<PAGE>
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
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 Rule 14a-11(c) or Rule 14a-12
MSC INDUSTRIAL DIRECT CO., INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO]
75 MAXESS ROAD
MELVILLE, NEW YORK 11747
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------
To the Shareholders of MSC Industrial Direct Co., Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of MSC
Industrial Direct Co., Inc. (the "Company"), a New York corporation, will be
held on Friday, January 5, 2001 at 9:00 a.m., local time, at the lower level
atrium of Fleet Bank at 300 Broad Hollow Road, Melville, New York 11747, for the
following purposes:
1. To elect ten directors of the Company to serve for one-year
terms;
2. To consider and act upon a proposal to ratify the
appointment of Arthur Andersen LLP as independent certified
public accountants of the Company for the fiscal year 2001;
and
3. To consider and act upon such other matters as may properly
come before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on December 1,
2000 are entitled to notice of and to vote at the meeting and any adjournments
thereof.
All shareholders are cordially invited to attend the meeting. However,
to assure your representation at the meeting, you are urged to complete, sign
and date the enclosed proxy card as promptly as possible and return it in the
postage-paid envelope provided. Any shareholder attending the meeting may vote
in person even if he or she has already returned a proxy.
By Order of the Board of Directors,
Thomas Eccleston
Secretary
Melville, New York
December 6, 2000
--------------------------------------------------------------------------------
IMPORTANT:
THE PROMPT RETURN OF PROXIES WILL ENSURE THAT YOUR SHARES WILL BE VOTED.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
--------------------------------------------------------------------------------
<PAGE>
[LOGO]
75 MAXESS ROAD
MELVILLE, NEW YORK 11747
------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON JANUARY 5, 2001
------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of MSC Industrial Direct Co., Inc. (the
"Company"), a New York corporation, to be used at the Annual Meeting of
Shareholders of the Company (the "Meeting") to be held at the lower level atrium
of Fleet Bank at 300 Broad Hollow Road, Melville, New York 11747, on Friday,
January 5, 2001 at 9:00 a.m., local time, and at any adjournment or postponement
thereof. The approximate date on which this proxy statement, the foregoing
notice and the enclosed proxy were first mailed or given to shareholders was
December 6, 2000.
Shareholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later dated proxy. Unless so revoked,
shares represented by proxies received by the Company, where the shareholder has
specified a choice with respect to the election of directors or the other
proposals described in this proxy statement, will be voted in accordance with
the specification(s) so made. In the absence of such specification(s), the
shares will be voted FOR the election of all ten nominees for the Board of
Directors and FOR the ratification of the selection by the Board of Directors of
Arthur Andersen LLP as the Company's independent certified public accountants
for the current fiscal year.
The expenses of solicitation of proxies for the Meeting will be paid by
the Company. Such solicitation may be made in person or by telephone by officers
and associates of the Company. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses incurred
by them in forwarding material to beneficial owners of shares of the Company's
Class A common stock, par value $.001 per share (the "Class A Common Stock").
VOTING
Only holders of record of the Class A Common Stock and the Company's
Class B common stock, par value $.001 per share (the "Class B Common Stock"), at
the close of business on December 1, 2000 are entitled to notice of and to vote
at the Meeting. On that date, the Company had outstanding 35,336,046 shares of
Class A Common Stock and 33,738,778 shares of Class B Common Stock.
Under New York law and the Company's By-Laws, the presence in person or
by proxy of the holders of a majority of the shares of the Class A Common Stock
and the Class B Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. For these purposes, shares which are present or
represented by proxy at the Meeting will be counted regardless of whether the
holder of the shares or the proxy fails to vote on a proposal ("abstentions") or
whether a broker with authority fails to exercise its authority with respect
thereto (a "broker non-vote"). Abstentions and broker non-votes will not be
included, however, in the tabulation of votes cast on proposals presented to
shareholders. With regard to the election of directors, votes may be cast in
favor of or withheld from each nominee; votes that are withheld (e.g.,
abstentions and broker non-votes) will have no effect, as directors are elected
by a plurality of votes cast. On all matters to be voted upon at the Meeting and
any adjournment or postponement thereof, the holders of the Class A Common Stock
and the Class B Common Stock vote together as a single class, with each record
holder of Class A Common Stock entitled to one vote per share of Class A Common
Stock and each record holder of Class B Common Stock entitled to 10 votes per
share of Class B Common Stock.
<PAGE>
The Board of Directors does not intend to bring any matter before the
Meeting, except as specifically indicated in the foregoing notice, nor does the
Board of Directors know of any matters which anyone else proposes to present for
action at the Meeting. If any other matters properly come before the Meeting,
however, the persons named in the enclosed proxy, or their duly constituted
substitutes acting at the Meeting, will be authorized to vote or otherwise act
thereon in accordance with their judgment on such matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The information set forth on the following table is furnished as of
November 1, 2000 (except as otherwise noted), with respect to any person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) who is known
to the Company to be the beneficial owner of more than 5% of any class of the
Company's voting securities. Except as otherwise indicated, the persons listed
below have advised the Company that they have sole voting and investment power
with respect to the shares listed as owned by them.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK(1) CLASS B COMMON STOCK
-------------------------- -----------------------------
AMOUNT & NATURE AMOUNT & NATURE % OWNERSHIP
OF BENEFICIAL PERCENT OF BENEFICIAL PERCENT OF COMMON % VOTING
OWNERSHIP OF CLASS OWNERSHIP OF CLASS(2) STOCK(3) POWER(2) (4)
-------------- -------- --------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price Associates, Inc.(5) 4,481,100 12.7 -- -- 6.5 1.2
Waddell & Reed Financial, Inc.(6) 3,052,100 8.6 -- -- 4.4 0.8
Lord Abbett & Co. (7) 2,527,432 7.2 -- -- 3.7 0.7
Capital Research and Management
Company (8) 2,444,800 6.9 -- -- 3.5 0.7
Reich & Tang Asset Management (9) 2,275,400 6.4 -- -- 3.3 0.6
Mitchell Jacobson(10) 965,152 (11) 2.7 20,669,586 (12) 61.3 31.3 55.7
Marjorie Gershwind(10) 800,416 (13) 2.2 13,481,500 (14) 40.0 20.7 36.4
Sidney Jacobson(10) 200 * 3,016,000 (15) 8.9 4.4 8.1
Joseph Getraer (10) 10,000 * 1,511,860 (16) 4.5 2.2 4.0
</TABLE>
------------------
* Less than 1%
(1) Does not include shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock. Shares of Class B Common Stock are
convertible at any time into shares of Class A Common Stock on a
share-for-share basis.
(2) Percentages total more than 100% because of shared beneficial ownership of
certain shares of Class B Common Stock described in footnotes 12 and 14.
(3) Indicates percentage ownership of the aggregate number of outstanding
shares of Class A Common Stock and Class B Common Stock. See Note 1.
(4) Indicates percentage of aggregate number of votes which can be cast. On all
matters to be voted upon at the Meeting and any adjournment or postponement
thereof, the holders of the Class A Common Stock and the Class B Common
Stock vote together as a single class, with each record holder of Class A
Common Stock entitled to one vote per share of Class A Common Stock and
each record holder of Class B Common Stock entitled to 10 votes per share
of Class B Common Stock.
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
(5) Information as to shares owned by T. Rowe Price Associates, Inc. is as of
June 2000, as set forth in a Schedule 13F filed with the Securities and
Exchange Commission. The address of T. Rowe Price Associates, Inc. is 100
E. Pratt Street, Baltimore, Maryland 21202.
(6) Information as to shares owned by Waddell & Reed Financial, Inc. is as of
June 2000, as set forth in a Schedule 13F filed with the Securities and
Exchange Commission. The address of Waddell & Reed Financial, Inc. is 6300
Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.
(7) Information as to shares owned by Lord Abbett & Co. is as of June 2000, as
set forth in a Schedule 13F filed with the Securities and Exchange
Commission. The address of Lord Abbett & Co. is 90 Hudson Street, Jersey
City, New Jersey 07302-3973.
(8) Information as to shares owned by Capital Research & Management Company is
as of June 2000, as set forth in a Schedule 13F filed with the Securities
and Exchange Commission. The address of Capital Research & Management
Company is 333 South Hope Street, Los Angeles, California 90071-1447.
(9) Information as to shares owned by Reich & Tang Asset Management is as of
June 2000, as set forth in a Schedule 13F filed with the Securities and
Exchange Commission. The address of Reich & Tang Asset Management is 600
Fifth Avenue, 8th Floor, New York, New York 10020.
