SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
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
FRANKLIN ELECTRIC CO., 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
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.:
....................................................................
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....................................................................
(4) Date Filed:
FRANKLIN ELECTRIC
400 East Spring Street
Bluffton, Indiana 46714
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 13, 1995 at 10:00 A.M., E.S.T.
To the Holders of Shares of Common Stock of
Franklin Electric Co., Inc.
THE ANNUAL MEETING OF SHAREHOLDERS (THE "ANNUAL MEETING") OF
FRANKLIN ELECTRIC CO., INC. (THE "COMPANY"), AN INDIANA
CORPORATION, WILL BE HELD AT THE PRINCIPAL OFFICE OF THE COMPANY,
400 EAST SPRING STREET, BLUFFTON, INDIANA ON APRIL 13, 1995 AT
10:00 A.M., E.S.T., FOR THE FOLLOWING PURPOSES:
1. To elect two directors for terms expiring at the 1998 Annual
Meeting of Shareholders;
2. To ratify the appointment of Deloitte & Touche as
independent auditors for the 1995 fiscal year; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements
thereof.
Only shareholders of record at the close of business on
February 24, 1995 will be entitled to vote at the Annual Meeting.
You are urged to sign and return the enclosed proxy in the
envelope provided, whether or not you plan to attend the Annual
Meeting. If you do attend, you may nevertheless vote in person,
or if any time before the proxy is voted you desire to revoke the
proxy, you may do so by delivering to the Secretary of the
Company written notice of such revocation or by executing and
delivering a subsequently dated proxy.
By order of the Board of Directors.
DEAN W. PFISTER
Dean W. Pfister, Secretary
Bluffton, Indiana
March 10, 1995
FRANKLIN ELECTRIC CO., INC.
400 EAST SPRING STREET
BLUFFTON, INDIANA 46714
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 13, 1995
GENERAL INFORMATION
This Proxy Statement (the "Proxy Statement") and the
enclosed proxy are furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors of Franklin
Electric Co., Inc. (the "Company"), 400 East Spring Street,
Bluffton, Indiana, for use at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on April 13, 1995 and at any
meeting resulting from an adjournment or postponement thereof.
This Proxy Statement will be first mailed to shareholders on or
about March 10, 1995. The Company's Annual Report to
shareholders, including financial statements contained therein,
is being mailed to shareholders together with this Proxy
Statement. Neither the Annual Report nor the financial
statements contained therein are to be considered part of this
soliciting material.
Shareholders are asked to sign and return the enclosed
proxy, whether or not they plan to attend the Annual Meeting. If
the enclosed proxy is properly signed and returned, the shares
represented thereby will be voted in the manner specified in the
proxy. If the shareholder does not specify the manner in which
the proxy shall be voted, it will be voted FOR the election of
the nominees for director as set forth in this Proxy Statement,
FOR the ratification of the appointment of Deloitte & Touche as
independent auditors, and in accordance with the recommendations
of management with respect to other matters that may properly
come before the Annual Meeting. A shareholder who has executed a
proxy has the power to revoke it at any time before it is voted,
by delivering written notice of such revocation to Mr. Dean W.
Pfister, Secretary, 400 East Spring Street, Bluffton, Indiana
46714, by executing and delivering a subsequently dated proxy, or
by attending the Annual Meeting and voting in person.
The expenses of solicitation, including the cost of printing
and mailing, will be paid by the Company. Officers and employees
of the Company, without additional compensation, may request the
return of the proxies personally, by telephone or by telegram.
Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of shares held of
record by such persons, and the Company will reimburse such
entities for reasonable out-of-pocket expenses incurred by them
in connection therewith.
SHAREHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
The Board of Directors of the Company fixed the close of
business on February 24, 1995 as the record date ("Record Date")
for determining shareholders entitled to notice of and to vote at
the Annual Meeting. As of the Record Date, there were 10,000,000
shares of common stock, $.10 par value (the "Common Stock"),
authorized, of which 6,221,522 shares were outstanding. Each
share of Common Stock is entitled to one vote on each matter
submitted to a vote of the shareholders of the Company. Votes
cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for the Annual
Meeting and will be counted as present for purposes of
determining whether a quorum is present. A majority of the
outstanding shares of Common Stock, present in person or
represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. The inspectors
will treat abstentions as shares that are present and entitled to
vote for purposes of determining a quorum, but as unvoted for
purposes of determining the approval of a matter submitted to the
shareholders for a vote. If a broker indicates on a proxy that
it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be voted and
will be disregarded for purposes of determining the approval of a
matter. Brokers who hold shares in street name have the
discretionary authority to vote on the two matters to be
considered at the Annual Meeting.
<TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the persons known by the Company to be the beneficial
owners of more than five percent (5%) of any class of equity securities of the Company as
of February 1, 1995. The nature of beneficial ownership is sole voting and investment
power, unless otherwise noted.
<CAPTION>
NAME AND ADDRESS OF TITLE OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C> <C>
Diane D. Humphrey Common 646,021 10.38
2434 N. Fairway Lane
Bluffton, IN 46714
Patricia Schaefer Common 652,021 <F1> 10.47
405 S. Tara Lane
Muncie, IN 47304
William H. Lawson Common 518,483 <F1> 8.04
7126 Blue Creek
Fort Wayne, IN 46804
Fort Wayne National Common 603,523 <F2> 9.70
Bank
110 W. Berry Street
Fort Wayne, IN 46801
NBD Bancorp, Inc. Common 501,784 <F3> 8.07
611 Woodward Avenue
Detroit, MI 48226
Ruane, Cunniff Common 449,166 <F4> 7.22
& Co., Inc.
1370 Avenue of the
Americas
New York, NY 10019
Marvin C. Schwartz Common 507,160 <F5> 8.15
c/o Neuberger & Berman
605 Third Avenue
New York, NY 10158
Neuberger & Berman Common 336,969 <F6> 5.42
605 Third Avenue
New York, NY 10158
<FN>
<F1> Includes shares issuable pursuant to stock options exercisable within 60 days as
follows: Ms. Schaefer, 6,000 shares; and Mr. Lawson, 224,169 shares.
<F2> Fort Wayne National Bank holds these shares as Trustee under the Company's Employee
Stock Ownership Plan ("ESOP") and Directed Investment Salary Plan ("401(k) Plan").
The 173,362 shares held in the ESOP will be voted pursuant to the direction of the
participants to the extent these shares are allocated to participants' accounts.
Unallocated shares and shares for which no direction is received from participants
will be voted by the Trustee in accordance with the direction of the Employee
Benefits Committee of the Company. In the absence of any direction from the Employee
Benefits Committee, such shares will be voted by the Trustee in the same proportion
that the allocated shares were voted, unless inconsistent with the Trustee's
fiduciary obligations. The 430,161 shares held by the 401(k) Plan will be voted in
accordance with the direction of the Employee Benefits Committee and, in the absence
of any such direction, in the discretion of the Trustee. The Trustee does not have
investment power over any of the shares held by the ESOP or the 401(k) Plan.
<F3> According to a schedule 13G filed with the Securities and Exchange Commission ("SEC")
on February 11, 1994, NBD Bancorp, Inc. has sole voting power with respect to all
shares shown and sole dispositive power with respect to 2,909 of those shares, shared
dispositive power with respect to 360 of those shares and no dispositive power with
respect to 498,515 of those shares.
<F4> According to a Schedule 13G filed with the SEC on February 8, 1995, Ruane Cunniff &
Co., Inc. has sole dispositive power with respect to all of the shares shown and has
sole voting power with respect to 151,200 of those shares.
<F5> According to a Schedule 13D filed with the SEC on January 13, 1994, Marvin Schwartz
has sole dispositive and sole voting power with respect to 422,570 shares and shared
dispositive power and no voting power with respect to 84,590 shares.
<F6> According to a Schedule 13D filed with the SEC on February 10, 1995, Neuberger &
Berman has shared dispositive power with respect to all of the shares shown and has
sole voting power with respect to 83,382 of those shares.
</FN>
</TABLE>
<TABLE>
The following table shows the number of equity securities beneficially owned by
directors, nominees, each of the executive officers named in the "Summary Compensation
Table" below, and all executive officers and directors as a group, as of February 1, 1995.
The nature of beneficial ownership is sole voting and investment power, unless otherwise
noted.
