<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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-12
ALLIED PRODUCTS CORPORATION
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(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
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(2) Aggregate number of securities to which transaction
applies:
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(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
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/ / 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:
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(4) Date Filed:
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</TABLE>
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[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 2000 Annual Meeting on Wednesday, May 24, 2000. 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 1999 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 vote the enclosed Proxy so that
your shares are represented. Your vote will be appreciated.
Your continued interest in the Company is most encouraging. Thank you for your
confidence and support.
Very truly yours,
RICHARD A. DREXLER
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE & FINANCIAL OFFICER
Chicago, Illinois
May 1, 2000
<PAGE>
[LOGO]
10 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
Telephone: (312) 454-1020
- ------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON May 24, 2000
- ---------------------------------
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 24, 2000 at 10:30 o'clock A.M. (Chicago Time) in
Conference Rooms A, B and C, 43rd Floor, LaSalle Bank, 135 South LaSalle Street,
Chicago, Illinois 60603, for the following purposes:
1. To elect two 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 7, 2000, 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 vote
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 VOTING YOUR PROXY WILL BE APPRECIATED.
Stockholders who vote their Proxy in advance of the meeting 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
May 1, 2000
<PAGE>
- ---------------------------------
PROXY STATEMENT
- ------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OF ALLIED PRODUCTS CORPORATION
May 24, 2000
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 24, 2000, 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, the presence, in
person or represented by proxy, of a majority of the shares entitled to vote is
required for a quorum. Directors are elected by a plurality of the votes cast at
a meeting at which a quorum is present. "Plurality" means that the individuals
who receive the largest number of votes are elected as directors up to the
maximum number of directors to be chosen at the meeting. Consequently, as long
as a quorum is established any shares not voted (whether by withholding
authority or otherwise) have no impact on the election of directors except to
the extent the failure to vote for an individual results in another individual's
receiving a larger number of votes.
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 other means.
This Proxy Statement and the enclosed proxy card were first mailed to the
stockholders on or about May 1, 2000.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 7, 2000, as the
record date for the determination of stockholders entitled to notice of this
Annual Meeting, and only stockholders of record on that date will be entitled to
vote thereat.
As of March 31, 2000, 11,869,664 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.
As of March 31, 2000, Allied's SMART and SIP Plans (employee benefit plans
formed pursuant to Section 401(k) of the Internal Revenue Code) hold 394,794
shares of Common Stock representing 3.34% of the outstanding shares of Allied
Common Stock. UMB Bank, n.a. acts as Trustee for the SMART and SIP Plans. The
shares held in the SMART and SIP Plans have been credited to the individual
accounts of the participants in the SMART and SIP Plans and will be voted in
accordance with instructions of such participants. Shares in the SMART and SIP
Plans with respect to which participants fail to return voting
2
<PAGE>
instructions (other than in the PAYSOP accounts) will be voted on each issue by
the Trustee, in the same proportion as all other outstanding shares are voted.
All PAYSOP account shares (approximately 16,028 shares) with respect to which
participants fail to return voting instructions will not be voted. Those shares
held in the SMART and SIP Plans, if any, which have not been credited to
participants' accounts will be voted by the Trustee.
As of March 31, 2000, the Allied Products Corporation Retirement Plan (the
"Plan") holds 612,710 shares of common stock representing 5.16% of the
outstanding shares of Allied Common Stock. CTC Illinois Trust Company (the
"Trustee") acts as trustee for the Allied Products Corporation Master Trust,
which holds the Plan's assets. The Verson segment of the Plan holds 591,500 of
the shares. Punk Ziegel & Company acts as investment manager with respect to the
shares held by the Verson segment of the Plan and has discretionary voting
authority with respect to these shares. Mr. Stanley J. Goldring, a Director of
Allied, is Senior Managing Director of Punk Ziegel & Company. The Bush Hog
segment of the Plan holds 21,210 of the shares. The Trustee acts as a directed
trustee with respect to the shares held by the Bush Hog segment of the Plan,
meaning that the Company can direct the Trustee with respect to investment and
voting.
