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
___ Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
KYSOR INDUSTRIAL 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 Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(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 file
fee is calculated and s tate 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:
___________________________________________________________________________
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 corporate
headquarters, One Madison Avenue, Cadillac, Michigan, on Friday, April 28,
1995, at 10 a.m., local time.
On the following pages you will find the Notice of Annual Meeting and
the Proxy Statement. The Proxy Statement and enclosed form of proxy are
being furnished to shareholders on and after March 24, 1995. At the Annual
Meeting, in addition to voting, you will hear our report on Company
activities and the outlook for 1995.
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 28, 1995
The 1995 Annual Meeting of Shareholders of Kysor Industrial
Corporation will be held at the corporate headquarters, One Madison Avenue,
Cadillac, Michigan, on Friday, April 28, 1995, at 10 a.m., local time, for
the following purposes:
1. Election of three directors to the class whose three-year term
will expire in 1998.
2. Transaction of such other business as may properly come before
the meeting or any adjournment of the meeting.
The record date for the meeting has been fixed by the Board of
Directors as the close of business on March 1, 1995. 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 24, 1995 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 you so request.
If your 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 Proxy Statement is furnished as part of the solicitation of
proxies by the Board of Directors of Kysor Industrial Corporation ("Kysor"
or the "Company") to be voted at the Annual Meeting of Shareholders to be
held on Friday, April 28, 1995, at 10 a.m., local time, at the Company's
headquarters, One Madison Avenue, Cadillac, Michigan, 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
and in accordance with the discretion of the persons named as proxies on
any other matters that may come before the meeting.
It is anticipated that this Proxy Statement and the enclosed proxy
will be first sent to shareholders on March 24, 1995. Any shareholder
giving a proxy in the enclosed form has the power to revoke it at any time
before it is exercised. A 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
1998:
Stephen I. D'Agostino Robert J. Ratliff Frederick W. Schwier
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 1998, or until their
successors are elected and qualified. The nominees are willing to be
elected and to serve. If any nominee is unable to serve or is otherwise
unavailable for election, which is not contemplated, the 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 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.
-1-
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
VOTING SECURITIES
At the close of business on March 1, 1995, the record date for
determining the shareholders entitled to vote at the Annual Meeting, Kysor
had issued and outstanding 5,706,318 shares of its Common Stock, $1 par
value ("Common Stock"), and 803,553 shares of Series A Preferred Stock,
$24.375 stated value per share ("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 as of March 1, 1995:
<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 Neumeier Investment 463,275 8.1%
Stock Counsel
26435 Carmel Rancho Blvd.
Carmel, California
93923(1)
Common State of Wisconsin 350,000 6.1%
Stock Investment Board
P.O. Box 7842
Madison, Wisconsin
53707 (2)
Common Neuberger & Berman 338,600 5.9%
Stock 605 Third Avenue
New York, New York
10152 (3)
-2-
Common Kysor Industrial 328,856 5.8%
Stock Corporation Employee
Stock Ownership Plan
("ESOP"), Old Kent
Bank, Trustee
One Vandenberg Center
Grand Rapids, Michigan
49503 (4)
Common George R. Kempton 291,086 5.0%
Stock Kysor Industrial
Corporation
One Madison Avenue
Cadillac, Michigan
49601(5)
Series A Kysor Industrial 803,553 100.0%
Preferred Corporation Employee
Stock Stock Ownership Plan
("ESOP"), Old Kent
Bank, Trustee
One Vandenberg Center
Grand Rapids, Michigan
49503 (4)
<FN>
(1) Based on Schedule 13G dated February 2, 1995.
(2) Based on Amendment No. 5 to Schedule 13G dated February 13, 1995.
(3) Based on Amendment No. 1 to Schedule 13G dated February 10, 1995. The
Schedule 13G indicates that Neuberger & Bergman has sole voting power
over 35,000 of such shares and shared dispositive power over all of
such shares.
