General Housewares Corp.
1536 BEECH STREET, P.O. BOX 4066, TERRE HAUTE, INDIANA 47804
(812)232-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 14, 1996
To the Holders of the Company's Common Stock:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
GENERAL HOUSEWARES CORP., a Delaware corporation (the "Company"), will be
held at the Tara Stamford Hotel, 2701 Summer Street, Stamford, Connecticut, on
Tuesday, May 14, 1996, at 10:00 a.m. (local time) for the following purposes:
1. To elect three directors;
2. To transact such other business as may properly come
before the meeting.
Only holders of record of the Company's Common Stock at the close of
business on March 18, 1996 are entitled to notice of, and will be entitled to
vote at, the meeting and any adjournment or adjournments thereof.
Holders of Common Stock are urged to date, sign and return the enclosed
form of proxy at their earliest convenience, even if they plan to attend the
meeting. A return envelope is enclosed for this purpose which requires no
postage if mailed in the United States.
By Order of the Board of Directors,
RAYMOND J. KULLA,
Secretary.
Dated: March 29, 1996
General Housewares Corp.
1536 BEECH STREET, P.O. BOX 4066, TERRE HAUTE, INDIANA 47804
(812)232-1000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 14, 1996
The accompanying proxy is solicited by the Board of Directors of General
Housewares Corp. (the "Company") for use at the Annual Meeting of Stockholders
to be held at the Tara Stamford Hotel, 2701 Summer Street, Stamford,
Connecticut, on Tuesday, May 14, 1996, at 10:00 a.m. (local time) (and at any
adjournment or adjournments thereof), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders ("Annual Meeting"). The
approximate date on which this Proxy Statement and form of proxy will be first
given or mailed to stockholders is March 29, 1996.
Only holders of record of the Company's Common Stock, par value $.33 1/3
per share, at the close of business on March 18, 1996, will be entitled to
vote at the meeting. At that date there were issued and outstanding 3,762,928
shares of Common Stock, the holders of which are entitled to one vote per
share on all matters, including the election of directors.
Any stockholder giving a proxy is empowered to revoke it at any time
before it is exercised. A proxy may be revoked by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date. Any stockholder may still attend the meeting and vote in person,
regardless of whether they have previously given a proxy, but presence at the
meeting will not revoke their proxy unless such stockholder votes in person.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Except as otherwise indicated, the following table sets forth as of
March 18, 1996, to the knowledge of the Company, information as to the
beneficial ownership of the Company's Common Stock by (i) persons that own
beneficially more than 5% of the outstanding Common Stock of the Company, (ii)
each director and nominee, (iii) each executive officer named in the Summary
Compensation Table, and (iv) all directors, nominees and all executive
officers as a group. Except as otherwise indicated, all beneficial ownership
reflected in the table represents sole voting and investment power as to
Common Stock and information is provided throughout this proxy statement only
with respect to the periods of time during which the indicated persons held
the specified position or relationship with the Company.
<TABLE>
<S> <C> <C>
Amount
Beneficially Percent of
Owned Class
(a) Holders of more than 5% of Common Stock
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434 661,900 17.6
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 236,380 6.3
Gangelhoff Enterprises Trust
1405 West Farm Road
Chaska, MN 55318 410,017 10.9
Investment Counselors of Maryland
803 Cathedral Street
Baltimore, MD 21201 285,000 7.6
(b) Directors and Nominees
Charles E. Bradley 4,100 (1)
John S. Crowley 8,810 (1)
Thomas L. Francis 3,577 (1)
Joseph Hinsey IV 2,562 (1)
Ann Manix 1,500 (1)
John H. Muller, Jr. 10,078(2) (1)
Phillip A. Ranney 3,434 (1)
Paul A. Saxton 123,568(3) 3.3
(c) Named Executive Officers other than
Paul A. Saxton
John C. Blackwell 13,068(4) (1)
Gordon R. Erickson 24,172(5) (1)
Stephen M. Evans 18,272(6) (1)
Robert L. Gray 42,500(7) (1)
(d) All Directors, Nominees and Executive
Officers as a Group (12 persons
including the above) 255,641 6.8
- ----------------------------------------
</TABLE>
(1) Less than 1% of class.