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 was notified on February 4, 2000 that Dimensional Fund Advisors,
whose address is 1299 Ocean Avenue, Santa Monica, California 90401, beneficially
owned 864,067 shares of Common Stock representing approximately 7.29% of the
outstanding shares of Allied Common Stock. It has sole voting power over these
864,067 shares.
PROPOSAL 1: ELECTION OF DIRECTORS
The directors are classified into three groups, with each group being as nearly
equal in number as possible. One class of directors generally is elected at each
year's Annual Meeting for a three-year term and to continue in office until
their successors are elected and qualified. In 1993, the Board of Directors
adopted a policy which provides that Directors who are not employees of the
Company and who turn 70 after the date of the adoption of the policy shall be
asked to tender their resignation from the Board at the first Annual Meeting of
the shareholders of the Company after they reach 70. Such Directors are not
eligible to stand for election to the Board thereafter.
In 1999, the Board of Directors, in accordance with the Bylaws, reduced the size
of the Board to six members effective upon the resignation of Mr. Puth and
Mr. Fischer, both of whom reached the age of 70 in 1999. Later in 1999, the
Board increased the size of the Board to seven members and nominated Mr. James
A. Star for election to the Board effective with the closing of the sale of the
majority interest in the Agricultural Products Group to Bush Hog Investors. In
light of the decision to sell the remaining interest, the Company and Mr. Star
jointly decided that he would not stand for election to the Board. The Company
has, therefore, reduced the size of the board to six members.
3
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Messrs. R. A. Drexler and Mitchell I. Quain, both of whom are presently
directors of the Company, are being nominated for election to Class A with a
three-year term expiring in 2003.
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 2003)
RICHARD A. DREXLER, age 52, has been Chairman of the Board since 1993, President
since 1982, Chief Executive Officer since 1986 and Chief Financial Officer since
1998. He has been a member of the Board of Directors since 1982. Mr. Drexler is
a director of ABC-NACO, a public company engaged in the manufacture of products
for the railroad industry.
MITCHELL I. QUAIN, age 48, has been a member of the Board of Directors since
February 1995. Mr. Quain has been executive vice president of ING Barings LLC
(formerly ING Barings Furman Selz, LLC), an investment banking firm, from 1997
to the present. ING Barings LLC served as a financial advisor to the Company and
delivered a fairness opinion to the Company in connection with the Company's
sale of an 80.1% interest in the Agricultural Products Group and received a fee
from the Company in connection therewith. Prior to 1997, 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 Titan International, a manufacturer of
off-highway components.
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 TWO 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 2001)
LLOYD A. DREXLER, age 82, was the Co-Chairman of the Board from 1992 until 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 1992. Mr. Drexler is the
father of Mr. Richard A. Drexler.
JOHN E. JONES, age 65, 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.
CLASS C DIRECTORS (TERM EXPIRES IN 2002)
S.S. SHERMAN, age 82, was the Co-Chairman of the Board from 1992 until 1993. He
was Chairman of the Board from 1973 until 1992 and has been a member of the
Board of Directors since 1963.
STANLEY J. GOLDRING, age 54, is Senior Managing Director of Punk Ziegel &
Company, an investment advisory company. From December 1996 until 1998,
Mr. Goldring was Senior Managing Director of J.W. Charles, Inc., an investment
banking company. Prior to December 1996, Mr. Goldring was Senior Managing
Director of Ladenburg, Thalman & Company, Inc. an investment banking company,
for thirteen years. Ladenburg, Thalman & Company, Inc., J.W. Charles, Inc., and
now, Punk Ziegel & Company 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.
