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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
(Name of Registrant as Specified in Its Charter)
DEVCON INTERNATIONAL CORP.
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the 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:
[ ] 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>
DEVCON INTERNATIONAL CORP.
1350 EAST NEWPORT CENTER DRIVE, SUITE 201
DEERFIELD BEACH, FLORIDA 33442
----------------
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 1997
----------------
To the shareholders of
Devcon International Corp.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
Devcon International Corp., a Florida corporation (the "Company"), will be held
at the Deerfield Beach Hilton, Hillsboro Executive Center North, 100 Fairway
Drive, Deerfield Beach, Florida on Friday, June 13, 1997 at 3:00 p.m., local
time, for the following purposes:
1. To elect five persons to the Company's Board of Directors to hold office
until their terms shall expire or until their successors are duly elected and
qualified;
2. To ratify the reappointment of KPMG Peat Marwick LLP, independent
certified public accountants, as the Company's auditor for 1997; and
3. To transact such other business as may properly come before the meeting
and any and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 25, 1997 as
the record date for determining those shareholders entitled to notice of and to
vote at the 1997 Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present at the meeting, please sign, date
and return the enclosed proxy card as promptly as possible in the enclosed
pre-addressed stamped envelope.
By Order of the Board of Directors,
/s/ DONALD L. SMITH, JR.
---------------------------------------
Donald L. Smith, Jr., President
Deerfield Beach, Florida
May 13, 1997
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>
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
DEVCON INTERNATIONAL CORP.
----------------
PROXY STATEMENT
----------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Devcon International Corp., a Florida corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$0.10 per share (the "Common Stock"), for use at the 1997 Annual Meeting of
Shareholders of the Company to be held on June 13, 1997, and any adjournments or
postponements thereof (the "Annual Meeting"), pursuant to the enclosed Notice of
Annual Meeting. It is expected that this Proxy Statement and the enclosed form
of proxy will be first mailed to shareholders of the Company on or about May 13,
1997. The complete mailing address, including zip code, of the Company's
principal executive offices is 1350 East Newport Center Drive, Suite 201,
Deerfield Beach, Florida 33442.
INFORMATION CONCERNING PROXY
The enclosed 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 a 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 headquarters a written revocation or duly executed
proxy bearing a later date. No revocation will be effective, however, 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 and telegraph. They will receive no
compensation therefor in addition to 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.
<PAGE>
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 directors to serve until the next annual meeting of
shareholders or until their successors are duly elected and qualified;
2. The ratification of the reappointment of KPMG Peat Marwick, LLP,
independent certified public accountants, as the Company's auditor for
1997; and
3. Such other business as may properly come before the Annual Meeting,
including any adjournments or postponements thereof.
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 five nominees for director named
below, and (b) in favor of all other proposals described on the Notice of Annual
Meeting. 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 April 25, 1997, 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 4,498,935 shares of Common Stock issued and outstanding, all of which
are entitled to be voted at the Annual Meeting. Holders of Common Stock are
entitled to one vote per share on each matter that is submitted to shareholders
for approval.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. In order to be elected, nominees for director
must receive a plurality of the votes cast by holders of shares of Common Stock
voting in person or by proxy at the Annual Meeting. The approval of proposal 2
will require an affirmative vote of the holders of a plurality of the shares of
the Common Stock of the Company voting in person or by proxy at the Annual
Meeting. Abstentions are considered as shares present and entitled to vote for
purposes of determining the outcome of any matter submitted to the shareholders
for a vote, but are not counted as votes cast "for" or "against" any matter. The
inspector of elections will treat shares referred to as "broker or nominee
non-votes" (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-votes, shares
represented by such proxies will be treated as not present and not entitled to
vote on that subject matter. Accordingly, such shares would not be considered by
the inspectors as shares entitled to vote on that subject matter and therefor
would not be considered by the inspectors when
2
<PAGE>
counting votes cast on the matter. If less than a majority of the outstanding
shares of Common Stock are represented at the meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice.
