COLUMBUS MCKINNON CORPORATION
140 JOHN JAMES AUDUBON PARKWAY
AMHERST, NEW YORK 14228-1197
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 17, 1998
----------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Columbus
McKinnon Corporation, a New York corporation (the "Company"), will be held at
the Company's corporate offices, 140 John James Audubon Parkway, Amherst, New
York, on August 17, 1998, at 10:00 a.m., local time, for the following purposes:
1. To elect six Directors to hold office until the 1999 Annual Meeting and
until their successors have been elected and qualified.
2. To take action upon and transact such other business as may be properly
brought before the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 26, 1998, as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting.
Shareholders are urged to execute the accompanying proxy and return it
promptly in the accompanying envelope, whether or not they expect to attend the
meeting. A shareholder may nevertheless vote in person if he or she does attend.
LOIS H. DEMLER
Corporate Secretary
Dated: July 14, 1998
<PAGE>
COLUMBUS MCKINNON CORPORATION
140 JOHN JAMES AUDUBON PARKWAY
AMHERST, NEW YORK 14228-1197
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PROXY STATEMENT
-------------------------------------------------
This Proxy Statement and the accompanying form of proxy are being furnished
in connection with the solicitation by the Board of Directors of Columbus
McKinnon Corporation, a New York corporation (the "Company"), of proxies to be
voted at the Annual Meeting of Shareholders to be held at the Company's
corporate offices, 140 John James Audubon Parkway, Amherst, New York, on August
17, 1998, at 10:00 a.m., local time, and at any adjournment or adjournments
thereof. The close of business on June 26, 1998 has been fixed as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the meeting. At the close of business on June 26, 1998, the Company had
outstanding 13,756,858 shares of common stock, $.01 par value per share ("Common
Stock"), the holders of which are entitled to one vote per share on each matter
properly brought before the Annual Meeting.
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to the use of the mails, proxies may be solicited
by personal interviews and telephone by Directors, officers and employees of the
Company. Arrangements will be made with brokerage houses, banks and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of Common Stock, and the Company will reimburse them
for reasonable out-of-pocket expenses incurred by them in connection therewith.
The shares represented by all valid proxies in the enclosed form will be
voted if received in time for the Annual Meeting in accordance with the
specifications, if any, made on the proxy card. If no specification is made, the
proxies will be voted FOR the nominees for Director named in this Proxy
Statement.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting will
constitute a quorum. Each nominee for election as a Director requires a
plurality of the votes cast in order to be elected. A plurality means that the
nominees with the largest number of votes are elected as Directors up to the
maximum number of Directors to be elected at the Annual Meeting. Only shares
that are voted in favor of a particular nominee will be counted towards
achievement of a plurality. Votes withheld will be counted in determining the
existence of a quorum, but will not be counted towards such nominee's or any
other nominee's achievement of plurality.
The execution of a proxy will not affect a shareholder's right to attend
the Annual Meeting and to vote in person. A shareholder who executes a proxy may
revoke it at any time before it is exercised by giving written notice to the
Secretary, by appearing at the Annual Meeting and so stating, or by submitting
another duly executed proxy bearing a later date.
The date of this Proxy Statement is the approximate date on which the Proxy
Statement and form of proxy were first sent or given to shareholders.
<PAGE>
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of not less than three nor more than nine Directors to
be elected at each annual meeting of shareholders and to serve for a term of one
year or until their successors are duly elected and qualified. In January 1998,
the number of Directors comprising the Board of Directors was increased from
five to six members.
Unless instructions to the contrary are received, it is intended that the
shares represented by proxies will be voted for the election as Directors of
Herbert P. Ladds, Jr., Timothy T. Tevens, Robert L. Montgomery, Jr., Edward W.
Duffy, Randolph A. Marks and L. David Black, each of whom is presently a
Director. Except for Mr. Tevens, each of these nominees has been previously
elected by the Company's shareholders. When the Board of Directors was expanded
to six members in January 1998, Mr. Tevens was appointed by the other Directors
to fill the additional directorship. If any of these nominees should become
unavailable for election for any reason, it is intended that the shares
represented by the proxies solicited herewith will be voted for such other
person as the Board of Directors shall designate. The Board of Directors has no
reason to believe that any of these nominees will be unable or unwilling to
serve if elected to office.
The following information is provided concerning the nominees for Director:
Herbert P. Ladds, Jr. has served as Chief Executive Officer of the Company
since 1986 and has been a Director of the Company since 1973. He was President
of the Company from 1982 until January 1998 and was Executive Vice President of
the Company from 1981 to 1982 and Vice President-Sales & Marketing from 1971 to
1980. In January 1998, Mr. Ladds was elected Chairman of the Board of Directors
of the Company. Mr. Ladds has announced that he plans to retire as Chief
Executive Officer of the Company in July 1998, but that upon such retirement he
will remain as Chairman of the Board of Directors. Mr. Ladds is also a director
of Utica Mutual Insurance Company and Eastman Machine Company.
