<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
VALLEY FORGE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / 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> 2
VALLEY FORGE CORPORATION
100 SMITH RANCH ROAD, SUITE 326
SAN RAFAEL, CALIFORNIA 94903
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO OUR STOCKHOLDERS:
The annual meeting of the stockholders of Valley Forge Corporation, a Georgia
corporation, will be held on June 12, 1996, at 10:00 a.m., Pacific time, at the
offices of the Corporation, located at 100 Smith Ranch Road, Suite 326, San
Rafael, California 94903. The items of business to be transacted at this
meeting are as follows:
1. Election of the Board of Directors of five people for the ensuing
year.
2. Ratification of the appointment of Coopers & Lybrand as independent
accountants of the Corporation for the 1996 fiscal year.
3. Approval of amendments to the Amended and Restated 1987 Stock Option
Plan.
4. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has specified May 1, 1996, at the close of business as
the record date for the purpose of determining the stockholders who are
entitled to receive notice of and to vote at the annual meeting. A list of the
stockholders entitled to vote at the annual meeting will be available for the
examination of any stockholder at the meeting.
The Proxy Statement for the annual meeting is set forth on the following pages.
So that as many shares as possible may be represented at this meeting, we urge
you to promptly sign, date, and return your proxy in the enclosed,
self-addressed envelope. If you attend the meeting, you may revoke the proxy
and vote your shares in person if you desire to do so.
Sincerely,
Monica J. Burke
Secretary - Treasurer
Dated: May 6, 1996
<PAGE> 3
PROXY STATEMENT OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1996
GENERAL INFORMATION
This Proxy Statement and the accompanying Proxy and other enclosures are being
mailed beginning May 8, 1996, to holders of common stock of Valley Forge
Corporation, a Georgia Corporation (the "Company"), in connection with the
stockholders' meeting to be held on June 12, 1996, at 10:00 a.m., Pacific time,
at the Company's offices at 100 Smith Ranch Road, Suite 326, San Rafael,
California 94903, or at any adjournment thereof (the "Meeting"). Proxies are
solicited to provide all stockholders of the Company with the opportunity to
vote. Shares may only be voted at the Meeting if the stockholder is present in
person or is represented by a proxy.
COSTS OF SOLICITATION OF PROXIES
The Company will bear the cost of preparing, mailing, and soliciting Proxies.
In addition to solicitations by mail, the directors, officers, and regular
employees of the Company may solicit proxies personally and by telephone,
telegraph, or other means, for which they will receive no compensation in
addition to their normal compensation. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for forwarding
solicitation material to the beneficial owners of common stock, and the Company
may reimburse them for their reasonable out-of-pocket and clerical expenses in
forwarding the soliciting materials.
VOTING RIGHTS AND REVOCABILITY OF PROXIES
Only holders of the Company's common stock, par value $.50 per share ("Common
Stock"), of record at the close of business on May 1, 1996, are entitled to
notice of and to vote at the Meeting. Holders of the Common Stock will be
entitled to one vote on all matters properly coming before the Meeting for each
share registered in their names on the record date specified above. On May 1,
1996, the Company had outstanding 2,795,940 shares of Common Stock, of which
2,667,733 will be entitled to vote at the Meeting (128,207 shares of Common
Stock are treasury shares and are not entitled to vote). The Company has no
other classes of securities issued and outstanding.
On December 6, 1995, the Company's Board of Directors authorized a
three-for-two stock split effected in the form of a 50% stock dividend
distributed on March 12, 1996, to shareholders of record on March 1, 1996.
Accordingly, unless otherwise indicated, all information contained in this
proxy reflects this stock split.
The By-Laws of the Company require that a quorum be present at all meetings of
stockholders before the stockholders may conduct business. A quorum consists of
the holders of record of a majority of the shares of Common Stock, issued and
outstanding, entitled to vote at the meeting, and present in person or by
proxy.
When a proxy is returned properly signed and dated, the person designated as
proxy shall vote the shares represented by the proxy in accordance with the
stockholder's directions. If a proxy is signed, dated, and returned without
specifying choices on one or more matters presented to the stockholders, the
shares will be voted on such matter or matters as recommended by the Company's
Board of Directors.
-2-
<PAGE> 4
Abstentions will be treated as shares present and entitled to vote for purposes
of determining the presence of a quorum. Each stockholder is entitled to one
vote, in person or by proxy, for each share of stock standing in his or her
name on the books of the Company as of the record date on any matter submitted
to the stockholders. The Company's By-Laws do not authorize cumulative voting.
In the election of directors, the five persons receiving the highest number of
votes will be elected. Each of the other proposals submitted hereby requires
the affirmative vote of a majority of the Stock represented and eligible to
vote at the Meeting. Accordingly, abstentions from voting on any matter other
than in the election of directors will have the effect of a vote "AGAINST" the
proposal.
A stockholder giving a proxy may revoke it by (i) delivering a written notice
of revocation to the Secretary of the Company at the office of the Company
identified above at any time before the commencement of the Meeting or any
adjournments thereof; (ii) attending the Meeting in person and voting; or (iii)
executing a proxy bearing a date and time later than that of the proxy to be
revoked. Revocation of the proxy will not affect any vote previously taken.
