<PAGE> 1
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 Section 240.14a-11(c) or Section 240.14a-12
CADE INDUSTRIES, INC.
________________________________________________________________________________
(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] No fee required
[ ] 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> 2
CADE INDUSTRIES, INC.
5640 ENTERPRISE DRIVE
P.O. BOX 23094
LANSING, MICHIGAN 48909
(517) 394-1333
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Cade Industries,
Inc. will be held at the Sheraton Lansing Hotel, 925 South Creyts Road, Lansing,
Michigan on Tuesday, May 6, 1997 at 10:00 a.m. (Eastern Time) for the following
purposes:
(1) to elect seven directors; and
(2) to transact such other business as may properly come
before the meeting and any adjournment thereof.
The Board of Directors has established the close of
business on March 19, 1997 as the record date for determining the shareholders
entitled to notice of and to vote at the meeting or any adjournment thereof;
only shareholders of record at the close of business on that date will be
entitled to vote.
A proxy, which is solicited on behalf of the Board of
Directors, is enclosed, together with a return envelope which requires no
postage if mailed in the United States. The affirmative vote of a plurality of
the votes cast by the outstanding shares represented at the meeting and entitled
to vote, a quorum being present, is required for the election of directors.
It is important that your shares be represented at the
meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
INDICATE YOUR VOTING DIRECTIONS, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN
THE ENCLOSED POSTPAID ENVELOPE. IF YOU LATER DESIRE TO REVOKE YOUR PROXY, YOU
MAY DO SO AT ANY TIME BEFORE THE VOTING BY GIVING WRITTEN NOTICE OF REVOCATION
TO THE COMPANY'S SECRETARY, OR BY GIVING ORAL NOTICE TO THE PRESIDING OFFICER
DURING THE MEETING.
A copy of the 1996 Annual Report to Shareholders and a
Proxy Statement accompany this Notice.
Persons attending the annual meeting are cordially
invited to join a tour of the Company's facilities immediately following the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Conrad G. Goodkind
Secretary
Lansing, Michigan
March 24, 1997
<PAGE> 3
PROXY STATEMENT
CADE INDUSTRIES, INC.
5640 ENTERPRISE DRIVE
P.O. BOX 23094
LANSING, MICHIGAN 48909
(517) 394-1333
SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of
Directors of Cade Industries, Inc. ("Cade" or the "Company") for use at the
Annual Meeting of Shareholders to be held on May 6, 1997. All properly executed
proxies will be voted at the meeting. A proxy may be revoked at any time prior
to its exercise by giving written notice of revocation to the Company's
Secretary, or by giving oral notice to the presiding officer during the meeting.
Each shareholder of record at the close of business on
March 19, 1997, will be entitled to one vote for each share registered in such
shareholder's name. At that date there were outstanding 21,712,604 shares of
common stock, the Company's only class of stock, outstanding.
The expense of printing and mailing proxy material,
including forwarding expense to beneficial owners of stock held in the name of
another, will be borne by the Company. No solicitation other than by mail is
contemplated, except that officers or employees of the Company may solicit the
return of proxies from certain shareholders by telephone.
This Proxy Statement is being mailed to shareholders
commencing on or about March 31, 1997. A copy of the 1996 Annual Report to
Shareholders, including financial statements, is enclosed herewith.
PRINCIPAL SECURITY HOLDERS AND
SECURITY HOLDINGS OF MANAGEMENT
The following table shows the beneficial ownership of
the outstanding common stock of the Company as of February 24, 1997, by each
person known to the Company to own beneficially more than 5% of such stock
outstanding, each director and nominee, each executive officer named in the
Summary Compensation Table below and all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
Number of Shares and
Nature of Beneficial Percent
Name Ownership (1)(2) of Class
- ---- ---------------- --------
<S> <C> <C>
Advent International Corporation (3) 1,937,290 (4) 8.9%
Molly F. Cade (5) 5,292,162 (6) 24.3%
Conrad G. Goodkind 285,300 1.3%
William T. Gross 60,000 (7) *
Richard A. Lund 193,512 *
Terrell L. Ruhlman 252,000 (8) 1.2%
John W. Sandford 70,000 (9) *
Edward B. Stephens 84,761 (10) *
Steven M. Tadler (11) 50,000 *
Trigran Investments, Inc. (12) 1,285,300 5.9%
All directors and executive officers as a group 6,287,735 28.2%
(8 persons)
</TABLE>
- ------------------------
*Less than 1.0%
<PAGE> 4
(1) Except as otherwise indicated, the specified persons have sole
voting and investment power as to all of the shares indicated.
