SCHEDULE 14A
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
KYSOR INDUSTRIAL CORPORATION
___________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
KYSOR INDUSTRIAL CORPORATION
___________________________________________________________________________
(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 transactions 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:
KYSOR INDUSTRIAL CORPORATION
CENTRAL STAFF OFFICE
One Madison Avenue
Cadillac, Michigan 49601-9785
TO THE SHAREHOLDERS OF
KYSOR INDUSTRIAL CORPORATION
You are cordially invited to attend the Annual Meeting of Shareholders
of Kysor Industrial Corporation. The meeting will be held at the Ritz-
Carlton Hotel-Buckhead, 3434 Peachtree Road, N.E., in Atlanta, Georgia, on
Friday, April 29, 1994, at 11 a.m., local time.
On the following pages you will find the Notice of Annual Meeting and
the Proxy Statement. At the Annual Meeting, in addition to voting, you
will hear our report on Company activities and the outlook for 1994.
It is important that your shares be represented at the meeting,
regardless of the size of your holdings. We therefore urge you to SIGN,
DATE AND RETURN AS SOON AS POSSIBLE the enclosed proxy card in the
postage-paid envelope furnished for that purpose. Please do this whether
or not you plan to attend the meeting. Sending a proxy will not affect
your right to vote in person in the event you attend the meeting.
Respectfully,
George R. Kempton
Chairman of the Board and
Chief Executive Officer
_________________________
YOUR VOTE IS IMPORTANT
Please Sign, Date and Return
Promptly the Enclosed Proxy
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 29, 1994
The 1994 Annual Meeting of Shareholders of Kysor Industrial
Corporation will be held at the Ritz-Carlton Hotel-Buckhead, 3434 Peachtree
Road, N.E., Atlanta, Georgia, at 11 a.m., local time, on April 29, 1994,
for the following purposes:
1. Election of three directors to the class whose three-year term
will expire in 1997.
2. Ratification of the appointment of Coopers & Lybrand, certified
public accountants, as independent auditors for the Company for
the year ending December 31, 1994.
3. Transaction of such other business as may properly come before
the meeting or any adjournment thereof.
The record date for the meeting has been fixed by the Board of
Directors as the close of business on March 1, 1994. All shareholders of
record on that date are entitled to vote at the meeting.
By order of the Board of Directors.
David W. Crooks
Cadillac, Michigan Vice President-
March 25, 1994 General Counsel and Secretary
IMPORTANT
All shareholders are cordially invited to attend the meeting. Whether
or not you plan to attend in person, you are urged to date and sign the
enclosed proxy and return it promptly in the envelope provided. This will
assure your representation and a quorum for the transaction of business at
the meeting. If you do attend the meeting in person, the proxy will not be
used if so requested by you.
If you shares are registered in the name of a broker or bank, only
your broker or bank can submit a proxy card on your behalf. Please contact
the person responsible for your account and direct him or her to submit a
proxy card on your behalf. If you have any questions about the procedure
to vote your shares, please call our proxy solicitor:
D.F. King & Co.
77 Water Street
New York, New York 10005
Telephone No.: (212) 269-5550
(please call collect)
___________________________________________________________________________
KYSOR INDUSTRIAL CORPORATION
One Madison Avenue
Cadillac, Michigan 49601-9785
PROXY STATEMENT
This statement is furnished as part of the solicitation of proxies by
the Board of Directors of Kysor Industrial Corporation ("Kysor" or the
"Company"), One Madison Avenue, Cadillac, Michigan 49601-9785, to be voted
at the Annual Meeting of Shareholders to be held Friday, April 29, 1994, at
11 a.m., local time, at the Ritz-Carlton Hotel-Buckhead in Atlanta,
Georgia, and at any adjournment of that meeting, for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders. Proxies in
the accompanying form, if properly executed, duly returned to the Company
and not revoked, will be voted at the Annual Meeting. Where a shareholder
specifies a choice, the shares represented by the proxy will be voted as
specified. If no choice is specified, the shares represented by the proxy
will be voted for the election of all nominees for director named in this
Proxy Statement, for ratification of the appointment of Coopers & Lybrand
as independent auditors, and in accordance with the discretion of the
persons named as proxies on any other matters that may properly come before
the meeting.
It is anticipated that this Proxy Statement and the enclosed proxy
will be first sent to shareholders on March 25, 1994. Any shareholder
giving a proxy in the enclosed form has the power to revoke it at any time
before it is exercised. Such revocation must be made in writing and
directed to the Secretary of the Company at the address set forth above. A
shareholder may also attend the Annual Meeting of Shareholders and vote in
person by ballot, in which event any prior proxy given by the shareholder
will be automatically revoked.
ELECTION OF DIRECTORS
The Board of Directors has nominated the following three persons for
election to the Board of Directors to the class whose term will expire in
1997.
George R. Kempton Philip LeBoutillier, Jr. Raymond A. Weigel
This Proxy Statement contains more information about the director
nominees below.
The directors to be elected at the Annual Meeting of Shareholders are
to serve until the Annual Meeting of Shareholders in 1997, or until their
successors are elected and qualified. The nominees are willing to be
elected and to serve. In the event that any nominee is unable to serve or
is otherwise unavailable for election, which is not contemplated, the
-1-
incumbent Board of Directors may or may not select a substitute nominee.
If a substitute nominee is selected, all proxies will be voted for the
person so selected. If a substitute nominee is not so selected, all
proxies will be voted for the election of the remaining nominees. Proxies
will not be voted for a greater number of persons than the number of
nominees named.
A plurality of votes of the holders of shares of the Company's voting
stock (common and preferred) present in person or by proxy at the Annual
Meeting and voting on the election of directors is required to elect
directors. For the purpose of counting votes on the election of directors,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted on the election, and the number of votes of which a
plurality is required will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
-2-
VOTING SECURITIES
At the close of business on March 1, 1994, the record date for
determining the shareholders entitled to vote at the Annual Meeting, Kysor
had issued and outstanding 5,495,809 shares of its Common Stock, $1 par
value (the "Common Stock"), and 810,163 shares of Series A Preferred Stock,
$24.375 stated value per share (the "Preferred Stock"). Each share of
Common Stock and Preferred Stock issued and outstanding on the record date
entitles its holder to one vote on each matter to be voted upon at the
meeting.
The following table shows the beneficial ownership of shares of the
Company's Common Stock and Preferred Stock by each shareholder known to be
the beneficial owner of more than 5% of the outstanding Common Stock or
Preferred Stock of the Company as of March 1, 1994:
-3-
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE NAME AND ADDRESS OF BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
<S> <C> <C> <C>
Common Stock State of Wisconsin 350,000 6.4%
Investment Board
P.O. Box 7842
Madison, Wisconsin
53707 (1)
Common Stock Kysor Industrial 340,095 6.2%
Corporation Employee
Stock Ownership Plan
("ESOP"), Old Kent
Bank and Trust Company,
Trustee
One Vandenberg Center
Grand Rapids, Michigan
49503 (2)
Common Stock Neuberger & Berman 305,100 5.6%
605 Third Avenue
New York, New York
10152 (3)
Common Stock George R. Kempton 281,304 5.0%
Kysor Industrial
Corporation
One Madison Avenue
Cadillac, Michigan
49601(4)
Series A Kysor Industrial 810,163 100.0%
Preferred Corporation
Stock Employee Stock Ownership
Plan ("ESOP"), Old Kent
Bank and Trust Company,
Trustee
One Vandenberg Center
Grand Rapids, Michigan
49503 (2)
<FN>
(1) Based on Schedule 13G dated February 8, 1994.
(2) Peter W. Gravelle, Richard G. De Boer and Kent J. Rosenau, all
officers or employees of the Company, are members of the
Administrative Committee of the ESOP trust. The Administrative
Committee does not have any investment or voting power with respect to
these shares. The shares of Preferred Stock may be converted into
-4-
shares of Common Stock on a one-for-one basis by the Trustee. If such
conversion were made, the ESOP would own 1,150,258 shares of Common
Stock, representing approximately 20.9% of the outstanding shares as
of March 1, 1994.
