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 12, 1998
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 GHC
ADVANCE(SM) (Advanced Distribution Value-Added Network CEnter), 1100 Whitaker
Road, Plainfield, Indiana, on Tuesday, May 12, 1998, at 10:00 a.m. (local
time) for the following purposes:
1. To elect three directors; and
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 17, 1998, 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 27, 1998
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 12, 1998
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 GHC ADVANCE(SM) (Advanced Distribution Value-Added Network
CEnter), 1100 Whitaker Road, Plainfield, Indiana, on Tuesday, May 12, 1998, 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 31, 1998.
Only holders of record of the Company's Common Stock, par value $.33 1/3 per
share, at the close of business on March 17, 1998, will be entitled to vote at
the meeting. At that date there were issued and outstanding 3,818,303 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, (a) the following table sets forth as of March
17, 1998, 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 executive officers as
a group; (b) all beneficial ownership reflected in the table represents sole
voting and investment power as to Common Stock; and (c) the information is
provided below (and 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.
Amount Percent
Beneficially of
Owned Class
(a) Holders of more than 5% of Common Stock
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 250,710 6.5
Walter Absil Investments, Inc.
875 McCaffrey
St. Laurent, Quebec H4T1N3 280,000(1) 7.3
Investment Counselors of Maryland
803 Cathedral Street
Baltimore, MD 21201 285,000 7.4
Gangelhoff Enterprises Trust
1405 West Farm Road
Chaska, MN 55318 323,517 8.4
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434 694,200 18.1
(b) Directors and Nominees
Thomas G. Belot 2,000 (2)
Charles E. Bradley 5,600 (2)
John S. Crowley 10,310 (2)
Thomas L. Francis 5,270 (2)
Joseph Hinsey IV 4,062 (2)
Richard E. Lundin 3,000 (2)
Ann Manix 3,000 (2)
Phillip A. Ranney 4,834 (2)
Paul A. Saxton 110,712(3) 2.8
(c) Named Executive Officers other than Paul A. Saxton
John C. Blackwell 26,057(4) (2)
Gordon H. Brown 22,528(5) (2)
William V. Higdon 21,000(6) (2)
Raymond J. Kulla 21,000(7) (2)
(d) All Directors, Nominees and Executive Officers as a Group
(13 persons) 239,373 6.2
(1) Includes 40,000 shares owned by Michael Absil Investments, Inc. and 40,000
shares owned by Ingrid Pokrass Investments, Inc., of which Walter Absil
Investments, Inc. disclaims beneficial ownership but of which Walter Absil
Investments, Inc. has sole voting power.
(2) Less than 1% of class.
(3) Includes 44,500 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.
(4) Includes 12,666 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) Includes 12,666 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 5,999 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 9,332 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 bylaws, 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 nine at the Regular Meeting of the
Board of Directors held on May 13, 1997. The three directors whose terms will
expire at the 1998 Annual Meeting are John S. Crowley, Richard E. Lundin and
Paul A. Saxton. John S. Crowley, Richard E. Lundin and Paul A. Saxton have
been nominated by the Board of Directors to stand for election as directors at
the Annual Meeting. While his nomination to continue as a member of the Board
of Directors is for the traditional three-year term that is specified in the
Company's bylaws, Mr. Crowley has indicated an intention to step down as a
director when he reaches age 75 in May 1999. Upon his withdrawal, the Board
will either fill the vacancy thus created by electing a new director to serve
for the remainder of Mr. Crowley's term or eliminate the vacancy by reducing
the size of the Board.
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.
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.
Information on Nominees and Incumbent Directors
Served
as Director
Name Since Age
Nominees for Election to Term Expiring in 2001:
John S. Crowley 1980 74
Richard E. Lundin 1996 46
Paul A. Saxton 1987 59
Directors Whose Term Expires in 2000:
Joseph Hinsey IV 1992 66
Ann Manix 1994 45
Thomas G. Belot 1996 47
Directors Whose Term Expires in 1999:
Charles E. Bradley 1967 68
Thomas L. Francis 1990 68
Phillip A. Ranney 1990 61
Mr. Belot has been President and Chief Executive Officer of The Vollrath
Company, Inc. (a manufacturer and marketer of food service equipment) for more
than five years.