<CAPTION>
NAME OF TITLE OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C> <C>
William W. Keefer Common 19,424 <F1> <F3>
William H. Lawson Common 518,483 <F1> 8.04
John B. Lindsay Common 172,711 <F1> 2.76
Robert H. Little Common 8,042 <F1> <F3>
Patricia Schaefer Common 652,021 <F1> 10.47
Donald J. Schneider Common 30,346 <F1><F2> <F3>
Michael J. Sloan Common 21 <F3>
Gerard E. Veneman Common 8,548 <F1> <F3>
Juris Vikmanis Common 7,000 <F1> <F3>
Howard B. Witt Common 0
Directors and Common 1,416,596 <F1> 21.76
executive
officers as a group
(10 persons)
<FN>
<F1> Includes shares issuable pursuant to stock options exercisable within 60 days as
follows: Mr. Keefer, 4,000 shares; Mr. Lawson, 224,169 shares; Mr. Lindsay, 37,000
shares; Mr. Little, 6,000 shares; Ms. Schaefer, 6,000 shares; Mr. Schneider, 5,000
shares; Mr. Veneman, 3,000 shares; Mr. Vikmanis, 2,000 shares; and Directors and
executive officers as a group, 287,169 shares.
<F2> Includes 97 shares held by Mr. Schneider's wife. Mr. Schneider disclaims beneficial
ownership of these 97 shares.
<F3> Less than 1% of class
</FN>
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, officers and greater than 10%
shareholders of a registered class of the Company's equity
securities to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock of the Company.
Directors, officers and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of
all Section 16(a) reports they file. Based solely on a review of
the copies of these reports furnished to the Company and
representations that no other reports were required to be filed,
the Company believes that during the past fiscal year its
directors, officers and greater than 10% shareholders complied
with all applicable Section 16(a) filing requirements applicable
to them during 1994, except that Mr. Howard B. Witt inadvertently
filed a late Form 5 in March 1995 to report a stock option grant
under the Non-Employee Director Stock Option Plan.
ELECTION OF DIRECTORS
The Company's Board of Directors consists of eight directors
divided into three classes of two or three directors each. Each
year, the directors of one of the three classes are to be elected
to serve terms of three years and until their successors have
been elected and qualified. Two directors are to be elected at
the Annual Meeting this year. The election of a director
requires the affirmative vote of a majority of the shares voted.
William H. Lawson and Donald J. Schneider have been
nominated to serve as directors of the Company. Each nominee is
currently a director of the Company and has indicated his
willingness to serve as a director if elected. If, however, any
nominee is unwilling or unable to serve as a director, it is the
intention of management to nominate such other person as a
director as it may in its discretion determine, in which event
the shares represented by the proxies will be voted for such
other person.
<TABLE>
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The ages, principal occupations during the past five years and certain other
affiliations of the director nominees and the continuing directors, and the years in which
they first became directors of the Company, are as follows:
NOMINEES FOR TERMS EXPIRING IN 1998
<CAPTION>
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
<S> <C> <C> <C>
William H. Lawson, 58 Chairman of the Board, President 1985
Chairman of the Board, and Chief Executive Officer of
President and Company. Director of Skyline
Chief Executive Corporation, Sentry Insurance
Officer a Mutual Company and American
Electronic Components Inc.
Donald J. Schneider, 59 President of Schneider National 1988
Director of the Company Inc., a transportation and
distribution company. Director
of Green Bay Packers and St.
Norbert College.
</TABLE>
<TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1996
<CAPTION>
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
<S> <C> <C> <C>
William W. Keefer, 69 Retired; Chairman of Warner 1968
Director of the Company Electric Brake & Clutch Co.
from 1985 to 1986, a
manufacturer of motion control
devices; formerly President
and Chief Executive Officer
of Warner. Director of Regal
Beloit Corporation.
Juris Vikmanis, 57 Retired; Vice President, 1988
Director of the Company Aerospace Operations, Amphenol
Corporation from 1992 to 1993,
an aerospace company; formerly
Corporate Senior Vice President,
Square D Company until the sale
of the company in 1991; prior
thereto, Executive Vice
President, Industrial Sector,
Square D Company from 1989 to
1990.
Howard B. Witt, 54 Chairman of the Board Appointed
Director of the Company since 1993, President to the
and Chief Executive Board
Officer, Littelfuse, Inc.; by the
a manufacturer of electronic, Directors
electrical and automotive in 1994
fuses.
</TABLE>
<TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<CAPTION>
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
<S> <C> <C> <C>
Robert H. Little, 59 President, Waddle Manufacturing 1987
Director of the Company Inc., a producer of precision
metal fabrications for the
electronic and medical device
industries.
