Fansteel Inc.
Number One Tantalum Place
North Chicago, Illinois 60064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1995
March 24, 1995
To the Stockholders
of Fansteel Inc.:
Notice hereby is given that the Annual Meeting of Stockholders of Fansteel
Inc. will be held at The Sheraton Stamford Hotel, 1 First Stamford Place,
Stamford, Connecticut, on April 26, 1995, at 11:00 a.m., Eastern Daylight
Time, for the purposes of:
(1) Electing eight Directors to serve until the next Annual
Meeting of Stockholders or until their successors are
elected;
(2) Ratifying the appointment of Ernst & Young LLP, Certified
Public Accountants, as auditors of the Company for the
year ending December 31, 1995; and
(3) Transacting such other business as may be brought before
the meeting.
The Board of Directors has fixed the close of business on March 1, 1995, as
the record date for the determination of stockholders entitled to notice of
and to vote at said meeting.
A list of the stockholders entitled to vote at the Annual Meeting will be
open to the examination of any stockholder for at least ten days prior to the
Annual Meeting at Number One Tantalum Place, North Chicago, Illinois 60064
for any purpose germane to such meeting, during ordinary business hours.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
By order of the Board of Directors,
Michael J. Mocniak
Secretary
Fansteel Inc.
Number One Tantalum Place
North Chicago, Illinois 60064
PROXY STATEMENT
SOLICITATION OF PROXIES
This statement is furnished in connection with the solicitation of Proxies
on behalf of the Board of Directors ("Board") of Fansteel Inc. (the
"Company") to be voted at the Annual Meeting of Stockholders, including any
and all adjournments thereof, to be held on April 26, 1995.
If the enclosed Proxy is executed and returned it will be voted in
accordance with the specifications thereon, and if there are no
specifications thereon, it will be voted in accordance with the proposals
recommended by the Board. The only business which the Board intends to
present, or knows that others will present, at the Annual Meeting, is
specified in the accompanying notice of the meeting. If, however, any other
matters properly come before the meeting for action, it is intended that the
persons named in the enclosed form of Proxy will vote the same in accordance
with their best judgment on such matters.
The enclosed Proxy may be revoked at any time insofar as it has not been
exercised.
The enclosed proxy material is being mailed to stockholders on or about
March 24, 1995. The cost of preparing, assembling and mailing the enclosed
proxy material will be paid by the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On March 1, 1995, the record date for determination of stockholders
entitled to notice of and to vote at said Annual Meeting, the Company had
outstanding 8,598,858 shares of Common Stock, each of which is entitled to
one vote.
The persons owning beneficially 5% or more of the Company's outstanding
Common Stock as of March 1, 1995, and the stock ownership of all the Officers
and Directors of the Company as a group as of that date are as follows:
Amount
Name and Address of Beneficially Percent
Beneficial Owner Owned of Class
T. M. Evans 4,050,786 47.11%(1)
500 Round Hill Road
Greenwich, CT 06831
Dimensional Fund Advisers Inc. 598,500 6.96%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
R. B. Haave Associates, Inc. 701,800 8.16%
270 Madison Avenue
New York, NY 10016
Cilluffo Associates, L.P. 445,500 5.18%
595 Madison Avenue
New York, NY 10022
All Officers and Directors 4,144,574 48.20%
as a group (6 persons)
(1) These shares do not reflect certain shares the beneficial ownership of
which is disclaimed in footnote 4 in the section dealing with Nominees for
Election as Directors.
NOMINEES FOR ELECTION AS DIRECTORS
Unless the stockholder has exercised the right to withhold such vote for
any nominee, the persons named in the enclosed Proxy will vote in favor of
the election of all of the eight nominees named below as Directors to serve
until the next Annual Meeting of Stockholders or until their successors are
elected. If, as a result of circumstances not known or unforeseen, any
nominee shall be unavailable to serve as a Director, Proxies will be voted
for the election of such other person or persons as the Board may select.
The following table sets forth pertinent information with respect to such
nominees, including their principal business experience and shares of the
Company's Common Stock beneficially owned by them, directly or indirectly, on
March 1, 1995.
Year in
Which
First
Became Shares of
Principal Business Director Common
Experience and of the Stock Owned Percent
Name Age Other Information Company Beneficially of Class
B. B. Evans 71 Mrs. Evans is a 1983 15,116 (1) 0.18%
Director of HBD
Industries, Inc.