5
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of March 31, 2000, 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 10 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 555,137(1) 4.68
Richard A. Drexler................... Common 599,054(2) 5.05
Robert J. Fleck...................... Common 66,525(3) *
Stanley J. Goldring.................. Common 49,913(4) *
John E. Jones........................ Common 99,075(5) *
Bobby Middlebrooks................... Common 45,286(6) *
Mitchell I. Quain.................... Common 84,612(7) *
S.S. Sherman......................... Common 1,070,482(8) 9.02
Mark C. Standefer.................... Common 30,911(9) *
All Executive officers and directors
as a group (9 persons).............. Common 2,628,995(10) 22.15
</TABLE>
- ------------------------
* Less than 1% of class.
(1) Includes 164,877 shares in his own name of which 135,898 shares are
restricted stock; 251,260 shares owned by a partnership of which Mr. Lloyd
Drexler is a partner and 100,000 shares owned by Mr. Drexler's wife and by a
family trust of which Mr. Drexler's wife is the trustee. Also includes
39,000 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 188,974 shares in his own name of which 85,150 shares are
restricted stock; 145,000 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; 50,000 held in joint tenancy with his spouse and
161,250 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) 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 48,500 shares which
Mr. Fleck has the right to acquire by exercise of stock options within
sixty days of the date of this proxy statement.
(4) Includes 39,000 shares which Mr. Goldring has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement.
(5) Includes 9,500 shares held in a trust in which Mr. Jones' wife is the
trustee and 39,000 shares which Mr. Jones has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement.
6
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(6) Mr. Middlebrooks served as Senior Vice President of the Company and
President of the Bush Hog Division. Effective March 7, 2000 upon the sale of
the majority interest in the former Agricultural Products Group,
Mr. Middlebrooks resigned from employment with the Company. Consists of
3,100 shares of restricted stock; 36,250 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 28,000 shares held in trust on behalf of Mr. Quain's children and
38,250 shares which Mr. Quain has the right to acquire by exercise of stock
options within sixty days of the date of this proxy statement.
(8) Includes 211,358 shares in his own name of which 93,244 shares are
restricted stock; 820,124 shares owned by a family corporation of which
Mr. Sherman, his wife and children are stockholders and a foundation
controlled by Mr. Sherman's spouse; and 39,000 shares which Mr. Sherman has
the right to acquire by exercise of stock options within sixty days of the
date of this proxy statement.
(9) Consists of 165 shares of restricted stock; 6,496 shares credited to
Mr. Standefer's account in the Company's 401(k) Plan and 24,250 shares which
Mr. Standefer has the right to acquire by exercise of stock options within
sixty days of the date of this proxy statement.
(10) Includes 464,500 shares which the group has the right to acquire by
exercise of stock options within sixty days of the date of this proxy
statement; 84,929 shares credited to the accounts of members of the group in
the Company's 401(k) Plan; and 318,619 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 1999 of Stanley J. Goldring, Chairman, John E. Jones and
Mitchell I. Quain, 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. The Stock Option and
Compensation Committee oversees the administration of certain of the Company's
stock-based compensation plans. 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.
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.
Compensation of the Company's executive officers for 1999 was comprised
primarily of salary, annual cash bonus awards, long-term awards under the
Company's Incentive Stock Plan and various benefits, including medical and life
insurance, generally available to employees of the Company.
In determining the compensation for the executive officers, the Stock Option and
Compensation Committee took into consideration a number of factors. As described
below, the Stock Option and
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Compensation Committee uses its discretion to set executive compensation at
levels warranted in its judgment by external, internal or an individual's
circumstances. In 1996, 1997 and 1998, a recognized consulting firm in the field
of executive compensation analyzed and categorized the duties of each of the
executive officers and also compiled salary and incentive compensation
information on similar officers at a number of companies in general and
manufacturing industries with revenues ranging from $200 million to
$500 million (the "Survey Group") selected by the compensation consultant. The
Stock Option and Compensation Committee reviewed such information for the Survey
Group and established targeted total compensation (salary, annual bonus and
long-term incentive awards) at the 50th percentile of the Survey Group.
The Internal Revenue Code generally prohibits the Company from deducting
executive compensation in excess of $1,000,000 per year. Qualifying "performance
based" compensation is not subject to this deduction limitation if certain
requirements are satisfied. It is the Committee's general intent to preserve the
deductibility of executive compensation to the extent reasonably practicable and
to the extent consistent with its other compensation objectives. All
compensation paid by the Company with respect to 1999 was deductible.
