SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERAL SCREW WORKS
(Name of Registrant as Specified In Its Charter)
____________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
[ ] 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: ________________________________________________
2) Form, Schedule or Registration Statement No.: __________________________
3) Filing Party: __________________________________________________________
4) Date Filed: ____________________________________________________________
<PAGE>
FEDERAL SCREW WORKS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is Hereby Given, that the Annual Meeting of Shareholders of
FEDERAL SCREW WORKS, a Michigan corporation, will be held at the offices of the
Company, 2400 Buhl Building, Detroit, Michigan 48226, on THURSDAY, OCTOBER 26,
1995 at 10:00 (Detroit time) in the forenoon of said day, for the following
purposes:
1. To elect three directors for a term of three years and until their
successors shall be duly elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business September 1, 1995 will be
entitled to notice of and to vote with respect to this solicitation.
By Order of the Board of Directors,
FEDERAL SCREW WORKS
W. T. ZurSchmiede, Jr., Secretary
Principal executive office:
2400 Buhl Building
Detroit, Michigan 48226
Detroit, Michigan
September 27, 1995
PLEASE FILL IN, SIGN AND MAIL PROMPTLY THE
ACCOMPANYING PROXY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
<PAGE>
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
This statement is furnished in connection with the solicitation of
Proxies being made by the Board of Directors of Federal Screw Works
(hereinafter designated the "Company"), to be used at the Annual Meeting of
Shareholders of the Company to be held on THURSDAY, OCTOBER 26, 1995 and at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The meeting will be held
at the principal executive offices of the Company, 2400 Buhl Building, Detroit,
Michigan 48226.
The Company has only one class of securities, consisting at the close of
business on September 1, 1995 of 1,086,662 issued and outstanding shares of
common stock of the par value of $1.00 per share. Each of the 1,086,662 shares
is entitled to one vote at the Shareholders meeting. The common stock transfer
books will not be closed, but only Shareholders of record as of the close of
business September 1, 1995 will be entitled to receive notice of and to vote
with respect to this solicitation. The approximate date on which the proxy
statement and form of proxy are to be first sent or given to security holders
is September 27, 1995.
Execution and return of a Proxy will not in any way affect a
Shareholder's right to attend the meeting and to vote in person, and a
Shareholder giving a Proxy has the power to revoke it at any time before it is
exercised. Properly executed Proxies in the accompanying form, received in due
time, and not previously revoked, will be voted at the meeting, or any
adjournment thereof, as specified therein.
Election of Directors and Security Ownership of Management
The Company's Articles of Incorporation provide that the number of
Directors, as determined from time to time by the Board of Directors shall be
seven, which number may be increased or decreased from time to time, but not to
less than three. The Board of Directors has fixed the number of Directors at
seven. Further in accordance with the Articles, the Board of Directors is
divided into three classes, each class as equal in number as possible. At the
1995 Annual Meeting a total of three Directors is to be elected for a
three-year term and in each case until their successors are elected and
qualified. Those nominees are presently three of the Directors of the Company
whose terms expire at the meeting. Other Directors whose terms have not expired
will continue in office in accordance with their previous elections. The
favorable vote of at least two-thirds (2/3) of the issued and outstanding
shares of common stock will be required to elect Directors. An abstention by a
Shareholder or a Broker non-vote has the effect of a negative vote. Votes cast
are counted by two Inspectors of Election, one of which is the State Street
Bank & Trust Co., the Company's Stock Transfer Agent. Management has nominated
for election as such three Directors the persons named in the following table,
which sets forth certain information as to each of the nominees and each
Director whose term as such will continue after the Annual Meeting. The persons
named in the enclosed form of Proxy will vote such Proxy for the election of
such nominees. Although management does not contemplate that any of the
nominees will be unable to serve, in the event that any nominee is unable to
serve as Director at the date of the Annual Meeting, the Proxy will be voted in
such case for any other nominee as may be designated by the present Board of
Directors, or the Board of Directors may appropriately reduce the number of
Directors to be elected. The names of such nominees, and of the Directors who
will continue as such for their respective terms, their principal occupations,
the year in which each first became a member of the Board of Directors of the
<PAGE>
Company and their beneficial ownership of common stock of the Company as of
September 1, 1995 are as follows:
<TABLE>
<CAPTION>
Amount and Nature
Name and Principal Term Director of Beneficial Ownership Percent
Occupation Expires Since as of September 1, 1995** of Class
------------------- ------- -------- ------------------------- --------
<S> <C> <C> <C> <C>
Nominees standing for election to term expiring in
1998:
John J. Slavin+
President of Professional Corporation law firm
since 1969. Since April 1992, Of Counsel to
Dykema Gossett PLLC law firm which provides legal
services to the Company. Age 74. 1995 1965 15,233(a) 1.4%
F. D. Tennent+
Business Consultant. Senior Vice President--
Finance & Secretary of the Company, 1976 to 1986.