(3) Based on Schedule 13G dated January 31, 1994.
(4) Based on information provided by Mr. Kempton.
</TABLE>
The following table shows certain information concerning the
beneficial ownership of the Company's Common Stock as of March 1, 1994, by
each director, each nominee for director, each named executive officer and
all directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND SHARES SUBJECT
NATURE OF PERCENT TO OPTIONS
NAME OF BENEFICIAL OF EXERCISABLE
BENEFICIAL OWNER OWNERSHIP(1) CLASS WITHIN 60 DAYS(4)
<S> <C> <C> <C>
William E. Callahan 33,000 .6% 19,000
Timothy J. Campbell 76,717(2) 1.4 50,150
Thomas P.
Forrestal, Jr. 59,151(2) 1.1 40,400
Paul K. Gaston 35,000 .6 15,500
Grant C. Gentry 38,500 .7 38,500
Peter W. Gravelle 49,236(2)(3) .9 38,120
George R. Kempton 281,304(2)(3) 5.0 93,800
Philip LeBoutillier, Jr. 50,628(3) .9 15,500
Robert W. Navarre 500 -- 500
Timothy D. Peterson 63,682 1.2 43,880
Frederick W. Schwier 36,500(3) .7 23,000
John D. Selby 47,278(3) .9 14,000
Raymond A. Weigel 48,000 .9 10,000
All of the above and other
executive officers as
a group (15 persons) 899,006(2) 15.1 450,230
<FN>
(1) The number of shares stated in this column is based on information
furnished by the persons listed and includes shares personally owned
of record by the person and shares which, under applicable
regulations, are deemed to be otherwise beneficially owned by the
person. Under these regulations, a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares
voting power and/or investment power with respect to the security.
Voting power includes the power to vote or to direct the power to
vote. Investment power includes the power to dispose or to direct the
disposition of the security. A person is also considered the
beneficial owner of a security if the person has a right to acquire
beneficial ownership of the security within 60 days. The number of
-5-
shares stated therefore includes shares which may be acquired through
the exercise of stock options within 60 days. Except as otherwise
noted in the footnotes to the table, single shareholders named have
sole voting and investment power with respect to all shares listed.
Except as otherwise noted, joint shareholders, as identified in these
footnotes, share voting and investment power with respect to all
shares listed.
(2) The figures shown for these directors and officers include an
aggregate of 17,777 shares of Common Stock held by the Employee Stock
Ownership Plan ("ESOP") and allocated to the accounts of the named
individuals, as well as 456 shares of Common Stock over which,
although not allocated to their accounts, the named individuals have
voting control pursuant to the terms of the ESOP. For purposes of
determining the number of ESOP shares over which the named individuals
exercise voting control, it is assumed that all ESOP participants will
direct the vote of shares allocated to their respective accounts.
Unallocated shares and allocated shares for which no vote direction is
given will be voted in accordance with the vote direction actually
made by ESOP participants, on a per capita basis, with each voting
participant being able to direct the vote of an equal number of
unallocated shares and allocated shares for which no vote direction is
received.
</TABLE>
In addition to the Common Stock allocated to their accounts in the
ESOP, each of the named individuals has shares of Preferred Stock held
by the ESOP allocated to his account. The named individuals, like all
ESOP participants, also direct the voting of unallocated Preferred
Stock and allocated Preferred Stock for which no vote direction is
received in the same manner described above with respect to the Common
Stock. The following table describes the beneficial ownership of
shares of Preferred Stock by the named individuals and all directors
and executive officers as a group. No director who is not also an
executive officer of the Company has an interest in the ESOP. The
table assumes that all ESOP participants direct the vote of shares of
Preferred Stock allocated to their respective ESOP accounts:
-6-
<TABLE>
<CAPTION>
Additional
Preferred Percent
Percent Stock Over of Class
Preferred of Class Which Vot- Repre-
Stock Al- Repre- ing Con- sented
located sented trol May by Col-
to ESOP by Be Exer- umns 1
Account Column 1 cised and 3
<S> <C> <C> <C> <C>
Timothy J. Campbell 1,137 .1% 701 .2%
Thomas P. Forrestal, Jr. 1,315 .2 701 .3
Peter W. Gravelle 842 .1 701 .2
George R. Kempton 1,526 .2 701 .3
Timothy D. Peterson 946 .1 701 .2
All directors and
executive officers
as a group
(15 persons) 6,587 .8 4,206 1.3
<FN>
Each share of Preferred Stock entitles its holder to one vote on
matters submitted for shareholder action at the meeting, as does each
share of Common Stock. The named individuals have sole voting power,
but no dispositive power (other than the power to direct the tender of
their allocated shares in the event of a tender offer), over the
shares of Common Stock and Preferred Stock held in the ESOP and
allocated to their respective ESOP accounts.
(3) The number of shares stated includes shares owned solely by the
indicated person's spouse, but over which the indicated person might
share voting and investment power by reason of the influence of the
relationship with the spouse. Included are Felia LeBoutillier (10,600
shares); Priscilla Schwier (2,000 shares); and Marian H. Selby (400
shares). All shares reflected as beneficially owned by George R.
Kempton are held jointly with his wife, Joyce H. Kempton. Included
among the shares reflected as beneficially owned by Peter W. Gravelle
are 300 shares held by Mr. Gravelle as custodian for a minor child.
(4) The number of shares stated includes shares subject to options which
may, under certain circumstances, become immediately exercisable as of
the date of this Proxy Statement.
</TABLE>
-7-
DIRECTORS AND EXECUTIVE OFFICERS
The following tables show certain information with respect to each
person nominated for election as a director, each director whose term of
office will continue and each executive officer of Kysor:
<TABLE>
<CAPTION>
NOMINEES FOR 3-YEAR
TERMS AS DIRECTOR PRINCIPAL
EXPIRING 1997 OCCUPATION (1) DIRECTORSHIPS (2)
<S> <C> <C>
George R. Kempton Chairman of the Board Director of Kysor since
Age 60 (3) and Chief Executive 1978; also a
Officer, Kysor director of Simpson
Industries,
Inc., Guardsman
Products, Inc. and JLG
Industries, Inc.
Philip LeBoutillier, Retired. Former Chair- Director of Kysor since
Jr. man of the Board, First 1963
Age 78 Ohio Bancshares, Inc.
(bank holding company)
Raymond A. Weigel Retired. Chairman Director of Kysor since
Age 76 Emeritus of the Board, 1948
Kysor
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS WITH
3-YEAR TERMS
EXPIRING 1995 PRINCIPAL OCCUPATION(1) DIRECTORSHIPS(2)
<S> <C> <C>
William E. Callahan Chairman of the Board, Director of Kysor since
Age 76 Kona-Cal, Inc. 1980; also a
(trucking industry director of Telecom,
publications) Inc.
Timothy J. Campbell Group Vice President Director of Kysor since
Age 51 (3) (Transportation 1988
Products), Kysor
Frederick W. Schwier Chairman of the Board, Director of Kysor since
Age 70 Great Lakes Communica- 1985
tions, Inc. (television
broadcasting)
John D. Selby Retired. Former Chair- Director of Kysor since
Age 72 man of the Board and 1980
Chief Executive Officer
Consumers Power Company
(public utility)
</TABLE>
-8-
<TABLE>
<CAPTION>
DIRECTORS WITH
3-YEAR TERMS
EXPIRING 1996 PRINCIPAL OCCUPATION(1) DIRECTORSHIPS(2)
<S> <C> <C>
Paul K. Gaston Chairman of the Board Director of Kysor since
Age 60 of Guardsman Products, 1984; also a director
Inc.(4) of Guardsman Products,
Inc.
