<PAGE>
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
ALLIED PRODUCTS CORPORATION
- --------------------------------------------------------------------------------
(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):
/ / $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:
------------------------------------------------------------------------
/X/ 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>
[LOGO]
10 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
Telephone: (312) 454-1020
TO OUR STOCKHOLDERS:
This letter affords me the opportunity to extend a cordial invitation to all our
stockholders to attend the 1996 Annual Meeting on Thursday, May 23, 1996. At
this meeting there will be ample time to answer your questions and thoroughly
discuss our Company's affairs.
Enclosed you will find the Notice of our Annual Meeting, together with a Proxy
Statement and a Proxy card, and a copy of our 1995 Annual Report. The Proxy
Statement describes the matters to be considered at the meeting. If you are
unable to attend the meeting in person, please complete and return the enclosed
Proxy so that your shares are represented and voted. We would appreciate your
prompt attention to this matter.
Very truly yours,
RICHARD A. DREXLER
PRESIDENT
Chicago, Illinois
April 11, 1996
<PAGE>
[LOGO]
10 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
Telephone: (312) 454-1020
- ------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON May 23, 1996
- ---------------------------------
Notice is hereby given that the Annual Meeting of Stockholders of ALLIED
PRODUCTS CORPORATION (herein referred to as "Allied" or the "Company") will be
held on Thursday, May 23, 1996 at 9:30 o'clock A.M. (Chicago Time) in the
Shareholders Room, 21st Floor, Bank of America, 231 South La Salle Street,
Chicago, Illinois 60697, for the following purposes:
1. To elect three directors in accordance with the Company's By-Laws.
2. To act upon any other business as may properly come before the meeting or
any adjournment or adjournments thereof.
Only stockholders of record as shown by the transfer books of Allied at the
close of business on March 29,1996, are entitled to notice of, and to vote at,
this Annual Meeting.
All stockholders are invited to attend this Annual Meeting in person. Those
stockholders who are unable to attend in person are respectfully urged to
execute and return the enclosed Proxy at their earliest convenience. SINCE
ATTENDANCE IN PERSON OR BY PROXY OF A MAJORITY OF THE OUTSTANDING SHARES IS
REQUIRED AT THE MEETING IN ORDER TO TRANSACT BUSINESS, PROMPTNESS IN RETURNING
THE EXECUTED PROXY WILL BE APPRECIATED. Stockholders who execute a Proxy may
nevertheless attend the meeting and vote their shares in person.
By Order of the Board of Directors
ALLIED PRODUCTS CORPORATION
David B. Corwine
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
April 11, 1996
<PAGE>
- ---------------------------------
PROXY STATEMENT
- ------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OF ALLIED PRODUCTS CORPORATION
May 23, 1996
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of ALLIED PRODUCTS
CORPORATION (herein referred to as "Allied" or the "Company") for use at the
Annual Meeting of Stockholders, to be held on Thursday, May 23, 1996, and at any
and all adjournments thereof. Any Proxy given may be revoked with respect to any
matter by notice in writing to the Secretary of Allied at any time prior to its
use, by delivering another later dated proxy or by voting in person at the
Annual Meeting. Pursuant to Delaware General Corporation Law, only votes cast
"For" a matter constitute affirmative votes. Votes "Withheld" or abstaining from
voting are counted for quorum purposes, but since they are not voted "For" a
particular matter they have the same effect as negative votes or votes "Against"
a particular matter. Broker non-votes, if any, while counted for general quorum
purposes, are not deemed to be present with respect to any matter for which a
broker does not have authority to vote. Accordingly, broker non-votes will not
have an effect on the outcome of the election of directors or any other matters
which are presented at the meeting.
The cost of preparing, assembling and mailing this Proxy Statement and the
material enclosed herewith is being borne by the Company. The Company has
engaged Georgeson & Company Inc. to assist in the solicitation of proxies from
stockholders at an estimated fee of $7,500. Upon request, the Company will
reimburse brokerage houses and other custodians and fiduciaries holding stock of
record for reasonable out-of-pocket expenses incurred in forwarding proxy
solicitation material to the beneficial owners of such stock. Directors,
officers, and certain regular employees of the Company, without additional
compensation, may solicit Proxies personally or by telephone or telegraph. This
Proxy Statement and the enclosed proxy card were first mailed to the
stockholders on or about April 15, 1996.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 29, 1996, as the
record date for the determination of stockholders entitled to notice of this
Annual Meeting, and only stockholders of record on that date will be entitled to
vote thereat.
