<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ZERO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ZERO CORPORATION]
- --------------------------------------------------------------------------------
ZERO CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
JULY 26, 1995
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
ZERO CORPORATION
The 1995 Annual Meeting of Stockholders of ZERO Corporation will be held on
Wednesday, July 26, 1995, at 2:00 p.m. local time, at The Biltmore Los
Angeles, Tiffany Room, 506 South Grand Avenue, Los Angeles, California, for
the following purposes:
1. To elect 3 directors for a three-year term to expire at the 1998
Annual Meeting of Stockholders.
2. To consider and vote upon a proposal submitted by a stockholder to
declassify the Board of Directors.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Stockholders of record at the close of business on June 9, 1995, are
entitled to notice of and to vote at the meeting. A list of such stockholders
will be open for examination by any stockholder, for any purpose germane to
the Annual Meeting, for a period of ten days prior to the date of the meeting
during ordinary business hours at the executive offices of the Company, 444
South Flower Street, Suite 2100, Los Angeles, California 90071.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you attend, to assure your representation, please vote, sign,
date and return your proxy card in the accompanying envelope. If you attend
the meeting and wish to vote in person, you may withdraw your proxy at that
time.
By Order of the Board of Directors
Howard W. Hill, Chairman of the Board
Anita J. Cutchall, Corporate Secretary
Los Angeles, California
June 28, 1995
<PAGE>
ZERO CORPORATION
444 SOUTH FLOWER STREET, SUITE 2100
LOS ANGELES, CALIFORNIA 90071-2922
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ZERO Corporation, a Delaware corporation,
for use at the 1995 Annual Meeting of Stockholders to be held on July 26,
1995, or at any adjournment or postponement thereof, pursuant to the Notice of
Annual Meeting of Stockholders.
The persons named on the accompanying proxy card will vote shares
represented by all valid proxies in accordance with the instructions thereon.
If no instructions are given, shares represented by valid proxies will be
voted FOR each of the nominees for director named herein. As to any other
business which may properly come before the Annual Meeting, the named proxies
will vote in accordance with their best judgment. The Company does not
currently know of any other such business. A stockholder giving a proxy may
revoke it at any time before it is exercised (i) by giving to the Corporate
Secretary of the Company a written notice of revocation or an executed proxy
bearing a later date, or (ii) by appearing at the Annual Meeting and voting in
person.
This Proxy Statement and the form of proxy will be sent to stockholders
commencing approximately June 28, 1995.
RECORD DATE AND VOTING
The close of business on June 9, 1995, has been fixed as the record date for
the determination of stockholders entitled to receive notice of and to vote at
the Annual Meeting. As of the close of business on June 9, 1995, the Company
had outstanding 15,977,005 shares of Common Stock, par value $.01 (Common
Stock).
A majority of the outstanding shares of Common Stock must be represented in
person or by proxy at the Annual Meeting in order to constitute a quorum for
the transaction of business. Subject to cumulative voting rights in the
election of directors, holders of shares of Common Stock are entitled to one
vote per share on each matter submitted to or acted upon by the stockholders
at the Annual Meeting. In the election of directors, votes may be cast in
favor or withheld. In tabulating the votes, broker nonvotes and votes that are
withheld will be excluded entirely from the vote and will have no effect. In
the election of directors, stockholders are also entitled to cumulative voting
rights. Under cumulative voting, each stockholder is entitled to as many votes
as is equal to the number of directors to be elected multiplied by the number
of shares owned by the stockholder, and all such votes may be cast for one
nominee or distributed among two or more nominees.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Annual Meeting in person or by proxy and entitled to vote
thereat will be required to adopt the stockholder proposal set forth in
Proposal 2 if duly presented at the Annual Meeting. In determining whether the
stockholder proposal has received the requisite number of affirmative votes,
abstentions will have the same effect as votes against the proposal, and
broker nonvotes will have no effect on the outcome.