(4) 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
shares of Common Stock on a one-for-one basis by the Trustee. If a
conversion were made, the ESOP would own 1,132,409 shares of Common
Stock, representing approximately 17.4% of the outstanding shares as
of March 1, 1995.
(5) 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, 1995, by
each director, each nominee for director, each named executive officer and
all directors and executive officers as a group:
-3-
<TABLE>
<CAPTION>
AMOUNT AND SHARES SUBJECT
NATURE OF PERCENT TO OPTIONS
NAME OF BENEFICIAL OF EXERCISABLE
BENEFICIAL OWNER OWNERSHIP(1) CLASS WITHIN 60 DAYS(2)
OF COMMON STOCK
___________________________________________________________________________
<S> <C> <C> <C>
William E. Callahan 36,750 .6% 21,750
Timothy J. Campbell 73,887(3) 1.3 58,300
Stephen I. D'Agostino -- -- --
Thomas P. Forrestal, Jr. 52,975(3) .9 30,600
Paul K. Gaston 37,750 .7 18,250
Grant C. Gentry 28,250 .5 16,250
Peter W. Gravelle 58,787(3)(4) 1.0 47,180
George R. Kempton 291,086(3)(4) 5.0 100,700
Philip LeBoutillier, Jr. 53,378(4) .9 18,250
Terry M. Murphy 12,876 .2 9,000
Robert W. Navarre 2,250 -- 2,250
Robert J. Ratliff 250 -- 250
Frederick W. Schwier 39,250(4) .7 25,750
John D. Selby 52,028(4) .9 12,750
Raymond A. Weigel 51,250 .9 13,250
All directors and
executive officers as
a group 930,095(3) 15.1 457,170
<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 that, under applicable regulations,
are considered 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 direct the power to vote. Investment
power includes the power to dispose or 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 shares stated 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 the footnotes, share voting and
investment power with respect to all shares listed.
(2) 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.
-4-
(3) The numbers shown for these individuals include an aggregate of 18,150
shares of Common Stock held by the ESOP and allocated to the accounts
of the named individuals, as well as 273 shares of Common Stock over
which, although not allocated to their accounts, the named individuals
have voting control under 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 are 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. Shares
reported do not include shares which are attributable to the 1994
fiscal year but have not yet been allocated to the accounts of
participants as of the record date.
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 as described above with respect to the
Common Stock held by the ESOP. 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.
Directors who are not also executive officers of the Company have no
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:
ADDITIONAL
PREFERRED PERCENT
PREFERRED PERCENT STOCK OVER OF CLASS
STOCK OF CLASS WHICH VOTING REPRESENTED
ALLOCATED TO REPRESENTED CONTROL MAY BY COLUMNS
ESOP ACCOUNT BY COLUMN 1 BE EXERCISED 1 AND 3
___________________________________________________________________________
<S> <C> <C> <C> <C>
Timothy J. Campbell 1,213 .2% 680 .2%
Thomas P.
Forrestal, Jr. 1,402 .2 680 .3
Peter W. Gravelle 891 .1 680 .2
George R. Kempton 1,628 .2 680 .3
Terry M. Murphy -- -- -- --
All directors and
executive officers 7,014 .9 4,080 1.4
as a group
Each share of Preferred Stock entitles its holder to one vote on
matters submitted for shareholder action at the meeting, as does each
-5-
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.
(4) The number of shares stated includes shares owned solely by the named
individual's spouse, but over which the named individual might share
voting and investment power by reason of the influence of their
relationship. Included are Felia LeBoutillier (10,600 shares);
Priscilla Schwier (2,000 shares); and Marion 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.
