<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
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
Columbus McKinnon Corporation
(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:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO FOR COLUMBUS McKINNON CORP. W/ADDRESS]
July 12, 1999
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Columbus McKinnon Corporation to be held on August 16, 1999. The meeting will
be held at the Company's headquarters at 140 John James Audubon Parkway,
Amherst, New York at 10:00 a.m. local time. Your Board of Directors and
management look forward to greeting personally those shareholders able to
attend.
PROXY CONTEST THREATENED
This year's annual meeting is particularly important. A small group of New
York City-based hedge funds and related individuals, calling themselves the
Columbus McKinnon Shareholders Committee (the "Dissidents"), is threatening to
wage a proxy fight to take control of your Company, with a platform of
pursuing a strategy designed to realize maximum value for all shareholders--
which the Company believes, simply put, is to put your Company up for sale.
For many reasons, we believe strongly that now is not the right time to sell
your Company, and that the interests of all Columbus McKinnon shareholders
will be best served if the Company's current group of experienced directors is
re-elected to continue its work with existing management to pursue its
carefully designed long-term business strategy--a strategy that will deliver
maximum shareholder value. Accordingly, you are urged to sign, date and
promptly mail your enclosed WHITE proxy card.
MAXIMIZING SHAREHOLDER VALUE
Your Board of Directors remains committed to maximizing long-term value for
all Columbus McKinnon shareholders and it is pursuing a course of action to
best achieve that objective. Take a closer look at some of the key reasons why
you should continue to support your Board of Directors.
First, the Dissidents are not saying that they are going to do a better job
of running your Company. They are on the record for admitting that
"operationally the Company has performed well" and "the investment community
is also aware of [Columbus McKinnon's]
<PAGE>
operational strength and value and is expecting even better performance to
come." Despite what sounds like an endorsement of the business plan being
executed by your current Board and management, the Dissidents now argue that
your Company's leaders should be voted out.
The consequences of having a Board of Directors whose aim is just to sell
the company can be dire, as at least one of the Dissidents knows from personal
experience: Mr. Curtis Schenker of Scoggin Capital Management was appointed to
the board of directors of Hills Stores, Inc. in 1995 following a proxy fight
led by Dickstein Partners Inc. in order to force a sale of the company in
connection with an offer by Dickstein at $27 per share. The stock price of
Hills at the time of the election of the new slate of directors was
approximately $24 per share. For three years, Hills' new board of directors
tried and failed to sell the company as operating performance deteriorated.
Finally, they accepted an offer at $1.50 per share. Although the Company
believes that Mr. Schenker resigned within a year of his appointment, he was
on the Board when Dickstein dropped its own proposal (two weeks after Mr.
Schenker's appointment).
Second, under the direction of your Board of Directors, management is
executing a solid operating plan that delivers value to shareholders. Your
Board believes that Columbus McKinnon will continue to grow profitably through
internal growth and acquisitions, domestically and internationally. Current
initiatives are in place to: (i) increase sales of our new broader line of
material handling products and integrated solutions; (ii) penetrate new global
markets; (iii) reduce costs by realizing synergies from past acquisitions as
well as from combined purchasing efforts due to the Company's increasing size;
(iv) selectively pursue acquisition opportunities, including execution of the
recently-announced CraneMart(TM) strategy (an integrated network of full
service crane builders to be supplied primarily by Columbus McKinnon) and (v)
divest assets that do not meet management's criteria. These strategic
initiatives are the foundation upon which your Board of Directors and
management plan to lead Columbus McKinnon into an even more profitable future.
Third, Columbus McKinnon's plan is working. Sales and cash flow from
operating activities have increased at compound rates of 39% and 59%,
respectively, over the past five years. Through carefully selected
acquisitions which transformed your Company into a global provider of material
handling solutions, your Company has established a strong platform for
continued growth. A change in control of your Board will jeopardize the
execution of this strategic plan and could affect the value of your
investment. The election of the Dissidents' nominees will cause Columbus
McKinnon to lose a group of experienced, dedicated directors with an average
of more than 10 years of material handling business experience and may lose
valued employees who would seek a more stable job environment.
<PAGE>
The directors, officers and employees of Columbus McKinnon own a very
significant amount of stock--far in excess of the Dissidents' position (with
the directors, officers and the Company's employee stock ownership plan alone
holding over 30%), and in most cases have held these shares for up to 12
years. The Columbus McKinnon Corporation Employee Stock Ownership Plan, Herb
Ladds, Chairman of the Board, and Bob Montgomery, Executive Vice President,
are the three largest shareholders in the Company and are thus completely
aligned with the other shareholders in seeking to maximize shareholder value.
Enclosed with this letter is Columbus McKinnon's notice of meeting and Proxy
Statement and a WHITE proxy. Please read these materials for a more complete
description of the matters to be considered at the annual meeting. Then, take
a minute to sign, date and mail your WHITE proxy in the postage-paid envelope.
Remember, to support your Board of Directors, do not sign any card you receive
from the Dissidents, not even as a protest. If you have any questions, please
call our Corporate Secretary, Lois Demler, at 716-689-5409.
Thank you for your continued interest and support.
Sincerely yours,
/s/ Herbert P. Ladds, Jr. /s/ Timothy T. Tevens /s/ Robert L. Montgomery, Jr.
Herbert P. Ladds, Jr. Timothy T. Tevens Robert L. Montgomery, Jr.
/s/ Edward W. Duffy /s/ Randolph A. Marks /s/ L. David Black
Edward W. Duffy Randolph A. Marks L. David Black
/s/ Carlos Pascual /s/ Richard H. Fleming
Carlos Pascual Richard H. Fleming
<PAGE>
- -------------------------------- IMPORTANT --------------------------------
Your vote is important. Please take a moment to sign, date and promptly
mail your WHITE proxy in the postage paid envelope provided. Remember, do
not return any proxy card sent to you by the Columbus McKinnon Shareholders
Committee, the Dissidents, not even as a vote of protest.
If your shares are registered in the name of a broker, only your broker
can execute a proxy and vote your shares and only after receiving your
specific instructions. Please contact the person responsible for your
account and direct him or her to execute a proxy on your behalf today. Then
mail your proxy at once in the envelope provided. If you have any questions
or need further assistance in voting, please call:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 296-5550 (Collect)
Call Toll-Free -- 1-800-697-6974
- --------------------------------------------------------------------------------
<PAGE>
COLUMBUS McKINNON CORPORATION
140 John James Audubon Parkway
Amherst, New York 14228-1197
----------------
Notice of Annual Meeting of Shareholders
to be Held August 16, 1999
----------------
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 16, 1999, at 10:00 a.m., local time, for the following
purposes:
1. To elect seven Directors to hold office until the 2000 Annual Meeting
and until their successors have been elected and qualified;
2. To consider and take action upon the proposed Amendment and
Restatement of the Columbus McKinnon Corporation 1995 Incentive Stock
Option Plan; and
3. 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 25, 1999, as
the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting.
It is important that your shares be represented and voted at the Annual
Meeting. Whether or not you plan to attend, please sign and date the enclosed
WHITE proxy and mail it promptly in the enclosed postage-paid envelope. If you
attend the Annual Meeting, you may vote your shares in person if you wish. We
sincerely appreciate your prompt cooperation.
LOIS H. DEMLER
Corporate Secretary
Dated: July 12, 1999
- ------------------------------- -------------------------------
I M P O R T A N T
We urge you to reject the solicitation by a group of dissidents calling
themselves the Columbus McKinnon Shareholders Committee. Do not sign or
return any GOLD proxy sent to you by this group.
To support your Board of Directors, please sign, date and promptly mail
your WHITE proxy card in the enclosed envelope. If you have any questions
or need assistance, please call D. F. King & Co., Inc., which is assisting
us, toll-free at 1-800-697-6974.
- -------------------------------------------------------------------------------
<PAGE>
COLUMBUS McKINNON CORPORATION
140 John James Audubon Parkway
Amherst, New York 14228-1197
----------------
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 16, 1999, at 10:00 a.m., local time, and at any adjournment or
adjournments thereof. The close of business on June 25, 1999 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 25,
1999, the Company had outstanding 14,724,397 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 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, FOR the approval of the adoption of the Amendment and Restatement
of the Columbus McKinnon Corporation 1995 Incentive Stock Option Plan and, if
the proposal is properly made at the Annual Meeting, AGAINST the Dissidents'
By-law Proposal discussed under Other Matters.
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. A majority of
the votes cast is required to approve the adoption of the Amendment and
Restatement of the Columbus McKinnon Corporation 1995 Incentive Stock Option
Plan (the "Plan Restatement"). A majority of the votes cast would be required
to approve the Dissidents' By-law Proposal. Under the law of the State of New
York, the Company's state of incorporation, only "votes cast" by the
shareholders entitled to vote are determinative of the outcome of the matter
subject to shareholder vote. Abstentions, broker non-votes and withheld votes
will not be considered "votes cast."
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.
This Proxy Statement and form of proxy is first being sent or given to
shareholders on or about July 12, 1999.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Background
On May 6, 1999, a group of New York City-based stock traders and risk
arbitrageurs consisting of Jeffrey E. Schwarz, Robert F. Lietzow, Curtis
Schenker, Karen Finerman and Craig Effron, and certain entities controlled by
the foregoing, and calling themselves the "Columbus McKinnon Shareholders
Committee" (the "Dissidents") filed a Schedule 13D with the Securities and
Exchange Commission (the "Commission"), disclosing that they had formed a
group and were planning to propose an alternate slate of directors at the
annual meeting of the Company, which directors, if elected, would be committed
to undertaking a "value maximization strategy". Put simply, the Company
believes this group is committed to a sale of the Company.
On May 25, 1999, the Company filed suit against the Dissidents, alleging
that, based on their actions in connection with the Company, together with
their past joint activities and close working relationship, the Dissidents
should have filed with the Commission as a group long ago, that there were
other persons, again based on past joint activities and prior relationships as
well as stock ownership in the Company, who were likely to be acting in
concert with the Dissidents and that the Dissidents were violating the proxy
rules by soliciting proxies without making the necessary filings. Following
the filing of the Dissidents' preliminary proxy materials, the Company
withdrew its complaint as to the violation of the proxy rules. On July 2,
1999, the federal district court judge denied the Dissidents' motion to
dismiss the complaint with respect to the Schedule 13D claim.
The Dissidents have proposed a slate of five directors: Messrs. Schwarz and
Lietzow, Jonathan Guss, who has served as a nominee of the Dissidents in prior
proxy contests, George Raymond, a retired executive of a forklift
manufacturer, and Larry Katsoulis, who was the head of a division of a
subsidiary of a public company which was acquired by Columbus McKinnon in
1996. Mr. Katsoulis' position was terminated by the Company approximately five
months thereafter. The operating income of the acquired company more than
doubled from the year ended March 31, 1996 (prior to the acquisition) to the
year ended March 31, 1998 (following the acquisition) (although the Company
believes this is more attributable to its efforts than to Mr. Katsoulis'
absence).
NOW IS NOT THE TIME TO SELL YOUR COMPANY
There are a number of reasons why your Company's board of directors believes
that today is not the appropriate time to sell your Company, and that greater
shareholder value will be obtained by pursuing management's strategic plan.