SALARY
The base salaries of the Company's executive officers for 1999 were determined
in October 1998, with an effective date of January 1, 1999, and (other than for
the Chief Executive Officer) were designed to be competitive with the Survey
Group at approximately the 50th percentile of the base salary range for
executives in similar positions with companies in the Survey Group. Actual base
salaries were determined based on individual performance and experience.
BONUSES
In October 1998, the Committee established target bonuses relating to 1999
performance for each of the Company's executive officers. The target bonuses
were expressed as a percentage of base salary and ranged from 30% to 65% of base
salary. Target bonuses (other than for the Chief Executive Officer) were
established so that the total compensation would be competitive with the 50th
percentile of total cash compensation paid to comparable executives in the
Survey Group.
Payment of the bonuses was dependent upon Company and individual performance
during 1999. In particular, in determining the final bonus payment amounts, the
Committee considered the Company's financial and operating results during 1999
and certain other corporate and individual initiatives. As a result, the
Committee determined that Mr. Middlebrooks, with direct operating responsibility
for the Bush Hog and Great Bend divisions would receive 100% of his target
bonus. This bonus was paid in cash in March 2000, following the closing of the
sale of the majority interest in our Agricultural Products Group to Bush Hog
Investors. Due to the financial and operating performance of the Company in
1999, no such bonuses were paid for 1999 to the officers or employees of the
Corporate and Verson divisions.
LONG-TERM INCENTIVES
The Committee administers the Incentive Stock Plan, which provides for the grant
of any or all of the following types of awards: stock options, stock
appreciation rights, restricted stock and performance units. For 1999, the
subcommittee chose to award stock options to executive officers.
Stock options were granted to Messrs. Drexler, Fleck and Standefer during the
third quarter of 1999 at an exercise price equal to the fair market value at the
date of the grant. The options have a 10-year term and
8
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vest over 2 years, with one-half of the options becoming exercisable at the end
of the first year and the remainder vesting at the end of the second year. Since
options were granted with an exercise price equal to the market value of the
Company's common stock at the time of grant, they provide no value unless the
Company's stock price increases after the options are granted. These awards are
thus tied to stock price appreciation in excess of the stock's value at time of
grant, rewarding executives as if they shared in the ownership of the Company.
The number of shares subject to options for each executive officer is set forth
in the Summary Compensation Table on page 10.
CEO COMPENSATION
The 1999 compensation for Mr. Drexler consisted of the same components as the
compensation for other executive officers. Mr. Drexler's 1999 salary was
increased from $485,000 to $525,000, effective January 1, 1999, in order to keep
his base salary competitive with the Survey Group at approximately the 75th
percentile of the base salary range for executives in similar positions with
companies in the Survey Group. Mr. Drexler's 1999 targeted bonus was set at 65%
of his base salary, which the Committee believed to be an appropriate level
based on his performance and his prior experience. As noted above in the
section on bonuses, no bonuses were paid to corporate executives for 1999. The
award of stock options made to Mr. Drexler was based on his performance,
leadership skills and positive reputation within the community and industry.