</TABLE>
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 after the Annual Meeting of Shareholders, and each
executive officer of Kysor:
<TABLE>
<CAPTION>
NOMINEES FOR 3-YEAR
TERMS AS DIRECTOR PRINCIPAL
EXPIRING 1998 OCCUPATION(1) DIRECTORSHIPS(2)
___________________________________________________________________________
<S> <C> <C>
Stephen I. President and Chief Director of Kysor
D'Agostino Executive Officer of since January
Age 61 D'Agostino Enter- 1995; also a
prises (personal director of
investment company (3) SuperValu Inc.
and Catalina
Marketing
Robert J. Ratliff Chairman of the Board, Director of Kysor
Age 63 President, and Chief since April 1994;
Executive Officer of also a director
AGCO Corporation of AGCO Corporation
(agriculture equip-
ment manufacturer) (4)
Frederick W. Schwier Chairman of the Director of Kysor
Age 71 Board of Great Lakes since 1985
Communications, Inc.
(television
broadcasting)
</TABLE>
-6-
<TABLE>
<CAPTION>
DIRECTORS WITH
3-YEAR TERMS PRINCIPAL
EXPIRING 1996 OCCUPATION(1) DIRECTORSHIPS(2)
___________________________________________________________________________
<S> <C> <C>
Paul K. Gaston Chairman of the Board Director of Kysor
Age 61 of Guardsman since 1984; also
Products, Inc. a director of
(diversified chemical Guardsman Products,
manufacturer)(5) Inc.
Grant C. Gentry Retired. Former Director of Kysor
Age 70 Chairman of the Board since 1986; also
and Chief Executive a director of
Officer of Pantry Bromar, Inc.
Pride, Inc.
(diversified
retailer)
Peter W. Gravelle President and Director of Kysor
Age 57 (6) Chief Operating since 1991
Officer of Kysor (7)
Robert W. Navarre Chairman of the Director of Kysor
Age 61 Board of Simpson since 1993; also a
Industries, Inc. director of Simpson
(automotive supplier) Industries, Inc.,
and Webster
Industries, Inc.
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS WITH
3-YEAR TERMS PRINCIPAL
EXPIRING 1997 OCCUPATION(1) DIRECTORSHIPS(2)
___________________________________________________________________________
<S> <C> <C>
George R. Kempton Chairman of the Board Director of Kysor
Age 61 (6) and Chief Executive since 1978; also a
Officer of Kysor director of Simpson
Industries, Inc.,
Guardsman Products,
Inc., and JLG
Industries, Inc.
-7-
Philip Retired. Former Director of Kysor
LeBoutillier, Jr. Chairman of the since 1963
Age 79 Board, First Ohio
Bancshares, Inc.
(bank holding
company)
Raymond A. Weigel Retired. Chairman Director of Kysor
Age 77 Emeritus of the since 1948
Board of Kysor
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
WHO ARE NOT PRINCIPAL SERVED IN SAME
DIRECTORS (6) OCCUPATION(1) OFFICE SINCE
___________________________________________________________________________
<S> <C> <C>
Timothy J. Campbell Group Vice President - 1987
Age 52 Transportation Products (8)
David W. Crooks Vice President-General 1991
Age 46 Counsel and Secretary (9)
Thomas P. Group Vice President - 1983
Forrestal, Jr. Commercial Products
Age 58
Terry M. Murphy Vice President - Chief 1992
Age 46 Financial Officer (10)
Timothy D. Peterson Vice President - Marketing 1983
Age 57 and International
<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 that
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) Since 1994; previously Chairman of the Board and Chief Executive
Officer of Lord Capital Corporation (investment banking firm) (1989-
1994).
(4) Since August 1993; previously director since 1990; President and Chief
Executive Officer since 1988.
(5) Since January 1994; previously Partner of Warner Norcross & Judd LLP,
Attorneys (Partner 1965-1993; Managing Partner 1988-1992).
-8-
(6) Kysor's executive officers are appointed annually by, and serve at the
pleasure of, the Board of Directors.
(7) Since January 1995; previously Executive Vice President-Chief
Operating Officer (1992-1995); Vice President, Treasurer and Chief
Financial Officer (1990-1992); General Manager of Electronic
Instruments Division of Eaton Corporation (diversified vehicle
component supplier) (1988-1990).
(8) Mr. Campbell has been a director of Kysor since 1988 and is not
standing for reelection.
(9) Since January 1991; previously Vice President-General Counsel
(1983-1991).
