<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
Falcon Products, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[FALCON LOGO]
FALCON PRODUCTS, INC.
9387 DIELMAN INDUSTRIAL DRIVE
ST. LOUIS, MISSOURI 63132
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
St. Louis, Missouri
January 24, 1997
The annual meeting of the stockholders of Falcon Products, Inc., will be
held on Tuesday, March 18, 1997, at 4:00 p.m. at the St. Louis Club, 7701
Forsyth Boulevard, Clayton, Missouri 63105, for the purposes of:
1. Electing three Class A directors for a term expiring in 2000; and
2. Transacting such other business as may properly come before the meeting.
Stockholders of record at the close of business on January 21, 1997, will be
entitled to vote at the meeting. A list of all stockholders entitled to vote at
the annual meeting, arranged in alphabetical order and showing the address of
and number of shares held by each stockholder, will be open at the principal
office of Falcon Products, Inc. at 9387 Dielman Industrial Drive, St. Louis,
Missouri 63132, during usual business hours, to the examination of any
stockholder for any purpose germane to the annual meeting for 10 days prior to
the date thereof at the office of the Company set forth above.
A copy of the Annual Report for fiscal 1996 accompanies this notice.
By Order of the Board of Directors
MICHAEL J. DRELLER
Secretary
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN,
DATE, AND RETURN THE ACCOMPANYING PROXY PROMPTLY. A RETURN ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
FALCON PRODUCTS, INC.
9387 DIELMAN INDUSTRIAL DRIVE
ST. LOUIS, MISSOURI 63132
PROXY STATEMENT
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Falcon
Products, Inc. (the "Company"), for use at the annual meeting of the Company's
stockholders to be held at the St. Louis Club, 7701 Forsyth Boulevard, Clayton,
Missouri 63105, on Tuesday, March 18, 1997, at 4:00 p.m. and at any adjournments
thereof. Whether or not you expect to attend the meeting in person, please
return your executed proxy in the enclosed envelope and the shares represented
thereby will be voted in accordance with your wishes. This proxy statement and
the enclosed form of proxy are being first sent to stockholders on or about
January 24, 1997.
REVOCABILITY OF PROXY
Any stockholder executing a proxy that is solicited hereby has the power to
revoke it prior to the voting of the proxy. Revocation may be made by attending
the annual meeting and voting the shares of stock in person, or by delivering to
the Secretary of the Company at the principal office of the Company prior to the
annual meeting a written notice of revocation or a later-dated, properly
executed proxy.
RECORD DATE
Stockholders of record at the close of business on January 21, 1997, will be
entitled to vote at the meeting.
ACTION TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the persons named in
the enclosed form of proxy, to-wit, Franklin A. Jacobs and Michael J. Dreller,
or the one of them who acts, will vote:
(1) FOR the election of the persons named herein as nominees for Class A
directors of the Company, for a term expiring at the 2000 annual meeting of
stockholders, (or until a successor is duly elected and qualified); and
(2) according to their judgment, on the transaction of such other
business as may properly come before the meeting or any adjournments
thereof.
Should the nominees named herein for election as a Class A directors become
unavailable for any reason, it is intended that the persons named in the proxy
will vote for the election of such other person in his stead as may be
designated by the Board of Directors. The Board of Directors is not aware of any
reason that might cause any nominee to be unavailable.
VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF
AND CUMULATIVE VOTING RIGHTS
On January 21, 1997, there were 9,689,086 shares of common stock, par value
$.02 per share ("Common Stock"), outstanding, which constitute all of the
voting securities of the Company. Each share is entitled to one vote, and
stockholders are entitled to vote cumulatively in the election of directors;
that is, each stockholder may vote the number of his, her or its shares
multiplied by the number of directors to be elected and may cast all such votes
for a single nominee or may distribute them among any number of nominees. There
is no condition precedent to the exercise of these cumulative voting rights.
A majority of the outstanding shares present in person or represented by
proxy will constitute a quorum at the meeting. Under applicable state law and
provisions of the Company's Restated Certificate of Incorporation (the
"Certificate") and Amended and Restated By-Laws (the "By-Laws"), the vote
required for the election of directors is a plurality of the votes of the issued
and outstanding shares of Common Stock present in person or represented by
2
<PAGE> 4
proxy at the annual meeting of stockholders and entitled to vote on the election
of directors. The vote required for any other matter properly brought before the
meeting is the affirmative vote of the majority of the shares of Common Stock
present in person or represented by proxy at the annual meeting of stockholders
and entitled to vote on the proposal to approve any such other matter.