SECURITY OWNERSHIP
The following table sets forth as of the Record Date the number of shares
beneficially owned and the percentage of ownership of the Company's Common Stock
by (i) each person known to the Company to own beneficially more than 5 percent
of the outstanding Common Stock, (ii) each director of the Company, (iii) each
of the four executive officers of the Company who had annual salary and bonus
for 1996 in excess of $100,000 (the "Named Executive Officers"), including the
President and Chief Executive Officer, and (iv) all directors, and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(2)
------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES PERCENT
- - -------------------------------------------------------------- ------------ ---------
<S> <C> <C>
Donald L. Smith, Jr.(3) .................................... 1,263,431 27.62%
Smithcon Family Investments, Ltd(4) ........................ 980,372 21.79%
Robert A. Steele(5) .......................................... 232,000 5.14%
Robert L. Kester(6) .......................................... 13,600 *
Richard L. Hornsby(7) ....................................... 52,125 1.14%
Walter B.Barrett(8) .......................................... 22,600 *
Donald L. Smith, III(9) .................................... 97,814 2.16%
W. Douglas Pitts (10) ....................................... 8,000 *
Dimensional Fund Advisors, Inc.(11) ........................ 282,900 6.29%
Quest Advisory and Charles M. Royce Group(12) ............... 260,500 5.79%
Tweedy, Browne Company L.P. and TBK Partners, L.P.(13) ...... 391,189 8.70%
All directors and executive officers
as a group (8 persons)(14) ................................. 1,704,570 36.50%
</TABLE>
- - ----------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial owners is
1350 East Newport Center Drive, Suite 201, Deerfield Beach, Florida 33442.
(2) Unless otherwise indicated each person or group has sole voting and
investment power with respect to all such shares.
(3) All 980,372 shares held by Smithcon Family Investments, Ltd. are deemed
beneficially owned by Donald L. Smith, Jr. and are included in the above
table for each of Mr. Smith and Smithcon Family Investments, Ltd. Mr.
Smith's holdings include (i) all 980,372 shares held by Smithcon Family
Investments, Ltd., an entity controlled by Smithcon Investments, Inc. (the
"Corporation"), a corporation that is wholly owned by Mr. Smith, (ii)
18,628 shares held by the Corporation and (iii) 75,000 shares issuable upon
exercise of options that are presently exercisable.
3
<PAGE>
(4) All 980,372 shares held by Smithcon Family Investments, Ltd. are deemed
beneficially owned by Donald L. Smith, Jr. and are included in the above
table for each of Mr. Smith and Smithcon Family Investments, Ltd. See
footnote (3) for a description of the relationship between Smithcon Family
Investments, Ltd. and Mr. Smith.
(5) Includes 12,000 shares issuable upon exercise of options that are presently
exercisable.
(6) Includes 12,000 shares issuable upon exercise of options that are presently
exercisable.
(7) Includes 22,125 shares issuable upon exercise of options granted by the
Company that are presently exercisable and 30,000 shares issuable upon
exercise of an option that is presently exercisable, granted by Mr. Donald
L. Smith, Jr., to Mr. Hornsby to purchase shares of Mr. Smith's Common
Stock at an exercise price of $2.33 per share. Does not include 35,250
shares subject to options held by Mr. Hornsby that are not presently
exercisable.
(8) Shares are owned jointly by Mr. Barrett and his wife. Includes 21,000
shares issuable upon exercise of options that are presently exercisable.
Does not include 29,000 shares issuable upon exercise of options that are
not presently exercisable.
(9) Includes (w) 33,964 shares directly owned by Mr. Smith and his wife (x)
42,400 shares held in trust by Donald L. Smith, III for the benefit of his
minor children, to which shares Mr. Smith disclaims beneficial ownership
and (y) 21,450 shares issuable upon exercise of options that are presently
exercisable. Does not include 31,500 shares issuable upon exercise of
options that are not presently exercisable.
