<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WINDMERE-DURABLE HOLDINGS, INC.
- - --------------------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
WINDMERE-DURABLE HOLDINGS, INC.
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1999
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Windmere-Durable Holdings, Inc., a Florida corporation (the "Company"), will be
held at the University of Miami, James W. McLamore Executive Education Center,
5250 University Drive, Coral Gables, Florida 33124 on Tuesday, May 11, 1999, at
10:00 a.m. local time for the following purposes.
1. To elect five members to Class III of the Company's Board of
Directors, to serve until the 2002 Annual Meeting of Shareholders, or until
their successors are duly elected and qualified, and one member to Class I of
the Company's Board of Directors, to serve until the 2000 Annual Meeting of
Shareholders, or until his successor is duly elected and qualified;
2. To consider and vote on a proposal to approve the Company's 1998
Stock Option Plan, as set forth in Appendix A hereto;
3. To ratify the reappointment of Grant Thornton LLP, independent
certified public accountants, as the Company's auditors for the fiscal year
ending December 31, 1999; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on March 15,
1999 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed preaddressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Harry D. Schulman, Secretary
Miami Lakes, Florida
April 12, 1999
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND
THE MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE
MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 3
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
WINDMERE-DURABLE HOLDINGS, INC.
------------------
PROXY STATEMENT
------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Windmere-Durable Holdings, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $.10 per share (the "Common Stock"), for use at the 1999 Annual
Meeting of Shareholders of the Company to be held on Tuesday, May 11, 1999, or
at any adjournment(s) or postponement(s) thereof (the "Annual Meeting"),
pursuant to the attached Notice of Annual Meeting. The approximate date that
this Proxy Statement and the enclosed form of proxy are first being sent to
holders of Common Stock is April 12, 1999. Shareholders should review the
information provided herein in conjunction with the Company's Annual Report to
Shareholders which accompanies this Proxy Statement. The Company's principal
executive offices are located at 5980 Miami Lakes Drive, Miami Lakes, Florida
33014-2467, and its telephone number is (305) 362-2611.
INFORMATION CONCERNING PROXY
The enclosed form of proxy is solicited on behalf of the Company's
Board of Directors. The giving of a proxy does not preclude the right to vote in
person should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person, at the Annual Meeting or by filing with the Company's
Secretary at the Company's principal executive offices a written revocation or
duly executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company at
or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company is also using the
services of Kissel-Blake, a proxy solicitation firm, at a cost of approximately
$4,000. The Company's employees will receive no compensation for soliciting
proxies other than their regular salaries. The Company may request banks,
brokers and other custodians, nominees and fiduciaries to forward copies of the
proxy material to their principals and to request authority for the execution of
proxies. The Company may reimburse such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of five members to Class III of the Company's Board of
Directors to serve until the 2002 Annual Meeting of Shareholders or until their
successors are duly elected and qualified, and one member to Class I of the
Company's Board of Directors, to serve until the 2000 Annual Meeting of
Shareholders, or until his successor is duly elected and qualified;
(2) The approval of the Company's 1998 Stock Option Plan, as set forth
in Appendix A hereto;
(3) The ratification of the reappointment of Grant Thornton LLP,
independent certified public accountants, as the Company's auditors for the
fiscal year ending December 31, 1999; and
(4) Such other business as may properly come before the Annual Meeting,
including any adjournment(s) or postponement(s) thereof.
<PAGE> 4
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) FOR the election of the six nominees for director named below;
(b) FOR the approval of the Company's 1998 Stock Option Plan; and (c) FOR the
ratification of the appointment of Grant Thornton LLP as the Company's auditors.
In the event a shareholder specifies a different choice by means of the enclosed
proxy, his shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 15, 1999
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of, and to vote at, the Annual Meeting. As of the
Record Date, there were 22,090,966 shares of Common Stock issued and
outstanding, all of which are entitled to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote on all matters to be acted upon at
the Annual Meeting and neither the Company's Articles of Incorporation nor
Bylaws provides for cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority of
the shares of Common Stock entitled to vote at the Annual Meeting is necessary
to constitute a quorum for transaction of business at the Annual Meeting. If
less than a majority of the outstanding shares of Common Stock are represented
at the Annual Meeting, a majority of the shares so represented may adjourn the
Annual Meeting from time to time without further notice. The affirmative vote of
a majority of the shares of Common Stock present in person or by proxy at the
Annual Meeting is required for the approval of each matter that is submitted to
shareholders for approval, with the exception of the vote for the directors, who
shall be elected by a plurality of the votes cast by the shares entitled to vote
at the Annual Meeting. An independent inspector shall count the votes and
ballots.
Abstentions are considered as shares present and entitled to vote but
are not counted as votes cast in the affirmative on a given matter. A broker or
nominee holding shares registered in its name, or in the names of its nominee,
which are beneficially owned by another person and for which it has not received
instructions as to voting from the beneficial owner, has, in the opinion of the
Company, the discretion to vote the beneficial owner's shares with respect to
each of the matters presented at the Annual Meeting (absent contrary
instructions from the beneficial owner). If a matter has been included in the
proxy to which a broker or nominee does not have discretionary voting power
under applicable New York Stock Exchange rules, any broker or nominee
"non-votes" will not be considered as shares entitled to vote on that subject
matter and, therefore, will not be considered by the inspector when counting
votes cast on the matter.
2
<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
director of the Company, (ii) the Company's Chief Executive Officer and four
other most highly compensated officers of the Company during the year ended
December 31, 1998, (iii) each beneficial owner of more than 5% of the
outstanding Common Stock and (iv) all directors and executive officers of the
Company, as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
---------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES (2) PERCENT
- - ---------------------------------------- ---------- -------
<S> <C> <C>
Frederick E. Fair.......................................................... 0 *
David M. Friedson.......................................................... 908,561 (3) 4.1
Susan J. Ganz.............................................................. 3,400 (4) *
Barbara Friedson Garrett.................................................. 184,815 (5) *
Leonard Glazer............................................................. 4,552 (6) *
J. Maurice Hopkins......................................................... 0 *
Thomas J. Kane............................................................. 14,500 (7) *
Lai Kin.................................................................... 1,834,500 (8) 8.3
Desmond Lai................................................................ 44,000 (9) *
Wendy Sager Pomerantz...................................................... 17,807 *
Jerald I. Rosen............................................................ 22,778 (10) *
Felix S. Sabates........................................................... 66,000 (11) *
Harry D. Schulman.......................................................... 142,196 (12) *
Raymond So................................................................. 132,000 (13) *
Harold Strauss............................................................. 39,104 (14) *
Arnold Thaler.............................................................. 78,972 (15) *
Dresdner Bank AG........................................................... 2,071,644 (16) 9.4
Jurgen-Ponto-Platz 1
60301 Frankfurt, Germany
Dresdner RCM Global Investors US Holdings LLC.............................. 2,049,644 (17) 9.3
Dresdner RCM Global Investors LLC
Four Embarcadero Center
San Francisco, California 94111
ICM Asset Management, Inc.................................................. 2,529,050 (18) 11.4
601 West Main Avenue, Suite 600
Spokane, Washington 99201
All directors and executive officers as a group (16 persons)............... 3,550,580 (19) 15.7%
</TABLE>
- - -------------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial
owners identified above is c/o Windmere-Durable Holdings, Inc., 5980
Miami Lakes Drive, Miami Lakes, Florida 33014-2467.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares. A person is deemed to be the
beneficial owner of securities that can be acquired by such person
within 60 days from the Record Date upon the exercise of options.
(3) Includes the ownership of options to purchase 83,040 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 1,035,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(4) Includes the ownership of options to purchase 3,000 shares of Common
Stock that are exercisable within 60 days from the Record Date.
(Footnotes continued on following page.)
3
<PAGE> 6
(5) Includes the ownership of options to purchase 145,500 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 50,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(6) Includes the ownership of options to purchase 2,000 shares of Common
Stock that are exercisable within 60 days from the Record Date.
(7) Includes the ownership of options to purchase 8,000 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 25,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(8) Includes the ownership of options to purchase 45,500 shares of Common
Stock that are exercisable within 60 days from the Record Date.
Represents shares owned by Ourimbah Investments, Limited, of which Mr.
Lai Kin is Managing Director. Mr. Lai Kin disclaims the ownership of
any Common Stock owned by his wife or his children.
(9) Includes the ownership of options to purchase 44,000 shares of Common
Stock that are exercisable within 60 days from the Record Date. Mr. Lai
disclaims the beneficial ownership of the shares of Common Stock held
by his wife or his father.
(10) Includes the ownership of options to purchase 22,118 shares of Common
Stock that are exercisable within 60 days from the Record Date. Does
not include 17,565 shares owned by the wife of Jerald I. Rosen, as to
which shares Mr. Rosen disclaims beneficial ownership.
(11) Includes the ownership of options to purchase 46,000 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 25,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(12) Includes the ownership of options to purchase 25,000 shares of Common
Stock that are exercisable within 60 days of the Record Date; does not
include options to acquire 120,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(13) Includes the ownership of options to purchase 70,500 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 110,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(14) Includes the ownership of options to purchase 29,000 shares of Common
Stock that are exercisable within 60 days from the Record Date.
(15) Includes the ownership of options to purchase 51,500 shares of Common
Stock that are exercisable within 60 days from the Record Date; does
not include options to acquire 50,000 shares of Common Stock granted
pursuant to the 1998 Stock Option Plan.
(16) As reported in the shareholders' Schedule 13G, field with the
Commission on January 29, 1999. Dresdner RCM Global Investors LLC
("DRCM") is an investment advisor and a wholly owned subsidiary of
Dresdner RCM US Holdings LLC ("DRCM Holdings"). DRCM Holdings, a
Delaware limited liability company, is a wholly owned subsidiary of
Dresdner Bank AG.
