<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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>
WAXMAN INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WAXMAN INDUSTRIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: ...........................................................
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<PAGE> 2
Waxman Logo
WAXMAN INDUSTRIES, INC.
24460 Aurora Road
Bedford Heights, Ohio 44146
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 1998
------------------
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 December 1, 1998 at 11:00 a.m.
Cleveland time to consider and act on the following matters:
1. The election of seven directors of the Company to serve until the
1999 Annual Meeting of Stockholders and until their successors are elected
and qualified;
2. The ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company; and
3. 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 13, 1998
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 and Class B 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, 1998 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 16, 1998
<PAGE> 3
Waxman Logo
WAXMAN INDUSTRIES, INC.
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 1998
------------------
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 Tuesday, December 1, 1998, 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 for (i) the election of the seven nominees
for directors and (ii) 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 16, 1998.
Stockholders of record at the close of business on October 13, 1998 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof. On that date, there were outstanding 9,908,276 shares of
common stock, $.01 par value per share, of the Company ("Common Stock"), and
2,148,271 shares of Class B common stock, $.0l par value per share, 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 22, 1998 (except as noted
in footnotes 8, 9 and 10 below), the number of shares of Common Stock
beneficially owned by each director, director nominee and executive officers
named in "Summary Compensation Table", 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
--------------------- ----------------
CLASS B CLASS B PERCENTAGE
NAME AND COMMON COMMON COMMON COMMON OF AGGREGATE
BENEFICIAL OWNER STOCK STOCK STOCK STOCK VOTING POWER
---------------- --------- --------- ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman(1)................ 1,130,300 1,011,932 11.1% 47.1% 35.5%
Armond Waxman(2)................ 1,030,882 770,282 10.1 35.9 27.6
Laurence S. Waxman(3)........... 169,775 55,252 1.7 2.6 2.3
Sheldon G. Adelman.............. 50,000 -- * -- *
William Pray(4)................. 116,875 -- 1.2 -- *
Irving Friedman(5).............. 25,000 -- * -- *
Samuel J. Krasney(6)............ 46,750 6,750 * * *
Judy Robins(7).................. 109,750 75,250 1.1 3.5 2.7
Directors and officers as a
group (9 individuals)......... 2,685,582 1,919,466 24.9 89.3 67.8
Monarch Management Group,
Ltd.(8).................... 1,228,200 -- 12.4 -- 3.9
767 Fifth Avenue
New York, NY 10153
Mitchell & Henry Inc.(9)........ 652,300 -- 6.6 -- 2.1
P.O. Box 31,
Lake Placid, NY 12946
Credit Suisse First Boston,
Inc.(10)................... 550,000 -- 5.6 -- 1.8
11 Madison Avenue
New York, NY 10010
</TABLE>
- ---------------
* less than 1%
(1) Includes 300,000 shares of Common Stock subject to options granted to Mr.
Melvin Waxman pursuant to the Company's 1992 Non-Qualified and Incentive
Stock Option Plan (the "1992 Stock Option Plan") and 100 shares of Common
Stock owned by a member of Mr. Waxman's immediate family, as to which
shares Mr. Waxman disclaims beneficial ownership. Does not include 200,000
shares of Common Stock subject to stock appreciation rights granted to Mr.
Waxman by the Company which have not vested.
(2) Includes 300,000 shares of Common Stock subject to options granted to Mr.
Armond Waxman pursuant to the 1992 Stock Option Plan and 100 shares of
Common Stock owned by a member of Mr. Waxman's immediate family, as to
which shares Mr. Waxman disclaims beneficial ownership. Does not include
200,000 shares of Common Stock subject to stock appreciation rights granted
to Mr. Waxman by the Company which have not vested.
(3) Includes 95,000 shares of Common Stock subject to options granted to Mr.
Laurence Waxman pursuant to the 1992 Stock Option Plan and 27,100 shares of
Common Stock for
2
<PAGE> 5
which Mr. Waxman is custodian to his minor children. Does not include
100,000 shares of Common Stock subject to stock appreciation rights granted
to Mr. Waxman by the Company which have not vested.