(2) Includes the following shares which may be acquired by the exercise
of options: 50,000 as to Ms. Cade, Mr. Goodkind, Mr. Gross, Mr.
Sandford and Mr. Tadler; 178,000 as to Mr. Lund; 100,000 as to Mr.
Ruhlman; 70,000 as to Mr. Stephens; and 598,000 as to all directors
and executive officers as a group.
(3) The business address of Advent International Corporation is 101
Federal Street, Boston, Massachusetts 02110.
(4) All shares are held of record by the following venture capital funds
managed by Advent International Corporation in the amounts
indicated: Adhill Limited Partnership, 219,207 shares; Adventact
Limited Partnership, 272,016 shares; Adval Limited Partnership,
196,413 shares; International Network Fund Limited Partnership,
834,067 shares; Advent International Technology Fund L.P., 73,694
shares; Adwest Limited Partnership, 219,207 shares; Hong Kong
Venture Investment Trust, 122,686 shares.
(5) Ms. Cade's business address is 5640 Enterprise Drive, P.O. Box
23094, Lansing, Michigan 48909.
(6) Includes 2,200 shares held by Ms. Cade as custodian for minor
children and 16,200 shares held by her spouse.
(7) Includes 10,000 shares held in a trust controlled by Mr. Gross.
(8) Voting and dispositive power shared with spouse as to 20,000 shares.
(9) Record ownership held by family trust controlled by Mr. Sandford.
(10) Voting and dispositive power shared with spouse as to 7,100 shares.
(11) Mr. Tadler is a Managing Director of Advent International
Corporation. Mr. Tadler disclaims beneficial ownership of any of the
shares held indirectly by Advent International Corporation. See Note
4 above.
(12) The business address of Trigran Investments, Inc. is 155 Pfingsten
Road, Suite 360, Deerfield, Illinois 60015.
The above beneficial ownership information is based upon information
furnished by the specified persons and determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934 as required for purposes of this
filing, which is not necessarily the same as beneficial ownership for other
purposes, and includes shares as to which beneficial ownership may be
disclaimed.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Bylaws provide for the election of directors at each
Annual Meeting of Shareholders to hold office until the next succeeding Annual
Meeting and until their successors are elected.
Shares represented by the enclosed proxy will be voted for the
nominees named below, unless otherwise specified on the proxy. If any of the
nominees should decline or be unable to act as a director, which is not
anticipated, the proxies may be voted for a substitute nominee designated by the
Board of Directors. In no event may the proxies be voted for more than seven
nominees.
NOMINEES:
<TABLE>
<CAPTION>
PRINCIPAL DIRECTOR
NAME AGE OCCUPATION SINCE
---- --- ---------- -----
<S> <C> <C> <C>
Molly F. Cade (2) 47 Educator 1986
Conrad G. Goodkind (1)(2)(3) 52 Partner, Quarles & Brady 1989
(law firm)
William T. Gross (1)(4) 67 Consultant 1992
Richard A. Lund (4) 45 President and Chief Operating 1991
Officer of the Company
Terrell L. Ruhlman (1)(4) 70 Chairman of the Board and Chief 1987
Executive Officer of the Company
John W. Sandford (2)(4) 62 President and Chief Executive 1990
Officer, Rolls-Royce North America
(manufacturer of aircraft engines)
Steven M. Tadler (1) 37 Managing Director, 1995
Advent International Corporation
(venture capital investment firm)
</TABLE>
- ------------------------------
(1) Member of the Audit Committee, which met once in 1996. The Audit
Committee annually considers the report and recommendations of the
Company's independent public accountants and is available for
additional meetings upon request of such accountants. The Audit
Committee's functions also include making recommendations to the
Board of Directors regarding the engagement or retention of such
accountants, directing the activities of and considering the reports
and recommendations of the Company's principal accounting officer,
adoption of accounting methods and procedures, public disclosures
required for compliance with securities laws and other matters
relating to the Company's financial accounting.