(10) Includes 8,000 shares issuable upon exercise of options that are presently
exercisable.
(11) The address for Dimensional Fund Advisors, Inc. ("Dimensional") is 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401. Dimensional, a
registered investment advisor, is deemed to have beneficial ownership of
282,900 shares (Dimensional has sole dispositive power over all such shares
and sole voting power with respect to 218,000 of such shares), all of which
shares are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and the
DFA Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares. The information with respect to Dimensional is based solely on a
Form 13G dated February 9, 1996 and a verbal update obtained from
Dimensional on April 21, 1997.
(12) The address for Quest Advisory Corp. and Charles M. Royce is 1414 Avenue of
the Americas, New York, New York 10019. Includes 260,500 shares with
respect to which Quest Advisory Corp. has sole voting and sole dispositive
power. Charles M. Royce may be deemed to be a controlling person of Quest
Advisory Corp. and as such may be deemed to beneficially own such shares.
Mr. Royce has disclaimed beneficial ownership of such shares. The
information with respect to this group is based solely on a Form 13G dated
February 3, 1997.
4
<PAGE>
(13) The address for Tweedy, Browne Company L.P. and TBK Partners, L.P. is 52
Vanderbilt Avenue, New York, New York 10017. Includes 304,075 shares with
respect to which Tweedy, Browne Company, L.P. has sole voting power, 3,000
shares to which TBK Partners, L.P. has sole voting and dispositive power,
and 391,189 shares to which Tweedy, Browne Company, L.P. has shared
dispositive power. Certain of the general partners of Tweedy, Browne
Company, L.P. may be deemed to have sole power to vote certain shares owned
by Tweedy, Browne Company L.P. TBK Partners, L.P. and Tweedy, Browne
Company L.P. have each disclaimed beneficial ownership of shares held by
each other. The information with respect to Tweedy, Browne Company L.P. and
TBK Partners, L.P. is based solely on a Form 13D, dated January 24, 1994
and Amendment No. 1 to Form 13D, dated February 2, 1994 and a verbal update
obtained from Tweedy, Brown Company, L.P. and TBK Partners, L.P. on April
21 1997.
(14) Includes 45,000 shares owned by Mr. Obenauf, the Company's Vice
President-Engineering.
ELECTION OF DIRECTORS
NOMINEES
The Company's Restated Articles of Incorporation and Bylaws provide that
the number of directors to serve on the Board of Directors shall be fixed by the
shareholders, and if not so fixed, shall be three. The Company's shareholders
have previously fixed the number of directors at five. Each director elected at
the Annual Meeting will serve as director for a term expiring at the 1998 Annual
Meeting of Shareholders, expected to be held in June 1998, or until his
successor has been duly elected and qualified. Messrs. Smith, Hornsby, Kester,
Steele and Pitts have been nominated for election as directors and proxies will
be voted for such persons absent contrary instructions.
The Board of Directors does not believe that any nominee will refuse to act
or be unable to accept election. In the event, however, that a nominee for
director is unable to accept election or if any other unforeseen contingencies
should arise, it is intended that proxies will be voted for the remaining
nominees and for such other person as may be designated by the Board of
Directors, unless it is directed by a proxy to do otherwise.
Each of the nominees for election as a director of the Company is a current
member of the Board of Directors. Mr. Smith has served as a director since 1951,
Mr. Kester has served as a director since 1972, Mr. Hornsby has served as a
director since 1975, Mr. Steele has served as a director since 1989 and Mr.
Pitts has served as a director since 1996.
5
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- - ---------------------------- ------ --------------------------------------------------
<S> <C> <C>
Donald L. Smith, Jr. ...... 75 Chairman of the Board, President and Chief
Executive Officer
Richard L. Hornsby ......... 61 Director and Executive Vice President
Robert L. Kester ......... 77 Director
Robert A. Steele ......... 81 Director
W. Douglas Pitts ......... 56 Director
Walter B. Barrett ......... 39 Vice President-Finance, Chief Financial Officer
and Treasurer
Henry C. Obenauf ......... 67 Vice President-Engineering
Donald L. Smith, III ...... 44 Vice President-Construction Operations
</TABLE>
Donald L. Smith, Jr., a co-founder of the Company, has served as its
Chairman of the Board, President and Chief Executive Officer since its formation
in 1951.