Columbus McKinnon is operating well and growing. Even the Dissidents concede
this. Your current managers are experienced business operators and integrators
with a wealth of industry experience. They know and understand the markets in
which they compete and they know how to create value by integrating
operations. Management has devised and is in the process of implementing key
strategies that focus on value creation through integration of new
acquisitions. These strategies include significantly reducing operating costs
by various means, including (i) implementing a common business system across
all operations, thereby reducing administrative costs and increasing
administrative efficiency (begun in 1991, with four new locations implemented
in 1999), (ii) establishing commodity oriented purchasing practices, reducing
purchase prices and purchasing costs (begun in 1996), and (iii) streamlining
manufacturing functions, removing bottlenecks, cutting cycle times, etc.
(begun in 1998). In addition, electric chain hoists, the dominant products
produced by Columbus McKinnon with well-known brand names, are the product of
choice in the U.S. markets, accounting for approximately nine out of ten of
the electric chain hoists manufactured in the United States being Columbus
McKinnon products. Market power, along with efficient and integrated
operations, has provided Columbus
2
<PAGE>
McKinnon with the following value enhancing results in terms of compound
annual growth rates ("CAGR") over the past five years:
<TABLE>
<CAPTION>
5-
Year
CAGR
----
<S> <C>
Sales................................................................... 39%
Operating income........................................................ 47%
Net income.............................................................. 31%
EBITDA.................................................................. 49%
Net cash flow from operating activities................................. 59%
</TABLE>
Columbus McKinnon is continuing to absorb a number of recent acquisitions,
the positive benefits of which are only beginning to be felt. In the past
eighteen months alone, the Company has acquired or merged with seven
significant businesses: Univeyor A/S, LICO, Inc., Abell-Howe Crane, Inc.,
Raccords Gautier, Tigrip/Camlok, GL International and Washington Equipment
Company. These, and other strategically driven acquisitions, have made your
Company the leading developer, manufacturer and distributor of hoists and
other related material handling products in the United States and one of the
largest in the world, increasing the Company's global presence so that
international sales now account for nearly 30% of the Company's business (up
from 21% in fiscal 1998). Shareholders should know the integration of these
acquisitions is still ongoing, and your Company expects to continue to
maximize utilization of these assets to further add to shareholder value. We
also expect that substantial synergies are yet to be realized. Commodity
purchase contracts continue to be negotiated with strategic suppliers.
Management expects that over the next several years, the savings from
executing these contracts will double the benefits already recognized.
Another recent strategy for Columbus McKinnon is the formation of a network
of integrated crane builders known as CraneMart(TM). Crane builders account
for approximately 25% of Columbus McKinnon's sales and are key users of
Columbus McKinnon's hoists and parts. This strategy solidifies your Company's
already excellent relationship with independent crane builders and establishes
a foundation for future growth with several newly acquired crane builders.
Similar to other strategies, the integration of these crane builders to form
CraneMart(TM) is synergistic from a revenue enhancement and cost reduction
standpoint. Moreover, the Company plans to continue to grow with selected
strategic acquisitions, strengthening its existing business by enhancing
productivity and reducing costs, introducing new products and services, and
increasing penetration in international markets. Finally, assets which no
longer meet management's criteria (including the complementary nature of the
business to the material handling industry, the degree to which the business
can be integrated and the business's profitability) will be divested.
Columbus McKinnon has instituted a number of cost reduction initiatives that
have yet to take full effect. Integration of the various acquisitions into the
Columbus McKinnon family has met or exceeded expectations. Even the Dissidents
themselves admit that management has been successful. The fact is, however,
that integration is a never-ending process of creating value by combining
businesses. Only experienced business managers who operate on a daily basis
truly recognize this fact and are equipped to make it happen and create value.
And there are many cost reduction initiatives yet to be realized. For example,
one such initiative that has recently begun is value engineering. The
standardization of hoist components across all brand names in the Columbus
McKinnon hoist family has and will continue to yield significant improvement
for Columbus McKinnon. The results of this effort and others will provide
significant savings over the long term and increased value for all Columbus
McKinnon shareholders.
ELECTION OF THE DISSIDENTS WOULD IN NO WAY
ENSURE A SUPERIOR RETURN.
Should the Dissidents' slate be elected, the Board believes it is unlikely
that they would be able to sell the Company at a price that reflects the
inherent long-term value of the Company. Shareholders should be aware that
election of the Dissidents' slate would be extraordinarily disruptive. Key
management and valued employees
3
<PAGE>
might well leave. Customers with long term contracts (over 25% of our
business) might hesitate to enter into new contracts, given the uncertainty as
to the future management of the Company. "Change in control" provisions in
employment agreements and employee benefit plans may be triggered.
For all the above reasons, the Board of Directors of the Company urges that
you reelect your incumbent board of directors--a Board with the experience and
dedication to maximize shareholder value.
The Company's Slate 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. The number
of Directors comprising the Board of Directors was increased from six to seven
members in August 1998 and from seven to eight members in March 1999.
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
Timothy T. Tevens, Robert L. Montgomery, Jr., Herbert P. Ladds, Jr., Randolph
A. Marks, L. David Black, Carlos Pascual and Richard H. Fleming, each of whom
is presently a Director. Except for Messrs. Pascual and Fleming, each of these
nominees has been previously elected by the Company's shareholders. When the
Board of Directors was expanded to seven members in August 1998, Mr. Pascual
was appointed by the other Directors to fill the additional directorship.
Similarly, Mr. Fleming was appointed by the other Directors in March 1999 to
fill the vacancy created when the Board of Directors was expanded to eight
members. 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.
Mr. Edward W. Duffy, a Director since 1986 and the Chairman of the Board of
Directors from 1986 until his resignation in January 1998, has announced that
he plans to retire as a Director effective as of the date of the Annual
Meeting. Accordingly, Mr. Duffy has not been nominated for re-election as a
Director and, effective as of the Annual Meeting, the Board of Directors will
be reduced to seven members.
The following information is provided concerning the nominees for Director:
Timothy T. Tevens was elected President and a Director of the Company in
January 1998 and assumed the duties of Chief Executive Officer in July 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.
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 PricewaterhouseCoopers LLP.
Herbert P. Ladds, Jr. has been a Director of the Company since 1973 and was
elected Chairman of the Board of Directors of the Company in January 1998. He
served as Chief Executive Officer of the Company from 1986 until his
retirement in July 1998. 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. Mr. Ladds is also a
director of Utica Mutual Insurance Company, Eastman Worldwide and R.P. Adams
Company, Inc.
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.
4
<PAGE>
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.
Carlos Pascual has been a Director of the Company since 1998. Since January
1999, Mr. Pascual has been an Executive Vice President and Deputy Executive
Officer of Xerox Corporation within its Industry Solutions Operations. From
August 1995 to January 1999, he served as President of Xerox Corporation's
United States Customer Operations, and from July 1997 to January 1999 he also
served as a Senior Vice President of Xerox Corporation. Prior thereto, since
1968 he has served in various capacities with Xerox Corporation.
Richard H. Fleming was appointed a Director of the Company in March 1999. In
February 1999, Mr. Fleming was appointed Executive Vice President and Chief
Financial Officer of USG Corporation. Prior thereto, Mr. Fleming has served
USG Corporation in various executive financial capacities since 1989,
including Senior Vice President and Chief Financial Officer from January 1995
to February 1999 and Vice President and Chief Financial Officer from January
1994 to January 1995.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended March 31, 1999, the Board of Directors held nine
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, Black and Pascual, all non-employee independent directors. 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 also reviews the scope and resulting reports of the Company's
internal audits. The Audit Committee held three meetings in fiscal 1999.
Compensation Committee
The Compensation Committee consists of Messrs. Duffy, Marks, Black and
Pascual, all non-employee independent directors. The Compensation Committee
held four meetings in fiscal 1999. The Compensation Committee makes
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, the functions of which are handled by the entire Board.
5
<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:
<TABLE>
<CAPTION>
Name Age Position(s) Held
---- --- ----------------
<S> <C> <C>
Herbert P. Ladds, Jr.... 66 Chairman of the Board
Timothy T. Tevens....... 43 President, Chief Executive Officer and Director
Robert L. Montgomery,
Jr..................... 61 Executive Vice President, Chief Financial Officer and Director
Ned T. Librock.......... 46 Vice President--Sales and Marketing
Karen L. Howard......... 37 Vice President--Controller
Ernst K. H. Marburg..... 64 Vice President--Total Quality and Standards
Lois H. Demler.......... 61 Corporate Secretary
Edward W. Duffy......... 73 Director
Randolph A. Marks....... 63 Director
L. David Black.......... 62 Director
Carlos Pascual.......... 53 Director
Richard H. Fleming...... 51 Director
</TABLE>
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.
Lois H. Demler has been employed by the Company since 1963. She has been the
Corporate Secretary of the Company since 1987.
6
<PAGE>
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, 1997, 1998 and 1999 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
------------------------------- ------------------------------------------
Restricted Securities
Name and Principal Fiscal Other Annual Stock Underlying All Other
Position Year Salary Bonus Compensation Awards(3) Options/SARs(4) Compensation(5)
------------------ ------ --------- -------- ------------ ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert P. Ladds, Jr., 1999 $ 155,192 $ 72,193 $ -- -- -- $ 12,263
Chief Executive
Officer(1) 1998 435,000 128,213 -- -- -- 20,729
1997 354,893 4,900 -- -- -- 14,474
Timothy T. Tevens, 1999 410,385 36,511 -- -- -- 9,834
President and Chief 1998 220,000 75,000 -- -- -- 31,952
Executive Officer 1997 162,411 1,845 217,044(2) -- 50,000 11,477
Robert L. Montgomery,
Jr., 1999 339,115 52,609 -- -- -- 12,703
Executive Vice
President 1998 317,000 97,575 -- -- -- 19,597
and Chief Financial
Officer 1997 274,431 3,798 -- -- -- 13,821
Ned T. Librock, 1999 191,570 35,463 -- -- -- 14,938
Vice President--Sales
and 1998 186,655 65,625 -- -- -- 18,984
Marketing 1997 170,623 1,381 -- -- 50,000 13,712
Ivan E. Shawvan, Jr., 1999 143,130 24,522 -- -- 1,000 13,848
Vice President--Human 1998 137,448 41,250 -- -- -- 17,330
Resources(6) 1997 95,187 1,139 -- -- 17,500 9,030
Karen L. Howard, 1999 141,661 22,975 -- 8,500 -- 13,154
Vice President--
Controller 1998 127,380 41,250 -- -- -- 14,559
1997 88,556 414 -- -- 50,000 5,785
Ernst K. H. Marburg, 1999 129,893 19,806 -- -- 1,000 12,201
Vice President--Total 1998 105,456 25,000 -- -- -- 15,273
Quality and Standards 1997 94,278 1,142 -- -- -- 9,966
</TABLE>
- --------
(1) Mr. Ladds retired as Chief Executive Officer of the Company in July 1998
and was succeeded in such capacity by Mr. Tevens.
(2) 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 (3) below.
(3) 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, 1999, the number of restricted shares of
Common Stock held by Mr. Librock was 17,000, and the value of such
restricted shares was $342,125. 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, 1999, the number of restricted shares of Common Stock held by Mr.