Timothy T. Tevens was elected President and a Director of the Company in
January 1998. From May 1991 to January 1998 he served as Vice
President-Information Services of the Company and was elected Chief Operating
Officer in October 1996. From 1980 to 1991, Mr. Tevens was employed by Ernst &
Young LLP in various management consulting capacities. The Company has announced
that upon Mr. Ladds' retirement as Chief Executive Officer of the Company, Mr.
Tevens will assume the additional duties of that position.
Robert L. Montgomery, Jr. joined the Company in 1974 and has served as
Executive Vice President and Chief Financial Officer since 1987 and as a
Director of the Company since 1982. Prior thereto he was employed as a certified
public accountant by Price Waterhouse LLP.
Edward W. Duffy has been a Director of the Company since 1986. He served as
Chairman of the Board of Directors of the Company from 1986 until his retirement
as Chairman in January 1998, but continues as a Director. Mr. Duffy is a retired
Chairman of the Board and Chief Executive Officer of Marine Midland Bank and a
retired director of W. R. Grace & Co., Niagara Mohawk Power Corporation, Oneida
Limited and Utica Mutual Insurance Company.
Randolph A. Marks has been a Director of the Company since 1986. Mr. Marks
is a private investor and is a retired Chairman of the Board of American Brass
Company. He also serves as a director of Computer Task Group, Inc.
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L. David Black has been a Director of the Company since 1995. Mr. Black has
been the Chairman of the Board, President and Chief Executive Officer of JLG
Industries, Inc., a manufacturer of construction equipment since 1993. Prior
thereto, he served as President of JLG Industries, Inc.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended March 31, 1998, the Board of Directors held ten
meetings. Each Director attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings held by all committees of the
Board of Directors on which he served.
AUDIT COMMITTEE
The Board of Directors has a standing Audit Committee comprised of
Messrs. Duffy, Marks and Black. The duties of the Audit Committee consist of
reviewing with the Company's independent auditors and its management, the scope
and results of the annual audit and other services provided by the Company's
independent auditors. The Audit Committee held three meetings in fiscal 1998.
COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Duffy, Marks and Black.
Although the Compensation Committee held no meetings in fiscal 1998, it did meet
in April 1998 (the beginning of fiscal 1999) to make recommendations concerning
the salaries for officers of the Company and incentive compensation for
employees of and consultants to the Company.
OTHER COMMITTEES
The Board of Directors does not have a standing executive or nominating
committee.
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<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Directors
and executive officers of the Company:
NAME AGE POSITION(S) HELD
---- --- ----------------
Herbert P. Ladds, Jr. 65 Chairman of the Board and Chief Executive
Officer
Timothy T. Tevens 42 President, Chief Operating Officer and
Director
Robert L. Montgomery, Jr. 60 Executive Vice President, Chief Financial
Officer and Director
Ned T. Librock 45 Vice President-Sales and Marketing
Karen L. Howard 36 Vice President-Controller
Ernst K. H. Marburg 63 Vice President-Total Quality and Standards
Ivan E. Shawvan, Jr. 46 Vice President-Human Resources
Lois H. Demler 60 Corporate Secretary
Edward W. Duffy 72 Director
Randolph A. Marks 62 Director
L. David Black 61 Director
All officers of the Company are elected annually at the first meeting of
the Board of Directors following the Annual Meeting of Shareholders and serve at
the discretion of the Board of Directors. There are no family relationships
between any officers or Directors of the Company. Recent business experience of
the Directors is set forth above under "Election of Directors." Recent business
experience of the executive officers who are not also Directors is as follows:
Ned T. Librock was elected Vice President-Sales and Marketing in November
1995. Mr. Librock has been employed by the Company since 1990 in various sales
management capacities. Prior to 1990, Mr. Librock was employed by Dynabrade
Inc., a manufacturer of power tools, as director of Sales and Marketing.
Karen L. Howard was elected Vice President-Controller in January 1997. From
June 1995 to January 1997, Ms. Howard was employed by the Company in various
financial and accounting capacities. Prior to June 1995, Ms. Howard was employed
by Ernst & Young LLP as a certified public accountant.
Ernst K. H. Marburg has been employed by the Company since May 1980. Prior
to his election as Vice President-Total Quality and Standards in October 1996,
Mr. Marburg served the Company as Manager of Product Standards and Services for
nearly fifteen years.
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<PAGE>
Ivan E. Shawvan, Jr. was elected Vice President-Human Resources in January
1997. He has been employed by the Company since September 1984 and served as
General Manager of the Company's Sarasota, Florida operations from October 1988
to August 1996 and as Corporate Human Resources Manager since August 1996.
Lois H. Demler has been employed by the Company since 1963. She has been
the Corporate Secretary of the Company since 1987.
