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))
_X__ Definitive Proxy Statement
____ Definitive Additional Materials
____ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GUARDSMAN PRODUCTS, INC.
(Name of Registrant as Specified in its Charter)
____________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
___ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
___ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
_X_ 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:
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Guardsman Products, Inc. [Client logo]
Corporate Offices
P.O. Box 1521
Grand Rapids, MI 49501
616 957 2600
616 957 1236 FAX
April 3,1995
To Our Stockholders:
On behalf of the Board of Directors, it is my pleasure to
cordially invite you to attend the Annual Meeting of Stockholders of
Guardsman Products, Inc. to be held on May 11, 1995, in Grand Rapids,
Michigan. Information about the meeting is presented on the following
pages.
In addition to the formal matters to be brought before the
meeting, we will report on the business and progress of Guardsman Products,
Inc. during 1994. The performance of your company is discussed in the 1994
Annual Report to Stockholders, which we believe you will find to be both
interesting and informative.
Your vote is very important regardless of how many shares you
own. You can be sure that your shares will be represented at the meeting
by completing, signing, and returning your proxy card in the envelope
provided, even if you plan to attend the meeting. Sending us your proxy
will not prevent you from voting in person at the meeting should you wish
to do so. The Proxy Statement and enclosed Proxy will be initially mailed
to stockholders on or about April 3, 1995.
Thank you for your continued support of Guardsman Products, Inc.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Paul K. Gaston
Paul K. Gaston
Chairman of the Board
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GUARDSMAN PRODUCTS, INC.
3033 Orchard Vista Drive, S.E.
Suite 200
Post Office Box 1521
Grand Rapids, Michigan 49501
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of Guardsman Products, Inc.,
will be held in the Gillett Auditorium, Old Kent Bank Building, One
Vandenberg Center, Grand Rapids, Michigan 49503, on Thursday, May 11, 1995,
at 10:30 a.m. (local time), to consider and act upon:
(1) The election of four directors.
(2) A proposal to approve an amendment to the Company's
Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 15,000,000
shares to 30,000,000 shares.
(3) A proposal to approve the 1995 Long-Term Incentive
Plan.
(4) The transaction of any other business that may properly
come before the meeting.
Stockholders of record at the close of business on March 10,
1995, are entitled to notice of and to vote at the meeting and any
adjournment of the meeting. A list of stockholders entitled to receive
notice of and vote at the Annual Meeting of Stockholders will be available
for examination by the Company's stockholders at the offices of the Company
set forth above during ordinary business hours for the ten-day period
before the meeting.
Whether or not you expect to attend the meeting in person, please
promptly sign and return the enclosed Proxy. You may revoke your proxy and
vote your shares in person if you do attend the meeting.
By Order of the Board of Directors
Jeffrey M. Suerth
Secretary
Grand Rapids, Michigan
April 3, 1995
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE ALL
STOCKHOLDERS, REGARDLESS OF THE NUMBER OF SHARES OF STOCK OWNED, TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.
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GUARDSMAN PRODUCTS, INC.
3033 Orchard Vista Drive, S.E.
Suite 200
Post Office Box 1521
Grand Rapids, Michigan 49501
PROXY STATEMENT
Annual Meeting of Stockholders
May 11, 1995
The Board of Directors of GUARDSMAN PRODUCTS, INC. ("Guardsman"
or the "Company"), solicits the enclosed Proxy for use at the Annual
Meeting of Stockholders to be held on May 11, 1995, and at any adjournment
of that meeting. The annual meeting will be held in the Gillett
Auditorium, Old Kent Bank Building, One Vandenberg Center, Grand Rapids,
Michigan 49503, commencing at 10:30 a.m., local time. This Proxy
Statement and the enclosed form of Proxy will be initially mailed to
stockholders on or about April 3, 1995.
Proxies in the enclosed form that are properly signed, returned
to management and not revoked will be voted at the meeting. If a
stockholder specifies a choice, the shares represented by the Proxy will be
voted as specified. If no choice is specified, the shares represented by
the Proxy will be voted for the election of the four nominees for directors
named in this Proxy Statement, for approval of the amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock, $1 par value ("Common Stock") to
30,000,000 shares, for approval of the 1995 Long-Term Incentive Plan, and
in accordance with the judgment of the persons named as proxies with
respect to any other matter that may come before the meeting or any
adjournment. For purposes of determining the presence or absence of a
quorum for the transaction of business at the meeting, all shares for which
a proxy or vote is received, including abstentions and shares represented
by a broker vote on any matter, will be counted as present and represented
at the meeting.
Any stockholder who returns a Proxy in the enclosed form has the
power to revoke it at any time before it is exercised. A revocation must
be made in writing and sent to the Secretary of the Company at the address
set forth above. A stockholder may also revoke a Proxy by attending the
annual meeting and voting in person by ballot.
ELECTION OF DIRECTORS
The Board of Directors proposes that the following four
individuals be elected as directors for terms expiring at the annual
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meeting to be held in the year listed below and until their successors are
elected and qualified:
<TABLE>
<CAPTION>
Term Expiring at
Nominee Annual Meeting in
<S> <C> <C>
K. Kevin Hepp 1996
George R. Kempton 1998
James L. Sadler 1998
Robert W. Schult 1998
</TABLE>
The persons named as proxies intend to vote for the election of
all of the named nominees. Each of the nominees has consented to being
named in this Proxy Statement and to serve if elected. If any nominee
should become unable or unwilling to serve, which is not contemplated, the
Board of Directors may or may not select a substitute nominee. If a
substitute nominee is selected, the shares represented by a Proxy will be
voted for the election of the substitute nominee. If no substitute nominee
is selected, the shares represented by a Proxy will be voted for the
election of the remaining nominees. Proxies will not be voted for more
than the number of nominees named in this Proxy Statement.
A plurality of the shares present in person or represented by
proxy and entitled to vote on the election of directors is required to
elect directors. For purposes of counting votes on the election of
directors, abstentions, broker non-votes and other shares not voted will
not be counted as shares voted, and the number of shares of which a
majority is required will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
ELECTION OF ALL NOMINEES AS DIRECTORS
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Board of Directors has proposed to amend the Fourth Article
of the Company's Certificate of Incorporation to increase the Company's
authorized capital stock from 15,000,000 shares of Common Stock, One Dollar
($1.00) par value per share, to 30,000,000 shares of Common Stock, One
Dollar ($1.00) par value per share. The purpose of the amendment is to
provide additional shares for possible future issuance.
As of March 10, 1995, 9,485,699 authorized shares of
Common Stock were issued and outstanding.
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The Board of Directors believes that the authorization of an
additional 15,000,000 shares of Common Stock will provide increased
flexibility for future growth and provide the opportunity for enhanced
marketability of Guardsman's Common Stock. Additional authorized shares of
Common Stock would be available for possible stock splits and dividends,
equity-based acquisitions, public or private offerings of Common Stock or
securities convertible into Common Stock, employee benefit plans, and other
proper corporate purposes that might be proposed. Authorized but unissued
shares of Common Stock, or funds raised in a public or private offering of
shares, may be used for acquisitions, which have been a part of the
Company's long-term growth strategy. The Company does not have any present
plans to issue additional shares of Common Stock.
All of the additional shares resulting from the increase in the
Company's authorized Common Stock would be of the same class, with the same
dividend, voting and liquidation rights, as the shares of Common Stock
presently outstanding. The Company's authorized capital also includes, and
will continue to include, 1,000,000 shares of Preferred Stock, One Dollar
($1.00) par value, none of which is currently outstanding.
If the proposed amendment is adopted, the newly authorized shares
would be unreserved and available for issuance, and no further stockholder
authorization would be required before the issuance of the shares by the
Company. Stockholders have no preemptive rights to acquire shares issued
by the Company under its Certificate of Incorporation, and stockholders
would not acquire any such rights with respect to the additional shares
under the proposed amendment to the Company's Certificate of Incorporation.
Under some circumstances, the issuance of additional shares of Common Stock
could dilute the voting rights, equity and earnings per share of existing
stockholders.
The additional authorized but unissued shares of Common Stock
could be used by the Board of Directors to make a change in control of the
Company more difficult. Under certain circumstances, these shares could be
used to create voting impediments or frustrate persons seeking to effect a
takeover or otherwise gain control of the Company. In addition, the
amendment might be considered to have the effect of discouraging an attempt
by another person or entity, through the acquisition of shares of the
Company's Common Stock, to acquire control of the Company with a view to
imposing a merger, sale of assets, or similar transaction that may not be
in the best interests of all of the stockholders because the issuance of
new shares could be used to dilute the stock ownership of that person or
entity. Although the additional shares could be used for these purposes,
the Company has no present intention of issuing shares for any such
purpose.
The first paragraph of Article 4 of the Company's Certificate of
Incorporation, as amended, would read as follows:
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4. The total number of shares that the corporation shall
have authority to issue and have outstanding is Thirty-One
Million (31,000,000) shares, of which One Million (1,000,000)
shares shall be Preferred Stock, par value One Dollar ($1.00) per
share, and Thirty Million (30,000,000) shares shall be Common
Stock, par value One Dollar ($1.00) per share.
The affirmative vote of holders of a majority of shares entitled
to vote at the annual meeting of stockholders is required to approve the
proposed amendment to the Company's Certificate of Incorporation. For the
purpose of counting votes on this proposal, abstentions, broker non-votes,
and other shares not voted have the same effect as a vote against the
proposal. The New York Stock Exchange has advised the Company that this
proposal is deemed to be a routine matter. Therefore, shares of Common
Stock held by New York Stock Exchange Member Organizations, or their
nominees, may be voted without specific instructions from the beneficial
owners of the shares.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
APPROVAL OF 1995 LONG-TERM INCENTIVE PLAN
The Board of Directors firmly believes that the Company's long-
term interests are best advanced by aligning the interests of its key
employees and directors with the interests of its stockholders. Therefore,
to attract and retain directors, officers and other key management
employees of exceptional abilities, and in recognition of the significant
and extraordinary contributions to the long-term performance and growth of
the Company and its subsidiaries made by these individuals, on February 17,
1995, the Board of Directors adopted, subject to stockholder approval, the
1995 Long-Term Incentive Plan (the "Plan"). The Plan is meant to
supplement other incentive plans of the Company, including the 1988 Stock
Option Plan (the "1988 Plan") (240,000 shares authorized for awards,
330,000 shares after adjustments for stock dividends and splits) and the
1991 Stock Option Plan (the "1991 Plan") (360,000 shares authorized for
awards) (collectively the "Current Plans"). Because the Current Plans have
limited authorized shares remaining for future awards and stock options
(24,100 shares under the 1988 Plan and 11,400 shares under the 1991 Plan),
the Board of Directors believes that the adoption of the Plan is now
advisable to make additional shares available for awards and stock
options.
It is presently contemplated that the Plan will primarily be used
to grant stock options. The decision whether to grant most stock options
is left to the discretion of the Company; however, the Plan provides that
directors who are not employees of the Company or any of its subsidiaries
or affiliates other than advisory directors ("Nonemployee Directors") will
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receive semi-annual automatic grants of stock options to purchase specified
numbers of shares of the Company's Common Stock. The Plan also permits the
grant of other forms of long-term incentive compensation if determined to
be desirable to advance the purposes of the Plan. These other forms of
long-term incentive compensation include tax benefit rights, stock
appreciation rights, restricted stock and stock awards (together with stock
options, collectively referred to as "Incentive Awards"). By combining in
a single plan many of the types of incentives commonly used in long-term
incentive compensation programs, it is intended that the Plan will provide
significant flexibility for the Company to tailor specific long-term
incentives that will best promote the objectives of the Plan, and in turn
promote the interests of the Company's stockholders.
