<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):
/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:
------------------------------------------------------------------------
(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 1997 Annual Meeting on Wednesday, May 28, 1997. 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 1996 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 14, 1997
<PAGE>
[LOGO]
10 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
Telephone: (312) 454-1020
- ------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON May 28, 1997
- ---------------------------------
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 Wednesday, May 28, 1997 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 consider and act upon a proposal to approve a new 1997 Incentive Stock
Plan.
3. 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 April 7, 1997, 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 14, 1997
<PAGE>
- ---------------------------------
PROXY STATEMENT
- ------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OF ALLIED PRODUCTS CORPORATION
May 28, 1997
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 Wednesday, May 28, 1997, 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 16, 1997.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 7, 1997, 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 April 7, 1997, 8,079,050 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 455,773 shares of Common Stock representing
5.6% of the outstanding shares of Allied Common Stock. CTC Illinois Trust
Company acts as trustee for the SMART Plan. The shares held in the SMART Plan
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 Plan with respect to which participants fail to return
voting instructions (other than in the PAYSOP accounts) will be voted on
2
<PAGE>
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 15,000
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.
BENEFICIAL OWNERS
Mr. S. S. Sherman and Messrs. Lloyd A. Drexler and Richard A. Drexler combined,
directors of the Company, beneficially own more than 5% of Allied Common Stock.
See the table set forth under the caption "Election of Directors - Principal
Stockholders and Management Ownership" and the notes thereto for information
concerning their ownership.
The Company has been informed that The Prudential Insurance Company of America,
whose address is 751 Broad Street, Newark, New Jersey, beneficially owns
1,127,300 shares of Common Stock representing approximately 14.0% of the
outstanding shares of Allied Common Stock. It has sole voting power over only
719,600 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 718,100 shares of
Common Stock representing approximately 8.9% of the outstanding shares of Allied
Common Stock. It has sole voting power over only 337,100 shares.
The Company has been informed that Neumeier Investment Counsel, whose address is
26435 Carmel Rancho Boulevard, Carmel, California 93923, beneficially owns
631,950 shares of Common Stock representing approximately 7.8% of the
outstanding shares of Allied Common Stock. It has sole voting power over only
311,700 shares.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
On February 18, 1997 the Board of Directors of Allied nominated the following
three individuals to run 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 2000. 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 A DIRECTORS (TERM EXPIRES IN 2000)
RICHARD A. DREXLER, age 49, 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. Mr. Drexler is a director of NACO,
a private company engaged in the manufacture of steel castings for the railroad
industry.
JOHN W. PUTH, age 68, has been a member of the Board of Directors since 1993. 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, a trucking company, System Software
Associates, an applications software company, A.M. Castle, a metals
manufacturer, and Brockway Standard, a container manufacturer. He is also a
director of several private companies.
MITCHELL I. QUAIN, age 45, has been a member of the Board of Directors since
February, 1995. Since 1988 he has been a managing director of Schroder Wertheim
& Company, an investment banking firm, and is currently co-head of the
Industrial Manufacturing Group. Schroder Wertheim & Company served as an
independent buying agent during 1996 with respect to the Company's share
repurchase program and accordingly received commissions from the Company. He is
also a director of Mechanical Dynamics, Inc. and Strategic Distribution, Inc.
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE THREE
NOMINEES FOR DIRECTOR.
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 B DIRECTORS (TERM EXPIRES IN 1998)
LLOYD A. DREXLER, age 79, 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 62, 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. Mr. Jones is a
director of NICOR Inc., Amsted Industries Incorporated, Valmont Industries, Inc.
and The Interlake Corporation.
STANLEY J. GOLDRING, age 51, is Senior Managing Director of J. W. Charles, Inc.,
an investment banking company. Prior to December 13, 1996, Mr. Goldring was
Senior Managing Director of Ladenburg, Thalman & Company, Inc., an investment
banking company, for thirteen years. Ladenburg, Thalman & Company, Inc. served
as an investment manager for certain funds held by the trustee for certain of
the Company's defined benefit pension plans and accordingly received a
management fee from the trustee. 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.
