<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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
ELCO INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ELCO INDUSTRIES, INC.
-----------------------------------------
(Name of Person(s) Filing Proxy Statment)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: _/
________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________
_/ Set forth the amount on which the filing fee is calculated and state
how it was determined
[ ] 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>
ELCO INDUSTRIES, INC.
1111 SAMUELSON ROAD
P.O. BOX 7009
ROCKFORD, IL 61125-7009
John C. Lutz
President
Chief Executive Officer
September 30, 1994
Fellow Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
of Elco Industries, Inc. on Friday, November 4, 1994, at 7:30 p.m., Rockford,
Illinois time, at the University of Illinois-College of Medicine Auditorium,
1601 Parkview Avenue, Rockford, Illinois. The formal Notice of Meeting and
Proxy Statement accompanying this letter describe the business to be acted
upon.
Enclosed with these materials is our Annual Report for the year ended June 30,
1994.
Please sign and return your proxy card now whether you plan to attend the
meeting or not.
Sincerely,
John C. Lutz
John C. Lutz
President
Chief Executive Officer
<PAGE>
ELCO INDUSTRIES, INC.
1111 Samuelson Road
P.O. Box 7009
Rockford, Illinois 61125
Notice of
Annual Meeting of Stockholders
To Be Held November 4, 1994
TO THE STOCKHOLDERS OF ELCO INDUSTRIES, INC.
The Annual Meeting of the Stockholders of Elco Industries, Inc., a Delaware
corporation, will be held at the University of Illinois-College of Medicine
Auditorium, 1601 Parkview Avenue, Rockford, Illinois on Friday, November 4,
1994, at 7:30 P.M. Rockford, Illinois time, for the purpose of considering
and taking action on the following matters:
1. The election of three Class 3 directors to serve for a term of three
years.
2. Such other or further business as may properly come before the
meeting.
The close of business on September 6, 1994, is the record date fixed for the
determination of stockholders entitled to receive notice of and to vote at
the meeting and any adjournment thereof.
Stockholders who, for any reason, do not expect to be present at the meeting
are respectfully urged to date, sign and return the enclosed proxy in the
envelope supplied herewith for that purpose. The proxy is revocable and will
not affect your right to vote in person in the event you revoke the same and
attend the meeting.
By Order of the Board of Directors
Kenneth L. Heal
Secretary
Rockford, Illinois
September 30, 1994
Page 1
<PAGE>
ELCO INDUSTRIES, INC.
1111 Samuelson Road
P.O. Box 7009
Rockford, Illinois 61125
Proxy Statement For
Annual Meeting of Stockholders
To Be Held November 4, 1994
SOLICITATION AND VOTING RIGHTS
The accompanying proxy is solicited by the Board of Directors of Elco
Industries, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of its Stockholders on November 4, 1994. Such proxies,
properly signed and received by the Secretary prior to the meeting and not
revoked, will be voted. To revoke this proxy the signer thereof must
deliver written notice of revocation to the Secretary before the proxy has
been voted pursuant to the authority therein set forth. A stockholder who
has returned a proxy, but who desires to vote in person at the meeting, must
deliver written notice of revocation to the Secretary before the proxy has
been voted. The cost of soliciting proxies and of the mailing to
stockholders of the notice of meeting, proxy statement, proxy form and
Annual Report will be borne by the Company. The Annual Report is not part of
the proxy solicitation materials.
As of September 6, 1994, the Company had 4,887,337 shares of Common Stock
outstanding, and each of such shares is entitled to one vote on all matters
to be voted upon at the meeting. Only stockholders of record as of the
close of business on September 6, 1994, will be entitled to vote. A majority
of the outstanding shares of Common Stock represented at such meeting either
in person or by proxy and entitled to vote thereat will constitute a quorum
for the transaction of business at the meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence of a
quorum. All elections will be decided by a plurality of the votes cast.
Each abstention will be counted as a vote against a nominee.
Broker non-votes will not be counted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth as of September 6, 1994, all of the shares
of Common Stock of the Company beneficially owned by each person who is
known by the Company to own more than 5% thereof.