(2) Of such shares, Mr. Muller's wife, Marie S. Muller, owns 280 shares.
Mr. Muller disclaims beneficial ownership of such shares. Includes
5,000 shares of Common Stock which may be acquired currently or within
60 days upon exercise of options; there is no voting or investment power
with respect to such shares until exercise.
(3) Of such shares, Mr. Saxton's wife, Kathleen Saxton, owns 1,000 shares.
Mr. Saxton disclaims beneficial ownership of such shares. Includes
68,167 shares of Common Stock which may be acquired currently or within
60 days upon exercise of options; there is no voting or investment power
with respect to such shares until exercise.
(4) Includes 3,333 shares of Common Stock which may be acquired currently or
within 60 days upon exercise of options; there is no voting or
investment power with respect to such shares until exercise.
(5) Of such shares, Mr. Erickson's wife, Eva Erickson, owns 500 shares. Mr.
Erickson disclaims beneficial ownership of such shares. Includes 16,500
shares of Common Stock which may be acquired currently or within 60 days
upon exercise of options; there is no voting or investment power with
respect to such shares until exercise.
(6) Includes 16,500 shares of Common Stock which may be acquired currently
or within 60 days upon exercise of options; there is no voting or
investment power with respect to such shares until exercise.
(7) Includes 28,500 shares of Common Stock which may be acquired currently
or within 60 days upon exercise of options; there is no voting or
investment power with respect to such shares until exercise.
ELECTION OF DIRECTORS
Under the Company's By-Laws, its directors are divided into three
classes, each class to be elected at successive annual meetings for terms of
three years. The number of directorships was fixed at eight at the Regular
Meeting of the Board of Directors held on February 8, 1994. The three
directors whose terms will expire at the 1996 Annual Meeting are Charles E.
Bradley, Thomas L. Francis, and Phillip A. Ranney. Charles E. Bradley, Thomas
L. Francis, and Phillip A. Ranney have been nominated by the Board of
Directors to stand for election as directors at the Annual Meeting and until
their successors are duly elected and shall qualify.
At the Annual Meeting, the accompanying proxy, if properly executed and
returned, will be voted (absent contrary instructions) in favor of electing as
directors these three nominees. Should any one or more of these nominees
become unable to accept nomination or election, which the Board of Directors
has no reason to believe will be the case, the persons named in the enclosed
form of proxy will vote for the election of such person or persons as the
Board of Directors may nominate. The other persons listed below will continue
in office as directors until the expiration of their terms and until their
successors are duly elected and shall qualify, except Mr. Muller intends to
resign in 1996 as disclosed in the 1995 proxy statement.
A plurality of the votes of the shares of Common Stock of the Company
present in person or represented by proxy and entitled to vote at the meeting
on the election of directors is required for the election of directors. For
this purpose, a stockholder voting through a proxy who withholds authority to
vote as to all nominees for election as directors is considered to be present
and entitled to vote on the election of directors at the meeting, and is in
effect a negative vote.
Information on Nominees and Incumbent Directors
<TABLE>
<S>
<C> <C> <C>
Served as
Director
Name Since Age
Nominees for Election to Term Expiring in 1999:
Charles E. Bradley................................1967...........66
Thomas L. Francis.................................1990...........66
Phillip A. Ranney.................................1990...........59
Directors Whose Term Expires in 1998:
John S. Crowley...................................1980...........72
John H. Muller, Jr................................1967...........71
Paul A. Saxton....................................1987...........57
Directors Whose Term Expires in 1997:
Joseph Hinsey IV..................................1992...........64
Ann Manix.........................................1994...........43
</TABLE>
Mr. Bradley has been President of Stanwich Partners, Inc. (private
investment banking firm) for more than five years. He is also a director of
Audits and Surveys Corporation, DeVlieg Bullard, Inc., Sanitas, Inc., Texon
Energy Corporation, Consumer Portfolio Services, Inc., Reunion Industries,
Inc. and Chatwins Group, Inc.