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth certain information
with respect to the compensation paid by the Company for services rendered
during the fiscal years ended March 31, 1996, 1997 and 1998 for the chief
executive officer and the other most highly compensated executive officers of
the Company. The amounts shown include compensation for services in all
compensation capacities.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
----------------------------- ---------------------------------------
Securities
Restricted Underlying
Fiscal Other Annual Stock Options/ All Other
Name and Principal Position Year Salary Bonus Compensation Awards(2) SARs(3) Compensation(4)
- --------------------------- ---- ------ ----- ------------ --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert P. Ladds, Jr., 1998 $435,000 $128,213 $ -- $ -- -- $ 20,729
Chief Executive 1997 354,893 4,900 -- -- -- 14,474
Officer 1996 341,096 144,450 -- -- -- 11,421
Timothy T. Tevens, 1998 220,000 75,000 -- -- -- 31,952
President and Chief 1997 162,411 1,845 217,044(1) -- 50,000 11,477
Operating Officer 1996 127,308 52,200 -- -- -- 7,086
Robert L. Montgomery, Jr., 1998 317,000 97,575 -- -- -- 19,597
Executive Vice President 1997 274,431 3,798 -- -- -- 13,821
And Chief Financial Officer 1996 259,588 109,935 -- -- -- 10,702
Ned T. Librock 1998 186,655 65,625 -- -- -- 18,984
Vice President - 1997 170,623 1,381 -- -- 50,000 13,712
Sales and Marketing 1996 100,631 34,459 -- -- -- 12,491
Ivan E. Shawvan, Jr., 1998 137,448 41,250 -- -- -- 17,330
Vice President - 1997 95,187 1,139 -- -- 50,000 9,030
Human Resources 1996 78,400 31,130 -- -- -- 11,798
<FN>
----------------------------------------
(1) Represents tax reimbursement payments made by the Company to Mr.
Tevens in fiscal 1997 to offset the income tax effects of the
expiration of the restrictions on 17,000 shares of restricted Common
Stock granted to him in 1991. See footnote (2) below.
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<PAGE>
(2) Mr. Librock was granted 11,900 shares of restricted Common Stock on
July 22, 1996, which had a value on such date of $166,600 and 5,100
shares of restricted Common Stock on August 1, 1994, which had a value
on such date of $48,996. As of March 31, 1998, the number of
restricted shares of Common Stock held by Mr. Librock was 17,000, and
the value of Mr. Librock's restricted shares of Common Stock on March
31, 1998 was $467,500. Mr. Tevens was granted 17,000 shares of
restricted Common Stock on May 1, 1991, which had a value on such date
of $135,650. The restrictions on Mr. Tevens' restricted shares of
Common Stock lapsed on April 30, 1996, on which date such shares had a
value of $269,875. Mr. Shawvan was granted 8,500 shares of restricted
Common Stock on August 1, 1994, which had a value on such date of
$81,660. As of March 31, 1998, the number of restricted shares of
Common Stock held by Mr. Shawvan was 8,500, and the value of Mr.
Shawvan's restricted shares of Common Stock on March 31, 1998 was
$233,750. None of the other officers listed in the above table hold
any restricted shares of Common Stock. The Company does not pay
dividends on its outstanding shares of restricted Common Stock, but
makes payments of additional compensation in lieu of such dividends.
See footnote (4) below.
(3) Represents options granted to Messrs. Librock, Tevens and Shawvan
pursuant to the Company's Incentive Stock Option Plan (the "Incentive
Plan").
(4) Comprised of: (i) the value of shares of Common Stock allocated in
fiscal 1998 under the Company's Employee Stock Ownership Plan (the
"ESOP") to accounts for Messrs. Ladds, Tevens, Montgomery, Librock and
Shawvan in the amounts of $19,001, $12,452, $17,869, $12,496 and
$13,222, respectively, (ii) premiums for group term life insurance
policies insuring the lives of Messrs. Ladds, Tevens, Montgomery,
Librock and Shawvan in the amount of $1,728 each, and (iii)
compensation in lieu of dividends on restricted shares of Common Stock
paid to Messrs. Tevens, Librock and Shawvan in the amounts of
$17,772, $4,760 and $2,380, respectively.
</FN>
</TABLE>
OPTIONS GRANTED IN LAST FISCAL YEAR
There were no grants of stock options to the named executives in fiscal
1998.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the named
executives concerning the exercise of options during fiscal 1998 and unexercised
options held at the end of fiscal 1998.
<TABLE>
<CAPTION>
Value of
Number of Unexercised in the
Unexercised Options Money Options
At Fiscal Year End At Fiscal Year End(1)
-------------------------- --------------------------
Shares
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Herbert P. Ladds, Jr.,
Chief Executive
Officer $--- $--- --- --- $ --- $ ---
Timothy T. Tevens,
President and Chief
Operating Officer --- --- 12,500 37,500 150,000 450,000
Robert L. Montgomery, Jr.,
Executive Vice President
and Chief Financial
Officer --- --- --- --- --- ---
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<PAGE>
Ned T. Librock,
Vice President -
Sales and Marketing --- --- 12,500 37,500 150,000 450,000
Ivan E. Shawvan, Jr.,
Vice President -
Human Resources --- --- 12,500 37,500 150,000 450,000
<FN>
- ----------------------------------
(1) Represent the difference between $27.50, the closing market value of Common
Stock as of March 31, 1998, and the exercise prices of such options.