Abstentions from voting and broker non-votes on the election of directors
will operate as neither a vote for nor a vote against any or all nominees for
directors. Abstentions from voting on any other matter properly brought before
the meeting effectively will operate as a vote against such proposals or such
other matters. Votes on all matters will be counted by duly appointed inspectors
of election, whose responsibilities are to ascertain the number of shares
outstanding and the voting power of each, determine the number of shares
represented at the meeting and the validity of proxies and ballots, count all
votes and report the results to the Company.
As of January 21, 1997, the following persons were known to the Company who
may, individually or as a group, be deemed to be the beneficial owners,
respectively, of more than 5% of the Common Stock, each having sole voting and
investment power over such Common Stock, except as indicated in the footnotes
hereto:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP<F1> OF CLASS
---------------- --------------------------- --------
<S> <C> <C>
Franklin A. Jacobs, 2,087,710<F2> 21.3%
Chairman of the Board and
Chief Executive Officer of the Company
9387 Dielman Industrial Drive
St. Louis, Missouri 63132
David L. Babson & Company, Inc. 845,680<F3> 8.9%
One Memorial Drive
Cambridge, MA 02142-1300
Robert Fleming, Inc. 788,260<F4> 8.2%
320 Park Avenue, 11th Floor
New York, NY 10022
Putnam Investments, Inc. 478,225<F5> 5.2%
One Post Office Square
Boston, MA 02109
<FN>
- --------
<F1> Reflects the number of shares outstanding on January 21, 1997, and, with
respect to each person, assumes the exercise of all stock options held by
such person that are exercisable currently or within 60 days of the date of
this proxy statement (such options being referred to hereinafter as
"currently exercisable options").
<F2> Includes 84,389 shares held by Joyce Jacobs, the wife of Mr. Jacobs, and
36,953 shares held in revocable trusts for the benefit of Mr. Jacobs'
children as to which Mr. Jacobs serves as sole trustee. Also includes
currently exercisable options to acquire 132,000 shares of Common Stock.
Does not include 162,494 shares held in trust for the benefit of Mr.
Jacobs' children as to which Donald P. Gallop serves as sole trustee. See
Note (3) to the table under "Security Ownership of Management."
<F3> According to Schedule 13G, provided to the Company in accordance with the
Securities and Exchange Act of 1934. Includes 247,885 shares as to which
such beneficial owner has shared voting power.
<F4> According to Schedule 13G, provided to the Company in accordance with the
Securities and Exchange Act of 1934.
<F5> According to Schedule 13G, provided to the Company in accordance with the
Securities and Exchange Act of 1934. Includes 237,950 shares as to which
such beneficial owner has shared voting power.
- --------
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
On January 21, 1997, the following represented beneficial ownership of
Common Stock by each director and nominee for election as a director, each of
the executive officers named in the Summary Compensation Table (see "Executive
Compensation" below), and by all current directors, nominees and executive
officers as a group (each
3
<PAGE> 5
director, nominee and officer having sole voting and investment power over the
shares listed opposite his name except as indicated in the footnotes hereto):
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNERSHIP<F1> OF CLASS
---- --------------------------- --------
<S> <C> <C>
Raynor E. Baldwin............................................. 285,994<F2> 3.0%
Melvin F. Brown............................................... 0 <F*>
Donald P. Gallop.............................................. 247,402<F3> 2.6%
James L. Hoagland............................................. 30,312<F4> <F*>
Franklin A. Jacobs............................................ 2,087,710<F5> 21.3%
S. Lee Kling.................................................. 167,371<F6> 1.7%
Lee M. Liberman............................................... 40,501<F7> <F*>
Alan Peters................................................... 49,684 <F*>
Darryl Rosser................................................. 80,824<F8> <F*>
James Schneider............................................... 336,086<F9> 3.5%
Stephen L. Clanton............................................ 35,391 <F*>
Richard Hnatek................................................ 81,127<F10> <F*>
All Directors, Nominees and Executive
Officers as a Group (14 individuals).......................... 3,445,599<F11> 34.6%<F12>
<FN>
<F*> Represents less than 1% of the class.
<F1> See Note (1) to the table under "Voting Securities, Principal Holders
Thereof and Cumulative Voting Rights."
<F2> Includes 69,294 shares held in a pension trust as to which Mr. Baldwin
serves as sole trustee and principal beneficiary and 24,048 shares owned by
his wife. Also includes currently exercisable options to acquire 6,600
shares of Common Stock.
<F3> Includes 162,494 shares which are held in a trust for the benefit of Mr.
Jacobs' children as to which Mr. Gallop serves as sole trustee, 49,627
shares which are owned of record by Gallop, Johnson & Neuman, L.C., a law
firm of which Mr. Gallop is Chairman, and 1,324 shares which Mr. Gallop owns
of record as custodian for the benefit of his children. Mr. Gallop disclaims
beneficial ownership of all such shares. Also includes currently exercisable
options to acquire 6,600 shares of Common Stock.
