GENERAL HOUSEWARES CORP.
1536 BEECH STREET, P. O. BOX 4066, TERRE HAUTE, INDIANA 47804 - (812) 232-
1000
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement X
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GENERAL HOUSEWARES CORP.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-
11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 11, 1999
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
Hilton Chicago O'Hare Airport, Chicago, Illinois, on Tuesday, May 11, 1999, 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, 1999, 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.
In order to facilitate arrangements for this meeting, we would like to know in
advance how many shareholders expect to attend in person. If you plan to
attend, please so indicate in the space provided on the proxy card.
By Order of the Board of Directors,
RAYMOND J. KULLA,
Secretary.
Dated: March 29, 1999
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 11, 1999
The accompanying proxy is solicited by the Board of Directors of General
Housewares Corp. (the "Company") for use at the Annual Meeting of Stockholders
("Annual Meeting") to be held at the Hilton Chicago O'Hare Airport, Chicago,
Illinois, on Tuesday, May 11, 1999, 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. The approximate date on
which this Proxy Statement and form of proxy will be first given or mailed to
stockholders is March 29, 1999.
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, 1999, will be entitled to vote at
the meeting. At that date there were issued and outstanding 4,027,268 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 a proxy has previously been given, but presence at the meeting will
not revoke the 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, 1999, 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 238,910 5.9
Gangelhoff Enterprises Trust
1405 West Farm Road
Chaska, MN 55318 242,217 6.0
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434 855,600 21.2
Sandera Partners, L.P. and Newcastle Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, TX 75201 512,599(1) 12.7
(b) Directors and Nominees
Charles E. Bradley 5,600 (2)
John A. Bricker, Jr. 497,849(1) 12.3
John S. Crowley 10,310 (2)
Thomas L. Francis 5,217 (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 142,546(3) 3.5
(c) Named Executive Officers other than Paul A. Saxton
John C. Blackwell 26,102(4) (2)
Gordon H. Brown 38,528(4) (2)
Raymond J. Kulla 41,000(4) 1.0
Alexander T. Lee 36,000(5) (2)
(d) All Directors, Nominees and Executive Officers as a Group
(13 persons) 818,048 20.3
(1) Sandera Partners, L.P. has filed a Schedule 13D jointly with Newcastle
Partners, L.P. As of the most recent amendment to that Schedule 13D, Sandera
Partners, L.P. reported beneficial ownership of 497,099 shares of Common
Stock. By virtue of their direct and indirect control positions over Sandera
Partners, L.P., each of Sandera Capital Management, L.P., Sandera Capital,
L.L.C., John A. Bricker, Jr., Clark K. Hunt, Mark E. Schwarz, Hunt Financial
Partners, L.P., Hunt Financial Group, L.L.C., J. R. Holland, Jr. and Lamar
Hunt may be deemed to beneficially own shares of Common Stock owned by
Sandera Partners, L.P. Newcastle Partners, L.P. reported beneficial ownership
of 15,500 shares of Common Stock. By virtue of his direct control over
Newcastle Partners, L.P., Mark E. Schwarz may be deemed to beneficially own
the shares of Common Stock owned by Newcastle Partners, L.P. In addition, Mr.
Bricker also owns 750 shares of restricted Common Stock awarded to him by the
Company.
(2) Less than 1% of class.
(3) Includes 44,334 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 15,333 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) Includes 4,333 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.
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 November 17, 1998. The three directors whose terms
will expire at the 1999 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 for Mr. Crowley who
intends to resign in 1999 as disclosed in the Company's 1998 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. Abstentions and broker
non-votes are counted as shares of Common Stock represented at the meeting for
purposes of determining a quorum, but will have no effect on the outcome of the
election.
Information on Nominees and Incumbent Directors
Served
as Director
Name Since Age
Nominees for Election to Term Expiring in 2002:
Charles E. Bradley 1967 69
Thomas L. Francis 1990 69
Phillip A. Ranney 1990 62
Directors Whose Term Expires in 2001:
John S. Crowley 1980 75
Richard E. Lundin 1996 47
Paul A. Saxton 1987 60
Directors Whose Term Expires in 2000:
Joseph Hinsey IV 1992 67
Ann Manix 1994 46
John A. Bricker, Jr. 1998 47
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
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. Bricker has been President of Sandera Capital, L.L.C., a private investment
firm, since 1995, and President and Manager of SCM Advisors, L.L.C., a
registered investment advisor, since 1991.