(17) As reported in the shareholders' Schedule 13G, filed with the
Commission on February 12, 1999. Se Note 15 above for information
regarding the relationship between DRCM, DRCM Holding and Dresdner Bank
AG.
(18) As reported in the shareholders' Schedule 13G, filed with the
Commission on February 10, 1999.
(19) Does not include options to purchase 1,445,000 shares of Common Stock
granted pursuant to the 1998 Stock Option Plan.
* * * * *
4
<PAGE> 7
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who own more than ten percent of the Company's outstanding Common Stock,
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock. Such persons
are required by SEC regulation to furnish the Company with copies of all such
reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and verbal confirmations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
met, except for (a) William Endres, President of Windmere Corporation, who filed
late a Form 3 reporting his Section 16 status and a Form 4 documenting the
granting of options pursuant to his employment agreement, (b) Ourimbah
Investments, Limited, which filed late a Form 4 documenting the entering into of
a collar transaction (Mr. Lai Kin is the Managing Director of Ourimbah
Investments, Limited ("Ourimbah")), (c) Desmond Lai, a director of the Company
and of Durable, who filed a late Form 4 relating to the transfer of stock
options from Ourimbah, (d) Raymond So, a director of the Company and Managing
Director of Durable, who filed a late Form 4 relating to the transfer of stock
options from Ourimbah and (e) Jerald Rosen, a director of the Company, who filed
a late Form 4 relating to the purchase of shares of Common Stock.
5
<PAGE> 8
PROPOSAL ONE
ELECTION OF DIRECTORS
On January 15, 1999, the Board of Directors of Company voted to
increase the size of the Board by one Class I and one Class III director and, on
January 29, 1999, elected Messrs. Fred Fair and J. Maurice Hopkins to fill the
positions. The Board of Directors is presently composed of fifteen directors,
divided evenly among Class I, Class II and Class III. The terms of office of all
of the directors in any one class expire each year on a rotating basis. Ms.
Wendy Sager Pomerantz, who is currently a Class I director, has decided not to
stand for re-election and the Board nominated Mr. Harry D. Schulman for election
to such position.
At the Annual Meeting, five directors, Frederick E. Fair, David M.
Friedson, Desmond Lai, Jerald I. Rosen and Harry Schulman are to be nominated
for election to Class III of the Board of Directors, to serve until the 2002
Annual Meeting of Shareholders or until their respective successors are duly
elected and qualified. In addition, pursuant to Florida law, J. Maurice Hopkins
must stand for election and he is nominated to Class I of the Board of
Directors, to serve until the 2000 Annual Meeting of Shareholders or until his
successor is duly elected and qualified.
Other than Harry Schulman, each of the nominees for election as a
director of the Company is presently a member of the Board of Directors of the
Company. The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to accept election; however, in the event that a
nominee is unable to accept election, proxies solicited hereunder will be voted
in favor of the remaining nominees, if any, and for such other persons as may be
designated by the Board of Directors, unless it is directed by a proxy to do
otherwise.
The table below sets forth certain information regarding each director
and nominee for director.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ----------------------------------------- -----
<S> <C> <C> <C>
NOMINEES FOR ELECTION TO CLASS III OF THE BOARD:
Frederick E. Fair................................. 66 Director 1999
David M. Friedson................................. 42 Chairman of the Board, President and Chief 1982
Executive Officer
Desmond Lai...................................... 37 Director and Director of Durable 1996
Jerald I. Rosen................................... 70 Director 1963
Harry D. Schulman................................. 47 Chief Operating Officer, Chief Financial 1999
Officer and Secretary
NOMINEE FOR ELECTION TO CLASS I OF THE BOARD:
J. Maurice Hopkins................................ 51 Director 1999
CONTINUING MEMBERS OF THE BOARD:
CLASS I DIRECTORS
Susan J. Ganz..................................... 38 Director 1996
Barbara Friedson Garrett......................... 45 Director and Senior Vice President 1984
Thomas J. Kane.................................... 56 Director 1996
Felix S. Sabates.................................. 56 Director 1991
CLASS II DIRECTORS
Leonard Glazer.................................... 75 Director 1979
Lai Kin........................................... 68 Director and Chairman of Durable 1989
Raymond So........................................ 48 Director and Managing Director of Durable 1995
Harold Strauss.................................... 75 Director 1972
Arnold Thaler..................................... 59 Director and Senior Vice President 1996
</TABLE>
6
<PAGE> 9
CLASS I DIRECTORS
J. MAURICE HOPKINS has served as President of Merchandise Sales
Corporation, a consumer products sales and marketing company, for more than the
last five years.
SUSAN J. GANZ has served as President and Chief Executive Officer of
each of Lion Brothers Co., Inc. (and as a senior officer of certain of its
direct and indirect subsidiaries and affiliates), a manufacturer of embroidered
emblems, and Chesapeake Cap Company, Inc., a manufacturer of headwear, for more
than the last five years.
BARBARA FRIEDSON GARRETT has served as Senior Vice President of the
Company since November 1, 1998. From June 16, 1998, until October 31, 1998, Ms.
Garrett served as a director of the Company, and from February 1996 until June
15, 1998, she served as Senior Vice President of the Company. Prior to that
time, Ms. Garrett served as an Executive Vice President-Sales and Marketing and
held various other management positions with the Company. Ms. Garrett is the
sister of David Friedson.
THOMAS J. KANE has served as President of T.J.K. Sales, Inc., an
independent sales representative, since he founded the company in 1978. See
"Certain Transactions" for a description of business conducted between T.J.K.
Sales, Inc. and the Company.
FELIX S. SABATES has been Chief Executive Officer of Top Sales Company,
Inc., an independent sales representative, since he founded the company in
January 1965. See "Certain Transactions" for a description of business conducted
between Top Sales Company , Inc. and the Company.
CLASS II DIRECTORS
LEONARD GLAZER retired in 1992 and is a private investor. For more than
five years prior thereto, Mr. Glazer was President of Professional Engineering
International, Inc., an engineering consulting firm.
LAI KIN has been Chairman of Durable Electrical Metal Factory, Ltd.
("Durable"), a subsidiary of the Company, since 1995. From 1973 to 1995, Mr. Lai
Kin was Managing Director of Durable. In addition, Mr. Lai Kin has been Managing
Director of Ourimbah Investment, Limited ("Ourimbah"), a holding and investment
company, since 1989. Mr. Lai Kin is the father of Desmond Lai.
RAYMOND SO has served as Managing Director of Durable since February
1996. From February 1996 to June 15, 1998, he served as a Senior Vice President
of the Company. Prior thereto and beginning in 1986, Mr. So held various senior
executive management positions with Durable.
HAROLD STRAUSS, Ph.D., has been a Professor of Business Management and
Organizational Behavior at the University of Miami since 1968.
ARNOLD THALER has served as a Senior Vice President of the Company
since November 1, 1998. From June 16, 1998 until October 31, 1998, Mr. Thaler
served as a director of the Company, and from February 1996 until June 15, 1998,
he served as a Senior Vice President of the Company. Prior to that time, Mr.
Thaler served as an Executive Vice President - Product Development, Engineering
and Manufacturing of the Company and held various other management positions
with the Company.
CLASS III DIRECTORS
FREDERICK E. FAIR has been Senior Vice President of Institutional Sales
of Raymond James Financial, Inc. for more than the last five years. Mr. Fair
accepted his nomination to the Board of Directors of the Company on January 15,
1999.
DAVID M. FRIEDSON has served as Chairman of the Board of the Company
since April 1996, Chief Executive Officer of the Company since January 1987 and
as President of the Company since January 1985.
7
<PAGE> 10
From June 1976 to January 1985, Mr. Friedson held various other management
positions with the Company. Mr. Friedson is the brother of Barbara Friedson
Garrett.
DESMOND LAI has served as a director of Durable since March 1993 and
has held various senior management positions with Durable for more than the last
five years. Desmond Lai is the son of Mr. Lai Kin.
JERALD I. ROSEN was Secretary of the Company from 1977 until December
31, 1998. Mr. Rosen has been engaged in the practice of law since 1969 and has
been a Certified Public Accountant since 1952.
HARRY D. SCHULMAN has served as Chief Operating Officer of the Company
since November 1, 1998, Chief Financial Officer of the Company since March 1990
and Secretary of the Company since January 1, 1999. From February 1998 until
June 15, 1998 he served as Senior Vice President of the Company. From February
1993 until June 1998, he served as Executive Vice President - Finance and
Administration of the Company. Prior thereto, he held other senior finance
positions in the Company.
DIRECTOR COMPENSATION
Salaried employees of the Company do not receive any additional cash
compensation for serving as a director or committee member. In 1998,
non-employee directors of the Company received $1,500 per month for service on
the Board of Directors and $750 for each Board of Directors' meeting and each
committee meeting attended. Additionally, each director of the Company received,
on June 1, 1998, options to acquire 1,500 shares of Common Stock at a price of
$31.69, the fair market value of the Common Stock on the date of the option
grant. The Company intends to continue to grant its directors 1,500 options on
June 1 of each year.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and acted five times in
writing during 1998. All of the Company's directors other than Messrs. Lai Kin,
So and Desmond Lai and Ms. Ganz attended more than 75% of the aggregate of (i)
the total number of meetings of the Board of Directors and (ii) the total number
of meetings held by all committees of the Board of Directors on which such
person served.
The Board of Directors of the Company has Audit, Nominating and
Compensation Committees. The members of each committee have been appointed by
the Board of Directors to serve until their respective successors are elected
and qualified.
AUDIT COMMITTEE. The Audit Committee reviews the scope and results of
the audit of the financial statements of the Company and reviews the internal
accounting, financial and operating control procedures of the Company. The Audit
Committee is composed of Dr. Strauss (Chairman), Mr. Glazer (who was appointed
on March 13, 1998) and Mr. Rosen, each of whom, in accordance with the rules of
the New York Stock Exchange, is independent of management and free from any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a committee member. The Audit
Committee met three times in 1998.