Mr. Bradley has been President of Stanwich Partners, Inc. (a private
investment banking firm) for more than five years. He is also a director of
Audits and Surveys Worldwide, DeVlieg Bullard, Inc., Sanitas, Inc., Texon
Energy Corporation, Consumer Portfolio Services, Inc., Reunion Industries,
Inc., NAB Assets Corporation, Zydeco Energy Co. and Chatwins Group, Inc.
Mr. Crowley was 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, Inc.
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.
Mr. Lundin has been President and Chief Executive Officer of Da-Lite Screen
Company, Inc. (a manufacturer and marketer of projection screens, overhead
projectors and related products) for more than five years.
Ms. Manix is currently the Managing Partner of 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. 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 1997, the Board of Directors held eight meetings, and there were 15
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. 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 paid to the Company's independent public
accountants, confers as to the year-end 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 Thomas L. Francis.
During 1997, the Audit Committee held four 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 Phillip A. Ranney (Chairman), Charles
E. Bradley and Thomas G. Belot. The Compensation Committee held four meetings
during 1997.
Remuneration of Non-Management Directors
The directors of the Company who are not employees receive an annual retainer
of $10,000 per year, plus attendance fees of $1,000 for each Board or
committee meeting and $250 for each such meeting held by telephone conference
in which they participate.
Pursuant to the 1997 Key Employees' Incentive Stock Plan, adopted by the Board
of Directors and approved by the stockholders of the Company at the Annual
Meeting held on May 13, 1997, the eight non-management directors serving on
that date were each awarded 1,500 shares of restricted Common Stock. The
restriction ends with respect to 500 shares on each of the respective dates on
which the Company's Annual Meeting is held in 1998, 1999 and 2000.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the nominees for director named
herein.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation earned for each of the three
fiscal years ended December 31, 1997, by the Company's Chief Executive Officer
and the four most highly paid executive officers who were serving as executive
officers at the end of the year, other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
Name and ANNUAL COMPENSATION
Principal Other Annual
Position Year Salary($) Bonus($) Compensation ($)
Paul A. Saxton 1997 294,000 30,253 0
Chairman & CEO 1996 294,000 0 0
1995 282,000 0 0
John C. Blackwell 1997 178,000 15,575 0
Vice President 1996 178,000 0 0
1995 124,923 0 43,374(1)
Gordon H. Brown 1997 178,000 15,575 0
Vice President 1996 178,000 0 0
1995 80,000 0 39,803(1)
William V. Higdon 1997 165,000 14,438 53,736(3)
Vice President 1996 13,750 37,098 0
Raymond J. Kulla 1997 173,000 15,138 30,912(3)
Vice President 1996 173,000 25,000 1,481(2)
1995 36,410 0 1,256(1)
Restricted Long Term
Name and Stock Compensation All Other
Principal Awards Options Compensation
Position Year ($)(4) (#) ($)(5)
Paul A. Saxton 1997 0 12,000 3,998
Chairman & CEO 1996 0 0 2,700
1995 37,503 12,000 4,500
John C. Blackwell 1997 0 8,000 3,999
Vice President 1996 0 0 2,280
1995 17,487 10,000 0
42,000
Gordon H. Brown 1997 0 8,000 4,000
Vice President 1996 0 0 2,700
1995 12,797 10,000 0
36,000
William V. Higdon 1997 0 8,000 0
Vice President 1996 29,250 0 0
Raymond J. Kulla 1997 0 8,000 4,750
Vice President 1996 0 0 0
1995 27,750 0 0
(1) Relocation expenses in 1995.
(2) Relocation expenses in 1996.
(3) Relocation expenses in 1997.