Mr. Crowley was President of Round Hill Associates Management Company
(private investment group) for more than five years and Managing Director of
Saugatuck Associates, Inc. (the management company of a private risk capital
partnership) from 1987 to 1993. Prior thereto, he was Executive Vice
President and a director of Xerox Corporation from 1977 until mid 1982. He is
presently a private investor. He is also a director of Morgan Products, Ltd.
Mr. Francis has been Chairman of the Board, Chief Executive Officer and
President of CDI, Inc. (a privately-owned firm engaged in general construction
and real estate development) for more than five years. He is also a director
of Merchants National Bank.
Mr. Hinsey is a Professor at the Harvard University Graduate School of
Business Administration holding the H. Douglas Weaver Professor of Business
Law Chair. Prior to joining the Harvard Business School senior faculty in
1987, he was a Partner of the law firm of White & Case for many years.
Ms. Manix is currently a Partner with Ducker Research Corp., an
industrial research firm serving Fortune 500 companies. Prior to that, Ms.
Manix was President of M & C Enterprises, a consulting firm. From 1988 until
1991, Ms. Manix served as President and Chief Executive Officer of Hallen
Company, a Houston-based consumer products manufacturing and marketing
company
specializing in wine and dining accessories.
Mr. Muller was Chairman of the Board of the Company from 1967 to June
24, 1992; was President from 1967 to August 1989 and Chief Executive Officer
from 1967 to July 1990.
Mr. Ranney has been a partner in the Cleveland, Ohio law firm of
Schneider, Smeltz, Ranney & LaFond for more than five years.
Mr. Saxton has been Chairman of the Company since June 24, 1992; Chief
Executive Officer since July 1, 1990 and President since August 1989. He was
Executive Vice President from September 1987 to August 1989. He is also a
director of AP&S Clinic LLC.
Information on Committees of the Board of Directors
During 1995, the Board of Directors held eight meetings and there were
fourteen meetings of committees of the Board. No director attended fewer than
75 percent of the total number of meetings of the Board and of the committees
of which the director was a member except for Messrs. Bradley and Muller.
Management does not regard attendance at meetings in a particular year to be
an adequate criterion to evaluate the contribution made by a director to the
Company. In addition to attending Board and committee meetings, directors
studied matters and documents affecting the Company and had numerous
discussions with management at times other than the meetings.
The standing committees of the Board of Directors include audit and
compensation committees but do not include a nominating committee.
The Audit Committee monitors the activities of the Company's independent
public accountants, receives reports concerning the Company's internal
accounting controls, reviews the fees to be paid to the Company's independent
public accountants, confers as to the financial statements when the audit is
completed and reports on such activities to the full Board of Directors. Its
members are Joseph Hinsey IV (Chairman), Ann Manix and John H. Muller, Jr.
During 1995, the Audit Committee held five meetings.
The Compensation Committee approves the compensation of officers of the
Company and has overall responsibility for the Company's compensation policies
for senior management. Its members are Charles E. Bradley (Chairman), John S.
Crowley and Phillip A. Ranney. The Compensation Committee held four meetings
during 1995.
Remuneration of Non-Management Directors
The directors of the Company who are not employees receive an annual
retainer of $10,000 per year, plus fees of $1,000 for each meeting of the
Board of Directors or meeting of the committees which they attend and $250 for
each meeting of the Board of Directors or meeting of the committees held by
telephone conference in which they participate.
Pursuant to the Addendum to 1993 Key Employees' Incentive Stock Plan,
adopted by the Board of Directors and approved by the stockholders of the
Company at the Annual Meeting held on May 10, 1994, the seven
non-management directors were each awarded 1,500 shares of restricted Common
Stock. The restricted period ended with respect to 500 shares on May 2, 1995
and will end with respect to 500 shares on the dates on which the Company's
Annual Meeting is held in 1996 and 1997 for each of the non-management
directors who continue as directors on such dates.