CLASS C DIRECTORS (TERM EXPIRES IN 1999)
WILLIAM D. FISCHER, age 69, 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 Company 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 which processes and distributes dairy and other foods
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 64, 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 Products since 1982 and
served as Secretary from 1972 to 1995. Mr. Light joined the Company in 1961 and
served as its General Counsel for more than a decade.
S.S. SHERMAN, age 79, 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.
5
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of April 7, 1997, 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 1996 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 314,800(1) 3.90
Richard A. Drexler.................................. Common 379,092(2) 4.69
William D. Fischer.................................. Common 11,750(3) *
Robert J. Fleck..................................... Common 36,017(4) *
Martin A. German.................................... Common 36,027(5) *
Stanley J. Goldring................................. Common 11,750(3) *
John E. Jones....................................... Common 41,708(3) *
Kenneth B. Light.................................... Common 75,104(6) *
Bobby Middlebrooks.................................. Common 15,025(7) *
John W. Puth........................................ Common 13,750(3) *
Mitchell I. Quain................................... Common 19,250(8) *
S.S. Sherman........................................ Common 524,902(9) 6.50
All Executive officers and directors as a group (14
persons)........................................... Common 1,511,242(10) 18.71
</TABLE>
- ------------------------
* Less than 1% of class.
(1) Includes 91,229 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 10,750 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 37,809 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 58,360 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 10,750 shares which each of Messrs. Fischer, Goldring, Jones and
Puth has 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 24,000 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) Consists of 13,527 shares credited to Mr. German's account in the Company's
401(k) Plan and 21,500 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; 42,030 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; 9,000 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 10,250 shares which Mr. Quain has the right to acquire by exercise
of stock options within sixty days of the date of this proxy statement and
3,200 shares owned by his children.
(9) Includes 62,163 shares of restricted stock; 374,917 shares owned by a family
corporation of which Mr. Sherman, his wife and children are stockholders;
and 10,750 shares which Mr. Sherman has the right to acquire by exercise of
stock options within sixty days of the date of this proxy statement.
(10) Includes 256,905 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 203,355 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 1996 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 are 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
7
<PAGE>
acceptable ranges of such companies. Similarly, bonuses as a percentage of base
salary were set with 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 1996, 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 1995 and 1996.
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 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
---------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/ COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (A) SARS(#)(B) ($)(C)
- ------------------------------ ---- --------- -------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 1996 400,008 240,500 1,378 60,000 8,409
Chairman, President and CEO 1995 370,000 210,000 2,728 20,000 8,409
1994 350,000 157,500 3,192 30,000 9,576
Kenneth B. Light 1996 225,000 107,500 1,423 25,000 30,000
Executive Vice President, 1995 211,000 84,000 2,818 10,000 30,000
Chief Financial and 1994 187,000 70,000 5,267 20,000 9,576
Administrative Officer
Martin A. German 1996 220,000 125,000 971 20,000 11,515
Senior Vice President 1995 200,000 100,000 1,923 10,000 11,514
1994 190,000 110,000 5,517 12,000 9,576
Bobby Middlebrooks 1996 210,000 50,000 0 5,000 0
Senior Vice President 1995 200,000 76,400 0 10,000 0
1994 191,000 72,400 0 10,000 0
Robert J. Fleck 1996 137,000 40,000 0 3,000 7,465
Vice President & Chief 1995 132,000 37,500 0 5,000 7,466
Accounting Officer 1994 125,000 28,000 0 7,500 7,589
</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
$50,000 or 10% of an individual's salary and bonus in such year. The amounts
shown represent the Medicare Hospital Insurance taxes paid by the Company on
behalf of each executive on the value of the increase in the executive's
vested accrued benefit in the Executive Retirement Plan (see "Retirement
Plans" elsewhere in this document).