(2) Mr. Goodkind is the Chair and Ms. Cade and Mr. Sandford are members
of the Compensation Committee, which met three times in 1996. The
Compensation Committee meets to consider and make recommendations to
the Board of Directors with respect to salaries, bonuses and benefit
plans for officers and other salaried employees.
(3) Mr. Goodkind serves as Secretary of the Company.
(4) Member of the Strategic Planning Committee, a joint Board of
Directors/Management committee which reviews the Company's strategic
direction and makes recommendations to the Board of Directors. The
Committee met once in 1996.
3
<PAGE> 6
The Board of Directors held five meetings during 1996. Each director
attended 75% or more of the total of all meetings of the Board and any committee
on which he or she served during the year, except that Mr. Tadler did not attend
the meeting of the Audit Committee. The Board of Directors currently maintains
an Audit Committee, a Compensation Committee and a Strategic Planning Committee.
The Board has not appointed a Nominating Committee.
The principal occupation of each director during the past five years
was that shown in the above table, except that: (1) Mr. Gross served as a
consultant to Douglas Aircraft Company (manufacturer of commercial and military
aircraft) from October 1989 until October 1992; Mr. Gross is also a director of
Ocal, Inc (manufacturer of steel tubing); (2) Mr. Lund was President of the
Company's Auto-Air Composites, Inc. subsidiary from January 1989 to November
1994 and was elected President and Chief Operating Officer of the Company in
April 1990; Mr. Lund also is a director of Blue Care Network Health Central and
Comerica Bank; (3) Mr. Ruhlman was a consultant to, and Director of, Sonitrol
Corporation (manufacturer of electronic security systems) from 1983 to 1992; Mr.
Ruhlman also is a director of EI Environmental Engineering Concepts Ltd.
(manufacturer of industrial misting systems); (4) Mr. Sandford was President and
Chief Executive Officer of Rolls Royce, Inc. from 1990 to January 1993, and
Managing Director, Rolls-Royce plc, Aerospace Group from January 1993 to January
1995, and is currently a Director of Rolls-Royce plc and several other privately
held entities; and (5) Mr. Tadler was a Vice President of Advent International
Corporation from May 1989 to January 1993, and Senior Vice President from then
until September 1996, when he became a Managing Director.
COMPENSATION OF DIRECTORS
The Company pays directors who are not full-time employees of the
Company $10,000 per year, and pays non-employee members of the Audit,
Compensation, and Strategic Planning Committees an additional $5,000 per year
for service on such committees. It is the Company's policy to grant each new
director an option to purchase 50,000 shares of the Company's common stock at an
exercise price equal to the then fair market value thereof. All options may be
exercised only for so long as the optionee remains a director of the Company and
for one year thereafter, but in no event more than ten years after the date of
grant. Mr. Goodkind is a partner in the law firm of Quarles & Brady, general
counsel to the Company, which performed legal services for the Company in 1996
and is expected to do so in 1997.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
Set forth below is a table summarizing the compensation of the
Company's Chief Executive Officer, its President and Chief Operating Officer and
its Vice President, Chief Financial Officer and Treasurer ("Named Executive
Officers") for each of the three preceding fiscal years. No other executive
officer received salary and bonus in excess of $100,000 during fiscal 1996.