(4) Includes 91,875 shares of Common Stock subject to options granted to Mr.
Pray pursuant to the 1992 Stock Option Plan.
(5) Includes 20,000 shares of Common Stock subject to options granted to Mr.
Friedman pursuant to the 1994 Non-Employee Directors Stock Option Plan (the
"1994 Directors Plan") and 5,000 shares of Common Stock granted to Mr.
Friedman pursuant to the 1996 Non-Employee Directors' Restricted Share Plan
(the "1996 Directors Plan").
(6) Includes 20,000 shares of Common Stock subject to options granted to Mr.
Krasney pursuant to the 1994 Directors Plan, 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 ownership, and 20,000
shares of Common Stock granted to Mr. Krasney pursuant to the 1996
Directors Plan.
(7) Includes 20,000 and 10,000 shares of Common Stock subject to options
granted to Mrs. Robins as director and her spouse, pursuant to the 1994
Directors Plan, as Corporate Secretary of the Company, respectively, and
15,000 shares of Common Stock granted to Mrs. Robins pursuant to the 1996
Directors Plan.
(8) The information set forth in the table with respect to Monarch Management
Group, Ltd. was obtained from information provided to the Company by
Monarch Management Group, Ltd. reflecting its beneficial ownership as of
July 31, 1998.
(9) The information set forth in the table with respect to Mitchell & Henry
Inc. was obtained from information provided to the Company by Mitchell &
Henry Inc., reflecting its beneficial ownership as of July 31, 1998.
(10) The information set forth in the table with respect to Credit Suisse First
Boston, Inc. was obtained from a Statement on Schedule 13G, dated February
l3, 1998, filed with the Securities and Exchange Commission. Such Statement
reflects Credit Suisse First Boston, Inc.'s beneficial ownership as of
December 31, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any officer, director or beneficial
owner of more than 10% of the Company's equity securities 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 by such officers, directors and beneficial
owners of more than 10% of the Company's equity securities, the Company believes
that during the fiscal year ended June 30, 1998, there was compliance with all
such filing requirements.
I.
ELECTION OF DIRECTORS
The authorized number of directors of the Company is currently seven.
Management recommends that seven 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 seven 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
3
<PAGE> 6
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,
except for Sheldon Adelman, are currently directors of the Company. Armond and
Melvin Waxman are brothers, Judy Robins is their sister and Laurence Waxman is
Melvin Waxman's son.
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
-------------------------- -------------------
<S> <C>
Melvin Waxman, 64 Mr. Melvin Waxman has been a Chief Executive Officer of
Chairman of the Board and Co-Chief the Company for over 20 years, a director of the Company
Executive Officer since 1962 and Chairman of the Board of the Company
since August 1976 (Co-Chairman from June 1995 to April
1996). Mr. Waxman is the Chairman of the Board of
Barnett Inc. ("Barnett").
Armond Waxman, 59 Mr. Armond Waxman has been the President and Treasurer
President, Co-Chief Executive Officer of the Company since August 1976 and Co-Chief Executive
and Director Officer since June 1995. Mr. Waxman has been a director
of the Company since 1962. Mr. Waxman is the
Vice-Chairman of the Board of Barnett.
Laurence S. Waxman, 41 Mr. Laurence Waxman was elected Senior Vice President of
Senior Vice President and Director the Company in November 1993 and is also President of
Waxman Consumer Products Group, Inc. ("Consumer
Products"), a wholly-owned subsidiary of the Company, a
position he has held since 1988. Mr. Waxman joined the
Company in 1981. Mr. Waxman was appointed to the board
of directors of the Company in July 1996.
William R. Pray, 51 Mr. Pray is the President, Chief Executive Officer and a
Director director of Barnett. Mr. Pray joined Barnett in 1979 as
Vice President of sales and marketing and has served as
President of Barnett since 1987. Mr. Pray was the Chief
Operating Officer of the Company from June 1995 to April
1996 and served as Senior Vice President of the Company
from February 1991 until June 1995. Upon the
consummation of the initial public offering of Barnett
in April 1996, Mr. Pray resigned from his position as an
officer of the Company, but remains a director.