The following is a summary of the principal features of the Plan.
The summary is qualified in its entirety by reference to the terms of the
Plan set forth in the Appendix to this Proxy Statement.
The Plan provides that a maximum of 470,000 shares of the
Company's Common Stock, $1.00 par value ("Common Stock"), will be available
for Incentive Awards under the Plan (subject to certain antidilution
adjustments). Persons eligible to receive Incentive Awards under the Plan
(with certain limitations discussed below) include directors (currently
9 persons), corporate executive officers (currently 5 persons, 4 of whom
are not directors), advisory directors (currently 1 person) and other
key employees (currently approximately 90 persons) of the Company and its
subsidiaries in consideration of the services of these persons to the
Company. Additional individuals may become directors, advisory directors,
corporate executive officers or key employees in the future and could
participate in the Plan. Because directors, officers and key employees of
the Company and its subsidiaries may receive Incentive Awards under the
Plan, they may be deemed to have an interest in the Plan. The Plan is not
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and is not subject to the Employee Retirement Income
Security Act of 1974 ("ERISA").
The Plan will be administered by the Stock Option Committee (the
"Committee") of the Board of Directors. The Committee will consist of at
least two members of the Board, neither of whom are employees of the
Company or its subsidiaries and neither of whom participates or is eligible
to participate in any long-term incentive plan of the Company or its
subsidiaries, except for nondiscretionary stock option grants based upon a
specified formula. Directors who are also employees of the Company or its
subsidiaries may not serve on the Committee. The Committee will make
determinations, subject to the terms of the Plan, as to the persons to
receive Incentive Awards, the amount of Incentive Awards to be granted to
each person, the time of each grant, the terms and duration of each grant
and all other determinations necessary or advisable for administration of
the Plan. Except for automatic grants of stock options to Nonemployee
Directors as provided under the Plan, the Committee may amend the terms of
Incentive Awards granted under the Plan from time to time in a manner
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consistent with the Plan. The Committee may modify awards granted to
Nonemployee Directors only to comply with securities or income tax laws.
The principal stock option features of the Plan provide that the
Company may grant to participants options to purchase shares of Common
Stock at stated prices for specified periods of time. Certain stock
options that could be granted to employees under the Plan may qualify as
incentive stock options as defined in Section 422 of the Code. Other stock
options would not be incentive stock options within the meaning of the
Code. Stock options could be granted at any time before the termination of
the Plan according to its terms or termination of the Plan by action of the
Committee or the Board of Directors.
The Committee would set forth the terms of individual grants
of stock options in stock option agreements. The stock option agreements
would contain terms, conditions and restrictions consistent with the
provisions of the Plan that the Committee determined appropriate. These
restrictions could include vesting requirements to encourage long-term
ownership of shares. The Company would receive no consideration upon the
grant of stock options other than services rendered and to be rendered by
the participants. The stock option price per share would be determined by
the Committee and would be a price equal to or higher than the "par value"
of Common Stock on the date of grant. Options issued to Nonemployee
Directors will be issued at "market value" on the date of grant, and
options qualified as incentive stock options under the Code must be at
prices at least equal to market value on the date of grant. "Market value"
is defined as the mean of the highest and lowest sales prices of Common
Stock on the New York Stock Exchange on the date of grant or, if the New
York Stock Exchange is closed on the date of grant or no shares of Common
Stock were traded on that date, the last preceding date on which the New
York Stock Exchange was open for trading and on which shares of Common
Stock were traded. On March 10, 1995, the closing price of Common Stock
on the New York Stock Exchange was $11.125 per share.
When exercising all or a portion of a stock option, a participant
may pay with cash or, with the consent of the Committee, shares of Common
Stock or other consideration substantially equal to cash. If shares of
Common Stock are used to pay the exercise price and the Committee consents,
a participant could use the value of shares received upon exercise for
further exercises in a single transaction, permitting a participant to
fully exercise a large stock option with a relatively small initial cash or
stock payment. The Committee could also authorize payment of all or a
portion of the stock option price in the form of a promissory note or
installments on terms that the Committee approved. The Board of Directors
could restrict or suspend the power of the Committee to permit these loans
and could require that adequate security be provided. Although the term of
each stock option will be determined by the Committee, no stock option will
be exercisable under the Plan after ten years from the date it was granted.
In addition to the options that can be granted at the discretion
of the Committee, the Plan provides that stock options will be
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automatically granted to each Nonemployee Director on March 1 and September
1 of each year. Advisory directors are not eligible to receive automatic
grants. The Plan provides that the directors eligible to receive automatic
options will receive options to purchase 2,755 shares on September 1, 1995.
For each automatic grant after September 1, 1995, the number of shares
subject to the grant will equal 105 percent of the number of shares subject
to the previous automatic grant under the Plan, with the result rounded up
or down to the nearest 5 share increment (for example, options for
105 percent of 2,755 shares will be granted on March 1, 1996; options for
105 percent of that figure will be granted on September 1, 1996).
Nonemployee Directors are only eligible to receive these automatic grants
and are not eligible to receive discretionary options or other Incentive
Awards.
Automatic grants to Nonemployee Directors under the Plan will
first occur only when there are insufficient shares available for automatic
grants under the Company's prior stock option plans. Currently, eight
directors would be eligible to receive automatic grants of stock options
under the Plan.
Stock options granted to Nonemployee Directors will not qualify
as incentive stock options. The exercise price of each option awarded to a
Nonemployee Director will be 100 percent of the market value at the date of
grant. A Nonemployee Director may pay the exercise price in cash or stock.
The Plan provides that any new director who would be eligible to receive an
automatic grant and is elected or appointed other than on a grant date
would receive an option on the date of his or her election or appointment
for the number of shares granted to Nonemployee Directors in the previous
grant under the Plan. The option price for an option awarded to a new
director under this provision would be the market value of Common Stock as
of the date of his or her appointment or the date of the prior grant,
whichever is higher. The term of a stock option granted to Nonemployee
Directors will be 10 years except that the option will terminate if the
director is terminated for cause.
Stock options granted under the Plan generally would be
exercisable for limited periods of time if a stock option holder died,
became disabled or was terminated without cause. If a stock option holder
retired after age 60, or after age 55 if the holder had at least five years
of service with the Company, or upon any other age determined by the
Committee, the option holder could exercise the option for the remainder of
the term of the option unless the terms of the option agreement or grant
provided otherwise. If a stock option holder was terminated for cause, the
stock option holder would forfeit all rights to exercise any outstanding
stock options. Any participant who is or becomes a Nonemployee Director
will be able to exercise the option during the directorship unless the
directorship is terminated for cause. If a director dies or becomes
disabled, his or her successor or legal representative may exercise the
director's options during the remainder of the term. Stock options granted
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to participants under the Plan generally could not be transferred except by
will or by the laws of descent and distribution. There is no specified
limit on the number of stock options that could be granted to any
individual participant under the Plan, except that no one participant may
receive Incentive Awards totaling more than 25 percent of the shares
available under the Plan.
Under the Code, a participant exercising an incentive stock
option will not recognize income at the time of the exercise. The
difference between the market value and the exercise price will, however,
be a tax preference item for purposes of calculating alternative minimum
tax. Upon sale of the stock, as long as the participant held the stock for
at least one year after the exercise of the stock option and at least two
years after the grant of the stock option, the participant's basis would
equal the stock option price, and the participant would pay tax on the
difference between the sale proceeds and the stock option price as capital
gain. The Company would receive no deduction for federal income tax
purposes. If, before the expiration of either of the above holding
periods, the participant sold shares acquired under an incentive stock
option, the tax deferral would be lost and the participant would recognize
compensation income equal to the difference between the stock option price
and the fair market value at the time of exercise, but not more than the
maximum amount that would not result in a loss on the disposition. The
Company would then receive a corresponding deduction for federal income tax
purposes. Additional gains, if any, recognized by the participant would
result in the recognition of short- or long-term capital gain.
Federal income tax laws provide different rules for stock options
that do not qualify as incentive stock options ("Nonqualified Options").
Under current federal income tax laws, a participant will not recognize any
income and the Company will not receive a deduction at the time a
Nonqualified Option is granted. If a Nonqualified Option is exercised, the
participant would recognize compensation income in the year of exercise
equal to the difference between the stock option price and the fair market
value on the date of exercise. The Company would receive a corresponding
deduction for federal income tax purposes. The optionee's tax basis in the
shares acquired would be increased by the amount of compensation income
recognized. Sale of the stock after exercise would result in recognition
of short- or long-term capital gain or loss.
In addition to the authority to grant stock options under the
Plan, the Committee may also grant tax benefit rights, which would be
subject to such terms and conditions as the Committee determined
appropriate. A tax benefit right is a cash payment received by a
participant upon exercise of a stock option. The amount of the payment
would not exceed the amount determined by multiplying the ordinary income
realized by the participant (and deductible by the Company) upon exercise
of stock options that are not incentive stock options, or upon a
disqualifying disposition of an incentive stock option, by the maximum
federal income tax rate (including any surtax or similar charge or
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assessment) for corporations plus the applicable state and local tax
imposed on the exercise of the stock option or disqualifying disposition.
Unless the Committee provided otherwise, the net amount of a tax benefit
right, subject to withholding, could be used to pay a portion of the stock
option price. Tax benefit rights could be issued under the Plan with
respect to stock options granted not only under the Plan but also with
respect to existing or future stock options awarded under any other plan of
the Company that has been approved by the stockholders as of the date of
the Plan. Although authorized, tax benefit rights have not previously been
granted by the Company under any stock option or other plan.
The Plan permits the Committee to grant stock appreciation
rights. A stock appreciation right is an award that allows the participant
to receive the appreciation value of the Company's Common Stock without
actually owning shares in the Company. The appreciation value would be
equal to the excess of the market value of the shares at the time of
exercise less the option price of those shares. The participant would
receive payment in cash, shares of Common Stock or some combination of the
two. For payments made in shares of Common Stock, the shares would be
valued as of the date of surrender of the stock appreciation right. The
Plan provides that stock appreciation rights must be related to a
particular option. A stock appreciation right could be granted at the same
time or after the option to which the right is related. The stock
appreciation right, therefore, could provide the participant with the
capital necessary to exercise a stock option. The Company has not previously
granted stock appreciation rights to any person.
The Plan also gives the Committee authority to make stock awards.
A stock award is an award of the Company's Common Stock that is subject to
terms and conditions determined by the Committee at the time of the award.
Stock award recipients would generally have all voting, dividend,
liquidation and other rights with respect to shares of Common Stock
received upon becoming the holder of record of the Common Stock. However,
the Committee could impose restrictions on the assignment or transfer of
Common Stock awarded under a stock award. The Company has not previously
granted stock awards to any person.
Finally, the Plan allows the Committee to award restricted stock,
subject to such terms and conditions, consistent with the provisions of the
Plan, that the Committee from time to time determined. As with stock
option grants, the Committee would set forth the terms of individual awards
of restricted stock in restricted stock agreements. Unlike stock options,
however, no more than one-half of the 470,000 shares available for
Incentive Awards under the Plan could be awarded as restricted stock.