(10) The address of each person is c/o MSC Industrial Direct Co., Inc., 75
Maxess Road, Melville, New York 11747.
(11) Includes (a) 81,052 shares of Class A Common Stock owned directly by Mr.
Jacobson, (b) 709,100 shares of Class A Common Stock which may be deemed to
be beneficially owned by Mr. Jacobson as a member of Platinum Investment
Management, L.L.C., a Delaware limited liability company, the owner of such
shares, and (c) 175,000 shares of Class A Common Stock which may be deemed
to be beneficially owned by Mr. Jacobson as a director of The Jacobson
Family Foundation. Mr. Jacobson disclaims beneficial ownership of 354,550
of the shares of Class A Common Stock owned by Platinum Investment
Management, L.L.C. and disclaims beneficial ownership of all the shares of
Class A Common Stock held by The Jacobson Family Foundation.
(12) Includes (a) 10,617,418 shares of Class B Common Stock owned directly by
Mr. Jacobson, (b) 7,032,000 shares of Class B Common Stock which may be
deemed to be beneficially owned by Mr. Jacobson as a member of JF-MSC,
L.L.C., a Delaware limited liability company, (c) 1,511,860 shares of Class
B Common Stock which may be deemed to be beneficially owned by Mr. Jacobson
as Settlor of the Mitchell Jacobson 1998 Qualified Seven Year Annuity Trust
and (d) 1,508,308 shares of Class B Common Stock owned by Marjorie Diane
Gershwind as Settlor of the Marjorie Diane Gershwind 1998 Qualified Seven
Year Annuity Trust of which trust Mr. Jacobson is the sole trustee and over
which shares he may be deemed to have beneficial ownership. Mr. Jacobson
disclaims beneficial ownership of 3,352,800 of the shares of Class B Common
Stock owned by JF-MSC, L.L.C. and disclaims beneficial ownership of the
shares of the Class B Common Stock owned by the trusts.
(13) Includes (a) 66,316 shares of Class A Common Stock owned directly by Ms.
Gershwind, (b) 709,100 shares of Class A Common Stock which may be deemed
to be beneficially owned by Ms. Gershwind as a member of Platinum
Investment Management, L.L.C., a Delaware limited liability company, the
owner of such shares and (c) 25,000 shares of Class A Common Stock which
may be deemed to be beneficially owned by Ms. Gershwind as a director of
The Gershwind Family Foundation. Ms. Gershwind disclaims beneficial
ownership of 354,550 of the shares of Class A Common Stock owned by
Platinum Investment Management, L.L.C. and disclaims beneficial ownership
of all the shares of Class A Common Stock held by The Gershwind Family
Foundation.
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
(14) Includes (a) 4,353,192 shares of Class B Common Stock owned directly by Ms.
Gershwind, (b) 5,700,000 shares of Class B Common Stock which may be deemed
to be beneficially owned by Ms. Gershwind as a member of GF-MSC, L.L.C., a
Delaware limited liability company, (c) 960,000 shares of Class B Common
Stock which may be deemed to be beneficially owned by Ms. Gershwind as
Settlor of the Marjorie Diane Gershwind 1994 Seven Year Annuity Trust, (d)
960,000 shares of Class B Common Stock which may be deemed to be
beneficially owned by Ms. Gershwind as Settlor of the Marjorie Diane
Gershwind 1994 Fifteen Year Annuity Trust and (e) 1,508,308 shares of Class
B Common Stock which may be deemed to be beneficially owned by Ms.
Gershwind as Settlor of the 1998 Qualified Seven Year Annuity Trust. Ms.
Gershwind disclaims beneficial ownership of 3,652,000 of the shares of
Class B Common Stock owned by GF-MSC, L.L.C. and disclaims beneficial
ownership of the shares of Class B Common Stock owned by the trusts.
(15) Reflects the aggregate ownership of Class B Common Stock by four trusts for
the benefit of two of Mr. Jacobson's grandchildren. Mr. Jacobson is a
co-trustee of two of such trusts and shares voting power and investment
control over the shares held by such trusts. Mr. Jacobson is the sole
trustee of the other two trusts. Mr. Jacobson disclaims beneficial
ownership of all such shares.
(16) Reflects the ownership of Class B Common Stock by the Mitchell Jacobson
1998 Qualified Seven Year Annuity Trust of which trust Mr. Getraer is the
sole trustee and over which shares he may be deemed to have beneficial
ownership. Mr. Getraer disclaims beneficial ownership of the shares of the
Class B Common Stock owned by such trust.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the Class
A Common Stock and Class B Common Stock beneficially owned by each director and
nominee for director of the Company, by the Company's Chief Executive Officer,
by each of the Company's four most highly compensated executive officers and by
all directors, nominees for director and executive officers as a group, at the
close of business on November 1, 2000. Except as otherwise indicated, the
persons listed below have advised the Company that they have sole voting and
investment power with respect to the shares listed as owned by them.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK(1) CLASS B COMMON STOCK
------------------------- -----------------------------
AMOUNT & NATURE AMOUNT & NATURE % OWNERSHIP
OF BENEFICIAL PERCENT OF BENEFICIAL PERCENT OF COMMON % VOTING
OWNERSHIP OF CLASS OWNERSHIP OF CLASS STOCK(2) POWER(3)
-------------- -------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Shelley Boxer............... 99,863 (4) * -- -- * *
Charles Boehlke............. 0 * -- -- * *
Roger Fradin................ 61,583 (5) * -- -- * *
Mitchell Jacobson........... 965,152 (6) 2.7 20,669,586 (7) 61.3 31.3 55.7
Sidney Jacobson............. 200 * 3,016,000 (8) 8.9 4.4 8.1
Denis Kelly................. 103,816 (9) * -- -- * *
Raymond Langton............. 15,200 (10) * -- -- * *
Philip Peller............... 4,292 (11) * -- -- * *
David Sandler............... 168,526 (12) * -- -- * *
James Schroeder............. 275,648 (13) * -- -- * *
All directors, nominees for
director and executive
officers as a group
(ten persons)........... 1,681,780 4.7% 23,685,586 70.2% 36.7% 63.9%
</TABLE>
------------------
* Less than 1%
(1) Does not include shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock. Shares of Class B Common Stock are
convertible at any time into shares of Class A Common Stock on a
share-for-share basis.
(2) Indicates percentage ownership of the aggregate number of outstanding
shares of Class A Common Stock and Class B Common Stock. See Note 1.
(3) Indicates percentage of aggregate number of votes which can be cast. On all
matters to be voted upon at the Meeting and any adjournment or postponement
thereof, the holders of the Class A Common Stock and the Class B Common
Stock vote together as a single class, with each record holder of Class A
Common Stock entitled to one vote per share of Class A Common Stock and
each record holder of Class B Common Stock entitled to 10 votes per share
of Class B Common Stock.
(4) Includes 4,000 shares of Class A Common Stock owned directly by Mr. Boxer
and 95,863 shares of Class A Common Stock issuable upon the exercise by Mr.
Boxer of options that are presently exercisable or exercisable within 60
days of the date of this proxy statement.
(5) Includes 52,000 shares of Class A Common Stock jointly owned by Mr. Fradin
and his wife and 9,583 shares of Class A Common Stock issuable upon the
exercise by Mr. Fradin of options that are presently exercisable or
exercisable within 60 days of the date of this proxy statement.
(Footnotes continued on next page)
5
<PAGE>
(Footnotes continued from previous page)
(6) Includes (a) 81,052 shares of Class A Common Stock owned directly by Mr.
Jacobson, (b) 709,100 shares of Class A Common Stock which may be deemed to
be beneficially owned by Mr. Jacobson as a member of Platinum Investment
Management, L.L.C., a Delaware limited liability company, the owner of such
shares, and (c) 175,000 shares of Class A Common Stock which may be deemed
to be beneficially owned by Mr. Jacobson as a director of The Jacobson
Family Foundation. Mr. Jacobson disclaims beneficial ownership of 354,550
of the shares of Class A Common Stock owned by Platinum Investment
Management, L.L.C. and disclaims beneficial ownership of all the shares of
Class A Common Stock held by The Jacobson Family Foundation.