NOMINATING COMMITTEE. The Nominating Committee considers nominees for
membership on the Board of Directors who are recommended by the Company's
shareholders. Under the Company's Amended and Restated Bylaws, nominations for
director may be made by a shareowner entitled to vote who delivers notice to the
Company not less than 90 days nor more than 120 days prior to the first
anniversary of the date of the notice of the preceding year's annual meeting.
Such shareholder's notice to the Secretary must set forth (a) as to each person
whom the shareholder proposes to nominate for election as a director (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
any shares of the Company or any subsidiary of the Company which are
beneficially owned by such person, (iv) any lawsuits to which such person is a
party, (v) the involvement of such person in or with any business which may be
competitive with the Company and (vi) any other information relating to such
person that is required to be disclosed in solicitations for proxies for
election of directors or in a Schedule 13-D pursuant to any then existing rule
or
8
<PAGE> 11
regulation promulgated under the Exchange Act; and (b) as to the shareholder
giving the notice (i) the name and record address of such shareholder and (ii)
the class and number of shares of the Company which are beneficially owned by
such shareholder. The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee as a director. The Nominating Committee,
which is composed of Mr. Friedson (Chairman), Dr. Strauss, Mr. Glazer (who was
appointed on March 13, 1998) and Messrs. Rosen and Sabates, did not meet in
1998.
COMPENSATION COMMITTEE. The Compensation Committee determines the cash
and other incentive compensation, if any, to be paid to the Company's executive
officers. The Compensation Committee is also responsible for the administration
and award of stock options under the Company's 1992 Employee Incentive Stock
Option Plan, the Company's 1996 Stock Option Plan and the Company's 1998 Stock
Option Plan (collectively, the "Stock Option Plans"), as well as the award of
non-qualified stock options issued pursuant to individual stock option
agreements. The Compensation Committee is composed of Messrs. Rosen (Chairman),
Glazer (who was appointed on March 13, 1998) and Dr. Strauss (as of March 13,
1998), each of whom is an "outside director" within the meaning of Rule 162(m)
("Rule 162(m)") of the Internal Revenue Code of 1986, as amended. The
Compensation Committee met three times and acted eight times in writing in 1998.
9
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the
aggregate compensation paid during each of the years ended December 31, 1998,
1997 and 1996 to the Company's Chief Executive Officer (the "CEO") and each of
the four most highly compensated executive officers of the Company other than
the CEO. The CEO and such other executive officers are sometimes referred to
herein as the "Named Executive Officers."
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
--------------
ANNUAL SECURITIES
COMPENSATION (1) UNDERLYING ALL OTHER
FISCAL ----------------------- OPTIONS/SARs COMPENSATION
NAME YEAR SALARY ($) BONUS ($) (#)(2) ($)
---- ------ ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David M. Friedson................. 1998 1,014,710 5,000,000(3) 1,036,500 $2,357(4)
Chairman, President and 1997 890,962 0 1,500 2,357
Chief Executive Officer 1996 881,280 192,200 601,500 2,357
Lai Kin........................... 1998 396,903 116,193 1,500 0
Chairman of Durable 1997 364,645 107,161 1,500 0
1996 314,322 96,194 15,500 0
Harry D. Schulman................. 1998 347,365 500,000(3) 120,000 2,609(5)
Chief Operating Officer, 1997 252,893 0 0 2,609
Chief Financial Officer 1996 252,884 54,962 50,000 2,609
and Secretary
Raymond So........................ 1998 349,935 505,613(3) 111,500 0
Senior Vice President 1997 300,903 92,064 1,500 0
1996 258,193 77,226 35,500 0
Arnold Thaler..................... 1998 337,762 150,000(3) 51,500 4,457(6)
Senior Vice President 1997 288,956 0 1,500 3,575
1996 295,192 37,663 51,500 3,575
</TABLE>
- - ----------
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column. The
aggregate amount of perquisites and other personal benefits provided to
each Named Executive Officer did not exceed the lesser of $50,000 or
10% of the total of annual salary and bonus of such officer.
(2) See "Option Grants Table" and "Aggregate Option Exercises and Year-End
Option Value Table" below for additional information about these
options. The Company has not granted any SARs.
(3) The 1998 bonuses for Messrs. Friedson, Schulman and Thaler, and a
portion of the bonus for Mr. So, were special, one-time payments made
in August 1998 in connection with increases in the Company's net income
as the result of the July 1998 sale of the Company's interest in
Salton, Inc. (f/k/a Salton/Maxim Housewares, Inc.), which resulted in a
significant gain to the Company. In connection with Mr. Friedson's 1998
bonus, the Committee also recognized his role in the investments in
Salton and Newtech Electronics Industries, Inc. and the contract with
K-Mart Corp. for White Westinghouse branded products he negotiated on
behalf of both of those companies. See "Compensation Committee's Report
on Executive Compensation."
(4) The amount indicated consists of life insurance premiums of $357 paid
by the Company on a policy as to which the Named Executive Officer may
designate the beneficiary and matching contributions made by the
Company of $2,000 to its 401(k) Profit Sharing Plan.
(Footnotes continued on following page.)
10
<PAGE> 13
(5) The amount indicated consists of life insurance premiums of $609 paid by
the Company on a policy as to which the Named Executive Officer may
designate the beneficiary and matching contributions made by the Company
of $2,000 to its 401(k) Profit Sharing Plan.
(6) The amount indicated consists of life insurance premiums of $2,457 paid
by the Company on a policy as to which the Named Executive Officer may
designate the beneficiary and matching contributions made by the Company
of $2,000 to its 401(k) Profit Sharing Plan.
* * * * *
OPTION GRANTS TABLE. The following table sets forth certain information
concerning grants of stock options made during 1998 to each of the Named
Executive Officers. The Company did not grant any stock appreciation rights in
1998.
OPTION/SAR GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARs EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME GRANTED (1) IN FISCAL YEAR ($/SH) DATE VALUE ($)(2)
---- ----------- -------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
David M. Friedson......... 1,500 * 31.69 5/31/08 $19,980
1,035,000 38.6% 24.50 4/30/03 $10,588,050
Lai Kin................... 1,500 * 31.69 5/31/08 $19,980
Harry D. Schulman......... 120,000 4.5% 24.50 4/30/03 $1,227,600
Raymond So................ 1,500 * 31.69 5/31/08 $19,980
110,000 4.1% 24.50 4/30/03 $1,125,300
Arnold Thaler............. 1,500 * 31.69 5/31/08 $19,980
50,000 1.9% 24.50 4/30/03 $511,500
</TABLE>
- - ----------
* Less than 1%
(1) The options were granted pursuant to either the Company's 1996 Stock
Option Plan or the Company's 1998 Stock Option Plan.
(2) Based on the binomial option pricing model adapted for use in valuing
executive stock options. The estimated values under that model are
based on certain assumptions as to variables such as interest rates,
stock price volatility and future dividend yields. The actual value, if
any, that an executive may realize will depend on the excess of the
stock price over the exercise price on the date the option is
exercised, so that there is no assurance that the value realized by an
executive will be at or near the value estimated by the binomial model.
* * * * *
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE. The
following table sets forth certain information concerning stock options
exercised during 1998 and unexercised stock options held by the Named Executive
Officers as of the end of 1998.
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARs AT
OPTIONS AT 1998 1998 FISCAL
SHARES FISCAL YEAR-END(#) YEAR-END ($)(1)
ACQUIRED VALUE EXERCISABLE (E) EXERCISABLE (E)
NAME ON EXERCISE(#) REALIZED ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
---- -------------- ------------ ------------------ ----------------
<S> <C> <C> <C> <C>
David M. Friedson................ 627,717 9,840,282 83,040(E) 40,725(E)
1,036,500(U) 0(U)
Lai Kin.......................... 0 0 1,500(E) 39,430(E)
45,500(U) 0(U)
Harry D. Schulman................ 25,000 456,250 0(E) 0(E)
165,000(U) 26,250(U)
Raymond So....................... 18,000 370,125 60,500(E) 38,000(E)
121,500(U) 7,500(U)
Arnold Thaler.................... 118,000 2,153,219 24,500(E) 15,000(E)
98,500(U) 30,000(U)
</TABLE>
- - ----------
(1) Based on the closing price of the Company's Common Stock on the New
York Stock Exchange on December 31, 1998, which was $7.75.
* * * * *
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
PHILOSOPHY. The Compensation Committee's executive compensation
philosophy is to provide competitive levels of compensation, integrate the
compensation of its executive officers with the achievement of the Company's
annual and long-term performance goals, reward above average corporate
performance, recognize individual initiative and achievement, particularly with
respect to special projects and assignments, and assist the Company in
attracting and retaining qualified management. To meet these objectives, the
Compensation Committee attempts to set the compensation of its executive
officers at levels that it believes are competitive with other companies of the
same size in the Company's industry in light of the Company's current and
anticipated performance. The Compensation Committee endorses the position that
equity interest in the Company by management is beneficial in aligning executive
officers' and shareholders' interests in the enhancement of shareholder value.
COMPONENTS OF EXECUTIVE COMPENSATION. Compensation of the Company's
executive officers consists of both cash payments and grants of stock options.
The annual cash compensation consists of a base salary and an annual bonus.
Long-term incentives are provided through the grant of qualified stock options
under the Company's Stock Option Plans and non-qualified stock options issued
pursuant to individual stock option agreements.
BASE SALARIES. The Compensation Committee attempts to set base salaries
of its executive officers at levels that it believes are competitive with other
companies of the same size in the Company's industry. Information about
appropriate salary levels has been determined by reviewing the public disclosure
of the Company's competitors and through the Company's recruiting activities.
Except as described below, salaries are reviewed annually, and any increases are
based on competitive practices as well as the performance of the Company and the
executive officer.
Eight of the Company's executive officers, five of whom (including the
Chief Executive Officer) are named in the compensation tables preceding this
Report, are parties to Employment Agreements with the Company.