<F4> Includes currently exercisable options to acquire 17,773 shares of Common
Stock.
<F5> See Note (2) to the table under "Voting Securities, Principal Holders
Thereof and Cumulative Voting Rights."
<F6> Includes 130,716 shares owned by a revocable trust of which Mr. Kling and
his wife are the trustees. Mr. Kling shares voting and dispositive power
over such shares. Also includes currently exercisable options to acquire
6,600 shares of Common Stock.
<F7> Includes currently exercisable options to acquire 11,550 shares of Common
Stock.
<F8> Includes currently exercisable options to acquire 48,692 shares of Common
Stock.
<F9> Includes 276,963 shares owned by a partnership of which Mr. Schneider and
his children are general partners and as to which Mr. Schneider shares
voting and dispositive power, 28,734 shares held in a pension trust as to
which Mr. Schneider serves as sole trustee and 331 shares which Mr.Schneider
holds as custodian for his children. Also includes currently exercisable
options to acquire 8,250 shares of Common Stock.
<F10> Includes currently exercisable options to acquire 37,520 shares of Common
Stock.
<F11> Includes 38,520 shares subject to stock options held by non-director
officers of the Company and 244,665 shares subject to currently
exercisable options held by directors of the Company.
<F12> For purposes of determining the aggregate amount and percentage of shares
deemed beneficially owned by directors and officers of the Company
individually and by all directors, nominees and officers as a group,
exercise of all currently exercisable options listed in the footnotes
hereto is assumed. For such purpose, 9,965,671 shares of Common Stock are
deemed to be outstanding.
- --------
</TABLE>
4
<PAGE> 6
PROPOSAL 1--ELECTION OF DIRECTORS
INFORMATION ABOUT THE NOMINEES
The Company's Certificate of Incorporation and By-Laws provide for a
division of the Board of Directors into three classes. One of the classes is
elected each year to serve a three-year term. The term of the Class A directors
expires at the 1997 Annual Meeting of Stockholders. It is the intention of the
persons named in the accompanying proxy, unless otherwise directed, to vote for
the election of the Class A nominees listed below to serve until the 2000 Annual
Meeting of Stockholders.
The Company's By-Laws currently specify that the total number of directors
shall be nine and that no person shall be eligible to be elected, re-elected or
appointed as a director who has reached the age of 73 unless the Board of
Directors determines it is in the best interest of the Company to waive the
retirement provision. The Board of Directors has determined it is in the best
interest of the Company to waive the retirement provisions with respect to
Messrs. Liberman and Hoagland and to submit each of them for election as a Class
A nominee. Each of the Class A nominees have agreed to serve if elected;
however, Messrs. Liberman and Hoagland have each indicated that they may elect
to resign prior to the completion of their full three-year term of service.
The following table shows for each nominee and director continuing in office
his age, his principal occupation for at least the last five years, his present
position with the Company, the year in which he was first elected or appointed a
director (each serving continuously since first elected or appointed except as
set forth in the footnotes hereto), his directorships with other companies whose
securities are registered with the Securities and Exchange Commission, and the
class and expiration of his term as director.
<TABLE>
CLASS A--TO BE ELECTED TO SERVE AS DIRECTOR UNTIL 2000
<CAPTION>
SERVICE AS
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Melvin F. Brown 61 Vice Chairman of Deutsche Financial Services, a commercial finance --
company, since January 1997; prior thereto, President and Chief
Executive Officer of Deutsche Financial Services, since May 1995;
prior thereto, President of ITT Commercial Finance Corporation, for
more than the last five years.
James L. Hoagland 74 Retired. Prior to September 1, 1989, President and Chief Executive 1990
Officer of Graybar Electric Company, Inc., a distributor of electrical
and telecommunications equipment, for more than five years.
Lee M. Liberman 75 Chairman emeritus and consultant to Laclede Gas Company, a retail 1985
natural gas distribution public utility, since January 1994; prior
thereto, Chairman of the Board and, until August 1991, Chief Executive
Officer of Laclede Gas Company, for more than five years; Director of
CPI Corporation, Furniture Brands International and DT Industries,
Inc.
<CAPTION>
CLASS B--TO CONTINUE TO SERVE AS DIRECTOR UNTIL 1998
SERVICE AS
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Raynor E. Baldwin 57 President of Woodsmiths, Incorporated, a manufacturer of table tops, 1977
<F1> for more than the last five years.
James Schneider 65 Broker--International Monetary Market, Chicago Mercantile Exchange, 1989
<F2> for more than the last five years.
