<PAGE>
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 (S) 240.14a-11(c) or (S) 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)(1) 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: Not Applicable
2) Form, Schedule or Registration Statement No.: _____________________
3) Filing Party: _____________________________________________________
4) Date Filed: _______________________________________________________
<PAGE>
CADE INDUSTRIES, INC.
2365 Woodlake Drive, Suite 120
Okemos, Michigan 48864
(517) 347-1333
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 4, 1999 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;
all as set forth in the accompanying Proxy Statement.
The Board of Directors has established the close of business on March 18,
1999, 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 EXPECT 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 1998 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
Okemos, Michigan
March 31, 1999
<PAGE>
CADE INDUSTRIES, INC.
2365 Woodlake Drive, Suite 120
Okemos, Michigan 48864
(517) 347-1333
----------------
PROXY STATEMENT
----------------
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 4, 1999. All properly executed proxies received
in time 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 18, 1999, will
be entitled to one vote for each share registered in such shareholder's name.
At that date there were outstanding 21,701,663 shares of common stock, the
Company's only class of stock.
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, 1999. A copy of the 1998 Annual Report to Shareholders, including
financial statements, is enclosed but is not a part of this Proxy Statement
nor incorporated herein.
<PAGE>
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 December 31, 1998, 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
Ownership of
Name (1)(2) Class
---- ---------- -------
<S> <C> <C>
Molly F. Cade (3)................................... 5,225,162(4) 24.1%
Conrad G. Goodkind.................................. 300,300 1.4%
William T. Gross.................................... 60,000(5) *
Richard A. Lund..................................... 247,131 1.1%
Joseph R. O'Gorman.................................. 50,000 *
Terrell L. Ruhlman.................................. 290,000 1.3%
John W. Sandford.................................... 172,444(6) *
Edward B. Stephens.................................. 123,228(7) *
Richard A. Joseph................................... 9,000 *
--------- ----
All directors and executive officers as a group (9
persons)........................................... 6,477,265 28.9%
=========
</TABLE>
- --------
* Less than 1.0%
(1) Except as otherwise indicated, the specified persons have sole voting
and/or dispositive power as to all of the shares indicated.
(2) Includes the following shares which may be acquired by options currently
exercisable or within 60 days of the record date: 50,000 as to Ms. Cade
and Messrs. Goodkind, Gross and O'Gorman; 224,000 as to Mr. Lund; 98,000
as to Mr. Stephens; 150,000 as to Mr. Sandford; 5,000 as to Mr. Joseph;
and 677,000 as to all directors and executive officers as a group.
(3) Ms. Cade's business address is 2365 Woodlake Drive, Suite 120, Okemos,
Michigan 48864.
(4) Includes 16,200 shares held by Ms. Cade's spouse.
(5) Includes 10,000 shares held in a trust controlled by Mr. Gross.
(6) Includes 20,000 shares held by family trust controlled by Mr. Sandford.
(7) Voting and dispositive power shared with spouse as to 7,100 shares.
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 amended, 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>
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>
Director
Name Age Principal Occupation Since
---- --- -------------------- --------
<S> <C> <C> <C>
Molly F. Cade 49 Educator 1986
(1)
Conrad G. 54 Partner, Quarles & Brady LLP 1989
Goodkind (law firm)
(1)(2)
William T. 69 Consultant 1992
Gross (2)(3)
Richard A. Lund 47 President and Chief Executive 1991
(3) Officer of the Company
Joseph R. 55 Former Chairman of the Board, President and 1998
O'Gorman Chief Executive Officer of Reno Air Inc.
(2)(3)
Terrell L. 72 Consultant 1987
Ruhlman
(1)(2)(3)
John W. 64 Chairman of the Board 1990
Sandford (3)
</TABLE>
- --------
(1) Mr. Goodkind is the Chair and Ms. Cade and Mr. Ruhlman were members of the
Compensation Committee, which met three times in 1998. 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.
(2) Mr. Gross is the Chair and Mr. Goodkind and Mr. O'Gorman were members of
the Audit Committee, which met once in 1998. The Audit Committee annually
considers the report and recommendations of the Company's independent
public auditors and is available for additional meetings upon request of
such auditors. The Audit Committee's functions also include making
recommendations to the Board of Directors regarding the engagement or
retention of such auditors, 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 and internal controls.
(3) 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 1998.