Unless the Committee provided otherwise in a restricted stock agreement, if
a participant's employment is terminated during the restricted period set
by the Committee for any reason other than death, disability, retirement
(as defined in the Plan), or termination for cause, the participant's
restricted stock would be entirely forfeited. If the participant's
employment terminated during the restricted period by reason of death,
disability or retirement, the restrictions on the participant's shares
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would terminate automatically with respect to that number of shares
(rounded to the nearest whole number) equal to the total number of shares
of restricted stock awarded to the participant multiplied by the percentage
of the total restricted period that had elapsed since the date of grant.
All remaining shares would be forfeited and returned to the Company, unless
the Committee provided otherwise. If the participant's employment is
terminated for cause, the participant would forfeit all stock then subject
to restrictions.
Without Committee authorization, a recipient of restricted stock
would not be allowed to sell, exchange, transfer, pledge, assign or
otherwise dispose of the stock other than to the Company or by will or the
laws of descent or distribution. In addition, the Committee could impose
other restrictions on shares of restricted stock. However, holders of
restricted stock would enjoy all other rights of a stockholder with respect
to restricted stock, including the right to vote restricted shares at
stockholders' meetings and the right to receive all dividends paid with
respect to shares of Common Stock. Any securities received by a holder of
restricted stock pursuant to a stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of shares
would be subject to the same terms, conditions and restrictions that were
applicable to the restricted stock for which the shares were received.
Generally, a participant would not recognize income upon the
award of restricted stock. However, a participant would be required to
recognize compensation income on the value of restricted stock at the time
the restricted stock vested (when the restrictions lapse). At the time the
participant recognized this compensation income, the Company would be
entitled to a corresponding deduction for federal income tax purposes. If
restricted stock was forfeited by a participant, the participant would not
recognize income, and the Company would not receive a deduction. Prior to
the lapse of restrictions, dividends paid on restricted stock would be
reported as compensation income to the participant, and the Company would
receive a corresponding deduction.
A participant could, within thirty days after the date of an
award of restricted stock, elect to report compensation income for the tax
year in which the award of restricted stock occurred. If the participant
made such an election, the amount of compensation income would be the value
of the restricted stock at the time of the award. Any later appreciation
in the value of the restricted stock would be treated as capital gain and
realized only upon the sale of the restricted stock. Dividends received
after such an election was made would be taxable as dividends and not
treated as additional compensation income. If, however, restricted stock
was forfeited after the participant had made an election as described
above, the participant would not be allowed any deduction for the amount
earlier taken into income. Upon the sale of restricted stock, a
participant would realize capital gain (or loss) in the amount or the
difference between the sale price and the value of the stock previously
-15-
reported by the participant as compensation income. The Company has not
previously granted restricted stock awards to any person.
The benefits payable under the Plan are presently not
determinable. Similarly, the benefits that would have been payable had the
Plan been in effect during the most recent fiscal year are not determinable
except for the stock options that would automatically be granted to
Nonemployee Directors. If the Plan had been in effect during the last
fiscal year, and assuming that there were no shares available for automatic
grants to Nonemployee Directors under the Company's prior stock option
plans, the benefits under the Plan would have been as follows:
NEW PLAN BENEFITS
<TABLE>
1995 LONG-TERM INCENTIVE PLAN
<CAPTION>
Dollar Value at Number of Securities
Group March 10, 1995 <F1> Underlying Options
<S> <C> <C>
Nonemployee Director
Group (9 persons) $3,257 45,340<F2>
<FN>
<F1> The dollar value of a stock option is determined by calculating
the spread between the exercise price of the option and the
current value of the Company's Common Stock. In the table, the
dollar value is calculated for the directors serving on the dates
of grant (March 1, 1994 and September 1, 1994) as the difference
between the market value of Common Stock on the date of grant and
the market value as of March 10, 1995, if higher. The dollar value
in the table for the directors appointed or elected after one of
those grant dates is the difference between the market value on the
date of his or her election or appointment or the date of the
previous grant, whichever is higher, and the market value as of
March 10, 1995, if higher.
<F2> Includes the following: (1) stock options to purchase 2,755
shares of Common Stock granted on March 1, 1994 to seven
Nonemployee Directors serving on that date; (2) stock options to
purchase 2,895 shares (105 percent of 2,755 rounded to the
nearest 5-share increment) granted on September 1, 1994 to seven
Nonemployee Directors serving on that date; and (3) stock options
to purchase 2,895 shares for two Nonemployee Directors whose
service as directors began after September 1, 1994.
</TABLE>
Upon the occurrence of a "change in control" of the Company (as
defined in the Plan), all outstanding stock options would become
immediately exercisable in full and would remain exercisable in accordance
-16-
with their terms, and all other outstanding Incentive Awards under the Plan
would immediately become fully vested and nonforfeitable. In addition, the
Committee, without the consent of any affected participant, could determine
that some or all participants holding outstanding stock options would
receive cash in an amount equal to the greater of the excess over the
exercise price per share of each stock option of: (a) the maximum price of
the shares on the New York Stock Exchange immediately before the effective
date of the change in control; or (b) the price per share actually paid in
connection with any change in control of the Company.
If Incentive Awards are made under the Plan, the Company could
withhold from any cash otherwise payable to a participant or require a
participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding taxes. Tax withholding obligations
could be satisfied by withholding Common Stock to be received upon exercise
of an option or the vesting of restricted stock or by delivery to the
Company of previously owned shares of Common Stock.
The Board of Directors could terminate the Plan at any time and
could from time to time amend the Plan as it considered proper and in the
best interests of the Company, provided that without stockholder approval
no amendment could materially increase either the benefits to participants
under the Plan or the number of shares that could be issued under the Plan,
modify the formula used to grant options to Nonemployee Directors more than
once in any six month period, materially modify eligibility requirements,
or impair any outstanding Incentive Award without the consent of the
participant except according to the terms of the Plan or Incentive Award.
No termination, amendment or modification could become effective with
respect to any Incentive Award outstanding under the Plan without the prior
written consent of the participant holding the award unless the amendment
or modification operated to the benefit of the participant. Subject to
stockholder approval, the Plan would take effect upon approval by the
stockholders, and, unless previously terminated by the Board of Directors,
the Plan would terminate on May 10, 2005. No award could be made under the
Plan after that date.
The Company intends to register shares covered by the Plan under
the Securities Act of 1933 before any Incentive Award could be exercised.
A simple vote of the stockholders holding a majority of the
shares present in person or represented by proxy and entitled to vote on
this proposal is required to approve the adoption of the Plan. For
purposes of counting votes on this proposal, abstentions will be counted
as voted against the proposal. Broker non-votes will not be counted as
voted on the proposal, and the number of shares of which a majority is
required will be reduced by the number of shares not voted. The New
York Stock Exchange has advised the Company that this proposal is deemed
to be a routine matter. Therefore, shares of Common Stock held by New
York Stock Exchange Member Organizations, or their nominees, may be
voted without specific instructions from the beneficial owners of such
shares.
-17-
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE 1995 LONG-TERM INCENTIVE PLAN
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Board of Directors has established March 10, 1995, as the
record date for determination of the stockholders entitled to notice of and
to vote at the annual meeting of stockholders. On March 10, 1995, there
were outstanding 9,485,699 shares of Common Stock of the Company, each
having one vote per share. Shares cannot be voted unless the stockholder
is present at the meeting or represented by proxy.
As of March 1, 1995, the following persons were known to the
Company to be beneficial owners of more than 5 percent of the Company's
Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name and Address of Ownership of of
Beneficial Owner Common Stock Class
<S> <C> <C> <C>
Irwin Wayne Uran 3,003,400 shares <F1> 31.67%
101 Saratoga Avenue
Santa Clara, CA 95151
James L. Sadler 750,000 shares <F2> 7.91%
7310 37th Avenue
Moline, IL 61265
John H. Sadler 760,000 shares <F2> 8.01%
5402 24th Avenue
Moline, IL 61265
________________________
<FN>
<F1> The Company has been informed that Mr. Uran possesses directly the
power to vote and dispose of, as record owner, all of these shares.
<F2> The Company acquired Moline Paint Manufacturing Co. effective August
31, 1994, under an Agreement and Plan of Merger ("Agreement"). The
Agreement provided that Messrs. James L. and John H. Sadler, as
selling shareholders, would each receive, among other consideration,
750,000 shares of Common Stock of the Company. These shares are
subject to an eight-year Stockholder Agreement dated August 31, 1994,
which provides that at any time after the expiration of one year after
the date of the Stockholder Agreement, the Sadlers may request
-18-
registration of these shares for the purpose of making an underwritten
public offering. The Company is obligated to pay certain registration
expenses associated with these shares as set forth in the Stockholder
Agreement.
The Company and the Sadlers have agreed that these shares will be sold
in a manner intended to effect a broad public distribution.
Accordingly, the Sadlers have agreed to certain restrictions on the
sale of these shares without obtaining the prior written consent of
the Company.
Commencing on September 1, 1995, and continuing throughout the term of
the Stockholder Agreement, the Sadlers have each agreed to vote their
shares in the same manner and in the same proportions as voted by all
other voting stockholders of the Company on all matters submitted to
the stockholders for approval or for a vote in accordance with the
Company's Certificate of Incorporation and Bylaws. The Sadlers have
each delivered to the Company an irrevocable proxy authorizing the
Company to vote these shares in accordance with the terms of the
Stockholder Agreement.
Subsequent to the date of the Agreement, John H. Sadler acquired an
additional 10,000 shares of Common Stock of the Company. These
additional shares are not subject to the Stockholder Agreement.
</TABLE>
The following table shows the beneficial ownership of shares of
the Company's Common Stock as of March 1, 1995, by each of the Company's
directors, nominees for election as director, named executive officers (as
defined in the Summary Compensation Table) and by all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
of Common Stock
Percent
Name of Shares Stock of
Beneficial Owner Owned <F1> Options <F2> Total Class
<S> <C> <C> <C> <C>
Paul K. Gaston 24,062<F3> 24,315 48,377 *
Charles E. Bennett 32,941 23,450 56,391 *
John Russell Fowler 31,732 21,815 53,547 *
K. Kevin Hepp 25,251 21,815 47,066 *
George R. Kempton 3,750 18,065 21,815 *
Winthrop C. Neilson 8,866<F4> 21,815 30,681 *
James L. Sadler 750,000<F5> -- 750,000 7.75%
Robert W. Schult -- -- -- *
Robert D. Tuttle 10,488 16,827 27,315 *
Edward D. Corlett 3,315 19,798 23,113 *
Everette L. Martin 3,614 15,270 18,884 *
-19-
Keith C. Vander Hyde, Jr. 4,219 15,986 20,205 *
All Directors and Executive
Officers as a Group 898,238 199,156 1,097,394 11.33%
___________________
<FN>
* Less than 1 percent.
<F1> Except as otherwise disclosed, shares owned represent shares for which
the beneficial owner has sole voting and investment power.
<F2> Shares in this column may be acquired by the exercise of options
exercisable within 60 days of March 1, 1995.
<F3> Includes 100 shares held by Mr. Gaston's wife as custodian for a
grandchild. Mr. Gaston disclaims beneficial ownership of these
shares.
<F4> Includes 368 shares owned by Mr. Neilson's wife. Mr. Neilson disclaims
beneficial ownership of these shares.
<F5> Mr. Sadler has given the Company an irrevocable proxy, effective
September 1, 1995, to vote these shares in the same proportions as
voted by all other voting stockholders of the Company on all matters
submitted to the stockholders for approval or for a vote in accordance
with the Company's Certificate of Incorporation and Bylaws. Mr. Sadler
has also agreed to certain restrictions on these shares that may limit
his dispositive power.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
Three directors are to be elected at the annual meeting for a
term of three years and until their successors are elected and qualified.