Amount and
Title Name and Address Nature of Percent
of of Beneficial of
Class Beneficial Owner Ownership Class
Common Okabe Company Limited 853,000 (1) 17.5%
Stock 4-21-15 Mukohjima
Sumeda-ku
Tokyo, Japan
Common Elco Industries, Inc., 412,070 (2) 8.4%
Stock Employee Stock Ownership Plan
c/o Amcore Trust Company
P.O. Box 1537
Rockford, IL 61110
Page 2
Common FMR Corp. 332,200 (3) 6.8%
Stock 82 Devonshire Street
Boston, MA 02109
(1) To the Company's knowledge, Okabe has sole voting and investment power
with respect to the shares owned.
(2) All of the shares held in the name of the ESOP are allocated to the
accounts of the participants. Participants exercise voting power over
the shares allocated to their account, but may not, under most
circumstances, exercise investment power over the shares until death,
disability, retirement or other termination of employment. The Trustee
of the ESOP may, at its discretion, vote those shares not voted by
participants.
(3) This information is based on the most recent schedule 13-G filed by the
named person. FMR Corp. has sole power to dispose or to direct the
disposition of the indicated shares. Various persons have voting power
and the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of the indicated shares.
On June 15, 1994, the Company purchased 135,000 shares of its common stock
for $2,497,500 from Okabe Company Limited. The purchase was pursuant to the
terms of a share purchase agreement dated as of June 7, 1994, which, in
addition to such purchase, provided that if requested by Okabe, the Company
would file a registration statement for an underwritten public offering of
Okabe's remaining shares no later than September 1,1994 (or as soon
thereafter as practicable), Okabe will not solicit offers to buy its
remaining shares of the Company in private transactions until the earlier of
November 15, 1994 or five business days following the effective date of such
registration statement, and Okabe is permitted to sell up to 25,000 of its
remaining shares of the Company per month on Nasdaq without first offering
such shares to the Company as required by a letter agreement dated June 27,
1989 between the Company and Okabe. Okabe did not request of the Company
by September 1, 1994 that a registration statement be filed.
No other stockholder beneficially owns, to the knowledge of the Company, more
than 5% of the Company's Common Stock.
Management
The following table sets forth as of September 6, 1994, all of the shares of
Common Stock of the Company owned beneficially by all directors, nominees,
the five most highly-compensated executive officers and by directors and
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name Title of Class Ownership Of Class
<S> <S> <C> <C>
Robert L. Berner Jr. Common Stock 19,141 (3) .4%
Milton R. Brown Common Stock 4,450 (3) .1%
Carl J. Dargene Common Stock 10,811 (2) .2%
August F. DeLuca Common Stock 3,080 .1%
G. Robert Evans Common Stock 7,106 (2) .2%
Derek M. Hasse Common Stock 29,847 .6%
Wayne P. Lockwood Common Stock 23,511 (2) .5%
John C. Lutz Common Stock 3,513 .1%
John C. Lutz-As trustee
of the Elco Industries, Inc. Profit
Sharing and Savings Plan Common Stock 110,019 (4) 2.3%
Page 3
Jack W. Packard Common Stock 51,208 (1) (5) (6) 1.1%
James L. Packard Common Stock (6)
David D. Peterson Common Stock 17,106 (2) (3) .4%
James H. Rilott Common Stock 4,937 (3) .1%
Robert H. Rothkopf Common Stock 1,715 *
James R. Stenberg Common Stock 3,482 .1%
All directors and
officers as a group Common Stock 293,723 (4) 6.0%
(15 persons)
</TABLE>
* Less than one-tenth of one percent.
(1) Includes 17,344 shares which are beneficially owned by Mr. Packard's wife
and with respect to which he disclaims beneficial ownership.
(2) Includes 6,000 shares held in a trust in which Mr. Peterson is
co-beneficiary and has shared voting and investment power.
(3) Includes 3,380 shares issued to Mr. Brown, 5,647 shares issued to Messrs.
Berner, Dargene and Lockwood, 5,106 shares issued to Messrs. Evans and
Peterson and 4,137 shares issued to Mr. Rilott pursuant to a non-employee
director stock compensation plan. The shares become vested at twenty
percent per year over a five year period from the date of issue. The
director receives dividends and exercises voting rights on all shares
whether vested or unvested.
(4) These shares are held by the Elco Industries, Inc. Profit Sharing and
Savings Plan Trust over which Mr. Lutz and certain other officers share
voting and investment power.
(5) Mr. Jack W. Packard has reached the mandatory retirement age and is not
being nominated at this meeting.