(4) Restricted stock awards for 1995 were made in lieu of certain annual cash
bonuses except for the awards of 3,000 shares each ($42,000, $36,000 and
$27,750, respectively) made to Messrs. Blackwell, Brown and Kulla in
connection with their employment agreements. In 1996, an award of 3,000
shares ($29,250) was made to Mr. Higdon in connection with his employment
agreement. The aggregate number and value of restricted stock holdings at
December 31, 1997, were 1,000 and $9,750, respectively; the prior vesting
schedule was as follows: 2,000 shares vested on March 20, 1996; 2,000 shares
vested on July 3, 1996; 2,000 shares vested on November 14, 1996; 9,813 shares
vested on February 7, 1997; 1,000 shares vested on March 20, 1997; 1,000
shares vested on July 3, 1997; 1,000 shares vested on November 14, 1997; and
2,000 shares vested on December 2, 1997. Regular Common Stock dividends were
paid on the restricted stock prior to vesting.
(5) Amounts shown consist solely of the Company's matching 401(K) Plan
contributions.
OPTION/SAR GRANTS IN LAST FISCAL YEAR TABLE
The following table provides information on option grants during 1997 to the
named executive officers.
Number of Individual Grants
Shares Percentage
Underlying of Total
Options/ Options/SAR's Exercise or
SAR's Granted Granted to Employees Base Price
Name (#)(1) in Fiscal 1997(2) ($/Share)
Paul A. Saxton 12,000 15.73% $10.50
John C. Blackwell 8,000 10.49 10.50
Gordon H. Brown 8,000 10.49 10.50
William V. Higdon 8,000 10.49 10.50
Raymond J. Kulla 8,000 10.49 10.50
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Expiration Option Term
Name Date 5%($) 10%($)
Paul A. Saxton 2/13/05 $60,159 $144,092
John C. Blackwell 2/13/05 40,106 96,061
Gordon H. Brown 2/13/05 40,106 96,061
William V. Higdon 2/13/05 40,106 96,061
Raymond J. Kulla 2/13/05 40,106 96,061
(1) The three tranches are part of a single option grant, each of which
become exercisable as to one-third of the shares granted on the first, second
and third anniversary dates following the date of grant, which was February
14, 1997.
(2) The Company granted options respecting 76,250 shares to employees in
fiscal 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES TABLE
The following table provides information respecting stock options exercised
during 1997 and the value of the unexercised options held at December 31,
1997, by the named executive officers.
Shares
Acquired on Value
Name Exercise(#) Realized ($)
Paul A. Saxton 6,667 $47,502
John C. Blackwell 0 0
Gordon H. Brown 0 0
William V. Higdon 0 0
Raymond J. Kulla 0 0
Number of Securities Underlying
Unexercised Options/SAR's
at 12/31/97(#)
Name Exercisable(#) Unexercisable(#)
Paul A. Saxton 40,500 16,000
John C. Blackwell 6,666 11,334
Gordon H. Brown 6,666 11,334
William V. Higdon 3,333 14,667
Raymond J. Kulla 6,666 11,334
Value of Unexercised In-the-
Money Options
at 12/31/97($)(1)
Name Exercisable($) Unexercisable($)
Paul A. Saxton $ 625 $ 0
John C. Blackwell 0 0
Gordon H. Brown 0 0
William V. Higdon 2,499 5,000
Raymond J. Kulla 8,332 4,167
(1) The closing price of the Company's Common Stock on December 31, 1997, was
$10.50. The numbers shown reflect the value of options accumulated over a
seven-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.