12
<PAGE> 15
Each of these Employment Agreements provides for an annual salary increase equal
to the increase in the Consumer Price Index.
BONUSES. Cash bonuses have been a standard and expected component of
compensation at the Company when the Company has experienced particularly
positive financial results. No annual bonuses were paid in 1998, except for
special, one-time bonus payments in recognition of the efforts of certain
employees in the sale of the Company's investment in Salton, Inc. Cash bonuses
of between one and three months' base salaries were paid to almost all persons
employed by the Company's subsidiaries in Hong Kong, in accordance with the
customary practice in Hong Kong. Messrs. Lai Kin and So, along with other
members of the senior management of Durable, are paid bonuses in excess of such
amounts, primarily because of their contribution to the successful operation of
such company.
In August 1998, the Compensation Committee approved the payment of
special bonuses pursuant to the terms of the Company's 1997 Cash Bonus
Performance Plan for Executive Officers (the "Plan") in the aggregate amount
equal to 10% of the amount, if any, by which the Net Income, as that term is
defined in the Plan, of the Company was increased as a result of the gain, if
any, from the Company's sales of its investment in Salton, Inc. and/or Newtech
Electronics Industries, Inc. (the "Bonus Pool"). The Company's investment in
Salton was sold on July 28, 1998. As approved, the first $5 million of the Bonus
Pool was payable to David M. Friedson, and the remainder of the Bonus Pool was
allocated among certain other employees.
STOCK OPTIONS. The Compensation Committee grants stock options to the
Company's executive officers pursuant to the Company's Stock Option Plans and
individual stock option agreements. The Compensation Committee has the authority
to determine the individuals to whom stock options are awarded, the terms at
which option grants are made, the duration of the options and the number of
shares subject to each option. The size of the option grants are generally based
on the position level of the recipient. Through the award of stock options, the
objective of aligning executive officers' long range interests with those of the
shareholders is met by providing the executive officers with the opportunity to
build a meaningful stake in the Company.
It is the Compensation Committee's intention that, over time,
compensation opportunities from option grants will constitute a significant
portion of each executive officer's total compensation. However, there are not
automatic grants to each executive officer every year. Instead, the Compensation
Committee reviews the performance of the Company overall and of each individual
executive officer, as well as past option grants to each executive officer, and
makes decisions about recipients and grant sizes for the year.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The Compensation Committee
considered a number of factors in determining the compensation to be paid to the
Company's Chief Executive Officer, including levels generally paid to executives
in the Company's industry, the Company's performance to date, the Chief
Executive Officer's contribution to the Company's development and the Company's
short- and long-term prospects. As noted above, in August 1998, the Compensation
Committee approved the granting of special bonuses under the Company's 1997 Cash
Bonus Performance Plan for Executive Officers in connection with increases in
the Company's net income as the result of the July 1988 sale of the Company's
interests in Salton, Inc. ("Salton") and/or Newtech Electronics Industries, Inc.
("Newtech"), which resulted in a significant gain to the Company. In connection
with such bonus, the Committee recognized Mr. Friedson's role in the investments
in Salton and Newtech and the contract with K-Mart Corp. for White Westinghouse
branded products he negotiated on behalf of both of those companies. The
Committee also noted that Mr. Friedson did not receive a bonus in 1997. In
recognition of his efforts, the Committee awarded Mr. Friedson a special $5.0
million bonus and 1,035,000 options at $24.50 per share. Additionally, he was
granted 1,500 options at $31.69 per share pursuant to the Company's 1996 Stock
Option Plan for his services as a director of the Company.
The Compensation Committee
Leonard Glazer
Jerald I. Rosen
Dr. Harold Strauss
13
<PAGE> 16
COMPARATIVE PERFORMANCE BY THE COMPANY
Set forth below is a five-year graphic comparison of the yearly
percentage change in the Company's cumulative shareholder return on its Common
Stock with the cumulative total return of (i) the Standard & Poor's 500 Stock
Index (the "S&P Index") and (ii) appropriate similar companies (the "Peer Group
Index"). The companies included as part of the Peer Group Index were selected on
the basis of the similarity of such companies to the Company, considering such
factors as products sold, market capitalization, existence of public market for
the equity securities of such companies and the industry within which such
companies operate.
(graphic omitted)
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WINDMERE PEER GROUP* S&P 500
--------------------- -------- ----------- -------
1993 $ 100 $ 100 $ 100
1994 $ 101 $ 88 $ 101
1995 $ 95 $ 93 $ 139
1996 $ 182 $ 147 $ 171
1997 $ 329 $ 203 $ 228
1998 $ 140 $ 237 $ 293
- - ----------
* Peer companies include National Presto Industries Inc., Royal Appliance
Manufacturing Co., Helen of Troy Corp. Ltd., Salton, Inc. and Holmes
Product International, Inc. Toastmaster Inc. and The Rival Company,
which were included in the Peer Group Index for 1997, were acquired by
Salton, Inc. and the Holmes Product International, Inc., respectively,
which companies are now included in the 1998 Peer Group Index.
NOTE: Assumes that $100 was invested on December 31, 1993 in the Company's
Common Stock, the S&P Index and the Peer Group Index and that dividends
are reinvested quarterly.
14
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Jerald
I. Rosen, Leonard Glazer (since March 13, 1998) and Dr. Harold Strauss (since
March 13, 1998). Mr. Rosen served as Secretary of the Company through December
31, 1998, although he was not compensated for his services in such capacity.
Messrs. Rosen and Glazer and Dr. Strauss are independent directors of the
Company and each are not affiliated with any principal shareholder of the
Company.
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with David M.
Friedson, dated July 18, 1983, which has been amended from time to time. Under
this agreement, among other things, Mr. Friedson is employed for a five-year
term, which term is automatically extended each year for an additional one-year
period unless written notice of an intention not to extend is given by either
party. This agreement provides for a minimum annual base salary which, as of
December 31, 1998, was $1,014,710, subject to adjustment in subsequent periods
according to changes in the Consumer Price Index, in addition to other benefits.
If, at any time during the term of the agreement, there is a change in control
of the Company, Mr. Friedson has the option of terminating his employment upon
60 days' notice and, in such event, any outstanding options held by Mr. Friedson
may be exercised and sold without restrictions imposed by the Company, and the
Company must pay Mr. Friedson a lump sum equal to three times Mr. Friedson's
then annual salary. Such lump sum payment would be in lieu of any compensation
that would otherwise be due and payable under this agreement. In consideration
for such lump sum payment, Mr. Friedson has agreed to consult with the Company
and its officers after termination of his employment, if requested to do so, for
a period of four years from the date of such termination, devoting such time to
such services as Mr. Friedson believes to be reasonable.
The Company has entered into employment agreements with Harry D.
Schulman and Arnold Thaler. These agreements, as amended from time to time,
provide, among other things, for the employment of Messrs. Schulman and Thaler
as Senior Vice Presidents, each for an initial term of three years, which terms
are each automatically extended each year for an additional one-year period
unless written notice of an intention not to extend is given by either party.
Under these agreements, each is entitled to a minimum annual base salary which,
as of December 31, 1998, was $347,365 for Mr. Schulman, and $337,762 for Mr.
Thaler, subject to adjustment in subsequent periods according to changes in the
Consumer Price Index, in addition to other benefits. If at any time during the
term of these agreements, there is a change in control of the Company, Messrs.
Schulman and Thaler each have the option of terminating his employment upon 60
days' notice and, in such event, any outstanding options held by him may be
exercised and sold without restrictions imposed by the Company, and the Company
shall pay each of them a lump sum equal to three times their current annual
salary. Such lump sum payment would be in lieu of any compensation that would
otherwise be due thereafter under these agreements. In consideration for such
lump sum payment, Messrs. Schulman and Thaler have agreed to consult with the
Company and its officers after termination of his or her employment, if
requested to do so, for a period of four years from the date of such
termination, devoting only such time to such services as he believes to be
reasonable.
Durable has entered into employment agreements with Lai Kin and Raymond
So. These agreements, as amended from time to time, provide, among other things,
for the employment of Messrs. Lai Kin and So, as Chairman and Managing Director,
respectively, of Durable, each for an initial term of three years, which terms
are each automatically extended each year for an additional one-year period
unless written notice of an intention not to extend is given by either party.
Under these agreements, the Durable Employees are each entitled to a minimum
annual base salary which, as of December 31, 1998, was $396,903 for Mr. Lai Kin
and $349,935 for Mr. So, subject to adjustment in subsequent periods according
to changes in the Consumer Price Index, in addition to other benefits. If at any
time during the term of these agreements, there is a change in control of the
Company, then Messrs. Lai Kin and So have the option of terminating his
employment upon 60 days' notice and, in such event, any outstanding options held
by them may be exercised and sold without restrictions imposed by the Company,
and the Company shall pay Messrs. Lai Kin and So a lump sum equal to three times
their current annual salary. Such lump sum payment would be in lieu of any
compensation that would otherwise be due thereafter under these agreements. In
consideration for such lump sum payment, each Durable Employee has agreed to
consult with the Company and its
15
<PAGE> 18
officers after termination of his or her employment, if requested to do so, for
a period of four years from the date of such termination, devoting only such
time to such services as the Durable Employee believes to be reasonable.
Upon Mr. Lai Kin's resignation or termination as Chairman of Durable,
the Company has agreed to employ Mr. Lai Kin as a consultant to the Company and
Durable and any of their affiliates at a salary equal to 60% of Mr. Lai Kin's
annual base salary from Durable in the fiscal year immediately preceding his
resignation or termination from Durable. Pursuant to this agreement, Mr. Lai Kin
will be employed as a consultant for a three-year period which is automatically
extended by one year on the first day of the second year of each three-year
period unless two years' prior written notice is given to terminate the
agreement, in which event the term of the agreement will be automatically
extended for one additional year beyond the expiration of the then current three
year period.
The Company entered into an employment agreement with William M.