Darryl C. Rosser 45 President and Chief Operating Officer of the Company since December 1996
1995; prior thereto, Executive Vice President -- Operations since May
1995; prior thereto, Senior Vice President--Operations since 1993; and
prior thereto, Vice President--Operations since January 1988.
5
<PAGE> 7
<CAPTION>
CLASS C--TO CONTINUE TO SERVE AS DIRECTOR UNTIL 1999
SERVICE AS
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Donald P. Gallop 64 Attorney-at-law; Chairman of the law firm of Gallop, Johnson & Neuman, 1963
<F3><F4> L.C., for more than the last five years; Director of Magna Group,
Inc., and Data Research Associates, Inc.
Franklin A. Jacobs 64 Chairman of the Board and Chief Executive Officer of the Company for 1957
<F2><F4> more than the last five years and President of the Company until
December 1995; Director of Magna Group, Inc. and Top Air
Manufacturing, Inc.
S. Lee Kling 68 Chairman of the Board of Kling Rechter & Co., L.P., a merchant banking 1969
<F4> company, for more than the last five years; Director of Bernard Chaus,
Inc., Electro Rent Corporation, Hanover Direct, Inc., Lewis Galoob
Toys, Inc., Magna Group, Inc., National Beverage Corp. and Top Air
Manufacturing, Inc.
<FN>
- --------
<F1> Mr. Baldwin has served continuously as a director, except for the period
from January 1982 through January 1988.
<F2> Messrs. Jacobs and Schneider are brothers-in-law.
<F3> Mr. Gallop is a member of the law firm serving as corporate counsel to the
Company. See "Transactions with Issuer and Others" for further
information.
<F4> Members of Executive Committee.
</TABLE>
INFORMATION CONCERNING BOARD OF DIRECTORS
During fiscal 1996, four meetings of the Board of Directors were held.
During such fiscal year, each director attended 75 percent or more of the
aggregate of (i) the total number of meetings of the Board of Directors held
during the period and (ii) the total number of meetings held during the period
by all committees of the Board of Directors on which he served. The Board of
Directors of the Company has a standing Audit Committee consisting of Messrs.
Liberman (Chairman), Peters (who is not standing for reelection), and Mr.
Baldwin. The purpose of the Audit Committee is to review the results and scope
of the audit and services provided by the Company's independent public
accountants. During fiscal 1996, four Audit Committee meetings were held.
The Company also has a standing Compensation Committee consisting of Messrs.
Hoagland (Chairman), Gallop, Kling and Schneider. The purpose of the
Compensation Committee is to act on behalf of the Board of Directors with
respect to the compensation of directors and executive officers. See the
"COMPENSATION COMMITTEE REPORT" beginning on page 9 for a discussion of the
key elements and policy of the Company's executive compensation program. The
Compensation Committee also serves as a nominating committee to evaluate and
recommend to the Board of Directors qualified nominees for election or
appointment as directors and qualified persons for selection as senior officers
and administers the Company's stock option and other benefit plans. The
Compensation Committee will give appropriate consideration to a written
recommendation by a stockholder for the nomination of a qualified person to
serve as a director of the Company, provided that such recommendation contain
sufficient information regarding the proposed nominee for the Committee to
properly evaluate such nominee's qualifications to serve as a director. During
fiscal 1996, one Compensation Committee meeting was held.
COMPENSATION OF DIRECTORS
Directors that are not salaried employees of or consultants to the Company
receive an annual fee of $15,500. Director's fees of $98,457 were paid during
fiscal 1996.
The Company also maintains a Non-Employee Director Stock Option Plan, which
provides for an automatic annual grant in December of each year of a
nonqualified stock option to purchase 1,650 shares of Common Stock at a per
share exercise price equal to the fair market value of the Common Stock on the
date the option is granted. The options become exercisable in increments of 20
percent of the shares with respect to such options commencing upon the date of
grant and thereafter on each of the four successive anniversaries of the date of
grant. All of the options granted under the Non-Employee Director Stock Option
Plan become exercisable in full for a period of one year beginning upon a
director's retirement, death or disability. Six non-employee directors of the
Company were each
6
<PAGE> 8
granted options to purchase 1,650 shares of Common Stock under the plan in
December 1995 at an exercise price of $13.125.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Alan Peters, a director of the Company, is the President of A.P., Inc., a
firm which provides consulting services to the Company pursuant to an
Independent Contractor Agreement. The agreement, as heretofore amended, provides
for base payments to A.P., Inc. of $50,000 per year. During fiscal 1996,
payments of $50,000 were made to A.P., Inc. under the agreement. This agreement
was extended effective November 1, 1996, and will expire at the end of fiscal
1997.
Donald P. Gallop, a director of the Company, is Chairman of the law firm of
Gallop, Johnson & Neuman, L.C., which has provided legal services to the Company
in prior years and is expected to provide legal services to the Company in the
future.