Brokers and nominees holding Common Stock in "street name" who are members of a
stock exchange are required by the rules of the exchange to transmit this Proxy
Statement to the beneficial owner of the Common Stock and to solicit voting
instructions with respect to the matters submitted to the Shareholders. In the
event any such broker or nominee has not received instructions from the
beneficial owner by the date specified in the statement accompanying such
material, the broker or nominee may give or authorize the giving of a Proxy to
vote such Common Stock on the matters to be considered at the Meeting;
provided, however, that the broker or nominee may not give or authorize the
giving of a Proxy for any matter if it has notice of any contest with respect
to any matter, and, provided, further, that the broker or nominee may not vote
the Common Stock "FOR" any matter which substantially affects the rights or
privileges of the Common Stock without specific instructions from the
beneficial owner. If you hold Common Stock in "street name" and you fail to
instruct your broker or nominee as to how to vote such Common Stock, your
broker or nominee may, in its discretion, vote such Common Stock "FOR" the
election of the Board of Directors' nominees; "FOR" the proposal to ratify the
appointment of Coopers & Lybrand as the Company's independent accountants for
the fiscal year ending December 31, 1996; and "FOR" the approval of amendments
to the Amended and Restated 1987 Stock Option Plan.
Unless revoked, the shares of Common Stock represented by proxies will be voted
in accordance with the instructions given thereon. In the absence of any
instruction in the Proxy, your shares of Common Stock will be voted in favor
(i) "FOR" the election of the nominees for director set forth herein; (ii)
"FOR" ratification of the appointment of Coopers & Lybrand as the Company's
independent accountants for the fiscal year ending December 31, 1996; and (iii)
"FOR" the approval of amendments to the Amended and Restated 1987 Stock Option
Plan.
The Meeting has been called for the purposes set forth in the Notice of Annual
Stockholders' Meeting (the "Notice") to which this Proxy Statement is appended.
The Board of Directors does not anticipate that matters other than those
described in the Notice will be brought before the Meeting for stockholder
action, but if any other matters properly come before the Meeting, votes
thereon will be cast by the proxy holder in accordance with her best judgment.
If a stockholder wishes to give a proxy to someone other than the person
indicated on the accompanying proxy, he must cross out the names appearing on
the proxy and insert the name or
-3-
<PAGE> 5
names of another person or persons to act as proxies. The signed proxy must be
presented at the Meeting by the person or persons representing the stockholder.
A copy of the Company's 1995 Annual Report to its stockholders is enclosed
herewith. Stockholders may obtain additional copies of the Annual Report
without charge upon written request to the Company's Secretary at the Company's
offices.
ITEM 1. ELECTION OF DIRECTORS
The Company's By-Laws authorize a Board of Directors of nine persons, but at no
time since 1974 have all directors' positions been filled. At the Company's
1995 annual meeting of stockholders, Messrs. Bloom, Desloge, Brining, Dressel,
and Warner were elected.
The Board of Directors has nominated all of its present members for election as
directors for a term of one year or until their successors are elected and
qualified.
All nominees have indicated their willingness to serve and, unless otherwise
specified on the proxy, it is the intention of the proxy holder to vote for the
Nominees listed below. No proxy may be voted for more than five persons. If
events not now known or anticipated make any of the Nominees unable to serve,
the Proxies will be voted at the discretion of the proxy holder. The vote of a
majority of the Common Stock, present in person or by proxy and voting, is
required to elect each of the Nominees.
The following sets forth biographical information of the five nominees for
director and of the executive officers of the Company:
<TABLE>
<CAPTION>
Year First
Name and Age Principal Occupation Elected Director
------------ -------------------- ----------------
<S> <C> <C>
NOMINEES FOR DIRECTORS:
Martin J. Bloom (65) Co-Chairman of the Board since 1983
100 Smith Ranch Road, Suite 326 July, 1984
San Rafael, CA 94903-1994
Theodore P. Desloge, Jr. (56) Co-Chairman of the Board since 1983
100 Smith Ranch Road, Suite 326 July, 1984
San Rafael, CA 94903-1994
David R. Brining (53) President, Chief Executive Officer, 1981
100 Smith Ranch Road, Suite 326 and Director of the Company
San Rafael, CA 94903-1994 since July, 1981
Phillip F. Dressel (59) President of Consolidated 1985
100 Smith Ranch Road, Suite 326 Flavor Corporation
San Rafael, CA 94903-1994
Dale J. Warner (73) Retired, formerly a Director of 1983
100 Smith Ranch Road, Suite 326 Gits Bros. Mfg. Co., a
San Rafael, CA 94903-1994 subsidiary of the Company
EXECUTIVE OFFICER:
Monica J. Burke (44) Vice President Finance and
Secretary of the Company
since November, 1988
</TABLE>
-4-
<PAGE> 6
Mr. Bloom has been a Director of the Company since July 1983, Co-Chairman of
the Board since July 1984, and is a Director for most of the Company's
subsidiaries. He is a past Director and Chairman of the Board of Park 'N Fly,
Inc., an operator of off-airport parking services.
Mr. Desloge has been a Director of the Company since July 1983 and Co-Chairman
of the Board since July 1984. He is a past Director and Chairman of the Board
of Park 'N Fly, Inc., an operator of off-airport parking services.
Mr. Brining has been President, CEO, and a Director of the Company since 1981.
He has served as a Director or Chairman of each of the Company's subsidiaries
since their acquisition.
Mr. Dressel has been a Director of the Company since 1985. He was Chairman of
the Board and is currently the President of Consolidated Flavor Corporation, a
privately held flavoring business located in St. Louis, Missouri.