(7) Includes (a) 10,617,418 shares of Class B Common Stock owned directly by
Mr. Jacobson, (b) 7,032,000 shares of Class B Common Stock which may be
deemed to be beneficially owned by Mr. Jacobson as a member of JF-MSC,
L.L.C., a Delaware limited liability company, (c) 1,511,860 shares of Class
B Common Stock which may be deemed to be beneficially owned by Mr. Jacobson
as Settlor of the Mitchell Jacobson 1998 Qualified Seven Year Annuity Trust
and (d) 1,508,308 shares of Class B Common Stock owned by Marjorie Diane
Gershwind as Settlor of the Marjorie Diane Gershwind 1998 Qualified Seven
Year Annuity Trust of which trust Mr. Jacobson is the sole trustee and over
which shares he may be deemed to have beneficial ownership. Mr. Jacobson
disclaims beneficial ownership of 3,352,800 of the shares of Class B Common
Stock owned by JF-MSC, L.L.C. and disclaims beneficial ownership of the
shares of the Class B Common Stock owned by the trusts.
(8) Reflects the aggregate ownership of Class B Common Stock by four trusts for
the benefit of two of Mr. Jacobson's grandchildren. Mr. Jacobson is a
co-trustee of two of such trusts and shares voting power and investment
control over the shares held by such trusts. Mr. Jacobson is the sole
trustee of the other two trusts. Mr. Jacobson disclaims beneficial
ownership of all such shares.
(9) Includes 60,000 shares of Class A Common Stock owned directly by Mr. Kelly
and 43,816 shares of Class A Common Stock issuable upon the exercise by Mr.
Kelly of options that are presently exercisable or exercisable within 60
days of the date of this proxy statement.
(10) Includes 200 shares of Class A Common Stock owned directly by Mr. Langton
and 15,000 shares of Class A Common Stock issuable upon the exercise by Mr.
Langton of options that are presently exercisable or exercisable within 60
days of the date of this proxy statement.
(11) Includes 2,000 shares of Class A Common Stock owned directly by Mr. Peller
and 2,292 shares of Class A Common Stock issuable upon the exercise by Mr.
Peller of options that are presently exercisable or exercisable within 60
days of the date of this proxy statement.
(12) Includes 10,302 shares of Class A Common Stock owned directly by Mr.
Sandler, 2,000 shares of Class A Common Stock held in trust by Mr. Sandler
for the benefit of his children and 156,224 shares of Class A Common Stock
issuable upon the exercise by Mr. Sandler of options that are presently
exercisable or exercisable within 60 days of the date of this proxy
statement.
(13) Includes 12,000 shares of Class A Common Stock owned directly by Mr.
Schroeder and 263,648 shares of Class A Common Stock issuable upon the
exercise by Mr. Schroeder of options that are presently exercisable or
exercisable within 60 days of the date of this proxy statement.
6
<PAGE>
ELECTION OF DIRECTORS
Ten directors will be elected at the Meeting for a term of one year
expiring at the annual meeting of shareholders to be held in 2002 and until
their respective successors shall have been elected and shall qualify. Each of
the nominees for director was previously elected a director of the Company by
the shareholders, except for Philip Peller who was elected by the directors in
April 2000 and Charles Boehlke who was nominated by the directors in November
2000.
The election of directors requires the affirmative vote of a plurality
of the votes cast in person or by proxy at the Meeting. Each proxy received will
be cast FOR the election of the nominees named below unless otherwise specified
in the proxy.
Each nominee has indicated that he is willing to serve as a director of
the Company, if elected, and the Board of Directors of the Company has no reason
to believe that any nominee may become unable or unwilling to serve. In the
event that a nominee should become unavailable for election for any reason, the
shares represented by a properly executed and returned proxy will be voted for
any substitute nominee who shall be designated by the current Board of
Directors. There are no arrangements or understandings between any director or
nominee for director and any other person pursuant to which such person was
selected as a director or nominee for director of the Company.
<TABLE>
<CAPTION>
NAME OF NOMINEE PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
--------------- -------------------- --- --------------
<S> <C> <C> <C>
Mitchell Jacobson Chairman of the Board of Directors, 49 October 1995
President and Chief Executive Officer
of the Company
Sidney Jacobson Vice Chairman of the Board of Directors 82 October 1995
of the Company
Charles Boehlke Senior Vice President and Chief Financial 44 --
Officer of the Company
David Sandler Executive Vice President and Chief Operating 43 June 1999
Officer of the Company
Shelley Boxer Vice President of Finance of the Company 53 October 1995
James Schroeder Senior Vice President of Logistics of the 60 October 1995
Company
Denis Kelly Managing Director of Prudential Securities 51 April 1996
Incorporated
Raymond Langton Co-founder and Chief Executive Officer of 55 July 1997
SKM Applied Tech Products
Roger Fradin President of the Security and Fire Solutions 47 July 1998
Division at Honeywell Inc.
Philip Peller Retired Partner of Arthur Andersen, LLP 60 April 2000
</TABLE>
Mitchell Jacobson was appointed Chairman of the Board of Directors of
the Company in January 1998 and was appointed President and Chief Executive
Officer of the Company upon its formation in October 1995. Mr. Jacobson has also
been President and Chief Executive Officer of Sid Tool Co., Inc., a wholly-owned
and the principal operating subsidiary of the Company (the "Operating
Subsidiary") since June 1982.
Sidney Jacobson was appointed Vice Chairman of the Board of Directors
of the Company in January 1998. Mr. Jacobson served as the Chairman of the Board
of Directors from its formation in October 1995 to January 1998. Mr. Jacobson is
a co-founder of the Operating Subsidiary and has been the Chairman of the
Operating Subsidiary since June 1982.
Charles Boehlke was appointed Chief Financial Officer and Senior Vice
President of the Company in June 2000. From April 1996 to April 2000, Mr.
Boehlke was the Vice President of Finance for North America operations
7
<PAGE>
at Arrow Electronics, Inc. From January 1994 to April 1996, Mr. Boehkle was the
Chief Financial Officer of Black & Decker Mexico.
David Sandler was appointed Chief Operating Officer of the Company in
November 2000 and Executive Vice President of the Company in June 1999. From
September 1998 to June 1999, he served as Senior Vice President of
Administration of the Company. From September 1997 to September 1998, Mr.
Sandler was the Senior Vice President of Information Systems and Human Resources
of the Company. From September 1996 to September 1997, Mr. Sandler served as the
Vice President of Information Systems and Business Development of the Company.
From 1995 to 1996, Mr. Sandler was the Director of Business Development of the
Company. From 1993 to 1995, Mr. Sandler was the Director of Product Management
and Purchasing of the Operating Subsidiary.
Shelley Boxer was appointed Vice President of Finance of the Company in
June 2000. Mr. Boxer was the Vice President and Chief Financial Officer of the
Company from its formation in October 1995 until June 2000. From June 1993 to
October 1995, Mr. Boxer also served as Chief Financial Officer of the Operating
Subsidiary. Mr. Boxer was the Vice President and Chief Financial Officer of
Joyce International, Inc., a distribution and manufacturing company, from 1992
to 1993. From 1987 to 1992, Mr. Boxer was the Executive Vice President and Chief
Financial Officer of Kinney Systems, Inc., an automobile parking facility and
real estate company.
James Schroeder was appointed Senior Vice President of Logistics of the
Company in August 1997. From October 1995 to August 1997, Mr. Schroeder served
as Vice President of Logistics of the Company. From 1995 to January 1998, Mr.
Schroeder also served as Chief Operating Officer of the Company. Mr. Schroeder
has also been Vice President of Logistics of the Operating Subsidiary since
1986.
Denis Kelly is a Managing Director of Prudential Securities
Incorporated, a position he has held since July 1993. Before July 1993, Mr.
Kelly was President of Denbrook Capital Corporation. Mr. Kelly is also a
director of Kenneth Cole Productions, Inc.
Raymond Langton is the Co-founder and Chief Executive Officer of SKM
Applied Tech Products, a leveraged buy-out firm. From 1995 to February 1997, Mr.
Langton was the President and Chief Executive Officer of Chicago Rawhide
Worldwide, a manufacturer of sealing devices and subsidiary of SKF USA Inc.
(itself a subsidiary of AB SKF of Sweden, a manufacturer of sealing devices and
ball bearings). From 1991 to 1995, Mr. Langton was President and Chief Executive
Officer of SKF North America, a manufacturer of ball bearings and subsidiary of
SKF USA, Inc. Mr. Langton has also been a director of SKF USA, Inc. since 1991
and is a director of Right Management Consultants.
Roger Fradin is the President of the Security and Fire Solutions
Division at Honeywell Inc., a position he has held since 2000. From 1987 until
2000, Mr. Fradin was the President of the ADEMCO Group.
