<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WAXMAN INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WAXMAN INDUSTRIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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:
(4) Proposed maximum aggregate value of transaction:
/ / 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:
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<PAGE> 2
WAXMAN
INDUSTRIES INC. [LOGO]
24460 Aurora Road
Bedford Heights, Ohio 44146
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 27, 1995
------------------
To Our Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of Waxman
Industries, Inc. (the "Company") will be held at the offices of the Company,
24460 Aurora Road, Bedford Heights, Ohio on November 27, 1995 at 11:00 a.m.
Cleveland time to consider and act on the following matters:
1. The election of six directors of the Company to serve until the
1996 Annual Meeting of Stockholders and until their successors are elected
and qualified;
2. To vote upon a stockholder proposal that is opposed by the Board of
Directors;
3. The ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company; and
4. Such other business as may properly come before the Annual Meeting
and any adjournment thereof.
The foregoing matters are described in more detail in the Proxy Statement
which follows.
The Board of Directors has fixed the close of business on October 23, 1995
as the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
Accordingly, only holders of record of shares of Common Stock of the Company at
the close of business on such date will be entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof. A copy of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, as
amended by an amendment on Form 10-K/A, is enclosed herewith.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING, PLEASE MARK DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN
THE RETURN STAMPED ENVELOPE PROVIDED. PROXIES ARE REVOCABLE BY WRITTEN NOTICE TO
THE SECRETARY OF THE COMPANY AT ANY TIME PRIOR TO THEIR BEING VOTED OR BY
APPEARANCE AT THE ANNUAL MEETING TO VOTE IN PERSON. YOUR PROMPT RETURN OF THE
PROXY WILL BE OF GREAT ASSISTANCE IN PREPARING FOR THE ANNUAL MEETING AND IS
THEREFORE STRONGLY REQUESTED.
By Order of the Board of Directors
/s/ Kenneth Robins
KENNETH ROBINS, Secretary
October 30, 1995
<PAGE> 3
WAXMAN
INDUSTRIES INC. [LOGO]
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 27, 1995
------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Waxman
Industries, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at 11:00 a.m.,
Cleveland time, on Monday, November 27, 1995, at the offices of the Company. The
enclosed proxy is solicited on behalf of the Board of Directors of the Company
and is subject to revocation at any time prior to the voting of the proxy as
provided below. Unless a contrary choice is indicated, all duly executed proxies
received by the Company will be voted (i) for the election of the six nominees
for directors, (ii) against the stockholder proposal that is opposed by the
Board of Directors; and (iii) for the ratification of the appointment of Arthur
Andersen LLP as the independent public accountants of the Company. The
approximate date on which this Proxy Statement and the enclosed proxy card are
first being sent to stockholders is October 31, 1995.
Stockholders of record at the close of business on October 23, 1995 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. On that date, there were outstanding 9,522,083 shares of common stock,
$.01 par value, of the Company ("Common Stock"), and 2,215,079 shares of Class B
common stock, $.01 par value, of the Company ("Class B Common Stock"). Each
share of Common Stock is entitled to one vote on all matters to come before the
Annual Meeting, and each share of Class B Common Stock is entitled to ten votes
on all matters to come before the Annual Meeting. Directors will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the Annual Meeting and entitled to vote on the election of directors. Action
on the other matters scheduled to come before the Annual Meeting will be
authorized by the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on such matters. For
purposes of determining whether a matter has received a majority vote,
abstentions will be included in the vote totals, with the result that an
abstention has the same effect as a negative vote. In instances where brokers
are prohibited from exercising discretionary authority for beneficial owners who
have not returned a proxy (so-called "broker non-votes"), those shares will not
be included in the vote totals, will only be counted for purposes of determining
whether a quorum is present at the Annual Meeting and therefore will have no
effect on the vote. The Company currently has no class of voting securities
outstanding other than Common Stock and Class B Common Stock.
Shares cannot be voted at the Annual Meeting unless the holder thereof is
present or represented by proxy. When proxies in the accompanying form are
returned, properly executed, the shares represented thereby will be voted as
specified thereon. Any stockholder giving a proxy has the right to revoke it at
any time prior to its exercise, either in writing, delivered to the Secretary of
the Company at its executive offices, or in person at the Annual Meeting.
1
<PAGE> 4
COMMON STOCK OWNERSHIP
CAPITAL STOCK
The following table sets forth, as of September 30, 1995 (except as noted
in footnote 4 below), the number of shares of Common Stock beneficially owned by
each director, by the directors and executive officers of the Company as a group
and by each holder of at least five percent of Common Stock known to the
Company, and the respective percentage ownership of the outstanding Common Stock
and Class B Common Stock and voting power held by each such holder and group.