(10) Since December 1992; previously Vice President-Finance, Treasurer and
Chief Financial Officer of North-West Telecommunications, Inc.
(telecommunications service supplier) (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
1994. All directors attended more than 75% of the aggregate of the total
number of meetings of the Board and the total number of meetings of
committees of which they are 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 that 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 did not meet
in 1994.
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
-9-
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 1994.
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 and 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, Ratliff, Selby and Weigel are members of the Compensation
and Organization Committee, and those individuals comprised the committee
at all times during 1994. The Compensation and Organization Committee met
one time during 1994.
NOMINATING COMMITTEE: The responsibilities of the Nominating Committee are
to (1) develop and recommend to the Board of Directors criteria for the
selection of candidates for director, (2) seek out and receive suggestions
concerning possible candidates, (3) review and evaluate the qualifications
of possible candidates, and (4) 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 two times during 1994. 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 address, 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 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 Restated Articles of
Incorporation 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.
-10-
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, Gravelle, Kempton and Ratliff are members of the
Acquisition, Divestiture and Merger Committee. This committee met four
times during 1994.
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's 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.
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 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.
-11-
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 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 1995 or in future years by reason of
awards granted in 1995. The Committee intends to review the Company's
executive compensation policies at a later date, when final regulations
have been adopted, and consider appropriate modifications, if any, 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 disallowances 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
those adjustments.
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 bonus compensation
ranging from 20% to 60% of their base salaries each year, depending upon
their level 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, 1993 and 1994 consistent with the formula.
-12-
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.
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 ranging
from 20% to 40% of their base salaries, depending upon their level of
corporate responsibility. The amount awarded is determined by a formula
that establishes performance levels that 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. The 1992/93
and 1993/94 two-year averages 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 these 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
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 considers
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.
-13-
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 of Common Stock 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 vests and becomes 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 1995, the Committee granted options to purchase an
aggregate of 201,500 shares of Common Stock to 121 employees 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." 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 depending upon the financial
performance of the Company.
Mr. Kempton's base salary for 1994 was increased 4.5% above his 1993
salary. The base salary paid to Mr. Kempton in 1994 was less than the
estimated market value paid by companies of comparable size as determined
by the independent outside consultant.
In January 1995, the Committee recommended, and the full Board
ratified, a profit-sharing incentive bonus of $183,883 (55.7% of 1994 base
salary) and an intermediate-term incentive bonus of $115,984 (35.1% of 1994
base salary) for Mr. Kempton based upon the formulas outlined above.
Mr. Kempton received long-term incentive compensation during 1994
through an award of stock options under the Company's 1987 Stock Option and
Restricted Stock Plan. Other corporate officers and key employees also
received stock option awards during 1994.
All recommendations of the Compensation and Organization Committee
concerning compensation attributable to 1994 were approved and adopted by
the Board of Directors without modification.