In addition to remuneration as a non-management director, Mr. Muller had
another arrangement with the Company. In connection with Mr. Muller's
decision to reduce his day-to-day involvement in the business of the Company
and, in consideration of the Company's desire to utilize his experience while
the duties and responsibilities of the Chief Executive Officer were assumed by
Mr. Saxton and to prevent his competing with the Company following his
employment by the Company, the Company entered into an Employment and
Consulting Agreement (the "Agreement") with him on July 1, 1990. As of July
1, 1992, Mr. Muller began his consulting role for the period which ended June
30, 1995 at an annual fee of $50,000 for up to 50 days of consultation per
annum. To the extent that consulting services were provided by him in excess
of 50 days, Mr. Muller was paid $1,000 per day. During 1995, Mr. Muller did
not provide consulting services in excess of 50 days. During the term of the
Agreement, Mr. Muller was provided with the employee benefits enjoyed by him
during the 12 months ended June 30, 1990. In addition to payments pursuant to
the Company's pension plan for non-bargaining unit employees, Mr. Muller began
receiving, as of July 1, 1992, a supplemental pension benefit of $3,424
monthly to compensate him for the benefit that would otherwise be payable to
him under the Company's pension plan, but for the limitations contained in the
Internal Revenue Code of 1986, as amended.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the nominees for director
named herein.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation earned for each of the three
fiscal years ended December 31, 1995 by the Company's Chief Executive Officer
and the four most highly paid executive officers who were serving as executive
officers at the end of the year, other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION
($)
Paul A. Saxton 1995 $282,000 0 0
Chairman & CEO 1994 252,000 57,078 0
1993 252,000 21,168 0
John C. Blackwell 1995 124,923 0 43,374(1)
Vice President
Gordon R. Erickson 1995 110,000 19,800 0
General Counsel 1994 102,000 19,635 0
Secretary 1993 102,000 7,140 0
Stephen M. Evans 1995 120,000 0 0
Vice President 1994 109,000 20,983 0
1993 109,000 7,630 0
Robert L. Gray 1995 160,000 0 0
Vice President 1994 148,000 28,490 0
1993 148,000 10,360 76,273(2)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
NAME RESTRICTED LONG TERM ALL OTHER
AND STOCK COMPENSATION COMPENSATION
PRINCIPAL POSITION AWARDS OPTIONS ($)(5)
YEAR ($)(3) (#)
Paul A. Saxton 1995 $37,503 12,000 4,500
Chairman & CEO 1994 0 4,500
1993 18,000 4,497
John C. Blackwell 1995 17,487 10,000 0
42,000
Gordon R. Erickson(4)1995 0 0 99,139(6)
General Counsel 1994 0 115,524(6)
Secretary 1993 9,000 103,673(6)
Stephen M. Evans 1995 15,117 6,000 3,854
1994 0 3,499
1993 9,000 3,597
Robert L. Gray 1995 14,397 6,000 4,500
Vice President 1994 0 4,500
1993 12,000 4,497
</TABLE>
(1). Relocation expenses in 1995.
(2). Relocation expenses in 1993.
(3). Restricted stock awards for 1995 were made in lieu of certain annual
cash bonuses except for the award of $42,000 (3,000 shares) which was
made to Mr. Blackwell in connection with his employment agreement. The
number and value of aggregate restricted stock holdings at December 31,
1995 was 13,090 and $126,504 respectively. The vesting schedule with
respect to such restricted stock is, as follows: 2,000 shares vested on
March 20, 1996; 10,090 shares will vest on February 7, 1997; and 1,000
shares will vest on March 20, 1997. Regular Common Stock dividends are
paid on the restricted stock until shares are forfeited and returned to
the Company.
(4). Mr. Erickson retired December 31, 1995.
(5). Amounts shown consist solely of the Company's matching 401(k) Plan
contributions unless otherwise noted.
(6.) Includes legal fees of $95,250, $112,250 and $100,306 paid with respect
to 1995, 1994 and 1993, respectively, pursuant to the arrangement
described under Certain Relationships and Related Transactions below.
OPTION/SAR GRANTS IN LAST FISCAL YEAR TABLE
The following table provides information on option grants during 1995 to
the named executive officers.
