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)(1) 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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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 24, 2008.
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
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William C. Ulland
Chairman of the Board
March 20, 2008
IKONICS CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2008
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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 24, 2008 for the following purposes:
1. To elect six directors for a one-year term.
2. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed March 6, 2008 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 20, 2008
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PROXY STATEMENT
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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 24, 2008
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 6, 2008 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 20, 2008.
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 6, 2008 there were 2,057,311 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. 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. 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 29, 2008, 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 248,030(2) 12.06%
Charles H. Andresen 26,289(3) 1.28
Gerald W. Simonson 112,973(4) 5.50
David O. Harris 89,042 4.34
Rondi Erickson 13,098 *
Leigh Severance 175,079(5) 8.53
Claude P. Piguet 21,675(6) 1.06
Jon Gerlach 11,250(7) *
All directors and executive officers (11 709,826(8) 34.18
persons, including those named above)
Additional Beneficial Owners > 5%
Joseph R. Nerges 307,079(9) 14.97
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* Less than one percent.
(1) The address for each of the persons listed below is 4832 Grand Avenue,
Duluth, Minnesota 55807, except for Mr. Nerges, whose address is 1726 Bundy
Street, Scranton, Pennsylvania 18508.
(2) Includes options to purchase 6,000 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(3) Includes options to purchase 2,175 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(4) Includes options to purchase 2,175 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(5) Includes options to purchase 2,175 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(6) Includes options to purchase 3,000 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(7) Includes options to purchase 11,250 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(8) Includes options to purchase 27,774 shares of Common Stock exercisable
within 60 days of February 29, 2008.
(9) Based solely on information contained in filings made by Mr. Nerges with
the Securities and Exchange Commission on or prior to February 29, 2008.
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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 2008 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.
All nominees for director, except for Mr. Ulland, meet the independence
requirements of The Nasdaq Stock Market, the stock exchange on which the
Company's shares trade.
Following is certain information regarding the nominees for the office of
director:
William C. Ulland, age 67
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 67
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 four 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 77
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 73
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.
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Rondi Erickson, age 60
Ms. Erickson was elected as a director of the Company in 2000. She is the
co-owner of Nokomis Restaurant & Bar in Duluth, Minnesota. From October 1999 to
February 2006, she was the Chief Executive Officer and a director of Apprise
Technologies Inc., a company that develops and sells optical and
electronic-based sensor technologies. 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 68
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 two private companies.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met four times during fiscal 2007. 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, a Compensation
Committee and a Nominating Committee.
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, Harris, Severance 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 the Board's 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
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February 23, 2004. A copy the Audit Committee Charter was included as Exhibit A
to the Proxy Statement for the 2007 Annual Meeting of Shareholders. The Audit
Committee met four times during fiscal 2007, once each quarter.
Compensation Committee
The Company's Compensation Committee presently consists of Messrs. Andresen
(Chairman), Simonson, Harris, Severance and Ms. Erickson. 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 a 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. Pursuant to the Compensation Committee Charter,
the Committee has authority to delegate any of its responsibilities to
subcommittees as the Committee may deem appropriate, provided that the
subcommittees are composed entirely of independent directors. A copy of the
Compensation Committee Charter was included as Exhibit B to the Proxy Statement
for the 2007 Annual Meeting of Shareholders. The Compensation Committee met
three times during fiscal 2007.
Nominating Committee
The Company's Nominating Committee presently consists of Ms. Erickson
(Chairperson) and Messrs. Andresen, Simonson, Harris and Severance. All of the
members of the Nominating Committee are "independent" as that term is defined in
the applicable listing standards of The Nasdaq Stock Market. The purposes of the
Nominating Committee are to identify individuals qualified to become Board
members and to approve director-nominees to be considered for election by
shareholders and for election by the Board to fill any vacancy or newly created
directorship. The responsibilities of the Nominating Committee are set forth in
the Nominating Committee Charter, which is regularly reviewed on at least an
annual basis and is included as Exhibit A to this Proxy Statement. The
Nominating Committee was established by the Board of Directors on February 20,
2008 and therefore there were no Nominating Committee meetings during fiscal
2007.