<PAGE>
SOLICITATION
The cost of solicitation will be borne by the Company. In addition to the
use of the mails, proxies may be solicited, in person and by telephone, by
regular employees of the Company, at no additional compensation. The Company
has also engaged Morrow & Co. to assist in the solicitation of proxies. This
firm will be paid a fee of $5,000 and will be reimbursed for expenses incurred
in connection with such engagement. The Company will also reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the shares held by them.
VOTING SECURITIES AND CERTAIN STOCKHOLDERS
The following table shows the total number of shares of Common Stock
beneficially owned by directors, the nominees and the named executive
officers, and all directors and executive officers as a group, at the close of
business on June 1, 1995. No stockholder was known by the Company to own
beneficially more than 5% of the outstanding Common Stock as of June 1, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF BENEFICIAL OF
CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
-------- ------------------------ ------------ -------
<C> <S> <C> <C>
Common Stock Gary M. Cusumano(a)............................................... 667 *
Bruce J. DeBever(a)............................................... 2,334 *
Clinton G. Gerlach(a)............................................. 12,209 *
John B. Gilbert(a)(b)............................................. 10,910 *
Wilford D. Godbold, Jr.(a)(b)..................................... 140,783 *
Bernard B. Heiler(a)(b)........................................... 22,728 *
Howard W. Hill(a)(b).............................................. 44,334 *
Whitney A. McFarlin(a)............................................ 6,209 *
Anita J. Cutchall(b).............................................. 3,600 *
George A. Daniels(b).............................................. 35,433 *
James F. Hermanson(b)............................................. 38,001 *
Directors and executive officers as a group (12 persons).......... 317,208 2%
</TABLE>
(a) --Director
(b) --Executive officer
- --------
* Less than 1%.
(1) Includes an aggregate of 151,044 shares which, as of June 1, 1995, may be
acquired within sixty days pursuant to the exercise of options, and shares
held by trusts of which directors, executive officers and members of their
families are trustees.
2
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
rules issued thereunder, the directors and executive officers of the Company
are required to file with the Securities and Exchange Commission and with The
New York Stock Exchange reports of ownership and changes in ownership of the
Company's Common Stock. Copies of such reports are required to be furnished to
the Company. Based solely on its review of the copies of such reports
furnished to the Company, or written representations that no reports were
required, the Company believes that during fiscal 1995 all of its executive
officers and directors complied with Section 16(a) requirements.
ELECTION OF DIRECTORS
PROPOSAL 1
There are currently 8 members of the Board of Directors of the Company. The
Certificate of Incorporation of the Company provides for a classified Board of
Directors. Class I consists of three members: Bruce J. DeBever, Bernard B.
Heiler, and Whitney A. McFarlin. The Board of Directors has nominated Messrs.
DeBever, Heiler and McFarlin in Class I for election to hold office for three
years until the 1998 Annual Meeting of Stockholders, and until their
successors have been duly elected and qualified.
In connection with Proposal 1, proxies, unless instructed otherwise, will be
voted for the election of Messrs. DeBever, Heiler and McFarlin in Class I. If
a nominee shall become unavailable or refuse to serve as a director (an event
that is not anticipated), the named proxies will vote for a substitute nominee
at their discretion.
The following information is furnished with respect to the nominees and each
of the directors whose terms will continue after the Annual Meeting.
NOMINEES FOR DIRECTORS:
<TABLE>
<CAPTION>
TERM TO DIRECTOR
CLASS I AGE POSITION/PRINCIPAL OCCUPATION EXPIRE SINCE
------- --- ----------------------------- ------- --------
<C> <C> <S> <C> <C>
Bruce J. DeBever........ 59 Director; President, Decor 1995 1992
Concepts, Inc. (commercial
furniture and playland
equipment).
Bernard B. Heiler....... 49 Director, Vice President- 1995 1988
Marketing and Sales.
Whitney A. McFarlin..... 54 Director; Chairman, President 1995 1988
and Chief Executive Officer,
Angeion Corporation (medical
research and development). Mr.