<TABLE>
<S> <C> <C> <C> <C>
Individual Grants
Number of Percentage of
Shares Total Options/
Underlying SAR's granted to Exercise or
Options/ Employees in Base Price Expiration
SAR's Fiscal 1995(2) ($/Share) Date
Granted
(#)(1)
Name
Paul A. Saxton 4,000 3.4% $13.125 7/31/2001
4,000 3.4% $13.125 7/31/2002
4,000 3.4% $13.125 7/31/2003
John C. Blackwell 3,333 2.9% $14.00 3/19/2001
3,333 2.9% $14.00 3/19/2002
3,334 2.9% $14.00 3/19/2003
Stephen M. Evans 2,000 1.7% $13.125 7/31/2001
2,000 1.7% $13.125 7/31/2002
2,000 1.7% $13.125 7/31/2003
Robert L. Gray 2,000 1.7% $13.125 7/31/2001
2,000 1.7% $13.125 7/31/2002
2,000 1.7% $13.125 7/31/2003
</TABLE>
<TABLE>
<S> <C> <C>
Potential Realizable
Value at Assumed Annual
Rates of Stock
Price Appreciation
for Option Term
5%($) 10%($)
Name
Paul A. Saxton $17,855 $40,507
$21,373 $49,808
$25,066 $60,038
John C. Blackwell $15,870 $36,003
$18,996 $44,269
$22,286 $53,378
Stephen M. Evans $8,928 $20,253
$10,686 $24,904
$12,533 $30,019
Robert L. Gray $8,928 $20,253
$10,686 $24,904
$12,533 $30,019
- ------------------------------------------
</TABLE>
(1) The three tranches are part of a single option grant, each of which
become exercisable as to one-third of the shares granted on the first,
second and third anniversary dates following the date of grant.
(2) The Company granted options representing 116,000 shares to employees in
fiscal 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES TABLE
The following table provides information on stock options exercised
during 1995 and the value of the unexercised options held at December 31, 1995
by the named executive officers.
<TABLE>
<S> <C> <C> <C> <C>
Number of Securities
Underlying
Unexercised
Options/SAR's
at 12/31/95 (#)
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable(#) Unexercisable(#)
Paul A. Saxton 6,666 $35,830 68,167 18,000
John C. Blackwell 0 10,000
Gordon R. Erickson 16,500 3,000
Stephen M. Evans 16,500 9,000
Robert L. Gray 28,500 10,000
Value of Unexercised
In-the-Money Options
At 12/31/95 ($)(1)
Name Exercisable($) Unexercisable($)
Paul A. Saxton $32,502 $0
John C. Blackwell 0 0
Gordon R. Erickson 0 0
Stephen M. Evans 0 0
Robert L. Gray 0 0
</TABLE>
(1). The closing price of the Company's Common Stock on December 31, 1995
was $8.625. The numbers shown reflect the value of options accumulated over
an eight year period.
PENSION PLAN TABLE
The table that follows shows the estimated annual benefits payable upon
retirement to the Company's employees not represented by a union under the
Company's defined benefit plan.
<TABLE>
<S> <C> <C> <C> <C>
10 15 20 25
Years of Years of Years of Years of
Remuneration Service Service Service Service
$75,000 $13,160 $19,740 $26,320 $32,900
100,000 18,100 27,160 36,200 45,274
125,000 22,900 34,360 45,800 57,274
150,000 27,700 41,560 55,400 69,274
175,000 32,500 48,760 65,000 81,274
200,000 37,300 55,960 74,600 93,274
225,000 42,100 63,160 84,200 105,274
250,000 46,900 70,360 93,800 117,274
275,000 51,700 77,550 103,400 120,000
300,000 56,500 84,760 113,000 120,000
325,000 61,300 91,960 120,000 120,000
350,000 66,100 99,160 120,000 120,000
</TABLE>
Effective January 1, 1994, compensation used for benefit calculations is
limited to $150,000 per year (as adjusted from time to time by the Internal
Revenue Service). To the extent that the annual benefits payable as reflected
in the foregoing Pension Plan Table are so limited by the Internal Revenue
Service, the named executive officers will receive supplemental pension
payments upon retirement after January 1, 1996 equal to the amount of the
annual benefit not payable under the Plan because of the limitation imposed by
the Internal Revenue Service.