Philip Peller was a partner of Andersen Worldwide S.C. and Arthur
Andersen LLP from 1970 until his retirement in 1999. Mr. Peller served as
Managing Partner of Practice Protection and Partner Affairs for Andersen
Worldwide S.C. from 1998 to 1999, and as Managing Partner of Practice Protection
from 1996 to 1998. Mr. Peller also served as the Managing Director - Quality,
Risk Management and Professional Competence for Arthur Andersen's global audit
practice.
Sidney Jacobson and Mitchell Jacobson are father and son. There are no
family relationships among any of the other directors or executive officers of
the Company.
COMMITTEES, MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the last fiscal year.
Each of the directors attended at least 75% of the meetings of the Board of
Directors and committees of the Board on which they served.
The Board of Directors has a standing Audit Committee currently
comprised of Denis Kelly, Raymond Langton, Roger Fradin and Philip Peller. All
members of the Audit Committee are independent, in accordance with Section
303.02 of the New York Stock Exchange listing standards. The Board of Directors
has adopted a new written charter for the Audit Committee effective April 3,
2000. A copy of the new written charter is included in this proxy statement as
Appendix A. The Audit Committee reviews and evaluates the Company's internal
accounting and auditing procedures; recommends to the Board of Directors the
firm to be appointed as independent accountants to audit the Company's
operations and financial statements; reviews with management and the independent
accountants the Company's year-end operating results; reviews the scope and
results of the annual
8
<PAGE>
financial and operational audits with the independent accountants; reviews with
management the Company's interim operating results; and reviews any non-audit
services to be performed by the independent accountants and considers the effect
of any such performance on the accountants' independence. The Audit Committee
met four times in the fiscal year ended August 26, 2000.
The Board of Directors has a standing Compensation Committee currently
comprised of Denis Kelly, Raymond Langton, Roger Fradin and Philip Peller. The
Compensation Committee is responsible for establishing salaries, bonuses and
other compensation for the Company's executive officers. The Compensation
Committee also administers the Company's 1995 Stock Option Plan (the "1995
Option Plan"), 1998 Stock Option Plan (the "1998 Option Plan") and 1995
Restricted Stock Plan. Pursuant to the 1995 Option Plan and the 1998 Option
Plan, the Compensation Committee has the authority to determine the persons to
whom and the times at which options are to be granted, the number of option
shares to be granted and the price and other terms of options and to designate
whether options granted are intended to qualify as incentive stock options or
are to be non-qualified stock options. Under the 1995 Restricted Stock Plan, the
Compensation Committee has the authority to determine the persons to whom and
the times at which awards are to be made. The Compensation Committee met five
times in the fiscal year ended August 26, 2000.
The Board of Directors does not have a standing Nominating Committee.
The Company's policy is not to pay compensation to directors who are
also associates of the Company. The Company grants options to purchase 5,000
shares of Class A Common Stock to non-employee directors upon their election and
reelection to the Board of Directors. Directors elected other than at an annual
meeting of shareholders receive a pro rata number of options. The Company also
pays each non-employee director compensation of $10,000 per annum and $1,500 per
board meeting attended.
EXECUTIVE OFFICERS
Sidney Jacobson, Mitchell Jacobson, Charles Boehlke, David Sandler,
James Schroeder and Shelley Boxer are executive officers of the Company, holding
the offices described above. In addition, the following individuals are also
executive officers of the Company.
<TABLE>
<CAPTION>
NAME OF OFFICER POSITION AGE EXECUTIVE OFFICER SINCE
--------------- -------- --- -----------------------
<S> <C> <C> <C>
Thomas Eccleston Vice President of Plant and Equipment 52 October 1995
and Secretary
Thomas Cox Senior Vice President of Sales 39 June 2000
</TABLE>
Thomas Eccleston was appointed Vice President of Plant and Equipment
and Secretary of the Company upon its formation in October 1995. Mr. Eccleston
has also served as the Vice President of Plant and Equipment of the Operating
Subsidiary since 1986.
Thomas Cox was appointed Senior Vice President of Sales of the Company
in April 2000. From September 1999 to April 2000, Mr. Cox was Vice President of
Sales for the North Region of the Company. From January 1998 to September 1999,
Mr. Cox served as Regional Manager for the Midwest Region of the Company. From
September 1997 to January 1998, Mr. Cox served as Director of Business
Development for the Company. From 1995 to 1997, Mr. Cox was President of Mailnet
Inc., an international delivery company.
Each executive officer serves until his successor is appointed and
qualified or until earlier resignation, death or removal. There are no
arrangements or understandings between any executive officer and any other
person pursuant to which he was or is to be selected as an officer of the
Company. The Operating Subsidiary, however, has entered into employment
agreements with each of Mitchell Jacobson, the Chairman of the Board, President
and Chief Executive Officer of the Company and Sidney Jacobson, the Vice
Chairman of the Board of the Company, which are described on page 14 of this
proxy statement. In addition, the Company has entered into an employment
agreement with Charles Boehlke, Chief Financial Officer and Senior Vice
President of the Company, which is described on page 14 of this proxy statement.
9
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the filings furnished to the Company
pursuant to Rule 16a-3(e) promulgated under the Exchange Act and written
representations from its executive officers, directors and persons who own
beneficially more than 10% of either the Class A Common Stock or the Class B
Common Stock, all filing requirements of Section 16(a) of the Exchange Act were
complied with during the fiscal year ended August 26, 2000, except that both Mr.
Jacobson and Ms. Gershwind failed to file timely two reports, one covering one
transaction, the other covering two transactions, all occurring during the
fiscal year ended August 26, 2000.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the Company's last three fiscal
years, the aggregate compensation awarded to, earned by or paid to the Company's
Chief Executive Officer, to each of the Company's other four most highly
compensated executive officers who were serving as executive officers at the end
of the Company's last fiscal year (collectively, the "Named Executive
Officers"), for services rendered in all capacities to the Company and its
subsidiaries. All compensation noted below, other than stock options, was paid
by the Operating Subsidiary.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- --------------------
FISCAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS (2) COMPENSATION(3)
--------------------------- ---- ------ -------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mitchell Jacobson 2000 $408,400 -- $9,292(4) -- $253,122(5)
President and Chief 1999 408,400 -- 4,400(4) -- 225,975(5)
Executive Officer 1998 408,400 -- 5,072(4) -- 221,171(5)
Sidney Jacobson 2000 $250,000 -- -- -- 3,887
Vice Chairman 1999 250,000 $50,000 -- -- 6,768
1998 250,000 50,000 -- -- 6,788
David Sandler 2000 306,808 -- 9,838(6) 200,000 187
Executive Vice President 1999 240,615 135,000 5,495(6) 200,000 318
and Chief Operating 1998 185,383 104,885 4,831(6) 30,000 312
Officer
James Schroeder 2000 315,000 -- 5,013(7) 60,000 69,532(8)
Senior Vice President, 1999 315,000 185,000 6,420(7) 200,000 66,494(8)
Logistics 1998 292,205 165,000 5,783(7) 180,000 76,350(8)
Shelley Boxer 2000 201,229 17,843 4,516(9) 20,000 655
Vice President of 1999 185,493 71,370 8,625(9) 75,000 897
Finance 1998 183,086 69,635 -- 18,800 864
</TABLE>
No restricted stock, stock appreciation rights or long-term incentive
plan payments, as defined in the regulations of the Exchange Act governing the
solicitation of proxies, were awarded to, earned by or paid to any of the Named
Executive Officers during any of the last three fiscal years.
---------------
(1) Amounts shown are for the year in which bonuses are paid, which is the
fiscal year following the year of award.
(2) The number of securities underlying options has been restated to give
effect to the two-for-one stock split in the form of a stock dividend
declared on April 6, 1998.
(3) Unless otherwise noted, amounts represent group term life insurance
benefits paid by the Company.
(Footnotes continued on next page)
11
<PAGE>
(Footnotes continued from previous page)
(4) Includes automobile allowances of approximately $7,792, $2,800 and $4,300
paid by the Company in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively, and matching contributions to the Operating Subsidiary's
401(k) Plan of approximately $1,500, $1,600 and $772 paid by the Company in
fiscal 2000, fiscal 1999 and fiscal 1998 respectively.
(5) Includes group term life insurance benefits of approximately $395, $522 and
$522 paid by the Company in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively, and split dollar life insurance premiums of approximately
$252,727, $225,453 and $220,649 paid by the Company in fiscal 2000, fiscal
1999 and fiscal 1998, respectively. Under the terms of such policies, a
portion of the premiums paid by the Company in fiscal 2000, fiscal 1999 and
fiscal 1998 have been reimbursed.