Mr. Warner has been a Director of the Company since 1983. He was a Director of
Gits Bros. Mfg. Co. for more than six years.
Ms. Burke has served as Vice President Finance since 1988.
None of the directors, nominees for director, or executive officers were
selected pursuant to any arrangement or understanding, other than with the
directors and executive officers of the Company acting within their capacity as
such. There are no family relationships among directors or executive officers
of the Company, and as of the date hereof, no directorships are held by any
director with a company which has a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or subject to the requirements of Section 15(d) of the Exchange Act or
any company registered as an investment company under the Investment Company
Act of 1940, except for Mr. Desloge, who is a director of Mississippi Valley
Bancshares, listed on the NASDAQ.
THE BOARD OF DIRECTORS AND COMMITTEES
The Corporation's Board of Directors met twice during 1995. The Board of
Directors has two committees, the Compensation Committee and the Audit
Committee and does not have a nominating committee. All of the persons who
were directors of the Company during 1995 attended at least 75% of (1) the
total number of Board meetings and (2) the total number of meetings held by all
committees on which they served.
The members of the Audit Committee are Messrs. Brining, Dressel, and Warner.
The Audit Committee met once during 1995. The Audit Committee reviews and
reports to the Board on various auditing and accounting matters, including the
annual audit report from the Company's independent accountants.
The members of the Compensation Committee are Messrs. Bloom, Desloge, and
Dressel. For a description of the functions of the Compensation Committee, see
"Report of the Compensation Committee on Executive Compensation." The
Committee met once during 1995.
-5-
<PAGE> 7
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16
Under Section 16(a) of the Exchange Act, the Company's directors, executive
officers, and any persons holding ten percent or more of Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC") and to furnish
the Company with copies of such reports. Specific due dates for these reports
have been established and the Company is required to report in this Proxy
Statement any failure to file on a timely basis by such persons. All persons
subject to the reporting requirements of Section 16(a) have filed all required
reports on a timely basis.
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of May 1, 1996 by (i) each
stockholder known by the Company to own beneficially more than five percent
(5%) of the outstanding Common Stock, (ii) each director of the Company, (iii)
the Company's Chief Executive Officer, (iv) all executive officers and
directors of the Company as a group. Except as otherwise indicated below, each
of the entities named in the table has sole voting and investment power with
respect to all shares of Common Stock beneficially owned by such entity as set
forth opposite such entity's name, subject to community property laws where
applicable. No effect has been given to shares reserved for issuance under
outstanding stock options except where otherwise indicated.
<TABLE>
<CAPTION>
Number of Shares
Beneficial Owner Beneficially Owned(1) Percent
---------------- ------------------ -------
<S> <C> <C>
Martin J. Bloom 497,452(2) 18.65%
126,852(3) 4.76%
Theodore P. Desloge, Jr. 538,327 20.18%
126,852(3) 4.76%
David R. Brining 243,975(4) 9.08%
Phillip F. Dressel 79,049(5) 2.96%
All directors and
officers as a group 1,623,007(6) 60.26%
FMR Corporation
82 Devonshire Street
Boston, MA 02109 223,500(7) 8.38%
</TABLE>
(1) Except as otherwise noted, each person has sole voting and investment power
with respect to the shares listed subject to community property laws where
applicable.
(2) Does not include 15,000 shares (.56%) owned by Mr. Bloom's wife with
respect to which Mr. Bloom disclaims beneficial ownership.
-6-
<PAGE> 8
(3) Represents shares owned by Bloom & Desloge Enterprises, Inc., a corporation
in which Messrs. Bloom and Desloge are each 50% stockholders. Bloom &
Desloge Enterprises, Inc. owns a total of 253,704 shares of common stock.
(4) Includes options to purchase 18,750 shares at $11.08 per share. Does not
include 1,425 shares (.05%) owned by Mr. Brining's wife with respect to
which Mr. Brining disclaims beneficial ownership.
(5) Represents shares deposited under trust agreements for the benefit of Mr.
Dressel.
(6) Includes options to purchase 6,750 shares at $4.83 per share purchasable by
an officer. In addition to the disclaimed shares described in (2) and (4)
above, does not include 5,400 shares (.20%) held in trust by Mr. Warner's
wife with respect to which Mr. Warner disclaims beneficial ownership.
(7) Based solely upon a Schedule 13G dated February 14, 1996. Of the 223,500
shares shown as beneficially owned by FMR Corporation, 223,500 are
beneficially owned by Fidelity Management Research Company ("Fidelity
Research"), a wholly-owned subsidiary of FMR Corporation and investment
advisor of several investment companies. FMR Corporation and its chairman,
Edward C. Johnson 3rd, each has sole power to dispose of the shares owned
by Fidelity Research, but neither FMR Corporation nor Mr. Johnson has the
sole power to vote or to direct the voting of such shares.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS' COMPENSATION
The following table shows certain summary information concerning compensation
paid or accrued by the Company to or on behalf of the Company's Chief Executive
Officer and the other executive officer of the company whose compensation
exceeds $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Fiscal Other Annual All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation(2)
------------------ ---- ------ ----- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David R. Brining, 1995 $276,317 $135,725 $6,600 0 $17,073
CEO(3) 1994 254,817 190,500 5,351 75,000 16,489
1993 240,750 63,500 4,563 0 21,005
Monica J. Burke, 1995 109,667 31,500 0 0 13,514
Vice President 1994 105,667 40,800 0 0 11,339
Finance(3) 1993 101,417 20,700 0 0 10,899
</TABLE>
(1) In August, 1987 and incident to the relocation of the corporate
headquarters from St. Louis, Missouri to San Rafael, California, the
Company accepted a $75,000 demand, non-interest bearing note from Mr.