As of March 29, 1996, 9,364,844 shares of Common Stock (par value $.01 per
share) were issued and outstanding, each of which shares is entitled to one vote
on the election of directors.
Allied's SMART Plan (an employee benefit plan formed pursuant to Section 401(k)
of the Internal Revenue Code) holds 523,421 shares of Common Stock representing
5.59% of the outstanding shares of Allied Common Stock. CTC Illinois Trust
Company acts as trustee for the SMART Plan. Of the total number of shares held
in the SMART Plan, 513,910 shares of Common Stock, representing 5.49% of the
outstanding shares of Allied Common Stock, have been credited to the individual
accounts of the participants in the SMART Plan and will be voted in accordance
with instructions of such participants. Shares in the SMART
2
<PAGE>
Plan with respect to which participants fail to return voting instructions
(other than in the PAYSOP accounts) will be voted on each issue by an advisory
committee composed of three members, Lloyd A. Drexler, S. S. Sherman and Richard
A. Drexler, in the same proportion as all other outstanding shares are voted.
All PAYSOP account shares (approximately 16,200 shares) with respect to which
participants fail to return voting instructions will not be voted. Those shares
held in the SMART Plan which have not been credited to participants' accounts
will be voted by the advisory committee in its discretion.
The Allied Products Corporation Master Trust, which is the trust for the pension
plans of certain employees of the Verson and Bush Hog divisions and certain
former Littell division employees, holds 300,000 shares of Common Stock
representing 3.2% of the outstanding shares of Allied Common Stock. CTC Illinois
Trust Company acts as trustee for the trust.
BENEFICIAL OWNERS
Mr. S. S. Sherman and Messrs. Lloyd A. Drexler and Richard A. Drexler,
collectively, beneficially own more than 5% of Allied Common Stock. Each is a
director of the Company. See the table set forth in "Election of Directors" and
the notes thereto for information concerning their ownership.
The Company has been informed that Dimensional Fund Advisors, Inc.
("Dimensional"), whose address is 1299 Ocean Avenue, Santa Monica, California
90401, is deemed to have beneficial ownership of 517,678 shares of Common Stock
as of December 31, 1995, representing approximately 5.53% of the outstanding
shares of Allied Common Stock. All of those shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company, or
in series of the DFA Investment Trust Company, a Delaware business trust, or the
DFA Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, for all of which Dimensional Fund Advisors,
Inc. serves as investment manager. Dimensional disclaims beneficial ownership of
those shares. It has sole voting power over only 277,784 of those shares.
The Company has been informed that FMR Corp., whose address is 82 Devonshire
Street, Boston, Massachusetts 02109, beneficially owns 583,900 shares of Common
Stock, representing 6.24% of the outstanding shares of Allied Common Stock. It
has sole voting power over only 57,200 of those shares.
The Company has been informed that Neumeier Investment Counsel, whose address is
26435 Carmel Rancho Boulevard, Carmel, California 93923, beneficially owns
664,900 shares of Common Stock representing 7.10% of the outstanding shares of
Allied Common Stock. It has sole voting power over only 452,200 of those shares.
The Company has been informed that Neuberger & Berman L.P., whose address is 605
Third Avenue, New York, New York 10158-3698, beneficially owns 653,700 shares of
Common Stock representing 6.98% of the outstanding shares of Allied Common
Stock. It has voting power over only 407,800 of those shares.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
On January 23, 1996 the Board of Directors of Allied nominated the following
individuals for election as Directors. Each of the individuals is a present
director whose term expires this year and each has been nominated for reelection
for a term expiring in 1999. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting.
THE FOLLOWING SETS FORTH CERTAIN BIOGRAPHICAL INFORMATION, PRESENT OCCUPATION
AND BUSINESS EXPERIENCE FOR THE PAST FIVE YEARS FOR EACH OF THE NOMINEES AS WELL
AS THE TERM OF OFFICE FOR WHICH EACH IS BEING NOMINATED:
CLASS C DIRECTOR (TERM EXPIRES IN 1999)
WILLIAM D. FISCHER, age 67, has been a member of the Board of Directors since
1993. He was President and Chief Operating Officer and a Director of
Chicago-based Dean Foods Co., which processes and distributes dairy and other
foods, from 1989 until December, 1993 when he retired. Prior to that he was Vice
President, Finance, a post he held since 1971. He was a director of Dean Foods
Co. until March 15, 1996. He is also a director of John P. Sanfilippo & Son,
Inc., a processor and marketer of nuts and snacks.