(B) No stock appreciation rights were granted to the named executive officers in
any of the three years. See "Option Grants for 1996 Fiscal Year" for
description of options granted.
(C) Amounts shown consist of Company contributions to defined contribution
plans.
9
<PAGE>
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information relating to options granted to the
named executive officers during fiscal 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION FOR
OPTIONS OPTIONS EXERCISE OPTION TERM(2)
GRANTED GRANTED IN PRICE EXPIRATION ----------------------
NAME (#)(1) FISCAL YR. ($/SH) DATE 5% ($) 10% ($)
- ----------------------------- ----------- ------------- ----------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 30,000 14.85 22.875 01/03/2006 431,579 1,093,706
30,000 14.85 24.125 11/20/2006 455,162 1,153,471
Kenneth B. Light 15,000 7.43 22.875 01/03/2006 215,789 546,853
10,000 4.95 24.125 11/20/2006 151,721 384,490
Martin A. German 15,000 7.43 22.875 01/03/2006 215,789 546,853
5,000 2.48 24.125 11/20/2006 75,860 192,245
Bobby Middlebrooks 5,000 2.48 24.125 11/20/2006 75,860 192,245
Robert J. Fleck 3,000 1.49 24.125 11/20/2006 45,516 115,347
</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 of the date of
grant and as to the remaining 50% of the 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
appreciation 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.
10
<PAGE>
OPTION EXERCISES DURING 1996 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The Company does not have any outstanding stock appreciation rights. The
following table provides information relating to the exercise of options during
1996 and the value of options held by the named executive officers at the end of
1996:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE END OF 1996(#) END OF 1996($)(1)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------ ------------- ----------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Richard A. Drexler 135,000 2,067,050 58,360/45,000 620,144/272,100
Kenneth B. Light 52,000 894,410 37,030/22,500 420,194/185,400
Martin A. German 24,500 366,523 16,500/17,500 152,620/157,250
Bobby Middlebrooks 27,940 297,832 9,000/5,000 101,020/28,150
Robert J. Fleck 24,500/5,500 517,345/55,640
</TABLE>
- ------------------------
(1) The closing price for the Company's Common Stock as reported by the New York
Stock Exchange on 12/31/96 was $29.75 per share. Value is calculated on the
basis of the difference between the option exercise price and $29.75
multiplied by the number of shares of Common Stock underlying the option.
RETIREMENT PLANS
Mr. Bobby Middlebrooks is a participant in the Bush Hog Division Salaried
Pension 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 61 years old) at his current
salary, Mr. Middlebrooks would be entitled to a pension of $6,350 per month.
Assuming Mr. Middlebrooks' salary is increased by 5% per year until retirement,
he would be entitled to a pension of $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) 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 participant
terminates 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. In lieu of monthly payments, the participant
may elect to receive a lump sum cash payment equal to the net present value of
his benefits. 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 -
$1,728,000; Mr. German - $945,000; Mr. Light - $884,500. Benefits payable under
the Executive Retirement Plan are reduced to the extent of payments received
under the Target Benefit Plan described below.
11
<PAGE>
TARGET BENEFIT PLAN
Effective January 1, 1995 the Company implemented a 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 by the Company 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 with respect to contributed amounts, 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 Middlebrooks who is a participant in a pension plan) is as
follows: Richard Drexler $32,188; Kenneth Light $10,847; Martin German $11,188;
Robert Fleck $28,750. With respect to Messrs. Drexler, Light and German, the
actual benefits paid under the Target Benefit Plan during the first ten years of
retirement will reduce amounts payable under the Executive Retirement Plan
described above.
TERMINATION AGREEMENTS
Agreements between the Company and Messrs. Richard Drexler, Light, German and
Middlebrooks provide that, if within one year following a specified change in
ownership or control of the Company there shall be an involuntary termination of
such executive's employment, or if there shall be certain patterns of 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.