Grant C. Gentry Retired. Former Chair- Director of Kysor since
Age 69 man of the Board and 1986; also Chairman of
Chief Executive the Board and a
Officer, Pantry Pride, director of Bromar,
Inc. (diversified Inc.
retailer)
Peter W. Gravelle Executive Vice- Director of Kysor since
Age 56 (3) President Chief 1991
Operating Officer,
Kysor (5)
Robert W. Navarre Chairman of the Board Director of Kysor since
Age 60 and Chief Executive 1993; also a director
Officer, Simpson of Simpson Industries,
Industries, Inc. Inc. and Webster
(automotive supplier) Industries, Inc.
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE
OFFICERS
WHO ARE NOT PRINCIPAL OCCUPATION SERVED IN SAME
DIRECTORS (3) (1) OFFICE SINCE
<S> <C> <C>
David W. Crooks Vice President- 1991
Age 45 General Counsel
and Secretary (6)
Thomas P. Forrestal, Group Vice President - 1983
Jr. Commercial Products (7)
Age 57
Terry M. Murphy Vice President - 1992
Age 45 Chief Financial Officer
(8)
Timothy D. Peterson Vice President - 1983
Age 56 Marketing and
International
-9-
<FN>
(1) Except as noted, each person listed has been engaged in the same
principal occupation for over five years.
(2) Except as noted, no director is a director of any other company which
has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or is subject to Section 15(d) of that
Act, or any company registered as an investment company under the
Investment Company Act of 1940.
(3) Kysor's executive officers are appointed annually by, and serve at the
pleasure of, the Board of Directors.
(4) Since January 1994, previously Partner of Warner, Norcross & Judd (law
firm).
(5) Since August 1992, previously Vice President, Treasurer and Chief
Financial Officer (1990-1992); General Manager of Electronic
Instruments Division of Eaton Corporation (1988-1990).
(6) Since January 1991, previously Vice President-General Counsel
(1983-1991).
(7) Mr. Forrestal has been a director since 1984 and is not standing for
re-election.
(8) Since December 1992, previously Vice President-Finance, Treasurer and
Chief Financial Officer of North-West Telecommunications, Inc. (1986-
1992).
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors, which is responsible for overall management of
the business and affairs of the Company, held four regular meetings during
1993. All directors attended more than 75% of the total number of meetings
of the Board and committees of which they were members. The Board has four
standing committees: the Executive Committee, the Audit Committee, the
Compensation and Organization Committee, and the Nominating Committee. Mr.
Kempton is an ex officio voting member of each of these standing committees
except the Audit Committee and the Compensation and Organization Committee.
The Board of Directors also has an Acquisition, Divestiture and Merger
Committee.
EXECUTIVE COMMITTEE: The responsibilities of the Executive Committee
include all of the responsibilities of the Board of Directors except those
responsibilities which cannot be delegated by law. The Executive Committee
acts upon matters requiring Board action during periods between Board
meetings. Messrs. LeBoutillier (Chairman), Gaston, Schwier and Weigel are
members of the Executive Committee. The Executive Committee met one time
in 1993.
-10-
AUDIT COMMITTEE: The responsibilities of the Audit Committee are to (1)
recommend the firm to be employed by the Company as its independent
auditors, (2) review and approve the scope of the yearly audit plan and
proposed budget for audit fees, (3) review the results of the annual audit
with the independent auditors, (4) review the auditors' management letter
with the independent auditors and engage in appropriate follow-up with
corporate staff, (5) review with the independent auditors the Company's
internal controls, (6) review activities of the internal auditors and (7)
report to the Board of Directors on activities and findings of the
committee and make recommendations to the Board of Directors on such
findings. Messrs. Selby (Chairman), Callahan, Gaston, Gentry, Navarre and
Schwier are members of the Audit Committee. The Audit Committee met two
times during 1993.
COMPENSATION AND ORGANIZATION COMMITTEE: The responsibilities of the
Compensation and Organization Committee include recommending to the Board
of Directors the salaries of each corporate officer, the retainer and
attendance fee for non-employee directors, making recommendations and
determinations concerning bonus compensation, administering stock option
plans (including those which permit the granting or award of other forms of
equity-based compensation), and reviewing compensation plans as they relate
to key employees. The Compensation and Organization Committee also reviews
the administration and results of operations of Kysor's pension plans,
confers with and receives reports from the actuaries and investment
managers of the plans, makes recommendations related to such plans and
reviews all material proposed plan changes. Messrs. Schwier (Chairman),
Callahan, Gentry, Selby and Weigel are members of the Compensation and
Organization Committee, and such individuals comprised the committee at all
times during 1993. The Compensation and Organization Committee met one
time during 1993.
NOMINATING COMMITTEE: The responsibilities of the Nominating Committee are
to develop and recommend to the Board of Directors criteria for the
selection of candidates for director, to seek out and receive suggestions
concerning possible candidates, to review and evaluate the qualifications
of possible candidates, and to recommend to the Board candidates for
vacancies occurring from time to time and for the slate of directors to be
proposed on behalf of the Board of Directors at the Annual Meeting of
Shareholders. The present members of the Nominating Committee are Messrs.
Callahan (Chairman), Gaston, LeBoutillier, Navarre and Weigel. The
Nominating Committee met one time during 1993. The Nominating Committee
will consider nominees recommended by shareholders. Article IX of the
Company's Restated Articles of Incorporation requires that a shareholder
desiring to nominate a director candidate submit to the Company the
nominee's name, age, business and residence addresses, principal
occupation, the number of shares of the Company's capital stock
beneficially owned by the nominee, and a statement that the nominee is
willing to be nominated. The information must be provided to the Company
not less than 120 days prior to the date of the annual meeting of
shareholders at which the nominee will be considered, or if he or she is to
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be considered at a special meeting of shareholders, not more than seven
days following the notice of the special meeting. The names of any such
nominees and the other information required by the Company's charter should
be forwarded to the Company's Secretary, Kysor Industrial Corporation, One
Madison Avenue, Post Office Box 1000, Cadillac, Michigan 49601-9785, who
will submit the information to the Nominating Committee for its
consideration. Nominations made other than in accordance with Article IX
of the Company's Restated Articles of Incorporation are void.
ACQUISITION, DIVESTITURE AND MERGER COMMITTEE: The responsibilities of the
Acquisition, Divestiture and Merger Committee are to review and evaluate
proposals received from other companies or made by management relating to
the acquisition or divestiture by the Company of subsidiaries, divisions or
other substantial business operations, and to make recommendations to the
Board of Directors relating to such proposals. Messrs. Weigel (Chairman),
Callahan, Campbell, Forrestal and Kempton are members of the Acquisition,
Divestiture and Merger Committee. This Committee met one time during 1993.
EXECUTIVE COMPENSATION
As described in further detail in the following report of the
Company's Compensation and Organization Committee, the Company's
compensation for executive officers consists of four components: a base
salary, a profit sharing incentive bonus, an intermediate-term incentive,
and a long-term incentive historically provided through the Company's stock
option plans. Information on each of these compensation elements follows
the Compensation and Organization Committee report.
COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation and Organization Committee (the "Committee")
administers the executive compensation program formulated by the Company
and provides appropriate recommendations and reports to the full Board for
approval. The Committee consists of only non-employee directors, including
Mr. Raymond A. Weigel, who retired as chairman of Kysor Industrial
Corporation in January 1987 and who also receives contractual deferred
compensation from the Company.
In 1991, the Company engaged The Wyatt Company, a nationally
recognized compensation consulting firm, to review its compensation
policies and make recommendations to the Committee concerning executive
compensation policies and competitive compensation levels. The
recommendations of The Wyatt Company were initially adopted in 1991 and are
the foundation of the Company's current executive compensation program.
Competitive compensation level studies are updated annually by The Wyatt
Company and furnished to the Committee for its consideration.