KENNETH B. LIGHT, age 63, has been a member of the Board of Directors since
1993. He became Chief Financial Officer in 1995. He has been Executive Vice
President and Chief Administrative Officer of Allied since 1982 and has served
as Secretary since 1972. Mr. Light joined the Company in 1961 and served as its
General Counsel for more than a decade.
S.S. SHERMAN, age 78, was the Co-Chairman of the Board from June 2, 1992 until
August 18, 1993. He was Chairman of the Board from 1973 until June 2, 1992 and
has been a member of the Board of Directors since 1963.
All of the above individuals are currently directors of the Company. Any
director may resign or may be removed as provided in the By-Laws. It is intended
that proxies received in response to this solicitation will be voted in favor of
the nominees unless otherwise specified in the proxy.
If for any reason any of such nominees should be unable to serve (a situation
which is not presently contemplated), it is intended that the proxies will be
voted for such other person or persons as the Board of Directors shall
designate.
4
<PAGE>
THE FOLLOWING SETS FORTH CERTAIN BIOGRAPHICAL INFORMATION, PRESENT OCCUPATION
AND BUSINESS EXPERIENCE FOR THE PAST FIVE YEARS FOR EACH OF THE OTHER MEMBERS OF
THE BOARD OF DIRECTORS:
CLASS A DIRECTORS (TERM EXPIRES IN 1997)
RICHARD A. DREXLER, age 48, has been Chairman of the Board since August 18,
1993, President since 1982 and Chief Executive Officer since 1986. He has been a
member of the Board of Directors since 1982.
JOHN W. PUTH, age 67, has been a member of the Board of Directors since 1993 and
serves as a Class A Director whose term expires in 1997. He has been President
of J.W. Puth Associates, a consulting/ investment firm, since 1987. From 1983
until 1987 he served as Chairman, President and Chief Executive Officer of
Clevite Industries, Inc., a multi-national manufacturer of valves, hydraulics,
bearings and other parts. Mr. Puth is a member of the boards of L.B. Foster Co.,
a manufacturer of rail products, Lindberg Corporation, a commercial heat
treating company, TNT Freightways Corp., a trucking company, System Software
Associates, Inc., an applications software company, A.M. Castle & Co., a metals
manufacturer, and Brockway Standard, Inc., a container manufacturer. He is also
a director of several private companies.
MITCHELL I. QUAIN, age 44, has been a member of the Board of Directors since
February 1995. Since 1988 he has been a managing director of Schroder Wertheim &
Company and is currently head of Equity Capital Markets. He is also a director
of Strategic Distribution, Inc.
CLASS B DIRECTORS (TERM EXPIRES IN 1998)
LLOYD A. DREXLER, age 78, was the Co-Chairman of the Board from June 2, 1992
until August 18, 1993 and he has been a member of the Board of Directors since
1963. Previously, he was Chairman of the Executive Committee from 1986 until
June 2, 1992. Mr. Drexler is the father of Mr. Richard A. Drexler.
JOHN E. JONES, age 61, has been a member of the Board of Directors since 1974.
Mr. Jones was Chairman of the Board, President and Chief Executive Officer of
CBI Industries, Inc., which is engaged in contracting services and the
manufacture of industrial gases, from 1989 through January 1996, when he
retired. Mr. Jones is a director of NICOR Inc., Amsted Industries Incorporated,
Valmont Industries, Inc. and The Interlake Corporation.
STANLEY J. GOLDRING, age 50, is Managing Partner of Ladenburg, Thalmann &
Company, Inc., an investment banking company. Mr. Goldring has been involved in
various aspects of analytical research, money management and investment banking
over the course of his 25-year career on Wall Street. He has been a member of
the Board of Directors since August 1993.
5
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of March 29, 1996, regarding the
beneficial ownership of capital stock of the Company by each director of the
Company, the Company's Chief Executive Officer, each of the Company's four other
most highly compensated executive officers for fiscal 1995 and the directors and
executive officers of the Company as a group. Except as otherwise indicated, the
shareholders listed in the table have sole voting and investing powers with
respect to the capital stock owned by them.