Brining. The amounts included under Other Annual Compensation
represent interest calculated at the prime rate on the demand note.
(2) Represents amounts contributed to the Company's two profit sharing
plans.
(3) Mr. Brining and Ms. Burke also serve as officers of each of the
Company's subsidiaries.
-7-
<PAGE> 9
OPTION GRANTS IN 1995
None to Named Executives.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Executive Officers
concerning the exercise of options during the fiscal year ended December 31,
1995, and unexercised options held by the Executive Officers as of December 31,
1995:
Aggregated Option(1) Exercises in Fiscal Year 1995
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised,
Number of Unexercised In the Money
Shares Options Held at Year End Options Held at Year End(2)
Named Acquired On Value ------------------------ ------------------------
Executives Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R. Brining 0 $ 0 18,750 56,250 $ 9,431 $28,294
Monica J. Burke 4,500 22,110 6,750 0 45,583 0
</TABLE>
1) The Company has no plans pursuant to which stock appreciation rights (SARs)
may be granted.
2) Value of unexercised "in the money" options is the difference between the
market price of the Common Stock on December 31, 1995 ($11.583 per share) and
the exercise price of the option, multiplied by the number of shares subject
to the option.
EMPLOYMENT AGREEMENTS
There are no employment contracts or termination agreements with the Executive
Officers.
STOCK OPTION PLAN
For a description of the Stock Option Plan, see "Item 3.- Amendments to Stock
Option Plan."
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company establishes, implements, and monitors
general policies regarding compensation for the Company's employees, adopts and
amends employee compensation plans, and approves specific compensation levels
for executive officers, including the Executive Officers. Currently, the
members of the Compensation Committee are Martin J. Bloom, Theodore P. Desloge,
Jr., and Phillip F. Dressel. Each member of the Compensation Committee is a
non-employee director of the Company.
Set forth below is a report of the Compensation Committee addressing the
Company's compensation policies for 1995 applicable to the Company's
executives, including the Executive Officers.
The Report of the Compensation Committee on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
(the "Securities Act") or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
-8-
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation programs reflect the philosophy that executive
compensation levels should be linked to Company performance, yet be competitive
and consistent with that provided to others holding positions of similar
responsibility in the recreational products and manufactured industrial
products industries. The Company's compensation plans are designed to assist
the Company in attracting and retaining qualified employees critical to the
Company's long-term success, while enhancing employees' incentives to perform
to their fullest abilities to increase profitability and thus maximize
shareholder value.
Salary Compensation
The Company pays cash salaries which it believes are competitive with salaries
paid to executives of other companies in the recreational products and
manufactured industrial products industries based upon the individual's
experience and past and potential contribution to the Company.
Mr. Brining's annual base salary was $276,317 for 1995. This amount represents
an increase of $21,500, or 8.4%, over Mr. Brining's base salary for 1994. The
increase was set by the Compensation Committee in June 1995 to maintain
competitive positioning versus comparable companies based on an analysis of
comparable company compensation practices as prepared by outside consultants.
Subsidiary Incentive Compensation
In 1990, as a result of Mr. Brining's recommendation and efforts, the Company
developed and implemented the Subsidiary Incentive Compensation Plan (the
"Bonus Plan") whereby individual compensation is directly linked to the
performance of the Company's subsidiary (the "Subsidiaries" or "Subsidiary").
The Bonus Plan and the Company's salary deferral 401(k) Plan (the "401(k)
Plan"), and the Company's Profit Sharing Plan (the "Profit Sharing Plan") are
the three programs under which employees of the Company or the Subsidiaries may
receive cash contributions and/or bonuses. The Executive Officers are not
eligible to receive bonuses under this Bonus Plan. However, the Executive
Officers are eligible for bonuses under the Valley Forge Corporate Incentive
Compensation Plan (the "Corporate Bonus Plan").
Valley Forge Corporate Incentive Compensation Plan
The Compensation Committee authorized the payment of bonus compensation in 1995
to Mr. Brining and Ms. Burke based upon the Company's achievement of certain
sales and return on equity objectives set by the Compensation Committee. The
specific bonuses for Mr. Brining and Ms. Burke were 49% and 29%, respectively,
of his and her base salaries.
401(k) Plan
The Company adopted the salary deferral 401(k) Plan in August 1992 which
benefits all employees at the corporate headquarters and certain Subsidiaries.
The 401(k) Plan is a pretax salary deduction retirement program with a
mandatory matching funds feature. It encourages participants to adopt a
regular savings program to defer part of their pretax compensation to provide
security for their retirement. Employees who meet certain service and length
of employment requirements are eligible to participate. The Company provides
matching contributions of 100% of the employee's own
-9-
<PAGE> 11
contributions into the 401(k) Plan, up to 3% of each employee's covered
compensation. For 1995, the Company made a matching contribution of $9,000 for
the benefit of the Executive Officers' 401(k) Plan accounts.