Treasurer, 1983 to 1986. Vice President-- less
Finance, Secretary-Treasurer of the Company, 1969 than
to 1976. Age 69. 1995 1978 1,000 1%
W. T. ZurSchmiede, Jr.*
Chairman of the Board & Chief Executive Officer
since 1978; Chief Financial Officer, Secretary
and Treasurer, since 1988. President of the
Company and Chief Executive Officer, 1970 to
1978. Age 69. 1995 1959 151,126(b) 13.9%
Directors continuing in office for their respective
terms:
Dr. Thomas W. Butler, Jr.+
President, Thomas W. Butler & Associates, Inc.,
business consultants. Vice President, The Genlyte
Group, 1985 to 1987, manufacturer of lighting
systems. Dean, School of Engineering and Computer
Science, Oakland University, Rochester, Michigan,
1984 to 1985. Vice President, Engineering and less
Research, AMF Inc., manufacturers of leisure and than
industrial products, 1974 to 1984. Age 72. 1996 1978 1,000 1%
Hugh G. Harness*
Business Consultant. President of the Company,
1985 through Jan. 1994. Executive Vice President,
1982 to 1985. Senior Vice President--Corporate
Development, 1976 to 1982. Vice President--
Corporate Development, 1975 to 1976. Member of
Harness, Dickey and Pierce law firm, Patent
Counsel to the Company, 1954 to 1975. Age 64. 1997 1965 136,380(c) 12.5%
Thomas ZurSchmiede*
President of the Company, Feb. 1994. Vice
President--Big Rapids Division, 1988-1994; Vice
President--Corporate Development, 1984-1988;
Director of Corporate Development, 1983 to 1984;
General Manager, Votrax Division of the Company,
1983; Assistant to the President of the Company,
1981 to 1983. Age 44. 1997 1984 51,678(d) 4.8%
Robert F. ZurSchmiede*
Vice President--Romulus Divisions, since 1986.
Vice President and General Manager of the Romulus
Division, 1984 to 1986; Assistant General Manager
of the Romulus Division, 1983 to 1984; Assistant
Manufacturing Manager, Romulus Division, 1982 to
1983; Sales Representative for the Company, 1981
to 1982; Inventory Control Supervisor, Detroit
and Romulus Divisions, 1979 to 1981; Production
Foreman Utex and Detroit Divisions, 1979. Age 42. 1996 1984 81,664(e) 7.5%
All Directors and Officers of the Company as a
group 454,881 41.9%
<FN>
* Member of Executive Committee of the Company's Board of Directors.
+ Member of Audit Committee of the Company's Board of Directors.
- ----------------
NOTES:
** Numerical Key: (1) sole voting power (2) shared voting power
(3) sole investment power (4) shared investment power
(a)(1) 14,609, (3) 14,609. Includes 624 shares owned by a family trust of
which Mr. Slavin is Trustee, 4,500 shares owned by his Professional
Corporation and 10,109 shares owned jointly with Mrs. Slavin.
(b)(1) 32,600 including 5,600 contingent shares as to which see Restricted
Stock Bonus Plans, page 10. (2) 6,600 (3) 27,000 (4) 6,600. Also includes
111,926 shares owned by Mr. ZurSchmiede's daughters and their spouses,
individually and as custodian for grandchildren, and 6,600 shares owned by
the W. T. ZurSchmiede, Sr. Foundation, of which he is a Trustee, the
beneficial ownership of all of which may be attributable to Mr.
ZurSchmiede. Mr. ZurSchmiede disclaims beneficial ownership of all but
32,600 shares owned by him. 6,600 of the shares attributed to Mr.
ZurSchmiede are also attributed to Mr. Harness, who shares the related
voting and investment power. The elimination of duplicate holdings reduces
the percent of class to 13.2%. Mr. ZurSchmiede may be deemed to be a
controlling person of the Company by reason of his ownership of shares of
the Company's outstanding common stock and his position as an officer and
director of the Company.
(c)(1) 30,928 including 4,200 contingent shares as to which see Restricted
Stock Bonus Plans, page 10. (2) 10,900 (3) 26,728 (4) 10,900. Also includes
41,876 shares owned by Mr. Harness' wife, 51,676 shares owned by his
children and 1,000 shares owned by his mother, the beneficial ownership of
which may be attributable to Mr. Harness and 6,600 shares owned by the W.
T. ZurSchmiede, Sr. Foundation of which Mr. and Mrs. Harness and Mr.
ZurSchmiede, Jr. comprise the three Trustees. Mr. Harness disclaims
beneficial ownership of all but 30,928 shares owned by him and 4,300 shares
owned jointly with Mrs. Harness. 6,600 of the shares attributed to Mr.
Harness are also attributed to Mr. ZurSchmiede Jr., who shares the related
voting and investment power. Mr. Harness is Mr. ZurSchmiede, Jr.'s
brother-in-law. The elimination of duplicate holdings reduces percent of
class to 11.9%.
(d)(1) 46,878 including 10,400 contingent shares as to which see Restricted
Stock Bonus Plans, page 10. (2) 4,800 (3) 36,478 (4) 4,800. Also includes
4,800 shares held as co-trustee for a niece and nephews which shares are
also attributable to Robert F. ZurSchmiede, who shares the related voting
and investment powers. Mr. ZurSchmiede disclaims beneficial ownership of
all but 46,878 owned by him. Mr. ZurSchmiede is a son of W. T. ZurSchmiede,
Jr. The elimination of duplicate holdings reduces the percentage of class
to 4.3%.