E. P. Evans 53 Since 1989 Mr. 1992 - (2) -
Evans has engaged
in personal
investments. Prior
to 1989, he was
Chairman of the
Board and Chief
Executive Officer
of Macmillan, Inc.
Mr. Evans is a
Director of HBD
Industries, Inc.
He is a son of T.M.
Evans. (3)
R. S. Evans 51 Chairman of the 1992 - -
Board and Chief
Executive Officer
of Crane Co. and
Medusa Corporation
for the past five
years. Mr. Evans
is a Director of
Crane Co., Medusa
Corporation, Mid-
Ocean ReInsurance,
Ltd., and HBD
Industries, Inc.
He is a son of T.M.
Evans.
T. M. Evans 84 Chairman of the 1976 4,050,786(4) 47.11%
Executive Committee
of the Company.
Mr. Evans is a
Director of HBD
Industries, Inc.
T. M. Evans, 57 Mr. Evans was a 1986 - -
Jr. partner of Bregman,
Surnamer, Weissman
& Co. He has
engaged in personal
investments since
1988. Mr. Evans is
a Director of HBD
Industries, Inc.
He is a son of T.
M. Evans.
K. R. Garrity 63 Mr. Garrity is and 1977 68,300(5) 0.79%
has been Chairman
and Chief Executive
Officer of the
Company since
April, 1983 and was
President from
April, 1994 to
February, 1995.
Mr. Garrity is also
Chairman and Chief
Executive Officer
of HBD Industries,
Inc.
J. S. Petrik 65 Mr. Petrik is 1985 2,000 less than
currently 0.1%
Consultant, New
Technologies,
Turner Broadcasting
System, Inc. Prior
to 1988 and until
1992, he was
Chairman of Turner
Program Services,
Vice President of
Syndication and
Licensing and a
member of the Board
of Directors of
Turner Broadcasting
System, Inc.
C. J. Queenan, 64 Mr. Queenan is a 1982 7,872 less than
Jr. partner of the law 0.1%
firm of Kirkpatrick
& Lockhart. Mr.
Queenan is also a
Director of
Allegheny Ludlum
Corporation, Crane
Co., and Medusa
Corporation.
Each of the above-named persons has continuously served as a Director of
the Company since the year shown in the table.
(1) Does not include 4,050,786 shares of Common Stock held by T. M.
Evans, husband of B. B. Evans. Mrs. Evans disclaims any beneficial
interest in the above mentioned shares.
(2) Beneficial ownership is not reported as to 75,320 shares held in
various trusts of which E. P. Evans is not a trustee but of which
he is an income beneficiary only.
(3) In December, 1989 Mr. E. P. Evans, without admitting or denying any
allegation contained in a complaint filed by the Securities and
Exchange Commission, consented to the entry of final judgment of
permanent injunction prohibiting him from violating Section 13(d)
of the Exchange Act and Rules 13d-1 and 13d-2 thereunder.
(4) Does not include 15,116 shares of Common Stock held beneficially on
behalf of B. B. Evans, wife of T. M. Evans. Mr. Evans disclaims
any beneficial interest in the above mentioned shares.
(5) Does not include 1,200 shares held by M. C. Garrity, wife of K. R.
Garrity. Mr. Garrity disclaims any beneficial interest in such
shares.
During 1994 there were seven Board meetings. Each Board member attended at
least 75% of the meetings of the Board except Mr. E. P. Evans, who attended
57% of all meetings, and Mr. T. M. Evans, Jr., who attended 71% of all
meetings. In addition, each member of the Audit Committee attended all of
the meetings of the Audit Committee.
Messrs. C. J. Queenan, Jr. (Chairman), T. M. Evans, Jr., and J. S. Petrik
were members of the Audit Committee from January 1, 1994 through December 31,
1994. The Committee held three meetings during the year 1994. The Committee
reviews the scope and results of the audit and proposes appointment of the
auditors subject to the approval of the Board and ratification of the
stockholders. The Committee also reviews the Company's system of internal
controls and procedures with the auditors and the rendering of non-audit
services by the auditors. Messrs. R. S. Evans (Chairman), J. S. Petrik, and
C. J. Queenan are members of the Compensation Committee which was established
on January 26, 1993. The Committee held one meeting in 1994. The Committee
reviews all matters relating to executive compensation. The Company has no
nominating committee.
