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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
IKONICS CORPORATION
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
IKONICS CORPORATION
4832 GRAND AVENUE
DULUTH, MINNESOTA 55807
(218) 628-2217
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held at The Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at
1:00 p.m., Central Time, on April 28, 2005.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
about the Company.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. Please mark, date and sign the enclosed proxy and return
it in the accompanying envelope as quickly as possible, even if you plan to
attend the Annual Meeting. You may revoke the proxy and vote in person at that
time if you so desire.
Sincerely,
/s/ William C. Ulland
William C. Ulland
Chairman of the Board
March 25, 2005
IKONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2005
The Annual Meeting of Shareholders of IKONICS Corporation will be held at
The Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at 1:00 p.m.,
Central Time, on April 28, 2005 for the following purposes:
1. To elect six directors for a one-year term.
2. To ratify the selection of McGladrey & Pullen, LLP as IKONICS
Corporation's independent registered public accounting firm for the
year ending December 31, 2005.
3. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed March 10, 2005 as the record date for the
meeting, and only shareholders of record at the close of business on that date
are entitled to receive notice of and vote at the meeting.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU OWN
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING,
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING
POSTAGE-PAID REPLY ENVELOPE AS QUICKLY AS POSSIBLE. YOU MAY REVOKE YOUR PROXY AT
ANY TIME PRIOR TO ITS EXERCISE AND RETURNING YOUR PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING AND REVOKE THE PROXY.
By Order of the Board of Directors,
/s/ Jon Gerlach
Jon Gerlach
Secretary
Duluth, Minnesota
March 25, 2005
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of IKONICS
Corporation, a Minnesota corporation ("IKONICS" or the "Company"), for use in
connection with the Annual Meeting of Shareholders to be held on April 28, 2005
at The Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at 1:00
p.m., Central Time, and at any adjournments thereof. Only shareholders of record
at the close of business on March 10, 2005 will be entitled to vote at such
meeting or adjournment. Proxies in the accompanying form which are properly
signed, duly returned to the Company and not revoked will be voted in the manner
specified. A shareholder executing a proxy retains the right to revoke it at any
time before it is exercised by notice in writing to the Secretary of the Company
of termination of the proxy's authority or a properly signed and duly returned
proxy bearing a later date.
The address of the principal executive office of the Company is 4832 Grand
Avenue, Duluth, Minnesota 55807 and the telephone number is (612) 628-2217. The
mailing of this Proxy Statement and the Board of Directors' form of proxy to
shareholders will commence on or about March 25, 2005.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by the use of the mails, certain directors,
officers and employees of the Company may solicit proxies by telephone, regular
or electronic mail, or personal contact, and have requested brokerage firms and
custodians, nominees and other record holders to forward soliciting materials to
the beneficial owners of stock of the Company and will reimburse them for their
reasonable out-of-pocket expenses in so forwarding such materials.
The Common Stock of the Company, par value $.10 per share, is the only
authorized and issued voting security of the Company. At the close of business
on March 10, 2005 there were 1,942,745 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. Holders of Common Stock are
not entitled to cumulate their votes for the election of directors.
A plurality of the votes cast is required for election of the director
nominees listed under "Election of Directors" in this Proxy Statement. The
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the meeting and
entitled to vote is required to ratify the selection of the Company's
independent registered public accounting firm. A shareholder voting through a
proxy who abstains with respect to any matter is considered to be present and
entitled to vote on such matter at the meeting and is in effect a negative vote
with respect to the proposal relating to ratification of the Company's
independent registered public accounting firm. However, a shareholder (including
a broker) who does not give authority to vote, or withholds authority to vote,
on any proposal shall not be considered present and entitled to vote on such
proposal.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of February 20, 2005, the number of
shares of Common Stock beneficially owned by each person who is a beneficial
owner of more than 5% of the Common Stock issued and outstanding, by each
executive officer named in the Summary Compensation Table, by each director, and
by all officers and directors as a group. All persons have sole voting and
dispositive power over such shares unless otherwise indicated.
NAME AND ADDRESS NUMBER PERCENTAGE OF
OF BENEFICIAL OWNER(1) OF SHARES OUTSTANDING SHARES
------------------------------------------ ---------- ------------------
Directors and executive officers:
William C. Ulland 236,250(2) 12.01%
Charles H. Andresen 31,578(3) 1.62
Gerald W. Simonson 117,923(4) 6.05
David O. Harris 94,190(5) 4.83
Rondi Erickson 11,513(6) *
Leigh Severance 200,079(7) 10.29
Claude P. Piguet 23,175(8) 1.19
All directors and executive officers as 751,749(9) 36.24
a group (11 persons, including those
named above)
------------------
* Less than one percent.