Respectfully submitted,
Frederick W. Schwier, Chairman
William E. Callahan
Grant C. Gentry
Robert J. Ratliff
John D. Selby
Raymond A. Weigel
-14-
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 December 31, 1994. The following table includes
amounts that 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>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-term Compensation
Annual Compensation Awards Payouts
Number of All Other
Name and Other Annual Securities Un- LTIP Compensa-
Principal Position Year Salary Bonus Compensation derlying Options Payouts tion(1)
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Kempton 1994 $323,140 $183,883 $ 4,234 10,000 $115,984 $28,699
Chairman of the 1993 314,776 152,074 4,582 14,500 98,349 22,072
Board, Chief 1992 299,900 138,692 47,684(2) 20,000 -- 26,246
Executive
Officer &
Director
Peter W. Gravelle 1994 214,725 112,007 4,116 8,750 67,437 17,378
President, Chief 1993 209,167 92,631 2,532 12,800 57,183 14,523
Operating 1992 186,325 84,480 3,557 15,000 -- 15,532
Officer &
Director
Thomas P. 1994 197,520 91,649 16,780(3) 7,500 52,027 19,908
Forrestal, Jr. 1993 190,463 79,206 1,020 11,000 46,101 14,563
Group Vice 1992 187,434 72,234 995 15,000 -- 17,975
President-
Commercial
Products
Timothy J. 1994 168,295 79,808 252 7,500 45,305 16,115
Campbell 1993 163,937 66,001 345 11,000 38,415 11,752
Group Vice 1992 156,188 60,192 -- 15,000 -- 14,743
President-
Trans-
portation
Products &
Director
Terry M. 1994 148,750 69,600 4,670 7,500 39,510 1,278
Murphy 1993 135,000 54,135 4,728 15,000 -- 9,188
Vice President- 1992 11,250 -- -- -- -- --
Chief Financial
Officer
-15-
_____________________
<FN>
(1) "All Other Compensation" includes imputed income from premiums paid for group life insurance
above $50,000 ($10,191 for Mr. Kempton, $3,386 for Mr. Gravelle, $3,462 for Mr. Forrestal,
$2,646 for Mr. Campbell and $1,278 for Mr. Murphy), amounts allocated to each named officer
under the ESOP based on shares allocated in 1994 for 1993 service ($18,508 for Mr. Kempton,
$13,992 for Mr. Gravelle, $16,447 for Mr. Forrestal and $13,469 for Mr. Campbell and moving
expenses in 1993 for Mr. Murphy of $7,647.
(2) Includes $43,424 of deemed interest compensation from the Company (assessed interest rate below
market rate) on indebtedness that was used to exercise stock options.
(3) Includes $16,141 which the Company paid on behalf of Mr. Forrestal for the employee portion of
Medicare tax due on the present value of the vested benefits related to Mr. Forrestal's vesting
under the Supplemental Executive Retirement Plan and an amount to cover income taxes due on the
income imputed to him as a result of this payment.
</TABLE>
RETIREMENT PLANS
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 1994:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Average Years of Service
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$150,000 $ 36,447 $ 48,596 $ 60,745 $ 72,894 $ 76,644
</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 they meet vesting requirements. Amounts
expensed 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, not to exceed $150,000, 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. Except for the $150,000 cap, this compensation for 1994 does not
vary by more than 10% from the amounts shown under the heading "Annual
Compensation" in the Summary Compensation Table above.
The executive officers referred to above have the following years of
accredited service for qualification under Kysor's Administrative Pension
Plan:
-16-
<TABLE>
<CAPTION>
<S> <C> <C>
George R. Kempton 16
Thomas P. Forrestal, Jr. 14
Peter W. Gravelle 4
Timothy J. Campbell 10
Terry M. Murphy 2
</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
except Mr. Murphy. To achieve minimum qualification in the Supplemental
Plan, a 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 full
qualification, the Supplemental Plan provides an additional annual benefit
which, together with benefits payable under the Administrative Pension
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.
For this purpose, compensation does not vary by more than 10% from the
amounts shown under the heading "Annual Compensation" in the Summary
Compensation Table above. 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 before or after 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 the benefits are reduced
by one-third. In addition, 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
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 after 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 that event, benefits
payable are calculated using compensation for the highest consecutive
-17-
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>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
Potential Realiz-
able Value at
Assumed Annual
Number of Percent of Rates of
Securities Total Options Exercise Stock Price
Underlying Granted to or Base Appreciation
Options Employees in Price Expiration for Option Term
Name Granted Fiscal Year (Per Share) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
George R. Kempton 10,000 4.5% $16.125 1/28/04 $101,409 $256,991
Peter W. Gravelle 8,750 4.0 16.125 1/28/04 88,733 224,867
Thomas P.