Patricia Schaefer, 64 Director of the Muncie Public 1982
Director of the Company Library; Muncie, Indiana.
Gerard E. Veneman, 74 Retired; President, Nekoosa 1969
Director of the Company Papers Inc. and Executive
Vice President, Great Northern
Nekoosa Corp. from 1970 to 1985,
producers of paper and paper
products. Director, Sentry
Insurance a Mutual Company,
and WCN Bank Corp.
</TABLE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Directors who are not employees of the Company were paid an
annual director's fee of $20,000 plus a fee of $750 for each
regular Board or Board committee meeting attended. Each
committee chairman was paid an additional annual fee of $1,500.
Directors who are employees of the Company received no fees.
Non-employee directors participate in the Non-Employee
Director Stock Option Plan ("Director Plan"). The Director Plan
made available 60,000 shares of Common Stock for issuance
pursuant to the exercise of non-qualified stock options. Under
the Director Plan, the exercise price of shares subject to any
option granted is to be equal to the fair market value of the
Company's shares on the date the option is granted. All options
granted under the Director Plan expire no later than ten (10)
years from the date of their grant.
Each non-employee director who is elected or re-elected
during the term of the Director Plan to serve on the Board of
Directors will automatically be granted an option to purchase
3,000 shares. On April 15, 1994, Robert H. Little, Patricia
Schaefer and Gerard E. Veneman each received an option to
purchase 3,000 shares at an exercise price of $32.50 per share
under the Director Plan. In addition, on August 15, 1994 Howard
B. Witt received an option to purchase 3,000 shares at an
exercise price of $31.00 per share under the Director Plan.
The Company has a Consulting Directors' Plan (the "Plan"),
for non-employee directors who retire from Board service at age
65 or older. Under the Plan, a retiring director may enter into
a consulting agreement with the Company under the terms of which
the consulting director agrees to be available for consultation
from time to time and is entitled to receive an annual fee equal
to the director's fee in effect at retirement, for the same
number of years he served as director (or until his death, if
sooner). Currently Mentor Kraus and Dr. N. A. Lamberti, who
retired in 1985 and 1988 with 29 and 19 years of service,
respectively, participate in this Plan. Messrs. Kraus and
Lamberti each received an annual fee of $15,000 in 1994.
The Board held five (5) regularly scheduled meetings during
1994 and no special meetings. Each director attended 75% or more
of the aggregate meetings of the Board and Board committees of
which he or she was a member.
The committees of the Board are: the Executive Committee,
the Audit Committee, and the Personnel and Compensation
Committee.
EXECUTIVE COMMITTEE. Members of the Executive Committee are
Gerard E. Veneman (Chairman), William W. Keefer and William H.
Lawson. Between the meetings of the Board of Directors, the
Executive Committee handles business which the Board might
otherwise handle. The Executive Committee held no meetings in
1994.
AUDIT COMMITTEE. Members of the Audit Committee are Robert
H. Little (Chairman), William W. Keefer, Patricia Schaefer and
Juris Vikmanis. It is the responsibility of the Audit Committee
to advise and make recommendations to the Board of Directors in
all matters regarding the Company's accounting methods and
internal control procedures. Specific duties of the Audit
Committee include: (i) the review of the scope of the annual
audit by the Company's independent public accountants and the
procedures to be employed and estimated compensation to be paid
therefor, (ii) the review of the audit results and financial
statements with the independent public accountants and the chief
financial officer of the Company, (iii) the review of changes in
accounting policies having a significant effect on the Company's
reports, (iv) the preparation and presentation to the Board of a
report summarizing recommendations with respect to retention or
discharge of the independent public accountants, (v) the review
of letters of recommendation from the independent public
accountants and determining that management has adequately
considered or implemented, or both, such recommendations, and
(vi) meeting periodically with the Company's financial staff to
assure that the internal auditing staff is able to express its
concerns, either directly to the Audit Committee or through the
independent public accountants, and to review the scope of the
internal accounting and auditing procedures. The Audit Committee
held two (2) meetings in 1994.