The Nominating Committee has established a policy with regard to the
consideration of any director candidates recommended by the Company's
shareholders. The Nominating Committee will consider director candidates
recommended by a Company shareholder provided that the shareholder sends the
Company a written notice received by the Secretary of the Company that (i)
states the name and address of the shareholder identifying the candidate as that
information appears on the Company's books and records and the number of shares
of the Company owned by the recommending shareholder and (ii) provides the
following information about the candidate:
1. name, age, and business and residential addresses;
2. principal occupation or employment;
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3. number of shares of the Company beneficially owned;
4. statement of the person's citizenship; and
5. any other information that must be disclosed about nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including the candidate's written consent to
be named as a nominee and to serve as a director if elected).
The Company may require any proposed candidate to furnish such other
information as may reasonably be required by the Nominating Committee to
determine the eligibility of the proposed nominee to serve as a director.
Provided a shareholder satisfies the requirements described above, the
Nominating Committee will consider director candidates recommended by
shareholders in the same manner that it considers all other director candidates.
All director candidates must meet certain minimum qualifications established by
the Nominating Committee from time to time, and the Nominating Committee will
assess the experience, integrity, competence, diversity, skills, and dedication
to the Company of all director candidates. Shareholders who wish to suggest
qualified candidates should write to the Office of the Corporate Secretary of
IKONICS Corporation, at 4832 Grand Avenue, Duluth, Minnesota 55807, stating the
information described above and any other relevant details concerning the
candidate's qualifications for consideration by the Nominating Committee.
Director Compensation
As of January 1, 2007, each non-employee director of the Company received 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. At the April
26, 2007 board meeting, the Company's standard non-employee director
compensation arrangements were changed to a quarterly retainer of $2,000, plus
per meeting fees of $2,000 for each meeting of the Board of Directors. Fees are
not paid for committee meetings. From time to time, the Company's non-employee
directors have been awarded options to purchase the Company's Common Stock under
the 1995 Stock Incentive Plan and Mr. Ulland has been awarded stock options
under such plan in connection with his position as Chairman, President and Chief
Executive Officer. No such grants of stock options have been made since 2003.
The following table sets forth the total compensation paid to each director for
fiscal 2007. Mr. Ulland did not receive separate compensation for his service as
a director during fiscal 2007.
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DIRECTOR COMPENSATION
NAME FEES EARNED OR PAID IN CASH TOTAL
------------------- --------------------------- -------
Charles H. Andresen $13,500 $13,500
Gerald W. Simonson $13,500 $13,500
David O. Harris $13,500 $13,500
Rondi Erickson $13,500 $13,500
H. Leigh Severance $12,950 $12,950
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.
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 2007, five Company
directors attended the Company's Annual Meeting of Shareholders.
REPORT OF THE AUDIT COMMITTEE
The role of the Company's Audit Committee, which is composed of five
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 with respect to 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.
At the Annual Meeting of Shareholders of IKONICS Corporation on April 26,
2007, the shareholders ratified the selection of McGladrey & Pullen, LLP as the
Company's independent registered public accounting firm as proposed by the Audit
Committee and full Board of Directors. The Audit Committee has (i) reviewed and
discussed the Company's audited financial statements for the fiscal year ended
December 31, 2007 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, as amended, regarding
communication with audit committees (Codification of Statements on Auditing
Standards, AU sec. 380); (iii) received the
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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 that 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 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, 2007 for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE
Gerald W. Simonson, Chairman
Charles H. Andresen
David O. Harris
Rondi Erickson
Leigh Severance
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 2007 and 2006, and fees billed for other services rendered by
McGladrey & Pullen, LLP and their affiliate RSM McGladrey, Inc. for those years.
2007 2006
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Audit Fees(1) $77,500 $65,500
Audit-Related Fees(2) 5,185 7,400
Tax Fees(3) 13,950 20,180
All Other Fees 0 0
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Total $96,635 $93,080
======= =======
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(1) Audit Fees in 2007 and 2006 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 procedures performed relating to implementation of FIN 48 and
potential acquisition discussions.
(3) Tax Fees consist of compliance fees for the preparation of tax returns. Tax
fees for 2007 and 2006 include $950 and $5,950 of tax consulting related to
state and local tax issues, respectively.
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
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Committee may pre-approve other non-audit services during the year on a
case-by-case basis.
EXECUTIVE OFFICERS
Following is certain information regarding the current executive officers
of the Company other than William C. Ulland:
Claude P. Piguet, age 50
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.