(e)(1) 76,864 including 10,400 contingent shares as to which see Restricted
Stock Bonus Plans, page 10. (2) 4,800 (3) 66,464 (4) 4,800. Also includes
4,800 shares held as co-trustee for a niece and nephews which shares are
also attributable to Thomas ZurSchmiede, who shares the related voting and
investment powers. Also includes 27,300 shares for which Mr. ZurSchmiede is
custodian for his children, the beneficial ownership of which may be
attributable to Mr. ZurSchmiede. Mr. ZurSchmiede disclaims beneficial
ownership of all but 49,564 shares owned by him. Mr. ZurSchmiede is a son
of W. T. ZurSchmiede, Jr. The elimination of duplicate holdings reduces the
percentage of class to 7%.
</TABLE>
Security Ownership of Certain Beneficial Owners
In addition to the above persons (for whom the Company's mailing address
may be used), the Company does not know of any person (including any "group" as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934)
who is the beneficial owner of more than five percent of the Company's voting
securities, except as follows:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc. (1) 75,800 6.97%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FMR Corp. (2) 108,800 10.01%
82 Devonshire Street
Boston, Massachusetts 02109-3614
<FN>
- ----------------
(1) Under date of February 9, 1995, the Company received a confirmation of
their holding from Dimensional Fund Advisors Inc., which advised the
Company as follows:
"Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 75,800
shares of Federal Screw Works stock as of December 31, 1994, all of
which shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of
the DFA Investment Trust Company, a Delaware business trust, or the
DFA Group Trust and the DFA Participating Group Trust, investment
vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of such shares."
(2) Under date of December 9, 1994, the Company received a copy of a Schedule
13G filed by FMR Corp., which advised the Company as follows:
"Pursuant to the instructions in Item 7 of Schedule 13G,
Fidelity Management & Research Company ("Fidelity"), 82 Devonshire
Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 108,800
shares or 10.01% of the common stock outstanding of Federal Screw
Works ("the Company") as a result of acting as investment adviser to
several investment companies registered under Section 8 of the
Investment Company Act of 1940.
The ownership of one investment company, Fidelity Low-Priced
Stock Fund, amounted to 108,800 shares or 10.01% of the common stock
outstanding. Fidelity Low-Priced Stock Fund has its principal
business office at 82 Devonshire Street, Boston, Massachusetts 02109.
Edward C. Johnson 3d, FMR Corp., through its control of
Fidelity, and the Funds each has sole power to dispose of the 108,800
shares owned by the Funds.
Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR
Corp., has the sole power to vote or direct the voting of the shares
owned directly by the Fidelity Funds, which power resides with the
Funds' Boards of Trustees. Fidelity carries out the voting of the
shares under written guidelines established by the Funds' Boards of
Trustees.
Edward C. Johnson 3d owns 24.9% of the outstanding voting common
stock of FMR Corp. Mr. Johnson 3d is Chairman of FMR Corp. Various
Johnson family members and trusts for the benefit of Johnson family
members own FMR Corp. voting common stock. These Johnson family
members, through their ownership of voting common stock and the
execution of a family shareholders' voting agreement, form a
controlling group with respect to FMR Corp."
</TABLE>
Compensation Committee Report
The Salary Compensation Committee of the Board of Directors ("Committee")
is composed of four senior Members of the Board. It recommends to the full
Board the salaries of all elected officers, the allocation of any cash bonus
fund among elected officers and the criteria applicable to the accrual of the
fund. The Committee is responsible for the continuing study of executive
compensation generally, so that the Company may remain competitive in that
regard. The three non-officer Members of the Committee comprise the Restricted
Stock Bonus Committee which recommends persons to receive restricted stock
awards, the form and amount of awards to be made, and the conditions under
which awards are restricted.
Executive Compensation Policy
The base salaries of the executive officers of the Company were adjusted
upward during the course of fiscal 1994, considering particularly the Company's
superior operating results for that year in the face of continuing very
demanding conditions in the automotive industry. There were no increases in
base salary in fiscal 1995; salary differences between fiscal 1995 and fiscal
1994 shown in the Summary Compensation Table in the Company's proxy statement
reflect the fact that the increases adopted during fiscal 1994 were not
retroactive to the beginning of fiscal 1994, but did apply throughout fiscal
1995. Fiscal 1995 resulted in a further superior operating result which
permitted the Company to increase its extra cash divided to $0.70 per share
payable to its shareholders in October, 1995. The Compensation Committee will
continue its evaluation of each executive's performance under the Company's
highly competitive circumstances, as well as the Company's performance as a
whole, including improving production efficiencies with emphasis on quality and
parts requiring high technology.
The Compensation Committee will continue to emphasize long-term
performance and increases in shareholder value, will support a bonus incentive
program based on the financial performance of the Company, and will offer
meaningful and competitive retirement and supplemental benefits that are
consistent with the Company's objective of rewarding and retaining key
employees.