The mailing address for Messrs. Melvin and Armond Waxman is the executive office
of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OWNED OWNERSHIP
------------------------- --------------------- PERCENTAGE
CLASS B CLASS B OF AGGREGATE
NAME OF COMMON COMMON COMMON COMMON VOTING
BENEFICIAL OWNER STOCK STOCK STOCK STOCK POWER
- ------------------------------ ---------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman(1).............. 831,282 1,011,932 9.4% 45.7% 34.7%
Armond Waxman(2).............. 765,107 826,082 8.8 37.3 28.7
William Pray.................. 25,000 -- * * *
Samuel J. Krasney(3).......... 6,750 6,750 * * *
Judy Robins................... 66,750 78,750 * 3.6 2.7
Directors and officers as a
group (9 individuals)....... 1,749,664 1,978,766 20.2 89.3 68.2
Weiss, Peck & Greer(4)........ 1,301,400 -- 13.7 -- 4.1
One New York Plaza
New York, NY 10004
</TABLE>
- ---------------
* less than 1%
(1) Includes 100 shares of Common Stock owned by a member of Mr. Melvin Waxman's
immediate family, as to which shares Mr. Waxman disclaims beneficial
interest.
(2) Includes 55,825 shares of Common Stock and 55,800 shares of the Class B
Common Stock owned by members of Mr. Armond Waxman's immediate family, as to
which shares Mr. Waxman disclaims beneficial interest.
(3) Includes 4,500 shares of Common Stock and 4,500 shares of the Class B Common
Stock owned by Mr. Krasney's wife, as to which shares Mr. Krasney disclaims
beneficial interest.
(4) The information set forth in the table with respect to Weiss, Peck & Greer
was obtained from Amendment No. 2 to a Statement on Schedule 13G, dated
February 8, 1995, filed with the Securities and Exchange Commission. Such
statement reflects Weiss, Peck & Greer's beneficial ownership as of December
31, 1994.
The Company is required to identify any director or officer who failed to
timely file with the Securities and Exchange Commission a required report
relating to ownership and changes in ownership of the Company's equity
securities. Based on material provided to the Company, it believes that during
the fiscal year ended June 30, 1995, all such filing requirements were complied
with.
I.
ELECTION OF DIRECTORS
The authorized number of directors of the Company previously had been fixed
at five, but was increased by the Board of Directors to six upon the election of
William R. Pray in June 1995.
2
<PAGE> 5
Management recommends that six directors be elected to serve until the next
Annual Meeting of Stockholders and until their respective successors are elected
and qualified.
Unless otherwise directed, all proxies (unless revoked or suspended) will
be voted for the election of the six nominees for director set forth below. If,
for any reason, any nominee is unable to accept such nomination or to serve as a
director, an event not currently anticipated, the persons named as proxies
reserve the right to exercise their discretionary authority to substitute such
other person or persons, as the case may be, as a management nominee, or to
reduce the number of management nominees to such extent as they shall deem
advisable. The Company is not aware of any reason why any nominee should become
unavailable for election, or if elected, should be unable to serve as a
director. Set forth below is certain information with respect to the nominees.
All of the nominees are currently directors of the Company. Armond and Melvin
Waxman are brothers and Judy Robins is their sister.
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
- ----------------------------------- --------------------------------------------------------
<S> <C>
Melvin Waxman, 61 Mr. Melvin Waxman was elected Co-Chairman of the Board
Co-Chairman of the Board and and Co-Chief Executive Officer of the Company in June
Co-Chief Executive Officer 1995. Mr. Waxman has been a Chief Executive Officer of
the Company for over 20 years and has been a director of
the Company since 1962. Mr. Waxman was Chairman of the
Board of the Company since August 1976.
Armond Waxman, 56 Mr. Armond Waxman was elected Co-Chairman of the Board
Co-Chairman of the Board, and Co-Chief Executive Officer and Treasurer of the
Co-Chief Executive Officer Company in June 1995. Mr. Waxman has been the President
and Treasurer of the Company since August 1976. Mr.
Waxman has been a director of the Company since 1962 and
was Chief Operating Officer of the Company from August
1976 to May 1988.
William R. Pray, 48 Mr. Pray was elected President and Chief Operating
President and Chief Officer of the Company in June 1995. Mr. Pray has been
Operating Officer the president of Barnett since 1987.
Samuel J. Krasney, 70 Mr. Krasney has been a director of the Company since
1977. In September 1993, Mr. Krasney retired from his
position of Chairman of the Board, President and Chief
Executive Officer of Banner Aerospace, Inc., a
distributor of parts in the aviation aftermarket, a
position he had held since June 1990. In September 1993,
Mr. Krasney also retired from The Fairchild Corporation
(formerly Banner Industries, Inc.) where he had been
Vice Chairman of the Board since 1985. Fairchild is a
manufacturer and distributor of fasteners to the
aerospace industry and industrial products for the
plastic injection molding industry and other industrial
markets and is a furnisher of telecommunication services
to office buildings. Mr. Krasney is presently a director
of Banner Aerospace and Fairchild and also a director of
FabriCenters of America, Inc.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
- ----------------------------------- --------------------------------------------------------
<S> <C>
Irving Z. Friedman, 62 Mr. Friedman has been a director of the Company since
1989. Mr. Friedman has been a certified public
accountant with the firm of Krasney Polk Friedman &
Fishman for more than the past five years. Mr. Friedman
is the brother-in-law of Samuel Krasney.
Judy Robins, 46 Mrs. Robins has been a director of the Company since
1980. Mrs. Robins has owned and operated an interior
design business for more than the past five years. Mrs.