</FN>
</TABLE>
EMPLOYEE PLANS
EMPLOYEE STOCK OWNERSHIP PLAN. The Company maintains the ESOP for the
benefit of certain of its salaried and non-union hourly employees. The ESOP is
intended to be an employee stock ownership plan within the meaning of Section
4975 (e)(7) of the Internal Revenue Code of 1986, as amended (the "Code") and an
eligible individual account plan within the meaning of Section 407(d)(3) of the
Code. From 1988 through 1995, the ESOP has purchased from the Company 1,373,549
shares of Common Stock (the "ESOP Shares") for the aggregate sum of
approximately $10.5 million. The proceeds of certain institutional loans (the
"ESOP Loans") were used to fund such purchases. The ESOP Loans are secured by
the ESOP Shares, and are guaranteed by the Company.
On a quarterly basis, the Company makes a contribution to the ESOP in an
amount determined by the Company's Board of Directors. In fiscal 1998, the
Company's cash contribution was $1,025,499. The ESOP trustees utilize the entire
contribution to make payments of principal and interest on the ESOP Loans.
Common Stock not allocated to ESOP participants ("ESOP Shares") is recorded
in an ESOP suspense account and is held as collateral for repayment of the ESOP
Loans. As payments of principal and interest are received by the lenders, ESOP
Shares are released from the ESOP suspense account annually and are then
allocated to the ESOP participants in the same proportion as a participant's
compensation for such year bears to total compensation of all participants.
An ESOP participant becomes 100% vested in all amounts allocated to him or
her after five years of service. The shares of Common Stock held by the
participants in the ESOP represent a registration-type class of securities and
are voted by the participants in the same manner as any other share of Common
Stock.
In general, Common Stock allocated to a participant's account is
distributed upon his or her termination of employment at normal retirement age
(65) or death. The distribution is made in whole shares of Common Stock plus
cash in lieu of any fractional shares.
Robert L. Montgomery, Jr., Karen L. Howard, Ivan E. Shawvan, Jr. and
Timothy R. Harvey serve as Trustees of the ESOP. As of March 31, 1998, the ESOP
owned approximately 1,180,428 shares of Common Stock. Common Stock allocated
pursuant to the ESOP to Messrs. Ladds, Tevens, Montgomery, Librock and Shawvan
as of March 31, 1998 is 14,500 shares, 3,214 shares, 12,550 shares, 3,289 shares
and 4,541 shares, respectively.
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<PAGE>
PENSION PLAN. The Company has a non-contributory, defined benefit pension
plan (the "Pension Plan") which provides certain of its employees with
retirement benefits. For each year of Plan Participation (as defined in the
Pension Plan) limited to 35 years, a participant earns an annual pension benefit
equal to 1.00% of his Final Average Earnings (as defined in the Pension Plan)
plus .50% of that part, if any, of such compensation in excess of his Covered
Compensation (as defined in the Pension Plan). Pension benefits are not subject
to reduction for social security or other offset amounts. If Messrs. Ladds,
Tevens, Montgomery, Librock and Shawvan continue at their current levels of
compensation and retire at age 65, the total estimated annual pension benefits
under the Pension Plan for them would be approximately $35,883, $61,823,
$41,512, $55,828 and $55,509, respectively.
NON-QUALIFIED STOCK OPTION PLAN. In October 1995, the Company adopted the
Columbus McKinnon Corporation Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") and reserved, subject to certain requirements, an
aggregate of 250,000 shares of Common Stock for issuance thereunder. Under the
terms of the Non-Qualified Plan, options may be granted to officers and other
key employees of the Company as well as to non-employee directors and advisors.
The Company has not granted any options under the Non-Qualified Plan.
INCENTIVE STOCK OPTION PLAN. The Company's Columbus McKinnon Corporation
Incentive Stock Option Plan (the "Incentive Plan"), which was adopted in October
1995, authorizes grants to officers and other key employees of the Company and
its subsidiaries of stock options that are intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Code. The Incentive Plan
reserved, subject to certain adjustments, an aggregate of 1,250,000 shares of
Common Stock to be issued thereunder. Options granted under the Incentive Plan
become exercisable over a four-year period at the rate of 25% per year
commencing one year from the date of grant at an exercise price of not less than
100% of the fair market value of the Common Stock on the date of grant. Any
option granted thereunder may be exercised not earlier than one year and not
later than ten years from the date such option is granted. In the event of
certain extraordinary transactions, including a change of control of the
Company, the vesting of such options would automatically accelerate. In fiscal
1998 the Company did not grant any options to purchase shares of Common Stock
under the Incentive Plan.
RESTRICTED STOCK PLAN. The Company adopted the Columbus McKinnon
Corporation Restricted Stock Plan (the "Restricted Stock Plan") in October 1995
and reserved, subject to certain adjustments, an aggregate of 100,000 shares of
Common Stock to be issued upon the grant of restricted stock awards thereunder.