The Board of Directors held four meetings during 1998. Each director
attended all of the meetings of the Board and any committee on which he or she
served during the year. The Board of Directors currently has committees for
Audit, Compensation, and Strategic Planning. 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. Lund was President of the
Company's Auto-Air Composites, Inc. subsidiary from January 1989 to November
1994 and was elected President in May 1990 and Chief Operating Officer of the
Company in May 1990 until September 1998; Mr. Lund also is a director of
Comerica Bank; (2) Mr. O'Gorman was Executive Vice President of United Air
Lines, Inc. from February 1991 to September 1997; (3) Mr. Ruhlman
3
<PAGE>
was previously Chairman and Chief Executive Officer of the Company from 1991 to
September 1997 and is a director of EI Environmental Engineering Concepts Ltd.
(manufacturer of industrial misting systems) and United Systems Software, Inc.;
(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 Avcorp
Industries (manufacturer of aircraft components) and several other privately
held entities.
Compensation of Directors
The Company pays directors who are not full-time employees of the Company
$12,000 per year, and pays non-employee members of the Audit, Compensation, and
Strategic Planning Committees an additional $6,000 per year for service on such
committees in the aggregate. 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 LLP,
general counsel to the Company, which performed legal services for the Company
in 1998 and is expected to do so in 1999.
4
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
Set forth below is a table summarizing the compensation of the Company's
Chief Executive Officer, its President and its Vice President, Chief Financial
Officer and Treasurer ("Named Executive Officers") for each of the three
preceding fiscal years. Effective September 1, 1998, John Sandford resigned as
Chief Executive Officer and on that same day Richard A. Lund was appointed
Chief Executive Officer. No other executive officer received salary and bonus
in excess of $100,000 during the year ended December 31, 1998. Although the
Company maintains certain stock option plans, it has no other long-term
incentive plan. The Company has not issued, and there are not currently
outstanding, any restricted stock awards or stock appreciation rights.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------- ---------------
Securities
Underlying All Other
Name and Principal Salary Bonus Other Annual Options/SAR Compensation
Position Year ($) ($)(1)(3) Compensation (No. of Shares) ($)
- ------------------ ---- ------- --------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John W. Sandford........ 1998 77,004(2) 38,629 (4) -0- -0-
Chairman of the Board
and 1997 37,839(2) 15,431 (4) 100,000 -0-
Chief Executive Officer 1996 10,000(2) -0- (4) -0- -0-
(until August 31, 1998)
Richard A. Lund......... 1998 207,116 105,344 (4) 50,000 10,696(5)
President and Chief
Executive 1997 185,000 111,220 (4) 25,000 10,196(6)
Officer (after August
31, 1998) 1996 170,616 43,916 (4) 15,000 10,196(6)
Edward B. Stephens...... 1998 103,408 52,622 (4) 20,000 10,654(7)
Vice President, Chief
Financial 1997 99,399 59,759 (4) 15,000 8,338(8)
Officer and Treasurer 1996 96,720 24,897 (4) 10,000 6,672(9)
Richard A. Joseph....... 1998 91,539 23,877 (4) 25,000 2,766(10)
Vice President
</TABLE>
- --------
(1) Represents bonus earned in the current fiscal year, but paid in the
succeeding fiscal year.
(2) Includes annual retainer received for serving as a director.
(3) Consists of 75% cash and 25% Company Common Stock valued as of the first
business day of 1998. 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) 401(k) matching contribution of $10,000; term life insurance premium of
$696.
(6) 401(k) matching contribution of $9,500; term life insurance premium of
$696.
(7) 401(k) matching contribution of $9,790; term life insurance premium of
$864.
(8) 401(k) matching contribution of $7,474; term life insurance premium of
$864.
(9) 401(k) matching contribution of $6,150; term life insurance premium of
$522.
(10) 401(k) matching contribution of $2,550; term life insurance premium of
$216; Mr. Joseph joined the Company in 1997.
5
<PAGE>
Option/SAR Grants in Last Fiscal Year (1)
The following table sets forth certain information regarding stock option
grants to each Named Executive Officer during the fiscal year ended December
31, 1998.
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Appreciation
for Option
Individual Grants(1) Term (2)
-------------------------------------------- --------------
% of Total
Number of Option/SARs Exercise
Securities Granted to or Base
Underlying Employees Price
Options/SARs in Fiscal Per Expiration
Name Granted (#) Year Share($) Date 5%($) 10%($)
- ---- ------------ ----------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
John W. Sandford... -0- -0- -- -- -- --
Richard A. Lund.... 50,000 18.0% 2.375 02/09 74,694 189,288
Edward B. Stephens. 20,000 7.2% 2.375 02/09 29,878 75,715
Richard A. Joseph.. 25,000 9.0% 2.375 02/09 37,347 94,644
</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.