EXECUTIVE COMPENSATION
The following table reflects compensation paid or payable for fiscal years
1996, 1995 and 1994 with respect to the Company's chief executive officer and
each of the four other most highly compensated executive officers whose fiscal
1996 salaries and bonuses combined exceeded $100,000 in each instance.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ------------------------------
AWARDS PAYOUTS
--------------------- -------
OTHER RESTRICT- SECURITIES
ANNUAL ED STOCK UNDERLYING LTIP ALL OTHER
FISCAL COMPENSA- AWARD OPTIONS PAYOUTS COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) TION ($)<F1> ($)<F2> (#)<F3> ($) TION ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
--------------------------- ------ ---------- --------- ------------ --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franklin A. Jacobs 1996 528,019 0 20,560 0 0 0 3,081<F4>
Chairman of the Board, President 1995 480,692 0 16,040 0 0 0 2,688<F4>
and Chief Executive Officer<F5> 1994 441,000 0 10,400 0 110,000 0 2,524<F4>
Stephen L. Clanton 1996 100,413 0 2,480 0 5,000 0 0
Vice President--Strategic 1995 146,055 22,199 2,240 28,700 22,000 0 0
Development<F6> 1994 128,269 28,134 840 0 22,000 0 0
Richard Hnatek 1996 144,995 0 5,448 0 5,000 0 0
Senior Vice President--Sales 1995 133,750 20,328 5,025 31,825 22,000 0 0
1994 123,269 27,052 2,080 0 22,000 0 0
Darryl Rosser 1996 218,580 0 5,512 0 10,000 0 0
President and Chief Operating 1995 162,908 24,760 5,408 28,700 22,000 0 0
Officer<F5> 1994 143,269 31,380 5,408 0 22,000 0 0
<FN>
- ---------
<F1> Consists of Company matching contributions under the Falcon Products, Inc.
Amended and Restated Stock Purchase Plan.
<F2> Represents the dollar value of shares of restricted stock awarded to
certain named executive officers during fiscal 1995, calculated by
multiplying the closing market price of the Company's Common Stock on the
date of the award by the number of shares awarded. The shares of restricted
stock carry from the date of award the same dividend and voting rights as
unrestricted shares of Common Stock. The restrictions lapse with regard to
one-third of the shares of restricted stock in fiscal 1996, one-third in
fiscal 1997, and the remaining one-third in fiscal 1998.
<F3> Option grants have been adjusted to reflect a 10-percent stock dividend to
stockholders of record on December 13, 1995, and distributed on January 2,
1996.
<F4> Consists of the economic benefit of premiums paid for a survivorship life
insurance policy on the lives of Mr. Jacobs and his spouse.
<F5> In December 1995, Mr. Rosser was appointed President and Chief Operating
Officer of the Company. Mr. Jacobs continues to serve as Chairman of the
Board and Chief Executive Officer.
<F6> Mr. Clanton's employment with the Company ceased in June 1996.
- --------
</TABLE>
7
<PAGE> 9
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable under
the Company's defined benefit pension plan upon normal retirement of covered
individuals. The estimates assume that benefits commence at age 65 under a
straight-life annuity form.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
------------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$15,000......................................... $ 1,125 $ 2,250 $ 3,375 $ 4,500 $ 5,625 $ 6,750 $ 7,875
25,000......................................... 1,875 3,750 5,635 7,500 9,375 11,250 13,125
35,000......................................... 2,625 5,250 7,875 10,500 13,125 15,750 18,375
50,000......................................... 3,750 7,500 11,250 15,000 18,750 22,500 26,250
75,000......................................... 5,625 11,250 16,875 22,500 28,125 33,750 39,375
</TABLE>
The pension plan benefit is determined by calculating 1.5 percent of the
average of the plan participant's salary or wages up to $75,000 per year after
November 1, 1992, and up to $50,000 per year before November 1, 1992, for each
year of service. Estimated benefit amounts listed in the above table are not
subject to any deduction for Social Security benefits or other offset amounts.
The credited years of service under the retirement plan for each of the
executive officers listed in the Summary Compensation Table are as follows:
Franklin A. Jacobs 38 Richard Hnatek 16
Darryl Rosser 8 Stephen L. Clanton 6
INFORMATION AS TO STOCK OPTIONS
The following table provides certain information as to option grants in
fiscal 1996 to the persons named in the Summary Compensation Table.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS<F1>
---------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL
SECURITIES PERCENT OF RATES OF STOCK PRICE
UNDERLYING TOTAL OPTIONS/SARs APPRECIATION FOR
OPTIONS/SARs GRANTED TO EXERCISE OR OPTION TERM<F3>
GRANTED EMPLOYEES BASE PRICE EXPIRATION --------------------------
NAME (#)<F2> IN FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- ---------------------------------- ------------ ------------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Franklin A. Jacobs................ -- -- -- -- -- --
Stephen L. Clanton................ 5,000 8.8% 12.88 12/12/05 40,485 102,597
Richard Hnatek.................... 5,000 8.8% 12.88 12/12/05 40,485 102,597
Darryl Rosser..................... 10,000 17.7% 12.88 12/12/05 80,970 205,194
<FN>
- --------
<F1> See footnote 3 to the Summary Compensation Table on page 7.