(6) Includes automobile allowances of approximately $8,338, $3,895 and $2,918
paid by the Company in fiscal 2000, fiscal 1999 and fiscal 1998 and
matching contributions to the Operating Subsidiary's 401(k) Plan of
approximately $1,500, $1,600 and $1,913 paid by the Company in fiscal 2000,
fiscal 1999 and fiscal 1998, respectively.
(7) Includes automobile allowances of approximately $3,513, $4,820 and $4,745
paid by the Company in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively, and matching contributions to the Operating Subsidiary's
401(k) Plan of approximately $1,500, $1,600, and $1,038 paid by the Company
in fiscal 2000, fiscal 1999 and fiscal 1998, respectively.
(8) Includes group term life insurance benefits of approximately $1,032, $1,994
and $1,350 paid by the Company in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively. Also includes approximately $68,500, $64,500, and $75,000
accrued by the Company in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively, in respect of annual post-retirement payments to be made to
Mr. Schroeder pursuant to the terms and provisions of a written agreement
between Mr. Schroeder and the Company which was terminated by the Company
on September 1, 1997.
(9) Includes automobile allowances of approximately $3,016 and $7,125 paid by
the Company in fiscal 2000 and fiscal 1999, respectively, and matching
contributions to the Operating Subsidiary's 401(k) Plan of approximately
$1,500 paid by the Company in fiscal 2000 and fiscal 1999.
12
<PAGE>
STOCK OPTION PLANS
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of
stock options under the 1998 Stock Option Plan by the Company during the fiscal
year ended August 26, 2000 to the Executive Officers listed on the Summary
Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------------- --------------------------
PERCENTAGE
OF
TOTAL OPTIONS
NUMBER OF GRANTED TO
SECURITIES ASSOCIATES
UNDERLYING IN EXERCISE
OPTIONS FISCAL YEAR PRICE EXPIRATION
NAME GRANTED (#) (%) ($/SH) DATE 5% ($) 10% ($)
-------------------------- ----------- ----------- -------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mitchell Jacobson......... 0 0.0% - - - -
Sidney Jacobson........... 0 0.0 - - - -
David Sandler............. 200,000 13.4 $7.75 10/19/09 $975,000 $2,470,000
James Schroeder........... 60,000 4.0 $7.75 10/19/09 292,000 741,000
Shelley Boxer............. 20,000 1.3 $7.75 10/19/09 97,000 247,000
</TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the exercise
of stock options during the fiscal year ending August 26, 2000 and the value at
August 26, 2000 of unexercised stock options held by the Executive Officers
listed on the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT FYE OPTIONS AT FYE
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
----------------------------- -------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mitchell Jacobson............ - - - -
Sidney Jacobson.............. - - - -
David Sandler................ 100,000 $889,805 73,469/327,600 $149,776/$2,129,611
James Schroeder.............. 117,000 1,226,614 165,118/245,530 213,850/966,372
Shelley Boxer................ 40,000 456,364 70,582/93,218 283,183/388,879
</TABLE>
---------------
(1) Fair market value of securities underlying the options at fiscal year end
minus the exercise price of the options.
13
<PAGE>
EMPLOYMENT ARRANGEMENTS AND COMPENSATION PLANS
Sidney Jacobson is employed as Chairman of the Board of Directors of
the Operating Subsidiary pursuant to an employment agreement, dated as of
January 2, 1994 and amended as of October 30, 1995, which expires in January
2004. Mr. Jacobson is required to devote his full working time to the affairs of
the Operating Subsidiary. Under Mr. Jacobson's employment agreement, he receives
an annual base salary of $250,000 and is entitled to participate in employee
benefit and other fringe plans made available to the executives of the Operating
Subsidiary. If the cost of living increases by more than 6% per annum, Mr.
Jacobson's annual base salary is subject to a percentage increase equal to the 3
percentage cost of living increase. The employment agreement also provides for a
benefit of $200,000 per year until January 2, 2004 payable to Mr. Jacobson's
wife in the event of his death. Under the employment agreement, if Mr.
Jacobson's employment is terminated because he becomes incapacitated due to
physical or mental illness, he would continue to receive his salary for a six
month period following such termination and, thereafter, would receive $200,000
per year for the balance of his employment term. Mr. Jacobson would also
continue to be carried on the Operating Subsidiary's health and other insurance
plans. The employment agreement provides that Mr. Jacobson may, at his option,
elect to become a consultant and advisor to the Operating Subsidiary at an
annual fee of $300,000, in which event Mr. Jacobson will be required to be
available to the Company for up to 10 hours per week, not to exceed 40 hours in
any given month. Mr. Jacobson does not have any current intention to make such
election, and any such election would not be expected to have a material impact
on the Operating Subsidiary.
Mitchell Jacobson is employed as President and Chief Executive Officer
of the Operating Subsidiary pursuant to an employment agreement, dated as of
August 1, 1994, which expires on the earlier of August 1, 2004 or 90 days after
Mr. Jacobson's written election to terminate his employment. Mr. Jacobson is
required to devote his full working time to the affairs of the Operating
Subsidiary. Under his employment agreement, Mr. Jacobson receives an annual base
salary (currently set at $408,400). Mr. Jacobson is also entitled to participate
in employee benefit and other fringe benefit plans made available to the
executives of the Operating Subsidiary. Under the employment agreement, Mr.
Jacobson's annual base salary is subject to an annual cost of living adjustment
equal to the percentage increase, if any, in a specified Consumer Price Index.
The employment agreement also provides that in the event Mr. Jacobson's
employment is terminated because he becomes incapacitated due to physical or
mental illness, Mr. Jacobson will receive payment of salary for a six-month
period following such termination and $200,000 per year for the balance of his
employment term. In the event of Mr. Jacobson's death, the agreement provides
that his wife will receive $400,000 per year for a period of three years.
Charles Boehlke is employed as Senior Vice President and Chief
Financial Officer of the Company pursuant to an agreement, dated as of June 19,
2000. Mr. Boehlke is required to devote his full working time to the affairs of
the Company. Under his agreement, Mr. Boehlke receives an annual base salary
(currently set at $275,000). Mr. Boehlke is also entitled to participate in
employee benefit and other fringe benefit plans made available to the executives
of the Company. The agreement provides that if within two years after (i) a sale
by the Company of all or substantially all of its assets, (ii) the consolidation
of the Company, (iii) the merger of the Company with any entity as a result of
which the Company is not the surviving entity as a public company or (iv) the
sale of the Company's voting securities to one or more persons (other than
Mitchell Jacobson and Marjorie Gershwind) as a result of which any such person
shall possess more than 50% of the combined voting power of the Company's then
outstanding securities (each such event, a "Change in Control"), Mr. Boehlke may
terminate his employment with the Company. In addition, if there is a change in
the circumstances of Mr. Boehlke's employment, such as (i) a material reduction
or change in his employment duties or reporting responsibilities, (ii) a
reduction in the annual base salary from the annual base salary received prior
to a Change in Control or (iii) a material diminution in his status, working
conditions or other economic benefits from those in effect immediately prior to
a Change in Control, Mr. Boehlke may terminate his employment with the Company.
Upon such termination, or if within two years after a Change in Control the
Company terminates Mr. Boehlke's employment other than for cause, the Company
will pay Mr. Boehlke an amount equal to his annual base salary at the time of
such termination plus the amount of any bonus paid to him in the fiscal year
ending immediately prior to such termination. The agreement provides that in the
event of the termination of Mr. Boehlke's employment other than for cause, he is
entitled to a severance payment in an amount equal only to the highest annual
base salary he received at any time during the period of his employment. In
addition, upon the termination of the Mr. Boehlke's employment other than for
cause, the Company is to retain Mr. Boehlke as a consultant to the Company for a
one-year period commencing on the date of such termination. Mr. Boehlke will
provide consulting services to the Company with respect to financial matters;
provided, however, that Mr. Boehlke shall not be required to devote
14
<PAGE>
more than ten (10) hours in any calendar quarter to such services. For such
consulting services, the Company is to pay Mr. Boehlke $2,500 per annum.