McFarlin also serves as a
director of PSICOR, Inc.
</TABLE>
3
<PAGE>
CONTINUING DIRECTORS:
<TABLE>
<CAPTION>
TERM TO DIRECTOR
CLASS II AGE POSITION/PRINCIPAL OCCUPATION EXPIRE SINCE
-------- --- ----------------------------- ------- --------
<C> <C> <S> <C> <C>
Gary M. Cusumano........ 51 Director; President, The 1996 1994
Newhall Land and Farming
Company (real estate and
agriculture). Mr. Cusumano
also serves as a director of
Watkins Johnson Company.
Clinton G. Gerlach...... 68 Director; Chairman of the 1996 1972
Board, President and Chief
Executive Officer, Calnetics
Corporation (molded plastic
components).
CLASS III
John B. Gilbert......... 74 Director, Chairman Emeritus; 1997 1952
Chairman and President, TOLD
Corporation (land
development).
Wilford D. Godbold, Jr.. 57 Director, President and Chief 1997 1982
Executive Officer. Mr. Godbold
also serves as a director of
Pacific Enterprises, Santa Fe
Pacific Pipelines, Ltd., and
The Southern California Gas
Company.
Howard W. Hill.......... 68 Director, Chairman of the 1997 1960
Board. Mr. Hill also serves as
a director of Precision
Castparts Corporation.
</TABLE>
Each of the directors listed above has held the same position or another
executive position with the same employer during the past five years except
for Messrs. Heiler and McFarlin. Mr. Heiler has held his current position with
the Company since October 1992, prior to which he was Vice President of GTE
West, a telephone public utility from 1984 through 1992, and President of
GTEL, a telecommunications integrator and a subsidiary of GTE, from January
1986 through October 1992. Mr. McFarlin has held his current position at
Angeion since September 1993, prior to which he was President and Chief
Executive Officer of Clarus Medical Systems (formerly Medilase, Inc.), medical
delivery systems, since July 1990 and a private investor since March 1990.
PLEASE NOTE THAT YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE NOMINEES LISTED ON PAGE 3.
MEETINGS OF THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND DIRECTORS'
FEES
The Board of Directors met four times during the fiscal year ended March 31,
1995 and all members attended. The Board at its organizational meeting
appoints an Audit Committee, a Compensation Committee, a Nominating Committee,
an Executive Committee, and a Stock Option Committee.
Messrs. Cusumano, DeBever, Gerlach and McFarlin serve on the Audit
Committee, the functions of which include serving as liaison between the Board
and the independent public accountants of the Company, reviewing and
discussing the accountants' annual internal control recommendations with both
the accountants and
4
<PAGE>
management, and making such other inquiries and recommendations as they deem
necessary. The Audit Committee met two times during fiscal year ended March
31, 1995.
Messrs. DeBever, Gilbert, Hill and McFarlin currently serve on the
Compensation Committee, the functions of which include reviewing and
recommending to the full Board the remuneration to be paid to the President
and Chief Executive Officer, and reviewing with the President his plans with
respect to the remuneration of other executive officers and certain key
employees of the Company. This committee also reviews and prepares
recommendations to the full Board with respect to proposed changes in the
Company's major fringe benefit plans, such as the 1994 Stock Option Plan, the
ZERO Corporation Retirement Savings Plan (the "Pension Plan"), and life
insurance plans. The Compensation Committee met twice during fiscal year ended
March 31, 1995 and all members attended. The Compensation Committee's report
on executive compensation begins below.
Messrs. Gilbert, Godbold and Hill serve on the Nominating Committee, the
functions of which include reviewing and recommending to the full Board
potential candidates for positions on the Board. The committee will consider
nominees recommended by stockholders if such nominations are submitted in
writing, accompanied by a description of the proposed nominee's
qualifications, an indication of the consent of the proposed nominee, and
relevant biographical information. Recommendations should be addressed to the
Nominating Committee in care of the Corporate Secretary of the Company for
receipt not less than thirty, nor more than sixty days, prior to the annual
meeting. If less than forty days' notice or prior public disclosure of the
meeting date is given to stockholders, then recommendations must be received
not later than the close of business on the tenth day following the notice or
public disclosure of the meeting date. The Nominating Committee met once
during fiscal year ended March 31, 1995 and all members attended.