Under the terms of the Restricted Stock Plan, the Compensation Committee may
grant to employees of the Company and its subsidiaries restricted stock awards
to purchase shares of Common Stock at a purchase price of not less than $.01 per
share. Shares of Common Stock issued under the Restricted Stock Plan are subject
to certain transfer restrictions and, subject to certain exceptions, shall be
forfeited if the grantee's employment with the Company or any of its
subsidiaries is terminated at any time prior to the date the transfer
restrictions have lapsed. Grantees who remain continuously employed with the
Company or its subsidiaries become vested in their shares five years after the
date of the grant, or earlier upon death, disability, retirement or other
special circumstances. The restrictions on any such stock awards automatically
lapse in the event of certain extraordinary transactions, including a change of
control of the Company. In fiscal 1998, the Company awarded 7,500 shares of
Common Stock under the Restricted Stock Plan.
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EXECUTIVE INCENTIVE PLAN. The Company maintained an incentive plan for its
executive officers and other management employees. This plan provided for annual
cash bonuses based upon the Company's attainment of targeted pre-tax earnings
determined annually by the Company's Board of Directors. Incentive awards were a
percentage of base salary, and for the executive officers ranged from 30% of
base salary, if the financial objective was met, to up to 45% of base salary if
the financial objective was exceeded by 10%. Awards earned under this plan were
reduced by any bonus earned under the Corporate Incentive Plan. In fiscal 1998,
bonuses paid under this plan to Messrs. Ladds, Tevens, Montgomery, Librock and
Shawvan were $113,308, $68,916, $86,105, $58,963 and $37,409.
CORPORATE INCENTIVE PLAN. The Company maintained an incentive plan for most
of its United States and Canadian based employees. This plan provided for annual
cash bonuses based upon the Company's attainment of targeted pre-tax earnings
determined by the Company's Board of Directors. The incentive pool, if any, is
distributed on the basis of relative compensation. In fiscal 1998, bonuses paid
under this plan to Messrs. Ladds, Tevens, Montgomery, Librock and Shawvan were
$14,905, $6,084, $11,470, $6,662 and $3,841, respectively.
EVA(R) INCENTIVE PLAN. In fiscal 1998, as a replacement for the Corporate
Incentive Plan and the Executive Incentive Plan, the Company adopted The
Columbus McKinnon Corporation EVA(R) Incentive Compensation Plan (the "EVA(R)
Plan") which is based upon Stern Stewart Economic Value Added ("EVA(R)"
concepts. Under the EVA(R) Plan, for each fiscal year, each employee of the
Company is assigned a target bonus by management ranging from 3% to 30% of base
compensation, depending upon job classification. The actual bonus to be paid to
an employee will be equal to his target bonus times a bonus multiple, which can
be greater or less than 100%, based upon the relationship between actual EVA(R)
results and targeted EVA(R) results. Payments under the EVA(R) Plan will be made
within two and one half months of the completion of the applicable fiscal year.
401(k) PLAN. The Company maintains a 401(k) retirement savings plan (the
"401(k) Plan") which covers all non-union salaried and hourly employees in the
United States who have completed at least 90 days of service. Employees may
contribute up to 15% of their annual compensation (8% for highly compensated
employees), subject to an annual limitation as adjusted by the Code. Employee
contributions are matched by the Company in amount equal to 50% of the
employee's Salary Reduction Contributions (as defined in the 401(k) Plan). The
Company's matching contributions are limited to 3% of the employee's base pay
and vest at the rate of 20% per year.
CHANGE IN CONTROL AGREEMENTS
In fiscal 1998, the Company entered into change in control agreements (the
"Change in Control Agreements") with each of the named officers and certain
other officers and employees of the Company. The Change in Control Agreements
provide for an initial term of one year, which, absent delivery of notice of
termination, is automatically renewed annually for an additional one year term.
Generally, each officer or employee is entitled to receive, upon termination of
employment within thirty-six months of a "Change in Control" (unless such
termination is because of death or disability, by the Company for "Cause" (as
defined in the Change in Control Agreements), or by an officer or employee other
than for "Good Reason" (as defined in the Change in Control Agreements)), (i) a
lump sum severance payment equal to three times the sum of (A) his or her
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<PAGE>
current annual salary and (B) the greater of (1) the annual target bonus under
the Executive Incentive Plan and/or Corporate Incentive Plan in effect on the
date of termination and (2) the annual target bonus under the Executive
Incentive Plan and/or Corporate Incentive Plan in effect immediately prior to
the Change in Control, (ii) continued coverage for thirty-six months under the
Company's medical and life insurance plans, (iii) at the option of the executive
or employee, either three additional years of deemed participation in the
Pension Plan or a lump sum payment equal to the actuarial equivalent of the
pension payment which he or she would have accrued under the Pension Plan had he
or she continued to be employed by the Company for three additional years and
(iv) certain other specified payments. Aggregate "payments in the nature of
compensation" (within the meaning of Section 280(G) of the Internal Revenue
Code) payable to any executive or employee under the Change in Control
Agreements is limited to the amount that is fully deductible by the Company
under Section 280(G) of the Internal Revenue Code less one Dollar. The events
that trigger a Change in Control under the Change in Control Agreements include
(i) the acquisition of 20% or more of the Company's outstanding Common Stock by
certain persons, (ii) certain changes in the membership of the Company's Board
of Directors, (iii) certain mergers or consolidations, (iv) certain sales or
transfers of substantially all of the Company's assets and (v) the approval of
the shareholders of the Company of a plan of dissolution or liquidation.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for the executive officers of the Company is administered by
the Compensation Committee which currently consists of three independent
(non-employee) Directors. The Compensation Committee approves the compensation
arrangements of the Chief Executive Officer and other officers of the Company.