<TABLE>
<CAPTION>
PERCENT
NAME OF BENEFICIAL OWNER OR GROUP CLASS AMOUNT OF CLASS
- ---------------------------------------------------- ----------- --------------- -----------
<S> <C> <C> <C>
Lloyd A. Drexler.................................... Common 340,618(1) 3.63
Richard A. Drexler.................................. Common 316,193(2) 3.38
William D. Fischer.................................. Common 11,000(3) 0.12
Robert J. Fleck..................................... Common 36,517(4) 0.39
Martin A. German.................................... Common 22,527(5) 0.24
Stanley J. Goldring................................. Common 11,000(3) 0.12
John E. Jones....................................... Common 40,958(3) 0.44
Kenneth B. Light.................................... Common 62,609(6) 0.67
Bobby M. Middlebrooks............................... Common 10,025(7) 0.11
John W. Puth........................................ Common 13,000(3) 0.14
Mitchell I. Quain................................... Common 15,000(3) 0.16
S.S. Sherman........................................ Common 554,566(8) 5.92
All Executive officers and directors as a group (13
persons)........................................... Common 1,487,508(9) 15.88
</TABLE>
- ------------------------
(1) Includes 77,197 shares of restricted stock; 168,708 shares owned by a
partnership of which Mr. Lloyd Drexler is a partner and 27,000 shares owned
by Mr. Drexler's wife and by a family trust of which Mr. Drexler's wife is
the trustee. Also includes 50,600 shares which Mr. Drexler has the right to
acquire by exercise of stock options within sixty days of the date of this
proxy statement.
(2) Includes 37,819 shares of restricted stock; 35,000 shares held by a trust of
which Mr. Richard Drexler is trustee; 100,000 shares owned by a family
corporation, of which Mr. Drexler is President; 35,888 shares credited to
Mr. Drexler's account in the Company's 401(k) Plan and 33,360 shares which
Mr. Drexler has the right to acquire by exercise of stock options within
sixty days of the date of this proxy statement.
(3) Includes 10,000 shares which each of Messrs. Fischer, Goldring, Jones and
Puth and 5,000 shares which Mr. Quain have the right to acquire by exercise
of stock options within sixty days of the date of this proxy statement.
(4) Includes 11,309 shares credited to Mr. Fleck's account in the Company's
401(k) Plan and 24,500 shares which Mr. Fleck has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement.
6
<PAGE>
(5) Includes 13,527 shares credited to Mr. German's account in the Company's
401(k) Plan and 9,000 shares which Mr. German has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement.
(6) Includes 9,198 shares of restricted stock; 29,530 shares which Mr. Light has
the right to acquire by exercise of stock options within sixty days of this
proxy statement; and 23,825 shares credited to Mr. Light's account in the
Company's 401(k) Plan.
(7) Includes 2,067 shares of restricted stock; 4,000 shares which Mr.
Middlebrooks has the right to acquire by exercise of stock options within
sixty days of the date of this proxy statement; and 3,958 shares credited to
Mr. Middlebrooks' account in the Company's 401(k) Plan.
(8) Includes 41,977 shares of restricted stock; 374,917 shares owned by a family
corporation of which Mr. Sherman, his wife and children are stockholders;
and 55,600 shares which Mr. Sherman has the right to acquire by exercise of
stock options within sixty days of the date of this proxy statement.
(9) Includes 285,855 shares which the group has the right to acquire by exercise
of stock options within sixty days of the date of this proxy statement;
106,528 shares credited to the accounts of members of the group in the
Company's 401(k) Plan; and 169,725 shares of restricted stock.
MANAGEMENT COMPENSATION
REPORT OF STOCK OPTION AND COMPENSATION COMMITTEE
The Stock Option and Compensation Committee of the Board of Directors was
comprised during fiscal 1995 of John W. Puth, Chairman, William D. Fischer and
John E. Jones, all outside directors of the Company. The Committee oversees the
administration of the Company's employee benefit plans and establishes policies
relating to compensation of employees. All decisions by the Stock Option and
Compensation Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board, except for decisions about awards under
certain of the Company's stock-based compensation plans, which must be made
solely by the Committee in order for the grants or awards under such plans to
satisfy Rule 16b-3 of the Securities Exchange Act of 1934.
COMPENSATION POLICY
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired Company performance.
- Provide compensation that will attract and retain superior talent and
reward performance.
- Align the executive officers' interests with the success of the Company.