Five other directors are serving terms which will expire in 1996 and 1997.
Mr. Keith C. Vander Hyde, Chairman Emeritus of the Board and retired
Chairman of the Board and Chief Executive Officer of the Company, served as
a director from 1968 until his death on October 5, 1994. One director,
K. Kevin Hepp, is to be elected at the annual meeting to serve the
remainder of Mr. Vander Hyde's term expiring in 1996.
The Company's executive officers are appointed annually by and
serve at the pleasure of the Board of Directors.
The following table shows certain information with respect to
each director, nominee for election as a director, and executive officer of
the Company:
-20-
<TABLE>
<CAPTION>
Nominees for Principal Service as a
Election Occupation <F1> Director <F2>
to the Board
<S> <C> <C>
(Term Expiring in
1996)
K. Kevin Hepp <F3> Retired; Senior Vice Since 1979
Age 78 President, Owens-
Illinois, Inc.,
manufacturer of packaging
products (1980 to 1982);
Vice President, Owens-
Illinois, Inc. (1964 to
1980).
Nominees for
Election Principal Service as a
to the Board Occupation <F1> Director <F2>
(Terms Expiring in
1998)
George R. Kempton Chairman of the Board and Since 1988; also
Age 61 Chief Executive Officer, a director of
Kysor Industrial Kysor Industrial
Corporation, a Corporation,
multinational Simpson
manufacturer of Industries, Inc.
transportation and and JLG
commercial refrigeration Industries, Inc.
products (since 1987);
President and Chief
Executive Officer, Kysor
Industrial Corporation
(1984 to 1987); President
and Chief Operating
Officer, Kysor Industrial
Corporation (1978 to
1984).
James L. Sadler <F4> Retired; President and Since 1994.
Age 51 Chief Operating Officer,
Moline Paint
Manufacturing Co.,
manufacturer of
industrial coatings (1987
to 1994).
Robert W. Schult <F5> President, Nestle Food Since 1994.
Age 45 Company, the largest of
Nestle USA Inc.'s
-21-
operating companies, a
manufacturer and marketer
of food products (since
1991); Senior Vice
President, Nestle Food
Company (1989 to 1991).
Incumbent Directors Principal Service as a
(Terms Expiring in Occupation <F1> Director <F2>
1997)
Paul K. Gaston Chairman of the Board of Since 1986; also a
Age 61 the Company (since 1994); director of Kysor
Partner, Warner Industrial
Norcross & Judd LLP, Corporation.
Attorneys (Partner from
1965 to 1993, Managing
Partner from 1988 to
1992).
Winthrop C. Neilson Managing Director, Since 1969.
Age 61 Neilson/Hetrick
Consulting Group
(previously known as
Cameron, Towey, Neilson
before 1991), an
international investor
relations firm (since
1989); President, Krone
Group, Inc. (1987 to
1989); Managing Director,
Krone Communications,
investor relations
consulting, graphic
services, advertising and
marketing communications
consulting (1986 to
1987).
Robert D. Tuttle Retired; Chairman of the Since 1987; also a
Age 69 Board, SPX Corporation, director of Walbro
manufacturer and Corporation, CMS
distributor of automotive Energy Corporation
components, diagnostic and Woodhead
equipment, specialty Industries, Inc.
tools and industrial
hardware to worldwide
markets (1991);
President, Chairman of
-22-
the Board and Chief
Executive Officer, SPX
Corporation (1980 to
1990).
Incumbent Directors Principal Service as a
(Terms Expiring in Occupation <F1> Director <F2>
1996)
Charles E. Bennett President and Chief Since 1989.
Age 48 Executive Officer of the
Company (since 1993);
President and Chief
Operating Officer of the
Company (1990 to 1992);
Vice President--Finance,
Secretary and Treasurer
of the Company (1988 to
1989); Vice President--
Coatings Group of the
Company (1985 to 1988).
John Russell Fowler Retired; Chairman of the Since 1983; also a
Age 77 Board, Jacobson Stores, director of
Inc., apparel retailers Tecumseh Products
(1993); Chairman of the Company.
Board and Chief Executive
Officer, Jacobson Stores,
Inc. (1982 to 1992);
President, Jacobson
Stores, Inc. (1966 to
1982).
Executive Officers Principal
Who Are Not Occupation <F1>
Directors
Edward D. Corlett Corporate Vice President
Age 41 and General Manager,
the Company (since 1994);
Corporate Vice President
and Chief Financial
Officer of the Company
(1991 to 1994); Vice
President, Secretary and
Treasurer of the Company
(1990 to 1994); Director
of Finance of the Company
(1988 to 1989).
-23-
Henry H. Graham,Jr. Corporate Vice President
Age 44 of Finance, Chief
Financial Officer and
Treasurer of the Company
(since January 1995);
President, Graham
Enterprises, Inc., a
business and financial
consulting firm (1989 to
1995); Executive Vice
President and Chief
Financial Officer, Adams
Drug Co. (1986 to 1987);
Senior Vice President and
Chief Financial Officer,
Revlon Group, Inc. (1985
to 1986); Senior Vice
President, Treasurer, and
Controller, Pantry Pride,
Inc. (1982 to 1985).
Everette L. Martin Corporate Vice President
Age 59 and General Manager, Wood
Coatings Group of the
Company (since 1994);
Corporate Vice President,
Coatings Group of the
Company (1992 to 1994);
Vice President/General
Sales Manager, Wood
Coatings of the Company
(1991 to 1992); Coatings
Group Director of Sales,
Eastern Region of the
Company (1990 to 1991);
General Manager--High
Point, North Carolina
Division of the Company
(1982 to 1990).
Keith C. Vander Hyde, Corporate Vice President,
Jr. Consumer Products Group
Age 37 of the Company (since
1992); Vice President,
Consumer Products Group
of the Company (1989 to
1992); Vice President,
International Operations
of the Company (1989).
-24-
______________________
<FN>
<F1> Except as noted, each person listed has been engaged in the same
principal occupation for over five years.
<F2> Except as noted, no director is a director of any other company which
has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or subject to Section 15(d) of that
Act, or any company registered as an investment company under the
Investment Company Act of 1940.
<F3> Mr. Hepp, who has served on the Board since 1979 and whose elected
term is to expire in 1995, was appointed by the Board of Directors to
fill the unexpired term of Mr. Vander Hyde. The appointment of Mr. Hepp
was made with the understanding that he would be included on the slate of
nominees for the election to the Board of Directors, as included in this
Proxy Statement, for a one-year term expiring in 1996.
<F4> Pursuant to an Agreement and Plan of Merger by which the Company
acquired Moline Paint Manufacturing Co. effective August 31,
1994, the Board of Directors of the Company appointed James L. Sadler,
one of the selling shareholders, as a director of the Company at a
meeting in November of 1994 to a term expiring at the Annual Meeting
of Stockholders in 1995, with the understanding that Mr. Sadler would
be included on the slate of nominees for election to the Board of
Directors, as included in this Proxy Statement, for a three-year term
expiring in 1998.
<F5> At its meeting in November of 1994, the Board of Directors of the
Company appointed Robert W. Schult as a director of the Company to a
term expiring at the Annual Meeting of Stockholders in 1995, with the
understanding that Mr. Schult would be included on the slate of
nominees for election to the Board of Directors, as included in this
Proxy Statement, for a three-year term expiring in 1998.
</TABLE>
ORGANIZATION OF THE BOARD
The Board of Directors has six standing committees: the Audit
Committee; the Organization/Compensation Committee; the Finance Committee;
the Nominating Committee; the Environmental Affairs Committee; and the
Stock Option Committee. The following information describes each committee
of the Board of Directors as it was constituted as of December 31, 1994.
The Audit Committee consisted of Robert D. Tuttle, Chairman, John
Russell Fowler, Paul K. Gaston, George R. Kempton and Winthrop C. Neilson.
The Audit Committee met twice last year. Each year the Audit Committee
reviews the upcoming audit plan submitted by the independent auditors with
respect to the scope of procedures that will be performed and the fee that
-25-
will be charged. The Audit Committee also reviews the results of the
independent audit each year, including any associated recommendations on
internal controls. In addition, the Committee meets regularly with the
Company's internal auditor.
The Organization/Compensation Committee consisted of Winthrop C.
Neilson, Chairman, John Russell Fowler, Paul K. Gaston and K. Kevin Hepp.
The Organization/ Compensation Committee met five times last year. The
Organization/Compensation Committee establishes the salary levels of the
Company's officers, reviews the compensation of certain middle management
employees and reviews the Company's organizational structure including its
personnel policies and programs.
The Finance Committee consisted of K. Kevin Hepp, Chairman,
Charles E. Bennett, John Russell Fowler, Paul K. Gaston, George R. Kempton
and Robert D. Tuttle. The Finance Committee met once in 1994. The Finance
Committee reviews the capital structure and financing needs of the Company,
examines potential acquisitions and submits recommendations to the Board of
Directors. The Committee also reviews the Company's employee benefit plans
and insurance programs.
The Nominating Committee consisted of Charles E. Bennett, Paul K.
Gaston and George R. Kempton. The Nominating Committee met twice last year.
The Nominating Committee considers and evaluates the qualifications of
potential candidates for the Board of Directors and recommends appropriate
candidates to the full Board of Directors.
The Environmental Affairs Committee consisted of George R.
Kempton, Chairman, Charles E. Bennett and Paul K. Gaston. Robert H. Ripley,
the Company's Vice President, Corporate Environmental and Technical
Affairs, served as an ex-officio member of this committee. The
Environmental Affairs Committee met twice in 1994. The Environmental
Affairs Committee monitors and reports to the Board of Directors on the
Company's compliance with environmental legislation and regulations.
The Stock Option Committee consisted of John Russell Fowler,
K. Kevin Hepp and Winthrop C. Neilson. The Stock Option Committee met once
in 1994. The Stock Option Committee is responsible for the administration
of the Company's various stock option plans and awards stock options to
officers and other management employees under the Company's various stock
option plans.
The Board of Directors met five times during 1994. During 1994,
each director attended at least 75 percent of the aggregate of the total
number of meetings of the Board of Directors held while he was a director
and the total number of meetings of all committees of the Board of
Directors on which he served during the period of his service.
-26-
COMPENSATION OF DIRECTORS
General Compensation. During 1994, each director was paid
$4,000 per quarter plus an additional $1,000 for each Board meeting and
$500 for each committee meeting attended. Chairmen received 150% of the
regular meeting fee for each meeting chaired by them. Salaried officers
who serve as directors do not receive these fees.
Under the Company's Retirement Plan for Directors, in which all
directors are eligible to participate, annual retirement benefits equal to
the annual directors' fees are payable to former directors who have ten or
more years of service as a member of the Board of Directors. Board members
with five to nine years of service are entitled to those fees multiplied by
their number of years on the Board, divided by ten. If a participating
director dies, the director's spouse or designated beneficiary is entitled
to any unpaid benefits under the plan. If an employee director leaves his
position with the Company before retirement, all benefits due under the
Retirement Plan for Directors are immediately forfeited.
In February of 1994, each Nonemployee Director was granted
options to purchase 4,337 shares of Common Stock under the Company's 1991
Stock Option Plan. These options, which were granted at an exercise price
of $15.375 per share, the fair market value of Common Stock on the date of
grant, were canceled on September 1, 1994, at which time each Nonemployee
Director was granted new options to purchase 2,500 shares of Common Stock.