12
<PAGE>
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 1991, 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>
1991 $100.00 $100.00 $100.00
1992 96.00 107.60 102.00
1993 400.00 118.50 151.10
1994 460.00 120.00 147.10
1995 770.40 165.10 181.50
1996 958.40 203.00 226.20
</TABLE>
PROPOSAL 2: ADOPTION OF 1997 INCENTIVE STOCK PLAN
The 1997 Incentive Stock Plan (the "Plan" or the "1997 Plan") was adopted by the
Board of Directors of the Company on March 31, 1997, subject to the approval of
the shareholders of the Company at its next regularly scheduled Annual Meeting.
The Plan was adopted to replace the Company's 1990 Incentive Stock Plan and 1993
Directors Incentive Stock Plan, each of which has almost exhausted the number of
shares authorized to be issued in accordance therewith. The Plan permits a
committee of the Company's Board of Directors to grant
13
<PAGE>
incentive awards ("Incentives") in the form of non-qualified stock options
(NQSOs), incentive stock options (ISOs), stock awards including restricted
stock, stock appreciation rights (SARs) and performance units to key employees
and non-employee directors. The purpose of the Plan is to enable the Company to
attract, retain and reward key employees and non-employee directors by offering
such individuals an opportunity to have a greater proprietary interest in and a
closer identity with the Company and its financial success.
The Plan has been designed to comply with Section 162(m) of the Internal Revenue
Code of 1986 (the "Code"), which generally denies a corporate tax deduction for
annual compensation exceeding $1,000,000 paid to the chief executive officer and
the four other most highly compensated officers of a public company ("Covered
Employees"). Certain types of compensation, including performance-based
compensation, are generally excluded from this deduction limit. In an effort to
ensure that stock awards under the Plan will qualify as performance-based
compensation, the Plan is being submitted to shareholders for approval at the
Annual Meeting. While the Company believes that compensation payable pursuant to
the Plan generally will be deductible for federal income tax purposes, under
certain circumstances such as a change in control, compensation not qualified
under Section 162(m) of the Code may be payable pursuant to the provisions of
the Plan. By approving the Plan, the shareholders will be approving, among other
things, the performance measures, eligibility requirements and limits on various
stock awards contained therein.
Set forth below is a summary of certain important features of the Plan, which
summary is qualified in its entirety by reference to the Plan, which is
available upon written request to the Secretary of the Company.
ADMINISTRATION
The Plan will be administered by a committee (the "Committee") of the Board of
Directors. To the extent required to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), each member of the Committee will
qualify as a "non-employee director." To the extent required to comply with the
performance-based compensation exemption under Section 162(m) of the Code, each
member of the Committee will qualify as an "outside director". Among other
things, the Committee has the authority to select individuals for participation,
to determine the type of Incentive to be awarded as well as the number of shares
of Allied Common Stock to be covered by such Incentive, and to determine the
terms and conditions of any such Incentive. The Committee also will have the
authority to construe and interpret the Plan, to establish, amend or waive rules
for its administration, accelerate the exercisability of any Incentive, and
amend the terms and conditions of outstanding Incentives. However, the Committee
shall have no authority to take any action to the extent that such action or the
Committee's ability to take such action would cause any Incentive granted to any
Covered Employee to fail to qualify as "performance-based compensation" under
Section 162(m) of the Code.
ELIGIBILITY
Incentive awards under the Plan may be granted to employees of the Company or
any subsidiary, including officers of the Company or any subsidiary, and
non-employee directors whose participation the Committee determines is in the
best interests of the Company.