The Cash Bonus Plan described in footnote (1) to the Summary Compensation
Table on page 6 was adopted in 1989, and is a less generous version of a
similar plan in place for many years prior to 1989. The Plan is structured in
such a way that no bonus amount is accrued in any fiscal year unless earnings
exceed a base amount equal to eight percent of beginning of the year
shareholders' equity.
CEO Compensation
The Compensation of the Chief Executive Officer is fixed by the full
Board of Directors (other than the CEO), after considering recommendations of
the Compensation Committee. The Committee makes recommendations consistent with
the objectives, performance, and results mentioned above. The Committee engages
and consults with outside compensation consultants, and considers overall
competitive compensation arrangements of other relevant companies. The
Committee does not however specifically link renumeration of the CEO solely to
quantitative measures of performance because of the extremely competitive
automotive markets served by the Corporation. In recognition of the Company's
excellent financial results for fiscal 1994 and 1995, the Committee recommended
a special one-time $140,000 bonus payment to the CEO in fiscal 1995, which is
reflected in the bonus column of the Summary Compensation Table.
The Committee undertook a comprehensive study of the general level of
executive retirement benefits available under the Company's Salaried Pension
Plan. This study was conducted over a period of several months during the past
fiscal year, and employed extensive use of outside compensation consultants.
The Committee concluded that a rolling two-year incentive plan for the CEO
would be desirable to remain competitive with current market practices, and
such one-time incentive plan was recommended to the full Board (not including
the CEO) and subsequently adopted.
The intermediate term bonus plan is intended to provide the CEO with an
incentive tied to the sustained improvement in Company financial performance.
The amount earned under the plan will be based on the Company meeting or
exceeding prescribed goals in revenue growth and return on equity (ROE) for
fiscal 1995 and 1996. Depending on the Company's performance for fiscal 1995
and 1996, the value of Mr. ZurSchmiede, Jr.'s bonus could range from zero to
150 percent of his 1994 cash bonus ($140,000). The threshold goals in revenue
growth and return on equity for fiscal 1995 and 1996 are 8 percent average
annual growth in revenue (4.3 percent being the average annual growth for
fiscal years 1988 to 1993, inclusive) and 12 percent average return on equity
(7.35 percent being the average return on equity for fiscal years 1988 to 1993,
inclusive). The maximum levels are earned at 12 percent average annual growth
in revenue and 16 percent average return on equity. Both thresholds must be met
for any award to be earned. Additional information concerning the plan is
contained in the section Long-Term Incentive Plan, below.
Compensation Committee
Thomas W. Butler, Jr.
John J. Slavin
F. D. Tennent
W. T. ZurSchmiede, Jr.
Compensation Committee Interlocks and Insider Participation
One Member of the Committee is an officer of the Company; one, the
Committee Chairman, is a former officer; and one is Of Counsel to Dykema
Gossett PLLC which regularly provides legal services to the Company. There are
no "interlocks" as defined by the Securities and Exchange Commission.
<PAGE>
Executive Compensation
The following table sets forth information with respect to the
compensation paid by the Company during the Company's last three fiscal years,
to (i) the Chief Executive Officer of the Company and (ii) each of the four
highest compensated executive Officers of the Company whose compensation
exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ------------
Restricted
Other Annual Stock All Other
Name and Principal Position Year Salary Bonus (1) Compensation (2) Awards (3) Compensation (4)
--------------------------- ---- ------ --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
W. T. ZurSchmiede, Jr. 1995 $295,000 $320,000 $32,900 0 $11,993
Chairman of the Board and Chief 1994 279,250 140,000 63,550 0 7,281
Executive Officer, Chief Financial 1993 268,000 59,700 0 0 5,569
Officer, Secretary and Treasurer
Thomas ZurSchmiede 1995 290,000 180,000 43,200 0 11,040
President and C.O.O. 1994 227,873 140,000 0 0 2,622
since Feb. 1, 1994 1993 164,000 28,700 0 0 1,817
Robert F. ZurSchmiede 1995 240,000 180,000 39,000 0 8,300
Vice President -- 1994 201,500 130,000 0 0 1,366
Romulus Divisions 1993 164,000 28,700 0 0 1,201
J. M. O'Brien 1995 240,000 180,000 43,600 0 11,657
Vice President -- 1994 201,500 130,000 0 0 1,319
Sales and Marketing 1993 164,000 28,700 0 0 1,120
Jeffrey M. Harness 1995 210,000 80,000 34,600 0 3,551
Vice President -- Chelsea 1994 169,166 80,000 0 0 991
and Novex Tool Divisions 1993 131,933 50,350 0 0 877
<FN>
- ----------------
(1) A Cash Bonus Plan, the eligible participants in which are the Officers of
the Company, was adopted for the fiscal year ended June 30, 1989, and has
been in effect each subsequent year. The bonus fund is subject to
discretionary award by the Board to those eligible participants recommended
to the Board by the Chief Executive Officer and the Salary Compensation
Committee. Any accrued bonus fund not awarded may be carried forward for
award in the current or subsequent years. Under the Plan no allocation is
made to the bonus fund in any fiscal year in which pre-tax earnings fail to
exceed a base amount equal to eight (8%) percent of beginning of the year
shareholders' equity. In any year that pre-tax earnings exceed the base
amount, an allocation is made to the bonus fund calculated as a percentage
of pre-tax earnings, the percentage being equal to the sum of one (1%)
percent plus .04 of 1% for each $10,000 that pre-tax earnings exceed the
base amount. The maximum percentage allowable is 9-1/2%. For the fiscal
year ended June 30, 1995, the base amount was $2,197,148, the percentage
allowance was 9-1/2% and the fund allocation was $860,000 all of which was
awarded by the Board, except for $60,000 which was carried forward for
award in the current or subsequent years. The Plan has been continued for
the fiscal year to be ended June 30, 1996, with the base amount of pre-tax
earnings required for allocation being increased to $2,476,571 as a result
of a $3,492,773 increase in shareholders' equity. Pre-tax earnings is
defined to exclude the effect of FAS 106. For Mr. ZurSchmiede, Jr., the
amount shown for 1994 is restated from the 1994 Proxy Statement to reflect
placement of $22,385 for his life insurance premium under the "Other Annual
Compensation" column for that year. Also for Mr. ZurSchmiede, Jr., the
amount shown for 1995 includes a special supplemental bonus payment of
$140,000, in recognition of the Company's excellent financial results for
fiscal 1994 and 1995.