These new options, which were granted at an exercise price of $11.00 per
share, the fair market value of Common Stock on the date of grant, vested
six months following the date of grant and expire in September of 2004. The
options may be exercised by each director, or by his designated beneficiary
if he should die, throughout the original terms of the options.
Compensation of the Chairman of the Board. As an outside
director, Mr. Gaston receives director fees as described above. In
addition to his regular director duties, Mr. Gaston devotes substantial
time and energies to the affairs of the Company in his role as Chairman of
the Board and has a Consulting Agreement with the Company. The
recommendations of The Wyatt Company, a nationally recognized compensation
consulting firm, were utilized by the Company in structuring its relationship
with Mr. Gaston. Pursuant to this Consulting Agreement, Mr. Gaston received
$90,000 in 1994, and deferred receipt of an additional $80,000 for services
rendered in 1994. The Consulting Agreement, which has a stated term of three
years and is intended to be extended for an additional two years, may be
terminated by either the Company or Mr. Gaston upon 60 days' written notice.
In 1994, Mr. Gaston was also reimbursed $2,260 for the cost of leasing an
automobile for two months.
In order to provide Mr. Gaston with a long-term incentive to
serve the Company as Chairman consistent with stockholder interests, on
November 11, 1994, he was granted an option to purchase 50,000 shares of
Common Stock. The option to purchase these shares, which was granted at an
-27-
exercise price of $10.875 per share (the fair market value of Common Stock
on the date of grant), vest at a rate of 10,000 shares per year beginning
on December 31, 1994, as long as Mr. Gaston continues his position as
Chairman of the Board.
Other Compensation of Directors. In connection with the
Company's acquisition of Moline Paint Manufacturing Co. through a merger
effective August 31, 1994, James L. Sadler entered into a twelve-year
Noncompetition Agreement with the Company. Under the Noncompetition
Agreement, Mr. Sadler will receive $374,350 per year for the first
four years after August 31, 1994, of which Mr. Sadler received $124,784
during 1994, and $292,750 per year during the final eight years. Also in
1994, K. Kevin Hepp received $35,000 for consulting services rendered to
the Company.
EXECUTIVE COMPENSATION
Summary of Compensation. The compensation on an accrual basis
during 1994, 1993 and 1992 for the Chief Executive Officer of the Company
and for all other executive officers who earned over $100,000 in salary and
bonus in 1994 (the "named executive officers") is set forth together with
certain other information in the following table:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Other Securities
Annual Underlying
Name and Compen- Stock All Other
Principal Position Year Salary Bonus sation<F1> Options(#) Compensation<F2>
<S> <C> <C> <C> <C> <C> <C>
Charles E. Bennett 1994 $220,004 $68,000 7,150 $ 400
President and Chief 1993 180,250 42,120 11,590 400
Executive Officer 1992 125,000 23,660 10,000 300
Edward D. Corlett 1994 124,667 43,367 3,445 400
Vice President,
Metal 1993 101,917 35,560 6,375 400
Coatings Group 1992 90,000 21,483 6,040 300
Everette L. Martin 1994 150,014 54,779 3,515 22,868<F3>
Vice President,
Wood Coatings 1993 117,500 32,848 6,505 400
Group 1992 93,667 3,892 $15,579 1,500 300
-28-
Keith C. Vander
Hyde, Jr. 1994 125,000 27,246 3,265 400
Vice President, 1993 96,917 33,847 6,110 400
Consumer Products
Group 1992 80,000 22,800 4,000 300
_______________________
<FN>
<F1> Other Annual Compensation for the named executive officers did not
exceed 10 percent of salary and bonus for 1994, 1993 and 1992, with
the exception of Mr. Martin, whose Other Annual Compensation in 1992
included $12,500 for country club initiation fees.
<F2> All Other Compensation includes the Company's matching contributions
under the Guardsman Products, Inc. Security Builder 401(k) Plan.
<F3> During 1994, Mr. Martin relocated to the Company's High Point, NC
facility in his new role as Vice President for the Wood Coatings
Group. In conjunction with this move, Mr. Martin received $12,944 for
real estate fees and closing costs on his Grand Rapids residence
("Residence"), $3,624 representing the gross-up for federal income
taxes on taxable moving expenses, $3,500 representing the difference
between the actual proceeds received and the appraised value of his
Residence and $2,400 for miscellaneous home repair and redecorating
expenditures. In addition, the Company made an interest-free loan to
Mr. Martin for $170,000, which was outstanding for approximately one
month and was secured by a mortgage on his Residence.
</TABLE>
Executive Employment Agreements. Messrs. Bennett, Corlett,
Martin and Vander Hyde each have an Employment Agreement with the Company.
These agreements automatically renew annually in May of each year, unless
the Board of Directors gives notice at least 60 days before the anniversary
date of each agreement that the agreement will not be renewed. The annual
salary for each executive is determined each year by the
Compensation/Organization Committee of the Board of Directors and the
minimum amounts in effect in 1994 for Messrs. Bennett, Corlett, Martin and
Vander Hyde were $220,000, $127,000, $150,000 and $125,000, respectively.
If any of these officers is terminated without cause within three years
after a change in control of the Company, the officer will receive his
annual compensation on a monthly basis and fringe benefits for the period
remaining between the date of termination and three years after the date of
the change in control of the Company.
COMPENSATION PURSUANT TO PLANS
Stock Options Granted During 1994. The following table sets
forth certain information concerning stock options granted during 1994 to
the named executive officers:
-29-
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants Potential
Percent Realizable Value at
of Total Assumed Annual
Number of Options Rates of Stock
Securities Granted to Price
Underlying Employees Exercise Expira- Appreciation
Options in Fiscal Price tion for Option Term
Name Granted(1) Year Per Share Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. Bennett 7,150 10.5% $11.00 9/1/2004 $0 $49,463 $125,348
Edward D. Corlett 3,445 5.1% 11.00 9/1/2004 0 23,832 60,395
Everette L. Martin 3,515 5.2% 11.00 9/1/2004 0 24,316 61,622
Keith C. Vander
Hyde, Jr 3,265 4.8% 11.00 9/1/2004 0 22,587 57,239
______________________
<FN>
(1) The above options, which were granted on September 1, 1994, at the
fair market value of Common Stock on the date of grant, vested six
months following the date of grant. The options may be exercised
within three months of the executive leaving his position or within
the original term of the option, by the executive or his beneficiary,
in the event of disability or death. The named executive officers
were also granted stock options on February 10, 1994, which were
canceled on September 1, 1994.
</TABLE>
The Company's stock option plans provide that an employee may
borrow from the Company up to 100 percent of the option price to exercise a
stock option or hold stock acquired through the Company's stock option
plans. Currently outstanding loans bear interest at the prime rate per
annum with interest payable quarterly. Upon exercise of an option through
the use of an installment loan, all outstanding loan balances are
consolidated and the resultant principal is payable monthly over a 60-month
period based on the date on which the most recent option to which the loan
relates is exercised. All loans are secured by a pledge of the shares of
Common Stock obtained upon exercise of the applicable option. The
outstanding loan balance as of March 1, 1995 and the maximum amount
outstanding since January 1, 1994 for Mr. Bennett were $72,164 and $88,702,
respectively. Outstanding loan balances since January 1, 1994 for Messrs.
Corlett and Vander Hyde were less than $5,500 and $1,500, respectively.
Mr. Martin has no outstanding loan balance.
Stock Options Exercised and Year-End Option Values. The
following table sets forth certain information concerning the aggregated
option exercises during 1994 and the number of outstanding options held as
of December 31, 1994, by each of the named executive officers:
-30-
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Fiscal Options at Fiscal
Number of Year-End Year-End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Charles E. Bennett 3,950 $17,281 16,300/7,150 $ 0/$10,725
Edward D. Corlett 2,268 10,490 18,353/1,445 12,007/ 2,168
Everette L. Martin 0 0 11,755/3,515 14,911/ 5,273
Keith C. Vander
Hyde, Jr. 4,219 19,513 12,721/ 3,265 9,572/ 4,898
</TABLE>
Performance Award Plan. The following table shows performance
award allotments granted in 1994, payable in 1997, for each of the named
executive officers under the Company's Performance Award Plan:
<TABLE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Number of Performance or Estimated Future
Shares, Units, Other Period Payouts Under
or Other Until Maturation Non-Stock-Price-Based Plans
Name Rights (1) or Payout Target Maximum
<S> <C> <C> <C> <C>
Charles E. Bennett 70% 3 Years $129,000 $154,800
Edward D. Corlett 35% 3 Years 40,000 48,000
Everette L. Martin 35% 3 Years 42,000 50,400
Keith C. Vander
Hyde, Jr 35% 3 Years 35,000 42,000
__________________________
<FN>
(1) Under the Performance Award Plan, key employees may earn incentive
compensation based upon achievement of specified levels of average
Company income before income taxes over a three-year performance
period. The numbers reported in this column represent the percentage
of each officer's base salary for the 1993 fiscal year that may be
earned as bonus compensation under the plan if the specified levels of
average Company income before income taxes are achieved. The target
level of average Company income before income taxes (the "Base") was
determined by the Organization/Compensation Committee. If higher or
lower levels of average Company income before income taxes are
-31-
achieved during the three-year performance period, the percentage of
1993 fiscal year base salary to be received by each officer as bonus
compensation will be correspondingly higher or lower. Bonuses are
conditioned upon achieving a minimum, or "threshold," percentage of
the Base. No bonuses are payable until the threshold of 80% of the
Base is exceeded. Bonuses are also capped and may not exceed 120
percent of the percentage of 1993 fiscal year base salary reported in
this column. The Base was established at the beginning of 1994 for
the period ending on the last day of the Company's 1996 fiscal year.
</TABLE>
No performance award bonuses were earned under the Performance
Award Plan for the three-year period ended December 31, 1994.
(d) Retirement Plans. The Company maintains the Guardsman Products,
Inc. Non-Bargaining Employees' Retirement Income Plan. The amount of
compensation used in determining benefits under a defined benefit plan has
been limited by the Code since 1989. The amount of the limit for 1995 is
$150,000. The Code also limits the maximum annual pension from a defined
benefit plan to $118,800.
During 1994, the Company implemented a Pension Restoration Plan
to provide participants of the Supplemental Executive Retirement Plan,
discussed below, with pension benefits on compensation in excess of the
$150,000 limit set by the Code. Benefits under the Pension Restoration
Plan are calculated by first determining the amount of a participant's
benefit payable under the Non-Bargaining Employees' Retirement Income Plan,
without reduction for any compensation limit under the Code, and then
subtracting the amount of the participant's actual benefit payable under
the Non-Bargaining Employees' Retirement Plan.
The following pension plan table shows the estimated annual
benefits payable upon retirement under the Non-Bargaining Employees'
Retirement Income Plan and, if applicable, the Pension Restoration Plan:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Average Years of Credited Service
Remuneration 15 20 25 30 and over
<S> <C> <C> <C> <C> <C>
$100,000 $20,312 $27,083 $33,853 $40,624
150,000 31,562 42,083 52,603 63,124
200,000 42,812 57,083 71,353 85,624
250,000 54,062 72,083 90,103 108,824
300,000 65,312 87,083 108,853 130,624
350,000 76,562 102,083 127,603 153,124
400,000 87,812 117,083 146,353 175,624
450,000 99,062 132,083 165,103 198,124
500,000 110,312 147,083 183,853 220,624
</TABLE>
-32-
All of the above annual benefits are subject to reductions for
early retirement but are not subject to deduction for Social Security
benefits.
