SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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only (as permitted by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ocean Bio-Chem, Inc.
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(4) Date Filed:
OCEAN BIO-CHEM, INC.
4041 S. W. 47 Avenue
Fort Lauderdale, Florida 33314
April 22, 2005
To our Stockholders:
I am pleased to invite you to attend the Annual Meeting of Stockholders of
Ocean Bio-Chem, Inc. to be held on Thursday, June 1, 2005 at 10:00 a.m. at the
Company's corporate offices located at 4041 S. W. 47 Avenue, Fort Lauderdale,
Florida 33314.
Details regarding admission to the meeting and the business to be conducted
are more fully described in the accompanying Notice of Annual Meeting and Proxy
Statement.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual
Meeting in person, you are requested to complete, date, sign and return the
enclosed proxy card in the enclosed envelope. If you attend the Annual Meeting,
you may vote in person if you wish, even if you previously returned your proxy
card.
We appreciate your support and continued interest in Ocean Bio-Chem, Inc.
Sincerely,
/s/ PETER G. DORNAU
-----------------------
Peter G. Dornau
Chief Executive Officer
OCEAN BIO-CHEM, INC.
4041 S. W. 47 Avenue
Fort Lauderdale, Florida 33314
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Stockholders:
Our Annual Meeting of Stockholders of the Company will be held on Thursday,
June 1, 2005 at 10:00 a.m. at our corporate offices located at 4041 S. W. 47
Avenue, Fort Lauderdale, Florida 33314 for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Shareholders or until their successors shall be elected and qualified;
2. To approve and ratify grants of the Company's restricted common stock
previously issued to employees as compensation;
3. To approve and ratify the amendment made on March 25, 2004 of certain
stock options granted to Messrs. Dornau and Tieger;
4. To ratify the appointment of Levi, Cahlin & Co. as our independent
certified public accountants for the year ending December 31, 2005;
5. To transact such other and further business as may properly come before
the meeting.
Only shareholders of record at the close of business on April 8, 2005 are
entitled to notice of and to vote at the Annual Meeting or any postponements or
adjournments thereof.
Whether or not you plan to attend the Annual Meeting in person, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person if
you wish, even if you previously returned you proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE AND IN FAVOR OF
EACH PROPOSAL.
By Order of the Board of Directors
/s/ PETER G. DORNAU
-----------------------
Peter G. Dornau
Chief Executive Officer
Fort Lauderdale, Florida
April 22, 2005
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
To Be Held June 1, 2005
General
We are providing these proxy materials in connection with the solicitation
by the Board of Directors of Ocean Bio-Chem, Inc. of proxies to be voted at our
Annual Meeting of Shareholders and at any postponement or adjournment of this
meeting. Our Annual Meeting will be held on June 1, 2005 at the offices of Ocean
Bio-Chem, Inc. located at 4041 S.W. 47th Avenue, Ft. Lauderdale, Florida 33314.
In this proxy statement, Ocean Bio-Chem, Inc. is referred to as the "Company",
"we"' "our" or "us".
Our principal executive offices are located at 4041 S.W. 47th Avenue, Ft.
Lauderdale, Florida 33314. Our proxy statement and the accompanying proxy card
are first being mail to our shareholders on or about April 29, 2005.
Outstanding Securities and Voting Rights
Only holders of record of our common stock at the close of business on
April 8, 2005, the record date, will be entitled to notice of, and to vote at
the, the Annual Meeting. On that date, we had 5,689,816 shares of our common
stock issued and outstanding. Each share of common stock is entitled to one vote
at the Annual Meeting. However, an aggregate of 710,500 of these shares are not
entitled to vote until we obtain shareholder approval of these grants. Please
see Proposal 2. Ratification of Stock Grants Previously Issued to Employees as
Compensation on page 14 of this Proxy Statement.
A majority of the outstanding shares of common stock present in person or
represented by proxy constitutes a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker "non-votes" are counted as present and
entitled to vote for purposes of determining whether a quorum exists. A "broker
non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received voting instructions
from the beneficial owner.
In tabulating the voting results for any proposal, shares that constitute
broker non-votes are not considered entitled to vote on that proposal. Thus,
broker non-votes will not affect the outcome of any matter being voted on at the
meeting assuming a quorum is obtained. Abstentions will have the same effect as
a vote against a proposal.
Proxy Voting
Shares for which proxy cards are properly executed and returned will be
voted at the Annual Meeting in accordance with the directions given or, in the
absence of directions, will be voted "FOR" Proposal 1- the election of each of
the seven nominees to the Board named herein, "FOR" Proposal 2 - the
ratification of stock grants previously issued to our employees as compensation,
"FOR" Proposal 3 - the ratification of the amendment on March 25, 2004 of
certain stock options granted to Peter G. Dornau and Jeffrey J.Tieger and "FOR"
Proposal 4 - the ratification of Levi, Cahlin & Co. as our independent certified
public accountants. If, however, other matters are properly presented, the
person named in the proxies in the accompanying proxy card will vote in
accordance with their discretion with respect to such matters.
The manner in which your shares may be voted depends on how your shares are
held. If you own shares of record meaning that your shares of common stock are
represented by certificates in your name so that you appear as a stockholder on
the records of our transfer agent, Registrar & Transfer Company, a proxy card
for voting those shares will be included within this Proxy Statement. You may
vote those shares by completing, signing and returning the proxy card in the
enclosed envelope.
If you own shares in street name, meaning that your shares of common stock
are held by a bank or brokerage firm, you may instead receive a voting
instruction form with this Proxy Statement that you may use to instruct your
bank or brokerage firm how to vote your shares. As with a proxy card, you may
vote your shares by completing, signing and returning the voting instruction
form in the envelope provided.