Robins is the sister of Melvin and Armond Waxman. Mrs.
Robins' husband is the Secretary of the Company.
</TABLE>
INFORMATION RELATING TO THE BOARD
OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held five meetings during the fiscal year ended June
30, 1995 and on numerous occasions took action by unanimous written consent. The
Company has an Executive Committee, Audit Committee, Compensation Committee and
Stock Option Committee. Messrs. Melvin and Armond Waxman and Krasney serve on
the Executive Committee, Messrs. Friedman and Krasney serve on the Audit
Committee and the Stock Option Committee and Mrs. Robins and Messrs. Krasney and
Friedman serve on the Compensation Committee. The Company does not have a
nominating committee.
AUDIT COMMITTEE
The Audit Committee acts as a liaison between the Company's independent
auditors and the Board of Directors, reviews the scope of the annual audit and
the management letter associated therewith, reviews the Company's annual and
quarterly financial statements and reviews the sufficiency of the Company's
internal accounting controls. The Audit Committee held two meetings during
fiscal 1995.
COMPENSATION COMMITTEE
The Compensation Committee determines the salaries and bonuses of Messrs.
Melvin and Armond Waxman (members of the Board of Directors who are also
officers of the Company). The Compensation Committee held one meeting during
fiscal 1995.
STOCK OPTION COMMITTEE
The Stock Option Committee administers both the 1992 Non-Qualified and
Incentive Stock Option Plan of the Company and the Employee Stock Purchase Plan
of the Company. Although the Stock Option Committee held no meetings during
fiscal 1995, on several occasions it took action by unanimous written consent.
DIRECTOR REMUNERATION
Each director who is not an employee of the Company received a fee of
$3,000 per fiscal quarter for services as a director during fiscal 1995 plus a
fee of $1,000 plus traveling expenses for each board meeting he or she attended.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid for services
rendered during fiscal 1995 to the Co-Chief Executive Officers and the four
other most highly compensated executive officers of the Company:
4
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL PAYOUTS
COMPENSATION(1) AWARDS ---------
---------------------- ------------------------- LTIP ALL OTHER
NAME AND BONUS($) RESTRICTED PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) (2) STOCK($) OPTIONS(#) ($) ($)(3)(4)
- ------------------------- ----- --------- -------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Melvin Waxman 1995 353,277 -- -- -- -- 111,397
Co-Chairman of the 1994 325,000 100,000 -- 300,000(5) -- 45,604
Board and Co-Chief 1993 365,000 100,000 -- 250,000(5) -- 65,293
Executive Officer
Armond Waxman 1995 311,065 100,000 -- -- -- 97,080
Co-Chairman of the 1994 366,923 200,000 -- 300,000(5) -- 86,776
Board and Co-Chief 1993 378,942 100,000 -- 250,000(5) -- 50,464
Executive Officer
William R. Pray 1995 228,200 57,607 -- 32,500 -- --
President and Chief 1994 206,000 75,000 -- 92,500(6) -- --
Operating Officer 1993 200,000 45,000 -- 25,000(6) -- 14,789
John S. Peters 1995 136,119 22,500 -- -- -- 12,500
Senior Vice 1994 130,018 42,500 -- 52,500(6) -- 12,500
President - Operations 1993 132,644 25,000 -- 45,000(6) -- 14,137
Laurence S. Waxman 1995 190,480 50,000 -- -- -- 12,544
Senior Vice 1994 151,826 65,000 -- 57,500(6) -- 11,589
President 1993 135,000 40,000 -- 50,000(6) -- 14,058
Neal R. Restivo(7) 1995 133,769 22,500 -- -- -- --
Former Vice President - 1994 111,346 55,000 -- 32,500(6) -- --
Finance and Chief 1993 93,300 17,500 -- 25,000(6) -- 1,100
Financial Officer
</TABLE>
- ---------------
(1) Certain executive officers received compensation in fiscal 1993, 1994 and
1995 in the form of perquisites, the amount of which does not exceed
reporting thresholds.
(2) Messrs. Pray, Peters and Restivo received their bonuses under the Company's
Profit Incentive Plan. Mr. Laurence Waxman received his bonus pursuant to
his employment agreement.
(3) For fiscal 1993, includes Company contributions to the Company's
Profit-Sharing Retirement Plan and premiums on split-dollar life insurance
policies. Profit Sharing Plan contributions were as follows: $2,289 each for
Messrs. Melvin and Armond Waxman and Mr. Pray, $1,637 for Mr. Peters, $1,558
for Laurence Waxman and $1,100 for Mr. Restivo. Premiums on split-dollar
life insurance policies were as follows: $63,004 for Melvin Waxman, $48,175
for Armond Waxman, $12,500 each for Messrs. Pray, Peters and Laurence
Waxman.
(4) For fiscal 1995 and 1994, amounts represent premiums on split-dollar life
insurance policies.
(5) During May 1994, Messrs. Melvin and Armond Waxman agreed to relinquish all
of their existing stock options in exchange for the grant of a like number
of new options.
(6) During May 1994, Messrs. Pray, Peters, Laurence Waxman and Restivo
relinquished all of their existing stock options in exchange for the grant
of a like number of new options. Mr. Pray's total number of options for
fiscal 1994 includes options to acquire 25,000 shares which were granted and
subsequently relinquished during fiscal 1994.