PERSONNEL AND COMPENSATION COMMITTEE. Members of the
Personnel and Compensation Committee (the "Committee") are Gerard
E. Veneman (Chairman), William W. Keefer, William H. Lawson and
Donald J. Schneider. The Committee determines and approves the
annual salary, bonus and other benefits of the chief executive
officer and the other executive officers and directors of the
Company; reviews and submits to the Board of Directors
recommendations concerning stock plans; and periodically reviews
the Company's policies in the area of management benefits. The
Committee also oversees the Company's management development and
organization structure. The Committee also initiates nominations
of directors, submitting recommendations to the Board for
approval. Nominations for the election of directors may also be
made by any shareholder entitled to vote in the election of
directors, provided that written notice of intent to make a
nomination is given to the Secretary of the Corporation not later
than ninety (90) days prior to the anniversary date of the
immediately preceding annual meeting of shareholders. Such
notice shall set forth: (i) information regarding the proposed
nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC, and (ii) the
consent of such nominee to serve as a director of the Corporation
if so elected. The Personnel and Compensation Committee held two
(2) meetings in 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William H. Lawson, the Chief Executive Officer of the
Company, is a member of the Personnel and Compensation Committee.
Mr. Lawson does not participate in the determination of his
compensation or benefits. Mr. Lawson advises in the awarding of
grants to officers of the Company under the Company's stock
option plans, the 1988 Stock Incentive Award Plan and the 1988
Executive Stock Purchase Plan.
COMPENSATION COMMITTEE REPORT
It is the philosophy of the Personnel and Compensation
Committee of the Board of Directors (the "Committee") of the
Company to maintain a compensation program to attract and retain
executive officers who can successfully build the Company's long-
term strategic capability. The Committee has retained a
compensation consulting firm to provide information on
compensation packages of firms of similar size and industries to
aid in the design of its package for the Company's executive
officers. The Committee encourages superior performance through
the use of annual performance targets as well as incentive
vehicles that more closely align the executive's reward to that
of the shareholders. The chief executive officer is a member of
the Committee. He does not participate in the Committee's
determination of his compensation package.
For the chief executive officer, the current compensation
package includes a base salary, an annual incentive cash bonus
and stock options. The Committee believes the combined value of
base salary plus bonus approximates market value of base salary
and bonus provided to similarly situated executives as reflected
in published market surveys. The Committee believes, however,
that a significant portion of executive officer compensation
should be dependent upon corporate performance. Accordingly,
base salaries have been established somewhat below market levels,
while a greater than average variable incentive bonus may be
achieved.
The Committee has set a benchmark to determine the level, if
any, of the annual incentive cash bonus to be paid. The
benchmark used is pre-tax return on assets. Considering this
ratio and other qualitative measures, a bonus percentage of base
salary is determined. The Committee awarded the chief executive
officer an incentive cash bonus of 70% of base salary. While it
did not do so in 1994, the Committee may cap, modify or eliminate
this bonus at its sole discretion.
As an additional incentive, the Committee makes grants and
awards under the Company's shareholder-approved stock option and
restricted stock plans as well as offering officers the
opportunity to purchase shares under the shareholder-approved
stock purchase plan. The purpose of these plans is to encourage
elective stock ownership, offer long-term performance incentive
and to more closely align the executive's compensation with the
return received by the Company's shareholders. Using
information, observations and recommendations on incentive
compensation programs provided by an outside consultant, the
Committee reviews annually the financial incentives to officers
under prior grants and awards and determines whether additional
grants or awards are appropriate. In 1994, the Committee made a
stock option grant to both the chief executive officer and the
executive vice president. In addition, the Committee made an
award to the executive vice president under the restricted stock
plan. In 1993, the Committee made a stock option grant as part
of the compensation package for the new chief financial officer.
The annual compensation of the other executive officers
includes a base salary and incentive bonus, determined similarly
to that described above for the Chief Executive Officer.
The Committee is currently studying the possible future
application of the limitations on the deductibility of executive
compensation under Section 162(m) of the Internal Revenue Code.
Compliance with Section 162(m) was not required in 1994 as the
compensation paid to any executive officer did not exceed the $1
million limitation.
G. E. Veneman
W. W. Keefer
W. H. Lawson
D. J. Schneider
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total
shareholder return on an investment in (1) the Company's Common
Stock (including reinvestment of dividends in 1993 and 1994 when
the Company paid a dividend on its shares), (2) the Standard &
Poor's 500 Stock Index (including reinvestment of dividends) and
(3) the NASDAQ Non-Financial Stock Index (including reinvestment
of dividends) for the period January 1, 1990 through December 31,
1994. In each case, the graph assumes the investment of $100 on
January 1, 1990.