2
All votes will be tabulated by Inspector of Elections appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. A list of the stockholders entitled to vote at
the Annual Meeting will be available at the Company's office, 4041 S.W. 47th
Avenue, Fort Lauderdale, FL 33314 for a period of ten (10) days prior to the
Annual Meeting for examination by any stockholder
Attendance and Voting at the Annual Meeting
If you own common stock of record, you may attend the Annual Meeting and
vote in person, regardless of whether you have previously voted by proxy card.
If you own common stock in street name, you may attend the Annual Meeting but in
order to vote your shares at the meeting, you must obtain a "legal proxy" from
the bank or brokerage firm that holds your shares. You should contact your bank
or brokerage account representative to learn how to obtain a legal proxy. We
encourage you to vote your shares in advance of the Annual Meeting by one of the
methods described above, even if you plan on attending the Annual Meeting. If
you have already voted prior to the meeting, you may nevertheless change or
revoke your vote at the Annual Meeting in the manner described below.
Revocation
If you own common stock or record, you may revoke a previously granted
proxy at any time before it is voted by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting any person. Any stockholder
owning common stock in street name may change or revoke previously granted
voting instructions by contacting the bank or brokerage firm holding the shares
or by obtaining a legal proxy from such bank or brokerage firm and voting in
person at the Annual Meeting.
MANAGEMENT
The following tables set forth the name and ages of our elected directors
and officers of the Company, as of April 15, 2005.
Name Office Age
----------------- ------------------------------------------ -----
Peter G. Dornau President, Chief Executive Officer and 65
Director
Edward Anchel Vice President-Finance, Chief Financial 58
Officer and Director
Jeffrey J. Tieger Vice President - Advertising and Marketing, 61
Secretary and Director
William W. Dudman Vice President-Operations 40
James M. Kolisch Director 53
Laz L. Schneider Director 66
John B. Turner Director 57
Sonia B. Beard Director 34
Peter G. Dornau is our co-founder and has served as our President, CEO and
Chairman of Board of Directors since 1973.
Edward Anchel joined our company as Vice President-Finance and Chief
Financial Officer in March 1999. For the five years immediately preceding his
employment, he was an officer of a privately owned manufacturing company and in
private practice as a Certified Public Accountant. He was initially elected to
serve as an outside Director of the Company in May 1998.
Jeffrey J. Tieger joined our company in June 1977 as our Vice
President-Advertising and has served in that position through the present date.
William W. Dudman joined our company in April 2004 as our Vice
President-Operations. For the five years immediately preceding his employment he
had held various management positions within the marine industry, most recently
with West Marine, Inc., our largest customer from May 1999 to April 2004.
3
James M. Kolisch joined our Board of Directors as an outside director in
May 1998. Mr. Kolisch has been engaged in the insurance industry and served as
president of USI Florida, or its predecessor company, an entity that sources
most of the our insurance needs, for a period of approximately twenty-five
years. Mr. Kolisch serves on the Board of Directors' Audit Committee.
Laz L. Schneider is, and has for the past five years, been an attorney in
private practice with the law firm of Berger Singerman, P.A. and was elected to
serve as an outside Director of the Company during May 1998. Mr. Schneider is a
partner at Berger, Singerman, P.A., a law firm that serves as our lead counsel
in various corporate and litigation matters.
John B. Turner joined our Board of Directors in June 2002. During the past
five years, Mr. Turner has been retired. Prior to his retirement, he was an
insurance executive. In addition to his insurance credentials, Mr. Turner holds
a Series 7 stock brokerage license. His professional experience in the
aforementioned areas spans in excess of twenty-five years. Mr. Turner serves on
the Board of Directors' Audit Committee.
Sonia B. Beard is a Florida Certified Public Accountant working for Walt
Disney World since 1997. She currently holds the position as the Manager of
Concept Development for the Revenue Lines of Business of Walt Disney World. Ms.
Beard has in excess of twelve years financial experience. She is an outside
director and serves as the Chairperson and Financial Expert of the Board of
Directors' Audit Committee.
All directors will serve until the next annual meeting of shareholders or
until their successors are duly elected and qualified. Each officer serves at
the discretion of the board of directors. There are no arrangements or
understandings between any of the officers or directors of our Company and the
Company or any other persons pursuant to which any officer or director was or is
to be selected as a director or officer.
CORPORATE GOVERNANCE AND RELATED MATTERS
The Board meets regularly during the year to review matters related to our
company and to act on matters requiring Board approvals. All persons who were
serving as directors during fiscal 2004 attended at least 75% of the aggregate
of the meetings of the Board and committees of which they were members. Our
Board of Directors held two (2) meetings during the year ended December 31,
2004, at which all the directors were present. We have a standing Audit
Committee and our nominating committee consists of our entire Board of
Directors. We do not have a separate compensation committee.
Audit Committee
The Audit Committee assists the Board in fulfilling its oversight
responsibility relating to our financial statements and financial reporting
process, the qualifications, independence and performance of our independent
auditors, the performances of our internal audit functions and our compliance
with legal and regulatory requirements. The members of the Audit Committee
during fiscal 2004 were Sonia B. Beard, our Chairperson, James M. Kolisch, and
John B. Turner. The Board has designated Sonia B. Beard as the "audit committee
financial expert," as defined by Item 401(h) of Regulation S-K of the Securities
Exchange Act of 1934.The shareholders ratified a charter for the Audit Committee
at our Annual Meeting of Shareholders held on June 9, 2000. On March 24, 2004,
the Board of Directors adopted a Restated Audit Committee Charter.
The Audit Committee met three times since last year's Annual Meeting of
Shareholders. We believe that all members of the Audit Committee are
independent, as defined in Rule 4200(a)(15) of the NASDAQ listing standards.