(7) Mr. Restivo terminated his employment with the Company effective September
29, 1995.
5
<PAGE> 8
EMPLOYMENT AGREEMENTS
Mr. Peters entered into an employment agreement with the Company which
became effective as of January 1, 1992, was amended as of October 23, 1995, and
terminates on June 30, 1997. Pursuant to such employment agreement, Mr. Peters
is to serve as Senior Vice President, Operations of the Company, and is also to
serve in such substitute or further offices or positions with the Company or any
subsidiary or affiliate of the Company as shall, from time to time, be assigned
by the Board of Directors of the Company. Mr. Peters' employment agreement
provides for a minimum annual salary of $125,000, which salary will be reviewed
annually by the Company (and shall be reduced by a corresponding percentage
reduction in hours worked in the sole discretion of the Company to an annual
amount not to be less than $75,000). Increases in salary and the granting of
bonuses to Mr. Peters will be determined by the Company, in its sole discretion,
based on such individual's performance and contributions to the success of the
Company, his responsibilities and duties and the salaries of other senior
executives of the Company. The employment agreement provides that upon
termination of employment for any reason other than death, disability (as
defined therein) or cause (as defined therein), Mr. Peters will be entitled to
receive all of the compensation he would otherwise be entitled to through the
end of the term of the agreement. The employment agreement also contains
provisions which restrict Mr. Peters from competing with the Company during the
term of the agreement and for two years following the termination thereof.
Mr. Pray has an employment agreement with Barnett and the Company which
became effective as of July 1, 1990 and which terminates on June 30, 2000.
Pursuant to this employment agreement, Mr. Pray is to serve as President of
Barnett and provide services to Barnett in such managerial areas as Mr. Pray
served in the past and such additional duties as shall be assigned to Mr. Pray
by the Co-Chief Executive Officers of the Company. Mr. Pray's employment
agreement provides for a minimum annual salary of $165,000 for the first year of
the employment agreement and provides that for each year thereafter the minimum
annual salary will be increased by eight percent of the prior year's salary or
any salary amount separately agreed to in writing by Mr. Pray, Barnett and the
Company. Mr. Pray is also eligible to receive additional discretionary bonuses
as may from time to time be determined in the sole discretion of the Board of
Directors of the Company. The employment agreement provides that upon
termination of employment for any reason other than death, disability (as
defined therein) or cause (as defined therein), Mr. Pray will be entitled to
receive all of the compensation he would otherwise be entitled to through the
end of the term of the agreement. The employment agreement also contains
provisions which restrict Mr. Pray from competing with the Company during the
term of the agreement and for two years following the termination thereof.
Mr. Laurence Waxman entered into an employment agreement with Waxman
Consumer Products Group Inc., a wholly owned subsidiary of the Company
("Consumer Products"), which became effective as of November 1, 1994 and
terminates on October 31, 1999. Pursuant to such employment agreement, Mr.
Laurence Waxman is to serve as President of Consumer Products, and is also to
serve in such further offices or positions with Consumer Products or any
subsidiary or affiliate of Consumer Products as shall, from time to time, be
assigned by the Board of Directors of Consumer Products. Mr. Laurence Waxman's
employment agreement provides for an annual salary of $200,000 for the first
year of the employment agreement and provides that for each year thereafter the
annual salary will be increased by six percent of the prior year's salary.
Additional increases in salary and the granting of bonuses to Mr. Laurence
Waxman will be determined by Consumer Products, in its sole discretion, based on
such individual's performance and contributions to the success of Consumer
Products, his responsibilities and duties and the salaries of other senior
executives of Consumer Products. A bonus in the amount of $50,000 was granted to
Mr. Lawrence Waxman in fiscal 1995. The employment agreement provides that upon
termination of employment by Mr. Laurence Waxman for good reason (as defined
therein) or by the Company for any reason other than death, disability (as
defined therein) or cause (as defined therein), Mr. Laurence Waxman will be
entitled to receive
6
<PAGE> 9
all of the compensation he would otherwise be entitled to through the end of the
term of the agreement. The employment agreement also contains provisions which
restrict Mr. Laurence Waxman from competing with the Company or Consumer
Products during the term of the agreement and for two years following the
termination thereof.
STOCK OPTION AND SAR GRANTS
The following table sets forth the information noted for all grants of
stock options made by the Company during fiscal 1995 to each of the executive
officers named in the Summary Compensation Table:
OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------- -------- ------------ -------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William R. Pray 32,500 100% $1.375 June 16, 2005 28,104 71,220
</TABLE>
- ---------------
(1) There were no SARs granted to any of the executive officers named in this
table in fiscal 1995.
(2) The potential realizable values represent future opportunity and have not
been reduced to present value in 1995 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
Securities and Exchange Commission for illustration purposes, and these
rates are not intended to be a forecast of the Common Stock price and are
not necessarily indicative of the values that may be realized by the named
executive officer.