Forrestal, Jr. 7,500 3.4 16.125 1/28/04 76,057 192,743
Timothy J. Campbell 7,500 3.4 16.125 1/28/04 76,057 192,743
Terry M. Murphy 7,500 3.4 16.125 1/28/04 76,057 192,743
</TABLE>
Pursuant to its 1993 Long-Term Incentive Plan, 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 over a ten-year period at prices equal to the
fair market value of the shares on the dates the options were granted. 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
-18-
20% only vests and becomes exercisable if all vested options (i.e. the
first 80%) are exercised in full and all of the shares are held by the
optionee for a period of one year. Options terminate, subject to certain
limited exercise provisions, in the event of death, retirement or other
termination of employment. The Plans are administered by the Compensation
and Organization Committee consisting of six 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, the 1983 Incentive Stock Option
Plan terminated on April 22, 1993, and the 1984 Stock Option Plan
terminated on July 27, 1994, although certain options granted under the
Plans remain outstanding.
The 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 to those
options 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 maximum installment payment period is the term of the option.
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 mean market price 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 December 31, 1994:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options In-the-Money Options
Shares at Fiscal Year End at Fiscal Year End
Acquired on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
George R. Kempton 4,000 $58,500 91,800 32,700 $762,486 $296,231
Peter W. Gravelle -- -- 39,870 26,680 484,320 234,293
Thomas P. Forrestal, Jr. 6,000 63,938 35,900 18,600 295,838 144,413
Timothy J. Campbell -- -- 51,650 24,600 385,275 222,413
Terry M. Murphy 3,000 5,250 4,500 15,000 18,563 64,688
</TABLE>
-19-
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>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Number Performance
of Shares, or Other Estimated Future Payouts
Units or Period Until under 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 $66,050 $99,075 $132,100
Peter W. Gravelle 35 Two Years 38,404 57,606 76,808
Thomas P. Forrestal, Jr. 30 Two Years 29,628 44,442 59,256
Timothy J. Campbell 30 Two Years 25,800 38,700 51,600
Terry M. Murphy 30 Two Years 22,500 33,750 45,000
<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; and
Messrs. Forrestal, Campbell and Murphy - 30% 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 1994 and 1995. The two-year average PEPS and ROI
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 twelve-year period ending December 31,
1994, respectively, using 1989 and 1982 as "base periods." The S & P 500
Index is a broad-based equity market index published by Standard & Poor's,
while the Russell 2000 is comprised of companies with a market
capitalization similar to that of Kysor. Over the five-year period ended
December 31, 1994, a $100 investment in Kysor Common Stock in 1989 would be
worth $216 compared to $152 for the S & P 500 stocks and $163 for the
Russell 2000 stocks. A $100 investment in Kysor Common Stock in 1982 would
be worth over $1,051 as of December 31, 1994, compared to $496 for the
S & P 500 stocks and $357 for the Russell 2000 stocks.
-20-
FIVE-YEAR INVESTMENT IN KYSOR INDUSTRIAL
CORPORATION VERSUS S & P 500 AND RUSSELL 2000
[GRAPH]
The dollar values for total shareholder return plotted in the graph
above are shown below:
<TABLE>
<CAPTION>
Year Ended December 31, 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Kysor $100.00 $60.39 $ 62.44 $169.02 $164.02 $216.03
S & P 500 100.00 96.90 126.43 136.06 149.77 151.74
Russell 2000 100.00 80.49 117.56 139.20 165.51 162.50
</TABLE>
-21-
TWELVE-YEAR INVESTMENT IN KYSOR INDUSTRIAL CORPORATION
VERSUS S & P 500 AND RUSSELL 2000
[GRAPH]
The dollar values for the total shareholder return plotted in the
graph above are shown below:
<TABLE>
<CAPTION>
Year Ended
December 31, 1982 1983 1984 1985 1986 1987 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Kysor $100.00 $311.28 $266.47 $369.04 $429.53 $635.29 $772.87
S & P 500 100.00 122.38 129.85 170.84 202.54 212.54 248.23
Russell 2000 100.00 129.10 119.67 156.83 165.74 151.21 188.85
Year Ended
December 31, 1989 1990 1991 1992 1993 1994
Kysor $486.96 $294.08 $304.07 $823.04 $803.12 $1,051.99
S & P 500 326.90 316.76 413.28 444.77 489.61 496.02
Russell 2000 219.53 176.70 258.07 305.59 363.34 356.73
</TABLE>
-22-
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
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, President and Chief Operating
Officer; Thomas P. Forrestal, Jr., Group Vice President - Commercial
Products; Timothy J. Campbell, Group Vice President - Transportation
Products; Terry M. Murphy, Vice President - Chief Financial Officer; and
other corporate officers. The Agreements provide for separation pay and
benefits if a change in control of the Company occurs. 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 after change in control of the Company 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 will be entitled to receive severance pay for the period
remaining between the date of the 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 issued under the Securities Exchange Act
of 1934, as amended ("Exchange Act"), provided that, without limitation, a
change in control will be considered to have occurred if (1) any "person"
-23-
(as that 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 the 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% to 40%
(for certain corporate officers other than those named in the paragraph
above), 45% (for Thomas P. Forrestal, Jr., Timothy J. Campbell and Terry M.