Sheldon G. Adelman, 56 Mr. Adelman is a nominee for director of the Company.
Director Nominee Mr. Adelman is the principal of Adelman Capital LLC, a
private investment firm. From 1996 to 1997, Mr. Adelman
was the Vice-Chairman and director of Quaker State
Corporation and Chief Executive Officer of their
consumer products group. Mr. Adelman was the Chairman of
the Board and Chief Executive Officer of Blue Coral,
Inc., a multi-divisional, commercial and consumer
products manufacturer with worldwide sales to the
automotive aftermarket from 1974 until its merger with
Quaker State Corporation in June 1996. Mr. Adelman
serves on the Board of Directors of Phoenix Dye Works,
Barnett and Cooperative Resources. He also is active in
many civic organizations.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, AGE AND OTHER
POSITIONS WITH THE COMPANY BUSINESS EXPERIENCE
-------------------------- -------------------
<S> <C>
Irving Z. Friedman, 66 Mr. Friedman has been a director of the Company since
Director 1989. Mr. Friedman has been a certified public
accountant with the firm of Krasney Polk Friedman &
Fishman for more than the past five years.
Judy Robins, 49 Mrs. Robins has been a director of the Company since
Director 1980. Mrs. Robins has owned and operated an interior
design business for more than the past five years. Mrs.
Robins is the sister of Messrs. Melvin and Armond Waxman
and the wife of the Secretary of the Company.
</TABLE>
INFORMATION RELATING TO THE BOARD
OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held four meetings during the fiscal year ended June
30, 1998 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 Samuel Krasney (a
current director of the Company who is not standing for reelection) 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. It is currently contemplated that Mr. Adelman will replace Mr.
Krasney on the committees on which Mr. Krasney serves.
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 one meeting during fiscal
1998.
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). Although the Compensation Committee held no meetings
during fiscal 1998, on several occasions it took action by unanimous written
consent.
STOCK OPTION COMMITTEE
The Stock Option Committee administers both the 1992 Stock Option Plan and
the Employee Stock Purchase Plan of the Company. The Stock Option Committee held
no meetings during fiscal 1998; however, 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 1998 plus a
fee of $1,000 plus traveling expenses for each board meeting he or she attended.
In addition, each director who is not an employee of the Company is
automatically granted 5,000 shares of restricted Common Stock for each five full
years of service such director served on the Board of Directors pursuant to the
1996 Directors Plan.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid for services
rendered during fiscal 1998 to the Co-Chief Executive Officers and the two other
most highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION(1) SECURITIES ALL OTHER
NAME AND PRINCIPAL ----------------------- UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($)(2) OPTIONS/SAR(#) ($)(3)
------------------ ---- --------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Melvin Waxman 1998 300,000 250,000 -- 107,500
Chairman of the Board and 1997 300,000 500,000 -- 91,129
Co-Chief Executive Officer 1996 300,000 250,000 200,000(4) 90,961
Armond Waxman 1998 350,000 392,000 -- 172,033
President and 1997 350,000 550,000 -- 149,066
Co-Chief Executive Officer 1996 350,000 400,000 200,000(4) 73,834
Laurence S. Waxman 1998 201,510 50,000 42,500 24,559
Senior Vice President 1997 196,962 150,000 100,000(5) 12,551
1996 189,098 50,000 50,000 12,549
Mark W. Wester(6) 1998 117,423 27,500 15,000 801
Vice President--Finance and 1997 72,673 80,000 25,000 --
Chief Financial Officer
</TABLE>
- ---------------
(1) Certain executive officers received compensation in fiscal 1996, 1997 and
1998 in the form of perquisites, the amount of which does not exceed
reporting thresholds.
(2) The executive officers named in the Summary Compensation Table received
their bonuses under the Company's Profit Incentive Plan. Messrs. Armond and
Melvin Waxman received their bonuses at the discretion of the Board of
Directors. In addition, Mr. Armond Waxman received a discretionary bonus
during fiscal 1998 equal to $142,000.