In January 1999, the Company entered into written agreements with each
of James Schroeder and David Sandler (each, an "Executive"). Each agreement
provides that in the event of a Change in Control, the Company shall pay to
James Schroeder and David Sandler, $2,000,000 and $1,200,000, respectively. Each
agreement further provides that if within five years after a Change in Control,
there is a change in the circumstances of the Executive's employment, such as
(i) a material reduction or change in his employment duties or reporting
responsibilities, (ii) a reduction in the annual base salary from the annual
base salary received prior to a Change in Control or (iii) a material diminution
in his status, working conditions or other economic benefits from those in
effect immediately prior to a Change in Control, the Executive may terminate his
employment with the Company. Upon such termination, or if within five years
after a Change in Control the Company terminates the Executive's employment
other than for cause, the Company will pay the Executive a lump sum equal to the
difference between (i) the sum of (a) five times the Executive's annual base
salary prior to a change in the circumstances of the Executive's employment or
termination other than for cause and (b) five times the largest annual bonus
paid to the Executive during the three fiscal years prior to the Executive's
termination and (ii) the aggregate of all base salary and bonus amounts paid to
the Executive from the Change in Control to the Executive's termination. Each
agreement provides that no amount shall be paid to the Executives if such
payment would restrict the ability of the Company to utilize the "pooling of
interests" method of accounting. The Company has also agreed to indemnify each
of Mr. Schroeder and Mr. Sandler on an after tax basis (giving effect to the
indemnity payments) for certain taxes that they may become liable for on account
of the payments described above.
James Schroeder is employed as Senior Vice President of Logistics of
the Company. Mr. Schroeder and the Company are parties to a written agreement
which provides for annual benefit payments to Mr. Schroeder for seven years upon
his retirement or, his termination by the Company without cause or, in the event
of his death, to his designated beneficiary. The benefit is based upon the
growth in the Company's earnings before interest and taxes over a certain base
amount. The Company may terminate the agreement at any time and elect to prepay
Mr. Schroeder any benefits accrued by the Company up to the date of such
termination. The Company exercised its right to terminate the agreement with Mr.
Schroeder as of September 1, 1997. Under the terms of the agreement, the Company
is obligated to accrue to Mr. Schroeder's benefit the total amount that would be
due as if September 1, 1997 were Mr. Schroeder's normal retirement date.
Accordingly, the total amount due to Mr. Schroeder is approximately $1,208,000
of which approximately $68,500 represents interest accrued in fiscal 2000. This
amount will accrue interest until Mr. Schroeder's normal retirement date and may
be prepaid, at the Company's election, at any time, without penalty.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS
During fiscal 2000, the Compensation Committee consisted of Denis
Kelly, Raymond Langton, Roger Fradin and Philip Peller. None of the members of
the Compensation Committee was, during such year, an officer of the Company or
any of its subsidiaries or had any relationship with the Company other than
serving as a director of the Company. In addition, no executive officer of the
Company served as a director or a member of the compensation committee of any
other entity one of whose executive officers served as a director or on the
Compensation Committee of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING MEMBERS OF THE
COMPENSATION COMMITTEE
An entity owned and controlled by Mitchell Jacobson, the Chairman of
the Board and the President and Chief Executive Officer of the Company, and
Marjorie Gershwind, Mr. Jacobson's sister, leases a distribution center, located
in Atlanta, Georgia, to the Operating Subsidiary. The square footage of the
distribution center is approximately 340,000 square feet. The rent paid by the
Operating Subsidiary was approximately $1,220,000 in fiscal 2000 and is
anticipated to be approximately $1,220,000 in fiscal 2001. The rent to be paid
by the Operating Subsidiary under the remaining lease term, which expires or is
subject to renewal in fiscal 2010, for the Atlanta, Georgia distribution center
is approximately $12,102,000. Additionally, seven other entities owned or
controlled by Mitchell Jacobson and Marjorie Gershwind lease certain branch
offices to the Operating Subsidiary. The aggregate square footage of such branch
offices is approximately 165,000 square feet. The aggregate rent paid by the
15
<PAGE>
Operating Subsidiary to lease these branch offices was approximately $424,000 in
fiscal 2000 and is anticipated to be approximately $484,000 in fiscal 2001. The
aggregate rent to be paid by the Operating Subsidiary under the remaining lease
terms, the last of which expires in fiscal 2004, is approximately $1,217,800.
The Company believes that the terms of the foregoing arrangements are at least
as favorable to the Company as could have been obtained from unaffiliated third
parties.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
During fiscal 2000, the Compensation Committee (the "Compensation
Committee") was comprised of Denis Kelly, Raymond Langton, Roger Fradin and
Philip Peller.
The Compensation Committee is responsible for recommending to the Board
of Directors the overall direction for the executive compensation strategy of
the Company and for the ongoing monitoring of the implementation of the
strategy. In addition to recommending and reviewing the compensation of the
executive officers, it is the responsibility of the Compensation Committee to
recommend new incentive compensation plans and to implement changes and
improvements to existing compensation plans, all subject to approval by the
Board of Directors. The Compensation Committee makes its compensation
determinations based upon its own analysis of information it compiles and the
business experience of the members. In addition, the views of Mitchell Jacobson,
as Chairman of the Board and the President and Chief Executive Officer of the
Company, are, and will continue to be, considered by the members of the
Compensation Committee in their review of the performance and compensation of
individual executives. The Company will engage an outside compensation
consultant to assist the Compensation Committee if its members so request. An
outside consultant was not used in fiscal 2000.
OVERALL POLICY
The Compensation Committee believes that the Company's executive
officers constitute a highly qualified management team and are largely
responsible for the Company's success. The Compensation Committee further
believes that the stability of the management team is a contributing factor to
the Company's success. In order to promote stability, the Company's strategy is
to (i) compensate its executive officers principally through a stable base
salary set at a sufficiently high level to retain and motivate these officers,
(ii) link a portion of the executive officers' compensation to their performance
and the Company's profitability for each fiscal year, and (iii) align the
financial interests of the Company's executive officers with those of the
Company's shareholders. The compensation objectives of the Compensation
Committee and the Board of Directors are designed to provide competitive levels
of compensation consistent with the Company's annual and long-term performance
goals, recognize individual initiative and achievements and assist the Company
in attracting and retaining qualified executives.
The major elements of the executive compensation program are base
salary, annual incentive bonuses and long-term incentive compensation in the
form of stock options and restricted stock. Executive officers are also entitled
to customary benefits generally available to all associates of the Company,
including group medical and life insurance and a 401(k) plan. Base salary,
bonuses and benefits are paid by the Operating Subsidiary. Overall compensation
is intended to be consistent with companies of similar characteristics (size,
profitability, business lines, growth, etc.) (the "peer group"). The peer group
for purposes of determining compensation of executive officers is not the same
group of companies which are included in the industry index which appears on the
performance graph contained in this proxy statement. The purpose of the industry
index is to compare the performance of the Class A Common Stock to the
performance of the stock of companies with similar businesses to the Company.
The peer group for purposes of compensation matters is based upon companies with
characteristics similar to the Company, including, but not limited to, type of
business, in order to provide a more accurate measure of the compensation paid
to executives of comparable companies. In any particular year, the Company's
executives may be paid more or less than the executives of competitors,
depending upon the Company's overall financial performance and other factors.
For the fiscal year ended August 26, 2000, the Compensation Committee believes
that the Company's senior executives were paid at approximately the median as
compared to comparable executives in the peer group.
16
<PAGE>
FEDERAL INCOME TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the amount of compensation a publicly held corporation may deduct
as a business expense for Federal income tax purposes. The limit, which applies
to a company's chief executive officer and the four other most highly
compensated executive officers, is $1 million, subject to certain exceptions
(including the exclusion from the cap generally of performance-based
compensation). The Compensation Committee has determined that compensation
payable to the executive officers should generally meet the conditions required
for full deductibility under Internal Revenue Code Section 162(m). While the
Company does not expect to pay its executive officers compensation in excess of
the Section 162(m) deductibility limit, the Compensation Committee also
recognizes that in certain instances it may be in the best interest of the
Company to provide compensation that is not fully deductible.
BASE SALARY
Base salaries for the Company's senior executives are influenced by a
variety of objective and subjective factors. Particular consideration is given
to a comparison of the salaries at companies in the peer group and the
executive's level of responsibility, tenure with the Company, prior year's
compensation and effectiveness of management. The Compensation Committee has
also relied heavily on the recommendations of Mitchell Jacobson, Chairman of the
Board and the President and Chief Executive Officer of the Company, in setting
the compensation of the other executive officers, other than Sidney Jacobson.