-12-
The Committee's compensation philosophy is to (1) pay competitively
for similar positions in companies of comparable size in order to attract
and retain qualified executives, (2) align compensation with the
achievement of specific short-term and intermediate-term financial
objectives rewarding above average corporate performance while also
recognizing individual initiative and achievement and (3) encourage the
long-term commitment to the Company through the ownership and retention of
Company stock. The implementation of this philosophy is designed to
enhance shareholder value by aligning the long-term financial interests of
executive officers with those of shareholders.
Compensation consists of both cash and equity, and includes (1) a
base salary, (2) a profit sharing incentive bonus, (3) an intermediate-term
incentive and (4) a long-term incentive through participation in a stock
option plan. Executive officers are also eligible to participate in a
supplemental executive retirement plan and a full range of other benefits
available to all other management employees of the Company.
In 1993, Congress amended the federal Internal Revenue Code to add
Section 162(m). This new section provides that publicly held corporations
may not deduct compensation paid to certain executive officers in excess of
$1 million annually, with certain exemptions. Kysor has examined its
executive compensation policies in light of Section 162(m) and the
regulations that have currently been proposed by the Internal Revenue
Service to implement that section. If the Internal Revenue Service adopts
regulations under Section 162(m) substantially as they have been proposed,
it is not expected that any portion of the Company's deduction for employee
remuneration will be disallowed in 1994 or in future years by reason of
awards granted in 1994. The Committee intends to review the Company's
executive compensation policies at a later date, when final regulations
have been adopted, and to propose appropriate modifications to the
Company's executive compensation plans and program with a view toward
implementing the Company's compensation policy in a manner that avoids or
minimizes any disallowance of tax deductions under Section 162(m).
Base Salary
Base salaries are determined by the Committee through an independent
evaluation of the responsibilities of each executive position and a
comparison of those responsibilities with similar positions throughout the
industry. Once a salary range for a position has been established, the
base pay of each executive is determined individually within that range by
considering the specific experience and performance of the executive. The
Company's current base salaries are generally within the established market
ranges. Annual adjustments are considered and approved by the Committee
when the competitive marketplace and the Company's performance justifies
such adjustments.
-13-
Profit Sharing Bonus Incentive Plan
The Profit Sharing Bonus Incentive Plan is a short-term compensation
plan designed to reward corporate officers and other key employees who are
not officers for achieving specific annual financial objectives. When
these objectives are met, executives will receive from 20% to 60% of their
base salaries each year, depending upon their levels of corporate
responsibility. The amount is determined by a formula that considers the
amount by which the Company's net income after tax ("NIAT"), as a
percentage of sales, exceeds a minimum percentage set by the Committee.
NIAT excludes extraordinary, unusual or infrequently occurring items as may
be determined by the Committee. Partial bonuses were paid for 1992 and
1993 consistent with the formula.
Intermediate-Term Incentive Plan
The Intermediate-Term Incentive Plan is designed to reward officers
and other key employees who grow the business profitably and produce
outstanding financial performance over any two-year "rolling" period (i.e.,
'91/'92, '92/'93). Growth and profitability are measured based upon
primary earnings per share ("PEPS") and return on investment ("ROI") as may
be modified from time to time by the Committee. The plan encourages
executives to focus on sustaining performance at or above minimum levels
and improving profitability and shareholder value. When these objectives
are met, executives participating in the plan may receive incentive awards
from 20% to 40% of their base salaries, depending upon their levels of
corporate responsibility. The amount awarded is determined by using a
formula that establishes performance levels which relate to an average of
PEPS and ROI over a two-year period, excluding extraordinary, unusual or
infrequently occurring items as may be determined by the Committee.
Failure to meet performance objectives during any two-year period will
prevent payment with respect to awards granted for that period under the
plan. No incentive bonuses were paid for the 1991/92 period. Above
minimum performance objectives were achieved in 1992. The 1992/93 two-year
average exceeded the minimum levels and incentive bonuses were paid to the
Company's executives and some key employees under the plan. For purposes
of the Summary Compensation Table following this report and the Long-Term
Incentive Plan table on page 17 of this Proxy Statement, awards under the
Intermediate-Term Incentive Plan are considered "long-term" incentives
pursuant to regulations issued by the Securities and Exchange Commission.
Long-Term Incentive Plan
Stock options have been granted to executives and other key employees
pursuant to various plans since 1953. The purpose of such plans is to
encourage long-term investment in the Company and to provide incentives to
executive officers to operate the Company consistent with shareholder
interests. The Company's current stock option plans are administered by
the Committee.
The Committee believes that, absent unusual circumstances, stock
options should be awarded to executives annually and on a generally
-14-
consistent basis in terms of the number of shares subject to options. For
this purpose, the Committee has established ranges of awards in terms of
numbers of shares that are based on and vary with levels of responsibility
within the Company. The size of awards generally increases as the level of
corporate responsibility increases. Other than for awards to the Chief
Executive Officer, management generally recommends to the Committee the
individuals to whom options should be awarded and the amount, timing and
other terms of awards. The Committee reviews the recommendations of
management, modifies the recommended awards if the Committee deems
modifications appropriate, and approves awards to executives based on
management's recommendations. The Committee alone determines the amount
and other terms of awards to the Chief Executive Officer.
Stock option awards permit executives and other key employees to
purchase shares of Common Stock over a ten-year period at a price equal to
the fair market value at the date of the grant. All options granted since
1990 vest and become exercisable at the rate of 20% for each of the first
four years after the date of grant, and the remaining 20% only vest and
become exercisable if all vested options (i.e. the first 80%) are exercised
in full and all of the shares are held by the executive for a period of one
year.
During January 1994, the Committee granted options to 128 employees
utilizing 183,500 shares under existing plans.
Chief Executive Officer Compensation
The Chief Executive Officer's compensation is based upon the same
principles and philosophy outlined above for all executives as a group with
one exception. The Chief Executive Officer has a higher percentage of his
total cash compensation "at risk." More specifically, Mr. Kempton's cash
compensation includes his base salary and participation in the profit
sharing incentive bonus plan (0 - 60% of base salary) and the intermediate-
term incentive plan (0 - 40% of base salary). The second and third
elements of the cash compensation are "at risk" each year and could
constitute an amount up to 100% of base salary or an amount equal to 0% of
base salary depending upon the financial performance of the Company.
Mr. Kempton's base salary for 1993 was increased 5% above his 1992
level. The base salary paid to Mr. Kempton in 1993 was less than the
estimated market value paid by companies of comparable size as determined
by an independent outside consultant.
In January 1994, the Committee recommended, and the full Board
ratified, a profit sharing incentive bonus of $152,074 (48.12% of 1993 base
salary) and an intermediate-term incentive plan bonus of $98,349 (31.12% of
1993 base salary) for Mr. Kempton based upon the formulas outlined above.
Mr. Kempton received long-term incentive compensation during 1993
through an award of stock options under the Company's Stock Option and
Restricted Stock Plan of 1987. Other corporate officers also received
stock option awards during 1993.
-15-
All recommendations of the Compensation and Organization Committee
concerning compensation attributable to 1993 were approved and adopted by
the Board of Directors without modification.