(1) The address for each of the persons listed below in 4832 Grand Avenue,
Duluth, Minnesota 55807.
(2) Includes options to purchase 33,450 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(3) Includes options to purchase 16,543 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(4) Includes options to purchase 14,543 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(5) Includes options to purchase 16,943 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(6) Includes options to purchase 10,013 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(7) Includes options to purchase 10,013 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(8) Includes options to purchase 7,500 shares of Common Stock exercisable
within 60 days of February 20, 2005.
(9) Includes options to purchase 140,354 shares of Common Stock exercisable
within 60 days of February 20, 2005.
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ELECTION OF DIRECTORS
The business of the Company is managed under the direction of a Board of
Directors, with the number of directors fixed from time to time by the Board of
Directors. The Board of Directors has fixed at six the number of directors to be
elected to the Board at the 2005 Annual Meeting of Shareholders and has
nominated the six persons named below for election as directors, each to serve
for a one-year term. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the six nominees named below.
Each of the nominees is a current director of the Company and each has
indicated a willingness to serve as a director for the one-year term. In case
any nominee is not a candidate for any reason, the proxies named in the enclosed
form of proxy may vote for a substitute nominee in their discretion.
Following is certain information regarding the nominees for the office of
director:
William C. Ulland, age 64
Mr. Ulland is Chairman, President and Chief Executive Officer of the
Company. He was named IKONICS' Chief Executive Officer in February of 2000 and
President in December of 2000. He has been a member of the Company's Board of
Directors since 1972 and has served as its Chairman since 1976. Mr. Ulland
earned a degree in Geophysical Engineering from the Colorado School of Mines in
1963 and a Master of Science degree in Industrial Administration from Purdue
University in 1965. Prior to becoming the Company's Chief Executive Officer, he
was involved in mineral development and evaluation as Managing Partner of the
American Shield Company and President of Geomines Inc.
Charles H. Andresen, age 64
Mr. Andresen was elected as a director of the Company in 1979. Mr.
Andresen has been a shareholder in the law firm of Andresen & Butterworth, P.A.,
in Duluth, Minnesota for the past two years. Prior to being a shareholder in
Andresen & Butterworth, P.A., Mr. Andresen was a shareholder in the law firm of
Andresen, Haag, Paciotti, & Butterworth, P.A. in Duluth, Minnesota.
Gerald W. Simonson, age 74
Mr. Simonson was elected as a director of the Company in 1978. He has been
the President of Omnetics Connector Corporation, a manufacturer of
microminiature connectors for the electronics industry located in Minneapolis,
Minnesota, for more than the past five years.
David O. Harris, age 70
Mr. Harris was elected a director of the Company in 1965. He has been
President of David O. Harris, Inc., a manufacturer's representative firm in
Minneapolis, Minnesota, for more than the past five years.
3
Rondi Erickson, age 57
Ms. Erickson was elected as a director of the Company in 2000. She has
been the Chief Executive Officer and a director of Apprise Technologies Inc., a
company that develops and sells optical and electronic-based sensor
technologies, since October 1999. Prior to joining Apprise, in 1995, Ms.
Erickson founded American Science Corporation, a registered FDA manufacturing
establishment that provided contract manufacturing and research and development
support for a dental pharmaceutical company. Prior to founding American Science,
Ms. Erickson founded Bay West, Inc., an environmental services firm, in 1974 and
served as its Chief Executive Officer.
H. Leigh Severance, age 66
Mr. Severance was elected as a director of the Company in 2000. Mr.
Severance has over forty years investment experience as a portfolio manager and
security analyst with advisory organizations and a mutual fund, including his
own firm, Severance Capital Management, which was founded in 1984 to specialize
in micro and small capitalization companies and quantitative portfolio
management strategies. He also co-founded Jefferson Capital Management, a large
capitalization quantitative investment management company. Prior to 1984, Mr.
Severance was a portfolio manager with Cambiar Investors, H.L.Severance,Inc.,
Founders Asset Management, and J.M. Hartwell & Company. Mr. Severance received a
Masters in Business Administration from the University of Chicago in 1963. He
also serves on the Board of Directors of Lifeline Therapeutics, Inc. and two
private companies.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met four times during fiscal 2004. All incumbent
directors attended at least 75% of the meetings of the Board and of the
committees on which they served held during the periods for which they served as
a director. The Company currently has an Audit Committee and a Compensation
Committee.