The above calculations used the covered compensation of someone born in
1929.
The Plan provides retirement benefits based upon Years of Service
limited to 25 years and Average Monthly Compensation. Average Monthly
Compensation is the average compensation (compensation means basic salary
received, including overtime, bonuses and incentive compensation received, and
other similar types of payment prior to any reduction pursuant to any Company
profit-sharing plan) for the highest five consecutive years of compensation
during the last ten years preceding retirement. The amount of compensation
used for 1995 in determining Average Monthly Compensation of each executive
officer named in the Summary Compensation Table is the aggregate amount shown
in the salary and bonus columns of the Table. Years of Service for retirement
benefits purposes are: Mr. Saxton, 8 years; Mr. Erickson, 22 years; Mr. Evans,
25 years, and Mr. Gray, 6 years. Under the Plan's benefit formula, effective
January 1, 1989, at the Normal Retirement Age of 65, a participant may retire
without any benefit reduction due to age and would receive a monthly benefit
equal to the sum of (i) 1.47% of the Average Monthly Compensation and (ii)
.45% of the Average Monthly Compensation in excess of Social Security Covered
Compensation times Years of Service. In no event, however, would the benefit
under the formula stated above be less than the benefit accrued under the
terms of the Plan in effect as of December 31, 1988. A participant is 100%
vested in the pension benefit after five years of service.
RETIREMENT AND TERMINATION ARRANGEMENTS
In connection with Mr. Saxton's employment, the Company agreed to
supplement the retirement benefits payable following his retirement by an
amount calculated as if each year of actual service equaled 1.5 Years of
Service, less the retirement benefits paid under the Plan.
The Severance Compensation Plan provides for special severance benefits
to employees, designated by the Board, in the event of their termination of
employment, for whatever reason, during the 24-month period following the
acquisition by any person or group of beneficial ownership of 21% of the
Company's outstanding shares or change in the composition of the Board during
any two-year period resulting in a majority turnover where election or
nomination of the new directors was not approved by at least two-thirds of the
directors then still in office who were directors at the beginning of such
period. The benefit, which is payable within ten days of termination of
employment, shall equal three times (i) current base salary, (ii) the highest
bonus received during the past five years, and (iii) certain annual medical
insurance premiums; provided, however, such amount may not exceed the
maximum amount that may be paid without incurring the adverse tax
consequences imposed upon such benefits by the Internal Revenue Code of 1986,
as amended (in general, approximately 300% of the employee's average total
compensation income for the five preceding calendar years). In certain
circumstances, the Plan may be amended or terminated at any time by the Board.
The Board has designated all of the executive officers named in the Summary
Compensation Table to participate in the Plan.
In connection with Mr. Saxton's becoming an employee in September 1987,
the Company agreed to continue payments to him for a period up to 12 months
equal to his annualized basic salary in effect prior to the Company's
termination of his employment before attaining age 64. In addition, the
Company agreed to continue his medical and life insurance benefits for the
same period to the extent that he could be continued as an employee. These
payments would not be paid if benefits are paid under the Severance
Compensation Plan described above or the Company's long term disability plan.
The payments would terminate upon Mr. Saxton's death or his entering a new
employment relationship. In connection with Messrs. Gray's and Blackwell's
becoming employees in April 1990 and March 1995, respectively, the Company
agreed to continue payments to them for a period up to 12 months equal to
their annualized basic salaries in the event of the Company's termination of
their employment.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Report of the Compensation Committee and the Performance Graph below shall not
be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of
three non-executive directors. The Committee is responsible for determination
of the executive officers' salaries, the annual cash bonus and long term
incentive plans. The Committee has prepared the following report for
inclusion in this proxy statement describing the policies and process of
compensating the executive officers of the Company.
Compensation Policies
The Company's compensation policies are designed to offer executive
officers competitive salaries and additional compensation opportunities based
on each executive officer's contribution to the Company's performance.