Endres, dated October 30, 1998. Pursuant to this agreement, Mr. Endres is
employed until December 31, 2000, which term is automatically extended each year
for an additional one-year period unless written notice of an intention not to
extend is given by either party. The agreement provides for a minimum annual
base salary which, as of December 31, 1998, was $235,00, subject to adjustment
in the discretion of the Board of Directors or the President of the Company, in
addition to other benefits and annual stock option grants at the discretion of
the Board of Directors. Upon the execution of his employment agreement, Mr.
Endres received non-qualified options to purchase 55,000 shares of the Company's
Common Stock, vesting over three years. Mr. Endres is also entitled to an annual
performance bonus based upon his completion of certain objective earnings and
personal performance goals set by the Board of Directors each year. The
performance bonus can be between 20% and 50% of his base salary, depending on
his performance. Additionally, Mr. Endres is entitled to an annual synergies
bonus based upon objective performance goals set by the Board of Directors in
integrating Household Products, Inc. into the Company. This bonus can be between
5% and 25% of his base salary, depending on his performance. Mr. Endres'
agreement contains certain non-competition, non-disclosure and non-solicitation
covenants. Mr. Endres can be terminated for cause, in which case all obligations
of the Company under the agreement immediately terminate, or without cause, in
which case he shall be entitled to a lump sum payment equal to 1.5 times his
base salary and 1.5 times his prior year performance bonus. If, at any time
during the term of the agreement, there is a change in control of the Company,
Mr. Endres has the option of terminating his employment and, in such event, any
outstanding options held by Mr. Endres may be exercised and sold without
restrictions imposed by the Company, and the Company must pay Mr. Endres a lump
sum equal to 1.5 times his base salary and 1.5 times his prior year performance
bonus.
The Company entered into an employment agreement with Michael
Michienzi, dated June 26, 1998. Under this agreement, among other things, Mr.
Michienzi is employed until June 30, 2000, which term is automatically extended
each year for an additional one-year period unless written notice of an
intention not to extend is given by either party. The agreement provides for
minimum annual base salary which, as of December 31, 1998, was $220,000, subject
to adjustment based on the increase in the consumer price index, in addition to
other benefits and annual stock option grants at the discretion of the Board of
Directors. Under the agreement, Mr. Michienzi received a grant on July 28, 1998,
of non-qualified options to purchase 20,000 shares of the Company's Common
Stock, vesting over three years in equal installments and terminating six years
from their date of grant, and additional grant of options to purchase 50,000
shares of the Company's Common Stock, vesting in full on June 30, 2000 and
terminating five years from their date of grant. Mr. Michienzi is also entitled
to an annual performance bonus based upon his completion of certain objective
earnings and personal performance goals set by the Board of Directors each year.
The performance bonus can be between 20% and 50% of his base salary, depending
on his performance. Additionally, Mr. Michienzi is entitled to an annual
synergies bonus based upon objective performance goals set by the Board of
Directors in integrating Household Products, Inc. into the Company. This bonus
can be between 5% and 25% of his base salary, depending on his performance. Mr.
Michienzi's agreement contains certain non-competition, non-disclosure and
non-solicitation covenants. Mr. Michienzi can be terminated for cause, in which
case all obligations of the Company under the agreement immediately terminate,
or without cause, in which case he shall be entitled to a lump sum payment equal
to 1.5 times his base salary and 1.5 times his prior year performance bonus. If,
at any time during the term of the agreement, there is a change in control of
the Company, Mr. Michienzi has the option of terminating his employment and, in
such event, any outstanding options held by Mr. Michienzi may be exercised and
sold without restrictions imposed by the Company, and the Company must pay Mr.
Michienzi a lump sum equal to 1.5 times his base salary and 1.5 times his prior
year performance bonus.
16
<PAGE> 19
CERTAIN TRANSACTIONS
The Company has agreed to use its best efforts to recommend to its
shareholders and directors that Lai Kin, Chairman of Durable and Managing
Director of Ourimbah, be appointed as, and remain a member of, the Company's
Board of Directors for such time as Mr. Lai Kin continues to be an indirect
shareholder of the Company and continues to be employed by Durable and/or any
other affiliate of the Company.
In April 1994, in connection with the purchase by the Company of 20% of
the outstanding shares of capital stock of Durable from Ourimbah, which resulted
in Durable becoming a wholly-owned subsidiary of the Company, the Company
agreed, upon a Change of Control of the Company (as defined in said agreement),
to make an additional payment to Ourimbah in respect of shares of Durable being
purchased under such agreement equal to the greater of (i) the same multiple of
earnings per share paid for the shares of Common Stock of the Company received
in connection with such Change of Control or (ii) the same multiple of net asset
value per share paid for the shares of Common Stock of the Company received in
connection with such Change of Control. In addition, the Company agreed to use
its best efforts to recommend to the shareholders and directors of the Company
that two individuals to be nominated by Mr. Lai Kin and deemed suitable by the
Company be appointed as members of the Company's Board of Directors. The Company
further agreed to maintain the composition of Durable's Board of Directors
equally divided between designees of Ourimbah and persons selected by the
Company. Accordingly, for so long as such designees of Ourimbah who are present
members of the Board of Directors of Durable (the "Durable Board"): (i) remains
a shareholder of Ourimbah, and (ii) Ourimbah remains a shareholder of the
Company, the Company must vote its shares of Durable to appoint such designees
of Ourimbah to the Durable Board. When any member of the Durable Board who has
been designated by Ourimbah ceases to be a shareholder of Ourimbah, such
designee shall no longer be entitled to serve on the Durable Board, and the
Company shall have the right to designate a replacement member to the Durable
Board in its sole discretion.
During 1998, the Company had a loan outstanding to David M. Friedson,
the Company's Chairman of the Board, President and Chief Executive Officer. As
of March 15, 1999, the balance of such loan was approximately $972,390. The
loan, which is unsecured, carries interest at a rate of LIBOR plus 1.5% and is
payable upon demand. Interest only is payable on an annual basis.
In 1986, the Company made a non-interest bearing loan of $78,000 to Mr.
Lai, a director of the Company, which loan was repaid in 1998.
Pursuant to a sales representation agreement dated November 6, 1978,
the Company paid T.J.K. Sales, Inc. ("TJK Sales") $468,625 representing
commissions on the sales of the Company's products made by such firm during
1998. Mr. Thomas J. Kane, a director of the Company, is the president of TJK
Sales. The Company also granted to TJK Sales options to acquire 25,000 shares of
its Common Stock at an exercise price of $24.50. Such options vest in equal
installments over three years and have a term of five years.
Pursuant to a sales representation agreement dated August 15, 1988, the
Company paid Top Sales, Inc. ("Top Sales") $497,899 representing commissions on
the sales of the Company's products made by such firm during 1998. Felix
Sabates, a director of the Company, is the sole shareholder and chief executive
officer of Top Sales. The Company also granted to Top Sales options to acquire
25,000 shares of its Common Stock at an exercise price of $24.50. Such options
vest in equal installments over three years and have a term of five years.
The Company was a 50% owner of Lion Redcliffe & Co. Ltd. ("Lion
Redcliffe"). Susan Ganz, a director of the Company, is President of Lion
Redcliffe and is the owner, directly or indirectly through family members, of
the remaining 50% of such company. In 1998, an affiliate of Lion Redcliffe
purchased 60% of the Company's ownership interest for $375,000. The Company
currently holds a 20% ownership interest in Lion Redcliffe.
Additionally, in 1995 and 1998, the Company and/or its subsidiaries
made loans to Lion Redcliffe in the amount of $300,000 and $250,000,
respectively. The loans bore interest at prevailing interest rates and were
repaid in 1998.
17
<PAGE> 20
PROPOSAL TWO
APPROVAL OF COMPANY'S 1998 STOCK OPTION PLAN
BACKGROUND AND PURPOSE
On April 30, 1998, the Board of Directors adopted the Company's 1998
Stock Option Plan (the "Plan") pursuant to which 3,000,000 shares of Common
Stock were reserved for issuance upon the exercise of stock options. The Plan
was subsequently amended by the Compensation Committee to, among other things,
decrease the number of shares of Common Stock available under the Plan to
2,100,000. The purpose of the Plan is to provide an additional incentive to
attract and retain qualified competent persons who provide services and upon
whose efforts and judgment the success of the Company is largely dependent,
through the encouragement of stock ownership in the Company by such persons. In
furtherance of this purpose, the Plan authorizes, among other things, the grant
of nonqualified stock options to purchase Common Stock (collectively, "Options")
to (i) employees, (ii) directors who are not employees of the Company or of any
subsidiaries and (iii) persons who provide consulting or other services as
independent contractors to the Company or its subsidiaries, subject to certain
exceptions. No Incentive Stock Options can be granted pursuant to the Plan.
Shareholder approval of the Plan is required (i) for purposes of
compliance with certain exclusions from the limitations of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) in order for the
Plan to be eligible under the "plan lender" exemption from the margin
requirements of Regulation U promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (iii) by the rules of the New York
Stock Exchange.
The effective date of the Plan is April 30, 1998 (the "Effective
Date"). Any Options granted under the Plan shall be subject to and conditioned
upon approval of the Plan by the Company's shareholders at the Annual Meeting.
The following is a summary of certain principal features of the Plan.
This summary is qualified in its entirety by reference to the complete text of
the Plan, which is attached to this Proxy Statement as Appendix A. Shareholders
are urged to read the actual text of the Plan in its entirety.
ADMINISTRATION OF THE PLAN
The Plan provides that it shall be administered by the Board of
Directors of the Company (the "Board") or by a committee (the "Committee")
appointed by the Board which shall be composed of two or more directors all of
whom shall be "outside directors" (as defined in the Plan) in compliance with
Rule 16b-3 of the Exchange Act and Section 162(m) of the Code (although Rule
16b-3 also may be complied with if the Options are approved by the Board). The
Plan is currently being administered by the Compensation Committee.