Shawvan was 8,500, and the value of such restricted shares of Common Stock
was $171,063. Ms. Howard was granted 8,500 shares of restricted Common
Stock on June 1, 1995, which had a value on such date of $107,875, and
8,500 shares of restricted Common Stock on August 17, 1998, which had a
value on such date of $196,563. As of March 31, 1999, the number of
restricted shares of Common Stock held by Ms. Howard was 17,000, and the
value of such restricted shares was $342,125. Mr. Marburg 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, 1999, the number of
restricted shares of Common Stock held by Mr. Marburg was 8,500, and the
value of such restricted shares was $171,063. 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 (5) below.
(4) Represents options granted to Messrs. Librock, Tevens and Shawvan, Ms.
Howard and Mr. Marburg pursuant to the Company's Incentive Stock Option
Plan (the "Incentive Plan").
(5) Comprised of: (i) the value of shares of Common Stock allocated in fiscal
1999 under the Company's Employee Stock Ownership Plan (the "ESOP") to
accounts for Messrs. Ladds, Tevens, Montgomery, Librock and Shawvan, Ms.
Howard and Mr. Marburg in the amounts of $11,210, $6,661, $10,425, $6,682,
$7,185, $5,534 and $6,500, respectively, (ii) premiums for group term life
insurance
7
<PAGE>
policies insuring the lives of Messrs. Ladds, Tevens, Montgomery, Librock and
Shawvan, Ms. Howard and Mr. Marburg in the amount of $68, $204, $204, $204,
$204, $204 and $204, respectively, (iii) compensation in lieu of dividends on
restricted shares of Common Stock paid to Messrs. Librock and Shawvan, Ms.
Howard and Mr. Marburg in the amounts of $4,760, $2,380, $3,570 and $2,380,
respectively and (iv) the Company's matching contributions under its 401(k)
plan for Messrs. Ladds, Tevens, Montgomery, Librock, and Shawvan, Ms. Howard
and Mr. Marburg in the amounts of $985, $2,969, $2,074, $3,292, $4,079,
$3,846 and $3,117, respectively.
(6) On June 1, 1998, Mr. Shawvan was reassigned to a non-executive officer
position within the Company.
Options Granted in Last Fiscal Year
The following table contains information concerning the grant of stock
options to the named executives in fiscal 1999. The exercise price of all such
options is equal to the market value of Common Stock on the date of the grant.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Percentage of Price Appreciation
Total Options For Option Term
Granted to Exercise ---------------------
Name and Principal Option Employees in Price Per Expiration
Position Grants(1) Fiscal Year Share Date 5%(2) 10%(3)
- ------------------ --------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Herbert P. Ladds, Jr., -- -- -- -- $ -- $ --
Chief Executive Officer
Timothy T. Tevens, -- -- -- -- -- --
President and Chief
Executive Officer
Robert L. Montgomery,
Jr., -- -- -- -- -- --
Executive Vice
President
and Chief Financial
Officer
Ned T. Librock, -- -- -- -- -- --
Vice President--
Sales and Marketing
Ivan E. Shawvan, Jr., 1,000 3.23% 29.00 06/01/08 18,240 46,220
Vice President--
Human Resources
Karen L. Howard, -- -- -- -- -- --
Vice President--
Controller
Ernst K. H. Marburg, 1,000 3.23% 29.00 06/01/08 18,240 46,220
Vice President--Total
Quality and Standards
</TABLE>
- --------
(1) Options granted pursuant to the Incentive Plan become exercisable in
cumulative annual increments of 25% beginning one year from the date of
grant; however, in the event of certain extraordinary transactions,
including a change of control of the Company, the vesting of such options
would automatically accelerate.
(2) Represents the potential appreciation of the options, determined by
assuming an annual compounded rate of appreciation of 5% per year over the
ten-year term of the grants, as prescribed by the Commission's rules. The
amount set forth above is not intended to forecast future appreciation, if
any, of the stock price. There can be no assurance that the appreciation
reflected in this table will be achieved.
(3) Represents the potential appreciation of the options, determined by
assuming an annual compounded rate of appreciation of 10% per year over the
ten-year term of the grant, as prescribed by the Commission's rules. The
amounts set forth above are not intended to forecast future appreciation,
if any, of the stock price. There can be no assurance that the appreciation
reflected in this table will be achieved.
8
<PAGE>
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 1999 and
unexercised options held at the end of fiscal 1999.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options At Fiscal Year in the Money Options
Shares End At Fiscal Year End(1)
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, -- -- 25,000 25,000 115,625 115,625
President and Chief
Operating
Officer
Robert L. Montgomery,
Jr., -- -- -- -- -- --
Executive Vice
President
and Chief Financial
Officer
Ned T. Librock, -- -- 25,000 25,000 115,625 115,625
Vice President--
Sales and Marketing
Ivan E. Shawvan, Jr., -- -- 17,500 1,000 80,938 --
Vice President--
Human Resources
Karen L. Howard, -- -- 25,000 25,000 115,625 115,625
Vice President--
Controller
Ernst K. H. Marburg, -- -- -- 1,000 -- --
Vice President--Total
Quality and Standards
</TABLE>
- --------
(1) Represents the difference between $20.125, the closing market value of
Common Stock as of March 31, 1999, and the exercise prices of such
options.
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 1998, 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. The ESOP acquired 479,900
shares of Common Stock in October 1998 for the aggregate sum of approximately
$7.7 million. The proceeds of a loan from the Company were used to fund the
purchase.
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 1999, the
Company's cash contribution was $1,216,246. 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
9
<PAGE>
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. Participants in the trust have the right to direct the Trustees how to
vote allocated shares. Allocated shares as to which no instructions are given
and unallocated shares are voted by the Trustees.
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, Neal E. Wixson and Timothy R.
Harvey serve as Trustees of the ESOP. As of March 31, 1999, the ESOP owned
approximately 1,595,063 shares of Common Stock. Common Stock allocated
pursuant to the ESOP to Messrs. Ladds, Tevens, Montgomery, Librock and
Shawvan, Ms. Howard and Mr. Marburg as of March 31, 1999 is 15,057 shares,
3,544 shares, 13,068 shares, 3,622 shares, 4,898 shares, 790 shares and 5,963
shares, respectively.
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. Tevens, Montgomery, Librock and Shawvan, Ms. Howard and Mr. Marburg
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 $61,395, $41,501, $55,491, $61,846, $64,143 and $21,404,
respectively. Mr. Ladds, who retired from the Company in July 1998, receives
annual benefits under the Pension Plan of approximately $31,678.
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 1999 the Company granted options to
purchase 31,000 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
10
<PAGE>
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 1999, the Company awarded 12,000 shares of Common Stock under the
Restricted Stock Plan.
EVA(R) Incentive Plan. In fiscal 1998, 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. In fiscal 1999, bonuses paid under this plan to
Messrs. Ladds, Tevens, Montgomery, Librock and Shawvan, Ms. Howard and Mr.
Marburg were $72,193, $36,511, $52,609, $35,463, $24,522, $22,975 and $19,806,
respectively.
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 1997 (and later as other employees became eligible), the Company entered
into change in control agreements (the "Change in Control Agreements") with
Messrs. Ladds, Tevens, Montgomery, Librock and Shawvan, Ms. Howard and certain
other officers and employees of the Company. Mr. Ladds' Change in Control
Agreement expired upon his retirement in July 1998, and Mr. Shawvan's Change
in Control Agreement was terminated upon his reassignment in June 1998. 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 annual salary and (B)
the greater of (1) the annual target bonus under the EVA(R) Plan in effect on
the date of termination and (2) the annual target bonus under the EVA(R) 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 Company's tax-qualified retirement plans
or a lump sum payment equal to the actuarial equivalent of the pension payment
which he or she would have accrued under the Company's tax-qualified
retirement plans 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
11
<PAGE>
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. Election of the slate
proposed by the Dissidents would constitute a Change in Control.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for the executive officers of the Company is administered by
the Compensation Committee which currently consists of four 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
targeted toward the median of the 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.
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
12
<PAGE>
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. These factors were accumulated by an
external compensation consulting firm and included comparisons of the
Company's fiscal 1998 financial statistics to peer companies, strategic
achievements such as acquisitions and their integration, comparisons of the
base salary level to the median for comparable companies in published
compensation surveys, as well as assessments prepared internally by other
members of executive management. The salary increases cited below were based
on those factors as well as a change in responsibilities during the year. The
bonus payout cited below was based on the Company's consolidated EVA(R)
performance for fiscal 1998.
To reflect his increased responsibilities upon appointment as Chief
Executive Officer in July 1998, the Compensation Committee increased Mr.
Tevens' base salary to approximately $410,000, representing an increase of
approximately 17.2%, effective January 1999. Traditionally, all officer
salaries are reviewed and possibly adjusted annually on or about April 1.
Accordingly, a salary adjustment was approved by the Compensation Committee
which increased Mr. Tevens' base salary to approximately $450,000, effective
April 1999.
In fiscal 1999, Mr. Tevens received a bonus of $36,511 based upon fiscal
1998 EVA(R) 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 the
Company's executive officers in fiscal 1999, 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.
Edward W. Duffy
Randolph A. Marks
L. David Black
Carlos Pascual
13
<PAGE>
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 Dow Jones Industrial--
Diversified Index. The comparison of total return assumes that a fixed
investment of $100 was invested on February 23, 1996 (the 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.
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN *
AMONG COLUMBUS MCKINNON CORPORATION,
THE S & P MIDCAP 400 INDEX
AND THE DOW JONES INDUSTRIAL-DIVERSIFIED INDEX
[THE FOLLOWING IS REPRESENTED BY A LINE GRAPH]
COLUMBUS DOW JONES
MCKINNON CORPORATION S & P MIDCAP 400 INDUSTRIAL-DIVERSIFIED
2/23/96 100 100 100
3/96 107 105 107
3/97 121 116 125
3/98 190 173 182
3/99 141 166 180
* $100 INVESTED ON 2/23/96 IN STOCK OR ON 1/31/96
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR END MARCH 31.
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Edward W. Duffy, Randolph A.
Marks, L. David Black and Carlos Pascual, each an outside director of the
Company. None of the members of the Compensation Committee was, during fiscal
1999 or prior thereto, an officer or employee of the Company or any of its
subsidiaries. In fiscal 1999, 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. In fiscal 1999, the Company also awarded 500 shares
of restricted Common Stock to each of Messrs. Pascual and Fleming under the
Restricted Stock Plan to recognize their election to the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
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 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, 1999 all Section
16(a) filing requirements applicable to its officers, Directors and greater
than 10% beneficial owners were complied with, except that due to oversight
Mr. Marks filed one report late covering one transaction.
15
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of May 31, 1999
regarding the beneficial ownership of the Company's Common Stock by (a) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock; (b) each Director; (c) each of the executive officers
named in the Summary Compensation Table; and (d) all executive officers and
Directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Percentage
Directors, Officers and 5% Shareholders Shares(1) of Class
- --------------------------------------- --------- ----------
<S> <C> <C>
Herbert P. Ladds, Jr.(2)(3).............................. 1,055,610 7.15
Timothy T. Tevens(2)(4).................................. 47,104 *
Robert L. Montgomery, Jr.(2)(5).......................... 1,148,396 7.78
Edward W. Duffy(2)....................................... 284,239 1.93
Randolph A. Marks(2)..................................... 238,840 1.62
L. David Black(2)........................................ 1,700 *
Carlos Pascual(2)........................................ 1,500 *
Richard H. Fleming(2).................................... 500 *
Ned T. Librock(2)(6)..................................... 46,777 *
Ivan E. Shawvan, Jr.(2)(7)............................... 31,398 *
Karen L. Howard(2)(8).................................... 43,606 *
Ernst K. H. Marburg(2)(9)................................ 14,463 *
Columbus McKinnon Corporation Employee Stock Ownership
Plan(2)................................................. 1,595,063 10.81
All Directors and Executive Officers as a Group(13
persons)(10)............................................ 2,928,259 19.84
Harris Associates L.P.(11)............................... 992,500 6.73
Gilchrist B. Berg(12).................................... 939,992 6.37
Columbus McKinnon Shareholders Committee(13)............. 1,245,545 8.44
</TABLE>
- --------
* 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 Corporation Employee Stock Ownership Plan is c/o
Columbus McKinnon Corporation, 140 John James Audubon Parkway, Amherst,
New York 14228-1197.