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, 1998. No Named Executive Officer exercised options during 1998.
The Company has no outstanding SARs.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options
End (#) at Fiscal Year End ($)(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Sandford..... 150,000 -0- 154,688 -0-
Richard A. Lund...... 224,000 26,000 240,782 26,719
Edward B. Stephens... 98,000 17,000 94,219 17,969
Richard A. Joseph.... 5,000 20,000 -0- -0-
</TABLE>
- --------
(1) Value is based upon closing price of $2.21875 as reported on the Nasdaq
National Market for December 31, 1998, minus the exercise price, multiplied
by the number of shares underlying the options.
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. Mr. Lund was named Chief
Executive Officer in September 1998. 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
6
<PAGE>
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. Effective December
31, 1998, Mr. Lund and other officers have entered into change in control
agreements pursuant to which the Company has agreed to make certain payments
upon a change in control. Payments vary under the agreements, but may be up to
three times the amount earned and provide for benefits and other perquisites
currently received by the officers. For purposes herein, generally, a "change
in control" is: (i) a sale of over 50% of the stock of the Company measured in
terms of voting power, other than in a public offering or in connection with
acquisition by the Company of a business filing reports under Section 13 or
15(d) of the Securities Exchange Act of 1934; or (ii) the sale by the Company
of over 50% of its business or assets in one or more transactions over a
consecutive 12-month period; or (iii) a merger or consolidation of the Company
with or into any other corporation or corporations such that the shareholders
of the Company prior to the merger or consolidation do not own at least 50% of
the surviving entity measured in terms of voting power; or (iv) the
acquisition by any means of more than 25% of the voting power or Common Stock
of the Company by any person or group of persons excluding shares held by Ms.
Cade or her affiliates (with group defined by the definition under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended); or (v) the
election of directors constituting a majority of the Company's board of
directors pursuant to a proxy solicitation not recommended by the Company's
Board of Directors.
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
following a change of control of the Company. Effective December 31, 1998, Mr.
Stephens and other officers have entered into change in control agreements
pursuant to which the Company has agreed to make certain payments upon a
change in control. Payments vary under the agreements, but may be up to three
times the amount earned and provide for benefits and other perquisites
currently received by the officers.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is composed of Molly
F. Cade, Conrad G. Goodkind, and Terrell L. Ruhlman. Mr. Goodkind is the
Secretary of the Company and a partner in the law firm of Quarles & Brady LLP,
general counsel to the Company, which performed legal services for the Company
in 1998 and is expected to do so in 1999.
7
<PAGE>
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, 1998. The graph is generated by assuming
that $100 was invested at the close of trading on the last trading day of 1993
in each of Cade Common Stock, the Standard & Poors 500 and the
Aerospace/Defense Industry Index, and that all dividends were reinvested.
Comparison of Five-Year Cumulative Total Return*
Cade Industries, Inc., Standard & Poors 500 And Value Line Aerospace/Defense
Index
(Performance Results Through 12/31/98)
[Performance Graph]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cade Industries, Inc. $100.00 $ 91.30 $ 86.96 $182.68 $330.44 $308.73
Standard & Poors 500* $100.00 $101.60 $139.71 $172.18 $229.65 $294.87
Aerospace/Defense* $100.00 $108.86 $168.02 $229.59 $277.71 $261.45
</TABLE>
Assumes $100 invested at the close of trading 12/93 in Cade Industries, Inc.
common stock, Standard & Poors 500 Stock Index and Aerospace/Defense Industry
Index. Source: Value Line, Inc.
*Cumulative total return assumes reinvestment of dividends.
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,
1998, except that Mr. Ruhlman exercised a previously reported option in
February 1998 and reported the transaction in April 1998. 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.
8
<PAGE>
Report of the Compensation Committee of the Board of Directors
Development of Compensation Committee. The Company's Compensation Committee
is composed of three non-employee Directors. The Compensation Committee, which
met three times in 1998, 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 executive
officer's potential compensation is linked to overall Company performance.
Compensation. Until August 31, 1998, the Company's Chief Executive Officer
("CEO") was not a full-time employee of the Company. That CEO's compensation
was primarily based on a subjective determination by the Committee of the
amount necessary to ensure the continued availability of his experience and
knowledge, which was believed to be of substantial value to the Company. This
amount was a function, in part, of the amount of time which the Committee
believed would 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.
Mr. Sandford was granted an additional stock option in connection with his
election as CEO and a performance-based bonus similar to those provided to the
Company's full-time officers.