The Committee or the Board in its sole discretion determines the
persons to be awarded the Options, the number of shares subject thereto and the
exercise price and other terms thereof. In addition, the Committee or the Board
has full power and authority to construe and interpret the Plan, and the acts of
the Committee or the Board are final, conclusive and binding on all interested
parties, including the Company, its shareholders, its officers and employees,
recipients of grants under the Plan, and all persons or entities claiming by or
through such persons. The Company intends to grant Options annually to directors
and, pursuant to the Plan, on June 1 of each year during the term of the Plan,
all directors of the Company will each receive a grant of nonqualified Options
to purchase 1,500 shares of Common Stock.
An aggregate of 2,100,000 shares of Common Stock (subject to adjustment
described below) are reserved for issuance upon the exercise of Options granted
under the Plan. No individual may be granted more than 1,500,000 options
(subject to adjustment as described below) under the Plan in any twelve-month
period. The shares acquired upon exercise of Options granted under the Plan will
be authorized and issued shares of Common Stock. The Company's shareholders will
not have any preemptive rights to purchase or subscribe for any Common Stock by
reason of the reservation and issuance of Common Stock under the Plan. If any
Option granted under the
18
<PAGE> 21
Plan should expire or terminate for any reason other than having been exercised
in full, the unpurchased shares subject to that Option will again be available
for purposes of the Plan.
CERTAIN TERMS AND CONDITIONS
All Options granted under the Plan must be evidenced by a written
agreement between the Company and the grantee. The agreement will contain such
terms and conditions as the Committee or the Board shall prescribe, consistent
with the Plan, including, without limitation, the exercise price, term and any
restrictions on the exercisability of the Options granted. For any Option
granted under the Plan, the exercise price per share of Common Stock may be any
price determined by the Committee or the Board.
The Committee or the Board may permit the exercise price of an Option
to be paid for in cash, by check, by money order, with already owned shares of
Common Stock that have been held by the Optionee for at least six months (or
such other shares as the Company determines will not cause the Company to
recognize for financial accounting purposes a charge for compensation expense),
the withholding of shares of Common Stock issuable upon exercise of the Option,
by delivery of a properly executed exercise notice together with such
documentation as shall be required by the Committee or the Board (or, if
applicable, the broker) to effect a cashless exercise, or a combination of the
above. If paid in whole or in part with shares of already owned Common Stock or
the withholding of shares issuable upon exercise, the value of the shares
surrendered is deemed to be their "Fair Market Value" on the date the Option is
exercised. For purposes of the Plan, the "Fair Market Value" on any date of
reference is deemed to be the closing price of Common Stock on the business day
immediately preceding such date, unless the Committee or the Board in its sole
discretion determines otherwise in a fair and uniform manner. For this purpose,
the closing price of Common Stock on any business day is (i) if Common Stock is
listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of Common Stock on
such exchange or reporting system, as reported in any newspaper of general
circulation; (ii) if Common Stock is quoted on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq"), or any similar system
of automated dissemination of quotations of securities prices in common use, the
last reported sales price of Common Stock on such system or, if sales prices are
not reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system; or (iii) if neither clause (i) nor (ii)
is applicable, the mean between the high bid and low asked quotations for Common
Stock as reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations for Common Stock
on at least five of the 10 preceding days.
The Plan also authorizes the Company to lend money to an Optionee,
guarantee a loan to an Optionee, or otherwise assist an Optionee to obtain the
cash necessary to exercise all or a portion of the Option granted thereunder or
to pay any tax liability of the Optionee attributable to such exercise. If the
exercise price is paid in whole or part with the Optionee's promissory note,
such note shall (i) provide for full recourse to the maker, (ii) be
collateralized by the pledge of the shares that the Optionee purchases upon
exercise of such Option, (iii) bear interest at the prime rate of the Company's
principal lender or such other rate as the Committee or the Board, as the case
may be, shall determine, and (iv) contain such other terms as the Committee or
the Board in its sole discretion shall reasonably require.
Generally, no Option granted under the Plan is assignable or
transferable, other than by will or by the laws of descent and distribution;
provided, however, that the Board or the Committee may, in its discretion,
permit Options to be transferred or assigned, subject to certain conditions.
During the lifetime of an Optionee, an Option is exercisable only by him or her,
or if applicable, by his or her permitted assigns. The expiration date of an
Option under the Plan will be determined by the Committee or the Board at the
time of grant, but in no event may such an Option be exercisable after 10 years
from the date of grant. An Option may be exercised at any time or from time to
time or only after a period of time in installments, as the Committee or the
Board determines. The Committee or the Board may in its sole discretion
accelerate the date on which any Option may be exercised. Each outstanding
Option granted under the Plan may become immediately fully exercisable in the
event of certain transactions, including certain changes in control of the
Company, certain mergers and reorganizations, and certain dispositions of
substantially all the Company's assets.
19
<PAGE> 22
Unless otherwise provided in the Option agreement, the unexercised
portion of any Option granted under the Plan shall automatically be terminated
(a) immediately, unless the Committee otherwise determines, upon termination of
the Optionee's employment or service as a director, other than for (i) mental or
physical disability, or (ii) death; (b) immediately upon the termination of the
Optionee's employment for Cause; (c) twelve months after the date on which the
Optionee's employment is terminated by reason of mental or physical disability;
or (d) twelve months after the date on which the Optionee's employment is
terminated by reason of Optionee's death, or if later, three months after the
date of Optionee's death if death occurs during the one year period following
the termination of the Optionee's employment by reason of mental or physical
disability. Without the prior written consent of the Company, an option may not
be exercised if the Optionee has or intends to take employment or render
services to others within six months of exercise, or if the Optionee has or
intends to engage in conduct that adversely effects the Company.
To prevent dilution of the rights of a holder of an Option, the Plan
provides for appropriate adjustment of the number of shares for which Options
may be granted, the number of shares subject to outstanding Options and the
exercise price of outstanding Options, in the event of any increase or decrease
in the number of issued and outstanding shares of the Company's capital stock
resulting from a stock dividend, a recapitalization or other capital adjustment
of the Company. The Committee or the Board has discretion to make appropriate
antidilution adjustments to outstanding Options in the event of a merger,
consolidation or other reorganization of the Company or a sale or other
disposition of substantially all of the Company's assets.
The Plan will expire on April 30, 2008, and any Option outstanding on
such date will remain outstanding until it expires or is exercised. The
Committee or the Board may amend, suspend or terminate the Plan or any Option at
any time, provided that such amendment shall be subject to the approval of the
Company's shareholders if such shareholder approval is required by any federal
or state law or regulation (including, without limitation, Rule 16b-3 or to
comply with Section 162(m) of the Code) or the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
granted. In addition, no amendment, suspension or termination shall
substantially impair the rights or benefits of any Optionee, pursuant to any
Option previously granted, without the consent of the Optionee.
PRIOR GRANTS OF OPTIONS
As of the Record Date, the Board of Directors has granted non-qualified
stock options pursuant to the Plan for an aggregate of 1,847,500 shares of
Common Stock. All of such options are currently outstanding. The following table
indicates certain information about the options previously granted under the
Plan to the persons and groups indicated:
<TABLE>
<CAPTION>
VALUE OF OPTIONS AT
MARCH 15, 1999
NUMBER OF SHARES EXERCISE PRICE EXERCISABLE (E)/
NAME OR GROUP SUBJECT TO OPTIONS PER SHARE UNEXERCISABLE (U)
------------- ------------------ -------------- --------------------
<S> <C> <C> <C>
David M. Friedson............... 1,035,000 (1) $24.50 $0 (E)(U)
Lai Kin......................... 0 -- -- (E)(U)
Harry D. Schulman............... 120,000 (1) $24.50 $0 (E)(U)
Raymond So...................... 110,000 (1) $24.50 $0 (E)(U)
Arnold Thaler................... 50,000 (1) $24.50 $0 (E)(U)
All current executive officers
as a group (6 persons)....... 1,395,000 (1) $24.50 $0 (E)(U)
All current directors who are
not executive officers as a
group........................ 50,000 (2) $24.50 0 (E)(U)
All employees as a group, other
than executive officers (89
persons)..................... 402,500 (3) $ 7.38 0 (E)(U)
</TABLE>
(Footnotes on following page.)
20
<PAGE> 23
(1) These options have a term of five years and vest 1/3 in each of the
first three years.
(2) These options were granted to persons (who are also non-employee
directors of the Company) who serve as officers of companies which
provide sales representation services to the Company in order to
provide incentive to focus on sales of the Company's products. For
additional information, see "Certain Transactions."
(3) These options have a term of six years and vest in equal installments
over the first five years.
* * * * *
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS OF OPTIONS
The Plan is not qualified under the provisions of section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and is not subject to
any of the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
Only nonqualified stock options can be granted under the Plan. On
exercise of a nonqualified stock option, an Optionee will recognize ordinary
income equal to the excess, if any, of the fair market value on the date of
exercise of the shares of Common Stock acquired on exercise of the Option over
the exercise price. If the Optionee is an employee of the Company, that income
will be subject to the withholding of Federal income tax. The Optionee's tax
basis in those shares will be equal to their fair market value on the date of
exercise of the Option, and his holding period for those shares will begin on
that date.
If an Optionee pays for shares of Common Stock on exercise of an Option
by delivering shares of the Company's Common Stock, the Optionee will not
recognize gain or loss on the shares delivered, even if their fair market value
at the time of exercise differs from the Optionee's tax basis in them. The
Optionee, however, otherwise will be taxed on the exercise of the Option in the
manner described above as if he had paid the exercise price in cash. If a
separate identifiable stock certificate is issued for that number of shares
equal to the number of shares delivered on exercise of the Option, the
Optionee's tax basis in the shares represented by that certificate will be equal
to his tax basis in the shares delivered, and his holding period for those
shares will include his holding period for the shares delivered. The Optionee's
tax basis and holding period for the additional shares received on exercise of
the Option will be the same as if the Optionee had exercised the Option solely
in exchange for cash.