(3) Includes (i) 859,408 shares of Common Stock owned directly, (ii) 163,705
shares of Common Stock owned directly by Mr. Ladds' spouse, (iii) 17,440
shares of Common Stock held by Mr. Ladds' spouse as trustee for the
grandchildren of Mr. Ladds and (iv) 15,057 shares of Common Stock
allocated to Mr. Ladds' ESOP account.
(4) Includes (i) 11,509 shares of Common Stock owned directly, (ii) 7,000
shares of Common Stock owned directly by Mr. Tevens' spouse, (iii) 50
shares of Common Stock owned by Mr. Tevens' son, (iv) 3,526 shares of
Common Stock allocated to Mr. Tevens' ESOP account and (v) 25,000 shares
of Common Stock issuable under currently exercisable options granted to
Mr. Tevens under the Incentive Plan. Excludes 25,000 shares of Common
Stock issuable under options granted to Mr. Tevens under the Incentive
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) 13,068 shares of Common Stock allocated to Mr. Montgomery's ESOP
account. Excludes 1,581,995 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.
16
<PAGE>
(6) Includes (i) 18,004 shares of Common Stock owned directly, (ii) 152
shares of Common Stock owned by Mr. Librock's son, (iii) 3,622 shares of
Common Stock allocated to Mr. Librock's ESOP account and (iv) 25,000
shares of Common Stock issuable under currently exercisable options
granted to Mr. Librock under the Incentive Plan. Excludes 25,000 shares
of Common Stock issuable under options granted to Mr. Librock under the
Incentive Plan which are not exercisable within 60 days.
(7) Includes (i) 9,000 shares of Common Stock owned directly, (ii) 4,898
shares of Common Stock allocated to Mr. Shawvan's ESOP account and (iii)
17,500 shares of Common Stock issuable under currently exercisable
options granted to Mr. Shawvan under the Incentive Plan. Excludes 1,000
shares of Common Stock issuable under options granted to Mr. Shawvan
under the Incentive Plan which are not exercisable within 60 days.
(8) Includes (i) 17,815 shares of Common Stock owned directly, (ii) 790
shares allocated to Ms. Howard's ESOP account, and (iii) 25,000 shares of
Common Stock issuable under currently exercisable options granted to Ms.
Howard under the Incentive Plan. Excludes (i) 1,594,273 additional shares
of Common Stock owned by the ESOP for which Ms. Howard serves as one of
four trustees and for which she disclaims any beneficial ownership and
(ii) 25,000 shares of Common Stock issuable under options granted to Ms.
Howard under the Incentive Plan which are not exercisable within 60 days.
(9) Includes (i) 8,500 shares of Common Stock owned directly and (ii) 5,963
shares of Common Stock allocated to Mr. Marburg's ESOP account. Excludes
1,000 shares of Common Stock issuable under options granted to Mr.
Marburg under the Incentive Plan which are not exercisable within 60
days.
(10) Includes options to purchase an aggregate of 92,500 shares of Common
Stock issuable to certain executive officers under the Incentive Plan,
all of which are exercisable within 60 days. Excludes (i) the shares of
Common Stock owned by the ESOP as to which Mr. Montgomery and Ms. Howard
serve as trustees, except for an aggregate of 52,169 shares allocated to
the respective ESOP accounts of the executive officers of the Company and
(ii) options to purchase an aggregate of 75,000 shares of Common Stock
issued to certain executive officers under the Incentive Plan, none of
which are exercisable within 60 days. Also includes shares of Common
Stock beneficially owned by Mr. Ladds who retired in July 1998 and Mr.
Shawvan who was reassigned to a non-executive officer position with the
Company in June 1998.
(11) Based on information set forth in Schedule 13G filed with the Commission
by Harris Associates L.P. on January 18, 1999. The stated business
address for Harris Associates L.P. is Two North LaSalle Street, Suite
500, Chicago, Illinois 60602-3790.
(12) Based on information set forth in Schedule 13D filed with the Commission
by Gilchrist B. Berg on April 9, 1999. The stated business address for
Mr. Berg is 225 Water Street, Suite 1987, Jacksonville, Florida 32202.
(13) Based on information set forth in Schedule 13D filed with the Commission
on May 6, 1999. According to said Schedule 13D, such committee consists
of Metropolitan Capital Advisors, Inc., Metropolitan Capital III, Inc.,
Jeffrey Schwarz, Karen Finerman, Lakeway Capital Partners, LLC, Robert F.
Lietzow, Jr., Scoggin, Inc., Scoggin, LLC, Curtis Schenker and Craig
Effron. The stated business address for such committee is 660 Madison
Avenue, New York, New York 10021.
17
<PAGE>
PROPOSAL 2
AMENDMENT AND RESTATEMENT OF THE COLUMBUS McKINNON CORPORATION INCENTIVE STOCK
OPTION PLAN
On October 27, 1995 the Company's shareholders approved the Incentive Plan.
The Board is now proposing an Amendment and Restatement of the Incentive Plan
which does not affect the number of shares reserved for issuance under the
Incentive Plan and is seeking shareholder approval of the Plan Restatement.
The Board of Directors has approved the Amendment and Restatement of the
Incentive Plan (the "Incentive Plan Restatement"), providing for, among other
things: (i) that the members of the Board of Directors who are employees of
the Company will be eligible to receive options under the Incentive Plan; (ii)
that employees that own 10% or more of the combined voting power of all
classes of the Company's outstanding capital stock will be permitted to
receive options subject to certain minimum requirements (described below)
regarding the option exercise price and the option exercise period; (iii)
that, under certain limited circumstances, options granted to executive
officers will be transferable; (iv) the cashless exercise of options and (v)
that, upon the occurrence of a "change in control", options will remain
exercisable for the balance of their original term. The amendments
contemplated in (i), (ii) and (iii) were initially approved by the Board of
Directors in March 1999; those in (iv) and (v) were approved in June 1999
following a review of the Plan against comparable plans. The only effect of
the proposal amendments on a sale of the Company would be under (v)--options
would be exercisable for their entire remaining term, rather than only a 90-
day period.
Information concerning the number of options granted to certain executive
officers under the Incentive Plan during the last year is set forth above
under the heading "Executive Compensation."
The following is a summary of the material features of the Incentive Plan
Restatement and does not purport to be complete. The summary is subject in all
respects and is qualified in its entirety by reference to the Incentive Plan
Restatement, the full text of which is set forth as Appendix A to this Proxy
Statement.
Purpose. The Incentive Plan is intended to provide officers and other key
employees of the Company and its subsidiaries with an additional incentive for
them to promote the business of the Company, to increase their proprietary
interest in the success of the Company and to encourage them to remain in the
employ of the Company.
Administration. The Incentive Plan is administered by a committee appointed
by the Board of Directors and consisting of not less than two Directors (the
"Incentive Committee"). The Incentive Committee has the sole authority to
grant options under the Incentive Plan, and all actions taken by the Incentive
Committee in administering the Incentive Plan are final.
Reservation of Common Stock. The Company has reserved 1,250,000 shares of
Common Stock for issuance under the Incentive Plan. Any options issued under
the Incentive Plan which are forfeited or terminated, will be available for
reissuance under the Incentive Plan. If the Company's outstanding shares of
Common Stock are increased or decreased as a result of stock dividends, stock
splits, recapitalizations or other means having the same effect, or if the
Company's Common Stock is converted into other shares or securities of the
Company as a result of a reorganization, the number of shares of Common Stock
available for issuance under the Incentive Plan and the number of shares of
Common Stock issuable under outstanding options under the Incentive Plan shall
be proportionately adjusted by the Incentive Committee.
Participants. The Incentive Committee shall determine from among the
officers and key employees of the Company and its subsidiaries those
individuals to whom options under the Incentive Plan shall be granted, the
terms and provisions of the options granted (which terms need not be
identical), the time or times at which options shall be granted and the number
of shares of Common Stock for which options are granted. As of March 31, 1999,
35 employees had received options to purchase an aggregate of 198,500 shares
of Common Stock under the Incentive Plan.
18
<PAGE>
Option Price. The exercise price of each option granted under the Incentive
Plan shall be determined by the Incentive Committee at the time the option is
granted, but in no event shall such exercise price be less than 100% of the
fair market value of the Common Stock on the date of the grant.
Notwithstanding the foregoing, if any options are granted to individuals
holding 10% or more of the combined voting power of all classes of the
Company's outstanding capital stock, in no event shall the exercise price of
the options granted to any such individuals be less than 110% of the fair
market value of the Common Stock on the date of the grant.
Option Exercise Periods. Any option granted under the Incentive Plan may be
exercised not earlier than one year nor later than ten years from the date
such option is granted, provided that, options granted to individuals holding
10% or more of the combined voting power of all classes of the Company's
outstanding capital stock may not be exercised later than five years from the
date any such options are granted. The recipient of an option must generally
remain in the continuous employment of the Company or its subsidiaries from
the date of the grant of the option to and including the date of exercise of
the option. In addition, with respect to all options granted under the
Incentive Plan, unless the Incentive Committee shall specify otherwise, the
right of a recipient to exercise his option shall accrue, on a cumulative
basis, at the rate of 25% per year. Upon a "change in control" of the Company
(as defined in the Incentive Plan) or upon the retirement, death or disability
of a recipient, all outstanding unexercised options granted to such recipient
under the Incentive Plan become immediately exercisable and shall remain
exercisable for the balance of their original term.
Federal Tax Consequences. The Code limits to $100,000 the value of employer
stock subject to incentive stock options that first become exercisable in any
one year, based on the fair market value of the stock at the date of grant.
Upon exercise, an optionee will not realize federally taxable income (except
that the alternative minimum tax may apply) and the Company will not be
entitled to any deduction. If the optionee sells the shares more than two
years after the grant date and more than one year after exercise, the entire
gain, if any, realized upon the sale will be federally taxable to the optionee
as long-term capital gain and the Company will not be entitled to a
corresponding deduction. If the optionee does not satisfy the holding-period
requirements, the optionee will realize ordinary income, in most cases equal
to the difference between the option price of the shares and the lesser of the
fair market value of the shares on the exercise date or the amount realized on
a sale or exchange of the shares, and the Company will be entitled to a
corresponding deduction.
Transferability. Generally, options granted under the Incentive Plan are not
transferable by a recipient during his lifetime. However, to the extent that
an executive officer of the Company has received options that first become
exercisable in any one year, which options have fair market value (based on
the fair market value of the Common Stock at the date of the option grant)
which exceeds $100,000, such executive officers may transfer to their
immediate family members, options to purchase common stock of the Company
having an aggregate value equal to the amount by which the aggregate value of
all options which first become exercisable in such year exceeds $100,000.