The following objectives, established by the Compensation Committee, are
the basis for the Company's executive compensation program:
* providing a comprehensive program with components including base salary,
performance incentives, and benefits that support and align with the Company's
goal of providing superior value to customers and shareholders; and
* ensuring that the Company is competitive and can attract and retain
qualified and experienced executive officers and other key personnel; and
* appropriately motivating its executive officers and other key personnel
to seek to attain short term, intermediate term and long term corporate and
divisional performance goals and to manage the Company for sustained long term
growth.
The Board of Directors of the Company has delegated to the Compensation
Committee responsibility for establishing and administering the compensation
programs for the Chief Executive Officer and other executive officers.
The Compensation Committee reviews compensation policy and specific levels
of compensation paid to the Chief Executive Officer and other executive officers
of the Company and reports and makes recommendations to the Board of Directors
regarding executive compensation, policies and programs.
The Compensation Committee is assisted in these efforts, when required by
an independent outside consultant, and by the Company's internal staff, who
provide the Compensation Committee with relevant information and recommendations
regarding compensation policies and specific compensation matters.
ANNUAL COMPENSATION PROGRAMS
Executive base salaries are compared to manufacturing companies included in
an annual management survey completed by outside compensation consultants; all
data has been regressed to revenues equivalent to the Company's. This survey is
used because it reflects companies in the same revenue size and industry sectors
as the Company. The Compensation Committee believes salaries should be
maintained between the first and third quartiles of surveyed salaries reported
depending upon the relative experience and individual performance of the
executive.
Salary adjustments are governed by guidelines covering three factors (1)
the individual officer's performance (merit), (2) market parity (to adjust
salaries of high performing individuals based on the competitive market), and
(3) promotions (to reflect increases in responsibility). In assessing market
parity, the Company targets groups of companies surveyed and referred to above.
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Each executive officer's corporate position is assigned a title
classification reflecting the Company's evaluation of the position's overall
contribution to corporate goals and the value the labor market places on the
associated job skills. A range of appropriate salaries is then assigned to that
title classification. Each April, the salary ranges may be adjusted to reflect
market conditions, including changes in comparison companies, inflation, and
supply and demand in the market. The midpoint of the salary range corresponds to
a "market rate" salary which the Compensation Committee believes is appropriate
for an experienced executive who is performing satisfactorily, with salaries in
excess of the salary range midpoint appropriate for executives whose performance
is superior or outstanding.
The Compensation Committee has recommended that any progression or
regression within the salary range for an executive officer shall depend upon a
formal annual review of job performance, accomplishments and progress toward
individual and/or overall goals and objectives for the segments of the Company
that such officer oversees as well as his contributions to the overall direction
of the Company. Long term growth in shareholder value is an important factor.
The results of executive officers' performance evaluations will form a part of
the basis of the Compensation Committee's decision to approve, at its
discretion, future adjustments in base salaries of executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation decisions affecting the Chief Executive Officer were based on
quantitative and qualitative factors relative to the Company's fiscal 1997
financial and operating results as well as strategic achievements such as
acquisitions. Both the salary increase and bonus payout cited below were based
on performance.
The Compensation Committee increased Mr. Ladds' base salary to
approximately $435,000 for fiscal 1998, representing an increase of
approximately 22.5% over his base salary for fiscal 1997. This salary adjustment
was made in April 1997.
In fiscal 1998, Mr. Ladds received an incentive compensation award of
$14,905 under the Corporate Incentive Plan and an award of $113,308 under the
Executive Incentive Plan, each based upon fiscal 1997 results.
SECTION 162(m) OF INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of
$1,000,000 paid to a Company's chief executive officer and any one of the four
other most highly paid executive officers during its taxable year. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. Based upon the compensation paid to Mr. Ladds and the
Company's other executive officers in fiscal 1998, it does not appear that the
Section 162(m) limitation will have a significant impact on the Company in the
near term. However, the Compensation Committee plans to review this matter
periodically and to take such actions as are necessary to comply with the new
statute to avoid non-deductible compensation payments.