Richard L. Hornsby was appointed the Company's Executive Vice President in
March 1989. Mr. Hornsby served as Vice President of the Company from August 1986
to February 1989. From September 1981 until July 1986 he was Financial Manager
of R.O.L., Inc. and L.O.R., Inc., companies primarily engaged in various private
investment activities. He has been a director of the Company since 1975 and
served as Vice President-Finance from 1972 to 1977.
Robert L. Kester, a director of the Company since 1972, is a private
investor and is Chairman of the Board of Big Sky Western Bank in Big Sky,
Montana. Mr. Kester retired from active employment with Florida Coast Bank of
Pompano Beach, Florida after its acquisition by Barnett Bank of Florida in 1984.
Robert A. Steele, a director of the Company since May 1989, has been
Chairman of the Board, Chief Executive Officer and a principal shareholder of
SFM Leasing Company, Inc. and RAMS Leasing Company, Inc. since 1972. Both
companies were engaged in the heavy truck and equipment leasing business.
Currently, these companies are primarily engaged in various investment
activities. Mr. Steele has also been managing partner of Steele Associates, Ltd.
since 1981 and SFM Realty Associates since 1985, both of which are primarily
engaged in various investment activities.
W. Douglas Pitts, a director of the Company since 1996, is Chairman of the
Board and Chief Executive Officer of The Courtelis Company, which is engaged
primarily in various real estate development activities. Prior to his selection
as Chairman of the Board and Chief Executive Officer in December 1995, Mr. Pitts
served as Executive Vice President and Chief Operating Officer of The Courtelis
Company from 1983 to 1995.
Walter B. Barrett has served as Vice President-Finance, Chief Financial
Officer and Treasurer since May 1991. Prior to that and from August 1985 he
served as Treasurer and Chief Financial Officer of James A. Cummings, Inc., a
large South Florida general contractor.
6
<PAGE>
Henry C. Obenauf was appointed Vice President-Engineering of the Company in
March 1989, after having served as Vice President of the Company since 1977. Mr.
Obenauf has been employed by the Company for over 22 years.
Donald L. Smith, III, was appointed Vice President-Construction Operations
for the Company in December 1992. Prior to that and from March 1992, he served
as Assistant Vice President of Construction Operations-South Florida and
Caribbean of the Company. Mr. Smith joined the Company in 1976 and has served in
various supervisory and managerial positions with the Company since that time.
The Company's directors hold office until the next annual meeting of
shareholders and until their successors have been duly elected and qualified.
The Company's officers are elected annually by the Board of Directors and serve
at the discretion of the Board. There are no arrangements or understandings with
respect to the selection of officers or directors. The Company pays each
director other than Mr. Smith an annual retainer of $4,000. Non-employee
directors who serve on the Compensation Committee or Audit Committee are paid an
annual fee of $1,000 or $500, depending on the level of responsibility they
assume.
Pursuant to the 1992 Directors' Stock Option Plan (the "Directors' Plan"),
the Company's non-employee directors were granted options to purchase 8,000
shares of Common Stock upon the approval of the Directors' Plan by shareholders.
A new non-employee director would receive a similar option upon the commencement
of service as a director. In addition, each non-employee director is granted
options to purchase 1,000 shares of Common Stock after each annual meeting of
the Company, pursuant to the Directors' Plan. For purposes of the Directors'
Plan, a director is a non-employee director if he does not receive regular
compensation from the Company or its subsidiaries other than directors fees and
reimbursement for expenses, even if such director is an officer of a subsidiary
of the Company.