(6) There is no family relationship between Mr. Jack W. Packard and Mr. James
L. Packard.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
comprised of not less than six or more than twelve. The number of directors
is currently fixed at nine. The directors are currently divided into three
classes, with members of each class holding office for staggered three-year
terms. At the Annual Meeting, three directors will be elected to serve in
Class 3 until the Annual Meeting of Stockholders to be held in 1997 or until
their respective successors are duly elected and qualified. Proxies will be
voted in a discretionary manner should any nominee be unable to serve. The
Company has no reason to believe that any such nominees will be unavailable.
The names of and certain information regarding nominees are as follows:
Page 4
NOMINEES FOR CLASS 3 DIRECTORS FOR TERM EXPIRING IN 1997:
<TABLE>
<CAPTION>
Occupation and Employment First Became
Name Age For Past Five Years A Director
<S> <C> <S> <S>
(3) Robert L. Berner Jr. 62 Partner, Baker & McKenzie, attorneys at law, 1983
Chicago, Illinois.
(2) (3) Carl J. Dargene 64 President and Chief Executive Officer, 1981
Amcore Financial, Inc., a bank holding
company.
James L. Packard 53 Chairman, President, Chief Executive Officer, Nominee
Regal-Beloit Corporation, producer of power
transmission systems and perishable high speed
steel rotary cutting tools.
</TABLE>
CLASS 1 DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1995:
<TABLE>
<S> <C> <S> <S>
(2) G. Robert Evans 63 Chairman and Chief Executive Officer, 1992
Material Sciences Corporation, a developer and
commercializer of continuously processed,
coated materials technologies, since 1991;
President and Chief Executive Officer,
Corporate Finance Associates Illinois, Inc.,
1990-1991.
(1) David D. Peterson 62 President and Chief Executive Officer, Baker, 1987
Fentress & Company, a non-diversified
closed-end management investment company,
Chicago, Illinois.
(1) (2) James H. Rilott 57 President, Rockford Calibration Services, an 1989
industrial metrology service, since January
1994; Management Consultant, Anderson
Industries, Inc., a diversified holding
company, 1992-1993; President, Atwood
Industries, Inc., a manufacturer of
automotive components, 1988-1992.
</TABLE>
CLASS 2 DIRECTORS FOR TERM EXPIRING IN 1996:
<TABLE>
<S> <C> <S> <S>
(2) Milton R. Brown 62 Chairman, President and Chief Executive 1993
Officer of Suntec Industries, Incorporated,
manufacturer of fuel unit components.
(3) Wayne P. Lockwood 58 Partner, William Blair & Company, investment 1970
bankers, Chicago, Illinois
John C. Lutz 56 President, Chief Executive Officer, Elco 1991
Industries, Inc. since June 1993; President,
Chief Operating Officer, Elco Industries, Inc.
from March 1991-June 1993; consultant to small
businesses from 1990-February 1991; Vice
President and Division Manager, Barber-Colman
Co., 1985-1989.
Page 5
</TABLE>
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Nominating and Director Affairs Committee.
There is no family relationship among any of the above-named directors.
Mr. Brown serves as a director of Amcore Financial, Inc., CLARCOR and Suntec
Industries, Inc.
Mr. Dargene serves as a director of Amcore Financial, Inc., Woodward Governor
Company, CLARCOR and Clinton Electronics.
Mr. Evans serves as director of Material Sciences Corporation, Consolidated
Freightways, Inc., The Old Second Bancorp, Inc. and Swift Energy Co.
Mr. James L. Packard serves as a director of Regal-Beloit Corporation.
Mr. Peterson serves as a director of Baker, Fentress & Company,
Consolidated-Tomoka Land Co. and American Electronic Components, Inc.
OTHER INFORMATION
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although
it is not involved in day-to-day operating details. Members of the Board are
kept informed of the Company's business by various reports and documents sent
to them during the course of the year and prior to each Board meeting, as
well as by operating and financial reports made at Board meetings by the
Company's executive officers.
The Board of Directors holds four regular meetings during the year and other
special meetings as necessary. In addition, there is an organizational
meeting following the conclusion of the Annual Meeting of Stockholders. In
fiscal 1994, the Board held eight meetings, inclusive of special meetings and
the organizational meeting. Each director attended at least 75% of the
aggregate number of Board and committee meetings.