(3) Unless otherwise noted, amounts principally represent premiums on
split-dollar life insurance policies.
(4) On March 29, 1996, each of Messrs. Melvin and Armond Waxman were awarded a
stock appreciation right ("SAR") with respect to 200,000 shares of the
Common Stock of the Company. Each SAR vests in whole three years after the
date of grant but not prior thereto, except in certain limited
circumstances.
(5) On September 27, 1996, Mr. Laurence Waxman was awarded an SAR with respect
to 100,000 shares of Common Stock. The SAR vests in whole three years after
the date of grant but not prior thereto, except in certain limited
circumstances.
(6) Mr. Wester became an employee of the Company in October 1996 and had
provided consulting services from May 1996 to October 1996.
EMPLOYMENT AGREEMENTS
Mr. Laurence Waxman entered into an employment agreement with 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
6
<PAGE> 9
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 $65,000, $50,000 and $50,000 was
granted to Mr. Laurence Waxman in fiscal 1998, 1997 and 1996, respectively.
During fiscal 1996, Mr. Waxman agreed to temporarily reduce his annual salary in
an effort to support the Company's cost containment efforts. In July 1996, Mr.
Waxman's base salary returned to $200,000 per annum. The employment agreement
provides that upon termination of employment by Mr. Laurence Waxman for good
reason (as defined therein) or by the Company for any reason other than death,
disability (as defined therein) or cause (as defined therein), Mr. Laurence
Waxman will be entitled to receive all of the compensation he would otherwise be
entitled to through the end of the term of the agreement. The employment
agreement also contains provisions which restrict Mr. Laurence Waxman from
competing with the Company or Consumer Products during the term of the agreement
and for two years following the termination thereof.
STOCK OPTION GRANTS
The following table sets forth the information noted for all grants of
stock options made by the Company during fiscal 1998 to each of the executive
officers named in the Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------- STOCK PRICE
% OF TOTAL APPRECIATION
OPTIONS FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM(1)
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------- ------------ -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Laurence S. Waxman........ 42,500 15.74% 4.0625 March 5, 2008 115,076 285,510
Mark W. Wester............ 15,000 5.56% 4.0625 March 5, 2008 40,615 100,768
</TABLE>
- ---------------
(1) The potential realizable values represent future opportunity and have not
been reduced to present value in 1998 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 tables set forth information with respect to (i) the number
of unexercised options and SARs held by each of the Executive Officers named in
the Summary Compensation Table who held options and/or SARs as of June 30, 1998
and (ii) the value of unexercised in-the-money options and SARs held by such
persons as of June 30, 1998:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END($)
SHARES NUMBER OF UNEXERCISED OPTIONS -------------------------
ACQUIRED ON VALUE AT FISCAL YEAR END(#) NOT
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE EXERCISABLE
---- ----------- ----------- ----------------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPTIONS:
Melvin Waxman........... -- -- 300,000/ None 356,250 None
Armond Waxman........... -- -- 300,000/ None 356,250 None
Laurence Waxman......... -- -- 95,000/105,000 130,430 63,281
Mark Wester............. -- -- 6,250/ 33,750 391 1,172
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE MONEY SAR'S AT
FISCAL YEAR-END($)
VALUE NUMBER OF UNEXERCISED SARS -------------------------
ACQUIRED ON VALUE AT FISCAL YEAR END(#) NOT
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE EXERCISABLE
---- ----------- ----------- ----------------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SAR'S:(1)
Melvin Waxman........... -- -- None/200,000 None 75,000
Armond Waxman........... -- -- None/200,000 None 75,000
Laurence Waxman......... -- -- None/100,000 None 37,500
</TABLE>
- ---------------
(1) On March 29,1996, each of Messrs. Melvin and Armond Waxman was awarded an
SAR with respect to 200,000 shares, and on September 27,1996, Laurence S.
Waxman was awarded a SAR with respect to 100,000 shares of the Common Stock
of the Company. Each SAR vests in whole three years after the date of grant
but not prior thereto, except in certain limited circumstances.