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PERFORMANCE GRAPH
The Performance Graph shown below compares the cumulative total shareholder
return on Common Stock, based on the market price of the Common Stock, with the
total return of the S & P MidCap 400 Index and the NASDAQ National Market
Industrials Index. The comparison of total return assumes that a fixed
investment of $100 was invested on February 22, 1996 (the effective date of the
Company's initial public offering) in Common Stock and in each of the foregoing
indices and further assumes the reinvestment of dividends. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Edward W. Duffy, Randolph A.
Marks and L. David Black, each an outside director of the Company. None of the
members of the Compensation Committee was, during fiscal 1998 or prior thereto,
an officer or employee of the Company or any of its subsidiaries. In fiscal
1998, none of the executive officers of the Company served on the Compensation
Committee of another entity or on any other committee of the Board of Directors
of another entity performing similar functions during such period, except that
Mr. Ladds served on the Compensation Committee of the Board of Directors of
Utica Mutual Insurance Company.
COMPENSATION OF DIRECTORS
The Company pays an annual retainer of $20,000 to its Chairman of the Board
and an annual retainer of $15,000 to each of its other outside directors.
Directors who are employees of the Company do not receive an annual retainer.
The Chairman of the Audit Committee and Compensation Committee each receive an
additional annual retainer of $2,500. In addition, each non-employee director
also receives a fee of $1,000 for each Board of Directors and committee meeting
attended and is reimbursed for any reasonable expenses incurred in attending
such meetings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission and NASDAQ initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, Directors and greater than 10% shareholders are required
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 1998 all Section
16(a) filing requirements applicable to its officers, Directors and greater
than 10% beneficial owners were complied with.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of May 31, 1998
regarding the beneficial ownership of the Company's Common Stock (a) by each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock; (b) by each Director; (c) by each of the executive
officers named in the Summary Compensation Table; and (d) by all executive
officers and Directors of the Company as a group.
Number Percentage
Of Shares(1) Of Class
------------ --------
Directors, Officers and 5% Shareholders
- ---------------------------------------
Herbert P. Ladds, Jr.(2)(3)................ 1,053,046 7.63%
Timothy T. Tevens(2)(4).................... 33,773 *
Robert L. Montgomery, Jr.(2)(5)............ 1,147,878 8.31
Edward W. Duffy(2)......................... 360,739 2.61
Randolph A. Marks(2)....................... 239,840 1.74
L. David Black(2).......................... 1,700 *
Ned T. Librock(2)(6)....................... 33,945 *
Ivan E. Shawvan, Jr.(2)(7)................. 26,241 *
Columbus McKinnon Corporation Employee
Stock Ownership Plan(2)................... 1,180,428 8.55
All Directors and Executive Officers
as a Group (11 persons)(8)................ 2,947,032 21.34
Harris Associates L.P.(9).................. 821,400 5.95
Gilchrist B. Berg(10)...................... 818,100 5.93
- --------------
* Less than 1%.
(1) Rounded to the nearest whole share. Unless otherwise indicated in the
footnotes, each of the shareholders named in this table has sole voting and
investment power with respect to the shares shown as beneficially owned by
him, except to the extent that authority is shared by spouses under
applicable law.
(2) The address of each of the executive officers and directors and the
Columbus McKinnon Employee Stock Ownership Plan is c/o Columbus McKinnon
Corporation, 140 John James Audubon Parkway, Amherst, New York 14228-1197.
(3) Includes (i) 861,201 shares of Common Stock owned directly, (ii) 161,705
shares of Common Stock owned directly by Mr. Ladds' spouse, (iii) 15,640
shares of Common Stock held by Mr. Ladds' spouse as trustee for the
grandchildren of Mr. Ladds and (iv) 14,500 shares of Common Stock allocated
to Mr. Ladds' ESOP account.
(4) Includes (i) 18,009 shares of Common Stock directly, (ii) 50 shares of
Common Stock owned by Mr. Tevens' son, (iii) 3,214 shares of Common Stock
allocated to Mr. Tevens' ESOP account and (iv) 12,500 shares of Common
Stock issuable under currently exercisable options granted to Mr. Tevens
under the Company's Incentive Stock Option Plan (the "ISO Plan"). Excludes
37,500 shares of Common Stock issuable under options granted to Mr. Tevens
under the ISO Plan which are not exercisable within 60 days.
(5) Includes (i) 1,050,328 shares of Common Stock owned directly, (ii) 85,000
shares of Common Stock owned directly by Mr. Montgomery's spouse and (iii)
12,550 shares of Common Stock allocated to Mr. Montgomery's ESOP account.
Excludes 1,167,878 additional shares of Common Stock owned by the ESOP for
which Mr. Montgomery serves as one of four trustees and for which he
disclaims any beneficial ownership.
(6) Includes (i) 18,004 shares of Common Stock directly, (ii) 152 shares of
Common Stock owned by Mr. Librock's son, (iii) 3,289 shares of Common Stock
allocated to Mr. Librock's ESOP account and (iv) 12,500 shares of Common
Stock issuable under currently exercisable options granted to Mr. Librock
under the ISO Plan. Excludes 37,500 shares of Common Stock issuable under
options granted to Mr. Librock under the ISO Plan which are not exercisable
within 60 days.