The Board of Directors has three standing committees consisting of the
Compensation Committee, the Audit Committee and the Nominating and Director
Affairs Committee.
The Compensation Committee makes recommendations to the Board with respect to
compensation of senior management of the Company. The Compensation Committee
met four times in fiscal 1994.
The Audit Committee reviews the objectivity of the Company's financial
reporting. It also reviews and makes recommendations regarding the Company's
Code of Ethics. It meets with appropriate Company financial personnel and
with independent certified public accountants in connection with such reviews.
The independent certified public accountants have the opportunity to meet,
independent of Company personnel, with the Audit Committee. The Audit
Committee met twice in fiscal 1994.
The Nominating and Director Affairs Committee reviews qualifications and
makes recommendations of candidates to fill director vacancies and considers
and makes recommendations with respect to other director matters. The
Nominating and Director Affairs Committee will consider nominees recommended
by stockholders in writing to the Company addressed to the Secretary. The
Nominating and Director Affairs Committee met twice in fiscal 1994.
Directors who are not employees of the Company receive an annual retainer of
$12,000 and fees of $800 for each Board of Directors meeting attended and
$750 for each committee meeting attended. Committee chairmen receive $1,500
for each meeting attended. Pursuant to the Company's stock compensation plan
for non-employee directors under 60 years of age, the annual retainer is
required to be paid primarily in Common Stock of the Company rather than in
cash. Non-employee directors over 60 years of age may
Page 6
elect to have the
annual retainer paid primarily in Common Stock of the Company rather than in
cash. Under the terms of the plan, the Company has issued seven
participating directors shares of Common Stock with a value of $60,000, the
aggregate of intended annual retainer fees for the five year period beginning
October 27, 1989 (one director), October 31, 1991 (three directors), October
30, 1992 (two directors) and October 29, 1993 (one director). The
directors' rights to the shares vest over a five year period at the rate of
twenty percent per year. However, each director is entitled to receive
dividends and exercise voting rights with respect to all shares prior to
vesting. Any unvested shares are forfeited if the director ceases to be a
director for any reason.
Mr. Jack W. Packard, who retired as Chairman of the Board and Chief Executive
Officer of the Company, has declined the annual retainer, meeting and
committee fees paid to other non-employee directors.
Under the 1992 Stock Option Plan for Non-Employee Directors, on October 23,
1992, each non-employee director was granted an option to purchase 1,000
shares of the Company's Common Stock at a per share price of $11.75.
Thereafter, following each annual meeting each eligible director will
automatically be granted additional options of 1,000 shares. The per share
exercise price of each option is equal to 100% of the fair market value of
Common Stock on the date of grant. Options become vested and exercisable six
months from the date of grant. The expiration date of each option is ten
years from the date of grant. However, the right to exercise an option
terminates six months from the date the optionee ceases to be a member of the
Board, unless the optionee dies, in which case the exercise right is extended
until the earlier of the second anniversary of the date of death or the
expiration of the option.
The Company has borrowed funds from time to time in the ordinary course of
business from the Amcore Bank-Rockford of Rockford, Illinois of which
Mr. Lutz is a director. Mr. Dargene and Mr. Brown are directors of Amcore
Financial, Inc., a bank holding company of which Amcore Bank-Rockford is a
part. There were no such borrowings outstanding at June 30, 1994.
Mr. Lockwood is a partner in the investment banking firm of William Blair &
Company, Chicago, Illinois, which firm has performed services for the Company
during its last fiscal year. William Blair & Company also maintains a market
in the Common Stock of the Company and, in connection therewith, may have a
long or short position in its trading account. Such position fluctuates and
any shares owned are not held for investment.
Mr. Berner is a partner in the law firm of Baker & McKenzie, Chicago,
Illinois, which firm has been retained by the Company during its last fiscal
year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. David D. Peterson,
Jack W. Packard and James H. Rilott. Mr. Packard was the Chairman of the
Board and Chief Executive Officer of the Company until his retirement as an
officer in June 1993. Mr. Packard receives annual benefits of $95,176 under
a supplemental benefit agreement. There are no other Committee interlocks or
insider participation in decisions of the Compensation Committee; no current
Elco officer serves on the committee and no officer serves as a director of a
Committee member's employer.
Page 7
<PAGE>
COMPENSATION COMMITTEE REPORT
Recommendations regarding the compensation of Company officers are made by
the Compensation Committee ("Committee") and approved by the Board of
Directors. The Board of Directors neither rejected nor materially modified
any Committee recommendations during the year.