The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the Optionee,
provided that amount constitutes an ordinary and necessary business expense for
the Company and is reasonable in amount, and either the employee includes that
amount in income or the Company timely satisfies its reporting requirements with
respect to that amount.
SECTION 162 LIMITATIONS. The Omnibus Budget Reconciliation Act of 1993
added Section 162(m) to the Code, which generally disallows a public company's
tax deduction for compensation to covered employees in excess of $1 million in
any tax year beginning on or after January 1, 1994. Compensation that qualifies
as "performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the company that
pays it. The Company intends that Options granted to employees whom the
Committee expects to be covered employees at the time a deduction arises in
connection with such Options, will qualify as such "performance-based
compensation," so that such Options will not be subject to the Section 162(m)
deductibility cap of $1 million. Future changes in Section 162(m) or the
regulations thereunder may adversely affect the ability of the Company to ensure
that Options under the Plan will qualify as "performance-based compensation"
that is fully deductible by the Company under Section 162(m).
21
<PAGE> 24
PROPOSAL THREE
RATIFICATION OF THE REAPPOINTMENT OF THE COMPANY'S AUDITOR
The Board of Directors recommends that the appointment of Grant
Thornton LLP independent certified public accountants, as the Company's auditors
for the fiscal year ending December 31, 1999, be ratified by the Company's
shareholders. Grant Thornton LLP has audited the books and records of the
Company since 1976. Although the appointment of Grant Thornton LLP as
independent auditors of the Company does not require ratification, the Board of
Directors considers it appropriate to obtain such ratification. Accordingly, the
vote of shareholders on this matter is advisory in nature and has no binding
effect upon the Board of Directors' appointment of Grant Thornton LLP. A
representative of Grant Thornton LLP is expected to be present at the Annual
Meeting to make a statement, if he desires to do so, and to respond to
appropriate questions.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business to be presented at the Company's 1999 Annual
Meeting of Shareholders. If any other business should properly come before the
Company's 1999 Annual Meeting of Shareholders, the persons named in the
accompanying proxy will vote thereon in accordance with their best judgment.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
AND DIRECTOR NOMINATIONS
Any shareholder who intends to present a proposal at the Company's 2000
Annual Meeting of Shareholders and who wishes to have their proposal included in
the Company's Proxy Statement for that meeting, must deliver the proposal, not
exceeding 500 words in length, to the Secretary of the Company in writing not
later than December 14, 1999.
Under the Company's Amended and Restated Bylaws, nominations for
director may be made only by the Board or a Board committee, or by a shareowner
entitled to vote who delivers notice to the Company not less than 90 days nor
more than 120 days prior to the first anniversary of the date of the notice of
the preceding year's annual meeting. For the Company's meeting in the year 2000,
the Company must receive this notice on or after December 14, 1999, and on or
before January 10, 2000. Nominations which are timely received will be
considered by the Nominating Committee of the Board of Directors.
The Amended and Restated Bylaws also provide that no business may be
brought before an annual meeting except as specified in the notice of meeting or
as otherwise brought before the meeting by or at the direction of the board or
by a shareowner entitled to vote who has delivered notice to the Company
(containing certain information specified in the Amended and Restated Bylaws)
within the time limits described above for delivering notice of a nomination for
the election of a director. Therefore, any shareholder proposal submitted other
than for inclusion in the Company's proxy materials must be received within the
time limits or will be considered untimely.
A copy of the full text of the Amended and Restated Bylaws provisions
discussed above may be obtained by writing to the Corporate Secretary at 5980
Miami Lakes Drive, Miami Lakes, Florida 33014-2467.
By Order of the Board of Directors
Harry D. Schulman, Secretary
Miami Lakes, Florida
April 12, 1999
22
<PAGE> 25
APPENDIX A
---------------------------------------
WINDMERE-DURABLE HOLDINGS, INC.
1998 STOCK OPTION PLAN
---------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
Windmere-Durable Holdings, Inc., a Florida corporation (the "Company"), and its
Subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide services to the Company and its
Subsidiaries, and upon whose efforts and judgment the success of the Company and
its Subsidiaries is largely dependent, through the encouragement of stock
ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the committee appointed by the
Board pursuant to Section 13(a) hereof.
(c) "Common Stock" shall mean the Company's Common Stock, par
value $.10 per share.
(d) "Director" shall mean a member of the Board.
(e) "Fair Market Value" of a Share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Committee or the Board
in its sole discretion shall determine otherwise in a fair and uniform manner.
For the purpose of determining Fair Market Value, the "Closing Price" of the
Common Stock on any business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such exchange
or reporting system, as reported in any newspaper of general circulation, (ii)
if the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on such system or, if sales prices are not
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days. If neither (i), (ii), or (iii) above is
applicable, then Fair Market Value shall be determined in good faith by the
Committee or the Board in a fair and uniform manner.
(f) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Internal Revenue Code.
(g) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(h) "Non-Qualified Stock Option" shall mean an Option which is
not an Incentive Stock Option.
A-1
<PAGE> 26
(i) "Officer" shall mean the Company's Chairman of the Board,
President, Chief Executive Officer, principal financial officer, principal
accounting officer, any vice-president of the Company in charge of a principal
business unit, division or function (such as sales, administration or finance),
any other officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function" does not include policy-making functions that are not
significant. If pursuant to Item 401(b) of Regulation S-K (17 C.F.R. ss.
229.401(b)) the Company identifies a person as an "executive officer," the
person so identified shall be deemed an "Officer" even though such person may
not otherwise be an "Officer" pursuant to the foregoing provisions of this
paragraph.
(j) "Option" (when capitalized) shall mean any option granted
under this Plan.
(k) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(l) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Section 162(m) of the Internal Revenue
Code and the regulations thereunder and as a "Non-Employee Director" under Rule
16b-3 promulgated under the Securities Exchange Act.
(m) "Plan" shall mean this 1998 Stock Option Plan for the
Company.
(n) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock.
(p) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AVAILABLE FOR OPTION GRANTS. The Committee or the Board may
grant to Optionees from time to time Options to purchase an aggregate of up to
2,100,000 Shares from the Company's authorized and unissued Shares. If any
Option granted under the Plan shall terminate, expire, or be cancelled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.
4. NON-QUALIFIED OPTIONS. An Option granted hereunder shall be a
Non-Qualified Stock Option. Incentive Stock Options may not be granted pursuant
hereto.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee or the
Board, provided such terms are not inconsistent with this Plan or any applicable
law. Optionees shall be (i) those persons selected by the Committee or the Board
from the class of all regular employees of , or persons who provide consulting
or other services as independent contractors to, the Company or its
Subsidiaries, including Directors and Officers who are regular employees, and
(ii) Directors who are not employees of the Company or of any Subsidiaries.
However, persons who are ineligible for registration of shares under a Form S-8
shall not be granted Options pursuant hereto, including consultants and advisors
who participate in the offer or sale of the Company's securities in a
capital-raising transaction or promote or maintain a market for the
A-2
<PAGE> 27
Company's securities. Any person who files with the Committee or the Board, in a
form satisfactory to the Committee or the Board, a written waiver of eligibility
to receive any Option under this Plan shall not be eligible to receive any
Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee or the Board shall take
into consideration the contribution the person has made to the success of the
Company or its Subsidiaries and such other factors as the Committee or the Board
shall determine. The Committee or the Board shall also have the authority to
consult with and receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The Committee or
the Board may from time to time in granting Options under the Plan prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
employment of the Optionee for a specified period of time, provided that such
terms and conditions are not more favorable to an Optionee than those expressly
permitted herein.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company or its
Subsidiaries.
(d) Each Director of the Company on June 1, 1999 and on each
anniversary thereof during the term of the Plan shall receive a grant, as soon
after such date as reasonably possible, of nonqualified options to purchase an
amount equal to the excess of (i) 1,500 shares of Common Stock or (ii) the
number of options granted to the Director pursuant to Section 5 of the 1996 Plan
on that date, at a price not less than 100% of the fair market value of the
Common Stock on the date of the particular option grant.
(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Optionee in any twelve-month period may not exceed 1,500,000,
subject to adjustment as provided in Section 10 hereof.
6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee or the Board but shall not be less than the
par value per Share.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or the Board in its sole discretion have
been made for the Optionee's payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements. The
consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Committee or the
Board and may consist of: (1) cash, (2) certified or official bank check, (3)
money order, (4) Shares that have been held by the Optionee for at least six (6)
months (or such other Shares as the Company determines will not cause the
Company to realize a financial accounting charge), (5) the withholding of Shares
issuable upon exercise of the Option, (6) by delivery of a properly executed
exercise notice together with such other documentation, and subject to such
guidelines, as the Board or the Committee and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price and any applicable
income or employment taxes, or (7) in such other consideration as the Committee
or the Board deems appropriate, or by a combination of the above. The Committee
or the Board in its sole discretion may accept a personal check in full or
partial payment of any Shares. If the exercise price is paid in whole or in part
with Shares that have been held for at least 6 months, or through the
withholding of Shares issuable upon exercise of the Option, the value of the
Shares surrendered or withheld shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole
A-3
<PAGE> 28
discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, lend money to an Optionee, guarantee a
loan to an Optionee, or otherwise assist an Optionee to obtain the cash
necessary to exercise all or a portion of an Option granted hereunder or to pay
any tax liability of the Optionee attributable to such exercise. If the exercise
price is paid in whole or part with Optionee's promissory note, such note shall
(i) provide for full recourse to the maker, (ii) be collateralized by the pledge
of the Shares that the Optionee purchases upon exercise of such Option, (iii)
bear interest at the prime rate of the Company's principal lender, and (iv)
contain such other terms as the Committee or the Board in its sole discretion
shall reasonably require. No Optionee shall be deemed to be a holder of any
Shares subject to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee or the
Board shall provide in such Option, except as otherwise provided in this Section
8.