Effective Date. The Incentive Plan was approved initially by the
shareholders of the Company on October 27, 1995.
Vote Required. The Affirmative vote of the holders of a majority of the
shares of Common Stock present, in person or by proxy, and entitled to vote at
the Meeting is required to approve the Incentive Plan Restatement. If the
shareholders do not approve the Incentive Plan Restatement, the Incentive Plan
in its current form will remain in effect.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR" PROPOSAL 2.
19
<PAGE>
SOLICITATION OF PROXIES
The cost of solicitation of proxies 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 or by telephone, telecommunications or other electronic means by
Directors, officers and employees of the Company at no additional
compensation. 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. For its services in connection with this proxy
solicitation, the Company has agreed to pay Goldman, Sachs & Co. ("Goldman
Sachs") a fee of $400,000. In addition, the Company has agreed to offer
Goldman Sachs the role of exclusive financial advisor in any sale of the
Company, for a fee equal to 0.86% of the amount paid in the transaction plus
the indebtedness assumed (the "Enterprise Value"). In the event an unsolicited
proposal is made to acquire the Company, (i) which proposal is publicly
disclosed or as to which the Company's Board of Directors determines its
fiduciary duty requires consideration of such proposal by the Board and (ii)
advice is received from a financial advisor, Goldman Sachs shall receive up to
$7 million in financial advisory fees (against which the $400,000 shall be
credited) for the Company remaining independent, payable $3 million at six
months, $2 million at nine months and $2 million at one year, but capped at
Enterprise Value as of the date of such engagement. The Company has retained
D.F. King & Co., Inc. ("D.F. King") for solicitation and advisory services in
connection with the solicitation of proxies, for which D. F. King will receive
a fee estimated to be $125,000 plus reimbursement of its reasonable out-of-
pocket expenses. It is anticipated that D. F. King will employ approximately
50 persons in connection with its solicitation efforts. The Company will also
indemnify Goldman Sachs and D.F. King against certain liabilities, including
liabilities under the Federal securities laws. The cost of soliciting proxies
for the 1999 Annual Meeting is expected to be approximately $500,000 in
addition to the fees of D.F. King and Goldman Sachs described above (excluding
the amount normally expended by the Company for the solicitation of proxies at
its annual meeting). The total cost incurred to date in furtherance of or in
connection with the solicitations of proxies is approximately $100,000.
OTHER MATTERS
The Dissidents have also stated that they plan to propose at the 1999 Annual
Meeting a proposal to have the shareholders rescind the By-law amendments
adopted by the Board of Directors in May 1999 (the "By-law Proposal"). The
Board of Directors recommends a vote AGAINST the By-law Proposal.
The By-law amendments were made to conform certain 50 day periods in the by-
laws to a change in New York law last year which extended such periods to 60
days and to adopt an "advance notice by-law", which requires shareholders to
give notice (other than with respect to proposals made pursuant to Rule 14a-8
under the Exchange Act), 60 to 90 days prior to the anniversary of the
previous year's annual meeting of any nominees for election as director or of
any shareholder proposals. Such advance notice by-laws are commonly adopted by
corporations today to give shareholders adequate time to make an informed
decision and was specifically adopted here to ensure that all shareholders
would receive adequate notice of any proposals by the Dissidents. Although the
Company is not required to include this proposal on its proxy card and could
vote in its discretion on this matter because the Dissidents failed to give
timely notice under the Commission's rules, the Company is nonetheless
providing a box on its proxy card to permit shareholders to vote on this
matter if the proposal is made at the Annual Meeting. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THE DISSIDENTS' BY-LAW PROPOSAL. In order to adopt
the By-law Proposal, the Dissidents must receive the affirmative vote of the
majority of votes cast.
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.
20
<PAGE>
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, 1999.
Representatives of Ernst & Young LLP are expected to be present at the 1999
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.
Effective April 1, 1998, the Company renewed its directors and officers
indemnification insurance coverage with Continental Casualty Company for an
additional term of three years at an aggregate cost of $450,000. This
insurance provides coverage to the Company's executive officers and directors
individually where exposures exist for which the Company is unable to provide
direct indemnification.
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, 1999, 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 25, 1999, the person
making the request was a beneficial owner of securities entitled to vote at
the Annual Meeting of Shareholders.
CERTAIN FORWARD LOOKING INFORMATION
The portions of this Proxy Statement concerning reasons to re-elect the
incumbent Board of Directors and the letter from the Board of Directors
include "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements involve known and
unknown risks, uncertainties and other factors that could cause the actual
results of the Company to differ materially from the results expressed or
implied by such statements, including general economic and business
conditions, conditions affecting the industries served by the Company and its
subsidiaries, conditions affecting the Company's customers and suppliers,
competitor responses to the Company's products and services, the overall
market acceptance of such products and services, the integration of
acquisitions and other factors disclosed in the Company's periodic reports
filed with the Commission. Consequently such forward looking statements should
be regarded as the Company's current plans, estimates and beliefs. The Company
does not undertake and specifically declines any obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting must be received by the Company by March 14, 2000 to be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting. In addition, the Company's by-laws require that notice of shareholder
proposals and nominations for director be delivered to the principal executive
offices of the Company not less than 60 days nor more than 90 days prior to
the first anniversary of the Annual Meeting for the preceding year; provided,
however, if the Annual Meeting is not scheduled to be held within a period
commencing 30 days before such anniversary date and ending 30 days after such
anniversary date, such shareholder notice shall be delivered by the later of
(i) 60 days prior to the date of the Annual Meeting or (ii) the tenth day
following the date such Annual Meeting date is first publicly announced or
disclosed. The date of the 2000 Annual Meeting has not yet been established.
Nothing in this paragraph shall be deemed to require the Company to include in
its Proxy
21
<PAGE>
Statement and proxy relating to the 2000 Annual Meeting any shareholder
proposal that does not meet all of the requirements for inclusion established
by the Exchange Act and the rules and regulations promulgated thereunder.
The accompanying Notice and this Proxy Statement are sent by order of the
Board of Directors.
LOIS H. DEMLER
Corporate Secretary
Dated: July 12, 1999
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IMPORTANT
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
SHAREHOLDERS ARE URGED TO SIGN AND DATE THE ENCLOSED WHITE PROXY AND MAIL 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. SHOULD YOU HAVE QUESTIONS OR REQUIRE ASSISTANCE, PLEASE CALL D. F.
KING & CO., INC., WHICH IS ASSISTING US, AT THE NUMBER LISTED BELOW:
D. F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
Call Toll Free 1-800-697-6974
22
<PAGE>
APPENDIX A
COLUMBUS McKINNON CORPORATION
1995 INCENTIVE STOCK OPTION PLAN
----------------
Amendment and Restatement
----------------
WHEREAS, Columbus McKinnon Corporation, a New York corporation with offices
at 140 John James Audubon Parkway, Amherst, New York (the "Company") has
adopted an incentive stock option plan known as the Columbus McKinnon
Corporation 1995 Incentive Stock Option Plan (the "Original Plan") on October
27, 1995 to enable the Company to attract and retain highly qualified
individuals as officers and key employees of the Company by providing such
officers and key employees an equity based form of incentive compensation; and
WHEREAS, the Company desires to amend and restate the Original Plan;
NOW, THEREFORE, the Company hereby adopts the following as the Amendment and
Restatement of the Columbus McKinnon Corporation 1995 Incentive Stock Option
Plan effective as of June 16, 1999:
1. Purpose of Plan. The Columbus McKinnon Corporation Amended and Restated
1995 Incentive Stock Option Plan (the "Plan") is intended to provide officers
and other key employees of the Company and officers and other key employees of
any subsidiaries of the Company as that term is defined in Section 3 below
(hereinafter individually referred to as a "Subsidiary" and collectively as
"Subsidiaries") with an additional incentive for them to promote the success
of the business, to increase their proprietary interest in the success of the
Company and its Subsidiaries, and to encourage them to remain in the employ of
the Company or its Subsidiaries. The above aims will be effectuated through
the granting of certain stock options, as herein provided, which are intended
to qualify as Incentive Stock Options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986, as the same has been and shall be amended
("Code").
2. Administration. The Plan shall be administered by a Committee (the
"Committee") composed of not less than two (2) Directors of the Company who
shall be appointed by and serve at the pleasure of the Board of Directors of
the Company. Any Director that serves as a member of the Committee shall not
receive or be eligible to receive a grant of an option or any other equity
security of the Company or any Subsidiary under this Plan during the period of
his or her service as a member of the Committee and during the one year period
prior to his or her service as a member of the Committee. If the Committee is
composed of two (2) Directors, both members of the Committee must approve any
action to be taken by the Committee in order for such action to be deemed to
be an action of the Committee pursuant to the provisions of this Plan. If the
Committee is composed of more than two (2) Directors, a majority of the
Committee shall constitute a quorum for the conduct of its business, and (a)
the action of a majority of the Committee members present at any meeting at
which a quorum is present, or (b) action taken without a meeting by the
approval in writing of a majority of the Committee members, shall be deemed to
be action by the Committee pursuant to the provisions of the Plan. The
Committee is authorized to adopt such rules and regulations for the
administration of the Plan and the conduct of its business as it may deem
necessary or proper.
Any action taken or interpretation made by the Committee under any provision
of the Plan or any option granted hereunder shall be in accordance with the
provisions of the Code, and the regulations and rulings issued thereunder as
such may be amended, promulgated, issued, renumbered or continued from time to
time hereafter in order that, to the greatest extent possible, the options
granted hereunder shall constitute "incentive stock options" within the
meaning of the Code. All action taken pursuant to this Plan shall be lawful
and with a view to obtaining for the Company and the option holder the maximum
advantages under the law as then obtaining,
A-1
<PAGE>
and in the event that any dispute shall arise as to any action taken or
interpretation made by the Committee under any provision of the Plan, then all
doubts shall be resolved in favor of such having been done in accordance with
the said Code and such revenue laws, amendments, regulations, rulings and
provisions as may then be applicable. Any action taken or interpretation made
by the Committee under any provision of the Plan shall be final. No member of
the Board of Directors or the Committee shall be liable for any action,
determination or interpretation taken or made under any provision of the Plan
or otherwise if done in good faith.
3. Participation. The Committee shall determine from among the officers and
key employees of the Company and its Subsidiaries (as such term is defined in
Section 424 of the Code) those individuals to whom options shall be granted
(sometimes hereinafter referred to as "Optionees"), the terms and provisions
of the options granted (which need not be identical), the time or times at
which options shall be granted and the number of shares of the Company's
common stock, $.01 par value per share (hereinafter "Common Stock"), (or such
number of shares of stock in which the Common Stock may at any time hereafter
be constituted), for which options are granted.
In selecting Optionees and in determining the number of shares for which
options are granted, the Committee may weigh and consider the following
factors: the office or position of the Optionee and his degree of
responsibility for the growth and success of the Company and its Subsidiaries,
length of service, remuneration, promotions, age and potential. The foregoing
factors shall not be considered to be exclusive or obligatory upon the
Committee, and the Committee may properly consider any other factors which to
it seems appropriate. The terms and conditions of any option granted by the
Committee under this Plan shall be contained in a written statement which
shall be delivered by the Committee to the Optionee as soon as practicable
following the Committee's establishment of the terms and conditions of such
option.