Profit Sharing Plan
The Company sponsors a profit sharing plan for the benefit of the corporate
headquarters and two Subsidiaries. The Chief Executive Officer of the Company
makes a discretionary allocation of the compensation amount calculated pursuant
to the Corporate Bonus Plan to be contributed to the Profit Sharing Plan (the
"Profit Sharing Amount") for the benefit of the eligible employees of the
corporate headquarters at the close of the fiscal year. The Profit Sharing
Amount is distributed to eligible employees in proportion primarily to the
employee's base salary of such year. The Company made a profit sharing
contribution of 5.6% of the Executive Officers' aggregate base salary to the
Executive Officers for 1995 from the Profit Sharing Amount.
Stock-Based Compensation
The Company also believes that stock ownership by directors, officers,
employees, and consultants provides valuable long-term incentives for such
persons who will benefit as the Common Stock price increases and that
stock-based performance compensation arrangements are beneficial in aligning
employees' and stockholders' interests. Further, the Company believes that the
Company's policy of encouraging stock ownership serves an important function in
attracting, retaining, and motivating such persons, and accordingly, in the
growth and success of the Company. To facilitate these objectives, the Company
adopted the Stock Option Plan in 1987, which was amended in 1992 to include
authority for the grant of incentive stock options, authority for the grant of
options to non-employee directors and consultants, elimination of certain
limitations on the vesting and exercise price of options, and permitting the
Board of Directors to delegate administration of the Stock Option Plan to a
committee.
Through the Stock Option Plan, stock options have been granted to employees of
the Company, including the Executive Officers, in previous years. Non-employee
directors and consultants are eligible to participate in the Stock Option Plan,
but at the present time there are no outstanding stock options held by such
persons and none have ever been exercised. The Stock Option Plan is
administered by the Compensation Committee.
Other Compensation
The Executive Officers also participate in the Company's broad-based employee
benefit plans, such as the Company's medical, supplemental disability, and term
life insurance plans.
Currently, the Company's compensation programs described above, including stock
option plans, will not qualify for the exception to the $1,000,000 limit under
Section 162(m) of the Internal Revenue Code on total compensation for named
executives as structured. The Compensation Committee has no plans to revise
the Company's compensation programs to qualify for the exception since the
level of total compensation for each named executive is not currently subject
to this limit nor is it expected to exceed this limit in the foreseeable
future.
COMPENSATION COMMITTEE
Martin J. Bloom, Chairman
Theodore P. Desloge, Jr.
Phillip F. Dressel
-10-
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Desloge and Mr. Bloom are members of the Compensation Committee and their
compensation arrangements are discussed under Directors' Compensation.
PERFORMANCE GRAPH
The Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent Valley Forge Corporation specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The graph below compares the company's cumulative total shareholder return on
Common Stock with (i) the cumulative total return of the American Stock
Exchange ("AMEX") market index; and (ii) the cumulative total return of peer
companies ("Peer Group") selected by the Company in good faith1 over the period
from January 1, 1990 through December 31, 1995. Each member of the Peer Group
is a publicly traded, diversified manufacturing company whose three principal
lines of business match three of the Company's top four principal lines of
business, and whose revenues are less than $1.1 billion. The graph assumes an
initial investment of $100 and reinvestment of dividends. This graph is not
necessarily indicative of future price performance.
PERFORMANCE GRAPH
COMPARES THE CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG
VALLEY FORGE CORPORATION, PEER GROUP INDEX, AND AMEX MARKET INDEX.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Valley Forge $100.00 $141.52 $191.73 $214.58 $293.63 $286.75
Peer Group 100.00 139.55 149.81 170.76 201.44 226.17
AMEX 100.00 128.22 129.57 154.86 140.75 177.93
</TABLE>
__________________________________
1The Peer Group includes Augat Inc., Bel Fuse Inc., Cherry Corp., Joslyn Corp.,
La Barge Inc., Molex Inc., Powell Industries Inc., and Thomas & Betts Corp.
Assumes $100 invested on 1/1/90 in Valley Forge common stock, Peer Group
Companies (weighted by market capitalization), and the American Stock Exchange
index (AMEX). Assumes reinvested dividends. Fiscal year ends December 31.
-11-
<PAGE> 13
DIRECTORS' COMPENSATION
The Company entered into consulting agreements with Messrs. Bloom and Desloge
in 1983. Pursuant to the terms of the agreements, Messrs. Bloom and Desloge
are to provide the Company with advice on any corporate acquisitions, retention
of corporate assets, evaluation of key personnel, evaluation of the operations
of Subsidiaries, supervision of new product development, and general strategic
planning. The agreements are renewable annually on December 31 with the
consulting fee for the succeeding year set at that time. The Company agreed to
a fee of $75,000 for Mr. Bloom for 1996 due to his increased contributions to
the Company. The Company agreed to a fee of $50,000 for Mr. Desloge for 1996.
The Company has an agreement with Mr. Warner to retain him as a consultant for
a fee of $8,400 which is renewable each year. In addition, the Company
generally pays directors $500 for each board meeting attended.
ITEM 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Coopers & Lybrand,
independent accountants, to audit the accounts of the Company and its
Subsidiaries for its current fiscal year ending December 31, 1996. Although
the appointment of independent accountants is not required to be approved by
the stockholders, the Board believes that stockholders should participate in
the appointment through ratification. If a majority of the stockholders voting
do not ratify the appointment, the Audit Committee of the Board of Directors
will reconsider its action.
A representative of Coopers & Lybrand is expected to be present at the meeting
and will have an opportunity to make a statement if he desires to do so and to
be available to respond to appropriate questions.