During 1994 the Company retained the law firm of Kirkpatrick & Lockhart, of
which firm Mr. Queenan is a partner.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
Long Term All Other
Compen- Compen-
Annual Compensation sation sation(2)
Awards
Securities
Name & Principal Underlying
Position Year Salary Bonus Other SAR's (1)
Keith R. Garrity 1994 $252,001 $50,000 $22,004 $ 0 $7,223
Chairman of the 1993 248,759 0 21,336 0 3,777
Board, Chief 1992 246,077 15,000 18,000 0 7,742
Executive Officer
and President
Carmin D. Dannible 1994 125,162 0 7,668 0 727
President and Chief 1993 228,618 0 21,336 0 3,474
Operating Officer 1992 225,307 15,000 18,000 3,000 7,119
(Retired)
Michael J. Mocniak 1994 150,508 19,000 0 0 4,314
Vice President, 1993 137,757 0 0 0 2,147
Secretary and 1992 129,479 15,000 0 1,500 4,172
General Counsel
R. Michael McEntee 1994 135,878 19,000 0 0 3,894
Vice President and 1993 125,915 0 0 0 1,970
Chief Financial 1992 114,691 15,000 0 12,000 3,729
Officer
Peter J. Fabian 1994 99,999 17,500 0 0 3,023
General Manager, 1993 123,446 5,500 0 0 2,002
VR/Wesson - 1992 116,085 10,000 0 3,000 3,393
Lexington
(1) Reported in number of units.
(2) Amounts of All Other Compensation are amounts contributed or accrued for
fiscal years 1994, 1993 and 1992 under the Company's Savings and Profit
Sharing Plan.
12/31/94 SAR VALUES
Number of
Unexercised
SAR's at
12/31/94(#)
Exercisable/
Name Unexercisable(1)
Keith R. Garrity -/-
Carmin D. Dannible -/-
Michael J. Mocniak 500/500
R. Michael McEntee 4,000/4,000
Peter J. Fabian 2,000/1,000
There were no in-the-money SAR's at December 31, 1994 as the fair market
value of the Company's common stock on December 31, 1994 did not exceed the
base price of the shares underlying the stock appreciation rights.
PENSION PLAN TABLE
YEARS OF SERVICE
Remuneration 15 20 25 30 35
$125,000 $32,565 $38,420 $44,275 $50,130 $55,985
150,000 39,315 46,420 53,525 60,630 67,735
175,000 44,720 52,820 60,925 69,030 77,135
200,000 50,115 59,220 68,325 77,430 86,535
225,000 54,511 64,431 74,350 84,269 94,188
250,000 55,305 65,371 75,438 85,504 95,570
300,000 55,305 65,371 75,438 85,504 95,570
400,000 55,305 65,371 75,438 85,504 95,570
500,000 55,305 65,371 75,438 85,504 95,570
The Fansteel Consolidated Employee Pension ("Plan") provides benefits to
the executive officers of the Company as well as salaried and hourly
employees. The annual benefit is calculated using the employee's salary,
overtime pay, commissions and bonus payments as covered compensation. This
covered compensation is essentially identical to the compensation reported in
the Summary Compensation Table.
The Plan provides benefits upon retirement at age 65 based upon years of
service and compensation. Messrs. K.R. Garrity, M.J. Mocniak, R.M. McEntee
and P.J. Fabian have 40, 12, 15 and 19 years of credited service,
respectively, under the Plan. Mr. Dannible retired in June of 1994 with six
years of credited service.
Annual pension benefits payable under the Plan, at age 65, based on an
annuity for ten years certain and for life thereafter, are equal to 1.8% of
the employee's average annual compensation for each of his first 15 years of
credited service, plus 1.0% of his average annual compensation for each year
of credited service after the 15th year less .325% of the lesser of the
employee's average compensation for the three years prior to retirement or
the average of the taxable wage basis under the Social Security Act for each
calendar year during the 35-year period ending with the year the employee
attains Social Security retirement age multiplied by the lesser of the
employee's actual years of credited service or 35. The amounts in the table
have been reduced by the offset.
The standard arrangement with the Directors provides for Directors' fees in
the amount of $20,000 per year, $500 per board meeting attended, $1,000 per
committee meeting attended, and $3,000 per year for serving as a committee
chairman.
Prior to the formation of The Compensation Committee on January 26, 1993,
all decisions regarding executive compensation were made by the entire Board.
As an officer and employee of the Company who is a member of the Board, Mr.
Garrity participated in deliberations of the Board during the last completed
fiscal year concerning executive officer compensation.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Company reviews all matters
relating to executive compensation and reports its actions and
recommendations to the Board of Directors.