An Optionee who has been granted an option under the Plan may be granted
additional options under the Plan if the Committee shall so determine.
Notwithstanding the foregoing, if during the twelve (12) month period
following the effective date of this amendment and restatement, any options
are granted to employees of the Company that are also members of the Board of
Directors of the Company and if this amendment and restatement is not approved
by the shareholders of the Company during such twelve (12) month period, any
options granted to any employees that are also members of the Company's Board
of Directors shall continue to be binding upon the Company according to their
terms but shall not be deemed to be "incentive stock options" as defined in
Section 422(b) of the Code. In addition, if at the time an option is granted
to an individual under this Plan, the individual owns stock of the Company
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries, (or if such
individual would be deemed to own such percentage of such stock under Section
424(d) of the Code) such option shall continue to be valid and binding upon
the Company according to its terms but shall not be deemed to be an "incentive
stock option" as defined in Section 422(b) of the Code unless: (a) the price
per share at which common stock of the Company may be acquired in connection
with the exercise of such options is not less than one hundred ten percent
(110%) of the fair market value of such common stock, determined as of the
date of the grant of such options; and (b) the period of time within which
such options must be exercised does not exceed five (5) years from the date on
which such options are granted. Finally, in no event shall any options be
granted under this Plan at any time after the termination date set forth at
the end of this Plan.
4. Shares Subject to the Plan. The aggregate number of shares of Common
Stock which have been reserved for issuance pursuant to the terms of options
granted pursuant to the terms of this Plan and the aggregate number of shares
of Common Stock which the Company is authorized to issue pursuant to options
granted pursuant to the terms of this Plan is 1,250,000, subject to anti-
dilutive adjustments, if any, made at any time after October 27, 1995,
pursuant to the provisions of Section 5 hereof. With respect to shares which
may be acquired pursuant to options which expire or terminate pursuant to the
provisions of this Plan without having been exercised in
A-2
<PAGE>
full, such shares shall be considered to be available again for placement
under options granted thereafter under the Plan. Shares issued pursuant to the
exercise of incentive stock options granted under the Plan shall be fully paid
and non-assessable.
5. Anti-Dilution Provisions. The aggregate number of shares of Common Stock
and the class of such shares as to which options may be granted under the
Plan, the number and class of such shares subject to each outstanding option,
the price per share thereof (but not the total price), and the number of such
shares as to which an option may be exercised at any one time, shall all be
adjusted proportionately in the event of any change, increase or decrease in
the outstanding shares of Common Stock of the Company or any change in
classification of its Common Stock without receipt of consideration by the
Company which results either from a split-up, reverse split or consolidation
of shares, payment of a stock dividend, recapitalization, reclassification or
other like capital adjustment so that upon exercise of the option, the
Optionee shall receive the number and class of shares that he would have
received had he been the holder of the number of shares of Common Stock for
which the option is being exercised immediately preceding such change,
increase or decrease in the outstanding shares of Common Stock. Any such
adjustment made by the Committee shall be final and binding upon all
Optionees, the Company, and all other interested persons. Any adjustment of an
incentive stock option under this paragraph shall be made in such manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code.
Anything in this Section 5 to the contrary notwithstanding, no fractional
shares or scrip representative of fractional shares shall be issued upon the
exercise of any option. Any fractional share interest resulting from any
change, increase or decrease in the outstanding shares of Common Stock or
resulting from any reorganization, merger, or consolidation for which
adjustment is provided in this Section 5 shall disappear and be absorbed into
the next lowest number of whole shares, and the Company shall not be liable
for any payment for such fractional share interest to the Optionee upon his
exercise of the option.
6. Option Price. The purchase price for each share of Common Stock which may
be acquired upon the exercise of each option issued under the Plan shall be
determined by the Committee at the time the option is granted, but in no event
shall such purchase price be less than one hundred percent (100%) of the fair
market value of the Common Stock on the date of the grant. Notwithstanding the
foregoing, in the case of an individual that owns stock of the Company
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries (or if such
individual would be deemed to own such percentage of such stock under Section
424 (d) of the Code), (any such individual being hereinafter referred to as a
"Ten Percent Shareholder") in no event shall the purchase price for each share
of Common Stock which may be acquired upon the exercise of each option issued
to such Ten Percent Shareholder be less than one hundred ten percent (110%) of
the fair market value of the Common Stock on the date of the grant. If the
Common Stock is listed upon an established stock exchange or exchanges on the
day the option is granted, such fair market value shall be deemed to be the
closing price of the Common Stock on such stock exchange or exchanges on the
day the option is granted, or if no sale of the Company's Common Stock shall
have been made on any stock exchange on that day, on the next preceding day on
which there was a sale of such stock.
If the Common Stock is listed in the NASDAQ National Market System, the fair
market value of the Common Stock shall be the average of the high and low
closing sale prices in the NASDAQ National Market System on the day the option
is granted, or if no sale of the Common Stock shall have been made on the
NASDAQ National Market System on that day, on the next preceding day on which
there was a sale of such stock.
7. Option Exercise Periods. The time within which any option granted
hereunder may be exercised shall be, by its terms, not earlier than one (1)
year from the date such option is granted and not later than ten (10) years
from the date such option is granted; provided that, in the case of any
options granted to a Ten Percent Shareholder, the time within which any option
granted to such Ten Percent Shareholder may be exercised shall be, by its
terms, not earlier than one (1) year from the date such option is granted and
not later than five (5)
A-3
<PAGE>
years from the date such option is granted. Subject to the provisions of
Section 10 hereof, the Optionee must remain in the continuous employment of
the Company or any of its Subsidiaries from the date of the grant of the
option to and including the date of exercise of option in order to be entitled
to exercise his option. Options granted hereunder shall be exercisable in such
installments and at such dates as the Committee may specify. In addition, with
respect to all options granted under this Plan, unless the Committee shall
specify otherwise, the right of each Optionee to exercise his option shall
accrue, on a cumulative basis, as follows:
(a) one-fourth ( 1/4) of the total number of shares of Common Stock which
could be purchased (subject to adjustment as provided in Section 5 hereof)
(such number being hereinafter referred to as the "Optioned Shares") shall
become available for purchase pursuant to the option at the end of the one
(1) year period beginning on the date of the option grant;
(b) one-fourth ( 1/4) of the Optioned Shares shall become available for
purchase pursuant to the option at the end of the two (2) year period
beginning on the date of the option grant;
(c) one-fourth ( 1/4) of the Optioned Shares shall become available for
purchase pursuant to the option at the end of the three (3) year period
beginning on the date of the option grant; and
(d) one-fourth ( 1/4) of the Optioned Shares shall become available for
purchase pursuant to the option at the end of the four (4) year period
beginning on the date of the option grant.
Continuous employment shall not be deemed to be interrupted by transfers
between the Subsidiaries or between the Company and any Subsidiary, whether or
not elected by termination from any Subsidiary of the Company and re-
employment by any other Subsidiary or the Company. Time of employment with the
Company shall be considered to be one employment for the purposes of this
Plan, provided there is no intervening employment by a third party or no
interval between employments which, in the opinion of the Committee, is deemed
to break continuity of service. The Committee shall, at its discretion,
determine the effect of approved leaves of absence and all other matters
having to do with "continuous employment". Where an Optionee dies while
employed by the Company or any of its Subsidiaries, his options may be
exercised following his death in accordance with the provisions of Section 10
below.
Notwithstanding the foregoing provisions of this Section 7, in the event
that the Company or the stockholders of the Company enter into an agreement to
dispose of all or substantially all of the assets or stock of the Company by
means of a sale, merger, consolidation, reorganization, liquidation, or
otherwise, or in the event a Change of Control (as hereinafter defined) shall
occur, each outstanding option shall become immediately exercisable with
respect to the full number of shares subject to that option and shall remain
exercisable until the expiration of the original term of the option. The
Committee may provide in connection with such transaction for assumption of
options previously granted or the substitution for such options of new options
covering the securities of a successor corporation or an affiliate thereof,
with appropriate adjustments as to the number and kind of securities and
prices.
For purposes of this Plan, a "Change in Control" shall be deemed to have
occurred if:
(a) there shall be consummated: (i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's common stock would be
converted into cash, securities or other property, other than a merger of
the Company in which the holders of the Company's common stock immediately
prior to the merger have the same proportionate ownership of common stock
of the surviving corporation immediately after the merger; or (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or
(b) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
A-4
<PAGE>
(c) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") but
excluding the Company and each of the Company's officers and directors,
whether individually or collectively), shall become the beneficial owner
(within the meaning of 13d-3 under the Exchange Act) of 20% or more of the
Company's outstanding common stock; or
(d) during any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the entire Board of Directors of
the Company shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of a least two-
thirds of the directors then still in office who were directors at the
beginning of the period.
Any change or adjustment made pursuant to the terms of this paragraph shall
be made in such a manner so as not to constitute a "modification" as defined
in Section 424 of the Code, and so as not to cause any incentive stock option
issued under this Plan to fail to continue to qualify as an incentive stock
option as defined in Section 422(b) of the Code. Notwithstanding the
foregoing, in the event that any agreement providing for the sale or other
disposition of all or substantially all the stock or assets of the Company
shall be terminated without consummating the disposition of said stock or
assets, any unexercised unaccrued installments that had become exercisable
solely by reason of the provisions of this paragraph shall again become
unaccrued and unexercisable as of said termination of such agreement; subject,
however, to such installments accruing pursuant to the normal accrual schedule
provided in the terms under which such option was granted. Any exercise of an
installment prior to said termination of said agreement shall remain effective
despite the fact that such installment became exercisable solely by reason of
the Company or its stockholders entering into said agreement to dispose of the
stock or assets of the Company.
8. Exercise of Option. Options shall be exercised as follows:
(a) Notice and Payment. Each option, or any installment thereof, shall be
exercised, whether in whole or in part, by giving written notice to the
Company at its principal office, specifying the options being exercised (by
reference to the date of the grant of the option), the number of shares to
be purchased and the purchase price being paid, and shall be accompanied by
the payment of all or such part of the purchase price as shall be required
to be paid in connection with the exercise of such option (as specified in
the written notice of exercise of such option) (i) in cash, certified or
bank check payable to the order of the Company, (ii) by tendering (either
actually or by attestation) shares (or a sufficient portion thereof) valued
as determined by the Committee at the time of exercise, (iii) by
authorizing a third party to sell shares (or a sufficient portion thereof)
acquired upon exercise of an option and to remit to the Company a
sufficient portion of the sale proceeds to pay for all the shares acquired
through such exercise and any resulting tax withholding obligations or (iv)
by any other method prescribed by the Committee. Each such notice shall
contain representations on behalf of the Optionee that he acknowledges that
the Company is selling the shares being acquired by him under a claim of
exemption from registration under the Securities Act of 1933 as amended
(the "Act"), as a transaction not involving any public offering; that he
represents and warrants that he is acquiring such shares with a view to
"investment" and not with a view to distribution or resale; and that he
agrees not to transfer, encumber or dispose of the shares unless: (i) a
registration statement with respect to the shares shall be effective under
the Act, together with proof satisfactory to the Company that there has
been compliance with applicable state law; or (ii) the Company shall have
received an opinion of counsel in form and content satisfactory to the
Company to the effect that the transfer qualifies under Rule 144 or some
other disclosure exemption from registration and that no violation of the
Act or applicable state laws will be involved in such transfer, and/or such
other documentation in connection therewith as the Company's counsel may in
its sole discretion require.