Nominating Committee
Our entire Board of Directors serves as our Nominating Committee. Our
Nominating Committee is responsible for identifying individuals qualified to
become members of the Board of Directors, and nominating persons for election as
directors at the annual meeting of shareholders and the persons to fill any
vacancies on the Board.
4
Directors are not required to meet any specific or minimum qualifications.
The Board attempts to identify persons who have the requisite experience and
expertise to be an asset to our Company.
The Board will consider nominees for the Board of Directors recommended by
shareholders. Nominations by shareholders must be in writing, must include the
full name of the proposed nominee, a brief description of the proposed nominee's
business experience for at least the previous five years, and a representation
that the nominating shareholder is a beneficial or record owner of our common
stock. Any such submission must also be accompanied by the written consent of
the proposed nominee to be named as a nominee and to serve as a director if
elected. Nominations must be delivered to the Board at the following address:
Board of Directors
Ocean Bio-Chem, Inc.
4041 SW 47th Avenue
Fort Lauderdale, Florida 33314-4023
The Board of Directors is required to review the qualifications and
backgrounds of all directors and nominees (without regard to whether a nominee
has been recommended by shareholders), as well as the overall composition of the
Board of Directors, and recommend a slate of directors to be nominated for
election at the annual meeting of shareholders, or, in the case of a vacancy on
the Board of Directors, elect a director to fill such vacancy.
Controlled Company Status
NASDAQ marketplace rules require that the board of directors of NASDAQ
listed companies consist of a majority of directors who are independent within
the meaning of the rules. The rules also impose additional independence
requirements on members of certain committees of the Board. The Company has
determined that, except with respect to the required independence of members of
the Audit Committee, it is exempt from the application of these rules as a
"controlled company," as defined in the rules. The Company believes it qualifies
as a controlled company under NASDAQ rules because more than 50% of the voting
power of its capital stock is held by a single group, consisting of Peter G.
Dornau and his son, Gregor M. Dornau.
Directors' Compensation
During fiscal 2004, our employee directors did not receive any additional
or special compensation for serving as directors. Our non-employee directors
received equity compensation for their services in fiscal 2004. Each outside
director received a grant of options to acquire 10,000 shares of our common
stock at an exercise price of $1.46 per share, the fair market value of the
underlying shares on the date of grant. These options are immediately
exercisable and expire on May 24, 2014.
Compliance with Section 16(a) of the Securities Exchange Act
Based solely on reviews of Forms 3 and 4 furnished to us by the
aforementioned individuals, it was determined that no reporting person failed to
file a timely submission of ownership changes and that we were in compliance
with Rule 16(a)3(e) of the Exchange Act during our most recent fiscal year.
EXECUTIVE COMPENSATION
The following table sets forth the amount of compensation for the fiscal
years ended December 31, 2004, 2003, and 2002 for Peter G. Dornau and each of
our executive officers, whose compensation exceeded $100,000 on an annual basis
(the "Named Officers").
5
SUMMARY COMPENSATION TABLE
Long term compensation
----------------------
Annual compensation Restricted
Name and -------------------------------- Stock Options/
Principal Position Year Salary Bonus Awards SARs
---------------------- ---- -------- ------- ---------- ------
Peter G. Dornau, CEO 2004 $108,450 $13,000 $21,875(1) 50,000
2003 $109,000 $12,000 $15,750(2) 25,000
2002 $109,000 - $16,275(3) 25,000
Edward Anchel, CFO 2004 $ 96,900 $13,000 $21,875(1) 50,000
2003 $100,400 $12,000 $15,750(2) 25,000
2002 $100,400 - $27,300(3) 25,000
(1) Represents the aggregate value on the date of grant of a restricted
stock award made on April 1, 2004 with respect to 35,000 shares of the Company's
common stock awarded each individual based on the closing price on that date.
(2) Represents the aggregate value on the date of grant of a restricted
stock award made on June 16, 2003 with respect to 35,000 shares of the Company's
common stock awarded each individual based on the closing price on that date.
(3) Represents the aggregate value on the date of grant of a restricted
stock award made on March 1, 2002 with respect to 31,000 and 52,000 shares of
the Company's common stock issued to Mr. Dornau and Mr. Anchel, respectively,
based on the closing price on that date.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning all options granted
to our officers and directors during the year ended December 31, 2004.
Potential Realizable Value at
Percent of Assumed Annual Rates of Stock
Shares Total Options Price Appreciation for Option
Underlying Granted to Exercise Term (2)
Options Employees in Price Expiration --------------------
Name Granted(1) Fiscal Year Per Share Date 5% 10%
---------------- ----------- ----------- --------- ---------- ------ ------
Peter J. Dornau 25,000(3) 6.1% $1.62 04/07/09 7,139 $20,676
25,000(3) 6.1% $1.16 10/26/09 4,627 $13,401
Edward Anchel 25,000(3) 6.1% $1.78 04/07/09 11,189 $24,726
25,000(3) 6.1% $1.05 10/26/09 7,252 $16,026
------- ----- -------- -------
Total 100,000 24.4% $30,2070 $74,829
======= ===== ======== =======
(1) Options were granted pursuant to the 1994 and 2002 Stock Option Plans.
Options granted to Mr. Anchel were equal to the fair market value of the
Company's common stock on the date of grant. Options granted to Mr. Dornau were
equal to 110% of the fair market value of the Company's common stock on the date
of grant.
(2) The dollar amounts under these columns are the result of calculations
based on the market price on the date of grant at an assumed annual rate of
appreciation over the maximum term of the option at 5% and 10% as required by
applications regulations of the SEC and therefore, are not intended to forecast
possible future appreciation, if any of the common stock price. Assumes all
options are exercised at the end of their respective terms. Actual gains, if
any, on stock option exercises depend on the future performance of the common
stock.
