company to
determine the auditors' objectivity and independence, undertaking or
recommending appropriate action to ensure and continue that
independence.
(3) Administer the Company's Policy Regarding the Approval of Audit and
Nonaudit Services Provided by the Independent Auditor.
(4) Following the effective date of the rules implementing Section 404
of the Sarbanes Act, review the independent auditors' report and
hold timely discussions with the independent auditors regarding the
content of that report, including the following:
(a) All critical accounting policies and practices;
(b) All alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor;
(c) Other material written communications between the independent
auditor and management including, but not limited to, management
letter and schedule of unadjusted differences; and
(d) An analysis of the auditor's judgment as to the quality of the
Company's accounting principles, setting forth significant
reporting issues and judgments made in connection with the
preparation of the financial statements.
(5) At least annually, obtain and review a report by the independent
auditor describing:
(a) The firm's internal quality control procedures;
(b) Any material issues raised by the most recent internal
quality-control review, peer review or by any inquiry or
investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent
audits carried out by the firm, and any steps taken to deal with
any such issues; and
(c) All relationships between the independent auditor and the Company.
C. FINANCIAL REPORTING PROCESSES.
(1) Review the integrity of the Company's financial reporting process,
both internal and external, giving consideration to consultation
with management, the independent auditors and the internal auditor.
(2) Consider and approve, as appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent auditors, management, or the internal auditor.
(3) Review and approve all related party transactions.
(4) Establish and maintain procedures for the receipt, retention, and
treatment of complaints regarding accounting or auditing matters,
including procedures necessary to receive and respond to
18
confidential and anonymous submissions by Company employees
regarding questionable accounting or auditing matters.
(5) Review with management and the independent auditors the content of
their respective assessments to be filed under Section 404 of the
Sarbanes Oxley Act.
D. INTERNAL AUDIT. The Audit Committee will oversee internal audit
activities, including discussing with management and the internal
auditors the internal audit function's organization, objectivity,
responsibilities, plans, results, budgets, and staffing.
E. ETHICAL AND LEGAL COMPLIANCE.
(1) Review the Company's Code of Conduct, approved by the Board of
Directors, to ensure that management has maintained a system to
comply with expected ethical and legal requirements.
(2) Review, with the Company's counsel, legal compliance matters
including corporate securities trading policies.
(3) Review, with the Company's counsel, any legal matter that could have
a significant impact on the Company's financial statements.
(4) Discuss the Company's major financial and accounting risk exposures
and steps taken by management to control or mitigate those
exposures.
(5) Review and approve all "related party transactions," as defined in
Item 404 of SEC Regulation S-K, involving directors, executive
officers and their respective affiliates and immediate family
members.
F. OTHER.
(1) Perform an annual self-assessment relative to the Audit Committee's
purpose, duties, and responsibilities set forth in this Charter.
(2) To the extent it deems appropriate, obtain advice and assistance
from outside legal, accounting, or other advisors to perform its
duties and responsibilities.
(3) Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
(4) Prepare the report that the SEC requires to be included in the
Company's annual Proxy Statement.
(5) At least annually, review and reassess the adequacy of this Charter
in light of changes in the law, governing rules, and applicable
corporate governance best practices.
19
APPENDIX B
UNIVERSAL FOREST PRODUCTS, INC.
POLICY REGARDING THE APPROVAL OF AUDIT SERVICES
AND PERMISSIBLE NON-AUDIT SERVICES PROVIDED
BY THE INDEPENDENT AUDITOR
I. PURPOSE. Section 10A of the Securities Exchange Act of 1934 and the Charter
of the Company's Audit Committee require that all audit services as well as
all non-audit services provided by the Company's auditors (the "Audit
Firm"), be pre-approved by the Company's Audit Committee. This policy sets
forth the guidelines and procedures to be followed by the Company prior to
the engagement of (a) any firm to provide audit services, and (b) the
Company's Audit Firm to perform audit and non-audit services.
II. PRE-APPROVAL REQUIREMENT:
A. GENERAL. Except as provided in Section II(B) below, each audit
engagement and each service provided by the Audit Firm, both audit and
non-audit (collectively a "Permitted Service"), must be pre-approved by
the Audit Committee or a Designated Member. The SEC rules allow the
pre-approval to be effected through the use of pre-approval policies and
procedures as long as (1) those policies and procedures are (a) detailed
as to the particular services to be provided, and (b) do not result in
the delegation of the Audit Committee's authority to management; and (2)
the Audit Committee is informed about each service. Each year, the
Committee will attach as appendices to this Policy the audit,
audit-related, tax, and all other services that have the general
pre-approval of the Audit Committee for that year. Any such pre-approval
(1) may be given not more than one year before the commencement of
specified services, (2) may not exceed the budgeted amount pre-approved
(unless subsequently approved), and (3) may not be given unless the
description of the services to be pre-approved is accompanied by
sufficient back-up documentation regarding the specific services to be
provided.