Donald L. Smith, III is the son of Donald L. Smith, Jr., the Company's
Chairman, President and Chief Executive Officer. Aside from the foregoing, there
are no family relationships between any directors or executive officers of the
Company. Certain other children of Donald L. Smith, Jr. are employed by the
Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1996, the Board of Directors took
certain actions by unanimous written consent and held seven meetings. During
1996, no incumbent director attended fewer than 75 percent of the aggregate of
(i) the number of meetings of the Board of Directors held during the period he
served on the Board, and (ii) the number of meetings of committees of the Board
of Directors held during the period he served on such committee. The Board of
Directors has two standing committees, the Audit Committee and the Compensation
Committee.
Messrs. Kester, Hornsby and Steele are members of the Audit Committee,
which met one time during 1996. The duties and responsibilities of the Audit
Committee include (a) recommending to the full Board the appointment of the
Company's auditors and any termination of engagement, (b) reviewing the plan and
scope of audits, (c) reviewing the Company's significant accounting policies and
internal controls and (d) having general responsibility for all related auditing
matters.
7
<PAGE>
Messrs. Kester and Steele are members of the Company's Compensation
Committee, which met three times during 1996. This committee administers the
1992 Stock Option Plan and has the power and authority to (a) determine the
persons to be awarded options and the terms thereof and (b) construe and
interpret the 1992 Stock Option Plan. This Committee also is responsible for the
final review and determination of executive compensation.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or paid
to the Company's Chief Executive Officer and each of the other three executive
officers of the Company who had an annual salary and bonus in 1996 in excess of
$100,000 (collectively, the "Named Executive Officers"). The Company has not
granted any restricted stock awards or stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- ---------------------------
AWARDS PAYOUTS
OTHER ANNUAL ------------- ------------ ALL OTHER
NAME AND FISCAL COMPENSATION LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) PAYOUTS($) ($)(2)
- - -------------------------- --------- ------------ ----------- --------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald L. Smith, Jr. 1996 260,000 - - - - 7,200
Chairman of the Board, 1995 260,000 - - - - 4,800
President and 1994 260,000 - - - - 4,800
Chief Executive Officer
Richard L. Hornsby 1996 165,000 - 9,000 - - 72,286
Executive Vice President 1995 165,000 - 9,000 30,000 - 70,736
1994 165,000 - 9,000 - - 70,636
Walter B. Barrett 1996 116,874 5,000 5,000 - - 1,482
Vice President-Finance, 1995 117,058 5,000 5,000 30,000 - -
Chief Financial Officer 1994 110,227 5,000 5,000 - - -
and Treasurer
Donald L. Smith, III 1996 98,900 8,000 5,000 - - 10,418
Vice President- 1995 98,450 10,000 5,000 30,000 - 10,418
Construction Operations 1994 96,104 12,500 5,000 - - 10,558
</TABLE>
- - ----------------
(1) Does not include the dollar value of personal benefits, such as the cost of
automobiles and health insurance, the aggregate value of which for each
named executive officer was less than 10% of such executive officer's salary
and bonus. Includes $4,000 a year for Mr. Hornsby, representing a retainer
paid to all directors other than Mr. Smith and $5,000 per year for Messrs.
Hornsby, Barrett and Smith, III for service on a management policy
committee.
8
<PAGE>
(2) Represents (i) the cost of term and non term life insurance coverage for
Messrs. Hornsby and Smith, III in 1996, 1995 and 1994 pursuant to a split
dollar life insurance policy on the life of the executive officer and (ii)
the Company's match of a 401(k) contribution made by each named executive
officer. The Company will be reimbursed for its non term premium payments at
such time as benefits are paid under the policies or the policies are
terminated and the cash proceeds distributed.
OPTION GRANTS AND LONG-TERM INCENTIVE AWARDS
There were no stock grants, stock appreciation rights or long-term
incentive awards granted to the Named Executive Officers during 1996.