In determining the compensation for the executive officers, the Stock Option and
Compensation Committee took into consideration a number of factors. Salaries
were somewhat adjusted in 1994 to partially catch up with prevailing salaries at
comparable companies. In 1995, the Committee authorized the retention of a
recognized consulting firm in the field of executive compensation. The duties of
each of the executive officers were analyzed and categorized. A statistical
comparison was drawn to a base of comparable companies and, after considering
the performance of each executive, salaries were set within acceptable ranges of
such companies. Similarly, bonuses as a percentage of base salary were set with
7
<PAGE>
the condition that they would be tied into performance of the Company's plan of
operation. Bonuses can exceed the standard if the Company appreciably exceeds
its plan. These decisions were deemed by the Committee to be in keeping with its
policy.
The executive compensation program provides an overall level of compensation
opportunity that is competitive with the manufacturing businesses in which the
Company is engaged as well as with a broader group of companies of comparable
size and complexity. Actual compensation levels may be greater or less than
average competitive levels in surveyed companies based upon annual and long-term
Company performance as well as individual performance. Subject to the
limitations described above, the Stock Option and Compensation Committee uses
its discretion to set executive compensation at levels warranted in its judgment
by external, internal or an individual's circumstances.
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, and various benefits, including medical and life
insurance generally available to employees of the Company.
CEO COMPENSATION
During 1995, the Company's most highly compensated officer was Richard A.
Drexler, Chairman of the Board, President and Chief Executive Officer.
Consistent with its policy, the Stock Option and Compensation Committee reviewed
the performance of Mr. Drexler and made recommendations to the Board concerning
annual compensation (salary plus bonus) and long-term compensation in the form
of stock options. The key measurement during the year involved the successful
management of the Company which attained record earnings and a sharp increase in
the price of its stock. Through Mr. Drexler's efforts, the Company was able to
realize excellent profits for 1994 and 1995.
John W. Puth, Chairman
William D. Fischer
John E. Jones
8
<PAGE>
SUMMARY COMPENSATION TABLE
The table below sets forth certain information regarding compensation paid
during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers, based on salary and bonus earned during fiscal 1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
---------------------------------- COMPENSATION
OTHER ANNUAL AWARDS ALL OTHER
COMPENSATION ------------- COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(A) OPTIONS/SARS(#)(B) ($)(C)
- ------------------------------ ---- --------- -------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 1995 370,000 210,000 2,728 20,000 8,409
Chairman, President and 1994 350,000 157,500 3,192 30,000 9,576
CEO 1993 315,000 74,000 35,000
Kenneth B. Light 1995 211,000 84,000 2,818 10,000 30,000
Executive Vice 1994 187,000 70,000 5,267 20,000 9,576
President, Chief Financial 1993 169,000 42,000 10,000
and Administrative Officer
Martin A. German 1995 200,000 100,000 1,923 10,000 11,514
Senior Vice President 1994 190,000 110,000 5,517 12,000 9,576
1993 176,000 110,000 5,000
Bobby M. Middlebrooks 1995 200,000 76,400 10,000
Senior Vice President 1994 191,000 72,400 10,000
1993 181,000 30,000 5,000
Robert J. Fleck 1995 132,000 37,500 5,000 7,466
Vice President & Chief 1994 125,000 28,000 7,500 7,589
Accounting Officer 1993 113,000 12,000 1,500
</TABLE>
- ------------------------
(A) While each named executive officer received certain perquisites and other
benefits in each of the years shown, the value of these amounts are not
shown, in accordance with the regulations of the Securities and Exchange
Commission, since such benefit did not exceed in aggregate the lesser of
$50,000 or 10% of an individual's salary and bonus in such year. The amounts
shown represent the Medicare Hospital Insurance taxes paid by the Company in
1995 and 1994 on behalf of each executive on the value of the increase in
the executive's vested accrued benefit in the Executive Retirement Plan as
of 12/31/95 and 12/31/94 (see "Retirement Plans" elsewhere in this
document). No payments were made in 1993.
(B) No stock appreciation rights were granted to the named executive officers in
any of the three years. See "Option Grants During 1995 Fiscal Year" for
description of options granted.
(C) Amounts shown consist of Company contributions to defined contribution
plans.
