<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 Section240.14a-11(c) or
Section240.14a-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.:
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(3) Filing Party:
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(4) Date Filed:
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<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 1998 Annual Meeting on Wednesday, May 20, 1998. 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 1997 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 10, 1998
<PAGE>
[LOGO]
10 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
Telephone: (312) 454-1020
- - - ------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON May 20, 1998
- - - ---------------------------------
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 20, 1998 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 April 3, 1998, 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
Mark C. Standefer
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
April 10, 1998
<PAGE>
- - - ---------------------------------
PROXY STATEMENT
- - - ------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OF ALLIED PRODUCTS CORPORATION
May 20, 1998
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 20, 1998, 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 by telephone or other means. This
Proxy Statement and the enclosed proxy card were first mailed to the
stockholders on or about April 10, 1998.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 3, 1998, 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 3, 1998, 11,916,980 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 472,504 shares of Common Stock representing
3.96% 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 17,824
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
As of March 1, 1998, 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 as of December 31, 1997 The Prudential
Insurance Company of America whose address is 751 Broad Street, Newark, New
Jersey 07102, beneficially owns 1,675,125 shares of Common Stock representing
approximately 14.07% of the outstanding shares of Allied Common Stock.
The Company has been informed that as of December 31, 1997 Neuberger & Berman
L.P., whose address is 605 Third Avenue, New York, New York 10158-3698,
beneficially owns 880,549 shares of Common Stock representing approximately
7.40% of the outstanding shares of Allied Common Stock. It has voting power over
only 596,499 shares.
The Company has been informed that as of December 31, 1997 Neumeier Investment
Counsel, whose address is 26435 Carmel Rancho Boulevard, Carmel, California
93923, beneficially owns 889,450 shares of Common Stock representing
approximately 7.47% of the outstanding shares of Allied Common Stock. It has
sole voting power over only 465,600 shares.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
On February 4, 1998 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 2001. 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 B DIRECTORS (TERM EXPIRES IN 2001)
LLOYD A. DREXLER, age 80, 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 63, has been a member of the Board of Directors since 1974.
Mr. Jones is the retired Chairman of the Board, President and Chief Executive
Officer of CBI Industries, Inc., which was engaged in contracting services and
the manufacture of industrial gases. He served in that function from 1989
through January 1996. Mr. Jones is a director of NICOR Inc., a gas utility
company, Amsted Industries Incorporated, a railroad supply company, Valmont
Industries, Inc., an irrigation and industrial products company, The Interlake
Corporation, which is in the powdered metal and material handling business, and
BWAY Corp., which is in the container business.
STANLEY J. GOLDRING, age 52, is Senior Managing Director of JW 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. and now, JW
Charles, Inc., have 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.
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 A DIRECTORS (TERM EXPIRES IN 2000)
RICHARD A. DREXLER, age 50, 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 69, 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, U.S. 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 46, has been a member of the Board of Directors since
February, 1995. Mr. Quain has been executive vice president and a member of the
board of Furman Selz, LLC, an investment banking firm from 1997 to the present.
Prior to that, and since 1988, he was a managing director of Schroder Wertheim &
Company, an investment banking firm. Schroder Wertheim & Company served as an
independent buying agent during 1996 and 1997 with respect to the Company's
share repurchase program and accordingly received commissions from the Company.
He is also a director of Strategic Distribution, Inc., an industrial
distributor, Mechanical Dynamics, Inc., an engineering oriented software company
and DeCrane Aircraft Holdings, Inc., a manufacturer of avionics components.
CLASS C DIRECTORS (TERM EXPIRES IN 1999)
WILLIAM D. FISCHER, age 70, 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.
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 March 1, 1998, 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 executive
officers named in the Summary Compensation Table on Page 9 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. All share holdings have been
adjusted to reflect the 3 for 2 stock split that occurred in September 1997.
<TABLE>
<CAPTION>
PERCENT
NAME OF BENEFICIAL OWNER OR GROUP CLASS AMOUNT OF CLASS
- - - -------------------------------------------------- ----------- ----------------- -----------
<S> <C> <C> <C>
Lloyd A. Drexler.................................. Common 471,619(1) 3.95%
Richard A. Drexler................................ Common 525,459(2) 4.40%
William D. Fischer................................ Common 22,292(3) *
Robert J. Fleck................................... Common 51,775(4) *
Martin A. German.................................. Common -0-
Stanley J. Goldring............................... Common 22,792(3) *
John E. Jones..................................... Common 67,730(3) *
Kenneth B. Light.................................. Common 35,821(5) *
Bobby Middlebrooks................................ Common 26,286(6) *
Richard W. Metzger................................ Common 45,879(7) *
John W. Puth...................................... Common 25,792(3) *
Mitchell I. Quain................................. Common 38,842(8) *
S. S. Sherman..................................... Common 791,715(9) 6.64%
All Executive officers and directors as a group
(14 persons)..................................... Common 2,227,895(10) 18.68%
</TABLE>
- - - ------------------------
* Less than 1% of class.