The Board does not have a Nominating Committee, or any committee
performing such function. The Board believes that it is appropriate not to have
such a committee because of the role of the whole Board in evaluating
nominations of director candidates, and in light of the policy adopted by the
Board regarding nomination of director candidates. Each member of the Board of
Directors participates in the consideration of director nominees.
The following is a description of the functions performed by each of the
Committees:
Audit Committee
The Company's Audit Committee presently consists of Messrs. Simonson
(Chairman), Andresen and Harris, and Ms. Erickson. All of the members of the
Audit Committee are "independent" as that term is defined in the applicable
listing standards of The Nasdaq Stock Market. In addition, the Board of
Directors has determined that Mr. Simonson is an "audit committee financial
expert" as defined by applicable regulations of the Securities and Exchange
Commission. The Audit Committee provides assistance to the Board of Directors in
fulfilling their
4
duties relating to corporate accounting, reporting practices of the Company and
the quality and integrity of the Company's financial reports. Among other
things, the Audit Committee selects and appoints the Company's independent
registered public accounting firm, meets with the independent registered public
accounting firm and financial management to review the scope of the audit and
the audit procedures and reviews annually the responsibilities of the Audit
Committee and recommends to the Board of Directors any changes to these
responsibilities. The responsibilities of the Audit Committee are set forth in
the Audit Committee Charter, adopted by the Company's Board of Directors on
February 23, 2004. A copy the Audit Committee Charter was included as Exhibit A
to the Proxy Statement for the 2004 Annual Meeting of Shareholders. The Audit
Committee met four times during fiscal 2004.
Compensation Committee
The Company's Compensation Committee presently consists of Messrs.
Andresen (Chairman), Simonson and Harris. All of the members of the Compensation
Committee are "independent" as that term is defined in the applicable listing
standards of The Nasdaq Stock Market. The Compensation Committee annually
reviews and acts upon the compensation package for the Chief Executive Officer
and the Company's other executive officers, and sets compensation policy for the
other employees of the Company. In addition, the Compensation Committee acts
upon management recommendations concerning employee stock options, bonuses and
other compensation and benefit plans. The Compensation Committee also
administers the IKONICS Corporation 1995 Stock Incentive Plan. The
responsibilities of the Compensation Committee are set forth in the Compensation
Committee Charter, adopted by the Company's Board of Directors on February 23,
2004. The Compensation Committee met three times during fiscal 2004.
Director Compensation
Each non-employee director of the Company receives a quarterly retainer of
$1,500, plus per meeting fees of $1,000 for each meeting of the Board of
Directors attended in person, $450 for each meeting of the Board of Directors
attended by telephone, $450 for each committee meeting attended in person and
$200 for each committee meeting attended by telephone.
During 1998, each non-employee director of the Company who beneficially
owned not more than 5% of the Company's outstanding Common Stock received a
one-time grant of an option to purchase 4,950 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of grant and will expire seven years
from the date of grant.
On April 26, 1999, each non-employee director of the Company who
beneficially owned not more than 5% of the Company's outstanding Common Stock
received a one-time grant of an option to purchase 1,980 shares of the Company's
Common Stock under the 1995 Stock Incentive Plan. These options have an exercise
price equal to the fair market value on the date of the grant and will expire
seven years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 4,950 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire seven
years from the date of the grant.
5
On April 26, 2000, each non-employee director of the Company received a
one-time grant of an option to purchase 2,400 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of the grant and will expire five
years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 7,500 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire five
years from the date of the grant.
On April 24, 2001, each non-employee director of the Company received a
one-time grant of an option to purchase 3,263 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of the grant and will expire five
years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 9,000 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire five
years from the date of the grant.
On June 3, 2002, each non-employee director of the Company received a
one-time grant of an option to purchase 2,175 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of the grant and will expire five
years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 6,000 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire five
years from the date of the grant.
On April 24, 2003, each non-employee director of the Company received a
one-time grant of an option to purchase 2,175 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of the grant and will expire five
years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 6,000 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire five
years from the date of the grant.
SHAREHOLDER COMMUNICATION WITH THE BOARD OF DIRECTORS AND DIRECTOR ATTENDANCE AT
ANNUAL MEETINGS
The Board provides a process for shareholders to send communications to
the Board or any of the directors. Shareholders may send written communications
to the Board of Directors or specified individual directors by addressing their
communication to Chief Financial Officer, IKONICS Corporation, 4832 Grand
Avenue, Duluth, Minnesota 55807, by U.S. mail. The communications will be
collected by the Chief Financial Officer and delivered, in the form received, to
the Board or, if so addressed, to a specified director.