The Board of Directors recommends that you VOTE FOR ratification of its
appointment of Coopers & Lybrand as the Company's independent accountants.
ITEM 3. AMENDMENTS TO STOCK OPTION PLAN
Introduction. In 1992, the Company substantially amended and restated
the Valley Forge Corporation Employee 1987 Stock Option Plan (the "Plan")
pursuant to which officers, directors, employees and consultants of the Company
were eligible to receive options to purchase up to 450,000 shares of Common
Stock (300,000 prior to the stock split).
On December 6, 1995, the Board of Directors adopted, subject to
shareholder approval, amendments to the Plan to increase the number of shares
issuable pursuant to the Plan from 450,000 shares to 750,000 shares. On April
24, 1996, the Board of Directors adopted, subject to shareholder approval, an
amendment to the Plan to extend the Plan's termination date to ten years from
its proposed amendment date, June 12, 1996. The Shareholders at the meeting
will be asked to consider and to vote upon a proposal to ratify amendments to
the Plan adopted by the Board of Directors. The proposal to ratify amendments
to the Plan requires the affirmative vote of a majority of the shares of Common
Stock represented and entitled to vote at the Meeting.
The purpose of the Plan is to enable the Company to attract, retain
and motivate officers, directors, employees, and independent contractors by
providing for or increasing their proprietary interests in the Company and, in
the case of non-employee directors, to attract such directors and further
-12-
<PAGE> 14
align their interests with those of the Company's shareholders by providing for
or increasing their proprietary interests in the Company.
The Plan authorizes the grant of options which qualify as "incentive
stock options" ("Incentive Stock Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and options which do not qualify
as Incentive Stock Options ("Nonqualified Stock Options").
Administration. The Plan is administered by a committee (the
"Committee") of not less than two members of the Board of Directors, each of
which is a "disinterested person" as defined in Rule 16b-3(c)(2)(i) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act").
The Committee currently consists of Messrs. Bloom, Desloge and Dressel. The
Committee has the full power and authority in its discretion to take any and
all action required or permitted to be taken under the Plan, including the
selection of participants to whom stock options may be granted, the
determination of the number of shares which may be covered by each stock
option, the exercise price and the other terms and conditions of the stock
options.
Shares Reserved. As of the close of business on May 1, 1996, there
were 450,000 shares reserved for issuance under the Plan, of which 209,625
shares had been issued upon the exercise of options, 224,625 shares were
subject to outstanding options, and 15,750 shares were available for granting
new options. If the amendment to increase the number of shares issuable is
approved by the shareholders, 750,000 shares would be reserved and 315,750
shares would be available for granting new options. If any option granted
under the Plan shall for any reason expire, be canceled or otherwise terminate
without having been exercised in full, the shares not purchased under such
option shall again become available under the Plan.
Eligibility. Under the Plan, employees and employee directors are
eligible to receive Incentive Stock Options and Nonqualified Stock Options, and
non-employee directors and independent contractors are eligible to receive
Nonqualified Stock Options. The Company may issue Incentive Stock Options
under the Plan provided that the aggregate fair market value (determined at the
time the Incentive Stock Option is granted) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by the optionee
during any calendar year (under all Incentive Stock Option plans of the Company
and its subsidiaries) shall not exceed $100,000. Should it be determined that
any Incentive Stock Options granted pursuant to the Plan exceed such maximum,
such Incentive Stock Options shall be considered to be Nonqualified Stock
Options and not to qualify for treatment as Incentive Stock Options under
Section 422 of the Code to the extent, but only to the extent, of such excess.
Option Price and Exercisability. The exercise price of each option
granted under the Plan shall be determined by the Committee and shall not be
less than 100% of the fair market value of the stock subject to the option on
the date the option is granted; provided, however, that the purchase price of
the stock subject to an Incentive Stock Option may not be less than 110% of
such fair market value (without regard to any restriction other than a
restriction which, by its terms, will never lapse) where the optionee owns (or
is deemed to own pursuant to Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company. The purchase price of stock acquired pursuant to an option granted
under the Plan shall be paid in cash or check payable to the order of the
Company at the time the option is exercised or, at the discretion of the
Committee, in whole shares of stock of the Company owned by the optionee having
a fair market value on the exercise date (determined by the Committee in
accordance with any reasonable valuation method, including the valuation method
-13-
<PAGE> 15
described in Treasury Regulation Section 20.2031-2) equal to the option price
for the shares being purchased, or according to a deferred payment arrangement
equal to the aggregate of the option price for the shares being purchased.
Payments in stock shall be made by delivery of stock certificates properly
endorsed for transfer in negotiable form.
Under the Plan, options shall be exercisable in such installments and
upon such contingencies as the Committee shall determine. If other than the
optionee, the person exercising an option granted under the Plan shall be
required to furnish the Company appropriate documentation that such person has
the full legal right and power to exercise the option on behalf of the
optionee.
Adjustments. If the outstanding shares of the capital stock of the
Company are increased, decreased, or changed into or exchanged for a different
number or kind of shares or securities of the Company, without receipt of
consideration by the Company, through a reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, an appropriate adjustment shall be made in the
number and kind of shares as to which options may be granted under the Plan. A
corresponding adjustment changing the number or kind of shares and the exercise
price per share allocated to unexercised options, or portions thereof, which
shall have been granted under the Plan prior to any such change likewise shall
be made. Any such adjustment, however, in an outstanding option shall be made
without change in the total price applicable to the unexercised portion of the
option but with a corresponding adjustment in the price for each share subject
to the option. Any such adjustment shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final and conclusive. No fractional shares of stock shall be issued
under the Plan on account of any such adjustment.