Although the Company maintains certain stock option plans, it has no other
long-term incentive plan. The Company has not issued, and there are not
outstanding, any restricted stock awards or stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
----------------------------------------- -------------
SECURITIES
UNDERLYING ALL OTHER
OTHER ANNUAL OPTIONS/SARS COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION (NO. OF SHARES) TION($)
- --------------------------- ---- --------- ----------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Terrell L. Ruhlman................. 1996 75,000(2) -0- (4) -0- -0-
Chairman of the Board and 1995 75,000(2) -0- (4) -0- -0-
Chief Executive Officer 1994 75,000(2) -0- (4) 100,000(5) -0-
Richard A. Lund.................... 1996 170,616 43,916(3) (4) 15,000 10,196 (6)
President and 1995 165,333 9,920 (4) 25,000 8,076 (7)
Chief Operating Officer 1994 157,417 20,464 (4) 100,000(5) 8,020 (8)
Edward B. Stephens................. 1996 96,720 24,897(3) (4) 10,000 6,672 (9)
Vice President, Chief 1995 95,480 5,729 (4) 20,000 5,157(10)
Financial Officer and 1994 91,750 11,928 (4) 25,000 522(11)
Treasurer
</TABLE>
- ---------------------------------------
(1) Represents bonus earned in the current fiscal year, but paid in the
succeeding fiscal year.
(2) Includes $10,000 received for serving as a director.
(3) Consists of 75% cash and 25% Company common stock valued at date the
bonus was awarded. See "Report of the Compensation Committee of the
Board of Directors" below.
(4) Personal benefits in an aggregate amount less than 10% of the total
of annual salary and bonus.
(5) Includes an option to purchase 50,000 shares granted to the
executive in his capacity as a director.
(6) 401(k) matching contribution of $9,500; term life insurance premium
of $696.
(7) 401(k) matching contribution of $7,500; term life insurance premium
of $576.
(8) 401(k) matching contribution of $7,612; term life insurance premium
of $408.
(9) 401(k) matching contribution of $6,150; term life insurance premium
of $522.
(10) 401(k) matching contribution of $4,635; term life insurance premium
of $522.
(11) Term life insurance premium of $522.
5
<PAGE> 8
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth certain information regarding stock
option grants to each Named Executive Officer during the fiscal year ended
December 31, 1996.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
---------------------------------------------------------- ------------------
Number of % of Total
Securities Option/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------- ------------ ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Terrell L. Ruhlman -- -- -- -- -- --
Richard A. Lund 15,000(3) 20.0% $ 1.125 5/7/2006 $10,614 $26,899
Edward B. Stephens 10,000(3) 13.3% 1.125 5/7/2006 7,076 17,933
</TABLE>
(1) Consist entirely of stock options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock appreciation of 5% or 10%
compounded annually from the date the respective options were
granted to their expiration date and are not presented to forecast
possible future appreciation, if any, in the price of the Common
Stock. The potential realizable value of the foregoing options is
calculated by assuming that the market price of the underlying
security appreciates at the indicated rate for the entire term of
the option and that the option is exercised at the exercise price
and sold on the last day of its term at the appreciated price.
(3) Exercisable in equal increments 6, 12, 24, 36 and 48 months after
the 5/7/96 grant date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The table below sets forth information regarding the number and
value of unexercised options held by the Company's Named Executive Officers as
of December 31, 1996. No Named Executive Officer exercised options during 1996.
The Company has no outstanding SARs.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
-------------------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Terrell L. Ruhlman 100,000 -0- $ 50,000 $ -0-
Richard A. Lund 178,000 47,000 62,046 20,844
Edward B. Stephens 70,000 30,000 18,796 13,469
</TABLE>
(1) Value is based upon closing price of $1.3125 as reported on the
Nasdaq National Market for December 31, 1996, minus the exercise
price, multiplied by the number of shares underlying the option.