NUMBER OF SHARES
The Plan authorizes the issuance of up to 500,000 shares of Common Stock
pursuant to the grant or exercise of stock options, including ISOs and NQSOs,
SARs, restricted stock and performance units. If any Incentive lapses, expires,
terminates, is forfeited or canceled without the issuance of shares or the
14
<PAGE>
payment of cash, the Common Stock subject to or reserved for such Incentive may
be used again for new Incentives, provided that in no event may the number of
shares of Common Stock issued under the Plan exceed the total number of shares
reserved for issuance. Any shares withheld or surrendered to pay withholding
taxes or withheld or surrendered in full or partial payment of the exercise
price of an option or the purchase price of any other Incentive will be added
back to the aggregate number of shares available for issuance. No Covered
Employee may be granted any stock options or stock awards for more than 100,000
shares in any calendar year or any performance unit award with respect to any
performance period (i) in an aggregate amount payable in cash in excess of
$400,000, or (ii) in excess of 100,000 shares. Subject to the foregoing limits,
the shares available under the Plan can be divided among the various types of
Incentives and among the participants as the Committee sees fit. Such shares are
to be made available from authorized but unissued shares of Common Stock, shares
purchased in the open market or treasury stock of the Company. The number of
shares subject to the Plan and subject to awards outstanding under the Plan will
adjust with any stock dividend or split, recapitalization, reclassification or
combination of shares, merger, sale of assets or similar event.
DESCRIPTION OF INCENTIVES
STOCK OPTIONS.
The Plan permits the award of ISOs and NQSOs. Each option granted under the Plan
must be evidenced by a written agreement specifying terms, including the type,
the number of shares covered, the exercise price, when it is exercisable and the
duration. No employee may be granted an ISO first exercisable in any calendar
year if the Fair Market Value (i.e., the average of the highest and lowest price
at which the Common Stock was traded, as reported in the NYSE-Composite
Transactions) of the underlying stock on the date of grant exceeds $100,000. The
purchase price per share of Common Stock covered by an option shall be
determined by the Committee, but in the case of an ISO and options granted to
Covered Employees may not be less than 100% of the Fair Market Value of the
underlying Common Stock on the date of grant. No ISOs shall be exercisable more
than ten years after the date of grant. Payment of an option may be made with
cash, with previously owned shares of Common Stock, with shares withheld by the
Company (upon such exercise) or by a combination of these. The principal
difference between ISOs and NQSOs is their tax treatment. See "--Federal Income
Tax Consequences."
STOCK APPRECIATION RIGHTS.
The Plan authorizes the Committee to grant SARs in connection with options or
independent of options. A holder of SARs is entitled upon exercise to receive a
number of shares of Common Stock, or cash or a combination of both, as the
Committee may determine, equal in value on the date of exercise to the amount by
which the Fair Market Value of one share of Common Stock on the date of exercise
exceeds the exercise price fixed by the Committee on the date of grant
multiplied by the number of shares in respect of which the SARs are exercised.
If the SAR is granted in connection with an option, the holder of the SAR must
surrender such option in order to exercise the SAR.
STOCK AWARDS.
The Plan authorizes the Committee to make stock awards, in the form of
unrestricted shares of common stock or in the form of restricted shares
("restricted stock") on terms and conditions fixed by the Committee. Restricted
stock may not be sold by the holder, or subject to execution, attachment or
similar process, until the lapse of the applicable period of restriction or
satisfaction of other conditions specified by the Committee. In the case of
Covered Employees, the Committee may condition the vesting or lapse
15
<PAGE>
of such periods of restriction upon the attainment of one or more performance
goals established by the Committee within the time period prescribed by Section
162(m) of the Code. These performance goals must be based on the attainment, by
the Company or its subsidiaries, of certain objective performance measures,
which shall include one or more of the following: total stockholder return,
return on equity, return on capital, return on assets, return on investment, net
income, operating income, earnings per share, market share, stock price, sales,
costs, cash flow, retained earnings, results of customer satisfaction surveys,
aggregate product price and other product price measures, safety record, service
reliability, and operating and maintenance cost management (the "Performance
Goals"). Such Performance Goals may also be based upon the attainment of
specified levels of performance of the Company or one or more subsidiaries
relative to the performance of other corporations. With respect to Covered
Employees, all Performance Goals shall be objective performance goals satisfying
the requirements for "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code.