(2) The amount shown for Mr. ZurSchmiede, Jr. for 1994 is restated from the
1994 Proxy Statement as described in note 1, with respect to $22,385 for
his life insurance premium. The amount shown for each officer in 1995
includes special payments to assist them in obtaining life insurance in
lieu of the Company undertaking such expense directly, and gross-up
payments for tax liabilities on such insurance premium payments, at each
officer's effective tax rate, as follows: W. T. ZurSchmiede, Jr., $22,385
(premium), $10,515 (tax liability gross-up); Thomas ZurSchmiede, $23,192
and $20,008; Robert F. ZurSchmiede, $21,353 and $17,647; J. M. O'Brien,
$23,192 and $20,408; Jeffrey M. Harness, $18,940 and $15,660.
(3) Subject to the contingencies of death, or retirement under the Company's
Salaried Employees' Retirement Plan, the Restricted Stock Bonus Plans
require that each Participant "earn out" awarded shares over a period which
extends to the earlier of ten years or the Participant's normal retirement
date. During the period of restriction, the certificates representing the
shares are deposited with the Company. The dividend paid to shareholders of
the Company is paid on these shares. At June 30, 1995, the aggregate number
and market value (at the then amount of $22.88/share) of unvested
restricted shares of Company common stock held by each of the named
executive Officers were: W. T. ZurSchmiede, Jr., 5,600 shares valued at
$128,128; Robert F. ZurSchmiede, 10,400 shares valued at $237,952; Thomas
ZurSchmiede, 10,400 shares valued at $237,952; J. M. O'Brien, 10,400 shares
valued at $237,952; and Jeffrey M. Harness, 7,000 shares valued at
$160,160. No restricted stock awards were made in the 1993, 1994, or 1995
fiscal years.
(4) The amounts shown consist of the Company-paid portion of the premiums on
additional term life insurance, and cash payments, including tax
liabilities, to compensate each officer for the reduction in the Company's
Salaried Pension Plan contribution for 1995 due to certain Internal Revenue
Service regulations, as follows: W. T. ZurSchmiede, Jr., $11,993 (term
insurance); Thomas ZurSchmiede, $3,480 (term insurance) and $7,560 (pension
reduction and related tax-liability compensation); Robert F. ZurSchmiede,
$1,120 and $7,180; J. M. O'Brien, $1,517 and $10,140; Jeffrey M. Harness,
$1,111 and $2,440.
</TABLE>
Long-Term Incentive Plan
The following table sets forth information with respect to the CEO
Intermediate Term Bonus Plan adopted by the Company's Board of Directors, which
applies only to fiscal years 1995 and 1996.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN -- ADOPTED
IN FISCAL YEAR 1995
Estimated Future Payout
Number Performance Under Non-Stock
of Shares, or Other Period Price-Based Plans
Units or Other Until -------------------------------
Rights Maturation Threshold Target Maximum
Name (#) or Payout ($) ($) ($)
---- -------------- --------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
W. T. ZurSchmiede, Jr. (1) FY 1995 and 1996 $70,000 $140,000 $210,000
<FN>
- ----------------
(1) The CEO Intermediate Term Bonus Plan payment depends on the average annual
return on equity and average annual revenue (net sales) growth for the
fiscal years 1995 and 1996. No amount will be paid unless both the average
return on equity equals or exceeds 12 percent and the average revenue
growth equals or exceeds 8 percent. If both thresholds are met or exceeded,
the Plan payment will equal (1) $70,000 plus (2) $17,500 times the sum of
(a) the percentage by which average return on equity exceeds 12 percent (up
to a maximum of four percentage points), plus (b) the percentage by which
average revenue growth exceeds 8 percent (up to a maximum of four
percentage points). Target average return on equity equals 14 percent and
target average revenue growth equals 10 percent. Maximum payout is earned
if average return on equity equals 16 percent and average revenue growth
equals 12 percent.