6
(3) Twenty percent of the options are exercisable on first anniversary of
the date of grant and an additional 20% are exercisable on each anniversary
thereafter with the last 20% exercisable at maturity.
Aggregate Option Exercises in Fiscal 2004 and Option Values
The following table sets forth information as to the exercise of stock
options during the fiscal year ended December 31, 2004, by our officers listed
in our Summary Compensation Table and the fiscal year-end values of unexercised
options.
Shares Number of options/SAR's Value of in-the-money options/
acquired Value at end of fiscal year SAR's at end of fiscal year (1)
Name by exercise Realized exercisable unexercisable exercisable unexercisable
--------------- ----------- -------- ----------- ------------- ----------- -------------
Peter G. Dornau 46,200 $ 24,180 164,000 81,500 $ 51,150 $ 2,900
Edward Anchel 75,075 39,395 48,500 81,500 13,100 3,900
------- -------- ------- ------- -------- --------
121,275 $ 63,575 212,500 163,000 $ 64,250 $ 6,800
======= ======== ======= ======= ======== =======
(1) The value of unexercised "in-the-money" options at December 31, 2004
was calculated by determining the difference between $1.10, the fair market
value of the underlying Common Stock at December 31, 2004 and the option price.
An option is "in-the-money' when the fair market value of the underlying Common
Stock exceeds the exercise price of the option.
Stock Option Plans
We have three stock options plans: our 1994, and 2002 Incentive Stock
Option Plans (the "1994 Plan", and "2002 Plan") and the 2002 Non-Qualified Stock
Option Plan. All of our employees are eligible to be selected to participate in
our 1994 and 2002 Qualified Plans and in our 2002 Non-Qualified Stock Option
Plan. The Plans are administered by the Board of Directors, which selects
individuals to be participants and determines the type and number of awards to
be granted. Our 1992 Incentive Stock Option Plan was terminated during April,
2002. However, as of April 15, 2005, we have 165,000 options outstanding under
this 1992 Incentive Stock Option Plan.
The option price for stock options granted under all Plans is stipulated to
be not less than the fair market value of Common Stock on the date of grant and
the term of each option is fixed by the Committee. Options become exercisable as
determined by the Board of Directors.
Other Benefits
We provide our executive officers and employees with group health,
hospitalization and life insurance plans. We also maintain a SAR/SEP Savings
Plan and a 401(k) savings plan which are sponsored by two of our subsidiaries,
Star brite Distributing, Inc. and Kinpak Inc., respectively. Both plans are
non-contributory by us and are entirely funded by employee contributions.
7
Securities authorized for issuance at December 31, 2004
under equity compensation plans:
Number of securities to Weighted average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance under
warrants & rights warrants & rights equity compensation plans
------------------------- -------------------- -------------------------
Equity compensation plans approved by
security holders:
Stock options granted (1) 600,000 $1.29 165,000
Equity compensation plans not approved
by security holders:
Stock options and restricted
stock awards (2), (3) and (4) 723,500 $0.95 -
--------- ----- -------
Total equity compensation plans
approved and not approved by
security holders 1,323,500 $1.10 165,000
========= ===== =======
(1) Includes 320,000 options granted under the 2002 Qualified Incentive
Stock Option Plan, 115,000 options under the 2002 Non-Qualified Stock Option
Plan and 165,000 options under the 1992 Qualified Incentive Stock Option Plan.
(2) Includes 352,000 options granted under the 1994 Non-Qualified Stock
Option Plan.
(3) Includes 231,000 options granted to Messrs. Peter G. Dornau and Jeffrey
J. Tieger in conjunction with a loan made to the Company by and entity 50% owned
by each of them. The modification of the maturity date of these options in March
2004 is subject to shareholder ratification. Please see Proposal 3. Ratification
of Modification of Stock Options previously granted to Messrs. Dornau and Tieger
on page 15 of this Proxy Statement
(4) Includes140,500 shares of restricted common stock awarded to officers
and other employees outside of our stock option plans.
During April 2004 we issued 140,500 shares of our common stock bearing a
restricted legend to certain officers and other key employees as a component of
their compensation. At the date of grant the shares had a market value of $1.25
each. Shares were awarded as follows:
Officers:
Peter G. Dornau, President and CEO 35,000 shares
Edward Anchel, Vice President and CFO 35,000 shares
Jeffrey J. Tieger, Vice President and Secretary 20,000 shares
William Dudman, Vice President 16,000 shares
-------
106,000 shares
Other employees, as a group (7 individuals) 34,500 shares
-------
Total restricted shares awarded 140,500 shares
=======
The restricted stock awarded to these officers and employees is subject to
shareholder ratification. Please see Proposal 2. Ratification of Stock Grants
Previously Issued to Employees as Compensation on page 4 of this Proxy
Statement.
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REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
Executive Compensation Policy
The Board of Directors (the "Committee") is responsible for setting the
policies and approving our practices in compensating our executive officers. In
carrying out its responsibility in 2004, the Committee considered the following:
-our financial performance;
-our policies and practices for compensation of employees generally;
-our historical philosophy to reward according to merit, commitment to,
and performance of, the Company.
In furtherance of this philosophy, the compensation of our executives
generally consists of three components: base salary, annual cash incentives and
long-term performance-based incentives.
Base Salaries
The base salary of our executives is designed to be competitive with base
salaries paid to executives with similar responsibilities and consist with the
salaries paid in the applicable geographical areas.
Incentive Cash Bonuses
Generally, we award cash bonuses to our management employees and other
employees, based on their personal performance in the past year and overall
performance of our company. Our Board of Directors established a bonus pool for
fiscal 2004 and awarded bonuses to executives and other employee from this bonus
pool.