Respectfully submitted,
Frederick W. Schwier, Chairman
William H. Callahan
Grant C. Gentry
John D. Selby
Raymond A. Weigel
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by Kysor to
the Chief Executive Officer and each of its four highest paid executive
officers other than the Chief Executive Officer during each year in the
three-year period ended in 1993. The following table includes amounts
which the named individuals may have deferred pursuant to the Company's
401(k) Savings Plan. No Company contributions are made to the Savings
Plan.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term Compensation
Annual Compensation Awards Payouts
Securities Un-
Other Annual derlying Options LTIP All Other Com-
Name and Principal Position Year Salary Bonus Compensation (No. of Shares) Payouts pensation(2)
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Kempton 1993 $314,776 $152,074 $ 4,582 14,500 $98,349 $22,072
Chairman of the Board, Chief 1992 299,900 138,692 47,684(1) 20,000 0 26,246
Executive Officer & Director 1991 288,020 0 0 0
Peter W. Gravelle 1993 209,167 92,631 2,532 12,800 57,183 14,523
Executive Vice President-Chief 1992 186,325 84,480 3,557 15,000 0 15,532
Operating Officer & Director 1991 170,000 0 0 0
Thomas P. Forrestal, Jr. 1993 190,463 79,206 1,020 11,000 46,101 14,563
Group Vice President 1992 187,434 72,234 995 15,000 0 17,975
(Commercial Products) & Director 1991 180,010 0 0 0
Timothy J. Campbell 1993 163,937 66,001 345 11,000 38,415 11,752
Group Vice President (Trans- 1992 156,188 60,192 0 15,000 0 14,743
portation Products) & Director 1991 150,000 0 0 0
Timothy D. Peterson 1993 141,307 51,201 462 7,200 26,219 10,695
Vice President - Marketing and 1992 134,625 46,694 179 10,000 0 13,551
International 1991 129,290 0 0 0
-16-
<FN>
(1) Includes $43,424 of deemed interest compensation (assessed interest
rate below market rate) on indebtedness from the Company that was used
to exercise stock options.
(2) "All Other Compensation" includes imputed income from premiums paid
for group life insurance above $50,000 ($10,212 for Mr. Kempton,
$3,408 for Mr. Gravelle, $3,381 for Mr. Forrestal, $2,553 for Mr.
Campbell and $2,342 for Mr. Peterson) and amounts allocated to each
named officer under the ESOP (estimated based on shares allocated for
1993) ($11,860 for Mr. Kempton, $11,115 for Mr. Gravelle, $11,182 for
Mr. Forrestal, $9,199 for Mr. Campbell and $8,353 for Mr. Peterson).
</TABLE>
ADMINISTRATIVE PENSION PLAN
The following table shows the estimated annual benefits payable upon
retirement under Kysor's Administrative Pension Plan for various
compensation and years of service classifications, assuming retirement at
age 65 in 1993.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
Remuneration 15 20 25 30 35
<S> C> <C> <C> <C> <C>
$150,000 $ 36,612 $ 48,804 $ 61,008 $ 73,212 $ 76,968
200,000 49,608 66,144 82,680 99,216 104,220
250,000 62,604 83,472 104,340 125,208 131,460
300,000 75,606 100,808 126,010 151,212 158,712
350,000 88,608 118,144 147,680 177,216 185,966
400,000 101,604 135,472 169,340 203,208 213,204
450,000 114,606 152,808 191,010 229,212 240,468
500,000 127,608 170,144 212,680 255,216 267,720
550,000 140,604 187,472 234,340 281,208 294,960
600,000 153,606 204,808 256,010 307,212 322,212
</TABLE>
The executive officers referred to above are participants in Kysor's
Administrative Pension Plan. The Administrative Pension Plan is a
qualified defined benefit retirement plan. All salaried employees are
eligible to participate after meeting vesting requirements. Amounts
expended for retirement plan benefits cannot be readily determined for
specific individuals since payments to the plan are computed on an
actuarial basis. Payments under the plan are based on the levels of
compensation and years of service of an individual at retirement.
Compensation covered by the plan for this purpose is determined in the same
fashion as for determination of social security taxes. For 1993, this
compensation does not materially vary from the amounts shown under the
heading "Annual Compensation" in the Summary Compensation Table above.
-17-
These retirement benefits may exceed the maximum amounts allowed under
the Employee Retirement Income Security Act ("ERISA"). In such event,
Kysor has an additional non-qualified, unfunded pension plan designed to
pay benefits to participants in the Administrative Pension Plan in an
amount equal to the difference between the amount of retirement benefits to
which each participant would be entitled under the formula set forth in the
Administrative Pension Plan and the maximum amount of retirement benefits
allowed under ERISA. Benefits under the plan are subject to a deduction
for Social Security benefits.
The executive officers referred to above have the following years of
credited service for qualification under Kysor's Administrative Pension
Plan:
<TABLE>
<CAPTION>
<S> <C> <C>
George R. Kempton 15
Thomas P. Forrestal, Jr. 13
Peter W. Gravelle 3
Timothy J. Campbell 9
Timothy D. Peterson 13
</TABLE>
In addition to the above, the Company has an unfunded Supplemental
Executive Retirement Plan (the "Supplemental Plan") which covers all of the
executive officers named in the Summary Compensation Table shown above. To
achieve minimum qualification in the Supplemental Plan, the participant
must have attained the age of 57 and completed at least 10 years of
credited service, and the sum of the participant's age plus years of
credited service must equal at least 72. A person is fully qualified under
the Supplemental Plan following 15 years of credited service and having
attained the age of 62. Once a person achieves such full qualification,
the Supplemental Plan provides an additional annual benefit which, together
with benefits payable under the basic plan, benefits payable by each and
every former employer, and 50% of benefits under Social Security, will
equal 65% of the participant's average annual cash compensation for the
three years in which his or her cash compensation was highest during the
final five complete years of the person's employment at the time of
retirement or termination of employment. The 65% is reduced
proportionately for each month the participant's termination date precedes
his or her 62nd birthday and for each month less than 15 years of credited
service. Benefits are payable commencing on the participant's 57th
birthday or the date of his or her termination of employment, whichever
occurs later. The Supplemental Plan also provides participants with health
care coverage at least equal to that provided under the basic plan.
If the participant has attained the minimum eligibility requirements,
but dies either prior to or following his or her actual retirement date,
the Company will pay benefits under the Supplemental Plan to the person's
spouse for the remainder of the spouse's life, but such benefits are
reduced by one-third. Furthermore, minimum age requirements are waived for
qualification purposes if the participant becomes totally disabled while in
the Company's employ, but benefits payable will be reduced accordingly. If
-18-
the participant has not attained age 57 at the time of disability, then
disability benefits terminate upon the participant's death.
Minimum eligibility requirements are inapplicable in the case of
involuntary termination (actual or constructive) without cause occurring
within five years following a change in control of the Company (as that
term is defined in the section entitled "Management Transactions;
Termination of Employment and Change in Control Arrangements"). In such
event, benefits payable are calculated using compensation for the highest
consecutive 12 calendar months out of the last complete 60 calendar months
of employment, and by using the age the participant would have attained and
the complete calendar months of credited service he or she would have
attained as of the date which is five years after a change in control.
The Company has also approved irrevocable trusts for each participant
to hold any Company contributions required by the Supplemental Plan. The
Company has no obligation to make contributions to such trusts unless there
is a change in control of the Company. If a change in control occurs, the
Company is then required to make contributions sufficient to meet all
future obligations to each participant under the Supplemental Plan as
determined from time to time by an actuary enrolled with the Internal
Revenue Service in accordance with standards provided in the Supplemental
Plan. The Company may, at its option, satisfy any funding obligations by
contributing a life insurance policy on the life of each participant having
a cash surrender value equal to any required contribution amount.
STOCK OPTION PLANS
The following table summarizes options granted under the Company's
1987 Stock Option and Restricted Stock Plan during the last fiscal year:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Percent Potential
of Realizable
Total Value at
Options Exer- Assumed
Number of Granted to cise Annual Rate
Securities Employees or Base of Stock
Underlying in Price Expira- Price Appre-
Options Fiscal (Per tion ciation for
Name Granted Year Share) Date Option Term
5% 10%
<S> <C> <C> <C> <C> <C> <C>
George R. Kempton 14,500 5.1% $18.9375 1/29/03 $172,691 $437,632
Peter W. Gravelle 12,800 4.5 18.9375 1/29/03 152,444 386,323
Thomas P. Forrestal, Jr. 11,000 3.9 18.9375 1/29/03 131,007 331,996
Timothy J. Campbell 11,000 3.9 18.9375 1/29/03 131,007 331,996
Timothy D. Peterson 7,200 2.5 18.9375 1/29/03 85,750 217,307
</TABLE>
-19-
Pursuant to its 1987 Stock Option and Restricted Stock Plan, its 1984
Stock Option Plan, its 1983 Incentive Stock Option Plan and its 1980 Stock
Option and Stock Appreciation Rights Plan (collectively, the "Plans"), the
Company has granted certain of its executive officers, directors and key
employees options to purchase shares of the Company's Common Stock at
prices equal to the fair market value of the shares on the dates the
options were granted. The Plans are administered by the Compensation and
Organization Committee consisting of five disinterested directors.