</TABLE>
<PAGE>
Comparative Performance Graph
The graph below compares the cumulative total shareholder return on the
common stock of the Company for the last five fiscal years with the cumulative
total return on the S&P 500 Index and a Peer Group over the same period
(assuming the investment of $100 in the Company's common stock, the S&P 500
Index and the Peer Group, and reinvestment of all dividends).
COMPARISON OF 5 YEAR TOTAL RETURN
FEDERAL SCREW WORKS, S&P 500 INDEX & A PEER GROUP
[EDGAR NOTE: The performance graph required by Item 402(l) of
Regulation S-K appears in this position of the paper document.
A copy of the performance graph on paper is being submitted to
the Branch Chief in the Division of Corporation Finance. A
table containing the data used to create the performance
graph's data points is provided below.]
<TABLE>
<CAPTION>
FYE 1990 FYE 1991 FYE 1992 FYE 1993 FYE 1994 FYE 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Federal Screw Works $100.00 $ 89.53 $132.19 $156.23 $177.90 $246.27
S & P 500 Index $100.00 $107.40 $121.80 $138.40 $140.35 $176.94
Peer Group (1) $100.00 $ 92.69 $ 82.80 $102.16 $103.87 $140.51
<FN>
- ----------------
(1) Includes Chicago Rivet & Machine Co., Elco Industries, Inc., Hi-Shear
Industries, Inc., Medalist Industries, Inc., Penn Engineering &
Manufacturing Corp., RB&W Corporation and SPS Technologies. The index is
weighted based upon the beginning of period market capitalization values.
</TABLE>
Certain Relationships and Related Transactions
Mr. Hugh G. Harness took early retirement as President and C.O.O. of the
Company effective February 1, 1994. Mr. Harness agreed to perform consulting
services for the Company for eight years with compensation for those services
commencing in 1994 at $130,200 with annual reductions of $5,000 a year to
$95,200 in 2001. Mr. Harness' retirement supplement reported in previous Proxy
Statements as in the monthly amount of $3,333, was increased to $4,000, payable
for 120 months, commencing at his retirement. Mr. Harness' participation in the
Cash Bonus Plan, reported in prior Proxy Statements, was terminated. Restricted
shares of Company stock unvested as of June 30, 1995 in the number of 4,200
shares valued at $96,096 will continue to vest in accordance with the vesting
schedules provided for in the grants.
In the ordinary course of business and pursuant to the Company's standard
practice in such circumstances, the Company purchased from William G. Harness
the house he owned in Big Rapids, Michigan, following his transfer by the
Company from the Big Rapids Division to the Steel Processing Division in
Romulus, Michigan, at a price equal to the price paid by Mr. Harness when he
purchased the house plus the cost of certain improvements made to such house by
Mr. Harness. Mr. Harness is a son of Hugh G. Harness.
Restricted Stock Bonus Plans
The Board of Directors adopted a Restricted Stock Bonus Plan in 1979, and
an Employee Restricted Stock Bonus Plan in 1983, for allocation of restricted
shares of the Company's common stock to officers and other employees of the
Company in recognition of their past contributions, and to encourage their
future contributions, to the profitability of the Company. Allocations of
restricted shares to individual employees are recommended to the Board by the
Restricted Stock Bonus Committee, taking into consideration evaluations by
management. Among the factors considered by the Committee are improvement in
earnings, the Company's performance in relation to others in its field of
business, the results of the particular Division of the Company in which an
individual is employed, the performance of individual employees and such other
factors as the Committee may deem relevant. The Plan is administered by the
Restricted Stock Bonus Committee of the Board, none of the members of which are
employees of the Company or eligible to receive such awards. No bonus shares
were awarded during fiscal 1995. See further note 3 to the Summary Compensation
Table, page 7.
Retirement Supplement
W. T. ZurSchmiede, Jr. in 1986 entered into an agreement with the Company
pursuant to which he has earned out supplemental retirement benefits for 120
months by remaining in the Company's employ until age 65. The Company may
terminate such payments if, at any time, the employee shall fail or refuse to
provide advice and counsel to the Company when reasonably requested to do so.
The monthly supplement provided for Mr. ZurSchmiede, Jr. is $4,166, the monthly
disability is $3,332 and the death benefit is $333,000. Mr. ZurSchmiede Jr.'s
supplement is fully funded by charges to operations in prior years.
Salaried Pension Plan
The Company maintains a Salaried Pension Plan, which covers all salaried
employees. The remuneration covered by the Plan is salary only. The approximate
years of credited service for the officers named in the Summary Compensation
Table are: W. T. ZurSchmiede, Jr., 28, Robert F. ZurSchmiede, 17, Thomas
ZurSchmiede, 14; J. M. O'Brien, 20; Jeffrey M. Harness, 15. For the 1995 plan
year the Plan has been amended so that the maximum salary taken into account in
calculating plan benefits is limited to $55,000, in order to comply with
requirements of the Internal Revenue Code. Company contributions are computed
on an actuarial basis which provides for fixed benefits in the event of
retirement at a specific age or after a specified number of years of service.