During the period of restriction, participants holding restricted stock may
exercise full voting rights with respect to the shares and are entitled to all
dividends and other distributions paid on those shares. Upon the lapse of the
applicable period of restriction, the restricted stock will become freely
transferable.
PERFORMANCE UNITS.
The Plan authorizes the Committee to grant performance units which may be earned
if specified long-term corporate goals are achieved over a period of time
selected by the Committee (a "Performance Period"). Prior to the grant of
performance units, the Committee must establish in writing an initial target
value or number of shares of Common Stock for the performance units, the
duration of the Performance Period and the specific performance goals to be
attained, including performance levels at which various percentages of
performance units will be earned and, for Covered Employees, the minimum level
of attainment to be met to earn any portion of the performance units. If the
Committee determines that a performance unit for a Covered Employee is to
qualify for the exemption from Section 162(m), then the performance goals shall
be based on the objective performance measures described above relating to
restricted stock. At the conclusion of a particular Performance Period, the
Committee will determine the extent to which the performance goals have been
met. As a result, depending upon the Company's performance in relation to the
performance goals, a participant may earn less or more than the number of
performance units initially awarded. In addition, to the extent that the value
of a performance unit is related to a share of Common Stock, the value of any
payout will be dependent upon the changing value of the Common Stock. Payments
may be made in cash, Common Stock or a combination as determined by the
Committee.
CHANGE IN CONTROL
Upon a change in control of the Company, all stock-based awards, such as ISOs,
NQSOs, SARs and restricted stock shall vest 100%, and the maximum value of all
performance units shall immediately be paid out in cash, prorated for the number
of days in the applicable Performance Period that have elapsed.
LIMITS ON TRANSFERABILITY AND EXERCISABILITY
Participants may transfer Incentives to family members, family corporations or
family partnerships. The Committee may, in its discretion and subject to any
conditions it may impose, authorize all or a portion of any Incentive to be
transferred to other persons or entities. Following transfer, such Incentives
will
16
<PAGE>
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. All Incentives granted under the Plan will be
forfeited immediately upon termination for substantial cause. Generally, upon
termination due to death, disability or retirement, all options and SARs will
become exercisable for three years (except that ISOs will be exercisable for
only three months) but in no event later than their term, and unvested
performance units will entitle the participant to receive prorated payments
based upon the number of full months of service during the Performance Period.
With respect to restricted stock, upon termination due to death, the
restrictions shall lapse immediately and upon termination due to disability or
retirement after age 65, the restrictions may be removed by the Committee in its
discretion at any time during the three years following termination. Generally,
upon voluntary termination or upon involuntary termination for any reason other
than for substantial cause, options and SARs (to the extent then vested or to
the extent vesting is accelerated by the Committee) will be exercisable for
three months, but not later than their expiration, and unvested restricted stock
and performance units will be forfeited (unless the specific terms of the award
provide otherwise or the Committee waives the forfeiture provision). The
Committee, in its discretion, may accelerate the vesting of any option, SAR or
restricted stock upon termination due to death, disability or retirement or
involuntary termination other than for substantial cause.
AMENDMENT AND DISCONTINUANCE
The Plan may be amended, altered or discontinued by the Board of Directors, but
except as specifically provided therein, no amendment, alteration or
discontinuance may be made which would in any manner adversely affect any
Incentive theretofore granted under the Plan, without the written consent of the
participant. Except as expressly provided in the Plan, the Plan may not be
amended without shareholder approval to materially increase the number of shares
of Common Stock subject to the Plan or to the extent such approval is required
by the New York Stock Exchange or Section 162(m) under the Internal Revenue
Code.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a brief discussion of the federal
income tax rules relevant to stock options, SARs, restricted stock and
performance units. The laws governing the tax aspects of Incentives are highly
technical and such laws are subject to change.
NQSOS AND SARS.