6
<PAGE> 9
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Richard A. Lund entered into an employment agreement with the
Company dated as of May 2, 1995 pursuant to which he continued to be retained to
act as the Company's President and Chief Operating Officer and to act in such
other capacities as directed by the Company's Board of Directors until his
resignation or termination by the Board of Directors. The agreement provides for
an initial annual base salary of $168,000 per year (to be reviewed annually by
the Board of Directors), a bonus not to exceed 50% of base salary and certain
other benefits. The Company must continue to pay benefits for one year if Mr.
Lund is terminated by the Company without cause. Compensation ceases upon
termination for cause or six months after death or disability. In the event Mr.
Lund's employment terminates within one year after a change in control of the
Company, the Company shall pay him an amount equal to his compensation for the
preceding year.
Edward B. Stephens, who joined the Company in July 1989, serves the
Company as Vice President, Chief Financial Officer and Treasurer pursuant to an
agreement with the Company terminable by the Company for cause at any time or
for any reason upon six months' written notice. The agreement originally
provided for an annual salary of $75,000 plus discretionary bonuses and certain
medical, dental and life insurance benefits. Under a 1991 amendment to this
agreement, Mr. Stephens would be entitled to a payment equal to his compensation
from the Company in the preceding year in the event his employment by the
Company is terminated for any reason within one year of a change of control of
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed of
Molly F. Cade, Conrad G. Goodkind and John W. Sandford. Mr. Goodkind is the
Secretary of the Company.
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total
shareholder return on the Company's common stock to the cumulative total return
of (i) the Standard & Poors 500 Stock Index and (ii) the Value Line
Aerospace/Defense Industry Index through December 31, 1996. The graph is
generated by assuming that $100 was invested at the close of trading on the last
trading day of 1991 in each of Cade common stock, the Standard & Poors 500 and
the Aerospace/Defense Industry Index, and that all dividends were reinvested.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CADE INDUSTRIES, STANDARD & POORS
(FISCAL YEAR COVERED) INC. 500 AEROSPACE/DEFENSE
<S> <C> <C> <C>
1991 $ 100 $ 100 $ 100
1992 $ 48.15 $ 107.79 $ 114.49
1993 $ 42.59 $ 118.66 $ 147.67
1994 $ 38.89 $ 120.56 $ 156.72
1995 $ 37.04 $ 165.78 $ 247.76
1996 $ 77.81 $ 204.32 $ 320.03
</TABLE>
7
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than 10% of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the SEC.
Specific due dates for these reports have been established, and the Company is
required to disclose any failure to file by those dates. The Company believes
that all of these filing requirements were satisfied during the year ended
December 31, 1996. In making these disclosures, the Company has relied solely on
written representations of those persons it knows to be subject to the reporting
requirements and copies of the reports that they have filed with the SEC.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Company's Compensation Committee is composed of three
non-employee Directors. The Compensation Committee, which met three times in
1996, reviews and approves adjustments to executive compensation. The Company's
policy with respect to compensation of its executive officers is to provide
benefits which are fair and which provide incentives to maximize performance. A
significant portion of each full-time executive officer's potential compensation
is linked to overall Company performance.
The Company's Chief Executive Officer ("CEO") is not a full-time
employee of the Company. The CEO's compensation is primarily based on a
subjective determination by the Committee of the amount necessary to ensure the
continued availability of his experience and knowledge, which is of substantial
value to the Company. This amount is a function, in part, of the amount of time
which the Committee and the CEO believe will be required to be devoted during
the succeeding year and the difficulty of the issues with which he is expected
to deal during that year. The CEO's compensation was unchanged in 1996.
Compensation of the Company's full-time executive officers is
composed of a base salary, cash and stock bonuses, and stock option grants. The
compensation is reviewed by the Committee in May of each year and changes, if
any, typically are effective immediately. The base salary is determined
subjectively by the Committee without formal guidelines, but taking into account
(without applying any specific weights) the officer's then existing base
compensation, increases in prior years, the Company's revenue and earnings
performance for the preceding fiscal year and compensation trends among other
manufacturing and similarly sized companies.