B. DELEGATION. Subject to the conditions in Section II(A) above, the Audit
Committee may delegate to one or more member(s) of the Audit Committee (a
"Designated Member"), the authority to grant pre-approvals of Permitted
Services to be provided by the Audit Firm or audit services provided by
any audit firm. The decisions of a Designated Member to pre-approve a
Permitted Service shall be reported to the Audit Committee at each of its
regularly scheduled meetings.
C. DE MINIMIS EXCEPTION. The pre-approval requirement set forth in Section
II(A) above will not apply to the provision of non-audit services
provided by the Company's Audit Firm if:
(1) The aggregate amount of all such non-audit services provided to the
Company represents not more than 5% of the total amount of revenues
paid by the Company to the Company's Audit Firm during the fiscal
year in which those services are provided;
(2) Those services were not recognized by the Company at the time of the
engagement to be non-audit services; and
(3) The services are promptly brought to the attention of the Audit
Committee and are approved by that Committee prior to the completion
of the audit for that year.
III.DISCLOSURES. The approval of all non-audit services to be performed by the
Audit Firm shall be disclosed in the Company's next periodic report
following such approval. In addition, the Company shall disclose in each
Proxy Statement filed in connection with Annual Meetings of Shareholders the
aggregate fees billed for (1) audit services, (2) audit-related services,
(3) tax services, and (4) all other services provided by the Audit Firm.
20
IV.PROHIBITED SERVICES. The Company may not engage the Audit Firm to provide the
non-audit services described below to the Company (the "Prohibited
Services").
A. Bookkeeping or other services related to the Company's accounting
records or financial statements.
B. Financial information systems design and implementation.
C. Appraisal or valuation services or fairness opinions.
D. Actuarial services.
E. Internal audit outsourcing.
F. Management functions or human resources.
G. Broker-dealer investment adviser, or investment banking services.
H. Legal services or expert services unrelated to the audit.
The list of Prohibited Services shall be automatically expanded to include
those services that are proscribed by rule by the Securities and Exchange
Commission.
V. AUDIT COMMITTEE REVIEW OF SERVICES. At each regularly schedule Audit
Committee meeting, the Audit Committee shall review the following:
- A report summarizing the Permitted Services, or grouping of related
services, including fees, provided by the Audit Firm since the last
meeting.
- A report summarizing the audit services and fees provided to the Company
by any firm.
- A listing of newly pre-approved Permitted Services (and estimated fees)
since its last regularly scheduled meeting.
- An updated projection for the current fiscal year, presented in a manner
consistent with the proxy disclosure requirements, of the estimated annual
fees to be paid to the Audit Firm.
VI.EFFECTIVE DATE. This policy is effective January 21, 2004.
21
ANNUAL MEETING OF SHAREHOLDERS OF
UNIVERSAL FOREST PRODUCTS, INC.
APRIL 21, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
\/ Please detach and mail in the envelope provided. \/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Directors to be Elected by Holders of Common Stock This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no
NOMINEES: direction is made, this Proxy will be voted FOR all nominees
[ ] FOR ALL NOMINEES O William G. Currie listed in Proposal 1.
O John M. Engler
[ ] WITHHOLD AUTHORITY O Philip M. Novell PLEASE SIGN, DATE AND RETURN PROMPTLY.
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual
----------- nominee(s), mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to withhold,
as shown here:
---------------------------------------------------------------
---------------------------------------------------------------
To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account
may not be submitted via this method. [ ]
Signature of Shareholder _____________________ Date: _______ Signature of Shareholder _________________________ Date: _______
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
UNIVERSAL FOREST PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter F. Secchia and Matthew J. Missad as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Universal Forest Products, Inc. held of record by the undersigned on
March 1, 2004 at the Annual Meeting of Shareholders to be held April 21, 2004,
and at any adjournment thereof.
(TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF SHAREHOLDERS OF
UNIVERSAL FOREST PRODUCTS, INC.
APRIL 21, 2004
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible. COMPANY NUMBER
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES from
any touch-tone telephone and follow the instructions. ACCOUNT NUMBER
Have your proxy card available when you call.
- OR -
INTERNET - Access "WWW.VOTEPROXY.COM" and follow the
on-screen instructions. Have your proxy card
available when you access the web page.
\/ Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. \/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Directors to be Elected by Holders of Common Stock This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
NOMINEES: made, this Proxy will be voted FOR all nominees listed in
[ ] FOR ALL NOMINEES O William G. Currie Proposal 1.
O John M. Engler
[ ] WITHHOLD AUTHORITY O Philip M. Novell PLEASE SIGN, DATE AND RETURN PROMPTLY.
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual
----------- nominee(s), mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to withhold,
as shown here:
---------------------------------------------------------------
---------------------------------------------------------------
To change the address on your account, please check the box
at right and indicate your new address in the address space
above. Please note that changes to the registered name(s) on
the account may not be submitted via this method. [ ]
Signature of Shareholder _____________________ Date: _______ Signature of Shareholder _________________________ Date: _______
NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.