POLICY OVERVIEW
The Company's officer compensation program is designed to closely relate
total compensation to both long-term and annual corporate performance as well
as shareholder return. The objectives are to motivate the Chief Executive
and other officers to achieve corporate performance goals and to link officer
and shareholder interests through equity-related incentive compensation plans.
The principal elements of the Company's officer compensation program consist
of base salary, an annual incentive compensation plan and a three-year
Performance Share Plan. The incentive opportunity for the Chief Executive
and administrative officers is more heavily weighted by long-term performance
while the opportunity for operating officers is more heavily weighted by
annual performance. The annual incentive plan compensates officers based on
consolidated, operating group and individual objectives established each
year. In 1994, the objective for the Chief Executive Officer and the
administrative officers was tied to achieving a desired level of operating
income. For operating officers, the objectives were tied to achieving
desired levels of operating income and return on assets. The Performance
Share Plan compensates officers based upon the three-year combination of
return on invested capital and Elco stock price appreciation. The Company
also has a stock option program which, while applicable to officers, extends
to approximately 95 employees. The Company's policies with respect to each
of these compensation elements is described below.
SALARY. With assistance from a national firm of compensation consultants,
the Company evaluates in detail all key management positions, including
officers. The evaluation process includes comparison of Elco base salaries
by position to base salaries for comparable positions which are included in
the consultant's survey of over 400 bonus-paying industrial companies. The
Company believes it competes within this group of companies for executive
officers. In general, Elco salaries are established at between 95% and 100%
of the median for the Chief Executive and other officers holding comparable
positions at comparable companies.
ANNUAL INCENTIVE PLAN. This plan provides an annual cash incentive
opportunity based upon performance objectives established each year and are
recommended by the Committee to the Board for final approval prior to the
start of the performance year.
For 1994, the objective used by the Committee in determining the size of the
award for the Chief Executive Officer and the administrative officers was
operating income. For operating officers, the objectives were operating
income and return on assets. The Committee establishes the target value of
an award stated as a percentage of base salary according to the Committee's
determination of the officer's ability to influence short-term financial
performance. For 1994, the range of this percentage was 10% to 26% with
operating officers having a higher percentage than the Chief Executive
Officer and administrative officers. The target value for the Chief
Executive Officer was 12.5%. The Committee also establishes a minimum
threshold level of performance to be achieved before any award can be
earned. The Committee also establishes a target level of performance for
the fiscal year. Thus, the award to be earned increases proportionately
based on increases between the threshold level and the target level and
beyond. The value of each award earned is the product of multiplying the
award target value by the performance level achieved in excess of the
threshold. Awards may not exceed 50% of base salary for the Chief Executive
Officer and the administrative officers and may not exceed 65% for the
operating officers.
Page 8
PERFORMANCE SHARE PLAN. The Performance Share Plan ("PSP") provides an
incentive opportunity based upon two longer-term corporate factors:
1) three-year cumulative return on invested capital relative to an
established target, and exceeding a threshold minimum; and 2) the Elco stock
price change from the beginning to the end of the same three-year period.
At the beginning of each three-year period, all officers (including the Chief
Executive Officer) are granted target award units, payable at the end of a
three-year period if the Company achieves its target return on invested
capital. Each officer receives award units equivalent to the dollar value of
a percentage of base salary divided by the per share Elco stock price at the
beginning of the three-year period. The Compensation Committee has
established a range of 14% to 38% of base salary according to the Committee's
determination of the officer's ability to influence long-term financial
performance with operating officers having a lower percentage and the Chief
Executive Officer and administrative officers having a higher percentage.
At the end of each three-year period, each officer is credited with
award units equal to the same percentage of target units as the actual
three-year return on invested capital exceeding the threshold minimum
represented as a percentage of the predetermined range of target return less
the threshold minimum. The total dollar value of each PSP award is the
product of the credited award units multiplied by the per share Elco stock
price at the end of the period. Awards may not exceed 100% of an officer's
base salary for the last year of the performance period and are payable in
cash and stock as determined by the Compensation Committee.
STOCK OPTIONS. Under the terms of the 1991 Stock Option Plan, which was
approved by shareholders, options to purchase Company common stock may be
granted to key employees approved by the Compensation Committee. The
exercise price of each option is equal to 100% of the fair market value on
the date of grant. Except under specific conditions, no granted option may
be exercised prior to the fifth anniversary of the grant date.