Upon the grant of a NQSO (with or without an SAR), the optionee will not
recognize any taxable income and the Company will not be required to record an
expense. Upon the exercise of such an option or an SAR, the excess of the fair
market value of the shares acquired on the exercise of the option over the
purchase price (the "spread"), or the consideration paid to the optionee upon
the exercise of the SAR, will constitute compensation taxable to the optionee as
ordinary income. In determining the amount of the spread or the amount of
consideration paid to the optionee, the fair market value of the stock on the
date of exercise is used, except that in the case of an optionee subject to the
six month short-swing profit recovery provisions of Section 16(b) of the
Exchange Act (generally officers and directors), the fair market value will be
determined six months after the date on which the option was granted (if such
date is later than the exercise date) unless such optionee elects to be taxed
based on the fair market value at the date of exercise. Any such election (a
"Section 83(b) election") must be made and filed with the Internal Revenue
Service within 30 days after exercise in accordance with the regulations under
Section 83(b) of the Code. The Company, in computing its federal income tax,
will generally be entitled to a deduction in an amount equal to the compensation
taxable to the optionee.
17
<PAGE>
ISOS.
An optionee will not recognize taxable income on the grant or exercise of an
ISO. However, the spread at exercise will constitute an item includible in
alternative minimum tax. Such alternative minimum tax may be payable even though
the optionee receives no cash upon the exercise of his ISO with which to pay
such tax. Upon the disposition of shares of stock acquired pursuant to the
exercise of an ISO after the later of (i) two years from the date of grant of
the ISO or (ii) one year after the transfer of the shares to the optionee (the
"ISO Holding Period"), the optionee will recognize long term capital gain or
loss, as the case may be, measured by the difference between the stock's selling
price and the exercise price. The Company is not entitled to any tax deduction
by reason of the grant or exercise of an ISO, or by reason of a disposition of
stock received upon exercise of an ISO if the ISO Holding Period is satisfied.
Different rules apply if the optionee disposes of the shares of stock acquired
pursuant to the exercise of an ISO before the expiration of the ISO Holding
Period.
RESTRICTED STOCK.
A participant who is granted restricted stock may make a Section 83(b) election
to have the grant taxed as compensation income at the date of receipt, with the
result that any future appreciation (or depreciation) in the value of the shares
of stock granted shall be taxed as capital gain (or loss) upon a subsequent sale
of the shares. However, if the participant does not make a Section 83(b)
election, the grant will be taxed as compensation income at the full fair market
value on the date that the restrictions imposed on the shares expire. Unless a
participant makes a Section 83(b) election, any dividends paid on stock subject
to the restrictions are compensation income to the participant and compensation
expense to the Company. The Company is generally entitled to a tax deduction for
any compensation income taxed to the participant, subject to the provisions of
Section 162(m) of the Code.
PERFORMANCE UNITS.
A participant who has been granted a performance unit award will not realize
taxable income until the applicable Performance Period expires and the
participant is in receipt of the Common Stock and/or cash distributed in payment
of the award, at which time such participant will realize ordinary income equal
to the fair market value of the shares delivered or the amount of cash paid. At
that time, the Company generally will be allowed a corresponding tax deduction
equal to the compensation taxable to the award recipient, subject to the
provisions of Section 162(m) of the Code.
NEW PLAN BENEFITS. Apart from the grant of NQSOs granted on November 20,
1996 to non-employee directors and described below, it cannot be determined at
this time what benefits or amounts, if any, will be received by or allocated to
any persons or group of persons under the Plan if the Plan is adopted. Such
determinations are subject to the discretion of the Committee. However, the
benefits and amounts that were paid or allocated under the 1990 Incentive Stock
Plan with respect to 1996 and prior years are described in the Summary
Compensation Table, Option/SAR Grants Table and Option/SAR Exercises and
Year-end Value Table on pages 9, 10 and 11 of this proxy statement.