Long Term Compensation - Stock Option Grants
We have utilized stock options to motivate and retain executive officers
and other employee for the long-term. We believe that stock options closely
align the interests of our executive officers and other employees with those of
our shareholders and provide a major incentive to building stockholder value.
Options are typically granted annually, and are subject to vesting provisions to
encourage officers and employees to remain employed with the Company.
The number of stock options granted to an executive is determined by the
Board of Directors and depends principally upon an individual's level of
responsibility within the Company and performance by the individual. Since stock
options are granted at the average market price on the date of grant and have
value only if the market price on the underlying common stock increases, and
since the exercisability of options vests over a five (5) year period after the
grant date, the Board of Directors believes stock options provide an appropriate
long-term incentive for those receiving grants, as well as stability in the work
force. In addition we, from time to time, award direct grants of our restricted
common stock to encourage stock ownership and retention of common stock by
employees.
Relationship between our Compensation Policies and Corporate Performance
We believe that our executive compensation policies correlate with our
corporate performance. Our stock options are usually granted at a price equal to
or above the fair market value of our common stock on the date of grant. As
such, our officers only benefit from the grant of stock options if our stock
price appreciates. Generally, we try to tie bonus payments to our Company's
financial performance. However, if an individual has made significant
contributions to our company, we will provide them with a bonus payment for
their efforts even if our company's financial performance has not been strong.
9
Compensation of Chief Executive Officer
Peter G. Dornau served as our Chief Executive Officer during fiscal 2004.
He received a base salary of $108,450, a bonus of $13,000 and restricted stock
valued at $21,875. He also received an aggregate of 50,000 stock options. Mr.
Dornau's compensation is determined annually based on the Company's financial
and operational performance for the preceding year.
Performance Comparisons
The following chart compares our Annual Shareholder Return for the five
years ended December 31, 2004 to the cumulative total shareholder return of (a)
the NASDAQ market US stocks, and (b) the Industry Index, which is the NASDAQ
Non-Financial Stocks index. This graph will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or under the
Securities Act of 1934, except to the extent that we specifically incorporate it
by reference, and will not otherwise be deemed to be soliciting material or to
be filed under such Acts.
We believe that no single peer index or peer company is totally comparable
to our business. The peer indices used to compare total shareholder return
include companies which supply to diverse markets. Some of our direct
competitors are divisions that represent small portions of companies and are not
included in the peer comparisons since information is not available to us to
show those divisions separately from the parent.
Chart to be inserted in paper filings
Cumulative Annual Return for Five Years
-----------------------------------------------------------
1999 2000 2001 2002 2003 2004
------ ----- ------ ------ ------ -----
Ocean Bio-Chem, Inc. 100.00 63.13 122.05 123.74 143.10 92.59
NASDAQ US 100.00 60.31 47.84 33.07 49.45 53.81
NASDAQ Non-financial 100.00 58.33 44.61 29.14 44.61 48.12
10
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of April 8, 2005 (record date for
shareholder voting at Annual Meting of Shareholders), information concerning
beneficial ownership of our common stock by:
-all directors of the Company;
-all executive officers of the Company;
-persons known to own more than 5% of our common stock;
Unless otherwise indicated, the address for each person is Ocean Bio-Chem,
Inc., 4041 S.W. 47th Avenue, Ft. Lauderdale, FL 33314. As of April 8, 2005, we
had 5,689,816 shares of our common stock issued and outstanding. As used herein,
the term beneficial ownership with respect to a security is defined by Rule
13d-3 under the Securities Exchange Act of 1934 as consisting of sole or shared
voting power (including the power to vote or direct the vote) and/or sole or
shared investment power (including the power to dispose or direct the
disposition of) with respect to the security through any contract, arrangement,
understanding, relationship or otherwise, including a right to acquire such
power(s) during the next 60 days. Unless otherwise noted, beneficial ownership
consists of sole ownership, voting and investment rights.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- ---------
Peter G. Dornau, President, CEO, 3,133,828 (1)(2) 49.57%
Chairman Board of Directors
Fort Lauderdale, FL 33317
Edward Anchel, Vice President-Finance, 274,451 (3) 4.34%
CFO, Director
Boynton Beach, FL 33437
Jeffrey J. Tieger, 380,780 (4) 6.02%
Vice President-Advertising,
Secretary, Director
Plantation, FL 33314
William W. Dudman, Vice President 34,300 .54%
Plantation, FL 33317
James M. Kolisch, Director 46,167 (5) .73%
Coral Gables, FL 33114
Laz L. Schneider, Director 30,000 (6) .47%
Fort Lauderdale, FL 33305
John B. Turner, Director 47,463 (7) .75%
Miami, FL 33186
Sonia B. Beard, Director 20,000 (8) .32%
Merritt Island, FL 32952
--------- ------
All directors and officers as a group 3,966,989 62.74%
8 individuals
========= ======
(1) Includes 164,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(2) Includes 176,960 shares owned by Gregor M. Dornau (son) with power to
vote or direct the vote given to Peter G. Dornau.
(3) Includes 48,500 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(4) Includes 164,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(5) Includes 30,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(6) Includes 30,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(7) Includes 30,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
(8) Includes 20,000 shares that are issuable upon the exercise of stock
options within 60 days of April 8, 2005.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 1, 1998, we entered into a ten-year lease for approximately 12,700
square feet of office and warehouse facilities in Fort Lauderdale, Florida from
an entity fifty percent owned each by Messrs. Peter G. Dornau and Jeffrey J.