The Company's policy on executive officer compensation is to provide
compensation which enables the Company to attract and retain a highly
qualified complement of executive officers who will enhance shareholder value
by optimizing the profitability of the Company's manufacturing operations and
maintaining sound, conservative fiscal policies. The Company's compensation
package consists of three parts: a base salary; a potential annual bonus; and
a stock appreciation rights plan.
The base salaries are set near the median for similarly-sized businesses
competing in the same or similar industries as the Company. The sources of
comparisons are publications dealing with executive compensation. The
information reported in those publications does not usually reveal the
identity of the companies which are the subject of the reports. The
companies which are the basis of that information, accordingly, are not
necessarily those which comprise the peer group for comparison of shareholder
returns. By pegging salaries at a median level, the Company believes that it
can attract and retain the caliber of executive officer desired. The Chief
Executive Officer's base salary was not increased in 1994.
The Company has no formal bonus plan; however, annual bonuses have been
granted in the past and were specifically related to corporate performance.
The factors that have been considered in determining whether a bonus will be
paid and, if so, in what amount, are income before taxes, inventory turns,
returns on investment and speed of collection of accounts receivable. These
incentive compensation criteria are designed to maximize the return to the
Company's shareholders while maintaining liquidity for expanding existing
businesses or acquiring new ventures. In determining the bonuses of the
executive officers other than the Chief Executive Officer, additional factors
such as the relative performance of the particular officer's area of
functional responsibility and the individual officer's past performance and
future potential are considered. For 1994, as reported in the accompanying
Summary Compensation Table, bonuses were awarded to executive officers of the
Company because the performance targets were attained.
In order to promote the long-term growth of the value of the Company's
common stock, the Board of Directors established the Stock Appreciation
Rights Plan. The Company utilizes stock appreciation rights for executive
officers to provide longer-term performance-related incentives that link
their rewards directly to shareholder gains over a longer period of time.
Awards under that Plan are designed to provide officers and key employees
with the long-term incentive to continue and increase their efforts to
improve the operating results of the Company and thereby the value of the
common stock. No stock appreciation rights were granted to any officer or
employee in 1994.
The Company does not anticipate that it will be affected in the near future
by Section 162(m) of the Internal Revenue Code, which imposes an annual limit
of $1,000,000 per person on the federal income tax deduction for executive
compensation. If the Company should determine that this limitation might
impact the Company, the Company would likely take the necessary steps to
bring its compensation programs into compliance with Section 162(m) so that
non-deductibility would be avoided.
R. S. Evans, Chairman of the Committee
C. J. Queenan, Jr.
J. S. Petrik
The Company compares its total shareholder return in the following
performance graph with the MG Industry Group 012 - Aerospace Components, as
in prior years, as well as the MG Industry Group 301 - Metals Fabrication.
The Company began comparing its shareholder returns in 1994 with MG Industry
Group 301 - Metals Fabrication as a better measure of the overall business of
the Company and because of the reduced concentration of the Company's sales
in the aerospace components market in 1994 as compared to previous years.
Note: Performance graph submitted under cover of Form SE.
SELECTION OF AUDITORS
The Board, upon recommendation of the Audit Committee, favors ratification
of the appointment of Ernst & Young LLP, Certified Public Accountants, as
auditors for the Company for the year ending December 31, 1995.
Representatives of Ernst & Young LLP are expected to attend the meeting; they
will be given the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
In the event a stockholder desires to make a proposal for the Company's
Annual Meeting scheduled for April 17, 1996, the proposal must be submitted
to the Secretary of the Company by November 22, 1995.
FORM 10-K ANNUAL REPORTS
THE COMPANY WILL FURNISH TO ANY STOCKHOLDER UPON REQUEST AND WITHOUT CHARGE
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR 1994.
REQUESTS FOR SAID REPORT MUST BE IN WRITING AND DIRECTED TO THE ATTENTION OF
THE SECRETARY OF THE COMPANY AT THE ADDRESS SET FORTH IN THE NOTICE OF
MEETING IMMEDIATELY PRECEDING THIS PROXY STATEMENT, AND MUST CONTAIN A
REPRESENTATION BY THE PERSON REQUESTING SAID REPORT THAT SUCH PERSON WAS THE
BENEFICIAL OWNER OF SECURITIES OF THE COMPANY ON MARCH 1, 1995.
Stockholders who do not expect to attend the meeting in person are urged to
vote, date, sign and return the enclosed Proxy in the enclosed self-addressed
envelope, which requires no postage if mailed in the United States.
By order of the Board of Directors,
K. R. Garrity
Chairman of the Board
March 24, 1995