Stanley J. Goldring, Chairman
John E. Jones
Mitchell I. Quain
9
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SUMMARY COMPENSATION TABLE
The table below sets forth certain information regarding compensation earned
during each of the Company's last three fiscal years by the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers, based on salary and bonus earned during fiscal 1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------------- -------------------------------------
SECURITIES ALL OTHER
BONUS($) OTHER ANNUAL UNDERLYING OPTIONS COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR SALARY($) (1) COMPENSATION (2) SAR'S#(3) ($)(4)
- -------------------------------- -------- --------- --------- -------------------- -------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler ............. 1999 525,000 0 -- 25,000 16,367
Chairman, President and Chief 1998 485,004 113,750 -- 52,500 12,449
Executive & Financial Officer 1997 455,004 315,250 -- 30,000 9,096
Bobby Middlebrooks ............. 1999 255,000 127,500 -- 0 6,647
Senior Vice President(5) 1998 240,496 120,000 -- 22,500 1,800
1997 220,149 110,000 -- 10,000 0
Robert J. Fleck ................ 1999 165,000 0 -- 15,000 11,107
Vice President--Accounting and 1998 155,004 18,100 -- 15,000 5,430
Chief Accounting & 1997 143,160 50,050 -- 5,000 8,076
Administrative Officer
Mark C. Standefer, ............. 1999 165,004 0 -- 15,000 8,222
Vice President, General Counsel 1998 140,000 16,950 -- 15,000 4,193
and Secretary(6)
</TABLE>
- ------------------------
(1) Mr. Drexler's bonus for 1998 was paid in restricted stock. (The total number
of shares and market value of restricted stock held by each of the named
executive officers as of December 31, 1999 were as follows: Mr. Drexler,
85,150 shares, $303,347; Mr. Middlebrooks, 3,100 shares, $11,044;
Mr. Fleck, 1,062 shares, $3,783; Mr. Standefer, 165 shares, $588.)
(2) 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.
(3) No stock appreciation rights were granted to the named executive officers in
any of the three years. See "Option Grants during 1999 Fiscal Year" for
description of options granted.
(4) Amounts shown represent Company contributions to defined contribution plans,
as follows: Richard Drexler $11,946, Bobby Middlebrooks $5,000, Robert Fleck
$10,681 and Mark Standefer $7,958. The supplemental portion of the Company's
contribution to the 401(k) plan is an estimate, as the amount may be
reduced. Company paid premiums for life insurance coverage are as follows:
Richard Drexler $4,421, Bobby Middlebrooks $1,647, Robert Fleck $426 and
Mark Standefer $264.
(5) Effective March 7, 2000 upon the sale of the Company's majority interest in
the former Agricultural Products Group, Mr. Middlebrooks resigned from
employment with the Company.
(6) Not an executive officer during 1997.
10
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OPTION GRANTS DURING 1999 FISCAL YEAR
The following table provides information relating to options granted to the
named executive officers during fiscal 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------- APPRECIATION AT
NUMBER OF ASSUMED ANNUAL
SECURITIES RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION
OPTIONS OPTIONS EXERCISE FOR OPTION TERM(2)
GRANTED GRANTED IN PRICE EXPIRATION -------------------
NAME (#)(1) FISCAL YR. ($/SH) DATE 5% ($) 10% ($)
---- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Drexler.......... 25,000 15 3.625 11/30/09 56,994 144,433
Bobby Middlebrooks.......... 0 0 -- -- -- --
Robert J. Fleck............. 15,000 9 3.625 11/30/09 34,196 86,660
Mark C. Standefer........... 15,000 9 3.625 11/30/09 34,196 86,660
</TABLE>
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(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.
(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.
OPTION EXERCISES DURING 1999 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
1999 and the value of options held by the named executive officers at the end of
1999:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE END OF 1999(#) END OF 1999($)(1)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNXERCISABLE
---- ------------ -------- -------------- -----------------
<S> <C> <C> <C> <C>
Richard A. Drexler............... -- -- 161,250/51,250 --
Bobby Middlebrooks............... -- -- 36,250/11,250 --
Robert J. Fleck.................. -- -- 48,500/22,500 6,523/0
Mark C. Standefer................ -- -- 24,250/22,500 --
</TABLE>
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(1) The closing price for the Company's Common Stock as reported by the New York
Stock Exchange on 12/31/99 was $3.5625 per share. Value is calculated on the
basis of the difference between the option exercise price and $3.5625
multiplied by the number of shares of Common Stock underlying the option.
11
<PAGE>
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 64 years old) at his current
salary, Mr. Middlebrooks would be entitled to a pension of $6,900 per month.