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning unexercised
stock options held by the Named Executive Officers as of the end of the 1996
year. No stock appreciation rights have been granted or are outstanding.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED VALUE FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ON EXERCISE REALIZED ---------------------------- -----------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE(4)
- - ---------------------------- -------------- ---------- -------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Donald L. Smith, Jr. ...... - - 75,000 - 285,000 -
Richard L. Hornsby ......... - - 22,125 35,250 61,275 42,750
Walter B. Barrett ......... - - 16,000 34,000 (2) (2)
Donald L. Smith, III ...... - - 21,450 31,500 58,710 28,500
</TABLE>
- - ----------------
(1) The closing price for the Company's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on
December 31, 1996 was $6.13. Value is calculated by multiplying (a) the
difference between $6.13 and the option exercise price by (b) the number of
shares of Common Stock underlying the option.
(2) Exercise price exceeded closing price at December 31, 1996.
(3) For certain exercisable shares, exercise price exceeded closing price at
December 31, 1996. Values shown include only in the money exercisable
shares.
(4) For certain unexercisable shares, exercise price exceeded closing price at
December 31, 1996. Values shown include only in the money unexercisable
shares.
9
<PAGE>
CERTAIN TRANSACTIONS
The Company leases a 4.4 acre parcel of real property from Mr. Donald L.
Smith, Jr., pursuant to which Mr. Smith received $48,605 in annual rent in 1996.
The Company has borrowed approximately $5.4 million from Donald L. Smith,
Jr. The note is unsecured, bears interest at the prime interest rate and is due
in full on January 1, 1998.
In 1989, an Antiguan subsidiary of the Company obtained a minority interest
in a partnership that acquired a manufacturer of acoustical ceiling tiles in
Matamoros, Mexico and that is engaged in the sale, distribution and marketing of
such tiles. The subsidiary invested approximately $1.2 million in the
partnership for a 29 percent interest and two of the Company's officers and
directors, Messrs. Smith, Jr. and Hornsby, obtained an 11 percent interest for
which they paid $450,000. In January 1994, another Antiguan subsidiary of the
Company became the new general partner of the partnership and was assigned all
the rights and assumed all the liabilities of the former Antiguan subsidiary
with respect to the partnership. In connection with an amendment of the
partnership agreement, the Antiguan subsidiary and the Company, as applicable,
contributed a note receivable of $505,000 from the partnership into equity and
contributed approximately $235,000 of equipment to the partnership. The Antiguan
subsidiary's ownership interest in the partnership was increased to 64.47
percent. The ownership interest of Messrs. Smith, Jr. and Hornsby was reduced to
6.47 percent.
In November 1995 the Company decided to sell this operation because of its
poor operating results and uncertain prospects for improvement. The Company's
investment in the partnership was written down to its estimated net realizable
value of approximately $749,000, which consists principally of property,
equipment and inventory with a net book value of approximately $1.4 million,
along with debt of approximately $621,000. The Company sold its interest in the
ceiling tile business in September 1996 in exchange for one secured promissory
note in the amount of $600,000 and one unsecured promissory note in the amount
of $385,000, assumed certain liabilities of the partnership and took an
additional loss on disposal of approximately $488,000.
The Company believes that, to the extent applicable, the foregoing
transactions were on terms no less favorable to the Company than those that
could have been obtained from independent third parties.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of
the Company's 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. Officers, directors and greater than 10 percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1996 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Robert L. Kester and Robert A. Steele.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is primarily responsible for determining the
compensation of the Company's executive officers, although the Company's Chief
Executive Officer and President makes recommendations to the Compensation
Committee as to the compensation of the Company's executive officers.
The Compensation Committee's general philosophy with respect to the
compensation of the Company's executive officers is to offer competitive
compensation programs designed to attract and retain qualified executives, to
motivate performance to achieve specific goals and to align the interests of
senior management with the long-term interests of the Company's shareholders.