Expiration, Termination, and Transfer of Options. No option under the
Plan may extend more than ten years from such date. Notwithstanding the
foregoing, any Incentive Stock Option granted to an optionee who owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any of its affiliates shall expire not later than five years from
the date of grant. The date of grant of an option shall be the date on which
the Committee takes final action approving the award of the option,
notwithstanding the date the optionee accepts the option.
Except in the event of termination of employment due to death,
disability or termination for cause, options granted under the Plan will
terminate three months after an employee or employee director ceases to be
employed by or ceases to serve as a director, a non-employee director ceases to
serve as a director or a consultant ceases to serve as a consultant unless the
options by their terms were scheduled to terminate earlier. During that three
month period after the employee or employee director ceases to be employed by
or ceases to serve as a director, or the non-employee director or consultant
ceases to serve as a director or consultant, such option shall be exercisable
only as to those shares with respect to which installments, if any, had accrued
as of the date of which the optionee ceased to be employed or ceased to serve
as a director or consultant, as the case may be. If such termination was due
to the optionee's permanent and total disability, or the optionee's death, the
option, by it terms, may be exercisable for one year after such termination of
employment or cessation of directorship or consulting agreement. If the
employee or employee director's employment or the consultant's consulting
agreement is terminated for cause, the option terminates immediately, unless
the termination is waived by the Committee. Termination for cause shall
include termination for malfeasance or gross misfeasance in the performance of
duties, or conviction of illegal activity in connection therewith, conviction
for a felony, or any conduct detrimental
-14-
<PAGE> 16
to the interests of the Company. If the employee director or non-employee
director is removed from the Board of Directors for cause, the option
terminates immediately on the date of such removal. Removal for cause shall
include removal of a director who has been declared of unsound mind by an order
of court or convicted of a felony. Any option by its terms may only be
transferred by will or by the laws of descent and distribution upon the death
of the optionee, shall not be transferable during the optionee's lifetime, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person. The Committee shall have the power to accelerate
the time during which an option granted under the Plan may be exercised,
notwithstanding the provisions in the option stating the time during which the
option may be exercised.
Termination and Amendment. The Plan and any option or portion thereof
not exercised will terminate upon the occurrence of a terminating event,
including, but not limited to, a liquidation, reorganization, merger, or
consolidation of the Company with another corporation as a result of which the
Company is not the surviving or resulting corporation, or a sale of
substantially all the assets of the Company to another person, or a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property (a "Triggering Event"). The Committee
shall notify each optionee not less than thirty days prior thereto of the
pendency of a Triggering Event. Upon delivery of such notice, any option
outstanding shall be exercisable in full and not only as to those shares with
respect to which installments, if any, have then accrued, subject, however, to
earlier expiration or termination as provided elsewhere in the Plan and subject
to the consummation of the Triggering Event. The Board of Directors may also
suspend or terminate the Plan at any time. Unless sooner terminated, the Plan
shall terminate ten years from its effective date, May 15, 1992 (the "Effective
Date"). If the amendment to extend the Plan's termination date is approved by
the shareholders, the Plan shall terminate ten years from June 12, 1996. No
options may be granted under the Plan while it is suspended or after it is
terminated. Rights and obligations under any option granted pursuant to the
Plan, while it is in effect, shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the
stock option was granted.
Grant of Options
For certain information concerning options exercised during fiscal
1995, or unexercised options held on December 31, 1995, by the Executive
Officers under the Plan, see "Item 1. Election of Directors - Option Exercises
and Holdings."
Federal Income Tax Consequences
The following discussion is only a summary of the principal federal
income tax consequences of options granted under the Plan, and is based on
existing federal law (including administrative regulations and rulings) which
is subject to change, in some cases retroactively. This discussion is also
qualified by the particular circumstances of individual optionees, which may
substantially alter or modify the federal income tax consequences herein
discussed.
Generally under present law, when an option qualifies as an Incentive
Stock Option: (i) an optionee will not realize taxable income either upon the
grant or the exercise of the option; (ii) any gain or loss upon a qualifying
disposition of the shares acquired upon exercise of the option will be treated
as capital gain or loss; and (iii) no deduction will be allowed to the Company
for federal income tax
-15-
<PAGE> 17
purposes in connection with the grant or exercise of the option or a qualifying
disposition of the shares acquired upon exercise thereof. A disposition by an
optionee of stock acquired upon exercise of an Incentive Stock Option will
constitute a qualifying disposition if it occurs more than two years after the
grant of the option and more than one year after the issuance of the shares to
the optionee. The Company obtains no deduction in connection with the grant or
exercise of an Incentive Stock Option or a qualifying disposition of the
shares. If such stock is disposed of by the optionee before the expiration of
those time limits, the transfer would be a "disqualifying disposition" and the
optionee, in general, will recognize ordinary income equal to the lesser of (i)
the aggregate fair market value of the shares as of the date of exercise less
the option price or (ii) the amount realized on the disqualifying disposition
less the option price. Ordinary income from a disqualifying disposition will
constitute compensation for which withholding may be required under federal and
state law. Any gain in addition to the amount reportable as ordinary income
from a "disqualifying disposition" generally will be capital gain.