Messrs. Gilbert, Godbold and Hill serve on the Executive Committee, the
functions of which include acting for the Board of Directors when the action
of the full Board is not required. This committee held no meetings during
fiscal year ended March 31, 1995.
Messrs. Cusumano, DeBever and McFarlin serve on the Stock Option Committee,
the functions of which include making all determinations necessary for the
administration of the 1994 Stock Option Plan. This committee met three times
during the year ended March 31, 1995.
Nonemployee directors receive a fee of $3,000 per quarter plus $1,000 for
each meeting attended. No additional fees are paid for attendance at committee
meetings. Under the 1994 Stock Option Plan, approved by stockholders of the
Company, at the organizational meeting of the Board of Directors immediately
following each annual meeting of stockholders, each nonemployee director is
automatically granted a non-qualified option to purchase 2,000 shares of
Common Stock. Options are granted at prices not less than the fair market
value of the Common Stock on the date of grant.
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee and the Performance Graph
shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the Commission) or subject to Regulations
14A or 14C of the Commission or the liabilities of Section 18 of the
Securities Exchange Act of 1934 (the Exchange Act). Such Report and
Performance Graph shall not be deemed incorporated by
5
<PAGE>
reference into any filing under the Securities Act of 1933 or the Exchange
Act, notwithstanding any general incorporation by reference of this Proxy
Statement in any other document.
GENERAL
The Company's compensation policies applicable to its executive officers
consist of three major components: base salary, annual bonus and stock
options. The executive compensation policies of the Compensation Committee
(the Committee) are designed to provide competitive levels of compensation
that integrate pay with the Company's annual and long-term performance goals
which reward above-average corporate performance, recognize individual
initiative and achievement, and assist the Company in attracting and retaining
highly-qualified and experienced executives.
The compensation policies of the Company were re-examined during 1994 when
the Committee retained the services of Hewitt Associates, an international
benefits and compensation consulting firm (Hewitt). In developing its
recommendations to the Committee, Hewitt examined, among other things, the
competitive position of the Company on each component of compensation in
comparison to the compensation practices of other companies of similar size
and in similar industries. Hewitt also reviewed the compensation plans in
which each of the officers named in the "Summary Compensation Table"
participate. Changes resulting from the study are described below.
The base salaries of the executive officers have been established at levels
considered appropriate in light of the responsibilities and duties of each
position. Salaries are reviewed annually and adjusted as warranted by the
performance of each individual, increases in the cost of living and other
factors. The President and Chief Executive Officer reviews with the Committee
his plans with respect to the base salaries of the executive officers and
other key employees of the Company. He also reviews with the Committee major
fringe benefit plans, including the 1994 Stock Option Plan, the Pension Plan,
and life insurance plans.
The Committee establishes a base salary for the President and Chief
Executive Officer, which is subject to approval of the full Board of
Directors. The Committee does not operate with a precise formula, but takes
into account various qualitative and quantitative factors. The Company's
strategic goals and its success in meeting strategic goals, its cash flow, its
earnings, the general cost of living, and the economy in which the Company
operates are quantitative factors considered. The Committee, however, also
recognizes achievements that may be difficult to quantify. In reviewing the
salary of the President and Chief Executive Officer for fiscal year 1995, as
done in 1994, the Committee considered his individual accomplishments,
including his efforts in obtaining viable acquisition candidates, effective
cost controls, working capital management and maintaining a high quality
workforce. For fiscal year 1995, in accordance with the compensation
philosophy, the Committee increased the salary of the President and Chief
Executive Officer from $300,000 to $325,000, an increase of 8.3%.