DOLLARS
500
420<F1>
406<F1>
400
300
282<F1>
212<F1>
200
178<F2> 170<F2>
142<F2> 155<F2> 150<F3> 152<F3>
109<F1> 126<F3> 136<F3>
100 97<F3>
88<F2>
0
1989 1990 1991 1992 1993 1994
YEAR
<F1> FRANKLIN ELECTRIC
<F2> NASDAQ NON-FINANCIAL
<F3> S & P 500
<TABLE>
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the years 1992 through
1994 for the Company's Chief Executive Officer and the Company's two other executive
officers who received compensation in excess of $100,000 during 1994.
<CAPTION>
LONG-TERM COMPENSATION
----------------------
AWARDS
------
SECURITIES
RESTRICTED UNDER- ALL OTHER
ANNUAL COMPENSATION STOCK LYING COMPEN-
-------------------
NAME AND SALARY BONUS AWARD<F1> OPTIONS SATION<F2>
PRINCIPAL POSITION YEAR $ $ $ # $
- - ------------------ ---- ------- ------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William H. Lawson, 1994 300,000 210,000 80,000 14,465
Chairman of the 1993 300,000 210,000 13,209
Board, President 1992 275,000 192,500 11,586
and Chief
Executive Officer
John B. Lindsay, 1994 160,000 112,000 530,000 50,000 5,250
Executive Vice 1993 151,180 105,826 5,676
President 1992 130,000 91,000 5,437
Michael J. Sloan<F3>, 1994 125,000 87,500 5,250
Vice President, 1993 36,458 25,000 50,000 731
Chief Financial
Officer
<FN>
<F1> Mr. Lindsay received an award of 20,000 shares under the 1988 Stock Incentive Award
Plan, with a market value of $530,000 on May 26, 1994 (the date of grant). One-half
of these shares will vest in 1998 if Mr. Lindsay remains an employee with the Company
through that date. The remaining shares will vest in 1999 if the net income for the
1998 fiscal year exceeds 1993 net income by 50%. During the restriction period,
dividends on these shares are paid to Mr. Lindsay. The value of these shares was
$680,000 at December 31, 1994.
<F2> All Other Compensation reflects Company matching contributions to defined
contribution plans for each executive officer, except that the amounts shown for Mr.
Lawson also include premiums incurred by the Company in connection with executive
split-dollar insurance arrangements. Accordingly, the matching contributions and
split-dollar insurance premium payments for Mr. Lawson were as follows: $5,250 and
$9,215 in 1994; $5,676 and $7,533 in 1993; $5,508 and $6,078 in 1992.
<F3> Mr. Sloan joined the Company in September, 1993.
</FN>
</TABLE>
<TABLE>
OPTION GRANTS IN 1994 FISCAL YEAR
<CAPTION>
PERCENT
OF
TOTAL
OPTIONS POTENTIAL
NUMBER OF GRANTED REALIZABLE VALUE
SECURITIES TO EXERCISE AT ASSUMED ANNUAL
UNDERLYING EMPLOYEES OR RATES OF STOCK PRICE
OPTIONS IN BASE APPRECIATION FOR
GRANTED FISCAL PRICE EXPIRATION OPTION TERM
---------------------
NAME (#)<F1> YEAR ($/SH) DATE 5% ($) 10% ($)
- - ---- ------ ---- ------ ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William H. Lawson 80,000 33 26.50 5/25/04 1,333,257 3,378,734
John B. Lindsay 50,000 20 26.50 5/25/04 833,285 2,111,709
Michael J. Sloan - - - - - -
<FN>
<F1> Options were granted on May 26, 1994 and vest at a rate of 20%/year beginning in
1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
1994 FISCAL YEAR-END OPTION VALUES<F1>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE<F2>
- - ---- ------------- ----------------
<S> <C> <C>
William H. Lawson 224,169/64,000 5,860,268/480,000
John B. Lindsay 37,000/40,000 766,875/300,000
Michael J. Sloan 0/50,000 0/237,500
<FN>
<F1> No options were exercised in 1994.
<F2> Based on fair market value of the Common Stock of $34.00 on December 31, 1994.
</FN>
</TABLE>
COMPENSATION PURSUANT TO PLANS
PENSIONS
The Company has three pension plans: the Franklin Electric
Co., Inc. Basic Retirement Plan ("Basic Pension Plan"), the
Franklin Electric Co., Inc. Contributory Retirement Plan
("Contributory Pension Plan"), and the Franklin Electric Co.,
Inc. Pension Restoration Plan ("Restoration Pension Plan"),
(collectively referred to herein as the "Pension Plans").