The plans provide annual retirement benefits equal to .9 percent
of a participant's average annual compensation plus .6 percent of the
participant's average annual compensation in excess of covered compensation
(average of maximum social security base), multiplied by the participant's
years of credited service (not to exceed 30 years). Average annual
compensation for a participant is the average of the participant's
compensation, including salary, annual bonus and amounts earned under the
Performance Award Plan, for the highest five consecutive years before
retirement. These components of average annual compensation for purposes of
the plan would include amounts consistent with those set for under the
captions "Salary" and "Bonus" in the Summary Compensation Table included in
this Proxy Statement, plus any amounts that may be paid under the Company's
Performance Award Plan for the given year (there were no amounts paid under
the Performance Award Plan in 1994). If there were amounts paid under the
Performance Award Plan, average annual compensation for purposes of the
plan could differ significantly from the amounts set forth in the Summary
Compensation Table in this Proxy Statement. The plans also provide for
death, disability and termination benefits. Since payments to the plans
are computed on an actuarial basis, there are no allocations to individual
participants. Substantially all full-time employees of the Company in the
United States are participants in the Non-Bargaining Employees' Retirement
Income Plan or similar plans.
The years of credited service for the named executive officers
are fourteen years for Mr. Bennett, six years for Mr. Corlett, thirty years
for Mr. Martin and eleven years for Mr. Vander Hyde.
The Company also has a Supplemental Executive Retirement Plan
(the "SERP") to provide various key management employees with deferred
compensation commencing upon retirement from the Company at normal or early
retirement age. The SERP also provides benefits in the event of death or
disability. The following table shows the estimated annual benefits payable
upon retirement under the SERP:
<TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
<CAPTION>
Average Years of Credited Service
Remuneration 10 15 and over
<S> <C> <C> <C>
$100,000 $12,500 $ 20,000
150,000 18,750 30,000
200,000 25,000 40,000
250,000 31,250 50,000
300,000 37,500 60,000
350,000 43,750 70,000
-33-
400,000 50,000 80,000
450,000 56,250 90,000
500,000 62,500 100,000
</TABLE>
All of the above annual benefit amounts are subject to reductions
for early retirement.
Benefits under the SERP are calculated at 12.5 percent of average
annual compensation when a participant attains ten years of credited
service increasing to a maximum of 20 percent of average annual
compensation at fifteen years of credited service. Average annual
compensation for a participant is the average of the participant's annual
salary and bonus (but excluding amounts earned under the Performance Award
Plan), for the highest five consecutive years before retirement. Average
annual compensation for purposes of the SERP are substantially similar to
the sum of the amounts shown under the captions "Salary" and "Bonus" in the
Summary Compensation Table in this Proxy Statement. The years of credited
service under this plan for the named executive officers are eleven years
for Mr. Bennett, four years for Mr. Corlett, three years for Mr. Martin and
three years for Mr. Vander Hyde.
ORGANIZATION/COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by
the Organization/Compensation Committee of the Board of Directors (the
"Compensation Committee"). The Compensation Committee evaluates annual
salaries and incentive compensation plans for the Company's executive
officers. It also reviews awards under certain stock-based compensation
plans as approved by the Stock Option Committee. The Compensation Committee
submits its recommendations on such matters to the full Board of Directors
(the "Board") for ratification. Directors who are also employees of the
Company and who may participate in the plans administered by the
Compensation Committee, other than participation under formula award
provisions, may not serve on the Compensation Committee.
Compensation Policies For Executive Officers
The Compensation Committee's executive compensation philosophy is
to provide competitive levels of compensation, align officers' pay with the
Company's achievement of annual and long-term performance goals, reward
outstanding performance, recognize individual accomplishment, and allow the
Company to attract and retain quality executive officers. The Compensation
Committee believes that a substantial portion of the annual compensation of
each officer must relate to, and be contingent upon, the performance of the
Company.
-34-
The Compensation Committee's compensation policies are designed
to enhance stockholder value by rewarding executive officers for profitable
growth of the Company and increases in the value of its Common Stock. The
Compensation Committee believes that outstanding performance, measured in
terms of profit growth and total stockholder return, should generate
significant rewards for senior executives and key employees.
Executive officer compensation is comprised of a base salary, an
annual performance bonus (the "Annual Bonus Plan") and a long-term
performance incentive plan (the "Performance Award Plan"). Additionally,
senior executives are granted incentive stock options by the Stock Option
Committee to align their financial interests with those of the Company's
stockholders. Executive officers are also eligible to participate in a
noncontributory defined benefit pension plan which covers substantially all
non-union employees, the Pension Restoration Plan, the Supplemental
Executive Retirement Plan, the Employee Stock Purchase Plan, the Guardsman
Products, Inc. Security Builder 401(k) Plan and the Company's various
health and life insurance benefit plans.
In 1993, the Company engaged The Wyatt Company, a nationally
recognized compensation consulting firm, to review its compensation
policies and make recommendations to the Compensation Committee concerning
executive compensation policies and competitive compensation levels. The
recommendations of The Wyatt Company have been and will continue to be
considered in developing the Company's executive compensation program.
Base Salary
The Company seeks to attract and retain executives by providing
base salaries that are generally competitive. The Compensation Committee
considers pay levels at similar companies to help establish guidelines.
However, the Company's operating performance, measured by consolidated
income before income taxes and income per common share, is considered the
key factor in determining the base salaries of senior executives.
Additionally, each individual's performance, skill and experience,
accountability, tenure and current economic conditions affect what each
individual earns as a base salary.
During 1993, The Wyatt Company analyzed the compensation paid by
companies that operate in similar businesses. Due to the growth in profits
experienced by the Company in the past two years, the Company has been
able to follow Wyatt's recommendations and adjust the base salaries of the
executive officers to make those salaries more competitive.
Incentive compensation based upon criteria designed to reward
executives for performance that enhances stockholder value will continue to
represent a substantial percentage of potential executive compensation.
-35-
The Compensation Committee believes that base salaries should
approximate the mid-point of the salary scale established by The Wyatt
Company's study and it may recommend adjustments on a frequent basis to
maintain the desired level of base salaries for the Company's executives.
Annual Bonus Plan
The Annual Bonus Plan ("Bonus Plan") is a key component of
officer compensation. Participation is limited to executive officers
employed at the time the annual goals are established. Four executives
participated in this plan in 1994. This plan is designed to motivate the
executive officers to achieve performance improvements measured in terms of
increases over the preceding year in consolidated income before income
taxes and income per common share, as well as income before income taxes
for the respective business units, as further described below. The Wyatt
Company's compensation analysis described above indicated that the award
opportunity under the Bonus Plan has been below competitive levels.
However, when considered together with the cash award opportunity available
under the Performance Award Plan described below, the total cash award
opportunity for the Company's executive officers is closer to the market
level.
For the President and Chief Executive Officer (the "CEO") and
the Vice President and Chief Financial Officer, the first part of the Bonus
Plan, which is designed to provide approximately 60 percent to 80 percent
of the entire amount earned thereunder, provides that each participant
receive a percentage of current year income before income taxes to the
extent it exceeds the level earned in the prior year. The second part of
the Bonus Plan awards each participant a cash payment equal to a percentage
of base salary determined by reference to a scale that provides for no
payment until income per common share exceeds prior year results and then
awards an increasing percentage of salary as current year results exceed
the prior year to a greater degree. Each year, the Compensation Committee
determines a maximum percentage of salary that may be earned on an annual
basis. In 1994, this maximum was set at 60 percent for the CEO and 50
percent for the Vice President and Chief Financial Officer.
In 1994, the vice presidents of the Company's two principal
business units, as then defined, participated in the Bonus Plan. The Bonus
Plan for these individuals reflected a monetary award under the first part
of the plan, based on improvements in consolidated income before income
taxes, an incentive under the second part of the plan to reward improvements
over the prior year in income before income taxes for their respective
business units, and a nominal additional third incentive to reward
improvement in sales over a target level for their respective business units.
The opportunity to earn awards under the first, second, and third parts of
the Bonus Plan were designed to be approximately 40 percent, 50 percent and
10 percent, respectively, of total potential awards. In 1994, the maximum
percentage of annual salary that could be earned under the Bonus Plan was 50
percent.
-36-
As the Summary Compensation Table on page 28 indicates, partial
awards were earned by the participating officers under the Bonus Plan for
1994, 1993 and 1992.
Performance Award Plan
In 1980, the stockholders approved the establishment of the
Company's Performance Award Plan. This long-term incentive plan is designed
to combine the potential of a monetary award for performance over a three-
year period, measured by income before income taxes, with an incentive
stock option that should increase in value if the performance levels
required to earn the monetary award are achieved. The monetary award is
based upon a percentage of each participant's base salary for the
immediately preceding year. In 1994, the monetary awards for executive
officers ranged from 35 percent to 70 percent of base salary for the prior
year. Options are granted at 100 percent of the market value of Common
Stock and the number of shares covered by each option is approximately
equivalent to the number of shares that could be purchased with proceeds
equal to the full monetary award granted to each participant.
The amount of the monetary award earned is based upon a
comparison of average income before income taxes for the three-year period
to a performance goal, or "Base," that is established by the Compensation
Committee each year. The goals adopted in 1994 provide that the monetary
award will begin to be earned on a pro-rata basis at the point that average
income before income taxes for 1996, 1995 and 1994 exceeds 80 percent of
the Base, increasing to 100 percent of the monetary award earned if average
income before income taxes for the three-year period equals the Base and
increasing to a maximum of 120 percent of the monetary award earned if
average income before income taxes for the three-year period equals or
exceeds 120 percent of the Base.
The foundation of the Performance Award Plan is the performance
goal that is set for the three-year period. Annually, the Compensation
Committee determines the performance objectives for the three-year cycle
that begins that year. The Performance Award Plan goal established in 1994
represents the Compensation Committee's target performance for average
income before income taxes during the three-year period beginning in 1994
and ending in 1996. This target performance was based on an average of the
Company's 1993 actual results and its strategic plan goals for 1996, 1995
and 1994.
No awards were earned by the participating officers under the
Performance Award Plan for 1994, 1993 and 1992.
Incentive Stock Options
It has historically been the Stock Option Committee's belief
that, absent unusual circumstances, stock options should be granted to
executives annually and on a generally consistent basis in terms of the
-37-
number of shares subject to option. For this purpose, the Stock Option
Committee has established ranges of grants in terms of numbers of shares
that are based on and vary with levels of responsibility within the
Company. The size of grants generally increase as the level of corporate
responsibility increases. For the executive officers other than the CEO,
the CEO generally recommends to the Committee the amount and terms of the
grants. The Committee reviews the recommendations of the CEO, modifies
the recommended grants if the Committee deems modifications appropriate,
and approves the grants to the executives. The Committee alone determines
the amount and other terms of grants to the CEO. These actions are then
submitted to the Compensation Committee and the Board of Directors for
review.
The number of shares covered by each grant is designed to
provide the executive officers a substantial incentive to operate the
business from the perspective of an owner, thereby closely aligning their
interests to those of the Company's stockholders. The Company currently has
no target ownership level for Common Stock holdings by executive officers.