Although authorized, no stock appreciation rights or restricted stock have
been granted under the Plans. The 1980 Stock Option and Stock Appreciation
Rights Plan terminated on April 25, 1990 and the 1983 Incentive Stock
Option Plan terminated on April 22, 1993, although certain options granted
under those plans remain outstanding.
The various Plans permit option exercise loans or installment purchase
agreements to encourage the exercise of options and thereby advance the
purposes of the Plans. In 1989, the Committee implemented a program to
provide for installment payments upon the exercise of stock options. The
installment purchase program was available for a period of six months
(ending October 30,1989) for the exercise of non-qualified stock options.
Non-qualified options for 157,128 shares were exercised under the
installment purchase program. The purchase obligations relating thereto
are secured by the stock acquired upon exercise of each option and related
dividends, but are otherwise non-recourse obligations. Interest is charged
at a rate of 4.5% per annum, and will be offset in whole or in part by
dividends paid on the Common Stock purchased pursuant to the program.
The Company will receive a tax deduction in connection with the
exercise of the options equal to the difference between the option price
and the market value on the date of exercise. The optionee would recognize
income in a corresponding amount.
The following table summarizes stock options exercised by the listed
individuals during the last fiscal year and the total number of options
held by each listed individual as of the end of the last fiscal year:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End
Shares
Acquired Value
on Exer- Real- Exercis- Unexer- Exercis- Unexer-
Name cise ized able cisable able cisable
<S> <C> <C> <C> <C> <C> <C>
George R. Kempton 0 0 86,900 31,600 $750,252 $165,000
Peter W. Gravelle 0 0 32,560 25,240 249,000 121,312
Thomas P. Forrestal, Jr. 12,000 105,175 35,200 20,800 134,250 92,625
Timothy J. Campbell 0 0 44,950 23,800 438,656 123,750
Timothy D. Peterson 0 0 40,440 15,760 344,625 82,500
</TABLE>
-20-
LONG-TERM INCENTIVE COMPENSATION
The following table summarizes all awards of incentive compensation
under Kysor's Intermediate-Term Incentive Plan to the listed individuals
during the last fiscal year:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Number Performance
of Shares, or Other Estimated Future Payouts Under
Units or Period Until Non-Stock-Price-Based Plans(1)
Other Maturation
Name Rights(1) Or Payout(2) Threshold Target Maximum
<S> <C> <C> <C> <C> <C>
George R. Kempton 40 Two Years $63,206 $95,820 $126,412
Peter W. Gravelle 35 Two Years 36,750 55,713 73,500
Thomas P. Forrestal, Jr. 30 Two Years 29,628 44,916 59,256
Timothy J. Campbell 30 Two Years 24,743 37,510 49,485
Timothy D. Peterson 25 Two Years 17,734 26,885 35,468
<FN>
(1) Under the Intermediate-Term Incentive Plan, the Company's executive
officers may earn incentive compensation based upon two performance
objectives: primary earnings per share ("PEPS") and return on
investment ("ROI"). The executive officers may be granted
"performance units" intended to equal 1% of the applicable officer's
salary if maximum performance objectives are satisfied. The maximum
number of units that may be granted to each of the named executives
are as follows: Mr. Kempton - 40% of base salary; Mr. Gravelle - 35%
of base salary; Messrs. Forrestal and Campbell - 30% of base salary;
and Mr. Peterson - 25% of base salary. The actual value of such
performance units will be based on actual two-year PEPS and ROI
averages, subject to the satisfaction of minimum plan thresholds.
Performance units are to be paid two years after they are granted.
(2) The award is calculated for fiscal years 1993 and 1994. The two-year
average primary earnings per share and return on investment results
will determine the actual value of the performance units to be paid.
</TABLE>
STOCK PERFORMANCE GRAPH
The following graphs compare the yearly percentage in the Company's
cumulative shareholder return on the Company's Common Stock with various
equity indices over a five-year and eleven-year period ending December 31,
1993, respectively, using 1988 and 1982 as "base periods." The S & P 500
is a broad-based equity market index, while the Russell 2000 is comprised
of companies with a market capitalization similar to that of Kysor.
Although the Company's stock performance lagged the indices during the
five-year period, a $100 investment in Kysor's stock in 1982 would be worth
over $803 as of December 31, 1993, compared to $494 for the S & P 500
stocks and $363 for the Russell 2000 stocks.
-21-
[Stock Performance Graph--Five-Year Investment in Kysor Industrial
Corporation versus S & P and Russell 2000.]
<TABLE>
<CAPTION>
Year ended
December 31 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Kysor Industrial 100.00 63.01 38.05 39.34 106.49 103.92
S & P 500 100.00 131.50 127.29 166.12 178.86 196.92
Russell 2000 100.00 116.24 93.57 136.66 161.81 192.40
</TABLE>
[Stock Performance Graph--An Investment in Kysor Industrial Corporation
versus S & P 500 and Russell 2000.]
<TABLE>
<CAPTION>
Year ended
December 31 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kysor Industrial 100.00 311.28 266.47 369.04 429.53 635.29 772.87 486.96 294.08 304.07 823.04 803.12
S & P 500 100.00 122.50 130.22 172.15 203.99 214.60 250.66 329.61 319.06 416.38 448.32 493.60
Russell 2000 100.00 129.10 119.67 156.83 165.74 151.21 188.85 219.53 176.70 258.07 305.59 363.34
</TABLE>
MANAGEMENT TRANSACTIONS; TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into an Employment Agreement with George R.
Kempton, the Chairman of the Board and Chief Executive Officer of the
Company. Under the Employment Agreement, Mr. Kempton will receive a salary
as may be determined from time to time by the Company's Board of Directors,
provided that in no event shall Mr. Kempton's salary for any given calendar
year be less than the salary received by Mr. Kempton during the prior
calendar year. Notwithstanding this provision, Mr. Kempton has elected in
the past to receive a salary less than the salary received by him in the
prior calendar year when he and other corporate executive officers
recommended to the Board of Directors and accepted a salary cut in response
to then current business conditions. In addition, Mr. Kempton is entitled
to bonuses under the Company's present bonus plans (subject to the terms
of such plans), or any subsequent plans, and other fringe benefits in an
amount not less favorable than those presently enjoyed by Mr. Kempton. If
Mr. Kempton's employment is terminated involuntarily by the Company without
cause (termination for cause requiring a two-thirds vote of the Board of
Directors) or by Mr. Kempton for good reason, Mr. Kempton is entitled to
receive severance pay for the remainder of the term of the Employment
Agreement. Severance pay includes payments under the Supplemental
Executive Retirement Plan described above, and those items (other than item
(5)) listed below the description of certain other corporate officer
-22-
Termination Agreements described in this section. Mr. Kempton's Employment
Agreement has a term of five years and is automatically renewed for one
additional year each January 1 unless either the Company or Mr. Kempton
notifies the other in writing that it or he does not choose to extend the
period of employment. No such notification has been provided. The
Employment Agreement was unanimously approved by the Board of Directors.
The Company has also entered into Termination Agreements
("Agreements") with Peter W. Gravelle, Executive Vice President-Chief
Operating Officer; Thomas P. Forrestal, Jr., Group Vice President
(Commercial Products); Timothy J. Campbell, Group Vice President
(Transportation Products); Timothy D. Peterson, Vice President-Marketing
and International; and other corporate officers. The Agreements provide
for separation pay and benefits should a change in control of the Company
occur. The Agreements were unanimously approved by the Board of Directors.