Bonuses, consisting of 75% cash and 25% stock, are awarded on the
basis of the Company's or a subsidiary's earnings and other performance criteria
for the preceding fiscal year in relation to performance targets previously
established by the Committee for such year and subject to a maximum total bonus
expressed as a percentage of base compensation. The Committee annually
establishes a minimum and aggressive target for earnings and other performance
criteria. If a minimum target is not achieved, the executive is not entitled to
any bonus with respect to that criteria. If the aggressive target is achieved,
the executive is entitled to the maximum bonus for that criteria, subject to any
additional performance criteria that may be imposed. The maximum bonus for each
recipient is established each year on the same basis as base salary, but may not
exceed 50% of base salary. The stock bonus is computed on the basis of the per
share price of the Company's stock on the first day of the fiscal year.
Stock option grants are designed to provide incentives for key
employees both as a reward for good performance and as a benefit that increases
in value as the Company's stock price rises. Individual grants are made by the
Committee from time to time on the basis of a subjective evaluation, without
formal guidelines, of the recipient's individual contribution to the Company's
earnings performance in the preceding year and, to a lesser extent, of such
recipient's total compensation for such year.
The compensation of the Company's Chief Operating Officer ("COO")
was reviewed in May and November 1996. In November, the COO's annual base
compensation rate was increased 10% from $168,000 to $185,000. Among the factors
considered by the Committee were the Company's financial performance during the
first three quarters of 1996 and the projected results for the fourth quarter,
the improved management planning and integration of operations accomplished
under the COO's direction during the year, the fact that the COO's base salary
did not represent an increase from 1995 compensation, the competitive situation
for experienced management in the industry in which the Company operates, and
the COO's years of service to the Company.
8
<PAGE> 11
The COO was eligible to receive a bonus in 1997 of up to 50% of the
COO's base compensation, based on the Company's performance in fiscal 1996. If
the Company's after-tax consolidated earnings failed to exceed the minimum
earnings target, the amount of the COO's bonus would be zero. If the Company's
after-tax consolidated earnings exceed the minimum earnings target, the COO is
entitled to a bonus which would be calculated pursuant to a performance-based
formula weighted as follows: after-tax consolidated earnings, 70%; a targeted
maximum amount of accounts receivable, measured by the number of days of sales,
10%; rate of inventory turnover, 10%; and rate of working capital turnover, 10%.
The bonus would be paid 75% in cash and 25% in Company common stock, computed on
the basis of the stock's price on the first day of 1996. The COO's bonus paid in
1997 was calculated in accordance with such formula, and was $33,782 or
approximately 19.8% of base salary. This bonus is worth $43,916 if the stock
portion of the bonus were valued at the date the bonus was awarded.
Section 162(m) of the Internal Revenue Code, added by the Omnibus
Budget Reconciliation Act of 1993, generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to the corporation's chief
executive officer and the other proxy-named executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Cade's executive compensation program, as
presently constructed, is not likely to generate non-deductible compensation in
excess of these limits. The Committee will continue to review these evolving tax
regulations as they apply to Cade's executive compensation program. It is the
Committee's intent to preserve the deductibility of executive compensation to
the extent reasonably practicable and to the extent consistent with its other
compensation objectives.
Compensation Committee
Conrad G. Goodkind, Chair Molly F. Cade John W. Sandford
AUDIT MATTERS
Effective May 1, 1995, the Company dismissed Ernst & Young, LLP,
which previously was engaged as the principal accountant to audit the Company's
financial statements. The reports of Ernst & Young, LLP on the financial
statements of the Company during the two years prior to the dismissal did not
contain any adverse opinion or a disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
The decision to change independent accountants was recommended and
approved by the Audit Committee of the Company's Board of Directors.
During the Company's two most recent fiscal years prior to the
dismissal of Ernst & Young, LLP and the subsequent interim period ending May 1,
1995, there had not been any disagreements with Ernst & Young, LLP on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Ernst & Young, LLP, would have caused it to make a reference to
the subject matter of the disagreements in connection with its reports.