Competitive compensation packages are designed to enable the Company to
attract and retain individuals with superior abilities. Commensurate with his
responsibilities, the Chief Executive Officer's additional compensation
opportunity is more dependent on the Company's performance than is that of the
other executive officers.
Application and Administration of Compensation Policies
The compensation of the Company's executive officers is determined and
administered annually by the Committee. The Company's executive officer
compensation program has been designed to:
* Provide salary and additional compensation opportunities
which are comparable to those offered by similar
companies, thus allowing the Company to compete for
and retain talented executives who are critical to its long
term success;
* Motivate executive officers to achieve specific business
goals annually and reward them for their achievement;
and
* Align the interests of executive officers with the long
term interests of stockholders by providing opportunities
that can result in significant ownership of the Company's
Common Stock.
At present, the executive officers' compensation packages are comprised
of base salaries, an annual incentive bonus plan and long term incentive
opportunities in the form of grants of stock options and awards of restricted
stock, as well as other benefits typically offered to executive officers
by comparable companies.
Base Compensation
Base salary ranges are established by the Committee for each executive
officer after considering industry comparisons, the executive's position and
responsibilities, his tenure and the size of the Company. Salaries are
reviewed annually and adjusted as warranted to reflect sustained individual
officer performance.
Annual Bonus Plan
A bonus plan is formulated annually by the Committee. The potential
1995 cash bonus for the Chief Executive Officer and the other executive
officers could have equaled 80% and 68% of their base salaries, respectively.
The cash bonus plan was based in part on achievement of specific quantitative
goals, measured in terms of increases in the Company's profit before tax and
return on average assets. These two measures accounted for seventy five
percent (75%) of the potential 1995 cash bonus. The Company did not meet
either of these goals; therefore, no bonus was paid under those provisions of
the plan. In addition to the quantitative goals there were individual goals
established for the executive officers of the Company and approved by the
Compensation Committee which, if achieved, could have accounted for 25% of
their potential 1995 bonuses. These goals were achieved in part and, as a
result, the Compensation Committee approved a combination of cash and
restricted stock awards ranging from 9% to 18% of the base salaries of the
executive officers other than the Chief Executive Officer.
Long-Term Incentive Compensation
Stock based incentives are an important element of the executive
officers' compensation packages. To provide such incentives the Company
maintains a stock plan for key employees which provides for the granting of
options or awards of restricted stock until January 31, 2003. The Committee
believes the granting of stock based incentives is the best mechanism for
aligning the financial interests of the Company's executive officers with
interests of shareholders since both gain through the appreciation of the
Company's stock. Unexercised stock options held by the Company's executive
officers and Chief Executive Officer are listed in the Aggregated Option/SAR
Exercises In Last Fiscal Year And Fiscal Year-End Option/SAR Values Table set
forth above. In 1995, the Company granted stock options to a broad-based
group representing 11% of the total employees. The Option/SAR Grants in Last
Fiscal Year Table set forth above lists the grants made in 1995 to the named
executive officers.
Compensation of the Chief Executive Officer
In evaluating the compensation of Paul A. Saxton, Chairman of the Board
and Chief Executive Officer, for the year ended December 31, 1995, the
Committee placed particular emphasis on Mr. Saxton's leadership in bringing
about significant organizational improvements and substantial progress in
solving supply chain management problems. Although the Company's 1995
financial results were not comparable to those of the recent past, the
Committee recognized the significant contributions of Mr. Saxton to the
Company's achievements despite a difficult economic market. In accordance
with the compensation philosophy and processes described above, the Committee
granted to Mr. Saxton options to acquire 12,000 shares of Common Stock at
$13.125 per share and 4,478 shares of Restricted Stock, both grants being
pursuant to the Company's 1993 Key Employee Incentive Stock Plan. As stated
under the caption "Compensation of Executive Officers", the award of
restricted stock was made in lieu of the annual cash bonus. In view of the
Company's financial performance for the year, it was believed that an award of
stock was more appropriate than cash, recognizing that additional equity more
closely aligns the interests of the Chief Executive Officer with the
shareholders. After holding Mr. Saxton's base salary even in 1994, and after
considering his performance, the size of the Company and general industry
comparisons, the Committee adjusted Mr. Saxton's base salary for 1995
upwards 12% to $282,000. In order to make appropriate comparisons, the
Committee relied on various compensation studies which included data from a
wide range of companies, including some of those in the peer group used for
purposes of the Performance Graph below.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
to $1 million the tax deduction for compensation paid to any of the named
executive officers unless certain requirements are met. All compensation paid
to the Company's executive officers in 1995 was fully deductible and, at this
time, it is not anticipated that any named executive officer of the Company
will receive any such compensation in excess of this limit during 1996.