The following table illustrates the approximate combined
monthly pension benefit payable upon retirement at age 65 under
the Pension Plans, after integration with social security. In
the table, Annual Compensation is based on the highest thirty-six
consecutive months' compensation which includes salary and bonus.
Messrs. Lindsay and Sloan are not currently covered by the
Restoration Pension Plan. Thus, their pension benefit accruals
under the Basic Pension Plan and the contributory Pension Plan
are limited by provisions of the Internal Revenue Code that
restrict to $150,000 the amount of any employee's compensation
that may be counted for pension benefit accrual purposes. (The
$150,000 limit is to be indexed according to cost-of-living.)
Additionally, the Contributory Pension Plan was amended to
provide reduced benefit accruals for individuals hired after
1988. Because Mr. Sloan was hired after 1988, he is covered only
by the lesser benefit accrual formula under the
Contributory
Pension Plan.
<TABLE>
COMBINED ANNUAL PENSION AMOUNT, INCLUDING SOCIAL SECURITY
<CAPTION>
ANNUAL
COMPEN- YEARS OF SERVICE
SATION 10 15 20 25 30 35
- - ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000 $ 76,300 $ 86,600
200,000 70,000 80,000 90,000 100,000 100,000 108,500
250,000 87,500 100,000 112,500 125,000 125,000 130,400
300,000 105,000 120,000 135,000 150,000 150,000 152,300
350,000 122,500 140,000 157,500 175,000 175,000 175,000
400,000 140,000 160,000 180,000 200,000 200,000 200,000
450,000 157,500 180,000 202,500 225,000 225,000 225,000
500,000 175,000 200,000 225,000 250,000 250,000 250,000
550,000 192,500 220,000 247,500 275,000 275,000 275,000
<FN>
Estimated years of service for the named executive officers eligible to receive the
foregoing pension amounts are as follows: Mr. Lawson, 9 years; Mr. Lindsay, 17 years; Mr.
Sloan, 1 year.
</TABLE>
AGREEMENTS
The Company has an employment agreement with William H.
Lawson, Chairman, President and Chief Executive Officer. The
agreement may be terminated by either the Company or Mr. Lawson
upon 90 days advance written notice. Under the agreement, the
Company, depending on the reason for termination of employment,
may be required to pay Mr. Lawson his annual compensation,
including bonus, for a period of one year after termination and
all stock options and stock appreciation rights held by Mr.
Lawson may become immediately exercisable. If termination is
effected in connection with a change in control of the Company,
the Company may be required to pay Mr. Lawson his annual
compensation for up to three years from the date of termination
or change in control, whichever is earlier, and to continue to
provide him with certain benefits under the Company's benefit
plans in which he was a participant at the time of his
termination of employment.
Mr. Lawson owes the Company $812,500 as of February 1, 1995
for amounts borrowed in connection with a stock purchase under
the Company's 1988 Executive Stock Purchase Plan. The borrowing
is evidenced by a non-recourse promissory note bearing no
interest, and the related shares are pledged to secure repayment.
The maximum amount outstanding at any time during the last fiscal
year was $812,500.
RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS
The Board of Directors has appointed, subject to
ratification by the shareholders, the firm of Deloitte & Touche
as auditors for the 1995 fiscal year. Although shareholder
ratification is not legally required, the Board of Directors
believes it advisable to submit its decision to the shareholders.
Deloitte & Touche has acted as auditors for the Company since
1988.
Representatives of Deloitte & Touche are expected to be
present at the Annual Meeting with the opportunity to make a
statement if they desire to do so, and to be available to respond
to questions relating to their examinations of the Company's
financial statements.
SHAREHOLDER PROPOSALS
November 13, 1995 is the date by which proposals of
shareholders intended to be presented at the next annual meeting
must be received by the Company to be considered for the
inclusion in the Company's proxy statement for the 1996 Annual
Meeting.
OTHER BUSINESS
Management has no knowledge of any other matters to be
presented for action by the shareholders at the Annual Meeting.
The enclosed proxy gives discretionary authority to the persons
designated as proxies therein to vote on any additional matters
that should properly and lawfully be presented.
By order of the Board of Directors
Dated: March 10, 1995
Dean W. Pfister, Secretary