Jon Gerlach, age 41
Mr. Gerlach was named Chief Financial Officer, Vice President Finance and
Secretary 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 B.S. in Accounting from St. John's University in 1989.
Toshifumi Komatsu, age 53
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 over 16 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 56
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 43
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
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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.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
for the fiscal years ended December 31, 2007 and December 31, 2006, provided to
the Chief Executive Officer and the two other most highly compensated executive
officers who received remuneration exceeding $100,000 during fiscal 2007 and
2006 (the "Named Executive Officers").
NON-EQUITY
INCENTIVE PLAN ALL OTHER
SALARY COMPENSATION COMPENSATION TOTAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
--------------------------- ---- ------- -------------- ------------ -------
William C. Ulland 2007 195,000 19,063 10,703 224,766
Chairman, President
and Chief Executive Officer 2006 180,000 22,370 10,119 212,489
Claude P. Piguet 2007 119,000 12,708 6,585 138,293
Executive Vice
President 2006 113,000 14,913 6,396 134,309
Jon Gerlach 2007 110,000 6,354 5,818 122,172
Chief Financial
Officer and Vice President 2006 102,000 7,457 5,473 114,930
Finance
The Company has not entered into employment agreements with any of the
Named Executive Officers. The amounts portrayed in the table above under "All
Other Compensation" represent the Company's contribution to its salary deferral
plan adopted under Section 401(k) of the Internal Revenue Code. The Company's
executive officers are eligible to participate in our 401(k) contributory
defined contribution plan. In any plan year, the Company will contribute to each
participant 5% of the participant's compensation into the 401(k) plan. All of
the Named Executive Officers participated in the 401(k) plan during fiscal 2007
and 2006 and received contributions.
Amounts shown in the "Non-Equity Incentive Plan Compensation" column
represent payments pursuant to the Company's bonus program for the applicable
fiscal year. Under the program, executive officers were eligible to receive cash
bonuses equal to a percentage of the year's bonus pool. The fiscal 2007 and
fiscal 2006 bonus pools were set at 10% of the amount by which net income before
income taxes (as adjusted for unusual items of income or expense) ("EBT") for
the applicable fiscal year exceeded the EBT target for that fiscal year. For
fiscal 2007 and fiscal 2006, Mr. Ulland was eligible to receive a bonus equal to
30% of the pool, and Mr. Piguet, the Company's Executive Vice President, was
eligible to receive a bonus equal to 20% of the pool. Each of the Company's
other executive officers was eligible to receive bonuses equal to 10% of the
pool for each year. The Committee did not allocate 10% of the pool in either
year.
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The Company did not make any grants of stock options to the Named Executive
Officers during fiscal 2007 or fiscal 2006.
OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END
The purpose of the following table is to provide information concerning
unexercised options and equity incentive plan awards outstanding as of the end
of fiscal 2007 for each Named Executive Officer. All of these options are vested
in full.
OPTION AWARDS
----------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
NAME OPTIONS (#) EXERCISABLE OPTION EXERCISE PRICE ($) OPTION EXPIRATION DATE
----------------- ----------------------- ------------------------- ----------------------
William C. Ulland 6,000 $2.93 4/24/2008
Claude P. Piguet 3,000 $2.67 4/24/2008
Jon Gerlach 11,250 $3.36 8/5/2008
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to the Company's
Common Stock that may be issued under its 1995 Stock Incentive Plan as of
December 31, 2007. The 1995 Stock Incentive Plan is the only equity compensation
plan of the Company in existence as of December 31, 2007 and has been approved
by the Company's shareholders.
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO BE AVAILABLE FOR FUTURE ISSUANCE
ISSUED UPON EXERCISE OF WEIGHTED-AVERAGE EXERCISE UNDER EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, PRICE OF OUTSTANDING (EXCLUDING SECURITIES REFLECTED
PLAN CATEGORY WARRANTS AND RIGHTS OPTIONS, WARRANTS AND RIGHTS IN COLUMN 1)
------------- -------------------------- ---------------------------- -------------------------------
Equity compensation plans
approved by shareholders 52,622 $4.03 56,173
Equity compensation plans not
approved by shareholders -- -- --
------ ----- ------
Total 52,622 $4.03 56,173
====== ===== ======
11
EMPLOYMENT CONTRACTS; TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company does not have any employment agreements with any members of its
executive management team, but has entered into confidentiality and
non-competition agreements with such persons. These agreements generally 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 two years
following such employment, will not compete with the Company during the
executive's employment and for one year thereafter, 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 2007 and on written representations from the Company's
directors and executive officers, all required reports were filed on a timely
basis during fiscal 2007 except for the following reports and transactions: (1)
Rondi Erickson failed to timely file one report covering two transactions and
(2) Charles H. Anderson failed to timely file one report covering one
transaction.