The Company grants options from time to time to a wide range of key employees
(approximately 95 to date) to encourage broad employee stock ownership,
rather than using options as a major incentive tool for the Chief Executive
Officer and other corporate officers. Accordingly, total options granted
through June 30, 1994 have been allocated approximately 25% to all officers
as a group, and 75% to all non-officer key managers as a group. In
determining the sizes of individual awards, the Committee considers the
amount of options already outstanding or previously granted and the
aggregate size of the current award to all employees. There were no options
granted during fiscal 1994.
David D. Peterson, Chairman
Jack W. Packard
James H. Rilott
Page 9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding compensation
received during each of the last three years by the Company's Chief Executive
Officer and the four other most highly paid executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities
Underlying LTIP All Other
Salary Bonus Options Payouts Compensation (2)(3)
Name & Principal Position Year ($) ($) (#) ($) ($)
- - ------------------------- ---- -------- ------- --------- ------- --------------------
<S> <S> <S> <S> <S> <S> <S>
John C. Lutz 1994 $268,017 $35,263 0 $43,469 $3,363
President, Chief Executive 1993 $206,204 $0 2,000 $0 $2,515
Officer and Director 1992 $181,500 $0 0 $0 -----
Robert H. Rothkopf 1994 $184,994 $50,395 0 $13,719 $3,427
President of Industrial 1993 $160,331 $10,179 1,400 $0 $2,862
Products Group 1992 $137,963 $0 0 $0 -----
August F. DeLuca 1994 $148,412 $15,733 0 $25,823 $3,181
Vice President-Finance 1993 $131,113 $0 1,200 $0 $2,366
and Chief Financial Officer 1992 $119,404 $0 0 $0 -----
James R. Stenberg 1994 $128,671 $0 0 $9,197 $3,845
President of Home and 1993 $113,206 $0 1,000 $0 $2,990
Construction Products Group 1992 (1) N/A N/A N/A N/A N/A
Derek M. Hasse 1994 $127,933 $13,563 0 $23,494 $4,764
Vice President-Administration 1993 $123,546 $0 1,100 $0 $3,847
1992 $106,200 $0 0 $0 -----
</TABLE>
(1) Mr. Stenberg was not an executive officer during fiscal year 1992.
(2) Disclosure of All Other Compensation is not required for 1992.
(3) Consists of the following: (a) contributions by the Company to the
executives' accounts under the Elco Industries, Inc. Profit Sharing and
Savings Plan; (b) contributions by the Company to the executives'
accounts under the Elco Industries, Inc. Employee Stock Ownership Plan
and (c) premiums related to group term life insurance. The 1994 values of
the three components for each executive officer are: Mr. Lutz (a) $711,
(b) $1,752 and (c) $900; Mr. Rothkopf (a) $768, (b) $1,789 and (c) $870;
Mr. DeLuca (a) $798, (b) $1,807 and (c) $576; Mr. Hasse (a) $1,262,
(b) $2,098 and (c) $1,404; and Mr. Stenberg (a) $1,175, (b) $2,044
and (c) $626.
Under the Elco Industries, Inc. Profit Sharing and Savings Plan
(a defined contribution plan), the Company contributed during the fiscal
year ended June 30, 1994, 10% of its profits (as defined in the plan)
from its Rockford-based operations. The contribution is allocated to
individual accounts of eligible employees on the basis of years of service
and limited proportionate compensation.
Under the Elco Industries, Inc. Employee Stock Ownership Plan
(a defined contribution plan), the Company makes contributions to the
plan in the form of Company stock or cash as the Board of Directors, in
its sole discretion, determines. The contribution is allocated to the
accounts of eligible employees on the basis of years of service and
limited proportionate compensation.
Page 10
OPTIONS
The Company has in effect a stock option plan pursuant to which options to
purchase Common Stock of the Company may be granted to key employees of the
Company and its subsidiaries, including the above-named executive officers.
No stock options were granted in 1994.