STOCK OPTION AND SAR EXERCISES
The following table sets forth the information noted for all exercises of
stock options and SARs during fiscal 1995 by each of the executive officers
named in the Summary Compensation Table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
SHARES OPTIONS VALUE OF UNEXERCISED
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) IN-THE-MONEY OPTIONS
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE AT FISCAL YEAR-END($)
- ------------------------ ------------- ------------- -------------------------- ---------------------
<S> <C> <C> <C> <C>
Melvin Waxman -- -- 75,000/225,000 --
Armond Waxman -- -- 75,000/225,000 --
William R. Pray -- -- 16,875/83,125 --
John S. Peters -- -- 13,125/39,375 --
Laurence S. Waxman -- -- 14,375/43,125 --
Neal R. Restivo (1) -- -- 8,125/24,375 --
</TABLE>
- ---------------
(1) Mr. Restivo terminated his employment with the Company effective September
29, 1995.
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
determines the compensation of the Company's Co-Chief Executive Officers. The
Committee is composed solely of non-employee directors who are not eligible to
participate in any of the executive compensation programs of the Company. The
proxy rules require the Committee to disclose the Committee's bases for
compensation of executive officers and for compensation reported for Melvin and
Armond Waxman, the Co-Chief Executive Officers of the Company, and to discuss
the relationship between the Company's performance during fiscal 1995 and
compensation.
The Company's compensation policy reflects its belief that the compensation
of its senior executive officers should provide total compensation reasonably
comparable and competitive to that offered by similarly situated companies and
to align the interests of its executive officers with the long term interests of
the Company's stockholders with the award of stock options. The object of these
awards is to reinforce and advance the long-term interest of the Company and its
stockholders. These awards provide rewards to executives upon the creation of
incremental stockholder value and have the potential of providing significant
benefit to the executives without burdening the Company's cash resources. Stock
options only produce value to executives as the price of the Company's stock
appreciates, thereby directly linking the interests of executives with those of
stockholders.
Cash compensation of the Co-Chief Executive Officers is established by the
Committee. Grants of stock options for all executive officers and employees,
including the Co-Chief Executive Officers, are awarded by the Company's Stock
Option Committee. Both members of the Stock Option Committee are also members of
the Compensation Committee.
While competitive practices are taken into account in determining cash
compensation, the Committee believes that the most important considerations in
setting annual compensation are individual merit, the Company's financial
performance and achievement of strategic objectives approved by the Board of
Directors. The Committee does not apply any specific quantitative formula in
making compensation decisions. The Committee appreciates the importance of
achievements that may be difficult to quantify, and accordingly recognizes
qualitative factors such as contributions of executive officers to the
achievement of the Company's strategic goals in a volatile business environment,
the managerial effectiveness and teamwork of individual executive officers and
the implementation of policies and measures that will benefit the Company's
long-term performance.
The compensation of the Company's Co-Chief Executive Officers has been
designed to provide them with a fair salary and to reward them for their efforts
towards enhancing the long-term performance of the Company and ultimately
increasing stockholder value. The Committee approved the base salary and cash
bonuses that were paid to each of them. The salary and bonuses were approved by
the Committees in order to compensate Messrs. Waxman for their continuing
efforts to reduce the Company's high degree of leverage and position the Company
for a return to profitability.
In setting each of Messrs. Waxmans' compensation for fiscal 1995, the
Committee considered Messrs. Waxmans' efforts during fiscal 1995 in the
continuous evaluation of various means to deleverage the Company's capital
structure. As a result of these efforts, the Company decided to sell its Waxman
Consumer Products Group Inc. business in order to stabilize the Company's
capital structure and further the Company's strategy of capitalizing on the
growth prospects of Barnett. In furtherance of its decision to sell Consumer
Products, the Company entered into a letter of intent which contemplates the
sale of the Consumer Products business, together with certain supporting
operations, to a group consisting of HIG Capital Management of Miami, Florida,
along with certain members of Consumer Products' existing management team, for
an aggregate cash purchase price of $50 million and the retention by the Company
of a 25% economic interest in the Consumer Products business on a going forward
basis. Such letter of intent contains certain contingencies, including a
financing contingency and is also subject to
8
<PAGE> 11
certain customary conditions. In connection with such sale, the Company intends
to obtain a new secured revolving credit facility and term loan, the terms of
which are currently being negotiated. The proceeds of such sale and the related
refinancing will be used to retire the Company's Senior Secured Fixed Rate and
Floating Rate Notes due 1998 and repay the Company's existing credit facility
and term loan. In addition, the Company currently intends to effect an exchange
offer pursuant to which Waxman USA Inc. would offer to exchange $48.75 million
aggregate principal amount of its Senior Subordinated Notes due 2001 for $48.75
million outstanding principal amount of the Company's 13 3/4% Senior
Subordinated Notes due 1998. It is currently contemplated that the Senior
Subordinated Notes due 2001 of Waxman USA Inc. will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States without registration or an applicable exemption from such registration
requirements. Although the Company's capital structure would remain highly
leveraged subsequent to these transactions, all near term debt maturities would
be eliminated, allowing the Company to focus on growing the Barnett business.
Although neither of these transactions has been consummated, the Committee
believes that each of Messrs. Armond and Melvin Waxman demonstrated a high level
of leadership and responsibility for planning and pursuing these deleveraging
transactions, which are a necessary step toward creating long term value for the
Company's stockholders.