<F2> Each option listed above was granted at fair market value on date of grant
and is exercisable in 20 percent annual increments, beginning on the first
anniversary date of grant and on each anniversary date thereafter. All
options listed above expire ten years from date of grant, subject generally
to earlier termination upon cessation of employment.
<F3> The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to expiration of their
term using 5 percent and 10 percent appreciation rates set by the
Securities and Exchange Commission, compounded annually and, therefore, are
not intended to forecast possible future appreciation, if any, of the
Company's stock price.
- --------
</TABLE>
8
<PAGE> 10
The following table lists option exercises in fiscal 1996 and the value of
options held as of the end of fiscal 1996 by the persons listed in the Summary
Compensation Table.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS
OPTIONS/SARs AT FISCAL YEAR-END AT FISCAL YEAR-END
(#) ($)
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#)<F1> REALIZED ($) UNEXERCISABLE<F1> UNEXERCISABLE
(a) (b) (c) (d) (e)
---- ---------------- ------------ --------------------------- ----------------------
<S> <C> <C> <C> <C>
Franklin A. Jacobs........... 0 0 132,000/60,500 625,944/279,604
Stephen L. Clanton........... 49,167 420,379 0/0 0/0
Richard Hnatek............... 1,980 21,353 37,520/29,300 175,375/114,525
Darryl Rosser................ 0 0 48,692/33,300 297,337/120,025
<FN>
- --------
<F1> See footnote 3 to the Summary Compensation Table on page 7.
- --------
</TABLE>
COMPENSATION COMMITTEE REPORT
GENERAL POLICY
The Company's executive compensation program is linked to corporate
performance and returns to shareholders. To this end, the Company has developed
a compensation strategy that ties a significant portion of executive
compensation to the Company's success in meeting performance goals and to
appreciation in the Company's stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to link
executive and shareholder interests through an equity-based plan and to provide
compensation levels that recognize individual contributions as well as overall
business results.
Each year the Compensation Committee reviews the Company's overall executive
compensation program in comparison to the Company's executive compensation,
corporate performance, stock price appreciation and total return to shareholders
to corporations of similar size. The annual compensation reviews permit an
evaluation of the link between the Company's performance and its executive
compensation in the context of the compensation programs of other companies.
The Compensation Committee determines the compensation of corporate
executives elected by the Board of Directors, including the individuals whose
compensation is detailed in this proxy statement. In reviewing the individual
performance of the executives whose compensation is detailed in this proxy
statement, other than Franklin A. Jacobs (the Company's Chief Executive
Officer), the Compensation Committee takes into account the views of Mr. Jacobs.
The key elements of the Company's executive compensation program consist of
base salary, annual bonus and stock options. The Compensation Committee's
policies with respect to each of these elements, including the bases for the
compensation awarded to Mr. Jacobs, are discussed below. The Compensation
Committee also takes into account the full compensation package afforded by the
Company to the individual, including pension benefits, insurance and other
benefits, as well as the programs described below. The Compensation Committee
continues to monitor qualifying compensation paid to the Company's executive
officers with respect to its deductibility under Section 162(m) of the Internal
Revenue Code.
BASE SALARIES
Base salaries for executive officers are initially determined by evaluating
the responsibilities of the position held and the experience of the individual,
and by reference to the competitive marketplace for executive talent, including
a comparison to base salaries for comparable positions at other companies. The
comparative group is not limited to companies which comprise the published
industry index shown in the Company's stock performance graph presented below.
9
<PAGE> 11
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, and also take into account new
responsibilities. The Compensation Committee exercises judgment and discretion
in the information it reviews and the analysis it considers, and where
appropriate, also considers non-financial performance measures. These include
increase in market share, manufacturing efficiency gains, improvements in
product quality and improvements in relations with customers, suppliers and
employees.