Compensation Committee
Charles E. Bradley, Chairman
John S. Crowley
Phillip A. Ranney
The following graph compares the yearly percentage change in the
cumulative total return on the Company's Common Stock during the five fiscal
years ended December 31, 1995, with cumulative total return on the S&P 500
Index and the S&P Housewares Composite Index. The comparison assumes $100
was invested on January 1, 1991 in the Company's Common Stock and in each of
the foregoing indices and assumes reinvestment of dividends. The stock price
performance shown on the graph below is not necessarily indicative of future
price performance.
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG GENERAL HOUSEWARES CORP., S&P 500 INDEX
AND S&P HOUSEWARES COMPOSITE INDEX
Cumulative Total Return Summary
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
GHC 100 115.54 155.5 120.55 133.09 84.4
S&P 500 100 130.47 140.41 154.56 156.6 214.86
S&P Housewares 100 190.63 166.98 199.86 193.64 208.5
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to his employment by the Company, on a part-time basis, Mr.
Erickson was engaged during 1995 in the private practice of law in
Connecticut. To the extent that his services for the Company exceeded half of
his time during a calendar week, he billed the Company for legal fees
on the basis of $1,500 for eight hours or more per day and $750 for more than
four but less than eight hours per day.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Price Waterhouse as its independent public
accountants for the current fiscal year. The firm has audited the Company's
financial statements annually since 1967. A representative of Price
Waterhouse is expected to be present at the Annual Meeting with the
opportunity to make a statement, if the representative desires to do so, and
is expected to be available to respond to appropriate questions from the
stockholders.
OTHER MATTERS
Management of the Company is not aware of any matters, other than those
specified in the Notice of Annual Meeting and discussed above in this Proxy
Statement, that are to be presented for action at the meeting. Should any
other matters properly come before the meeting or any adjournment or
adjournments thereof, the persons named as proxies in the enclosed form of
proxy will have discretionary power to vote, pursuant to the proxies hereby
solicited, with respect to such matters in accordance with their judgment on
such matters.
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or telegraph, by regular employees of the Company or others
affiliated with the Company. In addition, the Company will reimburse brokers
and other persons holding stock in their names or in the names of nominees for
their expenses in sending or forwarding proxy material to principals in
obtaining their proxies.
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy for next year's Annual Meeting, any proposals by
stockholders intended to be presented at the 1997 Annual Meeting must be
received by the Company on or before December 1, 1996.
The Company has determined, upon its review, that those persons subject
to Section 16 of the Securities Exchange Act of 1934, as amended, have filed
on a timely basis Forms 3, 4 and 5 in compliance with Section 16(a) of said
Act, except for one Form 5 with respect to Mr. Crowley's gift of 1,000 shares
which was filed one day late.
All stockholders are urged to execute, date and return promptly the
enclosed form of proxy in the enclosed return envelope, regardless of whether
they intend to be present in person at the Annual Meeting.
By Order of the Board of Directors,
RAYMOND J. KULLA,
Secretary.
Terre Haute, Indiana
Dated: March 29, 1996
FORM 10-K AVAILABLE
THE FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION PROVIDES CERTAIN ADDITIONAL INFORMATION, A COPY OF
WHICH MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO: TERESA BURNS,
ASSISTANT SECRETARY, GENERAL HOUSEWARES CORP., P.O. BOX 4066,
TERRE HAUTE, INDIANA 47804.