The Company's management bonus plan was also revised in 1994 based on the
Hewitt study mentioned above. Under the bonus plan, in addition to base
compensation, the Committee has the authority to assign a target bonus to the
President and Chief Executive Officer. Additionally, the President and Chief
Executive Officer will review with the Committee the target bonuses to be
assigned to officers and other key executives of the Company. The bonus plan
is designed to award bonuses based upon three factors: actual net income
versus plan net income for the fiscal year, the increase in value to the
Company's stockholders in the form of dividends and stock price appreciation,
and the percentage increase in tangible stockholders' equity during the fiscal
year. Bonuses awarded to the President and Chief Executive Officer, and to the
named executive officers of the Company, are shown in the "Summary
Compensation Table" on page 8.
6
<PAGE>
The Committee strongly endorses the philosophy of linking executive total
compensation to Company performance and aligning the interests of management
with those of the stockholders, and believes the result is an enhancement of
stockholder value. Thus, the Committee recommends to the Stock Option
Committee awards of options covering shares of Common Stock of the Company, as
well as stock appreciation rights for certain options not deemed to be
"incentive stock options" within the meaning of Section 422A of the Internal
Revenue Code of 1986.
Information with respect to the award of stock options to the President and
Chief Executive Officer, and to the named executive officers of the Company,
as well as the description of the 1994 Stock Option Plan, is shown on page 9
in the table entitled "Option/SAR Grants in Last Fiscal Year".
In determining the number of shares subject to options granted to the
President and Chief Executive Officer, officers and other key employees of the
Company, the Committee, along with the Stock Option Committee, evaluates their
respective overall compensation packages. The Committee has also established
general target guidelines for awards of stock options and stock appreciation
rights for other levels of management based upon salary range, individual
performance and potential to improve stockholder value, as recommended by the
President and Chief Executive Officer.
Compensation Committee of the Board
of Directors setting compensation
for fiscal year 1995
John B. Gilbert, Chairman
Bruce J. DeBever
Howard W. Hill
Whitney A. McFarlin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee setting compensation for fiscal
year 1995 consisted of Messrs. John B. Gilbert, Bruce J. DeBever, Howard W.
Hill and Whitney A. McFarlin. Mr. Gilbert is Chairman Emeritus of the Board of
Directors and Chairman of the Compensation Committee, and was formerly
President and Chief Executive Officer of the Company, and Chairman of the
Board. Mr. Hill is Chairman of the Board of Directors, and was formerly
President and Chief Executive Officer of the Company, and Vice Chairman of the
Board.
7
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION TABLES
The following table shows the compensation paid by the Company to its Chief
Executive Officer and the other highest-paid executive officers during the
fiscal years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ------------
STOCK
NAME AND PRINCIPAL OPTIONS (IN ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(1) SHARES) COMPENSATION ($)(2)
------------------ ---- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Wilford D. Godbold, Jr. ........ 1995 $325,000 $289,413 26,000 $30,321
President, Chief 1994 $300,000 $142,500 22,000 $27,824
Executive Officer 1993 $283,250 $ 78,563 25,000 $27,478
and Director
James F. Hermanson.............. 1995 $185,500 $132,150 12,500 $25,556
Vice President 1994 $175,200 $ 66,500 11,000 $24,602
1993 $167,890 $ 39,281 12,500 $21,454
Bernard B. Heiler(3)............ 1995 $185,500 $132,150 12,500 $13,059
Vice President--Marketing 1994 $175,000 $ 66,500 11,000 $ 2,415
and Sales
George A. Daniels............... 1995 $180,500 $128,588 12,500 $16,043
Vice President and Chief 1994 $169,925 $ 64,600 11,000 $17,323
Financial Officer 1993 $160,680 $ 36,663 12,500 $17,397
Anita J. Cutchall(3)............ 1995 $ 90,000 $ 40,073 3,200 $ 9,747
Director of Legal Affairs 1994 $ 85,017 $ 23,940 2,600 $ 1,929
and Corporate Secretary
</TABLE>
- --------
(1) Includes bonus payments earned and accrued in the fiscal year listed but
paid during the following fiscal year.