In determining compensation, job level, individual performance and Company
performance are considered. More specifically, factors considered include the
Chief Executive Officer and President's recommendations, specific
accomplishments of the executive officers, the Company's historical and
projected performance, sales, earnings, financial condition and return on equity
and economic conditions. These factors and the ultimate determination of
compensation are subjective. The Company attempts to provide incentives to
retain qualified executive officers, but also believes that the compensation
paid to its executives is well within the range of compensation paid to
similarly situated executives at other companies in similar industries or at
companies having a similar market capitalization. Given the level of the
Company's executive officer compensation, the Committee does not believe that it
is necessary to incur the expense of formal studies or market analyses.
Of all the components of compensation, salary is most closely related to
individual performance. Strong emphasis is given to the Chief Executive
Officer's recommendations, given his experience with the Company since its
origin and his day-to-day contact with the other executive officers.
Consideration is also given to the amount deemed necessary to retain an
executive officer's services. These considerations are subjective and not
subject to specific criteria. Company performance is also a factor and given
that the Company did not meet internal economic goals, salaries for executive
officers remained basically the same in 1996 as compared to 1995. Based on its
experience with companies generally and in the Company's industry, and without
utilizing any formal market studies, the Committee believes that the salaries
paid by the Company to its executive officers are moderate by comparison to
external standards. For this reason and since individual performances did not
merit a decrease in the view of the Committee, salaries did not decrease. The
Committee took special notice of several factors, including the additional time
and effort expended by management and difficult economic conditions in certain
of the Company's Caribbean operations. This analysis was also subjective and not
subject to specific criteria.
While bonuses are also related to individual performance, Company
performance is emphasized more in determining bonus payments than in determining
salary. This is particularly true at the highest level of management. In
considering performance, generally earnings are most emphasized, although
11
<PAGE>
revenues and financial condition are also considered. The amount of any bonus is
not tied to specific performance criteria, but is also subjectively determined
based upon an analysis of the aforementioned factors. An executive officer could
receive a bonus in a year where the Company is not profitable, based upon his
individual performance or areas of responsibility. As the Company was only
marginally profitable in 1996, executive officers either did not receive bonuses
or received nominal bonuses.
The Company also attempts to provide incentives to its executive officers
to remain with the Company and to improve performance through the grant of stock
options. Options allow executive officers to share, to some extent, in
shareholders' return on equity. Typically, Company options vest in staggered
amounts over a long-term, such as a given percentage every three years. The
determination of how many options to grant to an executive officer depends, to
varying degrees, on the number of outstanding options held by the executive
officer, his job level and performance and Company performance. Given that
options were granted to executive offices in 1995, and that the Company's
performance was not as hoped for, no additional options were granted in 1996.
As a result of the foregoing factors, primarily the need for more
consistent profitability, the President and Chief Executive Officer's salary was
not increased in 1996. In addition, he received no bonus or new grants of
options. In determining to maintain the President's compensation at its existing
level the Committee took into consideration, in addition to the other factors
mentioned above, the time and effort being expended by the President, with
respect to bonus, the Company's performance in 1996, with respect to salary, the
Company's results in 1995, the President's experience and expertise in handling
the issues facing the Company and the perceived progress towards enabling the
Company to meet future goals. The Committee, with the concurrence of the
President and Chief Executive Officer, decided not to increase his compensation
until a trend in profitability developed. The final determination, after
reviewing these factors, was subjective.
The Company had various obligations under its 401(k) plan and with respect
to split dollar insurance premiums, all of which were met.
In December 1993, the Internal Revenue Service issued proposed regulations
concerning compliance with Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"). Section 162(m) generally disallows a public company's
deduction for compensation to any one of certain employees (primarily executive
officers) in excess of $1.0 million per year unless the compensation is pursuant
to a plan or performance goals approved by the public company's shareholders.
None of the Named Executive Officers presently receives, and the Compensation
Committee does not anticipate that such persons will receive, annual cash
compensation in excess of the $1.0 million cap provided in Section 162(m). The
Compensation Committee intends to take any necessary steps to ensure compliance
with Section 162(m) of the Code.