Effective May 2, 1995, the Company engaged Deloitte & Touche LLP as
its principal accountant to audit the Company's financial statements. The
Company intends that Deloitte & Touche LLP will audit the Company's financial
statements for the fiscal year ending December 31, 1997. Representatives of
Deloitte & Touche LLP will be present at the shareholders' meeting to respond to
appropriate questions and to make a statement, if they so desire.
9
<PAGE> 12
VOTING PROCEDURES
The seven nominees receiving the highest number of affirmative votes
(whether or not a majority) cast by the outstanding shares represented at the
meeting and entitled to vote, a quorum being present, shall be elected as
directors. Abstentions and broker non-votes are not considered to be votes cast
under applicable state law and the Company's Articles of Incorporation and
Bylaws. Only affirmative votes are relevant in the election of directors.
The votes will be counted by the Company's transfer agent, Firstar
Trust Company, and certified to the Company in writing.
OTHER MATTERS
At the date of this Proxy Statement, the Company has not been
informed and is not aware that any other matters will be brought before the
meeting. However, proxies may be voted with discretionary authority with respect
to any other matters that may properly be presented to the meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than
December 1, 1997 in order to be considered for inclusion in next year's Annual
Meeting Proxy Statement.
CADE INDUSTRIES, INC.
Conrad G. Goodkind
Secretary
Lansing, Michigan
March 24, 1997
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K AND FINANCIAL STATEMENTS AND
SCHEDULES THERETO FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 WILL BE PROVIDED
WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF THE COMPANY'S COMMON SHARES
AS OF THE RECORD DATE FOR THE ANNUAL MEETING, ON THE WRITTEN REQUEST OF SUCH
PERSON DIRECTED TO: SHERYL A. MULL, SHAREHOLDER RELATIONS, CADE INDUSTRIES,
INC., 5640 ENTERPRISE DRIVE, P.O. BOX 23094, LANSING, MICHIGAN 48909.
10
<PAGE> 13
- --------------------------------------------------------------------------------
CADE INDUSTRIES, INC.
Proxy for 1997 Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Molly F. Cade and Terrell L. Ruhlman, and each
or either of them, proxies, with full power of substitution, to vote all shares
of stock which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Cade Industries, Inc. to be held at the Sheraton Lansing Hotel,
925 South Creyts Road, Lansing, Michigan, on May 6, 1997 at 10:00 a.m. (Eastern
Time), or at any adjournment thereof, as follows, hereby revoking any proxy
previously given.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" EACH OF THE NOMINEES LISTED IN PROPOSAL (1) AS RECOMMENDED BY THE BOARD OF
DIRECTORS.
(Continued and to be signed and dated on reverse side)
<PAGE> 14
-DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED-
- --------------------------------------------------------------------------------
CADE INDUSTRIES, INC. ANNUAL MEETING
1. ELECTION OF DIRECTORS
for terms expiring in 1998
1. Molly F. Cade, 2. Conrad G. Goodkind, 3. William T. Gross,
4. Richard A. Lund, 5. Terrell L. Ruhlman,
6. John W. Sandford, 7. Steven M. Tadler
/ / FOR all / / WITHHOLD
nominees AUTHORITY to vote
listed to the for all nominees listed
left (except as to the left
specified
below)
(Instructions: To withhold authority to vote for any indicated nominee, mark FOR
above and print the name of the nominee(s) with respect to whom authority is
withheld in the box provided to the right.)
_______________________________________________________
2. In their discretion on such other matters as may properly come before the
meeting or any adjournments thereof; all as set out in the Notice and Proxy
Statement relating to the meeting, receipt of which is hereby acknowledged.
Address change? Date: ______________________________________
MARK BOX / /
Indicate changes below:
NO. OF SHARES
____________________________________________________________
SIGNATURE(S) IN BOX
(If stock is owned by more than one person, all owners must sign. Persons
signing as executors, administrators, trustees or in similar capacities must so
indicate.)