Murphy), 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; (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 under 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
executives 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 since that time. 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
-24-
Bylaws, any liability insurance presently maintained or purchased in the
future, 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 1994, each director was paid $4,000 per quarter plus an
additional $1,000 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 each non-employee
director a death benefit in the amount of $25,000, which is paid to his or
her designated beneficiary if the director 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 nonemployee
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
any part of the compensation that 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 equal to one-fifteenth
of the annual retainer at the time of retirement or the year before 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 is
payable each calendar quarter. Payments cease upon the death of a director
or 15 years following retirement, whichever occurs first. To qualify for
these 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 directors and executive officers were indebted to the
Company in 1994 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:
-25-
<TABLE>
<CAPTION>
LARGEST AMOUNT
AMOUNT OWED OWED AT
NAME RELATIONSHIP IN 1994 12/31/94
___________________________________________________________________________
<S> <C> <C> <C>
George R. Kempton Chairman of the $1,016,409 $1,001,666
Board, Chief
Executive Officer
and Director
Philip Director 200,050 187,803
LeBoutillier, Jr.
Paul K. Gaston Director 102,836 97,685
</TABLE>
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, Ratliff, 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 through the year 2005 or for the remainder of Mr. Weigel's
life, whichever is longer.
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 the project. Other equity
participants in the cogeneration project include a corporation controlled
by Mr. Weigel and his son (approximately 18% interest).
INDEPENDENT AUDITORS
Coopers & Lybrand LLP served as independent auditors of the Company
for the year ended December 31, 1994, and it is anticipated that
Coopers & Lybrand LLP will be selected by the Board of Directors as
independent auditors of the Company for the year ending December 31, 1995.
The Board of Directors will select the independent auditors of the Company
for the current year at its regular meeting scheduled to be held in October
1995. Coopers & Lybrand LLP 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.
Representatives of Coopers & Lybrand LLP are expected to be present at
the Annual Meeting of Shareholders and will have an opportunity to make a
-26-
statement if they desire to do so. These representatives are likewise
expected to be available to respond to any appropriate questions.
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 come before the
meeting, the proxies named in the enclosed proxy will have discretionary
authority to vote on those matters.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who beneficially
own more than 10% of the Company's Common Stock, to file reports of
ownership and changes in ownership of the Company's Common Stock with the
Securities and Exchange Commission and the New York Stock Exchange.
Directors, officers and greater than 10% beneficial owners are required 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 1994.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting scheduled to be held on April 26, 1996, must be received by the
Company for consideration for inclusion in its proxy statement and form of
proxy relating to that meeting by November 24, 1995. Proposals of
shareholders should be made in accordance with Rule 14a-8 issued under the
Securities Exchange Act of 1934, as amended, 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, employees, and
shareholders of the Company, who will receive no compensation therefor, by
-27-
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 $8,000 plus expenses.
By Order of the Board of Directors.
David W. Crooks
Cadillac, Michigan Vice President-
March 24, 1995 General Counsel and Secretary
[FRONT]
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors. [ ] [ ] [ ]
Stephen I. D'Agostino, Robert J. Ratliff,
and Frederick W. Schwier
If you wish to withhold authority to vote "FOR" a particular nominee mark
the "For All Except" box and strike a line through the nominee(s) name.