Tieger, our President and Vice President-Advertising, respectively. The lease
required a minimum rental of $94,800 the first year and provides for a maximum
2% increase on the anniversary of the lease throughout the term. Additionally,
the landlord is entitled to collect from us its pro-rata share of all taxes,
assessments, insurance premiums, operating charges, maintenance charges and any
other expenses, which normally arise from ownership. We believe that the terms
of this lease are comparable to those of similar properties in the same
geographic area of the Company available from unrelated third parties. Rent
charged to operations during the years ended December 31, 2004, 2003 and 2002
amounted to approximately $100,500 each year. We acquired the rights to the Star
brite(R) trademark and related products for the United States and Canada in
conjunction with our original public offering during March 1981. Peter G.
Dornau, our president is the direct or beneficial owner of three companies that
market Star brite(R) products outside the United States and Canada. These
companies serve as distributors of our products and the terms of payment are the
same as for our other customers. At December 31, 2004 and 2003, we had amounts
due from affiliated companies, which are directly or beneficially owned by our
president aggregating approximately $408,500 and $172,900, respectively. Sales
of Star brite products to such affiliates aggregated approximately $616,800,
$373,600 and $317,100 during the years ended December 31, 2004, 2003 and 2002,
respectively. A subsidiary of ours currently uses the services of an entity that
is owned by our president to conduct product research and development. Such
entity received $30,000 per year during the years ended December 31, 2004, 2003
and 2002 under such relationship. On March 25, 1999, we granted Messrs. Peter G.
Dornau and Jeffrey J. Tieger a five-year option for 115,500 shares each, as
adjusted for our stock dividend distributions of 2000 and 2002, at an exercise
price of $.76 representing the market price at the time of grant. Such grants
were awarded in consideration of their making a loan to us in the amount of
$400,000 from an affiliated company in which they are each 50% co-shareholders.
On March 25, 2004, we amended these options for an additional five years to
expire on March 25, 2009.
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for assisting the Board in monitoring
(1) the quality and integrity of our financial statements, (2) our compliance
with regulatory requirements and (3) the independence and performance of our
independent auditors. Among other responsibilities, the Audit Committee reviews,
in its oversight capacity, our annual financial statement with both management
and the independent auditors and meets periodically with our independent
auditors to consider their evaluation of our financial and internal controls.
The Audit Committee also recommends to the Board of Directors the selection of
the company's independent certified public accountants. The Audit Committee is
composed of three directors and operates under a written charter adopted and
approved by the Board of Directors. During 2004, all of the Audit Committee
members were non-employee directors and were independent as defined by the
NASDAQ listing standards in effect during 2004. The members of the Audit
Committee during 2004 were Sonia B. Beard, James M. Kolisch, and John B. Turner.
Mrs. Beard served as the Chairperson of the Audit Committee.
In discharging its duties during 2004, the Audit Committee met with and
held discussions with management and our independent auditors, Berkovits, Lago &
Company, LLP and Levi, Cahlin and Co. Management represented to the independent
auditors that our audited financial statements were prepared in accordance with
generally accepted accounting principles. The Audit Committee also discussed
with our auditors the matters required to be discussed by Statement on Auditing
Standards No. 61, "Communications with Audit Committees." In addition, our
auditors, provided the Audit Committee with the written disclosures and the
letter required by Independence Standards Board Standard No. 1, "Independence
Discussion with Audit Committees," and the Audit Committee discussed with our
auditors their independence.
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Based on the above-mentioned review and discussions with management and the
independent auditors, the representations of management and the report of the
independent auditors to our committee, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004.
Audit Committee - submitted on March 23, 2005
Sonia B. Beard, Chairperson
James M. Kolisch
John B. Turner
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PROPOSALS TO THE SHAREHOLDERS
PROPOSAL 1. ELECTION OF DIRECTORS
The seven persons set forth alphabetically below, each of whom is currently
a director, are proposed to be re-elected as directors at the Annual Meeting. If
elected, each of these directors will hold office until the next Annual Meeting
of Stockholders in the year 2006 or until his or her successor is duly elected
and qualified.
Edward Anchel
Sonia B. Beard
Peter G. Dornau
James M. Kolisch
Laz L. Schneider
Jeffrey J. Tieger
John B. Turner
All of the nominees are currently serving as directors. Each nominee has
agreed to be named in this Proxy Statement and to serve as a director if
elected. For biographical information regarding the nominees, see "Management"
on pages 3-4 of this Proxy Statement. Management expects that each nominee will
be available for election, but if any of them is not a candidate at the time of
the election occurs, it is intended that such proxy will be voted for the
election of another nominee to be designated by the Board of Directors to fill
such vacancy.
Vote Required and Recommendation
The seven nominees for election to the Board of Directors who receive a
majority of votes cast, in person or by proxy, shall be elected directors.
Shareholders do not have the right to cumulate their votes for directors. In the
election of directors, an abstention or broker non-vote will have no effect on
the outcome. The Board recommends stockholders to vote "FOR" each of the
nominees for director set forth above.
PROPOSAL 2. RATIFICATION OF STOCK GRANTS PREVIOUSLY ISSUED TO
EMPLOYEES AS COMPENSATION
The Company's Board of Directors has previously granted stock as
compensation to certain employees in fiscal 2005, 2004, 2003, 2002, 2001 and
2000. An aggregate of 768,500 shares were granted as compensation in lieu of
cash. Officers of the Company received 546,000 of these shares as follows:
Employee 2005 2004 2003 2002 2001 2000
------------------- ------ ------ ------ ------- ------ -------
Peter G. Dornau 30,000 35,000 35,000 31,000 41,000 31,000
Edward Anchel 30,000 35,000 35,000 52,000 27,000 17,000
Jeffrey J. Tieger 15,000 20,000 20,000 17,000 27,000 17,000
William Dudman 15,000 16,000 - - - -
------ ------- ------ ------- ------ ------
Total 90,000 106,000 90,000 100,000 95,000 65,000
====== ======= ====== ======= ====== ======
On April 11, 2005, the Company was advised by The NASDAQ Stock Market that
it had failed to comply with Marketplace Rule 4350(i)(1)(a) which required
shareholder approval of these stock grants. The Company is submitting all of
these grants for approval and ratification by the shareholders of its Company.