The base salary for Sidney Jacobson, the Vice Chairman of the Board of Directors
of the Company, for fiscal 2000 was fixed under his employment agreement with
the Operating Subsidiary. The terms of Sidney Jacobson's employment agreement
were determined by negotiations between Mr. Jacobson and the Operating
Subsidiary and are reflective of his level of responsibility and tenure with the
Operating Subsidiary. A description of Mr. Jacobson's employment agreement (as
well as the employment agreement between the Operating Subsidiary and Mitchell
Jacobson, Chairman of the Board and President and Chief Executive Officer of the
Company) appears on page 14 of this proxy statement.
ANNUAL INCENTIVE BONUSES
Each fiscal year, the Company establishes a bonus pool in an amount
equal to 8-1/2% of the Company's pre-tax profits for that year. All associates
of the Company, including its executive officers, are eligible to receive
bonuses, but the award of bonuses to the associates generally and to any
associate specifically are at the Compensation Committee's sole discretion based
on the members' qualitative and quantitative evaluation of the Company's
performance during such year. Factors considered in awarding a bonus to a
specific executive officer include level of responsibility, exhibited individual
initiative, effectiveness of management and seniority. Bonuses to the Company's
senior executive officers are based on a percentage of their annual salaries.
The Compensation Committee does not currently establish specific
performance criteria which must be met in order to earn bonuses. The
Compensation Committee may consider setting objective standards in the future.
LONG-TERM INCENTIVE COMPENSATION
The Company reinforces the importance of producing satisfactory returns
to shareholders over the long term through the operation of the 1995 Option
Plan, the 1998 Option Plan and the Restricted Stock Plan. Stock option grants
and restricted stock awards provide executives with the opportunity to acquire
an equity interest in the Company and align the executive's interest with that
of the shareholders to create shareholder value as reflected in growth in the
price of the Class A Common Stock.
1995 and 1998 Option Plans. The 1995 Option Plan and 1998 Option Plan
(collectively, the "Option Plans) are administered by the Compensation
Committee, which may designate granted options as incentive stock options,
non-qualified stock options or a combination thereof. The Compensation Committee
has the discretion, subject to certain limitations, to determine the
participants under the Option Plans, the time and price at which options will be
granted, the period during which options will be exercisable and the number of
shares subject to each option. Under the Option Plans, the per share exercise
price of any option which is a non-incentive stock option may not be less than
85% of the fair market value of a share of Class A Common Stock on the date of
grant (except for non-incentive stock options granted to any person who is or
may reasonably be expected to become a "covered employee" under section
162(m)(3) of the Code, in which case the per share exercise price of such
options may not
17
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be less than 100% of such fair market value). The aggregate fair market value of
the shares of Class A Common Stock for which a participant may be granted
incentive stock options which are exercisable for the first time in any calendar
year may not exceed $100,000. No participant may be granted options to purchase
more than 1,000,000 shares of the Class A Common Stock. This approach provides
an incentive to the executive officers to increase shareholder value over the
long term, since the full benefit of the options granted cannot be realized
unless stock price appreciation occurs over a number of years.
Restricted Stock Plan. Pursuant to the Restricted Stock Plan, the
Compensation Committee will only regrant currently outstanding restricted shares
of Class A Common Stock to selected associates of the Company, including its
executive officers. The Compensation Committee, however, will not grant any
authorized but unissued restricted shares and will only regrant issued and
outstanding restricted shares currently held by associates of the Company if and
to the extent any such restricted shares are returned to the Company through
forfeiture. Pursuant to the Restricted Stock Plan, forfeiture of restricted
shares by associates of the Company shall occur if such associate leaves the
employ of the Company for any reason other than death or permanent disability or
termination of employment without cause, at which time all restricted shares
purchased by such individual shall be returned to the Company. The shares vest
in one-fifth increments over a five-year period commencing on the first
anniversary of the date of the award. The purpose of the Restricted Stock Plan
is to encourage ownership of the Class A Common Stock by associates, thereby
fostering a "shareholder perspective" among the participants, and to provide the
associates with additional incentive to promote the Company's success, thereby
promoting executive retention and long term achievement.
CHIEF EXECUTIVE OFFICER'S FISCAL 2000 COMPENSATION
The compensation paid to the Company's Chief Executive Officer,
Mitchell Jacobson, in fiscal 2000 consisted solely of base salary and was
established pursuant to his employment agreement with the Operating Subsidiary.
The terms of the agreement are described on page 14 of this proxy statement.
Under the terms of his employment agreement, Mr. Jacobson received an annual
base salary of $408,400. Mr. Jacobson did not receive any bonus compensation in
fiscal 2000. Due to his substantial stock ownership, the Compensation Committee
decided that it was not necessary to provide Mr. Jacobson with additional
long-term incentive through the grant of stock options.
COMPENSATION COMMITTEE
Roger Fradin
Denis Kelly
Raymond Langton
Philip Peller
REPORT OF AUDIT COMMITTEE
During fiscal 2000, the Audit Committee was comprised of Roger Fradin,
Denis Kelly, Raymond Langton and Philip Peller. The Audit Committee has adopted
a new written charter to set forth its responsibilities. A copy of the charter
is attached as Appendix A to this proxy statement.
As required by the charter, the Audit Committee reviewed the
Corporation's audited financial statements and met with management, as well as
with Arthur Andersen LLP, the Corporation's independent auditors, to discuss the
financial statements.
The Audit Committee received from Arthur Andersen LLP the required
disclosures regarding their independence and the report regarding the results of
their audit. In connection with its review of the financial statements and the
auditors' disclosures and report, the members of the Audit Committee discussed
with a representative of Arthur Andersen LLP their independence, as well as the
following:
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o the auditors' responsibilities in accordance with generally accepted
accounting standards;
o the initial selection of, and whether there were any changes in,
significant accounting policies or their application;
o management's judgments and accounting estimates;
o whether there were any significant audit adjustments;
o whether there were any disagreements with management;
o whether there was any consultation with other accountants;
o whether there were any major issues discussed with management prior
to the auditors' retention;
o whether the auditors encountered any difficulties in performing the
audit; and
o the auditor's judgments about the quality of the Corporation's
accounting policies.
Based on its discussions with management and the Corporation's
independent auditors, the Audit Committee did not become aware of any material
misstatements or omissions in the financial statements. Accordingly, the Audit
Committee recommended to the Board of Directors that the financial statements
be included in the Annual Report on Form 10-K for the period ended August 26,
2000 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Roger Fradin
Denis Kelly
Raymond Langton
Philip Peller
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STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the total
shareholder return on the Company's Class A Common Stock during the period
beginning on December 20, 1995 (the date on which the Class A Common Stock began
trading publicly on the New York Stock Exchange) and ending on August 26, 2000
with the cumulative total return on Standard & Poor's MidCap 400 Index and the
Dow Jones Other Industrial & Commercial Services Index. The comparison assumes
that $100 was invested on December 15, 1995 in the Class A Common Stock and on
November 30, 1995 in the foregoing indices and assumes the reinvestment of
dividends.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG MSC INDUSTRIAL DIRECT CO., INC., THE S&P MIDCAP 400 INDEX
AND THE DOW JONES INDUSTRIAL SERVICES, OTHER INDEX
[GRAPHIC OMITTED]
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
12/15/95 8/31/96 8/30/97 8/29/98 8/28/99 8/26/00
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
MSC Industrial Direct Co., Inc. 100 167 214 230 101 176
Standard & Poor's MidCap 400 Index 100 119 151 161 194 254
Dow Jones Other Industrial &
Commercial Services Index 100 113 116 127 153 143
</TABLE>
20
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Erik Gershwind, the nephew of Mitchell Jacobson, Chairman of the Board
and the President and Chief Executive Officer of the Company, and the son of
Marjorie Gershwind, Mr. Jacobson's sister and the beneficial owner of in excess
of 5% of the outstanding shares of Class B Common Stock, is employed by the
Company as the Director of Internet Business. Mr. Gershwind is currently
compensated at the rate of $165,000 per annum. Mr. Gershwind is also entitled to
participate in all of the employee benefit plans available to all of the
Company's associates.
See "Compensation Committee Interlocks and Insider Participation in
Compensation Decisions" for certain relationships and related party transactions
involving certain of the Company's directors.
SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, with the concurrence of the Audit Committee,
has selected Arthur Andersen LLP, independent auditors, as accountants for the
fiscal year 2001. Although shareholder ratification of the Board of Directors'
action in this respect is not required, the Board of Directors considers it
desirable for shareholders to pass upon the selection of auditors and, if the
shareholders disapprove of the selection, intends to reconsider the selection of
auditors for the fiscal year 2002, since it would be impractical to replace the
Company's auditors so late into the Company's current fiscal year.