Your shares will be voted for the remaining nominee(s).
RECORD DATE SHARES:
[SPACE FOR
SHAREHOLDER INFORMATION]
Please be sure to sign and date this Proxy. Date ___________
_______________________________ ___________________________________
Shareholder sign here Co-owner sign here
For Against Abstain
2.) In their discretion, the Proxies [ ] [ ] [ ]
are authorized to vote upon all other
matters that may be presented at
the meeting or any adjournment
thereof.
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 and in accordance with the judgment of the
Proxies with respect to any other matter which may come before the meeting.
Mark box at right if comments or address change have [ ]
been noted on the reverse side.
---------------------------------------------------------------------------
DETACH CARD
KYSOR INDUSTRIAL CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this
Proxy. An important issue related to the management and operation of
your Company requires your immediate attention and approval. This is
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on this Proxy to indicate how your shares shall
be voted. Then sign the Proxy, detach it and return your Proxy in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders
of KYSOR INDUSTRIAL CORPORATION, April 28, 1995.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
KYSOR INDUSTRIAL CORPORATION
[BACK]
KYSOR INDUSTRIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The shareholder(s) listed on the reverse side of this Proxy acknowledges
receipt of a Notice of Annual Meeting and a Proxy Statement dated March 24,
1995 and appoints GEORGE R. KEMPTON, PHILIP LeBOUTILLIER, JR., and DAVID W.
CROOKS, and each of them, Proxy of the shareholder, each with full power of
substitution, to vote all stock which the shareholder is entitled to vote
at the ANNUAL MEETING OF SHAREHOLDERS of KYSOR INDUSTRIAL CORPORATION at
the corporate headquarters, One Madison Avenue, Cadillac, Michigan, on
April 28, 1995, or at any adjournment of that meeting as specified on the
reverse side.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this Proxy exactly as your name appears on this Proxy. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be
that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[FRONT]
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors. [ ] [ ] [ ]
Stephen I. D'Agostino, Robert J. Ratliff,
and Frederick W. Schwier
If you wish to withhold authority to vote "FOR" a particular nominee mark
the "For All Except" box and strike a line through the nominee(s) name.
Your shares will be voted for the remaining nominee(s).
[SPACE FOR
SHAREHOLDER INFORMATION]
Please be sure to sign and date this Vote Direction Form.
Date _______________
_______________________________________
Participant sign here
For Against Abstain
2.) In the Trustee's discretion upon [ ] [ ] [ ]
all other matters that may be
presented at the meeting or any
adjournment thereof.
The 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 Form 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.
Mark box at right if an address change has been [ ]
noted on the reverse side.
[BACK]
KYSOR INDUSTRIAL CORPORATION EMPLOYEE STOCK
OWNERSHIP PLAN
THIS VOTE DIRECTION FORM IS BEING FURNISHED TO THE
PARTICIPANT LISTED ON THE REVERSE SIDE PURSUANT TO THE
KYSOR INDUSTRIAL CORPORATION EMPLOYEE STOCK OWNERSHIP
PLAN (the "PLAN").
The Participant acknowledges receipt of a Notice of Annual Meeting and a
Proxy Statement dated March 24, 1995, for Kysor Industrial Corporation and
submits this Vote Direction Form to THE WYATT COMPANY as a special agent to
the Trustee of the Plan to direct the voting by the Trustee of the shares
of Kysor Industrial Corporation voting stock allocated to an account of the
participant pursuant to the Plan at the ANNUAL MEETING OF SHAREHOLDERS OF
KYSOR INDUSTRIAL CORPORATION at the corporate headquarters, One Madison
Avenue, Cadillac, Michigan, on April 28, 1995, or at any adjournment of
that meeting as specified on the reverse side.
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.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this Vote Direction Form exactly
as your name appears on the mailing label.
HAS YOUR ADDRESS CHANGED?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