The following table provides information with respect to the named executive
officers concerning option exercises and unexercised option values as of
June 30, 1994.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year-End (#) Year-End ($)(1)
Shares -------------------- -----------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- - ------------------ ------------ ------------ -------------------- -----------------
<S> <C> <C> <S> <S>
John C. Lutz 0 0 0/6,000 $0/$38,500
Robert H. Rothkopf 0 0 0/4,050 $0/$24,612
August F. DeLuca 0 0 0/3,550 $0/$21,587
Derek M. Hasse 0 0 0/3,200 $0/$19,450
James R. Stenberg 0 0 0/2,800 $0/$17,000
</TABLE>
(1) Computed based upon the difference between the aggregate fair market
value and the aggregate exercise price. The closing price for the
Company's Common Stock on June 30, 1994 was $17.00.
The following table sets forth information with respect to the named
executive officers concerning Performance Share Awards granted during fiscal
1994 pursuant to the Company's Performance Share Plan.
Long-Term Incentive Plan - Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance or Under Non-Stock Price-Based Plans
Other Period ------------------------------------------------------
Number of Until Maturation Threshold Target Maximum
Name Units (1) or Payout (Units) (#) (2) (Units) (#) (3) (Units) (#) (4)
- - ------------------ --------- ---------------- --------------- --------------- ---------------
<S> <C> <S> <C> <C> <S>
John C. Lutz 8,450 7/1/93-6/30/96 845 8,450 17,333
Robert H. Rothkopf 2,100 7/1/93-6/30/96 210 2,100 12,000
August F. DeLuca 3,625 7/1/93-6/30/96 362 3,625 9,666
Derek M. Hasse 3,125 7/1/93-6/30/96 312 3,125 8,333
James R. Stenberg 1,467 7/1/93-6/30/96 147 1,467 8,386
Page 11
</TABLE>
(1) Participation in the 1988 Performance Share Plan is primarily open to
executive officers and managers. Under the plan, participants are
granted a target incentive award expressed as a percentage of base
salary. The dollar value of the award is converted into units based on
the then current market value of the Company's common stock. The
participant earns the right to receive the monetary value of some or all
of these units if the Company meets predetermined performance goals
measured over designated periods, except that in the event of a change of
control of the Company, all performance periods end and all performance
awards are paid as if 100% earned. The Compensation Committee of the
Board of Directors approves the target incentive award, establishes the
performance goals, establishes performance periods and determines whether
earned awards will be paid in cash, shares of stock or a combination
thereof. Awards are subject to change depending on the Company meeting
predetermined performance goals over the remaining fiscal years within
the performance period and the market value of the Company's Common
Stock at the end of the performance period.
(2) The units shown under the heading "Threshold" are the units that would be
earned at the lowest level of performance above the minimum level of
performance that must be achieved before any units are earned.
(3) The units shown under the heading "Target" are the units that would be
earned at the desired level of performance.
(4) The "Maximum" units payable are calculated by dividing the base salary
in the final year of the performance period by the per share price at the
beginning of the performance period. Since the base salary in the final
year of the performance period is not presently known, the estimate in
this column is calculated using current base salary.
RETIREMENT PLANS
Government regulations limit the benefits available to certain employees
through retirement plans which qualify for preferential tax treatment. In
order to provide a competitive level of retirement benefit (including Social
Security) that is comparable for all career employees, the Company has
entered into supplemental benefit agreements with Mr. Lutz, Mr. DeLuca and Mr.
Hasse. Such arrangements provide fifteen annual payments upon retirement at
age 65 of $115,794, $21,600 and $66,000 for Mr. Lutz, Mr. DeLuca and Mr.
Hasse, respectively. Payment of benefits (as defined in the plan) is subject
to the officers' continued employment by the Company until age sixty-five
(65). In the event of retirement at an earlier or later time, a benefit may
be payable in such amount and upon such terms as may be determined by the
Board of Directors. In the event of any change in control of the Company
while any officer is actively employed and in the event of an officer's
termination or discharge as a result of the change of control, the annual
benefit indicated above would be payable commencing with such termination or
discharge.
The Company also has defined benefit pension plans covering a significant
portion of all employees. The plan covering the executive officers other
than Mr. Lutz and Mr. Rothkopf has been amended so that benefits are frozen
as of December 31, 1988 and no additional benefits accrued after that date.