The Stock Option Committee generally considers stock options as an incentive
mechanism rather than compensation and does not take into account in its
decisions the amount and value of options previously awarded to, or
currently held by, the executive officer. The number of options granted to
each officer is primarily based upon a subjective determination of the
level necessary to provide the desired level of incentive. In February
1994, the Stock Option Committee awarded incentive stock options for an
aggregate of 34,750 shares to four executive officers. The exercise price
of these options was $13.875 per share, the fair market value of Common
Stock on the date of grant. As further discussed on page 39, at the
time of the Company's acquisition of Moline Paint Manufacturing Co., in
order to provide stronger incentives than provided by the original option
pricing, these stock options were canceled on September 1, 1994. New options
for one-half this amount (17,375 shares) were granted on both September 1,
1994, and February 17, 1995. The exercise price of these new options was
$11.00 per share for the September 1, 1994, grant and $10.9375 per share for
the February 17, 1995 grant, the fair market value of Common Stock on the
respective dates of grant.
Chief Executive Officer Compensation
The Compensation Committee considers current operating
performance, measured by consolidated income before income taxes and income
per common share, to be a key determinant in establishing the base salary of
the CEO. The Compensation Committee also considers the individual's
performance, skill and experience, accountability, length of service and
current economic conditions. The Compensation Committee believes that
incentive compensation, designed to reward performance, should represent a
significant percentage of the CEO's potential compensation. At its
November 1993 meeting, the Board approved the Compensation Committee's
recommendation that the salary of the CEO be increased to $220,000 effective
-38-
January 1, 1994. In 1994, the CEO could earn up to 60 percent of his current
salary under the terms of the Annual Bonus Plan and an additional 70 percent
of his 1993 salary was made available as a potential cash award under the
Performance Award Plan for the years 1996, 1995 and 1994. Each of these
plans is discussed in greater detail above.
The Annual Bonus Plan for 1994 rewarded the CEO for increases in
the Company's income before income taxes and income per common share over
1993 levels. In 1994, the CEO earned $68,000 under the Annual Bonus Plan.
Average income before income taxes for the years 1994, 1993 and
1992 did not amount to 80 percent of the performance goal established under
the Performance Award Plan for its three-year performance cycle. As a
result, the CEO did not earn a monetary award under the Performance Award
Plan for the three-year period ended December 31, 1994.
In February of 1994, the Stock Option Committee awarded the
CEO options to purchase 14,300 shares of the Company's Common Stock at an
exercise price of $13.875 per share, the fair market value of Common Stock
on the date of grant. The number of options granted to the CEO was based
upon the Stock Option Committee's subjective determination of the level
necessary to provide the desired level of incentive. As discussed below,
the February 1994 grants to all officers and key employees were canceled and
new options for one-half of the February 1994 amounts (7,150 shares for the
CEO) were granted on September 1, 1994, at an exercise price of $11.00 per
share, the current market price of Common Stock at the date of grant. An
option for the same number of shares was granted to the CEO on February 17,
1995, at an exercise price of $10.9375 per share, the current market price
of Common Stock at the date of grant.
All recommendations of the Committee concerning compensation
attributable to 1994 were approved and adopted by the Board of Directors
without modification.
Respectfully submitted,
Winthrop C. Neilson, Chairman Paul K. Gaston
John Russell Fowler K. Kevin Hepp
STOCK OPTION COMMITTEE REPORT ON
CANCELLATION AND NEW GRANTS OF STOCK OPTIONS
On August 31, 1994, the Company purchased 100 percent of the
stock of Moline Paint Manufacturing Co. ("Moline"). At that time, a number
of key employees of Moline became eligible for grants of stock options.
In reviewing the stock options granted in February of 1994, in light of the
options to be issued to employees of Moline, the Stock Option Committee noted
that the new options were to be granted at an exercise price of $11.00 per
-39-
share, the current market price at the date of grant. The exercise price at the
time of the annual stock option grants to officers and key employees in
February of 1994 was $13.875 per share. Because this price substantially
exceeded the current market price in August of 1994, the Committee believed
that the price did not provide a realistic, significant incentive for the
employees to participate in the growth in value of the Company and identify
with the stockholders of the Company. On February 1, 1994, the Nonemployee
Directors of the Company received an automatic grant of stock options at a
price of $15.375 per share. The Committee believed that the exercise price
of those options also failed to provide a significant incentive for
directors to increase the value of the Company in light of its relation to
the market value of the stock in August of 1994.
Based on the foregoing, the Board of Directors ratified a
proposal of the Committee to cancel all outstanding options granted to
officers and key employees during February of 1994, with the consent of the
optionees. In place of these options, the Committee granted to each
officer and key employee who agreed to cancel his or her February of 1994
option: (1) an option granted on September 1, 1994, for one-half the
number of shares subject to the option granted in February of 1994, at an
exercise of $11.00 per share, the current market price at the date of
grant; and (2) an option for one-half the number of shares subject to the
option granted in February of 1994, on the date of the February of 1995
meeting of the Board of Directors, provided that the officer or key
employee remains in the service of the Company at that time. Options for
the second half of the shares were granted on February 17, 1995 at an
exercise price of $10.9375 per share, the current market price at the date
of grant. The Board of Directors further recommended to the Committee that
in the future the options to be granted to officers and key employees
should be made at the time of the meeting of the Board of Directors in
February of each year as to half of the total annual option amount, and
again on September 1 as to the other half of the annual option amount.
The Committee acted due to the unusual circumstances that
occurred in 1994, particularly highlighted by the need to grant options to
the new Moline employees. This was the only time in the last decade in
which options were similarly canceled and new options granted. The
information concerning cancellation of the options held by executive
officers during 1994 and issuance of new options in 1994 and 1995 is
provided in the following table:
-40-
<TABLE>
TEN-YEAR OPTION REPRICINGS
<CAPTION>
Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at Remaining
Options Time of Time of at Date of
Repriced Repricing Repricing New Repricing
or or or Exercise or
Name Date Amended Amendment Amendment Price(1) Amendment
<S> <C> <C> <C> <C> <C> <C>
Charles E. Bennett 9/1/94 14,300 $11.00 $13.875 $11.00 9.44 years
Edward D. Corlett 9/1/94 6,890 11.00 13.875 11.00 9.44 years
Everette L. Martin 9/1/94 7,070 11.00 13.875 11.00 9.44 years
Keith C. Vander
Hyde, Jr. 9/1/94 6,530 11.00 13.875 11.00 9.44 years
__________________________
<FN>
(1) New options in the amount of 50 percent of options canceled were granted
on September 1, 1994, and 50 percent of options canceled were granted on
February 17, 1995. The February 17, 1995 options were granted at an
exercise price of $10.9375 per share.
</TABLE>
In addition to the cancellation of stock options granted to
officers and key employees, the Board of Directors approved the
cancellation of the options granted to Nonemployee Directors in February of
1994, with the consent of those directors. Upon cancellation of the
options for Nonemployee Directors, the 1991 Stock Option Plan was amended
to provide that in the future options will be granted to Nonemployee
Directors on March 1 and September 1 of each year. No discretionary
options are available to Nonemployee Directors. In place of the option
granted to each Nonemployee Director in February of 1994, which was an
option for 4,337 shares at an exercise price of $15.375 per share, the
current market price of Common Stock at the date of grant, an option was
granted on September 1, 1994, for 2,500 shares at an exercise price of
$11.00 per share, the current market price of Common Stock at the date of
grant. The number of shares to be subject to options on each succeeding
option date during the term of the 1991 Stock Option Plan will be
105 percent of the number of shares granted on the previous grant date.
The exercise price will be 100 percent of the market value of Common Stock
as of the date of grant. Any new Nonemployee Director elected or appointed
other than on a grant date will receive, as of the date of his or her
election or appointment, an option for the number of shares granted to a
Nonemployee Director as of the previous grant date. The option price for
options granted to any such new Nonemployee Director will be the higher of
the market value as of the date of his or her election or appointment or
the market value as of the prior grant date.
-41-
Respectfully submitted,
John Russell Fowler Winthrop C. Neilson
K. Kevin Hepp
-42-
STOCK PERFORMANCE GRAPHS
Set forth below is a line graph comparing the cumulative total
stockholder return on the Company's Common Stock based on the market price
of Common Stock assuming $100 invested on December 31, 1989 and assuming
reinvestment of dividends, against the Standard & Poor's 500 Stock Index
and the Standard & Poor's Chemicals Index for the five-year period from
December 31, 1989 to December 31, 1994.
[Performance Graph]
The dollar values for total stockholder return plotted in the
graph above are shown in the table below:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
GUARDSMAN PRODUCTS $100 $61 $69 $87 $120 $ 95
S&P 500 100 97 126 136 150 152
S&P CHEMICALS 100 85 111 121 136 157
</TABLE>
-43-
Set forth below is a line graph comparing the cumulative total
stockholder return on the Company's Common Stock, based on the same method as
the previous graph except assuming $100 invested on December 31, 1984, against
the Standard & Poor's 500 Stock Index for the ten-year period from December 31,
1984 to December 31, 1994. This graph is included only to provide additional
information regarding the Company's total stockholder return relative to a broad
market index over a longer period of time and has not been considered in the
determination of compensation levels for the executive officers.
[Performance Graph]
The dollar values for total stockholder return plotted in the graph
above are shown in the table below:
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GUARDSMAN
PRODUCTS $100 $132 $141 $160 $240 $323 $196 $222 $280 $388 $307
S&P 500 100 132 156 164 191 252 244 319 343 378 407
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Organization/Compensation Committee is charged with the duty
of reviewing the organizational structure and personnel policies, plans and
programs of the Company, including administration of the Company's
executive compensation program. The Organization/Compensation Committee is
composed of Winthrop C. Neilson, John Russell Fowler, Paul K. Gaston and
K. Kevin Hepp. Mr. Gaston, Chairman of the Board of the Company, has
entered into a three-year Consulting Agreement with the Company, effective
January 1, 1994, under which he received $90,000 in 1994, and deferred receipt
of an additional $80,000 for services rendered in 1994. The Company intends to
extend the Consulting Agreement for an additional two years. In 1994,
Mr. Gaston was also reimbursed $2,260 for the cost of leasing an automobile for
two months.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more
than 10 percent of the Company's Common Stock, to file reports of ownership
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and changes in ownership of the Company's Common Stock with the Securities
and Exchange Commission and the New York Stock Exchange. Directors,
officers and greater than 10 percent beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of such reports received
by it, or written representations from certain reporting persons that no
other filings were required for those persons, the Company believes that,
except as described below, all filing requirements applicable to its
directors, officers and greater than 10 percent beneficial owners were
satisfied in 1994.
INDEMNITY AGREEMENTS
The Company has entered into Indemnity Agreements with Charles E.
Bennett, Edward D. Corlett, Everette L. Martin and Keith C. Vander Hyde,
Jr., and with each director of the Company ("Executives"). A copy of the
form of the Indemnity Agreement was included as an exhibit to the Company's
Form 10-K Annual Report for the year ended December 31, 1986, filed with
the Securities and Exchange Commission. The Indemnity Agreements indemnify
each Executive against all expenses incurred in connection with any action
or investigation involving the Executive by reason of his position with the
Company (or with another entity at the Company's request). The Executives
will also be indemnified for costs, including judgments, fines and
penalties, indemnifiable under applicable law or under the terms of any
current or future liability insurance policy maintained by the Company that
covers the Executives. An Executive involved in a derivative suit will be
indemnified for expenses and amounts paid in settlement. Indemnification is
dependent in every instance on the Executive meeting the standards of
conduct set forth in the Indemnity Agreements. In the event of a potential
change in control, the Company may fund a trust to satisfy its anticipated
indemnification obligations.