It is expected that representatives of Arthur Andersen LLP will be
present at the Meeting, will have the opportunity to make a statement, if they
so desire, and will be available to respond to appropriate questions from
shareholders.
The Board of Directors recommends a vote FOR ratification of the
appointment of the independent certified public accountants. Proxies received in
response to this solicitation will be voted FOR ratification of the appointment
of the independent certified public accountants unless otherwise specified in
the proxy.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual
meeting of shareholders in 2002 must be received by August 8, 2001, in order to
be considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. The proxy or proxies designated by the Company will
have discretionary authority to vote on any matter properly presented by a
stockholder for consideration at the next Annual Meeting of Shareholders but not
submitted for inclusion in the proxy materials for such Meeting unless notice of
the matter is received by the Company not later than October 23, 2001 and
certain other conditions of the applicable rules of the Securities and Exchange
Commission are satisfied. Shareholder proposals should be directed to the
Secretary of the Company, at the address of the Company set forth on the first
page of this proxy statement.
21
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ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER, WITHOUT CHARGE AND UPON
WRITTEN REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K. ANY SUCH
WRITTEN REQUEST SHOULD BE DIRECTED TO THE OFFICE OF THE CHIEF FINANCIAL OFFICER,
MSC INDUSTRIAL DIRECT CO., INC., 75 MAXESS ROAD, MELVILLE, NEW YORK 11747.
Copies of the 2000 Annual Report to Shareholders are being mailed
simultaneously with this proxy statement. If you want to save the Company the
cost of mailing more than one Annual Report to the same address, the Company
will discontinue, at your request to the Secretary of the Company, mailing of
the duplicate copy to the account or accounts you select.
By Order of the Board of Directors,
Thomas Eccleston
Secretary
Melville, New York
December 6, 2000
22
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APPENDIX A
MSC INDUSTRIAL DIRECT CO., INC.
AUDIT COMMITTEE CHARTER
The Audit Committee shall be appointed by the Board of Directors (the "Board")
to assist the Board in monitoring (1) the integrity of the financial statements
of the Corporation, (2) the compliance by the Corporation with legal and
regulatory requirements and (3) the independence and performance of the
Corporation's internal and external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the New York Stock Exchange.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or associate of the Corporation or the Corporation's outside counsel
or independent auditor to attend a meeting of the Audit Committee or to meet
with any members of, or consultants to, the Audit Committee.
The Audit Committee shall make regular reports to the Board.
The principal responsibility of the Audit Committee is to satisfy itself that
the Corporation has effectively discharged its financial responsibilities and
made proper financial disclosures. This requires a review of the work done by
management, including a review of audit controls, in developing and presenting
the financial statements and operating results of the Corporation and a review
of the work of the independent auditors supporting their attestation that the
financial statements have been fairly presented. To satisfy this responsibility,
the Audit Committee shall:
Financial Statements
1. Review the annual audited financial statements with management and the
independent auditors prior to publication in order to detect any problem
areas and address the adequacy of proposed solutions. The Audit Committee
will review any major issues regarding accounting and auditing principles
and practices, as well as the adequacy of internal controls that could
significantly affect the Corporation's financial statements.
2. Review an analysis prepared by management and the independent auditor of
any significant financial reporting issues and judgments made in connection
with the preparation of the Corporation's financial statements.
3. Review with management and the independent auditor the Corporation's
quarterly financial statements prior to the release of quarterly earnings.
4. Review major changes to the Corporation's auditing and accounting
principles and practices as recommended by the independent auditor,
internal auditors or management.
5. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61, as the same may be modified or
supplemented, relating to the conduct of the audit.
6. Review with the independent auditor any problems or difficulties the
independent auditor may have encountered and any management letter provided
by the independent auditor and the Corporation's response to that letter.
Such review should include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
<PAGE>
b. Any changes required in the planned scope of the internal audit.
c. The internal audit department responsibilities, budget and staffing.
Independent Auditors
7. Recommend to the Board the engagement of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board. The
Audit Committee shall consider the auditor's expertise and experience,
reputation, cost, independence and procedures for quality control in making
such recommendation.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor, not less frequently
than annually, regarding the auditor's independence as required by
Independence Standards Board Standard No. 1, as the same may be modified or
supplemented, discuss such reports with the auditor, and if so determined
by the Audit Committee, recommend that the Board take appropriate action to
satisfy itself as to the independence of the auditor.
10. Evaluate together with the Board the performance of the independent auditor
and, as determined by the Audit Committee, recommend that the Board
re-engage or replace the independent auditor.
11. Meet with the independent auditor prior to the audit to review the planning
and staffing of the audit.
12. Obtain from the independent auditor assurance that the audit satisfied the
requirements of Section 10A of the Securities Exchange Act of 1934, as the
same may be modified or supplemented, and that the Audit Committee has been
adequately informed as to matters that have come to the attention of the
independent auditor.
Internal Audit
13. Review the appointment and replacement of the senior internal auditing
executive.
14. Review the significant reports to management prepared by the internal
auditing department and management's responses to such reports.
15. Meet periodically with management and internal audit personnel to review
the Company's major financial risk exposures and the steps being taken to
monitor and control such exposures.
Other Duties
16. Obtain reports from management, the Corporation's senior internal auditing
executive and the independent auditor that the Corporation's affiliated
entities are in conformity with applicable legal requirements and the
Corporation's Code of Conduct.
17. Advise the Board with respect to the Corporation's policies and procedures
regarding compliance with applicable laws and regulations and with the
Corporation's Code of Conduct.
18. Review with the Corporation's General Counsel legal matters that may have a
material impact on the financial statements, the Corporation's compliance
policies and any material reports or inquiries received from regulators or
governmental agencies.
19. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate
executive sessions.
<PAGE>
20. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Corporation's annual proxy statement.
21. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Corporation's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
Such duty is the responsibility of management and the independent auditor. Nor
is it the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with applicable laws and regulations and with the
Corporation's Code of Conduct.
<PAGE>
MSC INDUSTRIAL DIRECT CO., INC.
ANNUAL MEETING OF SHAREHOLDERS -- JANUARY 5, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints each of Shelley Boxer and Thomas
Eccleston as the undersigned's proxy, with full power of substitution, to vote
all shares of Class A Common Stock of MSC Industrial Direct Co., Inc. (the
"Company") which the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of the Company to be held on Friday,
January 5, 2001 at 9:00 A.M. local time, at the lower level atrium of Fleet Bank
at 300 Broad Hollow Road, Melville, New York 11747, and at any adjournments or
postponements thereof and, without limiting the generality of the power hereby
conferred, the proxy nominees named above and each of them are specifically
directed to vote as indicated below.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE BOARD OF DIRECTORS' NOMINEES
FOR DIRECTOR AND FOR THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN
THIS EXAMPLE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR WITHHOLD AUTHORITY Nominees:
1. Election of Directors all nominees listed at Charles Boehlke,
right (except as marked to to vote for all nominees Shelley Boxer,
the contrary below) listed at right Roger Fradin,
[ ] [ ] Mitchell Jacobson,
Sidney Jacobson,
Dennis Kelley,
Raymond Langton,
Philip Peller,
David Sandler and
James Schroeder.
.
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
---------------------------------------------------------------
2. Ratification of Arthur Andersen LLP as the Company's independent certified
public accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If there are any amendments or variations to the matters proposed at
the meeting or at any adjournments or postponements thereof, or if any other
business properly comes before the meeting, this proxy confers discretionary
authority on the proxy nominees named herein and each of them to vote on such
amendments, variations or other business.
The undersigned acknowledges receipt of the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement for the January 5, 2001
meeting.
MSC INDUSTRIAL DIRECT CO., INC.
75 MAXESS ROAD
MELVILLE, NEW YORK 11747
PLEASE PROMPTLY COMPLETE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
ENVELOPE.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(L.S.) (L.S.) Dated: ,
--------------------------- ---------- ------------------------ ---------- ----- ----
SIGNATURE OF SHAREHOLDER PRINT NAME SIGNATURE OF SHAREHOLDER PRINT NAME
</TABLE>
(Please sign exactly as name or names appear hereon. Full title of one signing
in representative capacity should be clearly designated after signature. If a
corporation, please sign in full corporate name by President or the authorized
officer(s). If a partnership, please sign in partnership name by authorized
person. If stock is in the name of two or more persons, each should sign. Joint
owners should each sign. Names of all joint holders should be written even if
signed by only one).