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 and Chief Executive Officer 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 Emeritus of the Harvard University Graduate School of
Business Administration, where he has held 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 Chairman and Chief Executive Officer of Da-Lite Screen
Company, Inc. (a manufacturer and marketer of projection screens and other
meeting room 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 thereto, 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. Ms. Manix is also a director of
Compx, a manufacturer of precision drawer slides and security systems.
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 1998, the Board of Directors held 11 meetings and there were 16
meetings of committees of the Board. No director attended fewer than 75
percent of the total number of meetings of the Board or 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), John A. Bricker, Jr., Ann Manix and
Thomas L. Francis. During 1998, the Audit Committee held 5 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 Richard E. Lundin. The Compensation Committee held 3 meetings
during 1998.
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 $250 for each such meeting held by telephone conference
in which they participate.
Pursuant to the 1997 Key Employees' Incentive Stock Plan, adopted by the Board
of Directors and approved by the stockholders of the Company at the Annual
Meeting held on May 13, 1997, the eight non-management directors serving on
that date were each awarded 1,500 shares of restricted Common Stock. The
restriction ended with respect to 500 shares on the date of the Company's
Annual Meeting in 1998. The restricted period will end with respect to 500
shares on each of the respective dates on which the Company's Annual Meeting
is held in 1999 and 2000. As part of the award set forth above, a director
assuming office after the 1997 Annual Meeting is to be awarded a different
number of shares as gives proportionate effect to the reduced period of time
he or she holds office. Accordingly, on November 17, 1998, the date upon
which he became a director, Mr. Bricker was awarded 750 shares of restricted
stock. The restricted period will end with respect to 250 shares on the date
of the Company's Annual Meeting in 1999 and 500 shares on the date of the
Company's Annual Meeting in 2000.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the nominees for director named
herein.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation earned for each of the three
fiscal years ended December 31, 1998, by the Company's Chief Executive Officer
and the four most highly paid executive officers who were serving as executive
officers at the end of the year, other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
Name and ANNUAL COMPENSATION
Principal Other Annual
Position Year Salary($) Bonus($) Compensation ($)
Paul A. Saxton 1998 294,000 9,673 0
Chairman & CEO 1997 294,000 30,253 0
1996 294,000 0 0
John C. Blackwell 1998 178,000 4,984 0
Vice President 1997 178,000 15,575 0
1996 178,000 0 0
Gordon H. Brown 1998 178,000 4,984 0
Vice President 1997 178,000 15,575 0
1996 178,000 0 0
Raymond J. Kulla 1998 173,000 4,844 0
Vice President 1997 173,000 15,138 30,912(2)
1996 173,000 25,000 1,481(1)
Alexander T. Lee 1998 150,000 43,938 0
Vice President
Restricted Long Term
Name and Stock Compensation All Other
Principal Awards Options Compensation
Position Year ($)(3) (#) ($)(4)
Paul A. Saxton 1998 407,500 0 5,053
Chairman & CEO 1997 0 12,000 3,998
1996 0 0 2,700
John C. Blackwell 1998 0 0 5,221
Vice President 1997 0 8,000 3,999
1996 0 0 2,280
Gordon H. Brown 1998 163,000 0 4,914
Vice President 1997 0 8,000 4,000
1996 0 0 2,700
Raymond J. Kulla 1998 203,750 0 4,417
Vice President 1997 0 8,000 4,750
1996 0 0 0
Alexander T. Lee 1998 305,625 0 4,800
Vice President
(1) Relocation expenses in 1996.
(2) Relocation expenses in 1997.
(3) Messrs Saxton, Brown, Kulla and Lee received awards of restricted stock in
1998 totaling 40,000, 16,000, 20,000 and 30,000, respectively. The
restrictions with respect to twenty-five percent of these shares lapsed on
February 1, 1999. The restrictions on the remaining shares will lapse on
January 1, 2002. The aggregate number and value of restricted stock holdings
at December 31, 1998, were 106,000 and $1,272,000, respectively. Regular
Common Stock dividends were paid on the restricted stock prior to vesting.
(4) Amounts shown consist solely of the Company's matching 401(k) Plan
contributions.
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 (the "Plan"). The calculations are based on the
covered compensation of an employee born in 1934.