6
The Company does not have a formal policy regarding attendance by members
of the Board of Directors at the Company's Annual Meetings of Shareholders. The
Company has always encouraged its directors to attend its annual meeting of
shareholders and expects to continue this policy. In 2004, four Company
directors attended the Company's Annual Meeting of Shareholders.
PROCEDURES REGARDING DIRECTOR CANDIDATES RECOMMENDED BY SHAREHOLDERS
Nominations of director candidates are made by the Board as a whole, and
the Board has adopted a policy that contemplates shareholders recommending
director candidates. The Board of Directors is responsible for reviewing, on an
annual basis, the requisite skills and characteristics of individual Board
members, as well as the composition of the Board as a whole, in the context of
the needs of the Company. The Board will review all nominees for director and
select those nominees whose attributes it believes would be most beneficial to
the Company. This assessment will include such issues as experience, integrity,
competence, diversity, skills, and dedication in the context of the needs of the
Board.
The Board will consider director candidates recommended by shareholders in
the same manner that it considers all director candidates. Director candidates
must meet certain minimum qualifications established by the Board from time to
time, and the Board will assess the various director traits discussed above.
Shareholders who wish to suggest qualified candidates to the Board should write
to the Office of the Corporate Secretary of IKONICS Corporation, at 4832 Grand
Avenue, Duluth, Minnesota 55807, stating in detail the candidate's
qualifications for consideration by the Board.
REPORT OF THE AUDIT COMMITTEE
The role of the Company's Audit Committee, which is composed of four
independent non-employee directors, is one of oversight of the Company's
management and the Company's outside auditors in regard to the Company's
financial reporting and the Company's controls respecting accounting and
financial reporting. In performing its oversight function, the Audit Committee
relied upon advice and information received in its discussions with the
Company's management and independent registered public accounting firm.
On November 18, 2004, both the Audit Committee and the full Board of
Directors unanimously approved the retention of McGladrey & Pullen, LLP as the
Company's independent registered public accounting firm. The Audit Committee has
(i) reviewed and discussed the Company's audited financial statements for the
fiscal year ended December 31, 2004 with the Company's management; (ii)
discussed with the Company's independent registered public accounting firm the
matters required to be discussed by Statement on Auditing Standards No. 61
regarding communication with audit committees (Codification of Statements on
Auditing Standards, AU sec. 380); (iii) received the written disclosures and the
letter from the Company's independent registered public accounting firm required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees); and (iv) discussed with the Company's independent registered
public accounting firm the independent registered public accounting firm's
independence.
Based on the review and discussions with management and the Company's
independent registered public accounting firm referred to above, the Audit
Committee recommended to the Board
7
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Gerald W. Simonson, Chairman
Charles H. Andresen
David O. Harris
Rondi Erickson
PRINCIPAL ACCOUNTING FIRM FEES
The following table presents fees for professional audit services rendered
by McGladrey & Pullen, LLP for the audit of the Company's annual financial
statements for 2004, and fees billed for other services rendered by McGladrey &
Pullen, LLP and RSM McGladrey, Inc.
2004 2003
-------- -------
Audit Fees(1) $ 52,000 $41,000
Audit-Related Fees(2) 3,000 13,000
Tax Fees(3) 52,000 19,000
All Other Fees 0 0
-------- -------
Total $107,000 $73,000
======== =======
--------------
(1) Audit Fees in 2004 and 2003 consist of fees for professional services
rendered for the audit of the Company's financial statements and review of
financial statements included in the Company's quarterly reports
(2) Audit-Related Fees are fees principally for professional services rendered
for the agreed upon procedures performed during a 2003 fraud
investigation, accounting assistance throughout the year and
Sarbanes-Oxley compliance discussions.
(3) Tax Fees consists of compliance fees for the preparation of original and
amended tax returns. Tax fees for 2004 also include fees related to state
and local tax compliance advice.
The Audit Committee's current practice on pre-approval of services
performed by the independent registered public accounting firm is to approve
annually all audit services and, on a case-by-case basis, all permitted
non-audit services to be provided by the independent registered public
accounting firm during the fiscal year. The Audit Committee reviews each
non-audit service to be provided and assesses the impact of the service on the
auditor's independence. In addition, the Audit Committee may pre-approve other
non-audit services during the year on a case-by-case basis.