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 comprised 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 1998 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 grant of equity based awards. 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 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 and other stock based awards 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 are intended to 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
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<PAGE> 11
bonuses were approved by the Committee in order to compensate Messrs. Waxman for
their continuing efforts to redefine the focus of the Company's core businesses,
reduce the Company's high degree of leverage and position the Company for a
return to profitability.
In determining each of Messrs. Waxmans' compensation for fiscal 1998,
including the bonuses paid to them, the Committee considered Messrs. Waxmans'
efforts during fiscal 1998 in the continuous evaluation and pursuit of certain
transactions intended to refine the Company's focus on its core businesses,
deleverage the Company's capital structure and provide it with greater stability
and financial flexibility.
Specifically, in July 1997, the Company sold substantially all of the
assets of the LeRan Gas Products division of WOC for approximately $3.8 million.
The proceeds of such sale were used to invest in the Company's businesses and
thereby contributed to the reduction of the Company's borrowings under its
working capital lines of credit. The Company also consummated a redemption of
$9.5 million principal amount of the Company's 11 1/8% Senior Notes due 2001 in
August 1997. Such transactions furthered the Company's strategy of reducing its
interest expense and leverage. In addition, during fiscal 1998, Messrs. Armond
and Melvin Waxman devoted a significant amount of their time exploring potential
transactions to further deleverage the Company's capital structure and have been
instrumental in such pursuits. The fact that these efforts have not yet resulted
in a significant debt reduction does not diminish the value of their efforts.
Also, during fiscal 1998, Messrs. Armond and Melvin Waxman led the
Company's refocus of its core businesses. As a result, sales at U.S. Lock
improved by 21.5% and revenues at the Company's foreign sourcing and
manufacturing operations improved by 22.4%. Mr. Melvin Waxman spent a
significant amount of his time in Taiwan and China, overseeing the Company's
Asian operations and new product development efforts. Messrs. Waxman also were
integral to the development and implementation of Consumer Products new
packaging and merchandising system for plumbing products, which system was well
received at the 1998 National Hardware Show in Chicago. Lastly, Messrs. Armond
and Melvin Waxman were instrumental in reinvigorating Consumer Products
management team, recruiting new management personnel and reorienting their
management priorities. The Company believes that this realignment will
substantially improve Consumer Products sales, marketing and new product
development efforts.
The Committee believes that each of Messrs. Armond and Melvin Waxman
demonstrated a high level of leadership and responsibility during fiscal 1998 in
pursuing, evaluating and implementing the aforementioned transactions and
iniatives and believe that such efforts will lead to 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.
Section 162(m) of the Internal Revenue code of 1986, as amended (the
"Code"), 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 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 Stock Option Plan and the 1996 Directors Plan comply with
these requirements. The Compensation Committee does not believe that the cash
compensation to be paid to the Co-Chief Executive
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<PAGE> 12
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 foregoing 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 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.
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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 1994. The graph
assumes $100 invested on July 1, 1993 in the Company and each of the other
indices.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
WAXMAN S&P BUILDING
INDUSTRIES S&P 500 MATERIALS
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 62.96 101.41 91.45
1995 37.04 127.84 99.17
1996 133.33 161.08 120.08
1997 140.74 216.98 154.55
1998 111.11 282.42 192.40
</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 (the "Lease"), 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. In July 1998, the Company announced that Consumer Products would
relocate its warehouse operations from Bedford Heights, Ohio to Groveport, Ohio
in November 1998. Until the termination of its lease in 2002, Consumer Products
will continue to use the office area and will sublease the warehouse to Handl-it
Inc., a company owned by John S. Peters, a consultant to, and former officer of,
the Company, together with certain members of his family and Melvin Waxman. The
sublease is on substantially the same terms that the Company could have obtained
from an unaffiliated party.