Contributions by the Company are, therefore, made to the Plan in the aggregate
and the amount of the contribution, payment, or accrual in respect of a
specified person is not and cannot readily be separately or individually
calculated by the regular actuaries for the Plan. The following table
illustrates representative retirement benefits at the maximum levels for
various service periods for employees under the Plan.
<TABLE>
<CAPTION>
Average Salary During
The Final Ten Years Annual Normal Retirement Benefits
of Service For Years of Credited Service Indicated(1)
- --------------------- ------------------------------------------
15 20 25 30
---- ---- ---- ----
<S> <C> <C> <C> <C>
$55,000....... $15,675 $20,700 $26,125 $26,125
<FN>
- ----------------
(1) Payable on a Life and 10 Year Certain basis. Life Only Option is not
available under the Plan. For married participants, however, the form of
benefit payment is the qualified 50% or 100% Joint and Survivor Annuity,
unless another form is elected. Benefits are increased actuarially for late
retirement. The benefit amounts set forth are not subject to any reduction
for Social Security benefits.
The amount payable to Plan participants may not be less than their June 30,
1995 accrued benefit. The estimated annual accrued benefits as of June 30,
1995 are: Jeffrey M. Harness, $15,576; J. M. O'Brien, $26,244; Robert
ZurSchmiede, $22,800; Thomas ZurSchmiede, $21,492; W. T. ZurSchmiede, Jr.,
$127,610 (after adjustments for late retirement). In lieu of his annual
benefit, W. T. ZurSchmiede, Jr. elected to receive his plan benefit in a
single lump sum payment.
</TABLE>
401K Savings Plan
The Company has adopted, effective September 1, 1993, a 401(k) tax
deferred savings plan. This plan is available to all eligible employees,
essentially all full time, non-organized employees. The plan is
non-contributory, that is, the Company does not match any portion of the
employees' contributions. The Company does, however, bear the costs of
administering the plan, which are expected to be about $7,500 per year.
Employees may contribute up to 20% of their annual compensation, but not more
than the maximum amount permitted under the Internal Revenue Code. Comerica
Bank is the Trustee of the plan. Contributions are invested in one or more of
six no-load mutual funds sponsored by Comerica Bank, and two Fidelity mutual
funds, as selected by each employee.
Board of Directors and Committees
Directors who are employees of the Company receive no compensation in
addition to their salaries and benefits received as employees. Directors who
are not employees of the Company are paid quarterly a retainer fee of $4,500
for all services as a Director. In addition, the Chairman of the Audit
Committee receives $750 quarterly and the Chairman of the Salary Compensation
Committee receives $750 quarterly. Each Director is a party to an agreement
with the Company under which it confirms to him the indemnity provided for
Directors under the Michigan Business Corporation Act and secures that
undertaking by providing for relating bank Letters of Credit, Trusts or other
arrangements.
To attract, retain and motivate service on the Company's Board of
Directors, the Company has a retirement plan for Directors who are not also
employees of the Company. A Director who has served at least five years on the
Board of Directors is entitled to a retirement benefit beginning as of the
first day of the fiscal quarter next following the date of termination of his
or her directorship. The benefit will be paid quarterly for a period of time
equal to the years of Board service of the Director but not to exceed fifteen
years (10 years if the recipient is not the Director or his spouse) and will be
in the amount of the quarterly base retainer fee being paid to the Director at
the time of his or her termination as a Director or the above quarterly
retainer whichever is greater. Directors who are former employees of the
Company but who have at least one year of service on the Board as a
non-employee of the Company will be entitled to the same benefits as if all of
their Board service had been as a non-employee. The plan will be funded
pursuant to the terms of a so-called Rabbi trust created September 13, 1995.
The trust is irrevocable, but in the event all benefits payable under the plan
have been paid, all amounts remaining in the trust would be returned to the
Company. In the event of the insolvency (as defined in the trust agreement) of
the Company, all amounts held in trust would be subject to the claims of the
Company's creditors.
During the fiscal year ended June 30, 1995, the Board of Directors held
seven meetings. The Company has standing Audit, Salary Compensation, Finance
and Restricted Stock Bonus Committees but does not have a standing Nominating
Committee or any Committee performing similar functions.
The Audit Committee, comprising Messrs. Tennent (Chairman), Butler (Vice
Chairman) and Slavin, held two meetings during the year. Generally, the Audit
Committee recommends to the full Board the engagement or discharge of the
independent public accountants to be appointed for the Company; reviews the
proposed scope of the annual audit and the findings of the independent public
accountants upon completion of the annual audit; reviews the independence of
the public accountants and considers the range of their audit and non-audit
fees; reviews with the independent public accountants and with appropriate
corporate personnel the adequacy of internal procedures and controls and
monitors the Company's published policies on management integrity.
The Finance Committee, comprising Messrs. ZurSchmiede, Jr. (Chairman),
Harness and Tennent, held two meetings during the year. The Committee studies
and makes recommendations to the Board concerning fundamental financial
policies of the Company with particular reference to the incurring of material
corporate debt and material capital expenditures.
The Salary Compensation Committee comprising Messrs. Tennent (Chairman),
Butler (Vice Chairman), Slavin and ZurSchmiede, Jr., held two meetings during
the year. The Committee recommends the salaries of all elected officers,
including bonuses, and is responsible for the continuing study of executive
compensation, so that the Company may remain competitive in that regard.