8
EXECUTIVE OFFICERS
Following is certain information regarding the current executive officers
of the Company other than William C. Ulland:
Jon Gerlach, age 38
Mr. Gerlach was named Chief Financial Officer on August 5, 2003.
Previously he served as the Finance Manager for Sappi Limited - Cloquet. Prior
to working for Sappi, Mr. Gerlach served in various positions with Potlatch's
Minnesota Pulp and Paper Division from 1994 to 2002. His most recent position at
Potlatch was the Division Manager of Business Planning. Mr. Gerlach has also
worked as a Financial Analyst with Maurices Incorporated and with Ernst & Young
LLP in their audit department. Mr. Gerlach earned a Masters in Business
Administration from the University of Minnesota - Duluth in 2001 and a Bachelors
in Accounting from St. John's University in 1989.
Claude P. Piguet, age 47
Mr. Piguet was named Executive Vice President on December 19, 2000.
Previously, he was the Company's Vice President of Operations beginning in May
1994. He was the Company's Director of Operations from January 1992 to May 1994.
Mr. Piguet joined the Company in 1990 and holds a diploma of Engineer ETS/HTL
from the Ecole D'Ingenieurs de l'Etat de Vaud in Switzerland.
Toshifumi Komatsu, age 50
Mr. Komatsu has been the Company's Vice President of Technology since
September 1993. Previously, he served as the Company's Director of Research and
Development for two years. Mr. Komatsu has been with the Company's Research and
Development Department for 15 years. His prior experience includes positions in
research and development at Alberta Gas Chemicals, a manufacturer of organic
acids. He received a B.S. in Chemistry and Mathematics from the College of Saint
Scholastica in 1980.
Robert D. Banks, Jr., age 53
Mr. Banks has been the Company's Vice President of International Sales
since February 1997. Previously, he was the Company's Director of International
Sales and Marketing from 1989 to 1997. His prior experience includes positions
with Marshall and Ilsley Bank, H & H Exports and the Boy Scouts of America. He
received a B.A. in both Economics and Environmental Studies from Northland
College in 1976.
Parnell Thill, age 40
Mr. Thill has been the Company's Vice President of Marketing since January
2005. Previously, he served as the Company's Marketing Director beginning in
2001. Prior to joining IKONICS, Mr. Thill worked as a marketing executive at The
Stanley Works in the Industrial Tools Division. Mr. Thill earned a Masters in
Business Administration from St. Thomas University in 2001, a Bachelors in
Education from the University of Minnesota - Duluth in 1991, and a Bachelors in
English from St. John's University in 1987.
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
for the fiscal years ended December 31, 2004, 2003 and 2002 provided to the
Chief Executive Officer and the other executive officer who received
remuneration exceeding $100,000 during 2004 (the "Named Executive Officers").
None of the Company's other executive officers received remuneration exceeding
$100,000 in 2004.
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION -----------------
---------------- SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
-------------------------------- ---- -------- ------ ----------------- ---------------
William C. Ulland, 2004 $155,000 $9,519 0 $8,223
Chairman, President and Chief 2003 149,000 4,109 6,000 7,450
Executive Officer 2002 144,200 0 6,000 7,210
Claude P. Piguet, 2004 $105,000 $6,346 0 $5,585
Executive Vice President 2003 101,900 2,740 3,000 5,050
2002 97,900 0 3,000 4,895
---------------
(1) Represents options to purchase Common Stock granted under the Company's
1995 Stock Incentive Plan.
(2) Represents the Company's contribution to its salary deferral plan adopted
under Section 401(k) of the Internal Revenue Code.
10
The Company did not make any grants of stock options to The Named
Executive Officers during fiscal 2004.
AGGREGATE OPTION
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The purpose of the following table is to report the exercise of stock
options by the Named Executive Officers during fiscal 2004 and the value of
their unexercised stock options as of December 31, 2004.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------- ----------- ----------- ------------- ----------- -------------
William C. Ulland - - 33,450 - $ 118,354 -
Claude P. Piguet 6,300 $ 12,295(2) 7,500 3,000 $ 34,492 $ 14,633
---------------
(1) Value is based on the difference between the per share closing price of
the Company's Common Stock on December 31, 2004 ($7.35) and the exercise
price of the options.
(2) Value is based on the difference between the per share closing price of
the Company's Common Stock on the date of exercise and the exercise price.