Under the Agreements, the executive's employment must be terminated
involuntarily, without cause, whether by actual or "constructive" demotion,
relocation, loss of benefits or other changes short of actual termination
of employment, and within five years following change in control of the
Company in order for an executive to be entitled to compensation. If an
executive's employment is terminated involuntarily by the Company without
cause or by an executive for good reason within five years after a change
in control of Kysor has occurred, the executive shall be entitled to
receive severance pay for the period remaining between the date of such
termination and 60 months after the change in control of Kysor. A change
in control means a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), provided that, without limitation, such a change in
control shall be deemed to have occurred if (1) any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes
the beneficial owner, directly or indirectly, of securities of Kysor
representing 25% or more of the combined voting power of Kysor's then
outstanding securities, or (2) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof
(unless the election or nomination for election by Kysor's shareholders of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period).
Severance pay includes the following: (1) monthly payments equal to
the executive's monthly salary for the last full month immediately
preceding the executive's termination plus one-twelfth of either 35% (for
certain corporate officers other than those named in the preceding
paragraph), 40% (for Timothy D. Peterson and certain other corporate
officers), 45% (for Thomas P. Forrestal, Jr. and Timothy J. Campbell), or
50% (for Peter W. Gravelle and George R. Kempton (see above)) of the total
salary paid to the executive during the one-year period immediately
preceding his or her termination; (2) continued treatment of the executive
as an "employee" under any stock option, employee benefit or other
long-term compensation arrangement for the term of the compensation period;
-23-
(3) reasonable outplacement services selected by the executive; (4)
continued treatment of the executive as an employee under each employee
welfare benefit plan in which the executive was entitled to participate
immediately prior to the date of his or her termination; (5) payment of a
supplemental retirement benefit offset by any amount payable pursuant to
the Administrative Pension Plan; (6) payment by the Company of all
reasonable legal fees and expenses incurred by the executive as a result of
his or her termination of employment by Kysor; (7) the right to immediately
exercise, in full, all stock options held by the executive; (8) an option
to sell his or her principal residence to Kysor at the greater of its then
fair market value or the executive's aggregate capital investment in the
residence; and (9) an option to purchase his or her automobile from Kysor
at its then wholesale value.
The Board of Directors believes that the agreements described above
assure fair treatment of the covered executives and, by assuring the
executive of some financial security, protect the shareholders by tending
to neutralize any bias of these executives in considering proposals to
acquire the Company.
In 1987, the Company entered into an Indemnity Agreement with each of
the Company's directors and executive officers, and the Company has entered
into a similar agreement with each individual who has become a director or
executive officer of the Company subsequent to that date. The Indemnity
Agreements, which were ratified by the Company's shareholders at the 1987
Annual Meeting of Shareholders, are designed to provide the maximum
indemnification protection allowed under the Michigan Business Corporation
Act. An indemnitee's rights under an Indemnity Agreement are not exclusive
of any other rights that he or she may have under the Michigan Business
Corporation Act, the Company's Restated Articles of Incorporation or
Bylaws, any liability insurance presently maintained or hereafter
purchased, or otherwise. A copy of the form of the Indemnity Agreement was
included as an exhibit to the Company's 1987 Proxy Statement.
DIRECTOR COMPENSATION
Director fees are paid to those directors who are not employees of
Kysor. During 1993, each director was paid $4,000 per quarter plus an
additional $700 for attendance at each regular or special meeting of the
Board of Directors. In addition, Board committee chairmen were paid $800
for each committee meeting attended and Board committee members were paid
$600 for each committee meeting attended. Kysor provides non-employee
directors a death benefit in the amount of $25,000, which is paid to their
designated beneficiary in the event such person dies while a director.
Directors of the Company may also elect to participate in the Company's
health care benefit plan.
The Company has a deferred compensation plan for non-employee
directors. Each member of the Board of Directors who is not an employee of
the Company is eligible to participate in the plan by directing that all or
-24-
any part of the compensation which would be payable for services as a
director be credited to a deferred compensation account. When a
participating director ceases to be a director of the Company, he or she
will be paid an amount in cash equal to the amount of compensation
deferred, plus an additional amount of compensation equivalent to interest
computed on the director's deferred compensation balance at an annual
percentage rate to be determined by the Compensation and Organization
Committee at the time of any election.
Under the Company's retirement plan for directors, annual retirement
benefits are payable to retired directors who have five or more years of
service as a director under specified circumstances in an amount equal to
one-fifteenth of the annual retainer at the time of retirement or the year
preceding a change in control of the Company, times years of service on the
Board of Directors (not to exceed 15 years). One-fourth of the annual
benefit shall be payable each calendar quarter. Payments cease upon the
death of the director or 15 years following retirement, whichever occurs
first. To qualify for such benefits, a retired director must agree to be
available to provide consultation and advice to the Company following his
or her retirement.
INDEBTEDNESS OF MANAGEMENT
The following executive officers and directors were indebted to the
Company in 1993 in amounts exceeding $60,000 for credit extended to them to
exercise stock options pursuant to the Company's various stock option
plans, as described elsewhere in this Proxy Statement (see section entitled
"Stock Option Plans"). The shares acquired pursuant to the exercise of
these options are pledged to the Company to secure payment of the
indebtedness, which is without recourse except to the pledged shares.
Interest is charged on the indebtedness at a rate of 4.5% per annum:
<TABLE>
<CAPTION>
LARGEST AMOUNT
AMOUNT OWED OWED AT
NAME RELATIONSHIP IN 1993 12/31/93
<S> <C> <C> <C>
George R. Kempton Chairman of the $1,052,565 $1,016,409
Board, Chief
Executive Officer
and Director
Philip LeBoutillier, Jr. Director $200,168 $200,050
Paul K. Gaston Director $102,836 $102,836
</TABLE>
-25-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served as members of the Compensation and
Organization Committee during the last fiscal year: Messrs. Schwier
(Chairman), Callahan, Gentry, Selby and Weigel.
The Company has a continuing deferred compensation agreement with Mr.
Weigel, former Chairman of the Company, which provides for annual payments
of $350,000 for twenty years or for the remainder of Mr. Weigel's life,
whichever last occurs.
The Company is a limited partner in a partnership formed to construct
a $58 million cogeneration facility in Cadillac, Michigan. The Company has
approximately an 8% equity interest in such project. Other equity
participants in the cogeneration project include a corporation controlled
by Raymond A. Weigel (a director) and his son (approximately 18% interest).
TRANSACTIONS WITH CERTAIN ORGANIZATIONS
During the past year, the Company utilized the services of Warner,
Norcross & Judd, a law firm in which Paul K. Gaston, a director, was a
Partner until December 31, 1993. The Company anticipates continuing such
relationship during the current year.
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand to serve as
independent auditors of the Company for the year ending December 31, 1994,
and proposes that the shareholders ratify this selection at the Annual
Meeting. Coopers & Lybrand has advised Kysor that it has no direct
financial interest nor any material indirect financial interest in Kysor or
its subsidiaries, or any connection during the past three years with Kysor
or its subsidiaries in the capacity of promoter, underwriter, voting
trustee, director, officer or employee. Coopers & Lybrand has served Kysor
as its independent auditors since 1976.
Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting of Shareholders and will have an opportunity to make a
statement if they desire to do so. These representatives are likewise
expected to be available to respond to any appropriate questions.
Ratification of the appointment of Coopers & Lybrand, certified public
accountants, as auditors for the Company for the year ending December 31,
1994, requires the vote of the holders of a majority of the shares of the
Company's voting stock (common and preferred) present in person or
represented by proxy at the Annual Meeting and voting on this proposal.
For purposes of counting votes on this proposal, abstentions, broker non-
votes and other shares not voted will not be counted as shares voted on the
proposal, and the number of shares of which a majority is required will be
reduced by the number of shares not voted.
