SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
THE EASTERN COMPANY
(Name of Registrant as Specified in Its Charter)
MMI INVESTMENTS, L.L.C.
(Name of Person(s) Filing Proxy Statement)
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FELLOW EASTERN SHAREHOLDERS!!!
ASK Stedman Sweet the questions he has intentionally avoided:
1. Why is the annual meeting one month earlier than normal this year? Why does
Sweet want to limit the time that shareholders have to consider his track
record?
2. In 1991 Eastern earned $1.44 per share. Last year Eastern earned $0.33 per
share. When can the shareholders expect earnings to exceed $2 per share
pursuant to Sweet's so called "strategic plan?"
3. Other than firing 75% of the company's employees in Connecticut (over 200
jobs with over $3 million in lost wages for local people), what has Stedman
Sweet done for the community and employees lately?
4. You say that the leaders of Eastern have increased their holdings by 44,000
shares this year. Yet the proxy shows that the board's holdings decreased
by over 5,000 shares from 1996 and Stedman Sweet's holdings have not
changed at all! It looks like all you did was exercise stock options at
below market prices. Did you buy any shares in the last decade with your
own money (not including stock options exercised)?
5. What has the investment banker, DLJ, done for the company? How much are you
paying them? Did they give a fairness opinion in favor of your strategic
plan and an unfairness opinion regarding the Millbrook valuation? Did any
of their analysis include a leveraged buyout of the company?
6. No research analysts cover the company, so the only independent research
available seems to be ISS, which recommended a vote for Millbrook. How do
you address the ISS conclusion that "...enough time has passed for
Eastern's strategic plan to yield demonstrated improvement in shareholder
value - and it has failed to do so."
7. How can Eastern possibly finance any major strategic acquisition if Sweet
is against debt and the stock price is too low? So far all the acquisitions
have been too small and most have failed anyway. By the way, if borrowing
is bad then why did Sweet borrow to pay the dividend in 1996?
8. Stedman Sweet has earned over $2.1 million since becoming CEO; he has over
$1.1 million of stock due to company granted options; he has a golden
parachute, an extra pension plan and a deferred compensation program from
the company worth over $3.0 million. This adds up to over $6.0 million.
What's so bad about being a millionaire?
<PAGE>
WHY DO STEDMAN SWEET'S TACTICS RELY ON PERSONAL ACCUSATIONS AND BROKEN
PROMISES?
WHY DOESN'T HE DEFEND HIS PERFORMANCE AT EASTERN?
BECAUSE HE CAN'T!
Sweet Becomes Nine (9)
Chief Executive Years Later
1988 1996 Change
Sales $74 million $58 million Down 22%
Net Income $2.6 million $0.9 million Down 65%
Employees 714 494 Down 31%
Return on Equity 12% 3% Down 75%
Sweet's
Compensation $189,801 $273,176 UP 44%
SWEET'S STRATEGIC PLAN = 10 YEARS OF SPECIAL CHARGES AND LOSSES*
Pretax Amounts
Year (in $000s)
1987 $3,208
1988 $ 951
1989 $1,870
1990 $3,206
1991 $1,934
1992 $2,418
1993 $ 77
1995 $ 321
1996 $ 707
Total Amount Wasted: $14,692,000 or $5.33 per share
* Source: The Eastern Company Public Filings
STOP STEDMAN SWEET FROM RUINING THE EASTERN COMPANY - ELECT MMI!
WHY DID THE NATION'S LEADING INDEPENDENT PROXY ADVISOR, INSTITUTIONAL
SHAREHOLDER SERVICES (ISS), AFTER EXTENSIVE DISCUSSIONS WITH BOTH SIDES,
RECOMMEND THAT SHAREHOLDERS VOTE FOR MMI'S NOMINEES?
- - "ISS believes that adequate time has passed for Eastern's strategic plan to
yield demonstrated improvement in shareholder value - and it has failed to
do so... We therefore conclude that a board shakeup is needed."
- - MMI's nominees "have put forth a sound action plan to improve Eastern's
performance, addressing expenditures, customer service, new product lines,
acquisitions, and management incentives."
- - MMI's nominees "have relevant expertise to contribute to the company in
M&A, manufacturing, and business and will serve to put pressure on the
board to act on shareholders' behalf."
- - "Eastern's management defends the company's uninspired performance by its
claim of running a conservative operation, yet conservative has come to
mean maintaining the status quo of poor performance."
ELECT OUR 3 DIRECTORS TO THE 9 MEMBER BOARD. WE ADVOCATE REBUILDING VALUE AT
EASTERN FOR ALL SHAREHOLDERS. REMEMBER! YOU HAVE THE RIGHT TO CHANGE YOUR VOTE.
ONLY YOUR LATEST DATED PROXY CARD COUNTS.