With respect to the base salary granted to Mr. Jacobs in fiscal 1996, the
Compensation Committee took into account the Company's success in exceeding its
net income and per-share book value in fiscal 1995, the increase in the market
price of the Company's common stock and the assessment by the Compensation
Committee of Mr. Jacob's individual performance. The Compensation Committee also
took into account the longevity of Mr. Jacob's service to the Company and its
belief that Mr. Jacobs is an excellent representative of the Company to the
public by virtue of his stature in the industry. The Compensation Committee did
not attribute specific values or weights to any of these factors. For the
reasons listed above, Mr. Jacobs was granted an annual base salary, commencing
January 1, 1996, of $524,000, representing an increase of approximately 7.2%
over calendar year 1995.
ANNUAL BONUSES
The Company's executive officers are eligible for annual cash bonuses under
terms of the Company's Officer Bonus Plan. Under such Plan, the Compensation
Committee establishes bonuses as a percentage of base salary to be paid if and
to the extent annual projections for net earnings are met or exceeded. In light
of the Company's earnings levels in fiscal 1996, the Compensation Committee did
not recommend nor did the Board of Directors authorize a bonus for any of the
Company's officers attributable to fiscal 1996. Mr. Jacobs did not participate
in the Officer Bonus Plan for fiscal 1996 and, accordingly, was not considered.
STOCK OPTIONS
The granting of stock options is a key part of the Company's overall
compensation program and is designed to provide its executive officers and other
key employees with incentives to maximize the Company's long-term financial
performance.
In determining whether and how many options should be granted, the
Compensation Committee may consider the responsibilities and seniority of each
of the executive officers, as well as the financial performance of the Company
and such other factors as it deems appropriate, consistent with the Company's
compensation policies. However, the Compensation Committee has not established
specific target awards governing the recipient, timing or size of option grants.
Thus, determinations by the Compensation Committee with respect to the granting
of stock options are subjective in nature.
CONCLUSION
Through the programs described above, a significant portion of the Company's
executive compensation is linked directly to individual and corporate
performance. The Compensation Committee intends to continue the policy of
linking executive compensation to corporate performance, recognizing that the
volatility of the business cycle from time to time may result in an imbalance
for a particular period.
James L. Hoagland, Chairman of Compensation Committee
Donald P. Gallop, Member
S. Lee Kling, Member
James Schneider, Member
FIVE YEAR TOTAL RETURN CHART
The following chart compares the Company's cumulative yearly shareholder
return over a five-year period, calculated monthly, with the NYSE Composite
Index of U.S. Companies and a peer group index of public companies that in the
judgment of the Company manufacture and/or sell furniture and related products
similar to those of the Company. The companies included in the index, in
addition to Falcon Products, Inc. are: Chromcraft Revington, Inc.; Flexsteel
Industries, Inc.; Herman Miller, Inc.; Hon Industries, Inc.; and Knape & Vogt
Manufacturing Co.
10
<PAGE> 12
The chart assumes a $100 investment made November 1, 1991, and the
reinvestment of all dividends.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Falcon Products, Inc........................................ $100.00 $240.70 $233.30 $245.40 $308.80 $354.50
NYSE Stock Market (US Companies)<F1>........................ $100.00 $110.50 $128.10 $131.70 $162.50 $200.00
Self-Determined Peer Group.................................. $100.00 $117.00 $179.10 $171.50 $183.60 $245.20
<FN>
- --------
<F1> On December 6, 1995, the Common Stock was withdrawn by the Company from
trading on the NASDAQ/ National Market System and, on that date, was listed
and began trading on the New York Stock Exchange.
- --------
</TABLE>
TRANSACTIONS WITH ISSUER AND OTHERS
Alan Peters, a director of the Company, is the President of A.P., Inc., a
firm which provides consulting services to the Company pursuant to an
Independent Contractor Agreement. The agreement, as heretofore amended, provides
for base payments to A.P., Inc. of $50,000 per year. During fiscal 1996,
payments of $50,000 were made to A.P., Inc. under the agreement. This agreement
expires at the end of fiscal 1997.
Donald P. Gallop, a director of the Company, is Chairman of the law firm of
Gallop, Johnson & Neuman, L.C., which has provided legal services to the Company
in prior years and is expected to provide legal services to the Company in the
future.
Raynor E. Baldwin, a director of the Company, is President and sole
stockholder of Woodsmiths, Incorporated, a manufacturer of table tops, which
purchases products from the Company. During fiscal 1996, the Company received
payments of $157,788 in connection with transactions with Woodsmiths,
Incorporated.
The Company believes that the terms and conditions of the transactions with
affiliated persons described above were no less favorable to the Company than
those that would have been available to the Company in comparable transactions
with unaffiliated persons.
11
<PAGE> 13
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% 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.
Such individuals are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on review of the
copies of such forms furnished to the Company or written representations that no
reports were required to be filed, the Company believes that such persons
complied with all Section 16(a) filing requirements applicable to them with
respect to transactions during fiscal 1996, except as described below.