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(7) Includes (i) 9,200 shares of Common Stock owned directly, (ii) 4,541 shares
of Common Stock allocated to Mr. Shawvan's ESOP account and (iii) 12,500
shares of Common Stock issuable under currently exercisable options granted
to Mr. Shawvan under the ISO Plan. Excludes (i) 1,175,887 additional shares
of Common Stock owned by the ESOP for which Mr. Shawvan serves as one of
four trustees and for which he disclaims any beneficial ownership and (ii)
37,500 shares of Common Stock issuable under options granted to Mr. Shawvan
under the ISO Plan which are not exercisable within 60 days.
(8) Includes options to purchase an aggregate of 50,000 shares of Common Stock
issuable to certain executive officers under the ISO Plan, all of which are
exercisable within 60 days. Excludes the shares of Common Stock owned by
the ESOP as to which Messrs. Montgomery and Shawvan and Ms. Howard serve as
trustees, except for an aggregate of 49,258 shares allocated to the
respective ESOP accounts of the executive officers of the Company and (ii)
options to purchase an aggregate of 150,000 shares of Common Stock issued
to certain executive officers under the ISO Plan, none of which are
exercisable within 60 days.
(9) Based on information set forth in Schedule 13G filed with the Commission by
Harris Associates L.P. on January 29, 1998. The stated business address for
Harris Associates L.P. is Two North LaSalle Street, Suite 500, Chicago,
Illinois 60602-3790.
(10) Based on information set forth in Schedule 13D filed with the Commission by
Gilchrist B. Berg on November 1, 1996. The stated business address for Mr.
Berg is 225 Water Street, Suite 1987, Jacksonville, Florida 32202.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of Common Stock present,
in person or by proxy, is required for the election of each Director, assuming a
quorum is present or represented at the meeting.
The Board of Directors recommends a vote "FOR" each of the nominees for
Director.
OTHER MATTERS
The Company's management does not presently know of any matters to be
presented for consideration at the Annual Meeting other than the matters
described in the Notice of Annual Meeting. However, if other matters are
presented, the accompanying proxy confers upon the person or persons entitled to
vote the shares represented by the proxy, discretionary authority to vote such
shares in respect of any such other matter in accordance with their best
judgment.
OTHER INFORMATION
Ernst & Young LLP has been selected as the independent auditors for the
Company's current fiscal year and has been the Company's independent auditors
for its most recent fiscal year ended March 31, 1998.
Representatives of Ernst & Young LLP are expected to be present at the 1998
Annual Meeting of Shareholders and will have the opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
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THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, FOR THE FISCAL YEAR ENDED MARCH 31, 1998, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO. Such written request should be directed to Columbus McKinnon
Corporation, 140 John James Audubon Parkway, Amherst, New York 14228-1197,
Attention: Robert L. Montgomery, Jr. Each such request must set forth a good
faith representation that, as of June 26, 1998, the person making the request
was a beneficial owner of securities entitled to vote at the Annual Meeting of
Shareholders.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting must be received by the Company by March 19, 1999 to be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting.
The accompanying Notice and this Proxy Statement are sent by order of the
Board of Directors.
LOIS H. DEMLER
Corporate Secretary
Dated: July 14, 1998
- --------------------------------------------------------------------------------
SHAREHOLDERS ARE URGED TO EXECUTE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING.
A SHAREHOLDER MAY NEVERTHELESS VOTE IN PERSON IF HE OR SHE DOES ATTEND.
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PROXY
COLUMBUS McKINNON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 17, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints TIMOTHY T. TEVENS and ROBERT L. MONTGOMERY,
JR. and each or any of them, attorneys and proxies, with full power of
substitution, to vote at the Annual Meeting of Shareholders of COLUMBUS McKINNON
CORPORATION (the "Company") to be held at the Company's corporate offices at 140
John James Audubon Parkway, Amherst, New York, on August 17, 1998 at 10:00 a.m.,
local time, and any adjournment(s) thereof revoking all previous proxies, with
all powers the undersigned would possess if present, to act upon the following
matters and upon such other business as may properly come before the meeting or
any adjournment(s) thereof.
ELECTION OF DIRECTORS:
_ _
FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote |_|
(except as marked to the for all nominees listed below
contrary below)
Instruction: To withhold authority to vote for any individual nominee mark the
box next to the nominee's name below):
_ _
|_| HERBERT P. LADDS, JR. |_| EDWARD W. DUFFY
|_| TIMOTHY T. TEVENS |_| RANDOLPH A. MARKS
|_| ROBERT L. MONTGOMERY, JR. |_| L. DAVID BLACK
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED ABOVE.
Dated: ___________, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
Please sign exactly as name appears. When shares are held by
joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If
a partnership, please sign a partnership name by authorized
person. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