9
<PAGE>
OPTION GRANTS DURING 1995 FISCAL YEAR
The following table provides information relating to options granted to the
named executive officers during fiscal 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
---------------------------------------------------- STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS EXERCISE OPTION TERM(2)
GRANTED GRANTED IN PRICE EXPIRATION --------------------
NAME (#)(1) FISCAL YR. ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------- ----------- ------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 20,000 17.5 14.25 1/3/2005 179,200 454,200
Kenneth B. Light 10,000 8.8 14.25 1/3/2005 89,600 227,100
Martin A. German 10,000 8.8 14.25 1/3/2005 89,600 227,100
Bobby M. Middlebrooks 10,000 8.8 14.25 1/3/2005 89,600 227,100
Robert J. Fleck 5,000 4.4 14.25 1/3/2005 44,800 113,550
</TABLE>
- ------------------------
(1) All options are non-qualified and have exercise prices equal to the fair
market value of Allied Common Stock on the date of grant. Each option is
exercisable as to 50% of the shares on the first anniversary date and as to
all shares on the second anniversary date and thereafter, and each option
includes the right to pay the exercise price in cash or shares of Allied
Common Stock.
(2) The amounts shown in these columns are calculated based upon assumed annual
apreciation rates of 5% and 10%, as set by the Securities and Exchange
Commission, and are not intended to be forecasts of future appreciation of
Allied Common Stock. If the assumed appreciation rates of 5% and 10% over
the life of the options are achieved, the value of Allied Common Stock at
the end of the period would be $23.21 and $36.96, respectively.
OPTION EXERCISES DURING 1995 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The Company does not have any outstanding stock appreciation rights. None of the
named executive officers exercised options during fiscal 1995. The following
table provides information relating to the value of options held by the named
executive officers at the end of 1995:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
END OF 1995(#) END OF 1995($)(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Richard A. Drexler 178,360/35,000 2,125,000/357,000
Kenneth B. Light 86,530/20,000 990,000/212,000
Martin A. German 38,500/16,000 327,000/167,000
Bobby M. Middlebrooks 36,940/16,000 188,000/167,000
Robert J. Fleck 27,000/8,750 29,500/92,000
</TABLE>
- ------------------------
(1) The closing price for the Company's Common Stock as reported by the New York
Stock Exchange on 12/29/95 was $24.00 per share. Value is calculated on the
basis of the difference between the option exercise price and $24.00
multiplied by the number of shares of Allied Common Stock underlying the
option.
10
<PAGE>
RETIREMENT PLANS
Mr. Bobby M. Middlebrooks is a participant in the Bush Hog Segment of the Allied
Products Corporation Retirement Plan, a defined benefit plan. As such, upon
retirement he will be entitled to the following monthly benefit: one percent of
his final monthly salary multiplied by the number of years of service to the
Company. Assuming Mr. Middlebrooks' retirement at age 65 (he is now 60 years
old), Mr. Middlebrooks would be entitled to a pension of approximately $6,400
per month.
Effective January 1, 1994, the Company entered into agreements with Messrs.
Richard Drexler, German and Light to provide retirement benefits pursuant to an
Executive Retirement Plan adopted by the Board of Directors. Each of the
participants shall be eligible, upon reaching Normal Retirement Date (which is
defined as the earlier of age sixty-five or completion of twenty-five years of
service, but in no event prior to reaching age fifty-five), to receive a
retirement benefit equal to three times his final average annual compensation
(which is defined as the average of the participant's compensation during the
thirty-six months prior to the participant's separation from service). Such
benefit shall be paid to participants in 120 equal monthly installments
commencing on the month following the date the participants terminate service
with the Company. If the participant dies during such period, the unpaid
remaining monthly installments will be paid to the participant's named
beneficiary or to his estate. Based on the average compensation received during
the past three years, the participants, if vested, would receive on the normal
retirement date the following aggregate benefits (payable over ten years): Mr.
Richard Drexler - $1,475,000; Mr. German - $886,000; Mr. Light - $763,000.
Deducted from such sums are the sums such participants shall receive from a new
defined contribution plan implemented by the Company on January 1, 1995 (see
"Target Benefit Plan").