(1) Includes 135,898 shares of restricted stock; 251,260 shares owned by a
partnership of which Mr. Lloyd Drexler is a partner and 37,500 shares owned
by Mr. Drexler's wife and by a family trust of which Mr. Drexler's wife is
the trustee. Also includes 21,292 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 56,713 shares of restricted stock; 52,500 shares held by a trust of
which Mr. Richard Drexler is trustee; 145,552 shares owned by a family
corporation, of which Mr. Drexler is President; 53,830 shares credited to
Mr. Drexler's account in the Company's 401(k) Plan and 110,040 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 21,292 shares which each of Messrs. Fischer, Goldring, Jones and
Puth have the right to acquire by exercise of stock options within sixty
days of the date of this proxy statement.
6
<PAGE>
(4) Consists of 1,062 shares of restricted stock; 16,963 shares credited to Mr.
Fleck's account in the Company's 401(k) Plan and 33,750 shares which Mr.
Fleck has the right to acquire by exercise of stock options within sixty
days of the date of this proxy statement.
(5) Includes shares credited to Mr. Light's account in the Company's 401(k)
Plan.
(6) Consists of 3,100 shares of restricted stock; 17,250 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 5,936 shares credited to
Mr. Middlebrooks' account in the Company's 401(k) Plan.
(7) Includes 1,704 shares credited to Mr. Metzger's account in the Company's
401(k) Plan; 43,875 shares which Mr. Metzger has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement; and 300 shares owned by Mr. Metzger's wife.
(8) Includes 20,542 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
4,800 shares owned by his children.
(9) Consists of 208,048 shares in his own name of which 93,244 shares are
restricted stock; 562,375 shares owned by a family corporation of which Mr.
Sherman, his wife and children are stockholders; and 21,292 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 363,834 shares which the group has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement; 120,750 shares credited to the accounts of members of the group
in the Company's 401(k) Plan; and 290,182 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 1997 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.
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. In 1996, 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
7
<PAGE>
companies and, after considering the performance of each executive, salaries for
1997 were set within the seventy-fifth percentile 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 1997, 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 continues to attain 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, 1996 and 1997.
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 to each of the Company's four other most highly
compensated executive officers, as well as one former executive officer who
would have been one of the four most highly compensated officers had he not
resigned before the end of the year, based on salary and bonus earned during
fiscal 1997.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
---------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (A) SAR'S#(B) ($)(C)
- - - ------------------------------ ---- --------- -------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 1997 455,004 395,750 1,378 30,000 8,409
Chairman, President and Chief 1996 400,008 240,500 2,728 60,000 8,409
Executive Officer 1995 370,000 210,000 20,000
Kenneth B. Light * 1997 235,008 117,500 1,423 -- 30,000
Executive Vice President, 1996 225,000 107,500 2,818 25,000 30,000
Chief Financial and 1995 211,000 84,000 10,000 30,000
Administrative Officer
Martin A. German ** 1997 230,003 388,400 971 -- --
Senior Vice President 1996 220,000 125,000 1,923 20,000 11,514
1995 200,000 100,000 10,000 11,514
Bobby Middlebrooks 1997 220,149 105,000 10,000
Senior Vice President 1996 210,000 50,000 5,000
1995 200,000 76,400 10,000
Robert J. Fleck 1997 143,160 41,100 5,000 8,076
Vice President--Accounting 1996 137,000 40,000 3,000 7,465
and 1995 132,000 37,500 5,000 7,466
Chief Accounting &
Administrative Officer
Richard W. Metzger *** 1997 135,070 130,000 10,000 3,115
Vice President
</TABLE>
- - - ------------------------
* Retired as of 1/3/98
** Resigned as of 10/30/97
*** Not an executive officer during 1995 and 1996
(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
$50,000 or 10% of an individual's salary and bonus in such year. The amounts
shown represent the Medicare Hospital Insurance taxes paid by the Company on
behalf of each executive on the value of the increase in the executive's
vested accrued benefit in the Executive Retirement Plan (see "Retirement
Plans" elsewhere in this document).
(B) No stock appreciation rights were granted to the named executive officers in
any of the three years. See "Option Grants during 1997 Fiscal Year" for
description of options granted.
(C) Amounts shown consist of Company contributions to defined contribution
plans.