Mr. Lutz and Mr. Rothkopf are not covered by a defined benefit plan. The
maximum amount of retirement benefits payable to a participant is 42% of the
participant's highest average compensation during any continuous five-year
period within the ten years immediately preceding December 31, 1988, reduced
by a percentage deduction of the participant's primary social security
benefits based upon credited service of the participant. The annual pension
benefit payable at normal retirement age for the named and covered executive
officers will be as follows: Mr. DeLuca-$552, Mr. Hasse-$15,276 and Mr.
Stenberg-$8,592.
Page 12
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder
return of the Company's Common Stock with the Nasdaq Stock Market (U.S.) and
the S & P Manufacturing Diversified Industries. The comparison assumes
$100 was invested on June 30, 1989 in the Company's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends.
In 1993, the Company's Performance Graph included a self-constructed peer
index consisting of four companies. During the last year, one of those
companies sold that portion of its business which was in the same line of
business as the Company. Another of the four companies was sold and
information is no longer publicly available. In order to provide a more
meaningful comparative performance graph to its shareholders, the Company
has elected to utilize the S & P Manufacturing Diversified Industries Index as
the peer group index.
<TABLE>
COMPARATIVE FIVE-YEAR CUMULATIVE RETURN
<CAPTION>
June 30 June 30 June 30 June 30 June 30 June 30
Index 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Elco Industries, Inc. $100 $85 $71 $92 $115 $139
Nasdaq Stock Market (U.S.) $100 $108 $114 $137 $172 $173
S & P Manufacturing Diversified Industries $100 $123 $131 $129 $153 $171
Page 13
</TABLE>
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand, L.L.P., has been the Company's principal
independent auditors for the last fiscal year. Management expects to select
Coopers & Lybrand, L.L.P., to provide auditing service for the fiscal year
ending June 30, 1995. The stockholders will not be asked to take any action
at the annual meeting regarding this selection.
A representative of Coopers & Lybrand, L.L.P., will be present at the meeting
and be given the opportunity to make a statement and to respond to appropriate
questions.
SECTION 16 COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission. Executive officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the Company's
1994 fiscal year all Section 16(a) filing requirements applicable to its
executive officers, directors, and greater than ten-percent beneficial owners
were complied with.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in next year's proxy material, any
stockholder proposals to be presented at the Company's 1995 Annual Meeting
must be submitted to the Company by June 2, 1995.
OTHER MATTERS
The Company has no knowledge of any matters, other than the election of
directors, upon which action is to be taken at the meeting. Should any other
matter be properly submitted to the vote of stockholders at the meeting, the
persons named in and authorized to vote the proxies will vote them according
to their best judgment.
By Order of the Board of Directors
Kenneth L. Heal
Secretary
Rockford, Illinois
September 30, 1994
Page 14
<PAGE>
PROXY ELCO INDUSTRIES, INC. PROXY
Annual Meeting of Stockholders - November 4, 1994
This Proxy is Solicited on Behalf of the Board of Directors of the Company
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated September 30, 1994, and the 1994
Annual Report to Stockholders, and appoints John C. Lutz and August F. DeLuca,
or either of them, as the proxies and attorneys-in-fact, with full power to
each of substitution on behalf and in the name of the undersigned to vote and
otherwise represent all of the shares registered in the name of the
undersigned at the 1994 Annual Meeting of Stockholders of the Company to be
held on November 4, 1994 at 7:30 p.m., Rockford, Illinois time, at the
University of Illinois-College of Medicine Auditorium, 1601 Parkview Ave.,
Rockford, Illinois, and any adjournement thereof with the same effect as if
the undersigned were present and voting such shares, on the following matters
and in the following manner.
The shares represented by this proxy will be voted in accordance with the
specification made. If no specification is made, the shares represented by
this proxy will be voted for each of the above persons and proposals, and
for such other matters as may properly come before the meeting as the
proxyholders deem advisable.
I plan to attend the meeting: Yes _____ No _____
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
1. Election of Directors:
Nominees: Robert L. Berner, Jr., Carl J. Dargene and James L. Packard
2. To vote or otherwise represent the shares on any other business which may
properly come before the meeting or any adjournement thereof, according
to their discretion and in their discretion.
Dated: __________________________, 1994
Signature(s) ______________________________________________________________
___________________________________________________________________________
Sign exactly as your name(s) appear on the stock certificate. A Corporation
is requested to sign its name by its President or other authorized officer,
with the office held designated. Executors, administrators, trustees, etc.,
are requested to so indicate when signing. If stock is registered in two
names, both should sign.