(2) Represents Company contributions of $10,118, $9,746, $9,761, $9,775 and
$7,719 under the ZERO Corporation Retirement Savings Plan (a profit
sharing plan) for the accounts of Messrs. Godbold, Hermanson, Heiler, and
Daniels, and Ms. Cutchall, respectively; $14,539, $12,393, $1,648, $6,268
and $1,230 under the Company's life insurance plans for Messrs. Godbold,
Hermanson, Heiler, and Daniels, and Ms. Cutchall, respectively; and an
additional $5,664, $3,417, $1,650, and $798 under the Employee Stock
Purchase Plan for Messrs. Godbold, Hermanson and Heiler, and Ms. Cutchall,
respectively.
(3) Fiscal years prior to fiscal year 1994 are not required to be disclosed.
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS GRANT
UNDERLYING GRANTED TO EXERCISE OR DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Wilford D. Godbold, Jr. ... 26,000 9.5% $12.875 10/16/2001 $113,100
James F. Hermanson......... 12,500 4.6% $12.875 10/16/2001 $ 54,375
Bernard B. Heiler.......... 12,500 4.6% $12.875 10/16/2001 $ 54,375
George A. Daniels.......... 12,500 4.6% $12.875 10/16/2001 $ 54,375
Anita J. Cutchall.......... 3,200 1.2% $12.875 10/16/2001 $ 13,920
</TABLE>
- --------
(1) The option price of each option granted under the 1994 Stock Option Plan
is not less than the fair market value of the Common Stock on the date of
grant. Options are generally granted for terms of seven years and
generally exercisable in annual installments of one-third of the total
grant commencing one year from the date of grant, on a cumulative basis.
Options are subject to earlier termination in certain events related to
death, retirement or other termination of employment. Options granted
generally are intended to meet the definition of an "incentive stock
option" as that term is defined in Section 422A of the Internal Revenue
Code of 1986 or are non-qualified options. Such options may be granted
with provisions that they may be exercised for a period of up to ten years
from the date of grant, may provide for stock appreciation rights and may
give the option holder the right to deliver shares of the Company's Common
Stock already owned as consideration for the option price. All of the
above options were granted on October 17, 1994.
(2) The Present Value is based on the modified Black-Scholes option pricing
model adapted for use in valuing executive stock options. The actual
value, if any, an executive may realize will depend on the excess of the
stock price over the exercise price on the date the option is exercised,
so that there is no assurance the value realized by an executive will be
at or near the value estimated by the Black-Scholes model. Assumptions
under the Black-Scholes model are: expected volatility of 17.7%, risk-free
rate of return of 6.5%, dividend yield of 3%, and time of exercise at
seven years. No adjustments have been made for non-transferability or risk
of forfeiture.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES NUMBER OF UNEXERCISED IN-THE-MONEY
UNDERLYING OPTIONS/SARS AT OPTIONS/SARs AT
OPTIONS/SARS VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(2)
EXERCISED REALIZED ------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Wilford D. Godbold, Jr.. 0 0 58,710/49,001 $158,065/$61,705
James F. Hermanson...... 0 0 28,500/27,724 $ 74,610/$30,223
Bernard B. Heiler....... 0 0 17,333/25,167 $ 33,792/$33,516
George A. Daniels....... 0 0 22,997/27,724 $ 53,996/$30,223
Anita J. Cutchall....... 0 0 3,000/ 6,000 $ 6,345/$ 7,683
</TABLE>
- --------
(1) Represents the difference between the market value on the date of exercise
of the option and the exercise price.
(2) Represents the difference between $14.13, which was the closing market
price of the Company's Common Stock on The New York Stock Exchange
Composite Index on March 31, 1995, minus the exercise price of the option.