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<PAGE> 14
CERTAIN RELATIONSHIPS
The Company and Barnett provide to and receive from each other certain
selling, general and administrative services and reimburse each other for
out-of-pocket disbursements related to those services. Pursuant to an
Intercorporate Agreement (the "Intercorporate Agreement") among the Company, and
certain of its subsidiaries, and Barnett, the Company provides certain
managerial, administrative and financial services to Barnett and Barnett pays
the Company the allocable cost of the salaries and expenses of the Company's
employees while they are rendering such services. Barnett also reimburses the
Company for actual out-of-pocket disbursements to third parties by the Company
required for the provision of such services by the Company. In addition to the
services provided by the Company to Barnett pursuant to the Intercorporate
Agreement, Barnett also continues to provide certain services to U.S. Lock, an
operating division of WOC Inc. These services include the utilization of
Barnett's management information systems, financial accounting, order processing
and billing and collection services. The Company pays to Barnett the allocable
cost of the salaries and expenses of Barnett's employees while they are
performing such services. The Company also reimburses Barnett for all actual
out-of-pocket disbursements to third parties by Barnett required for the
provisions of such services. The net effect of these charges is not material.
The arrangements provided in the Intercorporate Agreement may be modified and
additional arrangements may be entered into pursuant to a written agreement
between Barnett and the Company.
On July 1,1997, the Company sold substantially all of the business of LeRan
Gas Products, a division of WOC Inc. to Barnett. A Special Transaction Committee
of the Board, comprised of Messrs. Krasney and Friedman, was appointed to
evaluate the transaction. In connection with the Special Transaction Committees
evaluation of the contemplated sale, the Company received a fairness opinion
from SBK-Brooks Investment Co. which stated that the purchase price received by
the Company was fair to the stockholders of the Company from a financial point
of view.
The Company also contracts for certain outside warehousing services under
month-to-month agreements with Handl-it Inc., a company owned by John S. Peters,
a consultant to, and former officer of, the Company, together with certain
members of his family and Melvin Waxman. Rent expense under this arrangement was
$30,000 in fiscal 1998. Such agreements are on substantially the same terms that
the Company could obtain from an unaffiliated third party.
II.
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, 1998
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, 1998 (without exhibits) (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
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<PAGE> 15
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 1998 ANNUAL MEETING
The Company intends to hold its 1999 annual meeting of stockholders in
November or December 1999. 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 June 17, 1999
and must otherwise comply with the rules of the Securities Exchange Commission
relating to stockholder proposals.
EXPENSES OF SOLICITATION
All expenses relating to the solicitation of proxies will be paid by the
Company (including the cost of mailing the proxy material) and are estimated to
be $20,000. 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, AND FOR PROPOSAL II (THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP). 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 16, 1998
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<PAGE> 16
PROXY WAXMAN INDUSTRIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 1, 1998
The undersigned appoints each of Melvin Waxman and Armond Waxman, each with the
power to appoint his substitute, as proxies of the undersigned, and hereby
authorizes them to represent and to vote, as designated on the reverse side of
this Proxy Card, all the shares of Common Stock and Class B Common Stock of
Waxman Industries, Inc. held of record by the undersigned on October 13, 1998,
at the Annual Meeting of Stockholders of Waxman Industries, Inc. to be held on
December 1, 1998.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 17
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
WAXMAN INDUSTRIES, INC.
DECEMBER 1, 1998
- Please Detach and Mail in the Envelope Provided-
[X] Please mark your
votes as in this
example.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for
to the contrary below) all nominees
1. Election of
Directors [ ] [ ]
(INSTRUCTIONS: To withhold authority to vote for
any individual nominee, write that nominee's name
on the space provided below.)
- ----------------------------------------------
Nominees: Melvin Waxman
Armond Waxman
Laurence S. Waxman
Sheldon G. Adelman
Irving Z. Friedman
Judy Robins
William R. Pray FOR AGAINST ABSTAIN
2. Ratification of the appointment of Arthur [ ] [ ] [ ]
Andersen LLP as independent public
accountants.
3. In their discretion, the proxies are authorized to vote upon 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 AND IN FAVOR OF PROPOSAL II.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
_______________________ ______________________________ DATED____________,1998
SIGNATURE SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as names appear hereon. When shares are held by
jointly tenants, both must sign. When signing as attorney, executor,
administrator, trustee or guardian, please given 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 an
authorized person.