(a) The expiration date of an Option shall be determined by
the Committee or the Board at the time of grant, but in no event shall an Option
be exercisable after the expiration of 10 years from the date on which the
Option is granted.
(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable in the event of a "Change in
Control" or in the event that the Committee or the Board exercises its
discretion to provide a cancellation notice with respect to the Option pursuant
to Section 9(b) hereof. For this purpose, the term "Change in Control" shall
mean:
(i) if there occurs any transaction (which shall
include a series of transactions occurring within 60 days or occurring pursuant
to a plan), that has the result that shareholders of the Company immediately
before such transaction cease to own at least 51% of the voting stock of the
Company or of any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) if the shareholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the Company shall
approve a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).
(c) The Committee or the Board may in its sole discretion,
accelerate the date on which any Option may be exercised and may accelerate the
vesting of any Shares subject to any Option or previously acquired by the
exercise of any Option.
9. TERMINATION OF OPTION PERIOD. Unless otherwise provided in any
Agreement, the unexercised portion of any Option shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:
(i) unless the Committee shall otherwise determine in
writing in its sole discretion, the date on which the Optionee's employment is
terminated other than by reason of (A) Cause, which, solely for purposes of this
Plan, shall mean the termination of the Optionee's employment by reason of the
Optionee's willful misconduct or gross negligence, (B) a mental or physical
disability (within the
A-4
<PAGE> 29
meaning of Internal Revenue Code Section 22(e)) of the Optionee as determined by
a medical doctor satisfactory to the Committee, or (C) death of the Optionee;
(ii) immediately upon the termination of the
Optionee's employment for Cause;
(iii) twelve months after the date on which the
Optionee's employment is terminated by reason of a mental or physical disability
(within the meaning of Internal Revenue Code Section 22(e)) as determined by a
medical doctor satisfactory to the Committee or the Board;
(iv) (A) twelve months after the date of termination
of the Optionee's employment by reason of death of the Optionee, or, if later,
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one-year period specified in Subsection 9(a)(iii) hereof.
All references herein to the termination of the Optionee's employment shall, in
the case of a Optionee who is not an employee of the Company or a Subsidiary,
refer to the termination of the Optionee's service with the Company.
(a) To the extent not previously exercised, (i) each Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) hereof, and (ii) the Committee or the Board in its sole discretion
may by written notice ("cancellation notice") cancel, effective upon the
consummation of any corporate transaction described in Subsection 8(b)(i) hereof
in which the Company does survive, any Option that remains unexercised on such
date. The Committee or the Board shall give written notice of any proposed
transaction referred to in this Section 9(b) a reasonable period of time prior
to the closing date for such transaction (which notice may be given either
before or after approval of such transaction), in order that Optionees may have
a reasonable period of time prior to the closing date of such transaction within
which to exercise any Options that then are exercisable (including any Options
that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of a
transaction referred to in this Section 9(b).
(b) Notwithstanding the provisions of this Section 9 or any
other provision in this Plan, the exercise of any Option shall be subject to
satisfaction of the conditions precedent that, without the prior written consent
of the Company, the Optionee (i) does not intend to take employment or render
services to others within six months of the exercise of any Option (ii) has
neither taken other employment nor rendered services to others or (iii) has not
and does not intend to engage in conduct that adversely effects the Company.
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, or available for
grant to any person under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and
A-5
<PAGE> 30
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.
(b) Unless otherwise provided in any Option, the Committee or
the Board may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's or Board's sole discretion, such adjustments
become appropriate so as to preserve but not increase benefits under the Plan.
(c) In the event of a proposed sale of all or substantially
all of the Company's assets or any reorganization, merger, consolidation or
other form of corporate transaction in which the Company does not survive, where
the securities of the successor corporation, or its parent company, are issued
to the Company's shareholders, then the successor corporation or a parent of the
successor corporation may, with the consent of the Committee or the Board,
assume each outstanding Option or substitute an equivalent option or right. If
the successor corporation, or its parent, does not cause such an assumption or
substitution to occur, or the Committee or the Board does not consent to such an
assumption or substitution, then each Option shall terminate pursuant to Section
9(b) hereof upon the consummation of sale, merger, consolidation or other
corporate transaction.
(d) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) Unless the prior written consent of the Committee or the
Board is obtained (which consent may be withheld for any reason) and the
transaction does not violate the requirements of Rule 16b-3 promulgated under
the Securities Exchange Act, no Option shall be subject to alienation,
assignment, pledge, charge or other transfer other than by the Optionee by will
or the laws of descent and distribution, and any attempt to make any such
prohibited transfer shall be void. Each Option shall be exercisable during the
Optionee's lifetime only by the Optionee, or if applicable Option that has been
assigned or transferred with the prior written consent of the Committee or the
Board, only by the permitted assignee.
(b) Unless the prior written consent of the Committee or the
Board is obtained and the transaction does not violate the requirements of Rule
16b-3 promulgated under the Securities Exchange Act, no Shares acquired by an
Officer or Director pursuant to the exercise of an Option may be sold, assigned,
pledged or otherwise transferred prior to the expiration of the six-month period
following the date on which the Option was granted.
A-6
<PAGE> 31
12. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Committee or the Board may require such agreements
or undertakings as the Committee or the Board may deem necessary or advisable to
facilitate compliance with any applicable law or regulation including, but not
limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for such Shares that
are, in the opinion of the Committee or the Board, necessary or appropriate to
facilitate compliance with the provisions of any securities laws deemed by the
Committee or the Board to be applicable to the issuance and transfer of such
Shares.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee") which shall be composed of
two or more Directors all of whom shall be Outside Directors. The membership of
the Committee shall be constituted so as to comply at all times with the
applicable requirements of Rule 16b-3 promulgated under the Securities Exchange
Act and Section 162(m) of the Internal Revenue Code. The Committee shall serve
at the pleasure of the Board and shall have the powers designated herein and
such other powers as the Board may from time to time confer upon it.
(b) The Board may grant Options pursuant to this Plan to
Directors who are not employees of the Company or any Subsidiary and/or other
persons to whom Options may be granted under Section 5(a) hereof.
(c) The Committee or the Board, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan. The
determinations by the Committee or the Board, and the interpretation and
construction of any provision of the Plan or any Option by the Committee or the
Board, shall be final and conclusive.
(d) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
A-7
<PAGE> 32
15. INTERPRETATION.
(a) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee or the Board may from time to time adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
(b) If any provision of the Plan should be held invalid or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan.
(c) This Plan shall be governed by the laws of the State of
Florida.
(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee or the
Board may from time to time amend, suspend or terminate the Plan or any Option;
provided, however, that, any amendment to the Plan shall be subject to the
approval of the Company's shareholders, if such shareholder approval is required
by any federal or state law or regulation (including, without limitation, Rule
16b-3 or to comply with Section 162(m) of the Internal Revenue Code) or the
rules of any Stock exchange or automated quotation system on which the Common
Stock may then be listed or granted. Except to the extent provided in Sections 9
and 10 hereof, no amendment, suspension or termination of the Plan or any Option
issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is April 30, 1998, and the Plan shall terminate ten years thereafter. The Plan
shall be submitted to the shareholders of the Company for their approval and
adoption and Options hereunder may be granted prior to such approval and
adoption but contingent upon such approval and adoption.
A-8
<PAGE> 33
Appendix B
WINDMERE-DURABLE HOLDINGS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Burton A. Honig and Joann Ledbetter and
each of them, each with full power of substitution, proxies to vote at the
Annual Meeting of Shareholders of Windmere-Durable Holdings, Inc. (the
"Company") to be held at the University of Miami, James W. McLamore Executive
Education Center, 5250 University Drive, Coral Gables, Florida 33134 on Tuesday,
May 11, 1999, at 10:00 a.m. local time, and at any adjournments thereof, hereby
revoking any proxies heretofore given, to vote all shares of common stock of the
Company held or owned by the undersigned as directed below, and in their
discretion upon such other matters as may come before the meeting.
Proposal 1. Election of five members to Class III of the Company's
Board of Directors to serve until the 2002 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified; and election of one member to Class I of the
Company's Board of Directors to serve until the 2000 Annual
Meeting of Shareholders or until his successor is duly elected
and qualified.
NOMINEES:
[ ] FOR ALL THE NOMINEES [ ] WITHHOLD AUTHORITY
LISTED BELOW to vote for all nominees
(except as marked to the listed below.
contrary below)
CLASS III DIRECTORS:
Frederick E. Fair, David M. Friedson, Desmond Lai, Jerald I. Rosen,
Harry D. Schulman.
CLASS I DIRECTOR:
J. Maurice Hopkins.
INSTRUCTIONS: To withhold authority for any individual nominees,
write that nominee's name in the space below.
--------------------------------------------------------------------
Proposal 2. Approval of the Company's 1998 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. Ratification of the reappointment of Grant Thornton LLP,
independent certified public accountants, as the Company's
auditors for the fiscal year ending December 31, 1999.
(Continued and to be signed on the other side)
<PAGE> 34
The undersigned hereby acknowledges receipt of a Notice of Annual
Meeting of Shareholders of the Company called for May 11, 1999 and a Proxy
Statement for the Annual Meeting prior to the approving of this proxy.
This proxy when properly executed will be voted as specified above. If
no direction is made, this Proxy will be voted FOR Proposals 1, 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
Dated: _______________________________, 1999
____________________________________________
(Signature)
____________________________________________
(Signature)
Please date this proxy and sign your name
exactly as it appears hereon.
Where there is more than one owner, each
should sign. When signing as an agent,
attorney, administrator, executor, guardian,
or trustee, please add your title as such.
If executed by a corporation, the proxy
should be signed by a duly authorized
officer who should indicate his office.
Please date, sign, and mail this proxy card
in the enclosed envelope. No postage is
required if mailed in the United States.