Assuming Mr. Middlebrooks' salary is increased by 5% per year until retirement,
he would be entitled to a pension of $6,900 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 with
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 Mr. Middlebrooks retires at age 65, the Company estimates
his non-qualified retirement benefit would be $4,400 per month. As part of the
terms of the Agricultural Group sale, Mr. Middlebrooks' retirement plan was
assumed by Bush Hog, LLC.
Effective January 1, 1994, the Company entered into an agreement with
Mr. Richard Drexler to provide retirement benefits pursuant to an Executive
Retirement Plan adopted by the Board of Directors. Under such Plan, Mr. Drexler
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 benefits shall be paid in 120 equal monthly installments
commencing on the month following the date of termination of service with the
Company or, upon prior election by Mr. Drexler, in a lump sum amount discounted
to present value. If Mr. Drexler dies during such period, the unpaid remaining
monthly installments will be paid to his named beneficiary or to his estate.
Based on the average compensation received during the past three years,
Mr. Drexler would receive $2,315,588 (payable over ten years) on his Normal
Retirement Date. Benefits payable under the Executive Retirement Plan are
reduced by the sum of (a) payments made by the Company to Mr. Drexler's Target
Benefit Plan account and (b) Supplemental Payments made by the Company to
Mr. Drexler's Smart Plan (401(k)) account, both of which are described below.
12
<PAGE>
SMART PLAN 401(k)
The Company has had a 401(k) plan for many years. Effective October 1, 1998 the
Plan was amended to add a Company matching and a Company supplemental
contribution feature. For the first six percent of a Participant's earnings, the
Company contributes 50 cents for each dollar contributed by the Participant to
the Plan: At the end of each year, the Company may make a supplemental
contribution to each Participant's account of up to three percent of his or her
earnings for that year. A Participant need not make any contributions to be
eligible for the supplemental contribution. The supplemental contribution
accrued in 1999 to the named officers (other than Mr. Bobby Middlebrooks who is
a participant in the SIP Plan described below, which has no supplemental
contribution feature) is as follows: Richard Drexler $4,800; Robert Fleck
$4,800; Mark Standefer $4,800. Also effective October 1, 1998, the Company
terminated its defined benefit plan, the Target Benefit Plan, and all sums in
the Participants' accounts were frozen and placed in their SMART Plan
401(k) account. The total supplemental benefit payments made by the Company to
Mr. Drexler's account plus the frozen target benefit contributions described
above will reduce the amounts payable under the Executive Retirement Plan
described above.
SAVINGS INCENTIVE PLAN 401(k) (SIP)
The Company established the Savings Incentive Plan 401(k) (SIP) for salaried
employees of the Bush Hog division effective October 1, 1998. For the first six
percent of a Participant's earnings, the Company contributes 50 cents for each
dollar contributed by the Participant to the Plan. No supplemental contribution
is made to the Participant's account. Bobby Middlebrooks is a participant in the
SIP Plan.
TERMINATION AGREEMENTS
Agreements between the Company and the named executive officers 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.
13
<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 1994, and
reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURNS
<S> <C> <C> <C>
Allied Products S&P 500 Index Machinery (Diversified)-500
1994 $100.00 $100.00 $100.00
1995 167.57 137.58 123.41
1996 209.27 169.17 153.82
1997 254.92 225.60 203.47
1998 68.15 290.08 169.34
1999 40.42 351.12 200.21
</TABLE>
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 1999,
each non-employee director received the sum of $20,000 for his services as a
director and the chairman of each committee (if a non-employee of the Company)
received the additional sum of $4,000. Each non-employee director of the Company
also received $1,000 for each meeting of the Board which he attended and, except
for the Executive Committee, for each committee meeting which he attended.
Beginning in October 1999, the Board of Directors elected to pay all director,
committee and meeting fees with Common Stock of the Company.
14
<PAGE>
Members of the Executive Committee are Messrs. R. Drexler (Chairman), L. Drexler
and Sherman. During 1999, the Committee met on two 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. Jones (Chairman), Goldring and Quain.