ROBERT L. KESTER, ROBERT A. STEELE
12
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock over the last five fiscal years as compared to the total
returns of the NASDAQ Stock Market Index and a group of peer companies (the
"Peer Group"). Returns are based on the change in year-end to year-end price and
assume reinvested dividends. The graph assumes $100 was invested on December 31,
1991 in the Company's Common Stock, the NASDAQ Stock Market Index and the Peer
Group.
The Peer Group includes the Company; Florida Rock Industries; Granite
Construction, Inc.; Lafarge Corp.; and Medusa Corp. The Peer Group consists of
companies that are engaged in the concrete and related products business and/or
the land development contracting business. Companies included in the Peer Group
were weighted by market capitalization from the beginning of each period for
which a return is indicated.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ AND SELECTED PEERS
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
12/91 12/92 12/93 12/94 12/95 12/96
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
DEVCON INTL CORP DEVC 100 74 44 63 61 47
PEER GROUP PPEER1 100 111 178 143 162 181
NASDAQ STOCK MARKET-US INAS 100 116 134 131 185 227
</TABLE>
13
<PAGE>
RATIFICATION OF THE REAPPOINTMENT OF THE COMPANY'S AUDITOR
The firm of KPMG Peat Marwick LLP, independent certified public
accountants, has been the Company's auditor since 1980 and has advised the
Company that the firm does not have any direct financial interest or indirect
financial interest in the Company or any of its subsidiaries, nor has such firm
had any such interest in connection with the Company or its subsidiaries during
the past 4 years, other than in its capacity as the Company's independent
certified public accountant. The Board of Directors, on the recommendation of
the Company's Audit Committee, has selected KPMG Peat Marwick LLP as the
Company's auditor for the year ended December 31, 1997. Although the Board is
not required to do so, it is submitting its selection of the Company's auditors
for ratification at the Annual Meeting, in order to ascertain the views of its
shareholders. The Board will not be bound by the vote of the shareholders,
however, if the selection is not ratified, the Board would reconsider its
selection. One or more representatives of KPMG Peat Marwick LLP are expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if they desire to do so, and are expected to be available to respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
PRINCIPAL INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies as
in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal for action at the 1998
Annual Meeting of Shareholders must deliver a proposal in writing to the
Company's principal executive offices on or before January 13, 1998.
By Order of the Board of Directors,
/s/ DONALD L. SMITH, JR.
---------------------------------------
Donald L. Smith, Jr., President
Deerfield Beach, Florida
May 13, 1997
14
<PAGE>
DEVCON INTERNATIONAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
COMMON STOCK
The undersigned, a holder of Common Stock of Devcon International Corp., a
Florida corporation (the "Company"), hereby appoints Donald L. Smith, Jr. and
Richard L. Hornsby, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated below, all of the shares of stock of
the Company that the undersigned is entitled to vote at the 1997 Annual Meeting
of Shareholders of the Company, to be held on Friday, June 13, 1997, at 3:00
p.m., local time, at the Deerfield Beach Hilton, Hillsboro Executive Center
North, 100 Fairway Drive, Deerfield Beach, Florida and at any adjournments or
postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSALS SET FORTH.
(1) ELECTION OF DONALD L. SMITH, JR., RICHARD L. HORNSBY, ROBERT L. KESTER,
ROBERT A. STEELE AND W. DOUGLAS PITTS, as directors.
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominees (if any):
[ ] VOTE WITHHELD from all nominees listed above.
[ ] ABSTAIN
(2) PROPOSAL to ratify the reappointment of KPMG Peat Marwick LLP,
independent certified public accountants, as the Company's auditor for
1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon such other matters as may properly come before the Annual Meeting
and any adjournments or postponements thereof. In their discretion, the
proxies are authorized to vote upon such other business as may properly
come before the Annual Meeting, and any adjournments or postponements
thereof.
(see reverse side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED 'FOR' ALL OF THE PROPOSALS.
Dated _________________________ , 1997
________________________________
(Signature)
________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