-26-
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
RATIFICATION OF THE SELECTION OF AUDITORS
OTHER BUSINESS
At the date of this Proxy Statement, the management of the Company has
no knowledge of any business, other than that described above, which will
be presented at the meeting. If any other business should properly come
before the meeting, the proxies named in the enclosed proxy will have
discretionary authority to vote on those matters.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of the Company's Common Stock,
to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the New York Stock Exchange. Directors,
officers and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of such reports received by
it, or written representations from certain reporting persons that no other
filings were required for those persons, the Company believes that all
filing requirements applicable to its directors, officers and greater than
10% beneficial owners were satisfied in 1993.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders intended to be presented at the next
annual meeting scheduled to be held on April 28, 1995, must be received by
the Company for inclusion in its proxy statement and form of proxy relating
to that meeting by November 25, 1994. Proposals of security holders should
be made in accordance with Rule 14a-8 promulgated under the Exchange Act
and should be addressed to Mr. George R. Kempton, Chairman of the Board and
Chief Executive Officer, Kysor Industrial Corporation, One Madison Avenue,
Post Office Box 1000, Cadillac, Michigan 49601-9785.
SOLICITATION OF PROXIES
The expenses involved in the preparation and solicitation of proxies
for the Annual Meeting of Shareholders will be borne by the Company.
Brokerage houses, custodians, nominees and fiduciaries will be reimbursed
by the Company for their reasonable expenses incurred in forwarding the
soliciting material to the beneficial owners of stock held by such persons
or firms. In addition to the solicitation of proxies by use of the mails,
solicitation may be made by certain directors, officers and their
-27-
employees, and shareholders of the Company, who will receive no additional
compensation by personal interview, telephone or telegraph. The Company
has retained D. F. King & Co., 77 Water Street, New York, New York 10005,
to aid in the solicitation of proxies. It is anticipated that the fee to
be paid to D. F. King & Co. will not exceed $7,500 plus expenses.
By order of the Board of Directors.
David W. Crooks
Cadillac, Michigan Vice President-
March 25, 1994 General Counsel and Secretary
-28-
NOTICE TO PLAN PARTICIPANTS:
Under the terms of the ESOP and TRASOP, Participants with Kysor common
or preferred stock allocated to their accounts have the ability to direct
the plan Trustee on how such stock will be voted. In addition (except for
the TRASOP shares), the plan also provides that allocated stock which is
not directed and stock which is held by the plans but has not yet been
allocated to Participants will be voted as directed by Participants.
Each participant who directs the voting of allocated shares will also
be directing the voting of the unallocated and non-directed shares in the
same manner. The number of such shares subject to direction by each
participant will be determined by dividing the total number of such shares
by the number of Participants directing the vote. Therefore, each
directing Participant will determine the vote for the same number of
unallocated and non-directed shares, except for TRASOP shares.
A different vote direction card is requested for the ESOP and TRASOP
shares. You will find enclosed a vote direction card for each in which you
have Kysor stock allocated to your account. Each card is a different
color, with blue representing the ESOP and green representing the TRASOP.
Please complete and return the vote direction card for each plan in
the enclosed envelope.
THE VOTE DIRECTION CARD MUST BE RECEIVED NO LATER THAN APRIL 20, 1994.
KYSOR INDUSTRIAL CORPORATION THIS VOTE DIRECTION FORM IS
EMPLOYEE STOCK OWNERSHIP PLAN BEING FURNISHED TO THE UNDERSIGNED
PURSUANT TO THE KYSOR INDUSTRIAL
CORPORATION EMPLOYEE STOCK OWNERSHIP
PLAN (the "Plan"). The undersigned
acknowledges receipt of a Notice of
Annual Meeting and a Proxy Statement
dated March 25, 1994, for Kysor
Industrial Corporation and submits this
Vote Direction Form to THE WYATT COMPANY
as special agent to the Trustee of the
Plan to direct the voting by the Trustee
of shares of Kysor Industrial
Corporation voting stock allocated to an
account of the undersigned pursuant to
the Plan at the ANNUAL MEETING OF
SHAREHOLDERS OF KYSOR INDUSTRIAL
VOTE DIRECTION FORM CORPORATION at the Ritz-Carlton Hotel-
Buckhead, Atlanta, Georgia, on April 29,
1994, or at any adjournment of that
meeting as specified below:
_______________________________
(1) ELECTION OF ____ Vote FOR all ____ WITHHOLD
DIRECTORS nominees listed AUTHORITY
below (except to vote for all
as marked to nominees listed
the contrary below
below)
George R. Kempton Philip LeBoutillier, Jr. Raymond A. Weigel
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
________________________________________________________________
(2) Proposal to ratify the appointment of Coopers & Lybrand as the
independent auditors of Kysor Industrial Corporation.
_____ FOR _____ AGAINST _____ ABSTAIN
(3) In the Trustee's discretion upon all other matters that may be
presented at the meeting or any adjournment thereof.
(Continued on other side)
Shares of voting stock of Kysor Industrial Corporation allocated to an
account of the undersigned pursuant to the Plan (either a TRASOP Account or
an ESOP Account) will be voted by the Trustee as directed. Shares
allocated to a TRASOP Account will not be voted unless a properly executed
Vote Direction Form is received. Shares held in an ESOP Account with
respect to which no Vote Direction is received and unallocated ESOP shares
will be voted by the Trustee in accordance with Vote Directions received
with respect to allocated ESOP shares, on a per capita basis.
PLEASE MARK, SIGN, DATE, AND RETURN THE VOTE DIRECTION FORM TO
THE WYATT COMPANY PROMPTLY USING THE ENCLOSED ENVELOPE.
X__________________________________ DATED _____________, 1994
Signature of Plan Participant
NOTE: This Vote Direction Form should be signed exactly as your name
appears on the mailing label affixed hereto.
DO NOT RETURN THIS CARD TO THE COMPANY. IT MUST BE RETURNED TO THE WYATT
COMPANY, ONE NORTHWESTERN PLAZA, SUITE 500, 28411 NORTHWESTERN HIGHWAY,
SOUTHFIELD, MICHIGAN 48034.
KYSOR INDUSTRIAL CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS. The undersigned
acknowledges receipt of a Notice of Annual
Meeting and a Proxy Statement dated March 25,
1994 and appoints GEORGE R. KEMPTON, PHILIP
LeBOUTILLIER, JR., and DAVID W. CROOKS, and
each of them, Proxy of the undersigned, each
with full power of substitution, to vote all
stock which the undersigned is entitled to
vote at the ANNUAL MEETING OF SHAREHOLDERS of
KYSOR INDUSTRIAL CORPORATION at the Ritz-
Carlton Hotel-Buckhead, Atlanta, Georgia, on
April 29, 1994, or at any adjournment of that
PROXY meeting as specified below:
One Madison Avenue
Cadillac, Michigan
_______________________________
The Board of Directors recommends a vote FOR the following items:
(1) ELECTION OF DIRECTORS ____ Vote FOR all ____ WITHHOLD
nominees listed AUTHORITY
below (except to vote
as marked to for all
the contrary nominees
below) listed
below.
George R. Kempton Philip LeBoutillier, Jr. Raymond A. Weigel
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
_________________________________________________________________
(2) Proposal to ratify the appointment of Coopers & Lybrand as the
independent auditors of the Company.
_____ FOR _____ AGAINST _____ ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon all other
matters that may be presented at the meeting or at any adjournment
thereof.
(Continued on other side)
Account Number Number of Shares Proxy Number
The shares represented by this Proxy will be voted as specified. If no
specification is made, the shares will be voted for election of all of the
board nominees as directors, for ratification of the appointment of
Coopers & Lybrand as auditors, and in accordance with the judgment of the
Proxies with respect to any other matter which may properly come before the
meeting.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
X____________________ X__________________ DATED _______, 1994
Signature(s) of Shareholder(s)
NOTE: Signature(s) should be identical with the name(s) typed on this
Proxy. Joint owners should each sign personally. Persons signing as
attorney, executor, administrator, trustee or guardian should give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