The Committee does not establish the cash compensation levels for the
Company's other executive officers. The Board has delegated to the Co-Chief
Executive Officers the responsibility for establishing the salaries and bonuses
payable to those individuals. However, the grants of stock options and other
equity-based compensation are the responsibility of the Stock Option Committee.
As a result, the members of the Committee are able to review and have input into
the overall levels of compensation provided to executive officers and, in their
role as Board members, are in a position to review the performances of those
individuals with the Co-Chief Executive Officers.
As it does with respect to the Co-Chief Executive Officers, the Committee
supports the principle that stock ownership by the Company's executive officers,
encouraged by equity based compensation plans, aligns the interests of the
senior executive officers with the stockholders of the Company. By using
equity-based compensation over a period of time, the executive officers of the
Company will strengthen their identification with the stockholders of the
Company and make increasing stockholder value an important focus for the
Company's management group.
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted in 1993, generally disallows a tax deduction for compensation paid or
accrued in excess of $1 million with respect to the chief executive officer and
each of the four most highly compensated employees of a publicly held
corporation. Qualifying performance based compensation will not be subject to
the deduction limit if certain requirements are met. The 1992 Plan and the Non-
Employee Directors Plan, complies with these requirements. The Compensation
Committee does not believe that the cash compensation to be paid to the Co-Chief
Executive Officers or such other highly paid executive officers will exceed the
deduction limit of Section 162(m).
MEMBERS OF THE COMMITTEE:
Samuel J. Krasney
Irving Z. Friedman
Judy Robins
The forgoing report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporated this information by reference, and shall not
otherwise be deemed filed under such Acts.
9
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in the
cumulative total stockholder return of the Company's Common Stock, the Standard
& Poor's 500 Composite Stock Index and the Standard & Poor's Building Materials
Index for the period of five fiscal years commencing with fiscal 1991. The graph
assumes $100 invested on July 1, 1990 in the Company and each of the other
indices.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD WAXMAN INDUS- S&P BUILDING
(FISCAL YEAR COVERED) TRIES S & P 500 MATERIALS
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 61.35 107.40 105.41
1992 72.89 121.80 120.47
1993 55.76 138.40 146.75
1994 35.11 140.35 134.21
1995 20.65 176.94 145.54
</TABLE>
* Total Return Assumes Reinvestment of Dividends
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mrs. Judy Robins, a member of the Compensation Committee, owns a 13% equity
interest in Aurora Investment Company ("Aurora"). All of the other equity
interests in Aurora are owned by Melvin Waxman (34%), Armond Waxman (34%) and
members of their and Mrs. Robins' families (19%). Armond and Melvin Waxman are
brothers and Judy Robins is their sister. The Company, pursuant to a lease dated
June 30, 1992, which expires on June 30, 2002 (with an option to renew for one
additional term of five years), leases its office and warehouse facility located
at 24455 Aurora Road, Bedford Heights, Ohio, from Aurora. The annual rent on the
facility, consisting of approximately 125,000 square feet of space, is $314,150,
which management believes is competitive with other rates in the area.
10
<PAGE> 13
II.
STOCKHOLDER PROPOSAL
The following stockholder proposal was submitted pursuant to Rule 14a-8 of
the Securities Exchange Act of 1934. The Company will furnish the name and
address of the proponent of the statement, and information concerning the number
of shares of Common Stock that the proponent beneficially owns, to any person,
orally or in writing, promptly upon receipt of any oral or written request
thereof.
THE PROPOSAL
"[M]y proposal is to recommend that the Board of Directors come up with a
simple and reasonable OBJECTIVE formula for granting bonuses and stock options
and any other perks to directors and executives that can be easily understood
and calculated by the average shareholder, and during this time and until the
company is really profitable and reasonable dividends restored not grant any pay
increases, bonuses or any other additional compensation, in any form, to the
executives and members of the Board of Directors."
Set forth below is the proponent's supporting statement reproduced in a
form identical to which it was received by the Company:
"In my opinion, there are three ways to measure financial success:
1. By the net NET after all expenses and writeoffs including
EXTRAORDINARY LOSSES are calculated.
2. By the dividend paid out to the stockholders AND
3. By the perception of investors as reflected by the price they are
willing to pay for a share of stock.
BY EVERY PARAMETER, WAXMAN IS FAILING.
There are a number of things being done in various corporations that need
to be changed. Among them are:
Term restrictions and elimination of stock options and retirement benefits
for outside directors (and relatives), paying of bonuses based on objective
rather than subjective parameters, elimination of golden parachutes and payments
of cash in lieu of income tax (on excessive bonuses), listing names and
addresses (in the proxy statement) of those making stockholder proposals (so
others may communicate), elimination of self-serving proposals and then using
S.E.C. "rules" to frustrate and keep certain information from shareholders. Not
all corporations engage in all of these practices.