Vote Required and Recommendation
The ratification of the stock awards previously granted to the Company's
employees as compensation requires the affirmative vote of the holders of a
majority of shares of the Company's common stock, present in person or by proxy
at the annual meeting. The Board recommends shareholders to vote "FOR" the
ratification of the stock grants previously issued to the Company's employees as
compensation.
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PROPOSAL 3. RATIFICATION OF MODIFICATION OF STOCK OPTIONS PREVIOUSLY
GRANTED TO MESSRS. DORNAU AND TIEGER
On March 25, 1999, the Company granted a five-year option for 115,000
shares to each of Messrs. Dornau and Mr. Tieger as consideration for advancing
$400,000 to the Company in the form of a loan. The exercise price of the options
was $.76 per share. This grant of options was not prohibited under Rule
4350(i)(1)(a) which was in effect at that time. During April, 2004, Mr. Dornau
and Mr. Tieger agreed to extend the term of the loan for five years and as
consideration for this extension, the Company modified the options to extend the
maturity date for five years in consideration for such loan extension.
On April 11, 2005, the Company was advised by The NASDAQ Stock Market that
its modification of the terms of the option in 2004 had failed to comply with
Marketplace Rule 4350(i)(1)(a) which required shareholder approval of this
modification. The Company is submitting this modification of the options for
approval and ratification by the shareholders of its Company.
Vote Required and Recommendation
The ratification of the amendment of the stock options granted to Messrs.
Dornau and Tieger requires the affirmative vote of the holders of a majority of
shares of the Company's common stock, present in person or by proxy at the
annual meeting. The Board recommends shareholders to vote "FOR" the ratification
of the amendment of the stock options granted to Messrs. Dornau and Tieger.
PROPOSAL 4. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We are asking our shareholders to ratify the Audit Committee's appointment
of Levi, Cahlin & Co. as our independent certified public accountants for the
year ending December 31, 2005. In the event the shareholders fail to ratify the
appointment, the Audit Committee will reconsider this appointment. Even if the
appointment is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent auditing firm at any time during the year
if the Audit Committee determines that such a change would be in our company and
our shareholders' best interests.
We engaged Levi, Cahlin & Co. as our independent auditor on December 23,
2004 and Levi, Cahlin & Co. audited our consolidated financial statements for
the year ended December 31, 2004. Representatives of Levi, Cahlin & Co. are
expected to be present at the meeting and will have the opportunity to make a
statement if they desires to do so. It is also expected that they will be
available to respond to appropriate questions.
Principal Accountant Fees and Services
The following is a summary of the fees billed to the Company by Levi,
Cahlin & Co. and our former auditors, Berkovits, Lago & Company, LLP and charged
to operations during the years ended December 31:
Fee Category 2004 2003
------------------ ------- -------
Audit Fees $42,900 $40,300
Audit Related Fees - -
Tax Fees - -
All Other Fees - -
------- -------
Total Fees $42,900 $40,300
======= =======
Audit Fees. Consists of fees billed for professional services rendered for
the audit of the Company's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by Levi, Cahlin & Co. and Berkovits, Lago &
Company, LLP in connection with statutory and regulatory filings or engagements.
15
Audit-Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's consolidated financial statements and are not reported under
"Audit Fees." These services include employee benefit plan audits, accounting
consultations in connection with acquisitions, attest services that are not
required by statute or regulation, and consultations concerning financial
accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state and international tax compliance, tax audit defense,
customs and duties, mergers and acquisitions, and international tax planning.
All Other Fees. Consists of fees for products and services other than the
services reported above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The Audit Committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditors and management are
required to periodically report to the Audit Committee regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.
Vote Required and Recommendation
The ratification of the selection of Levi, Cahlin & Co., as our independent
certified public accountants for the year ending December 31, 2005, requires the
affirmative vote of the holders of a majority of shares of the Company's common
stock, present in person or by proxy at the annual meeting. The Board
recommends shareholders to vote "FOR" the ratification of the selection of Levi,
Cahlin & Co. as our independent auditors for the year ended December 31, 2005.
Previous Independent Auditors
On December 15, 2004, we dismissed Berkovits, Lago & Company, LLP
("Berkovits"). The decision to change accountants was approved by our Audit
Committee. As of December 15, 2004, we did not have any change or disagreement
with Berkovits with respect to the preparation of our financial statements for
the two (2) most recent years contained in our Annual Report on Form 10-K for
the year ended December 31, 2004.
The report of Berkovits on our financial statements for fiscal 2003, fiscal
2002 and all subsequent interim periods, did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles for fiscal 2003, fiscal 2002 and all subsequent
interim periods. Furthermore, Berkovits did not advise us that:
1) internal controls necessary to develop reliable financial statements did
not exist, or
2) information had come to the attention of Berkovits which made in
unwilling to rely upon management's representations or made it unwilling to be
associated with the financial statement prepared by management, or
3) the scope of the audit should be expanded significantly, or information
had come to the attention of Berkovits that they concluded will, or if further
investigated might, materially impact the fairness or reliability of a
previously issued audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal periods
subsequent to December 31, 2003 (including information that may prevent it from
rendering an unqualified audit report on those financial statements) or made in
unwilling to rely on management's representations or to be associated with the
financial statements prepared by management or,
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4) information has come to the attention of Berkovits that they have
concluded will, or if further investigated might, materially impact the fairness
or reliability of a previously issued audit report or the underlying financial
statements or the financial statements issued or to be issued covering the
fiscal periods subsequent to December 31, 2003 through December 15, 2004, the
date of the Form 8-K filing reporting our change in accountants, that had not
been resolved to the satisfaction of Berkovits or which would have prevented
Berkovits from rendering an unqualified audit report on such financial
statements.