(b) Issuance of Certificates. Certificates representing the shares
purchased by the Optionee shall be issued as soon as practicable after the
Optionee has complied with the provisions of Section 8(a) hereof.
A-5
<PAGE>
(c) Rights as a Stockholder. The Optionee shall have no rights as a
stockholder with respect to the shares of Common Stock purchased until the
date of the issuance to him of a certificate representing such shares.
9. Assignment of Option. (a) Subject to the provisions of Sections 9(b) and
10(c) hereof, options granted under this Plan may not be assigned voluntarily
or involuntarily or by operation of law and any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any incentive stock option, or any right
thereunder, contrary to the provisions hereof shall be void and ineffective,
shall give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the option with respect
to the shares involved in such attempt.
(b) Notwithstanding anything to the contrary contained in the terms of
the Plan as in effect at any time prior to the date hereof and
notwithstanding anything to the contrary contained in the terms of any
statement, letter or other document or agreement setting forth the terms
and conditions of any options previously issued pursuant to the terms of
this Plan, any and all Non-Qualified Options (as defined in Section 13
hereof) previously issued to any officer of the Company (as defined in Rule
16A-a(f) issued under the Securities and Exchange Act of 1934 (hereinafter
an "Executive Officer")) pursuant to the terms of the Plan and, subject to
the approval of the Committee, any Non-Qualified Options which may be
granted or issued to any Executive Officer of the Company at any time in
the future pursuant to the terms of the Plan shall be transferable by the
Executive Officer to whom such Non-Qualified Options have been or are
granted to: (i) the spouse, children or grandchildren of the Executive
Officer (hereinafter "Immediate Family Members"); (ii) a trust or trusts
for the exclusive benefit of such Immediate Family Members; (iii) a
partnership or limited liability company in which such Immediate Family
Members are the only partners or members; or (iv) a private foundation
established by the Executive Officer; provided that: (x) there may be no
consideration for any such transfer; (y) in the case of Non-Qualified
Options which may be granted in the future, the statement, letter or other
document or agreement setting forth the terms and conditions of any such
Non-Qualified Options must expressly provide for and limit the
transferability of such Non-Qualified Options to transfers which are
permitted by the foregoing provisions of this Section 9(b); and (z) any
subsequent transfer of transferred Non-Qualified Options shall, except for
transfers occurring as a result of the death of the transferee as
contemplated by Section 10(c), be prohibited. Following the transfer of any
Non-Qualified Options as permitted by the foregoing provisions of this
Section 9(b), any such transferred Non-Qualified Options shall continue to
be subject to the same terms and conditions applicable to such Non-
Qualified Options immediately prior to the transfer; provided that, for
purposes of this Plan, the term "Optionee" shall be deemed to refer to the
transferee. Notwithstanding the foregoing, the events of termination of
employment of Section 10 hereof shall continue to be applied with respect
to the original Optionee for the purpose of determining whether or not the
Non-Qualified Options shall be exercisable by the transferee and, upon
termination of the original Optionee's employment, the Non-Qualified
Options shall be exercisable by the transferee only to the extent and for
the periods that the original Optionee (or his estate) would have been
entitled to exercise such Options as specified in Section 10 below.
10. Effect of Termination of Employment, Death or Disability. (a) In the
event that an Optionee's employment with the Company or the Subsidiary by whom
the Optionee was employed is terminated either by reason of: (i) a discharge
for cause; (ii) voluntary separation on the part of the Optionee (other than
any termination of employment by the Optionee which qualifies as a termination
for "Good Reason" pursuant to the terms of a letter agreement between the
Optionee and the Company (a "Good Reason Termination")) and without consent of
the Company or the Subsidiary by whom the Optionee was employed, any rights of
the Optionee to purchase shares of Common Stock pursuant to the terms of any
option or options granted to him under this Plan shall terminate immediately
upon such termination of employment to the extent such options have not
theretofore been exercised by him.
(b) In the event of the termination of employment of an Optionee
(otherwise than by reason of death or retirement of the Optionee at his
Retirement Date) by the Company or by any of the Subsidiaries
A-6
<PAGE>
employing the Optionee at such time or pursuant to a Good Reason
Termination, any option or options granted to him under the Plan to the
extent not theretofore exercised shall be deemed cancelled and terminated
forthwith, except that, subject to the provisions of subparagraph (a) of
this Section, such Optionee may exercise any options theretofore granted to
him, which have not then expired and which, as of the date the Optionee's
employment with the Company is terminated, were otherwise exercisable
within the provisions of Section 7 hereof, within three (3) months after
such termination. If the employment of an Optionee shall be terminated by
reason of the Optionee's retirement at his Retirement Date by the Company
or by any of the Subsidiaries employing the Optionee at such time, the
Optionee shall have the right to exercise such option or options held by
him to the extent that such options have not expired, at any time within
three (3) months after such retirement. The provisions of Section 7 to the
contrary notwithstanding, upon retirement, all options held by an Optionee
shall be immediately exercisable in full. The transfer of an Optionee from
the employ of the Company to a Subsidiary of the Company or vice versa, or
from one Subsidiary of the Company to another, shall not be deemed to
constitute a termination of employment for purposes of this Plan.
(c) In the event that an Optionee shall die while employed by the Company
or by any of the Subsidiaries or shall die within three (3) months after
retirement on his Retirement Date (from the Company or any Subsidiary), any
option or options granted to him under this Plan and not theretofore
exercised by him or expired shall be exercisable by the estate of the
Optionee or by any person who acquired such option by bequest or
inheritance from the Optionee in full, notwithstanding the provisions of
Section 7 hereof, at any time within one (1) year after the death of the
Optionee. References herein above to the Optionee shall be deemed to
include any person entitled to exercise the option after the death of the
Optionee under the terms of this Section.
(d) In the event of the termination of employment of an Optionee by
reason of the Optionees' disability, the Optionee shall have the right,
notwithstanding the provisions of Section 7 hereof, to exercise all options
held by him, in full, to the extent that such options have not previously
expired or been exercised, at any time within one (1) year after such
termination. The term "disability" shall, for the purposes of this Plan, be
defined in the same manner as such term is defined in Section 22(e)(3) of
the Internal Revenue Code of 1986.
(e) For the purposes of this Plan, "Retirement Date" shall mean, with
respect an Optionee, the date the Optionee actually retires from his
employment with the Company or, if applicable, the Subsidiary by whom he is
employed; provided that such date occurs on or after the date the Optionee
is otherwise entitled to retire under the terms of the defined benefit
pension plan which the Optionee is a participant in (and which plan is
maintained by the Company or, if applicable, the Subsidiary by whom the
Optionee is employed).
11. Amendment and Termination of the Plan. The Board of Directors of the
Company may at any time suspend, amend or terminate the Plan; provided,
however, that except as permitted in Section 13 hereof, no amendment or
modification of the Plan which would:
(a) increase the maximum aggregate number of shares as to which options
may be granted hereunder (except as contemplated in Section 5); or
(b) reduce the option price or change the method of determining the
option price; or
(c) increase the time for exercise of options to be granted or those
which are outstanding beyond a term of ten (10) years; or
(d) change the designation of the employees or class of employees
eligible to receive options under this Plan, may be adopted unless with the
approval of the holders of a majority of the outstanding shares of Common
Stock represented at a stockholders' meeting of the Company, or with the
written consent of the
A-7
<PAGE>
holders of a majority of the outstanding shares of Common Stock. No
amendment, suspension or termination of the Plan may, without the consent
of the holder of the option, terminate his option or adversely affect his
rights in any material respect.
12. Incentive Stock Options; Power to Establish Other Provisions. It is
intended that the Plan shall conform to and (except as otherwise expressly set
forth herein) each option shall qualify and be subject to exercise only to the
extent that it does qualify as an "incentive stock option" as defined in
Section 422 of the Code and as such section may be amended from time to time
or be accorded similar tax treatment to that accorded to an incentive stock
option by virtue of any new revenue laws of the United States. The Board of
Directors may make any amendment to the Plan which shall be required so to
conform the Plan. Subject to the provisions of the Code, the Committee shall
have the power to include such other terms and provisions in options granted
under this Plan as the Committee shall deem advisable. The grant of any
options pursuant to the terms of this Plan which do not qualify as "incentive
stock options" as defined in Section 422 of the Code is hereby approved
provided that the maximum number of shares of Common Stock of the Company
which can be issued pursuant to the terms of this Plan (as provided for in
Section 4 hereof but subject to anti-dilutive adjustments made pursuant to
Section 5 hereof) is not exceeded by the grant of any such options and, to the
extent that any options previously granted pursuant to the terms of this Plan
were not "incentive stock options" within the meaning of Section 422 of the
Code, the grant of such options is hereby ratified, approved and confirmed.
13. Maximum Annual Value of Options Exercisable. Notwithstanding any
provisions of this Plan to the contrary if: (a) the sum of: (i) the fair
market value (determined as of the date of the grant) of all options granted
to an Optionee under the terms of this Plan which become exercisable for the
first time in any one calendar year; and (ii) the fair market value
(determined as of the date of the grant) of all options previously granted to
such Optionee under the terms of this Plan or any other incentive stock option
plan of the Company or its subsidiaries which also become exercisable for the
first time in such calendar year; exceeds (b) $100,000; then, (c) those
options shall continue to be binding upon the Company in accordance with their
terms but, to the extent that the aggregate fair market of all such options
which become exercisable for the first time in any one calendar year
(determined as of the date of the grant) exceeds $100,000, such options
(referred to, for purposes of this Plan, as "Non-Qualified Options") shall not
be deemed to be incentive stock options as defined in Section 422(b) of the
Code. For purposes of the foregoing, the determination of which options shall
be recharacterized as not being incentive stock options issued under the terms
of this Plan shall be made in inverse order of their grant dates and,
accordingly, the last options received by the Optionee shall be the first
options to be recharacterized as not being incentive stock options granted
pursuant to the terms of the Plan.
14. General Provisions. (a) No incentive stock option shall be construed as
limiting any right which the Company or any parent or subsidiary of the
Company may have to terminate at any time, with or without cause, the
employment of an Optionee.
(b) The Section headings used in this Plan are intended solely for
convenience of reference and shall not in any manner amplify, limit, modify
or otherwise be used in the construction or interpretation of any of the
provisions hereof.
(c) The masculine, feminine or neuter gender and the singular or plural
number shall be deemed to include the other whenever the content so
indicates or requires.
(d) No options shall be granted under the Plan after ten (10) years from
the date the Plan is adopted by the Board of Directors of the Company or
approved by the stockholders of the Company, whichever is earlier.
15. Effective Date and Duration of the Plan. The Plan became effective on
October 27, 1995, the date the adoption of the Plan was approved by the Board
of Directors of the Company. On January 8, 1996, as required by Section 422 of
the Code, the Plan was approved by the Stockholders of the Company. The Plan
will terminate on October 27, 2005; provided however, that the termination of
the Plan shall not be deemed to modify, amend or otherwise affect the terms of
any options outstanding on the date the Plan terminates.
A-8
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Plan by and on behalf
of the Company as of the 16th day of June, 1999.
COLUMBUS MCKINNON CORPORATION
By: /s/ Robert L. Montgomery, Jr.