Many shareholder proposals have been introduced to try to control
compensation to directors and top management and to try to tie them in with
profits and dividends, but managements oppose this. Last year, Waxman management
blamed a poor Canadian economy for their lack of success, but shouldn't more
DO-IT YOURSELF products sell in a poor economy? "When things go bad, cut pay at
the top; when things go well, reward at the bottom first" (John Ashton -- CEO of
Ashton Photo) -------------- BUT NOT AT WAXMAN. Dana Mead, CEO of the Tenneco
Company (in talking of his success) says that "a world class company will
continue to grow earnings at any point in the business cycle." And Tom Sullivan,
CEO of the very successful RPM Company says: There are three types of people
needed on Boards of Directors:
1. People with expertise in OUR business
2. People with expertise in other areas of business
3. AND people to look out for the shareholder
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<PAGE> 14
WHO ON WAXMAN'S BOARD IS LOOKING OUT FOR THE SHAREHOLDER?
Executives at Waxman say that they are also shareholders and are not
satisfied with the fiscal reports, but they conveniently changed the rules to
suit themselves; e.g. they have provided profit-incentive bonuses (to
themselves) when there were no profits (with the excuse that they had so many
problems, they put in extra hours in pursuit of solutions). Hourly workers get
paid extra for overtime -- not executives. In addition, seeing that the
previously awarded stock options might NEVER be practicably exercisable, they
reduced the exercise price. During this period, there were no dividends and it
seemed that they completely ignored the plight of the non-employee shareholder.
Since top management owns a significant number of shares, they could easily
work without pay if they could make the company successful and share in
dividends payable to ALL shareholders. Therefore, my proposal is to recommend
that the Board of Directors come up with a simple and reasonable OBJECTIVE
formula for granting bonuses and stock options and any other perks to directors
and executives that can be easily understood and calculated by the average
shareholder, and during this time and until the company is really profitable and
reasonable dividends restored not grant any pay increases, bonuses or any other
additional compensation, in any form, to the executives and members of the Board
of Directors."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE PROPOSAL
The Board of Directors recommends a vote AGAINST the foregoing stockholder
proposal.
The Compensation Committee and the Co-Chief Executive Officers believe that
the most important considerations in setting bonus awards are individual merit,
the Company's financial performance and achievement of strategic objectives
approved by the Board of Directors. The Compensation Committee and the Co-Chief
Executive Officers believe that specific quantitative formulas should not be the
sole factor in making bonus award decisions because of the importance of
achievements that may be difficult to quantify, and accordingly recognize
qualitative factors such as contributions of executive officers to the
achievement of the Company's strategic goals in a volatile business environment,
the managerial effectiveness and teamwork of individual executive officers and
the implementation of policies and measures that will benefit the Company's
long-term performance.
The Board of Directors believes that it would not be in the Company's best
interests to adopt a simplistic "objective" formula for granting bonus awards to
executive officers when many subjective factors are involved in all calculations
of bonus awards. The Board of Directors believes that the Compensation Committee
and the Co-Chief Executive Officers must be accorded the flexibility to develop
a methodology to determine bonus awards that balances the financial condition of
the Company with individual merit in a competitive economic atmosphere.
It appears that the proponent's proposal as it relates to director
compensation is inapplicable to the Company. As noted in this Proxy Statement,
non-employee directors are paid a flat fee for serving as such and have not been
and are not awarded discretionary bonuses or discretionary stock options.
It should be noted that the supporting statement to the proponent's
proposal contains several statements which relate to certain broad issues of
corporate governance but which do not apply to the Company or the proposal. The
proponent's supporting statement refers to the provision of retirement benefits
for outside directors (and relatives), golden parachutes and "payment in lieu of
income tax (on excessive bonuses)" in the laundry list of corporate woes that
need to be corrected. However, it should be noted that the Company is not
currently a party to any agreement or plan which provides any of the foregoing
benefits. In addition, the proponent's supporting statement contains certain
statements which are either incorrect and/or misleading. Among those statements
are the following:
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<PAGE> 15
- "Management blames a poor economy for their lack of success, but
shouldn't more DO-IT-YOURSELF products sell in a poor economy?" As a
review of the Company's periodic reports indicates, the Company has not
blamed "a poor economy for their lack of success." In fact, the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1994
indicates that the Company's fiscal 1994 losses were caused by, among
other things, the discontinuation of a failing foreign subsidiary (the
failure of which was caused, in part, by the poor Canadian economy), the
Company's excessive interest burden, and the costs associated with a much
needed financial restructuring intended to cure existing defaults under
the Company's public debt and to stabilize the Company's capital
structure.
- The proponent attributes to the management of the Company "the excuse
that they worked lots of extra hours in pursuit of solutions" as the
basis for compensation decisions. This assertion contradicts the 1994
Proxy Statement which discloses the factors for the level of compensation
which was granted to Messrs. Armond and Melvin Waxman (the Co-Chief
Executive Officers of the Company) with respect to fiscal 1994. The
factors considered by the Compensation Committee included the successful
efforts in the Fall of 1993 in navigating the Company through
negotiations with its public debt holders to eliminate the defaults
under, and modify the provisions of, the indentures governing the
Company's public debt and in completing in the Spring of 1994 a complex
financial restructuring. It should also be noted that the bonuses paid to
the Co-Chief Executives Officers in fiscal 1994 were discretionary, and,
contrary to the assertions made in the proponent's supporting statement,
were not based on the profitability of the Company.