TARGET BENEFIT PLAN
Effective January 1, 1995, the Company implemented a new defined benefit plan
called "The Target Benefit Plan". The purpose of the plan is to provide
retirement benefits for certain employees (i.e., those employees who are not a
part of an established pension plan), taking into consideration the employee's
age, years of service and compensation. The plan, which is funded solely by the
Company, sets forth a "Target" benefit amount to be paid to the employee upon
reaching age 65. The target benefit is one-half of one percent of the employees'
final average salary (the average of taxable earnings over the last five years
of service with the Company) multiplied by all years of service with the
Company. The amount contributed is actuarially derived and is based on the
assumption that the employees will continue to work for the Company until age
65; that money in the plan will grow at a specified rate of earnings over time
(although not guaranteed); and that salaries will increase at a specified rate
over time (although not guaranteed). Since the employees make their own
investment decisions, the target benefit is only an estimate and will vary based
on the actual earnings of each account. Based on the most recent estimate, the
annual target benefit for the named officers (other than Bobby M. Middlebrooks
who is a participant in a pension plan) is as follows: Richard Drexler $32,188;
Kenneth Light $27,602; Martin German $11,188; Robert Fleck $28,750. With respect
to Messrs. Drexler, Light and German, the actual benefits paid during the first
ten years of retirement will be deducted from the sums payable under the
Executive Retirement Plan (see "Retirement Plans" above).
TERMINATION AGREEMENTS
Agreements between the Company and Messrs. Richard Drexler, Light, German and
Middlebrooks provide that, if within one year following a defined change in
ownership or control of the Company there shall be an involuntary termination of
such executive's employment, or if there shall be defined patterns of
11
<PAGE>
activity during such period by the Company causing such executive to resign,
then, subject to prevailing tax laws and regulations, the executive shall be
entitled to payments equal approximately to three years' compensation.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the Common
Stock of the Company for the last five fiscal years with the cumulative total
return on the S&P 500 Index and the S&P Machinery-Diversified Index over the
same period (assuming the investment of $100 in the Company's Common Stock, the
S&P 500 Index and the S&P Machinery-Diversified Index at the end of 1990, and
reinvestment of all dividends).
COMPARISON OF 5 YEAR TOTAL RETURN
AMONG ALLIED PRODUCTS CORPORATION, S&P 500 INDEX & S&P
MACHINERY DIVERSIFIED INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ALLIED PRODUCTS S&P 500 S&P MACHINERY - DIVERSIFIED
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 96.20 130.47 118.88
1992 92.30 140.41 121.30
1993 384.60 154.56 179.60
1994 440.80 156.60 174.83
1995 738.00 215.75 215.45
</TABLE>
12
<PAGE>
FUNCTIONING OF THE BOARD AND COMMITTEES
Allied's Board of Directors presently has an Executive Committee, an Audit
Committee, a Stock Option and Compensation Committee and a Nominating Committee.
In 1995, each of the outside directors received the sum of $15,000 annually for
his services as a director and the chairman of each committee (if a non-employee
of the Company) received the additional sum of $3,000 annually. Each
non-employee director of the Company also received $500 for each meeting of the
Board and, except for the Executive Committee, for each committee meeting which
he attended.
Members of the Executive Committee are Messrs. R. Drexler (Chmn.), L. Drexler
and Sherman. During 1995, the Committee met on five occasions to exercise the
powers of the Board of Directors in the management of the business and affairs
of the Company.
Members of the Audit Committee are Messrs. Fischer (Chmn.), Goldring, Jones,
Puth and Quain. During 1995, the Committee met on three occasions to review and
make recommendations to the full Board with respect to the scope and results of
the annual audit, and the selection of independent public accountants.
Members of the Stock Option and Compensation Committee are Messrs. Puth (Chmn.),
Jones and Fischer. During 1995, the Committee met on two occasions to review and
make recommendations to the full Board with respect to officers' salaries,
options and corporate incentive compensation plans.
Members of the Nominating Committee are Messrs. Jones (Chmn.), Goldring,
Fischer, Puth, R. Drexler, L. Drexler and Sherman. The Committee met once in
1995.
Allied's Board of Directors met on five occasions during 1995. All of the
current directors attended at least 75% of the meetings of the Board and the
respective committees to which they belong.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
During 1995, upon the recommendation of Allied's Audit Committee and approval by
its Board of Directors, Allied engaged Coopers & Lybrand, L.L.P. as its
independent public accountants to perform the following audit services:
examination of Allied's annual consolidated financial statements, assistance and
consultation in connection with various accounting matters and other non-audit
professional services.
The appointment of auditors is approved annually by the Board of Directors. The
decision of the Board of Directors is based on the recommendations of the Audit
Committee. In making its recommendations, the Audit Committee reviews both the
audit scope and estimated audit fees for the coming year. At its October 18,
1995 meeting, the Audit Committee reviewed and approved the services described
above as well as the services to be performed in 1996 and concluded that they do
not impair the independence of the accountants.