9
<PAGE>
OPTION GRANTS DURING 1997 FISCAL YEAR
The following table provides information relating to options granted to the
named executive officers during fiscal 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL APPRECIATION
NUMBER OF AT ASSUMED ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS EXERCISE OPTION TERM(2)
GRANTED GRANTED IN PRICE EXPIRATION ----------------------
NAME (#)(1) FISCAL YR. ($/SH) DATE 5% ($) 10% ($)
- - - ----------------------------- ----------- ------------- ----------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler 30,000 27 24.875 10/22/2007 469,313 1,189,330
Kenneth B. Light 0 0 N/A N/A N/A N/A
Martin A. German 0 0 N/A N/A N/A N/A
Bobby Middlebrooks 10,000 9 24.875 10/22/2007 156,438 396,443
Robert J. Fleck 5,000 4.5 24.875 10/22/2007 78,219 198,222
Richard W. Metzger 10,000 9 24.875 10/22/2007 156,438 396,443
</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 1997 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
1997 and the value of options held by the named executive officers at the end of
1997:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE END OF 1997(#) END OF 1997($)(1)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNXERCISABLE
- - - -------------------------- ------------- --------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Richard A. Drexler 22,500 334,462 87,540/75,000 858,597/374,625
Kenneth B. Light 4,500 66,892 66,045/18,750 758,583/157,650
Martin A. German 32,250 459,039 0 0
Bobby Middlebrooks 0 0 17,250/13,750 186,893/29,663
Robert J. Fleck 9,000 153,518 33,750/7,250 567,743/17,798
Richard W. Metzger 0 0 37,875/23,500 506,021/111,765
</TABLE>
- - - ------------------------
(1) The closing price for the Company's Common Stock as reported by the New York
Stock Exchange on 12/31/97 was $24 per share. Value is calculated on the
basis of the difference between the option exercise price and $24 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 62 years old) at his current
salary, Mr. Middlebrooks would be entitled to a pension of $6,500 per month.
Current Federal law prohibits paying benefits under the Bush Hog Division
Salaried Pension Plan based on compensation in excess of $160,000 per year and
annual benefits in excess of $130,000 per year. Therefore, the Company also has
granted to Mr. Middlebrooks a non-qualified retirement benefit which is not
subject to these limits. This additional benefit will provide Mr. Middlebrooks
payments equal to the difference between (i) the sum Mr. Middlebrooks will
receive subject to the maximum compensation and benefits limitations under
Internal Revenue Code provisions and (ii) the sum he would have been able to
receive under the Bush Hog Division Salaried Pension Plan without such
limitations. Assuming his salary remains level until his retirement at age 65 he
would be entitled to additional payments of $3,100 per month under the
non-qualified Plan.
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. Under such plan,
each of these individuals is 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 in 120 equal
monthly installments commencing on the month
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<PAGE>
following the date of termination of service with the Company or, upon prior
election by the individual, in a lump sum amount discounted to present value. If
the individual dies during such period, the unpaid remaining monthly
installments will be paid to his named beneficiary or to his estate. Messrs
German and Light have each retired from the Company in 1997 and 1998,
respectively, and have elected to receive lump sum payments. In 1997 Mr. German
received $512,646 and in 1998, Mr. Light received $632,277. Based on the average
compensation received during the past three years, Mr. Drexler would receive
$2,071,262 on the Normal Retirement Date (payable over ten years). Benefits
payable under the Executive Retirement Plan are reduced to the extent of
payments received under the Target Benefit Plan described below.
TARGET BENEFIT PLAN
Effective January 1, 1995 the Company implemented a defined contribution 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 (including bonus) 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 $34,333; Robert Fleck $30,667; Richard Metzger $23,133.
The target benefits of Messrs. German and Light, who retired in 1997 and 1998,
respectively, were $27,818 and $99,835, and were deducted from the payments made
to these individuals under the Executive Retirement Plan described above. With
respect to Richard Drexler, 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 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.
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<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 1992, and
reinvestment of all dividends).
[PERFORMANCE CHART]
FUNCTIONING OF THE BOARD AND COMMITTEES
Allied's Board of Directors has an Executive Committee, an Audit Committee, a
Stock Option and Compensation Committee and a Nominating Committee. In 1997,
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 which
he attended and, except for the Executive Committee, for each committee meeting
which he attended.
13
<PAGE>
Members of the Executive Committee are Messrs. R. Drexler (Chairman), L. Drexler
and Sherman. During 1997, the Committee met on 2 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 1997, the Committee met on 2 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 1997, the Committee met on 2 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
1997. The Nominating Committee will consider recommendations for nominees for
election to the Board submitted by shareholders. These nominations should be
submitted to the Secretary of the Company for review by the Committee. Such
nominations for the 1999 Annual Meeting should be submitted no later than
December 11, 1998.
Allied's Board of Directors met on five occasions during 1997. 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 1997, 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,
1997 meeting, the Audit Committee reviewed and approved the services described
above as well as the services to be performed in 1998 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 and 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 1997 all filing requirements applicable to its
officers and directors were complied with.
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<PAGE>
STOCKHOLDER PROPOSAL
A stockholder proposal must be received by the Secretary of Allied on or before
December 11, 1998 for inclusion in the Proxy Statement and form of proxy
relating to Allied's 1999 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, but if any other
matters are properly presented to the meeting for action, the persons named in
the accompanying proxy will vote them in accordance with their best judgment.
By Order of the Board of Directors
ALLIED PRODUCTS CORPORATION
MARK C. STANDEFER
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
April 10, 1998
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<PAGE>
PROXY PROXY
ALLIED PRODUCTS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS--
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 20, 1998
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
20, 1998, 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>
LLOYD A. DREXLER JOHN E. JONES STANLEY J. GOLDRING
</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 PROPOSALS 1 AND 2.
DATED: ____________________, 1998
___________________________(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.