The Committee reviews and makes recommendations to the full Board with respect
to the scope and results of the annual audit, and the selection of independent
public accountants. During 1999, the Committee met on twenty occasions.
Members of the Stock Option and Compensation Committee are Messrs. Goldring
(Chairman), Jones and Quain. During 1999, 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. L. Drexler (Chairman), Goldring,
Jones, Quain, R. Drexler and Sherman. The Committee met on one occasion in 1999.
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 2001 Annual Meeting should be submitted no later than December 1, 2000.
Allied's Board of Directors met on eight occasions during 1999. 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 1999, upon the recommendation of Allied's Audit Committee and approval by
its Board of Directors, Allied engaged PricewaterhouseCoopers LLP 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 27,
1999 meeting, the Audit Committee reviewed and approved the services described
above as well as the services to be performed in 2000 and concluded that they do
not impair the independence of the accountants.
Representatives of PricewaterhouseCoopers LLP 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.
All filing requirements applicable to the Company's officers and directors were
complied with in 1999, with the exception of a late filing for 28,437 restricted
shares awarded to Mr. Drexler as per the terms of his 1998 performance bonus.
15
<PAGE>
STOCKHOLDER PROPOSAL
In order for a stockholder proposal to be included in the Proxy Statement and
form of proxy relating to Allied's 2001 Annual Stockholders' meeting it must be
received by the Secretary of Allied on or before January 2, 2001.
Proposals received by that date, deemed to be proper for consideration at the
Annual Meeting and otherwise conforming to the rules of the Securities and
Exchange Commission, will be included in the 2000 proxy statement.
A shareholder who intends to submit a shareholder proposal for consideration at
the Annual Meeting, but does not want it included in the proxy statement, must
follow the procedures established by the By-laws. These procedures require that
the shareholder notify the Company in writing of the proposal. The notice must
be received by the Corporate Secretary at least 30 days, but not more than
60 days, prior to the meeting and must contain the following information:
- a brief description of the business desired to be brought before the
Annual Meeting and the reasons for conducting such business at the
Annual Meeting
- the name and address of the shareholder submitting the proposal, and any
other shareholders known to support it
- the number of shares of Common stock which are beneficially owned by the
shareholder
- any material financial interest the shareholder may have in the business
being proposed
GENERAL
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
May 1, 2000
16
<PAGE>
[ALLIED LOGO] ALLIED PRODUCTS CORPORATION
10 SOUTH RIVERSIDE PLAZA - CHICAGO, ILLINOIS 60608
PROXY SERVICES
P.O. BOX 9079
FARMINGDALE, NY 11735
VOTE BY PHONE: 1-800-690-6903
1. Read the accompanying Proxy Statement and this proxy
card.
2. Call toll free 1-800-690-6903.
3. Enter your 12 digit Control Number, shown below.
4. Follow the simple recorded instructions.
VOTE BY INTERNET: WWW.PROXYVOTE.COM
1. Read the accompanying Proxy Statement and this proxy
card.
2. Go to website WWW.PROXYVOTE.COM
3. Enter your 12 digit Control Number, shown below.
4. Follow the simple instructions.
VOTE BY MAIL
1. Mark, sign and date your proxy card.
2. Return it in the enclosed postage paid envelope.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
ALLIED KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
ALLIED PRODUCTS CORPORATION
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
1. The nominees for Directors are:
01) RICHARD A. DREXLER
02) MITCHELL I. QUAIN / / / / / /
To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.
- ----------------------------------------------------
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.
<TABLE>
<S> <C>
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
ALLIE2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY ALLIED PRODUCTS CORPORATION PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 24, 2000
The undersigned hereby appoints S.S. Sherman, Llyod 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
24, 2000 at 10:30 a.m., Chicago Time, and at any adjournment thereof, for the
purpose of acting upon the proposal referred to herein in accordance with the
designations on the reverse, and of acting in their discretion upon such other
matters as may properly come before the meeting.
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 PROPOSAL 1.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- --------------------------------------------------------------------------------