DATE ADOPTED BY BOARD OF DIRECTORS: October 27, 1995
DATE APPROVED BY STOCKHOLDERS: January 8, 1996
TERMINATION DATE: October 27, 2005
A-9
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS,
AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES
OF COLUMBUS McKINNON CORPORATION
The following table sets forth the name and the present principal occupation
or employment (except with respect to the directors, whose principal
occupation is set forth in the Proxy Statement), and the name, principal
business and address of any corporation or other organization in which such
employment is carried on, of (1) the directors and executive officers of
Columbus McKinnon Corporation and (2) certain employees and other
representatives of Columbus McKinnon Corporation who may assist in soliciting
proxies from Columbus McKinnon Corporation shareholders. Unless otherwise
indicated below or in the Proxy Statement, the principal business address of
each such person is 140 John James Audubon Parkway, Amherst, New York 14228-
1197 and such person is an employee of Columbus McKinnon Corporation.
Directors are indicated with a single asterisk.
Directors and Executive Officers of Columbus McKinnon Corporation
<TABLE>
<CAPTION>
Name and Principal Present Office or Other Principal
Business Address Occupation or Employment
- ------------------ ---------------------------------
<S> <C>
Herbert P. Ladds, Jr.*......
Edward W. Duffy*............
3385 Highland's Bridge Road
Sarasota, FL 33425
Randolph A. Marks*..........
369 Franklin Street, Suite
100
Buffalo, NY 14202
L. David Black*.............
JLG Industries, Inc.
1 JLG Drive
McConnellsburg, PA
Carlos Pascual*.............
Xerox Corporation
800 Long Ridge Road
Stamford, CT
Richard H. Fleming*.........
USG Corporation
125 S. Franklin Street
Chicago, IL 60606
Timothy T. Tevens*.......... President and Chief Executive Officer
Robert L. Montgomery, Jr.*.. Executive Vice President, Chief Financial Officer,
Treasurer, and Assistant Secretary
Ned T. Librock.............. Vice President--Sales and Marketing
Karen L. Howard............. Vice President--Controller
Ernst K. H. Marburg......... Vice President--Total Quality and Standards
Lois H. Demler.............. Corporate Secretary
Zane T. Goggin.............. Operating Group Leader, Forging Division
Richard M. Davidson......... Operating Group Leader, Hoist Packaged
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Present Office or Other Principal
Business Address Occupation or Employment
- ------------------ ---------------------------------
<S> <C>
Earl L. Loeswick................... Operating Group Leader, Chain Division
Clifford W. Minton................. Operating Group Leader, Hoist Engineered
John Stewart....................... Operating Group Leader, Duff-Norton Division
Joseph J. Owen..................... Director--Materials Management
Timothy R. Harvey.................. Manager--Legal Affairs
Neal E. Wixson..................... Director--Human Resources
</TABLE>
I-2
<PAGE>
SCHEDULE II
SHARES HELD BY COLUMBUS McKINNON CORPORATION DIRECTORS
AND EXECUTIVE OFFICERS, CERTAIN EMPLOYEES AND OTHER
REPRESENTATIVES OF COLUMBUS McKINNON CORPORATION AND
CERTAIN TRANSACTIONS BETWEEN ANY OF THEM
AND COLUMBUS McKINNON CORPORATION
The Shares held by Columbus McKinnon Corporation's directors and Ned T.
Librock, Karen L. Howard, Ernst K. H. Marburg, and Ivan E. Shawvan are set
forth in the Proxy Statement. The following officers and employees of Columbus
McKinnon Corporation own the following Shares:
<TABLE>
<CAPTION>
Shares of Common
Stock
Beneficially
Name of Beneficial Owner Owned
------------------------ ----------------
<S> <C>
Lois H. Demler(1)....................................... 14,121
Zane T. Goggin.......................................... 91,388
Richard M. Davidson..................................... 88,521
Earl L. Loeswick(1)..................................... 14,713
Clifford W. Minton...................................... 982
John Stewart............................................ 442
Joseph J. Owen(1)....................................... 5,482
Timothy R. Harvey(1).................................... 2,738
Neal E. Wixson(1)....................................... 2,500
</TABLE>
- --------
(1) Includes 5,100 shares of Common Stock awarded to Ms. Demler on August 1,
1994, 3,400 shares of Common Stock awarded to Ms. Demler on July 22, 1996,
8,500 shares of Common Stock awarded to Mr. Loeswick on August 1, 1994,
5,000 shares of Common Stock awarded to Mr. Owen on May 21, 1997, 2,500
shares of Common Stock awarded to Mr. Harvey on July 17, 1996, and 2,500
shares of Common Stock awarded to Mr. Wixson on October 19, 1998. All such
shares were awarded under the Restricted Stock Plan and vest five years
after the award date. Such shares are subject to restrictions on transfer
and forfeiture upon the occurrence of certain events, prior to vesting.
The following table sets forth information concerning all purchases and
sales of securities of the Company by directors, officers, and certain
corporate staff members since June 4, 1997:
<TABLE>
<CAPTION>
Date of Nature of Number of Shares
Name Transaction Transaction of Common Stock
---- ----------- ----------- ----------------
<S> <C> <C> <C>
Directors:
Herbert P. Ladds, Jr................ 2/2/98 Sale 10,000
2/3/98 Sale 20,000
2/4/98 Sale 26,000
3/31/98 (1) 691
9/10/98 Purchase 2,000
3/31/99 (1) 557
Edward W. Duffy........................ 5/22/98 Sale 5,000
5/26/98 Sale 10,000
5/27/98 Sale 11,500
5/28/98 Sale 5,000
5/29/98 Sale 5,000
6/1/98 Sale 5,000
6/3/98 Sale 10,000
6/3/98 Sale 15,000
6/8/98 Sale 5,000
6/11/98 Sale 8,500
6/15/98 Sale 5,000
12/2/98 (2) 14,000
1/21/99 (2) 14,000
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Date of Nature of Number of Shares
Name Transaction Transaction of Common Stock
---- ----------- ----------- ----------------
<S> <C> <C> <C>
Robert L. Montgomery, Jr.............. 3/31/98 (1) 650
3/31/99 (1) 518
Timothy T. Tevens..................... 3/31/98 (1) 453
9/14/98 Purchase 500
3/31/99 (1) 331
Carlos Pascual........................ 8/17/98 Purchase 1,000
9/9/98 (3) 500
Richard H. Fleming.................... 3/29/99 (3) 500
Randolph A. Marks..................... 12/11/98 Sale 1,000
Officers:
Ned T. Librock........................ 3/31/98 (1) 454
3/31/99 (1) 332
Ernst K. H. Marburg................... 3/31/98 (1) 439
5/22/98 Sale 39,729
3/31/99 (1) 323
Karen L. Howard....................... 3/31/98 (1) 396
9/2/98 Purchase 300
9/9/98 (3) 8,500
3/31/99 (1) 275
Lois H. Demler........................ 3/31/98 (1) 246
3/31/98 (1) Spouse 78
9/4/98 Purchase 200
3/31/99 (1) 215
Ivan E. Shawvan..................... 3/31/98 (1) 481
3/23/99 (4) 200
3/31/99 (1) 357
Certain Corporate Staff Members:
Zane T. Goggin........................ 3/31/98 (1) 570
9/1/98 Purchase 2,750
3/31/99 (1) 442
Joseph J. Owen........................ 9/18/98 Purchase 300
3/31/99 (1) 180
Timothy R. Harvey..................... 3/31/98 (1) 90
3/31/99 (1) 148
Neal E. Wixson........................ 10/19/98 (3) 2,500
Clifford W. Minton.................... 3/31/98 (1) 400
3/31/99 (1) 275
Earl L. Loeswick...................... 3/31/98 (1) 501
3/31/99 (1) 371
Richard M. Davidson................... 3/31/98 (1) 536
3/31/99 (1) 410
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Date of Nature of Number of Shares
Name Transaction Transaction of Common Stock
---- ----------- ----------- ----------------
<S> <C> <C> <C>
John Stewart........................... 9/4/98 Purchase 200
10/8/98 Purchase 50
3/31/99 (1) 192
</TABLE>
- --------
(1) Represents ESOP Shares allocated to the individual's account.
(2) Represents gifts to trusts for the benefit of Mr. Duffy's children, as to
which shares Mr. Duffy disclaims beneficial ownership.
(3) Represents restricted shares of Common Stock awarded under the Restricted
Stock Plan, all of which vest five years after the date of grant. Such
shares are subject to restrictions on transfer, and forfeiture upon the
occurrence of certain events, prior to vesting.
(4) Represents shares of Common Stock transferred to Mr. Shawvan's ex-spouse;
Mr. Shawvan disclaims beneficial ownership of such shares.
II-3
<PAGE>
I M P O R T A N T
Your vote is important. Regardless of the number of shares of Columbus
McKinnon common stock you own, please vote as recommended by your Board of
Directors by taking these two simple steps:
1. PLEASE SIGN, DATE AND PROMPTLY MAIL the enclosed WHITE proxy card in the
postage-paid envelope provided.
2. DO NOT RETURN ANY GOLD PROXY CARD sent to you by the Shareholders
Committee, not even as a vote of protest.
IF YOU VOTED THE COMMITTEE'S GOLD PROXY CARD BEFORE RECEIVING YOUR COLUMBUS
McKINNON WHITE PROXY CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE SIMPLY BY
SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD. THIS WILL CANCEL
YOUR EARLIER VOTE. REMEMBER, ONLY YOUR LATEST DATE PROXY CARD WILL COUNT AT
THE ANNUAL MEETING.
Instructions for "Street Name" Shareholders
If you own your shares in the name of a brokerage firm (or other nominee),
only your broker can vote your shares on your behalf and only after receiving
your specific instructions. Please call your broker and instruct him/her to
execute a WHITE card (or voting instruction form) on your behalf. You should
also promptly sign, date and mail your WHITE card when you receive it from
your broker. Please do so for each separate account you maintain.
You should return your WHITE proxy card at once to ensure that your vote is
counted.
If you have any questions or need assistance in voting your
shares, please call D. F. King & Co., Inc., which is assisting
us, toll-free at 1-800-697-6974.
<PAGE>
PROXY COLUMBUS McKINNON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 16, 1999
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") all of the shares of stock of the Company held by the
undersigned, to be held at the Company's corporate offices at 140 John James
Audubon Parkway, Amherst, New York, on August 16, 1999 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.
<TABLE>
The Board of Directors recommends a vote "FOR" Proposal No. 1
<S> <C> <C>
1. Election of Directors. FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below). [ ] for all nominees listed below. [ ]
Herbert P. Ladds, Jr. Timothy T. Tevens Robert L. Montgomery, Jr. Randolph A. Marks L. David Black Carlos Pascual
Richard H. Fleming
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"FOR" all nominees above and write the name(s) of that nominee(s) with respect
to whom you wish to withhold authority to vote here: ________________________
The Board of Directors recommends a vote "FOR" Proposal No. 2
2. Proposal to approve the Proposed Amendment and Restatement of the Columbus
McKinnon Corporation 1995 Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on reverse side)
<PAGE>
The Board of Directors recommends a vote "AGAINST" Proposal No. 3
3. Proposal to rescind By-Law Amendments made by Columbus McKinnon Corporation's
Board of Directors in May 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS NO. 1 AND NO.
2 AND "AGAINST" PROPOSAL NO. 3.
Dated: ________________, 1999
_____________________________
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 in partnership
name by authorized person. PLEASE SIGN,
DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