10
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change,
assuming quarterly reinvestment of dividends, of the Common Stock of the
Company against the cumulative total return of the S&P Composite-500 Stock
Index, the S&P Smallcap 600, and the S&P Manufacturing Industries Index for
the five year period commencing March 31, 1990. The Company was chosen for
inclusion in the S&P Smallcap 600 in October 1994, a new index designed to
track the stock performance of 600 companies with capitalization ranges of $27
million to $886 million. The stock price performance depicted is not
necessarily indicative of future price performance.
The information shall not be deemed "filed" with the Securities and Exchange
Commission and shall not be deemed to be incorporated into any filing of the
Company under the Securities Act of 1933 or the Exchange Act in the absence of
specific reference to such captions and information.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG ZERO CORPORATION, S&P 500 INDEX,
S&P SMALLCAP 600 AND S&P MANUFACTURING
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period ZERO S&P S&P S&P
(Fiscal Year Covered) CORPORATION 500 INDEX SMALLCAP 600 MANUFACTURING
- --------------------- ----------- --------- ------------ -------------
<S> <C> <C> <C> <C>
Measurement Pt- 1990 $100 $100 $100 $100
FYE 1991 $100 $108 $101 $114
FYE 1992 $101 $126 $118 $127
FYE 1993 $128 $148 $146 $128
FYE 1994 $114 $149 $150 $161
FYE 1995 $123 $169 $172 $175
</TABLE>
* $100 INVESTED ON 03/31/90 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCHING 31.
11
<PAGE>
PROPOSAL 2
STOCKHOLDER PROPOSAL
ZERO has been advised by a stockholder owning 850 shares of Common Stock of
the Company of his intention to introduce at the Annual Meeting the proposal
and supporting statement set forth below. The Board of Directors disclaims any
responsibility for the content of the proposal and for the statement made in
support thereof, which are presented as received from the stockholder. The
name and address of the proponent will be furnished to any person, orally or
in writing as requested, promptly upon receipt of any oral or written request
for the information.
STOCKHOLDER PROPOSAL REGARDING DECLASSIFYING THE BOARD OF DIRECTORS
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected annually,
such declassification to be effected in a manner that does not affect the
unexpired terms of directors previously elected."
Supporting Statement:
"The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable for
its implementation of those policies. I believe that the classification of the
Board of Directors, which results in only a portion of the Board being elected
annually, is not in the best interests of the Company and its stockholders."
"The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. I believe that the Company's classified Board of
Directors maintains the incumbency of the current Board and therefore of
current management, which in turn limits management's accountability to
stockholders."
"The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity
to register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders."
"As a founding member of the Investors Rights Association of America I
believe that concerns expressed by companies with classified boards that the
annual election of all directors could leave companies without experienced
directors in the event that all incumbents are voted out by stockholders, are
unfounded. In my view, in the unlikely event that stockholders vote to replace
all directors, this decision would express stockholder dissatisfaction with
the incumbent directors and reflect the need for change. I urge your support,
vote for this resolution."
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE FOREGOING STOCKHOLDER
PROPOSAL
Your Board of Directors recommends that you vote AGAINST the above proposal.
Upon appoval of stockholders representing more than a majority of the Common
Stock outstanding at the 1988 Annual Meeting of Stockholders, ZERO was
reorganized and became a Delaware corporation with a classified Board of
Directors. The stockholders of the Company approved the reorganization after
consideration of the recommendations and
12
<PAGE>
reasons presented by the Board of Directors, including its belief that a
classified board provides the Board a greater likelihood of continuity and
experience.
Greater continuity on ZERO's board of directors assures that the majority of
directors at any given time will have experience with its operations and
business affairs. This permits more effective long-term strategic planning. A
classified board also helps ZERO to attract and retain well-qualified
individuals who are able to commit the time and resources to understand ZERO
and its operations. Continuity and quality of leadership resulting from the
classified board create long-term value for the stockholders.