1996 AWARDS. In November, 1996, the Committee granted NQSOs to purchase
shares of Common Stock to each non-employee director of the Company under the
1993 Directors Incentive Stock Plan subject to shareholder approval to increase
the number of shares available for issuance under that plan. The Committee
subsequently decided to replace the Directors Plan with the Plan and make the
options granted in 1996 subject to the terms of the Plan. The NQSOs will become
exercisable with respect to 40% of the shares one year from the date of grant,
30% two years from the date of the grant and the
18
<PAGE>
remaining 30% three years from the date of the grant at a purchase price of
$24.125 per share. The closing price of the Common Stock in the New York Stock
Exchange - Composite Tape on April 7, 1997 was $28.75.
VOTE REQUIRED. The affirmative vote of a majority of the votes entitled to
be cast by the holders of the Company's Common Stock present or represented at
the Annual Meeting and entitled to vote thereon is required to approve the Plan
with respect to Section 162(m) of the Code. Abstentions from voting on this
matter are treated as votes against, while broker nonvotes are treated as shares
not voted. Such vote will also satisfy the shareholder approval requirements of
the New York Stock Exchange, Section 422 of the Code with respect to the grant
of ISOs and Rule 16b-3 under the Exchange Act. If the 1997 Plan is not approved
by the stockholders, it will not be implemented and grants and awards made
thereunder will be canceled.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1997 STOCK
INCENTIVE PLAN.
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 1996, each of the outside directors received the sum of $20,000 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 $750 for each meeting of the
Board and, except for the Executive Committee, for each committee meeting which
he attended. Pursuant to the 1993 Directors Incentive Stock Plan, in 1996 each
of the non-employee directors was granted an option to acquire 500 shares of
Allied's Common Stock at $22.875 per share, the fair market value of the stock
on the date of the grant. In addition, each of the non-employee directors was
granted an option to acquire 10,000 shares of Allied's Common Stock subject to
shareholder approval of the 1997 Incentive Stock Plan.
Members of the Executive Committee are Messrs. R. Drexler (Chairman), L. Drexler
and Sherman. During 1996, the Committee met on seven 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 (Chairman), Goldring, Jones,
Puth and Quain. During 1996, 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
(Chairman), Jones and Fischer. During 1996, 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 (Chairman), Goldring,
Fischer, Puth, R. Drexler, L. Drexler and Sherman. The Committee did not meet in
1996.
Allied's Board of Directors met on five occasions during 1996. All of the
current directors attended at least 75% of the meetings of the Board and the
respective committees to which they belong.
19
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
During 1996, 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 22,
1996 meeting, the Audit Committee reviewed and approved the services described
above as well as the services to be performed in 1997 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 and written
representations from its officers and directors, the Company believes that
during fiscal year 1996 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 15, 1997 for inclusion in the Proxy Statement and form of proxy
relating to Allied's 1998 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 14, 1997
20
<PAGE>
PROXY PROXY
ALLIED PRODUCTS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS--
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 28, 1997
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
28, 1997, 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>
1. ELECTION OF DIRECTORS: / / FOR all nominees listed below (except / / WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all nominees listed below
</TABLE>
<TABLE>
<S> <C> <C>
RICHARD A. DREXLER JOHN W. PUTH MITCHELL I. QUAIN
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through that nominee's name.
2. APPROVAL OF 1997 INCENTIVE STOCK PLAN:
/ / FOR / / AGAINST / / ABSTAIN
(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 PROPOSALS 1 AND 2.
DATED: ____________________, 1997
___________________________(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 CARD
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 28, 1997 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 March 31,
1997, as directed below on the following matters, and, in their discretion, on
any other matters that may come before the meeting:
1. ELECTION OF / / FOR all nominees listed / / WITHHOLD AUTHORITY
DIRECTORS: below to vote for all nominees
listed below
RICHARD A. DREXLER JOHN W. PUTH MITCHELL I. QUAIN
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THAT NOMINEE'S NAME.
2. APPROVAL OF 1997 INCENTIVE STOCK PLAN:
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
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: .................. , 1997
........................ (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.