EMPLOYMENT CONTRACTS; TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company does not have any employment or non-competition agreements
with any members of its executive management team, but has entered into
confidentiality and non-solicitation agreements with such persons. Such
agreements provide that the executive will not solicit any other employee of the
Company to leave the Company during the executive's employment with the Company
and for one year following such employment, will not compete with the Company
during the executive's employment and will protect the proprietary information
of the Company during and following such executive's employment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors, executive officers and
persons who own more than ten percent of the Company's Common Stock file initial
reports of ownership of the Company's Common Stock and changes in such ownership
with the Securities and Exchange Commission. To the Company's knowledge based
solely on a review of copies of forms submitted to the Company during and with
respect to fiscal 2003 and on written representations from the Company's
directors and executive officers, all required reports were filed on a timely
basis during fiscal 2003.
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rondi Erickson, one of the Company's directors, is the Chief Executive
Officer and a director of Apprise Technologies, Inc. ("Apprise"). In 2004, the
Company exercised previously-issued warrants to purchase shares of Apprise's
common stock for an aggregate exercise price of $85,000. As of March 15, 2005,
the Company's ownership of Apprise's common and preferred stock represented
approximately 4.95% of the outstanding shares of Apprise.
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected McGladrey & Pullen, LLP to serve as the
Company's independent registered public accounting firm for the fiscal year
ending December 31, 2005. It is the judgement of the Audit Committee that
McGladrey & Pullen, LLP has and will conduct its affairs in an appropriate
manner and warranted selection as the Company's independent registered public
accounting firm. While it is not required to do so, the Board of Directors is
submitting the selection of McGladrey & Pullen, LLP for ratification in order to
ascertain the views of the Company's shareholders on this selection. If the
selection is not ratified, the Audit Committee will reconsider its selection.
A representative of McGladrey & Pullen, LLP will be present at the Annual
Meeting of Shareholders and will be afforded an opportunity to make a statement
if such representative so desires and will be available to respond to
appropriate questions during the meeting.
ADDITIONAL MATTERS
The Annual Report of the Company for the year ended December 31, 2004,
including financial statements, is being mailed with this Proxy Statement.
Shareholder proposals intended to be presented at the 2006 Annual Meeting
of Shareholders must be received by the Company at its principal executive
office no later than December 1, 2005 for inclusion in the Proxy Statement for
that meeting. Any other shareholder proposal must be received by the Company at
its principal executive office no later than January 31, 2006 in order to be
presented at the 2006 Annual Meeting of Shareholders.
As of the date of this Proxy Statement, management knows of no matters
that will be presented for determination at the meeting other than those
referred to herein. If any other matters properly come before the Annual Meeting
calling for a vote of shareholders, it is intended that the shares of Common
Stock represented by the proxies solicited by the Board of Directors will be
voted by the persons named therein in accordance with their best judgment.
12
By Order of the Board of Directors,
/s/ Jon Gerlach
Jon Gerlach
Secretary
Dated: March 25, 2005
13
IKONICS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 28, 2005
1:00 P.M., LOCAL TIME
THE KITCHI GAMMI CLUB
831 E. SUPERIOR STREET
DULUTH, MINNESOTA
IKONICS CORPORATION
4832 GRAND AVENUE, DULUTH, MN 55807 PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 28, 2005.
The shares of stock you hold in your account will be voted as you specify on the
reverse side.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint William C. Ulland
and Jon Gerlach, and each of them, with full power of substitution, to vote your
shares on the matter shown on the reverse side and any other matters which may
come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
HOW TO VOTE YOUR PROXY
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to IKONICS Corporation, c/o Shareowner Services,
P.O. Box 64873, St. Paul, MN 55164-0873.
- Please detach here -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors: 01 Charles H. Andresen 04 William C. Ulland [ ] Vote FOR [ ] Vote WITHHELD
02 David O. Harris 05 Rondi C. Erickson all nominees from all nominees
03 Gerald W. Simonson 06 H. Leigh Severance (except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDICATED NOMINEE, WRITE THE NUMBER(S)
OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) [ ]
2. Ratification of the selection of McGladrey
& Pullen, LLP as IKONICS Corporation's
independent registered public accounting
firm for the year ending December 31, 2005. [ ] For [ ] Against [ ] Abstain
3. In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting, or any adjournments or
postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes
below: Date _______________, 2005
[ ]
Signature(s) in Box (If there
are co-owners, each must
sign.)
Please sign exactly as your
name(s) appear on Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should
include title and authority.
Corporations should provide
full name of corporation and
title of authorized officer
signing the proxy.