Upon the exercise of an Incentive Stock Option, the difference between
the fair market value of stock on the date of exercise and the option price
generally is treated as a "tax preference" adjustment in the taxable year for
alternative minimum tax purposes, as are a number of other items specified by
the Code. Tax preference items (with adjustments) form the basis for the
alternative minimum tax (presently at a maximum rate of 28% for individuals),
which may apply depending on the amount of the computed "regular tax" of the
employee for that year. Under certain circumstances the amount of alternative
minimum tax is allowed as a carryforward credit against regular tax liability
in subsequent years.
In the case of Nonqualified Stock Options, no income generally is
recognized by the optionee at the time of the grant of the option. The
optionee generally will recognize ordinary income at the time of the
Nonqualified Stock Option is exercised equal to the aggregate fair market value
of the shares acquired less the option price. However, if the shares received
upon the exercise of a Nonqualified Stock Option are subject to certain
restrictions, the taxable event is postponed until the restrictions lapse. For
example, if a sale of the shares at a profit would subject an optionee to
liability under Section 16(b) of the 1934 Act, the optionee generally will
recognize taxable income on the date that the optionee is no longer subject to
such liability in an amount equal to the fair market value of the shares on
such date less the option price. Notwithstanding the foregoing, the optionee
may make a special election with thirty days of receiving restricted shares to
recognize taxable income as of the date of exercise. Ordinary income for a
Nonqualified Stock Option will constitute compensation for which withholding
may be required under federal and state law.
Subject to special rules applicable when an optionee uses stock of the
Company to exercise an option, shares acquired upon exercise of a Nonqualified
Stock Option will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is recognized,
and the holding period for the shares generally will begin on the date of
exercise or such other relevant date. Upon subsequent disposition of the
shares, the optionee generally will recognize capital gain or loss. Provided
the shares are held by the optionee for more than one year prior to
disposition, such gain or loss will be long-term capital gain or loss.
The Company will generally be entitled to a deduction equal to the
ordinary income (i.e., compensation) portion of the gain recognized by the
optionee in the case of a "disqualifying disposition" of an Incentive Stock
Option or in connection with the exercise of a Nonqualified Stock Option
provided the Company complies with withholding requirements of federal and
state law.
The Board of Directors recommends you VOTE FOR amendments to the Plan.
-16-
<PAGE> 18
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholders' action, consistent with regulations of the Securities and
Exchange Commission. Should a stockholder intend to present a proposal at next
year's annual meeting, it must be received by the Secretary of the Company at
the Company's principal office on or before January 8, 1997, in order to be
included in the Company's Proxy Statement and form of proxy relating to that
meeting.
OTHER BUSINESS
The Board of Directors knows of no matters to be presented for action at the
Meeting other than as set forth in this Proxy Statement. If other matters
properly do come before the Meeting, the persons named in the accompanying
proxy will vote said proxy in accordance with their judgment. It is important
that proxies be returned promptly. Therefore, stockholders are urged to
promptly sign, date, and return the proxy in the attached stamped and addressed
envelope.
Proxies, ballots, and voting tabulations identifying stockholders are secret
and will not be available to anyone, except as actually necessary to meet legal
requirements.
Stockholders may obtain without charge, copies of the Company's annual report
on Form 10-K for the year ended December 31, 1995, and all financial statements
and schedules thereto as filed with the SEC by writing the Company's Secretary,
Ms. Monica J. Burke, 100 Smith Ranch Road, Suite 326, San Rafael, California
94903.
BY ORDER OF THE BOARD OF DIRECTORS
MONICA J. BURKE
SECRETARY - TREASURER
Date: May 6, 1996
-17-
<PAGE> 19
VALLEY FORGE CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VALLEY FORGE
CORPORATION. The undersigned, revoking all previous proxies, hereby appoints
Monica J. Burke as Proxy with the power to appoint her substitute, and hereby
authorizes her to represent and vote, as designated below, all of the shares of
common stock of Valley Forge Corporation (the "Corporation") held of record by
the undersigned on May 1, 1996, at the annual meeting of stockholders to be
held on June 12, 1996, or at any adjournment thereof.
ITEM 1. ELECTION OF DIRECTORS
_____ FOR all nominees listed below (except as marked to the
contrary below).
_____ WITHHOLD AUTHORITY to vote for all nominees listed below.
INSTRUCTIONS: To withhold authority to vote for any nominee,
strike a line through the nominee's name in the list below:
Martin J. Bloom Theodore P. Desloge, Jr.
David R. Brining Phillip F. Dressel Dale J. Warner
ITEM 2. RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND AS THE
CORPORATION'S INDEPENDENT ACCOUNTANTS FOR 1996
______ FOR ______ AGAINST ______ABSTAIN
ITEM 3. APPROVAL OF AMENDMENTS TO THE AMENDED AND RESTATED 1987 STOCK
OPTION PLAN
______ FOR ______ AGAINST ______ABSTAIN
In her discretion, the Proxy is authorized to vote upon such other business
as may properly come before the annual meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, DATED, AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL THE NOMINEES FOR DIRECTOR DESIGNATED IN
ITEM 1, FOR ITEM 2, AND FOR ITEM 3.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS BELOW. 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 the President or other
authorized officer. If a partnership, please sign in the partnership name by
an authorized partner.
DATED: _____________________, 1996
___________________________________
Signature
___________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