Representatives of Coopers & Lybrand, L.L.P. will be present at the Annual
Meeting, will be given an opportunity to make any comments they wish, and will
be available to respond to any questions.
13
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission.
Based solely on its review of such reports received by it, the Company believes
that during fiscal year 1995 all filing requirements applicable to its officers
and directors were complied with.
STOCKHOLDER PROPOSAL
A stockholder proposal must be received by the Secretary of Allied on or before
December 12, 1996 for inclusion in the Proxy Statement and form of proxy
relating to Allied's 1997 Annual Stockholders' meeting.
GENERAL
A quorum at this Annual Meeting is a majority of the outstanding shares entitled
to vote thereat.
Allied has no knowledge of any matters, other than those set forth in this Proxy
Statement or referred to in the accompanying Notice of Annual Meeting of
Stockholders, which will be presented at the Annual Meeting.
By Order of the Board of Directors
ALLIED PRODUCTS CORPORATION
DAVID B. CORWINE
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
April 11, 1996
14
<PAGE>
PROXY ALLIED PRODUCTS CORPORATION PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS--
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 23, 1996
The undersigned hereby appoints S. S. Sherman, Lloyd A. Drexler and Richard
A. Drexler, and each of them, Proxies, with the powers the undersigned would
possess if personally present, to vote all shares of the undersigned in Allied
Products Corporation at the annual meeting of the stockholders to be held on May
23, 1996, at 9:30 A.M., Chicago time, and at any adjournment thereof, for the
purpose of acting upon the proposals referred to herein in accordance with the
designations below, and of acting in their discretion upon such other matters as
may properly come before the meeting.
<TABLE>
<S> <C> <C>
ELECTION OF DIRECTORS:
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed below (except as to vote for all
marked to the contrary nominees listed below
below)
</TABLE>
<TABLE>
<S> <C> <C>
WILLIAM D. FISCHER KENNETH B. LIGHT S. S. SHERMAN
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through that nominee's name.
(Continued and to be signed on other side)
<PAGE>
IF YOU SIGN AND RETURN THIS PROXY, THE SHARES REPRESENTED HEREBY WILL BE
VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE HEREON. IF NOT OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR.
DATED: ____________________, 1996
___________________________(L.S.)
___________________________(L.S.)
IMPORTANT: Please sign exactly as
your name or names appear on the
stock certificate or
certificates, and when shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustees or
guardian, give your full title as
such. If the signatory is a
corporation or partnership sign
the full corporate or partnership
name by duly authorized officer
or partner.
NOTE: Please date, sign and mail
this proxy in the enclosed
envelope. No postage is required
for mailing in the United States.
<PAGE>
FORM OF DIRECTION
ALLIED PRODUCTS CORPORATION
SMART PLAN
DIRECTIONS FOR VOTING SHARES OF ALLIED PRODUCTS CORPORATION (ALLIED) HELD IN
TRUST FOR THE EMPLOYEE
The undersigned hereby authorizes the Advisory Committee for the
above-captioned plan (the "Plan") to direct the Trustee for the Plan to vote at
the Annual Meeting of Stockholders of Allied on May 23, 1996 or at any
adjournments thereof, all shares of Allied stock credited to the account of the
undersigned under the Trust for such Plan at the close of business on December
31, 1995, as directed below on the following matters, and, in their discretion,
on any other matters that may come before the meeting:
ELECTION OF / / FOR all nominees / / WITHHOLD AUTHORITY
DIRECTORS: listed below to vote for all
nominees listed below
<TABLE>
<S> <C> <C>
WILLIAM D. FISCHER KENNETH B. LIGHT S. S. SHERMAN
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through that nominee's name.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
IF YOU SIGN AND RETURN THIS DIRECTION, THE SHARES REPRESENTED HEREBY WILL BE
VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE HEREON. SMART SHARES FOR WHICH NO
INSTRUCTIONS ARE RECEIVED WILL BE VOTED IN THE SAME PROPORTION AS NON-SMART
SHARES ARE VOTED.
Dated: .................. , 1996
........................ (L.S.)
Signature
NOTE: PLEASE DATE, SIGN AND MAIL
THIS DIRECTION IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED
FOR MAILING IN THE UNITED STATES.