10 15 20 25
Years of Years of Years of Years of
Remuneration Service Service Service Service
$75,000 $12,912 $19,368 $25,825 $32,281
100,000 17,712 26,568 35,425 44,281
125,000 22,512 33,768 45,025 56,281
150,000 27,312 40,968 54,625 68,281
175,000 32,112 48,168 64,225 80,281
200,000 36,912 55,368 73,825 92,281
225,000 41,712 62,568 83,425 104,281
250,000 46,512 69,768 93,025 116,281
275,000 51,312 76,968 102,625 128,281
300,000 56,112 84,168 112,225 130,000
325,000 60,912 91,368 121,825 130,000
350,000 65,712 98,568 130,000 130,000
Effective January 1, 1998, 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, 1999, equal to the amount of the
annual benefit not payable under the Plan because of the limitation imposed by
the Internal Revenue Service.
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 1998 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, 11 years; Mr. Blackwell, 4 years; Mr. Brown, 4
years; and Mr. Kulla, 3 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. 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 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 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 except Mr. Blackwell, 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
or her 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 July
1995 and October 1995, respectively, the Company agreed to continue payments
to Messrs. Brown and Kulla for a period up to 12 months, equal to their
annualized base salaries, in the event of the Company's termination of their
employment. In connection with his promotion to Corporate Vice President
in August 1998, the Company agreed to continue payments to Mr. Lee for a
period up to 12 months, equal to his annualized base salary, in the event of
the Company's termination of his employment.
In January 1999, Mr. Blackwell entered into an Employment and Severance
Agreement with the Company. The Employment and Severance Agreement with Mr.
Blackwell provides that, subject to certain conditions, the Company will employ
Mr. Blackwell and pay him a base salary of $178,000 plus his current benefits
until June 30, 1999. If Mr. Blackwell continues as Vice President, Sales and
Marketing, through June 30, 1999, and meets certain conditions, the Company and
Mr. Blackwell will enter into a Separation Agreement and Release of Claims in
June of 1999. Under the terms of the Separation Agreement and Release of
Claims, the Company would employ Mr. Blackwell as a consultant until June 30,
2000. In exchange for his services as a consultant, the Company will pay Mr.
Blackwell his salary of $178,000 plus his current benefits. In addition, the
Company will provide Mr. Blackwell a supplemental retirement benefit.
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 1998 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. The targets for profit before tax and customer satisfaction index
were not met. The inventory turns target was partially achieved resulting in
bonus payments ranging from 2.8% to 3.3%.
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 stock-based incentives are
the best mechanisms 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 Summary Compensation Table set forth above. In 1998, the
Company awarded restricted shares to a group representing 3% of the total
employees, including 106,000 restricted shares to executive officers. No stock
options were granted.
Compensation of the Chief Executive Officer
In accordance with the compensation policies described above, and as a
result of partial achievement of the inventory turns target, Mr. Saxton
earned a cash bonus of three and three tenths percent (3.3%) of his base
salary. No change was made in his base salary. In awarding Mr. Saxton
restricted stock in the amount of 40,000 shares, the Committee placed
particular emphasis on Mr. Saxton's leadership in formulating and
implementing a corporate policy designed to change the Company from a
manufacturing to a distribution company and strengthening 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 1998 was fully deductible; at this time,
it is not anticipated that any named executive officer of the Company will
receive compensation in excess of this limit during 1999.
Compensation Committee
Phillip A. Ranney, Chairman
Charles E. Bradley
Richard E. Lundin
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, 1998, with cumulative total return on the S&P 500 Index and the
S&P Housewares Composite Index. The comparison assumes $100 was invested
at the close of business on December 31, 1993, 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
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1993 1994 1995 1996 1997 1998
GHC 100 110.39 70.01 81.54 90.71 106.95
S&P 500 100 101.32 139.40 171.40 228.59 293.91
S&P
Housewares 100 96.88 104.32 122.07 134.44 130.84
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP 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 2000 Annual Meeting, proposals must be received by the Company no
later than November 30, 1999.
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 Company 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 2000 annual meeting,
proposals which have not been submitted by the deadline for inclusion in the
proxy statement, noted above, must be received by the Company between December
31, 1999 and February 11, 2000.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and stockholders owning more than 10% are
required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on the information furnished to the
Company and written representations that no other reports were required for the
fiscal year ended December 31, 1998, all applicable Section 16(a) filing
requirements were complied with except that Newcastle Partners, L.P. made a
late filing of a Form 4 to report four transactions, Sandera Partners,
L.P. made a late filing of a Form 4 to report five transactions and John
A. Bricker, Jr., made a late filing on Form 5 to report one transaction.
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.
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, 1999
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 PAUL A. SAXTON 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 11, 1999, at the Hilton Chicago O'Hare Airport,
Chicago, Illinois, 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 29, 1999.
Election of Directors
Charles E. Bradley
Thomas L. Francis
Phillip A. Ranney
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 29, 1999.
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.