10 15 20 25
Years of Years of Years of Years of
Remuneration Service Service Service Service
$75,000 $12,999 $19,499 $25,998 $32,498
100,000 17,799 26,699 35,598 44,498
125,000 22,599 33,899 45,198 56,498
150,000 27,399 41,099 54,798 68,498
175,000 32,199 48,299 64,398 80,498
200,000 36,999 55,499 73,998 92,498
225,000 41,799 62,699 83,598 104,498
250,000 46,599 69,899 93,198 116,498
275,000 51,399 77,099 102,798 128,498
300,000 56,199 84,299 112,398 130,000
325,000 60,999 91,499 121,998 130,000
350,000 65,799 98,699 130,000 130,000
Effective January 1, 1997, compensation used for benefit calculations is
limited to $160,000 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, 1998, 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 (basic salary received, including
overtime, bonuses and incentive compensation 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 1997 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 benefit
purposes) are: Mr. Saxton, 10 years; Mr. Blackwell, 3 years; Mr. Brown, 3
years; Mr. Higdon, 1 year; and Mr. Kulla, 2 years. Under the Plan's benefit
formula, a participant may retire, at the Normal Retirement Age of 65, 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 be less than
the benefit that was 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 their employment, the Company agreed to supplement the
retirement benefits payable to Messrs. Saxton, Brown, Higdon and Kulla
following their retirement by an amount calculated under the Plan formula, but
calculating their benefit as if each year of actual service equaled 1.5 Years
of Service for Messrs. Saxton, Higdon and Kulla and 1.4 Years of Service for
Mr. Brown. The amount of this supplemental benefit is reduced by the
retirement benefits paid under the Plan.
Mr. Saxton and certain other officers, including each of the officers named in
the Summary Compensation Table, have entered into Employment Agreements with
the Company providing that, subject to certain conditions described below and
assuming that the officer is in the Company's employ at the time of a Change
of Control, the officer will be employed for a period of three years
thereafter. A Change of Control is defined as (i) the acquisition by any
person or group of beneficial ownership of 30% or more of the combined voting
power of the Company, (ii) a 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, (iii)
a consummated merger or consolidation of the Company or (iv) approval by
stockholders of a complete liquidation or dissolution of the Company. The
Employment Agreements further provide that if the officer's employment shall
be terminated by the Company for other than just cause or disability (as
defined) or death, or by the officer for good reason (as defined therein), the
Company shall continue to pay the officer his base salary and provide benefits
through the third anniversary of the date on which the Change of Control
occurs unless such termination occurs during the final twelve-month period of
the Agreement, in which case the officer shall continue to receive salary and
benefits until the first anniversary of the date of such termination. The
compensation received by the officer may not exceed the maximum amount that
may be paid without incurring an excise tax imposed by Section 4999 of 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 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 Mr. Saxton is entitled to benefits paid under the Employment Agreement
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 their becoming employees in March 1995, July
1995, October 1995 and December 1996, respectively, the Company agreed to
continue payments to Messrs. Blackwell, Brown, Kulla and Higdon for a period
up to 12 months, equal to their annualized base 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 filing.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of three non-
employee directors. The Committee is responsible for administering the
Company's long-term incentive compensation plans and for considering and
submitting recommendations to the Board on base compensation, the annual bonus
plan and other compensation of the executive officers. The Committee has
prepared, for inclusion in this proxy statement, the following report
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 reviewed periodically
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. Adjustments are recommended to the Board, as warranted, to
reflect sustained individual officer performance.
Annual Bonus Plan
A bonus plan is formulated annually by the Committee and recommended to the
Board. The potential 1997 cash bonus for the Chief Executive Officer and the
other executive officers could have equaled 80% and 68% of their base
salaries, respectively. The plan was based upon achievement of three specific
quantitative goals: target increases in the Company's profit before taxes
accounted for 60% of the bonus plan, target increases in inventory turns
accounted for 20% of the bonus plan and achievement of a "customer
satisfaction index" accounted for 20% of the bonus plan. The customer
satisfaction index is a daily measurement of customer service based on a 400
point scale. 200 points are awarded for perfect, on-time and complete
shipments. 50 points are awarded for a perfect computer performance; if the
computer is not available even for a few seconds, zero points are awarded.
100 points are awarded for a perfect in-stock position, and 30 points are
derived from same-day order entry. Finally, 20 points relate to telephone
performance. When the point total is calculated for a day, it is reduced to a
percentage. The targets for profit before tax and inventory turns were not
met. The customer satisfaction index target was partially achieved resulting
in bonus payments ranging from 8.75% to 10.3%.
Long-Term Incentive Compensation
Stock based incentives are an important element of the executive officers'
compensation packages. To provide such incentives, the Company maintained a
stock plan for key employees which provided for the granting of options or
awards of restricted stock. 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 1997, the Company
granted stock options to a group representing 3% of the total employees,
including options for 68,000 shares to executive officers.