During fiscal 2003, fiscal 2002 and all subsequent interim periods, there
were no disagreements with Berkovits on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which,
if not resolved to the satisfaction of Berkovits would have caused it to make
reference to the subject matter of the disagreements in connection with its
reports on these financial statements for those periods.
ANNUAL REPORT ON FORM 10-K
We are mailing copies of our Annual Report on Form 10-K for the year ended
December 31, 2004 with this proxy statement to our shareholders of record as of
April 8, 2005.
STOCKHOLDERS SHARING THE SAME LAST NAME AND ADDRESS
We have adopted a procedure approved by the SEC called "householding."
Under this procedure, certain stockholders of record who have the same address
and last name and don't participate in electronic delivery of proxy materials
will receive only one copy of our Annual Report, Proxy Statement and any
additional proxy soliciting materials sent to stockholders until such time as
one or more of these stockholders notifies us that they wish to continue
receiving individual copies. This procedure will reduce duplicate mailings and
save printing costs and postage fees, as well as natural resources. Stockholders
who participate in householding will continue to receive separate proxy cards.
If you received a householded mailing this year, and you would like to have
additional copies of our Annual Report and Proxy Statement mailed to you, please
submit your request to Corporate Secretary, Ocean Bio-Chem, Inc., 4041 SW 47
Avenue, Fort Lauderdale, FL 33314, or call (954) 587-6280. Upon your request, we
will promptly deliver a separate copy of our Annual Report and Proxy Statement.
You may also contact us at the address or phone number above if you received
multiple copies of the annual meeting materials and would prefer to receive a
single copy in the future. If you would like to opt out of householding for
future mailings, call 1 (954) 587-6280 or send a written request to the
Corporate Secretary at the above address, and your request will be effective
within 30 days.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Under SEC rules, any stockholder who intends to present a proposal at our
next Annual Meeting of Stockholders must submit the proposal, in writing, so
that we receive it at our principal executive office by January 1, 2006 in order
for the proposal to be included in our Proxy Statement and proxy for such
meeting. The submission of a stockholder proposal does not guarantee that it
will be included in our Proxy Statement. We reserve the right to reject, rule
out of order or take other appropriate action with respect to any proposal that
does not comply with these and other applicable requirements.
OTHER MATTERS
As of the date of this Proxy Statement, we are not aware of any matter to
be presented for action at the meeting other than the matters set forth above.
If any other matter is properly brought before the meeting for action by
shareholders, proxies in the enclosed form returned to us will be voted in
accordance with the recommendation of the Board of Directors, or in the absence
of such a recommendation, in accordance with the judgment of the proxy holders.
Fort Lauderdale, Florida
April 22, 2005
17
OCEAN BIO-CHEM, INC.
4041 S. W. 47 Avenue
Fort Lauderdale, Florida 33314
Proxy for Annual Meeting of Shareholders on June 1, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Shareholder of Ocean Bio-Chem, Inc. hereby appoints Peter
G. Dornau and Jeffrey J. Tieger, and each of them as proxies of the undersigned,
with full power of substitution and revocation, to represent the undersigned and
to vote and otherwise represent all of the shares of the Common Stock of Ocean
Bio-Chem, Inc. which the undersigned is entitled to vote at our Annual Meeting
of Shareholders to be held on June 1, 2005 at 10:00 a.m., local time, and at any
adjournments thereof, with the same effect as if the undersigned were present
and voting the shares, on the following matters and in the following manner.
1. The election of the following persons as directors of our Company to
serve until the next annual meeting of shareholders or until their successors
shall be elected and shall qualify:
Name:
Peter G. Dornau For / / Withhold Authority / /
Edward Anchel For / / Withhold Authority / /
Jeffrey J. Tieger For / / Withhold Authority / /
Laz L. Schneider For / / Withhold Authority / /
James M. Kolisch For / / Withhold Authority / /
John B. Turner For / / Withhold Authority / /
Sonia B. Beard For / / Withhold Authority / /
The Board of Directors recommends a vote "FOR" Proposal 2 below.
2. Ratification of restricted stock grants previously issued to employees
as compensation.
For / / Against / / Abstain / /
The Board of Directors recommends a vote "FOR" Proposal 3 below.
3. Ratification of modification of stock options previously granted to
Messrs. Dornau and Tieger.
For / / Against / / Abstain / /
The Board of Directors recommends a vote "FOR" Proposal 4 below.
4. The approval, adoption and ratification of the selection by the Board of
Directors of Levi, Cahlin & Co., Certified Public Accountants, as our Auditors
for the year ending December 31, 2005. For / / Against / / Abstain / /
5. To vote or otherwise represent the shares on any other business or on
other matters which should properly come before the meeting or any adjournments
thereof according to their decision or according to the decision of the majority
of them.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE AND THE PROXY IS RETURNED
SIGNED, THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED "FOR" ITEMS (1),
(2), (3) AND (4) ABOVE.
Unless specifically indicated, the execution of this proxy is an
acknowledgment of the receipt of the Notice of Annual Meeting of Shareholders,
Annual Report and Proxy Statement.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as Attorney, as Executor, Administrator,
Trustee or Guardian, please give full title as such. If a company, please sign
in full corporate name by President or other authorized officer. If partnership,
please sign in partnership name by authorized person. PLEASE SIGN, DATE AND
RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Dated , 2005 By
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