Messrs. Baldwin, Clanton, Gallop, Hoagland, Hnatek, Kling, Liberman, Peters,
Rosser and Schneider failed to file in a timely manner a Form 5 covering option
grants with respect to fiscal years 1994, 1995 and 1996. Mr. Jacobs failed to
file a report covering option grants in a timely manner with respect to fiscal
year 1994. Also, Mr. Dreller did not file his initial Form 3 in a timely manner.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, the Company's independent public accountants for the
fiscal year ended November 2, 1996, has been selected as its independent public
accountants for the fiscal year ending November 1, 1997. Representatives of
Arthur Andersen LLP are expected to attend the annual meeting and will have the
opportunity to make statements and respond to appropriate questions from
stockholders.
ANNUAL REPORT
The Annual Report of the Company for fiscal 1996 accompanies this Notice of
Annual Meeting and Proxy Statement.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 1998
annual meeting of stockholders must be received by the Company not later than
October 3, 1997, for inclusion in the Company's 1998 proxy statement and form of
proxy relating to the 1998 annual meeting.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the annual
meeting other than as set forth above. If other matters properly come before the
meeting, it is the intention of the persons named in the solicited proxy to vote
the proxy on such matters in accordance with their judgment.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit the return of proxies by telephone,
telegram or personal interview and may request brokerage houses, custodians,
nominees and fiduciaries to forward soliciting material to their principals and
will agree to reimburse them for their reasonable out-of-pocket expenses.
Stockholders are urged to mark, sign and send in their proxies without
delay.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 1996 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING RELATED FINANCIAL
STATEMENTS AND SCHEDULES) IS AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE, UPON
WRITTEN REQUEST TO THE SECRETARY, FALCON PRODUCTS, INC., 9387 DIELMAN INDUSTRIAL
DRIVE, ST. LOUIS, MISSOURI 63132.
By Order of the Board of Directors
MICHAEL J. DRELLER
Secretary
St. Louis, Missouri
January 24, 1997
12
<PAGE> 14
[FALCON LOGO] FALCON PRODUCTS, INC.
January 24, 1997
Dear Stockholder:
The annual meeting of Stockholders of Falcon Products, Inc. will
be held at the St. Louis Club, 7701 Forsyth Boulevard, Clayton,
Missouri 63105 at 4:00 p.m. on Tuesday, March 18, 1997. At the
meeting Stockholders will elect three directors and act upon such
other business that may come before the meeting.
It is important that your shares are represented at this
meeting. Whether or not you plan to attend the meeting, please
review the enclosed proxy materials, complete the proxy form below,
and return it promptly in the envelope provided.
(Detach Proxy Form Here)
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE DIRECTORS UNDER PROPOSAL 1, AND IN THE DISCRETION
OF THE PROXIES WITH RESPECT TO THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
The undersigned hereby acknowledges receipt
of copies of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated
January 24, 1997 and the Annual Report of
the Company for fiscal 1996.
Dated: _______________________________, 1997
--------------------------------------------
--------------------------------------------
Please sign name(s) exactly as it appears on
this proxy. In the case of joint holders,
all should sign. If executed by a corporation,
this proxy should be signed by a duly
authorized officer. Executors, administrators
and trustee should so indicate when signing.
If executed by a partnership, this proxy
should be signed by an authorized partner.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 15
(Detach Proxy Form Here)
- --------------------------------------------------------------------------------
FALCON PRODUCTS, INC.
9387 DIELMAN INDUSTRIAL DRIVE, ST. LOUIS, MISSOURI 63132
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MARCH 18, 1997
The undersigned hereby appoints Franklin A. Jacobs and Michael J. Dreller,
and each of them, with full power of substitution, the true and lawful attorneys
in fact, agents and proxies of the undersigned to vote at the Annual Meeting of
Stockholders of Falcon Products, Inc., to be held on Tuesday, March 18, 1997,
commencing at 4:00 p.m., at the St. Louis Club, 7701 Forsyth Boulevard, Clayton,
Missouri 63105 and at any and all adjournments thereof, according to the number
of votes which the undersigned would possess if personally present for the
purpose of considering and taking action upon the following as more fully set
forth in the Proxy Statement of the Company dated January 24, 1997.
1. Election of Class A Directors:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for
(except as marked to the ALL nominees listed below
contrary below)
CLASS A: Melvin F. Brown James L. Hoagland Lee M. Liberman
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
- --------------------------------------------------------------------------------
2. In their discretion with respect to the transaction of such other business as
may properly come before the meeting or any adjournments thereof.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS PROXY
<PAGE> 16
APPENDIX
Page 11 of the printed proxy contains a stock performance graph.
The information contained in the graph is depicted in the table that
immediately follows the graph.