Effective August 31, 1998, Mr. Lund became CEO. His compensation was
composed of a base salary, cash and stock bonuses, and stock option grants. The
compensation is reviewed by the Committee in February of each year and changes,
if any, typically are effective in the month of May. 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, as determined
subjectively by the Committee.
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. The Committee
may also grant discretionary bonuses, but did not do so for the Named Executive
Officers for 1998.
Stock Incentive Compensation. 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.
In 1998, the Board of Directors adopted, and shareholders approved, the Cade
Industries, Inc. 1998 Omnibus Incentive Stock Plan. The Committee made several
grants to executive officers.
The CEO was eligible to receive a bonus for 1998 of up to 50% of the CEO's
base compensation, based on the Company's performance in fiscal 1998. If the
Company's after-tax consolidated earnings failed to exceed the minimum earnings
target, the amount of the CEO's bonus would be zero. If the Company's after-tax
consolidated earnings exceed the minimum earnings target, the CEO is entitled
to a bonus which would be calculated pursuant to a performance-based formula
weighted as follows: after-tax consolidated earnings, 70%; and cash flow from
operations, 30%. 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 1998. The
bonus paid for 1998 was calculated in accordance with such formula, and was
$105,000 or 50% of base salary. This bonus is worth $105,344 if the stock
portion of the bonus were valued at the date the bonus was awarded.
9
<PAGE>
Tax Deductibility of Executive Compensation. 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, ChairMolly F. CadeTerrell L. Ruhlman
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.
A majority of the votes entitled to be cast by shares entitled to vote,
represented in person or by proxy, constitutes a quorum for action on a matter
at the meeting. Directors are elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election at a meeting at which a
quorum is present. A "plurality" means that the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be elected at the meeting. Shares for which authority is withheld
to vote for director nominees and broker non-votes (i.e., proxies from brokers
or nominees indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares as to a matter
with respect to which the brokers or nominees do not have discretionary power
to vote) are considered present for purposes of establishing a quorum, but will
have no effect on the election of directors except to the extent that the
failure to vote for a director nominee results in another nominee receiving a
larger number of votes. Votes attempted to be cast against a candidate are not
given legal effect and are not counted as votes cast in an election of
directors.
The votes will be counted by the Company's transfer agent, Firstar Bank
Milwaukee, N.A., and certified to the Company in writing.
AUDIT MATTERS
Representatives of Deloitte & Touche LLP, the independent public accountants
who have audited the Company since 1995 will be present at the Shareholders
Meeting to respond to questions and to make a statement if they so desire.
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.
10
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than December
2, 1999, in order to be considered for inclusion in next year's Annual Meeting
Proxy Statement. The Company may use its discretion in voting proxies with
respect to shareholder proposals not included in the 1999 year-end proxy
statement for the 2000 Annual Meeting unless the Company receives notice of the
proposal prior to February 15, 2000.
Cade Industries, Inc.
Conrad G. Goodkind
Secretary
Okemos, Michigan
March 31, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, SHAREHOLDERS ARE REQUESTED
TO COMPLETE, DATE, SIGN AND RETURN THEIR PROXY AS SOON AS POSSIBLE.
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, 1998 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.,
2365 WOODLAKE DRIVE, SUITE 120, OKEMOS, MICHIGAN 48864.
11
<PAGE>
CADE INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 4, 1999
P R O X Y
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MOLLY F. CADE AND JOHN W. SANDFORD, and each of them, are hereby authorized as
Proxies, with full power of substitution, to represent and vote the Common Stock
of the undersigned at the Annual Meeting of Shareholders of Cade Industries,
Inc., a Wisconsin corporation, to be held on Tuesday, May 4, 1999, or any
adjournment thereof, with like effect as if the undersigned were personally
present and voting, upon the following matters:
1. Election of Directors
[_] FOR all nominees listed [_] WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below) nominees listed below
MOLLY F. CADE, CONRAD G. GOODKIND, WILLIAM T. GROSS, RICHARD A. LUND,
JOSEPH R. O'GORMAN, TERRELL L. RUHLMAN, JOHN W. SANDFORD
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, upon such other business as may properly come before the
Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
(Continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Continued from reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1. AND 2.
Dated: ____________________, 1999
____________________________________
____________________________________
Signature(s) of Shareholder(s)
PLEASE SIGN PERSONALLY AS NAME APPEARS AT LEFT.
When signing as attorney, executor, administrator,
personal representative, trustee or guardian, give
full title as such. If signer is a corporation,
sign full corporate name by duly authorized
officer. If stock is held in the name of two or
more persons, all should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE - PLEASE
DO NOT FOLD