- "Since top management owns a significant number of shares, they could
easily work without pay if they could make the company successful and
share in dividends payable to ALL shareholders." The proponent's
assertion that top management "could easily work without pay..." assumes
that "top management" has no need for, nor deserves, any current income.
It also assumes, incorrectly, that the negative covenants in the
Company's debt instruments would allow the payment of dividends in an
amount sufficient to support the income requirements of top management if
the Company were to become profitable. While it may be beneficial to
align executive interests with those of stockholders through stock-based
incentive compensation, this is not a substitute for salary. The
proponent's view is not related to the stockholder proposal, which
relates to the ability of the Board and management of the Company to
grant bonus compensation.
For the reasons set forth above, the Board recommends a vote AGAINST the
stockholder proposal.
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<PAGE> 16
III.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
At the Annual Meeting, the stockholders of the Company will be called upon
to ratify the appointment of the independent public accountants of the Company.
The Company's financial statements for the fiscal year ended June 30, 1995
have been examined by the firm of Arthur Andersen LLP, independent certified
public accountants. Arthur Andersen LLP have been the independent certified
public accountants of the Company since 1982. Representatives of Arthur Andersen
LLP are expected to be present at the Annual Meeting to make a statement if they
so desire and they are expected to be available to respond to appropriate
questions.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Arthur Andersen LLP, Cleveland, Ohio, as independent public
accountants of the Company.
ANNUAL REPORT
The Annual Report on Form 10-K of the Company for the fiscal year ended
June 30, 1995 (without exhibits), as amended by an amendment on Form 10-K/A (the
"Annual Report") is being furnished simultaneously herewith. The Annual Report
is not to be considered a part of this Proxy Statement. The Company will furnish
a copy of any exhibit to the Annual Report, as listed thereon, upon request and
upon payment of the Company's reasonable expenses of furnishing such exhibit.
Requests should be directed to the Chief Financial Officer, Waxman Industries,
Inc., 24460 Aurora Road, Bedford Heights, Ohio 44146.
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
The Company intends to hold its 1996 annual meeting of stockholders in
November or December 1996. In order for a stockholder proposal to be included in
next year's proxy statement, it must be received by the Secretary of the Company
at its offices, 24460 Aurora Road, Bedford Heights, Ohio 44146, by July 5, 1996.
EXPENSES OF SOLICITATION
All expenses relating to the solicitation of proxies will be paid by the
Company. Solicitation will be made principally by mail, but officers and regular
employees may solicit proxies by telephone or personal contact with nominal
expense to the Company. The Company will request brokers and other nominees who
hold Common Stock or Class B Common Stock in their names to solicit proxies from
the beneficial owners thereof and will pay the standard charges and expenses
associated therewith.
OTHER MATTERS
The Board of Directors and management know of no other matters to be
presented for action at the Annual Meeting. If other matters properly come
before the Annual Meeting, it is intended that proxies in the accompanying form
will be voted thereon in accordance with the best judgment of the person or
persons voting the proxies.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE NOMINEES TO THE
BOARD OF DIRECTORS NAMED HEREIN, AGAINST PROPOSAL II (THE STOCKHOLDER PROPOSAL)
AND FOR PROPOSAL III (THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN
LLP).
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<PAGE> 17
ALL STOCKHOLDERS ARE URGED TO MARK, SIGN AND SEND IN THEIR PROXIES WITHOUT
DELAY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
By Order of the Board of Directors
/s/ Kenneth Robins
KENNETH ROBINS, Secretary
October 30, 1995
15
<PAGE> 18
WAXMAN INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 27, 1995
The undersigned appoints each of Melvin Waxman, Armond Waxman
P and William Pray, each with the power to appoint his substitute, as
R proxies of the undersigned, and hereby authorizes them to represent
O and to vote, as designated below, all the shares of Common Stock and
X Class B Common Stock of Waxman Industries, Inc. held of record by
Y the undersigned on October 23, 1995, at the Annual Meeting of
Stockholders of Waxman Industries, Inc. to be held on November 27,
1995.
1. Election of Directors
<TABLE>
<S> <C>
FOR all nominees listed below (except WITHHOLD AUTHORITY
as marked to the contrary below) / / to vote for all nominees / /
</TABLE>
Melvin Waxman, Armond Waxman, Irving Z. Friedman, Samuel J.
Krasney, Judy Robins, William Pray
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
--------------------------------------------------------------------
2. Approval of the stockholder proposal.
/ / FOR APPROVAL / / AGAINST APPROVAL / / ABSTAIN
3. Ratification of the appointment of Arthur Andersen LLP as
independent public accountants.
/ / FOR APPROVAL / / AGAINST APPROVAL / / ABSTAIN
(Continued and to be signed on reverse side)
(Continued from other side)
4. In their discretion, the proxies are authorized to vote on such
other business as may properly come before the meeting and any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES, AGAINST PROPOSAL II
AND IN FAVOR OF PROPOSAL III.
Please sign exactly as name appears below. When shares are held by
joint tenants, both must 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
partnership name by any
authorized person.
DATED: _____________ , 1995
---------------------------
Signature
---------------------------
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