ADDITIONAL MATTERS
The Annual Report of the Company for the year ended December 31, 2007,
including financial statements, is being mailed with this Proxy Statement.
Shareholder proposals intended to be presented at the 2009 Annual Meeting
of Shareholders must be received by the Company at its principal executive
office no later than November 20, 2008 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, 2009 in order to be
presented at the 2009 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.
By Order of the Board of Directors,
/s/ Jon Gerlach
-----------------------------------
Jon Gerlach
Secretary
Dated: March 20, 2008
12
EXHIBIT A
IKONICS CORPORATION
NOMINATING COMMITTEE CHARTER
PURPOSE
The purposes of the Nominating Committee (the "Committee") of the board of
directors (the "Board") of IKONICS Corporation (the "Company") are to:
- identify individuals qualified to become Board members, and
- approve director-nominees to be considered for election by shareholders and
for election by the Board to fill any vacancy or newly created
directorship.
ORGANIZATION AND COMMITTEE MEMBERSHIP
The Committee will be composed of at least two directors, all of whom satisfy
the definition of "independent" under the listing standards of the Nasdaq Stock
Market. The Committee members will be appointed by the Board and may be removed
by the Board in its discretion. The Board will designate one member of the
Committee to serve as chairperson of the Committee. The Chairperson shall
preside over the Committee. The Committee has the authority to delegate any of
its responsibilities to subcommittees as the Committee may deem appropriate,
provided the subcommittees are composed entirely of independent directors.
MEETINGS
The Committee shall meet as often as its members deem necessary to perform the
Committee's responsibilities.
COMMITTEE AUTHORITY AND RESPONSIBILITIES REGARDING NOMINATIONS
The Committee has the authority, to the extent it deems necessary or
appropriate, to retain a search firm to be used to identify director candidates.
The Committee has sole authority to retain and terminate any such search firm,
including sole authority to approve the firm's fees and other retention terms.
The Committee also has authority, to the extent it deems necessary or
appropriate, to retain other advisors. The Company will provide for appropriate
funding, as determined by the Committee, for payment of compensation to any
search firm or other advisors employed by the Committee.
The Committee will make regular reports to the Board and will propose any
necessary action to the Board.
The Committee, to the extent it deems necessary or appropriate, will:
- identify individuals qualified to become members of the Board;
A-1
- establish procedures for shareholders to submit potential candidates for
election to the Board;
- review and evaluate potential candidates for election to the Board,
including incumbent directors and director candidates properly submitted by
shareholders, and comply with any requirements of the Securities and
Exchange Commission to consider such candidates;
- nominate the director nominees to be considered for election by
shareholders and for election by the Board to fill any vacancy or newly
created directorship;
- make recommendations to the Board regarding the size and composition of the
Board and develop and recommend to the Board criteria (such as,
independence, experience relevant to the needs of the Company, leadership
qualities, diversity and ability to represent the shareholders) for the
selection of individuals to be considered as candidates for election to the
Board;
- review and reassess the adequacy of the Nominating Committee Charter
annually and recommend any proposed changes to the Board of Directors for
approval;
- undertake such other responsibilities as may be delegated by the Board to
the Committee from time to time in accordance with applicable law; and
- take any and all other actions as may be required by the federal securities
laws or other applicable laws or regulations regarding the nomination of
directors.
A-2
IKONICS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 24, 2008
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 24, 2008.
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" ITEM 1.
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 ServicesSM,
P.O. Box 64873, St. Paul, MN 55164-0873.
Please detach here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of directors: 01 Charles H. Andresen [ ] Vote FOR
02 David O. Harris all nominees
03 Gerald W. Simonson (except as marked)
04 William C. Ulland
05 Rondi C. Erickson [ ] Vote WITHHELD
06 H. Leigh Severance from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) [ ]
2. In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting, or 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 , 2008
-----------------------------
----------------------------------------
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.