Compensation of the Chief Executive Officer
In accordance with the compensation philosophy and cash bonus criteria
described above, the Committee authorized the payment of a cash bonus of ten
and three tenths percent (10.3%) of his base salary to Paul A. Saxton,
Chairman of the Board and Chief Executive Officer. No change was made in his
base salary. In awarding Mr. Saxton a stock incentive option in the amount of
12,000 shares, the Committee placed particular emphasis on Mr. Saxton's
leadership in improving the Company's information systems and customer service
and on strengthening of the senior management team.
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 1997 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 1998.
Compensation Committee
Phillip A. Ranney, Chairman
Charles E. Bradley
Thomas G. Belot
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, 1997, 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, 1992, 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
1992 1993 1994 1995 1996 1997
GHC 100 77.53 85.59 54.28 63.22 70.33
S&P 500 100 110.08 111.53 153.45 188.68 251.63
S&P
Housewares 100 119.70 115.97 124.87 146.11 160.91
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NONE
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.
FUTURE STOCKHOLDER PROPOSALS
From time to time, stockholders present proposals which may be proper subjects
for inclusion in the proxy statement. To be included in the proxy statement
for the 1999 annual meeting, proposals must be received by the Company no
later than December 1, 1998.
In addition, stockholders may present proposals which are proper subjects for
consideration at an annual meeting, even if the proposal is not submitted by
the deadline for inclusion in the proxy statement. To do so, the stockholder
must comply with the procedures specified by the Company's bylaws. The
Company's bylaws require that to be timely, a stockholder's notice to the
Secretary must be delivered to, or mailed and received at, the principal
executive offices of the Corporation not less than 90 days, nor more than 130
days, prior to the anniversary date of the immediately preceding annual
meeting. To be eligible for consideration at the 1999 annual meeting,
proposals which have not been submitted by the deadline for inclusion in the
proxy statement must be received by the Company between January 2 and February
10, 1999.
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.
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.
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 27, 1998
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 A. MAGER, ASSISTANT SECRETARY, GENERAL HOUSEWARES
CORP., P. O. BOX 4066, TERRE HAUTE, INDIANA 47804.
FORM OF PROXY
The undersigned hereby appoints TERESA A. MAGER and RAYMOND J. KULLA, and each
of them, his proxies with full power of substitution, to vote all shares of
Common Stock of General Housewares Corp. which the undersigned is entitled to
vote at the Annual Meeting of the Stockholders of the Company to be held at
10:00 A.M. on Tuesday, May 12, 1998, at GHC ADVANCE(SM) (Advanced Distribution
Value-Added Network CEnter), 1100 Whitaker Road, Plainfield, Indiana, and at
any adjournments thereof, with all powers the undersigned would possess if
personally present, upon and in respect of the following matter and, in their
discretion for the transaction of such other business as may properly come
before the meeting; all as set forth in the Proxy Statement dated March 17,
1998.
Election of Directors
John S. Crowley
Richard E. Lundin
Paul A. Saxton
COMMENTS: (change of address)
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card). You are encouraged to specify your choice by
marking the appropriate box, SEE REVERSE, but you need not mark any box if you
wish to vote in accordance with the Board of Directors' recommendation. The
Proxy Committee cannot vote your shares unless you sign and return this card.
Please mark your vote as in this example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposal 1.
The Board of Directors recommends a vote FOR proposal 1.
1. Election of directors FOR ALL WITHHELD
(see reverse) NOMINEES FROM ALL
NOMINEES
To withhold a vote on one or more nominees, please write their name on the
line below.
- -------------------------
SPECIAL ACTION
Change of Address/Comments
Will Attend Annual Meeting
This proxy may be revoked by the undersigned as provided in the accompanying
Proxy Statement.
The undersigned hereby acknowledges receipt of the Notice of Annual meeting of
Stockholders and related Proxy Statement, both dated March 27, 1998.
The undersigned hereby revokes any proxy or proxies heretofore given by the
undersigned to any other person or persons.
SIGNATURES(S)
DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