The Restricted Stock Bonus Committee, comprising Board members who are
not employees of the Company and not eligible for any stock award pursuant to
the Plan (Messrs. Tennent, Chairman, Butler and Slavin), administers the
Company's Restricted Stock Bonus Plan. The Committee recommends the persons who
are to receive such awards, the form and amount of awards to be made to each
person and the conditions under which awards are restricted. The Restricted
Stock Bonus Committee did not meet during the year.
Relationship with Independent Public Accountants
The Board of Directors has reappointed Ernst & Young as independent
accountants to audit the financial statements of the Company for the current
fiscal year. One or more members of the firm of Ernst & Young are expected to
be present at the Annual Meeting of Shareholders, will be available to respond
to appropriate questions, and will be afforded the opportunity to make a
statement.
Compliance With Section 16(a) of the Exchange Act
Under the securities laws of the United States, the Company's directors
and its executive officers are required to report ownership of the Company's
common stock and any changes in that ownership to the Securities and Exchange
Commission and to furnish to the Company copies of all Section 16(a) forms they
file. Based solely on review of the copies of such forms furnished to the
Company, and written representations of its directors and executive officers,
the Company believes that during the fiscal year ended June 30, 1995 those
filing requirements were complied with.
Concerning Other Matters Which May Come Before the Meeting
At the meeting, reports will be received from the Officers of the Company
relative to the operation, management and conduct of the Company during the
fiscal year ended June 30, 1995, but it is not contemplated that there will be
any vote in respect of any of said matters. Management is not aware of any
other matters to be presented for action at the meeting, and it is not intended
to bring any other matters before the meeting, except those specifically set
forth above. However, should any other matters requiring the vote of the
Shareholders arise, the persons named in the enclosed form of Proxy will vote
such Proxy according to their best judgment.
Proposals for 1996 Annual Meeting
Shareholder proposals pursuant to Rule 14(a)(8) promulgated under the
Securities Exchange Act of 1934 must be received by the Company no later than
May 31, 1996 in order to be included in the Company's Proxy Statement and Form
of Proxy for that meeting. Such proposals must also meet the other requirements
of the rules of the Securities and Exchange Commission relating to
shareholders' proposals.
Concerning Expenses of Proxies Solicitation
The cost of soliciting Proxies will be borne by the Company. Proxies may
be solicited by mail, telegraph or telex, or by directors, officers and regular
employees of the Company in person or by telephone. The Company has retained
the services of Corporate Investor Communications, Inc. to assist in the
distribution of Proxy materials and to solicit Proxies from the banks, brokers
and nominees at a cost of not to exceed $4,500 plus reasonable out-of-pocket
expenses. The Company will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding the Proxy Statement and the Annual Report to the
beneficial owners of common stock of the Company.
It is important that Proxies be returned promptly in order that a quorum
of the Company's shares be represented at the Annual Meeting. Shareholders who
do not expect to attend the meeting in person are urged to execute and return,
without delay, the enclosed form of Proxy in the enclosed, stamped envelope.
By Order of the Board of Directors
W. T. ZurSchmiede, Jr., Secretary
Detroit, Michigan
September 27, 1995
P.S. Although not a part of the Proxy soliciting material, a copy of the
Company's Annual Report for the fiscal year ended June 30, 1995 is
enclosed herewith.
<PAGE>
[Form of Proxy -- Front]
FEDERAL SCREW WORKS
The undersigned hereby constitutes and appoints T. W. Butler, Jr. and
R. F. ZurSchmiede, or either of them, attorneys and proxies with full
power of substitution to vote at the Annual Meeting of Shareholders of
Federal Screw Works, to be held on Thursday, October 26, 1995, or at any
adjournment or adjournments thereof.
The shares represented by this proxy will be voted as directed. Unless
authority is withheld, this proxy will be voted to elect as directors the
nominees shown.
Discretionary authority is hereby conferred as to any other matters as
may properly come before the meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting of Shareholders, the Proxy Statement dated
September 27, 1995, and the Annual Report of Simpson Industries, Inc. to its
Shareholders for the year ended June 30, 1995. The undersigned
ratifies all that the proxies or any of them or their substitutes may
lawfully do or cause to be done by virtue hereof and revokes all former
proxies.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation, this
signature should be that of an authorized officer who should state his or
her title.
HAS YOUR ADDRESS CHANGED?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
[Form of Proxy -- Back]
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors / / / / / /
FEDERAL SCREW WORKS John J. Slavin, F. D. Tennent
and W. T. ZurSchmiede, Jr.
If you do not wish to direct the voting of
your shares for a particular nominee, mark
the "For All Except" box and strike a line
through the Nominee(s) name. Your shares
will be voted for the remaining Nominee(s).
RECORD DATE SHARES:
2.) To act in their discretion upon the
transaction of such other business as may
properly come before the meeting.
Please be sure to sign and date this Proxy.
Mark box at right / /
Date____________________ if address change
has been noted
________________________ ________________________ on the reverse side.
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