A classified board also reduces the possibility of a sudden change in
majority control of the Board of Directors. In the event of a hostile takeover
attempt, arm's length discussions with management and the Board would be more
likely due to the fact that approximately one-third of the directors have
terms of more than one year. The Board along with management would then be in
a position to negotiate the most favorable transaction for the stockholders of
the Company.
The Board of Directors continues to believe that a classified board will
benefit the Company and its stockholders by permitting all stockholders to
rely on the consistency and continuity of corporate policy. At the same time,
annual elections, in which a third of the Board of Directors is elected each
year, assures stockholders an opportunity to renew and reinvigorate corporate
decision-making while maintaining the basic integrity of corporate policy year
to year for the benefit of all who rely on it.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE
ABOVE PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
OTHER MATTERS
A representative of Deloitte & Touche, the firm of independent accountants
who audited the financial statements of the Company for the fiscal year ended
March 31, 1995, will attend the Annual Meeting. The representative will be
provided the opportunity to make a statement if the representative desires to
do so and will be available to respond to appropriate questions.
The management of the Company does not know of any matter to be acted upon
at the Annual Meeting other than the matters described above. If any other
matter properly comes before the Annual Meeting, however, the holders of the
proxies will vote thereon in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 1996 Annual Meeting of
Stockholders must be received at the executive offices of ZERO Corporation at
444 South Flower Street, Suite 2100, Los Angeles, California 90071-2922,
addressed to the attention of the Corporate Secretary, by February 16, 1996,
for inclusion in the proxy statement and form of proxy relating to that
meeting.
ANNUAL REPORT
The Company's 1995 Annual Report, which includes financial statements, is
being mailed to stockholders concurrently herewith.
13
<PAGE>
ANNUAL REPORT ON FORM 10-K
Upon written request the Company will provide to any stockholder solicited
hereby (without charge) a copy of its 1995 Annual Report on Form 10-K filed
with the Securities and Exchange Commission. Requests should be directed to
Anita J. Cutchall, Corporate Secretary, ZERO Corporation, 444 South Flower
Street, Suite 2100, Los Angeles, California 90071-2922.
Howard W. Hill, Chairman of the Board
Anita J. Cutchall, Corporate Secretary
June 28, 1995
14
<PAGE>
PROXY (SOLICITED BY THE BOARD OF DIRECTORS OF ZERO CORPORATION)
ZERO CORPORATION ANNUAL MEETING OF STOCKHOLDERS, WEDNESDAY, JULY 26, 1995
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the accompanying Proxy Statement for the 1995 Annual
Meeting and, revoking all prior proxies, hereby appoints Wilford D. Godbold,
Jr. and Howard W. Hill, or either one of them, with full power of substitution,
as Proxies to vote all the shares of Common Stock owned or held by the
undersigned at the Annual Meeting of Stockholders to be held at The Biltmore
Los Angeles, Tiffany Room, 506 South Grand Avenue, Los Angeles, California, on
Wednesday, July 26, 1995 at 2:00 P.M. local time, or any adjournment or
postponement thereof, upon the matters set forth below and upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BELOW, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR ITEM 1, AGAINST ITEM 2, AND AT THE
DISCRETION OF THE PROXIES IN MATTERS DESCRIBED IN ITEM 3 BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1
1. Election of Directors
[_] FOR the nominees listed below [_] WITHHOLD AUTHORITY
(except as marked to the contrary)
BRUCE J. DEBEVER BERNARD B. HEILER WHITNEY A. MCFARLIN
(INSTRUCTION: To withhold authority to vote for the nominee write the
nominee's name in the space provided below.)
---------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 2
2. Declassification of the Board of Director [_] FOR [_] AGAINST [_] ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE
(Continued on the reverse side)
DATED: ______________, 1995
---------------------------
(Signature)
---------------------------
(Signature)
This proxy should be dated,
signed by the stockholder(s)
as the name(s) appears hereon,
and returned promptly in the
enclosed envelope. Persons
signing in a fiduciary
capacity should so indicate.