SELECTION OF AUDITORS
The Company selected Arthur Andersen LLP as its principal
auditors for 1994 pursuant to the recommendation of the Audit Committee of
its Board of Directors. Representatives of Arthur Andersen LLP are expected
to be present at the annual meeting, will have the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to appropriate questions. Consistent with its past practice, the
Company's Board of Directors expects to finalize the selection of its
principal auditors for its 1995 annual financial audit during August 1995.
During 1993, the Company's management and the Audit Committee of
the Board of Directors obtained competitive proposals for audit services
from a number of prominent accounting firms, including the Company's former
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principal accountants. On August 12, 1993, the Board of Directors approved
the appointment of Arthur Andersen LLP as the Company's principal
independent accountants for the fiscal year ended December 31, 1993,
replacing Ernst & Young LLP, who previously served in this role. The
decisions to invite proposals and to select the proposal of Arthur
Andersen LLP were recommended by the Audit Committee.
The report of Ernst & Young LLP on the corporation's financial
statements for the fiscal year ended December 31, 1992 did not contain any
adverse opinion or a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles. In
connection with the audit of the Company's financial statements for the
1992 fiscal year and in any subsequent interim period, there were no
disagreements with Ernst & Young LLP on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to the satisfaction of Ernst & Young LLP, would have
caused them to make reference to the matter in their report.
NOMINATIONS OF DIRECTOR CANDIDATES
The Nominating Committee of the Board of Directors will consider
nominees recommended by stockholders. Nominations of candidates for
election as directors of the Company at any meeting of stockholders called
for election of directors (an "Election Meeting") may be made by any
stockholder entitled to vote at the Election Meeting. Any stockholder who
intends to make a nomination at an Election Meeting is required to deliver,
not less than 120 days prior to the date of the Election Meeting in the
case of an annual meeting, and not more than seven days following the date
of notice of the meeting in the case of a special meeting, a notice to the
Secretary of the Company setting forth (i) the name, age, business address
and residence address of each nominee proposed in the notice; (ii) the
principal occupation or employment of each nominee; (iii) the number of
shares of capital stock of the Company that are beneficially owned by each
nominee; (iv) a statement that each nominee is willing to be nominated; and
(v) such other information concerning each nominee as would be required
under the rules of the Securities and Exchange Commission to be included in
a proxy statement soliciting proxies for the election of the nominees. If
the chairman of the Election Meeting determines that a nomination was not
made in accordance with these procedures, the nomination will be void.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 annual
meeting must be received by the Company for consideration for inclusion in
its proxy statement and form of proxy relating to that meeting by December
5, 1995. Stockholder proposals should be made in accordance with Rule 14a-8
issued under the Securities Exchange Act of 1934, as amended, and should be
addressed to Paul K. Gaston, Chairman of the Board, Guardsman Products,
Inc., Post Office Box 1521, Grand Rapids, Michigan 49501.
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SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers and employees of the Company, personally or by telephone
or telegram, without additional compensation. Banks, brokerage houses and
other custodians, nominees and fiduciaries may communicate with and forward
soliciting materials to the beneficial owners of shares held by them to
obtain authorization for the execution of proxies. The Company has
retained D. F. King & Co., Inc., of New York, New York, to assist in the
solicitation of proxies. D. F. King & Co., Inc., is expected to solicit
proxies personally and by mail, telephone and telegram. The Company will
pay a fee to D. F. King & Co., Inc. for its services, which is expected to
be approximately $6,000, in addition to expenses.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be
presented for stockholder action at the annual meeting other than those
stated in the Notice of Annual Meeting of Stockholders. If other matters
come before the meeting, or any adjournment of the meeting, the enclosed
Proxy will be voted on those matters in accordance with the judgment of the
person or persons voting the Proxy.
By Order of the Board of Directors
JEFFREY M. SUERTH
Secretary
Grand Rapids, Michigan
April 3, 1995
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APPENDIX
GUARDSMAN PRODUCTS, INC.
1995 LONG-TERM INCENTIVE PLAN
SECTION 1
Establishment of Plan; Purpose of Plan
1.1 Establishment of Plan. Guardsman hereby establishes the 1995
LONG-TERM INCENTIVE PLAN (the "Plan") for its corporate, divisional, and
Subsidiary directors, advisory directors, officers, and other key
employees. The Plan permits the grant and award of Stock Options, Stock
Appreciation Rights, Restricted Stock, Stock Awards, and Tax Benefit
Rights.
1.2 Purpose of Plan. The purpose of the Plan is to provide
directors, advisory directors, officers, and key management employees of
Guardsman, its divisions, and its Subsidiaries with an increased incentive
to make significant and extraordinary contributions to the long-term
performance and growth of Guardsman and its Subsidiaries, to join the
interests of directors, officers, and key employees with the interests of
Guardsman's stockholders through the opportunity for increased stock
ownership, and to attract and retain directors and key employees of
exceptional ability. The Plan is further intended to provide flexibility
to Guardsman in structuring long-term incentive compensation to best
promote the foregoing objectives.
SECTION 2
Definitions
The following words have the following meanings unless a
different meaning is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of Guardsman.
2.3 "Change in Control" means (i) the failure of the Continuing
Directors at any time to constitute at least a majority of the
members of the Board; (ii) the acquisition by any Person other
than an Excluded Holder of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of twenty
percent (20%) or more of the outstanding Common Stock or the
combined voting power of Guardsman's outstanding securities
entitled to vote generally in the election of directors; (iii)
the approval by the stockholders of Guardsman of a
reorganization, merger or consolidation, unless with or into a
Permitted Successor; or (iv) the approval by the stockholders of
Guardsman of a complete liquidation or dissolution of Guardsman
or the sale or disposition of all or substantially all of the
assets of Guardsman other than to a Permitted Successor.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Stock Option Committee of the Board or such
other committee as the Board shall designate to administer the
Plan. The Committee shall consist of at least two members of the
Board, and all of its members shall be "disinterested persons" as
defined in Rule 16b-3 under the Act.
2.6 "Common Stock" means the Common Stock of Guardsman, par value $1
per share.
2.7 "Continuing Directors" mean the individuals constituting the
Board as of the date this Plan was adopted and any subsequent
directors whose election or nomination for election by
Guardsman's stockholders was approved by a vote of two-thirds
(2/3) of the individuals who are then Continuing Directors, but
specifically excluding any individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as the term is used in Rule 14a-11 of
Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board.
2.8 "Employee Benefit Plan" means any plan or program established by
Guardsman or a Subsidiary for the compensation or benefit of
employees of Guardsman or any of its Subsidiaries.
2.9 "Excluded Holder" means (A) any Person who at the time this Plan
was adopted was the beneficial owner of twenty percent (20%) or
more of the outstanding Common Stock or (B) Guardsman, a
Subsidiary or any Employee Benefit Plan of Guardsman or a
Subsidiary or any trust holding Common Stock or other securities
pursuant to the terms of an Employee Benefit Plan.
2.10 "Guardsman" means Guardsman Products, Inc., a Delaware
corporation, and any Permitted Successor.
2.11 "Incentive Award" means the award or grant of a Stock Option,
Stock Appreciation Right, Restricted Stock, Stock Award, or Tax
Benefit Right to a Participant pursuant to the Plan.
2.12 "Market Value" shall equal the mean of the highest and lowest
sales prices of shares of Common Stock on the New York Stock
Exchange (or any successor exchange that is the primary stock
exchange for trading of Common Stock) on the date of grant, or if
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the New York Stock Exchange (or any such successor) is closed on
that date, the last preceding date on which the New York Stock
Exchange (or any such successor) was open for trading and on
which shares of Common Stock were traded.
2.13 "Participant" means a corporate director or officer, advisory
director, divisional officer, or other key employee of Guardsman,
its divisions, or its Subsidiaries who the Committee determines
is eligible to participate in the Plan and who is designated to
be granted an Incentive Award under the Plan.
2.14 "Permitted Successor" means a corporation which, immediately
following the consummation of a transaction specified in clauses
(iii) and (iv) of the definition of "Change in Control" above,
satisfies each of the following criteria: (A) sixty percent
(60%) or more of the outstanding common stock of the corporation
and the combined voting power of the outstanding securities of
the corporation entitled to vote generally in the election of
directors (in each case determined immediately following the
consummation of the applicable transaction) is beneficially
owned, directly or indirectly, by all or substantially all of the
Persons who were the beneficial owners of Guardsman's outstanding
Common Stock and outstanding securities entitled to vote
generally in the election of directors (respectively) immediately
prior to the applicable transaction, (B) no Person other than an
Excluded Holder beneficially owns, directly or indirectly, twenty
percent (20%) or more of the outstanding common stock of the
corporation or the combined voting power of the outstanding
securities of the corporation entitled to vote generally in the
election of directors (for these purposes the term Excluded
Holder shall include the corporation, any Subsidiary of the
corporation and any Employee Benefit Plan of the corporation or
any such Subsidiary or any trust holding common stock or other
securities of the corporation pursuant to the terms of any such
Employee Benefit Plan), and (C) at least a majority of the board
of directors is comprised of Continuing Directors.
2.15 "Person" means any individual, entity or group (within the
meaning of Section 13(d) and 14(d)(2) of the Act).
2.16 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to
restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect
to shares of Common Stock covered by the same Incentive Award.
2.17 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to Section 6 of the Plan.
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2.18 "Retirement" means the voluntary termination of all employment
and service as a director with Guardsman by a Participant after
the Participant has attained 60 years of age, or age 55 with at
least five years of service, or such other age as shall be
determined by the Committee in its sole discretion or as
otherwise may be set forth in the Incentive Award agreement or
other grant document with respect to a Participant and a
particular Incentive Award.
2.19 "Stock Appreciation Right" means a right granted in connection
with a Stock Option pursuant to Section 8 of the Plan.
2.20 "Stock Award" means an award of Common Stock awarded to a
Participant pursuant to Section 7 of the Plan.
2.21 "Stock Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes of the
Plan, a Stock Option may be either an incentive stock option
within the meaning of Section 422(b) of the Code or a
nonqualified stock option, and the option shall be interpreted in
accordance with such intention as stated in the applicable Stock
Option Agreement.
2.22 "Subsidiary" means any corporation or other entity of which fifty
percent (50%) or more of the outstanding voting stock or voting
ownership interest is directly or indirectly owned or controlled
by Guardsman or by one or more Subsidiaries of Guardsman.
2.23 "Tax Benefit Right" means any right granted to a Participant
pursuant to Section 9 of the Plan.
SECTION 3
Administration
3.1 Power and Authority. The Committee shall have full power and
authority to interpret the provisions of the Plan, and shall have full
power and authority to supervise the administration of the Plan. All
determinations, interpretations, and selections made by the Committee
regarding the Plan shall be final and conclusive. The Committee shall hold
its meetings at such times and places as it deems advisable. Action may be
taken by a written instrument signed by a majority of the members of the
Committee, and any action so taken shall be fully as effective as if it had
been taken at a meeting duly called and held. The Committee shall make
such rules and regulations for the conduct of its business as it deems
advisable. The members of the Committee shall not be paid any additional
fees for their services.
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3.2 Grants or Awards to Participants. In accordance with and subject
to the provisions of the Plan, the Committee shall have the authority to
determine all provisions of Incentive Awards as the Committee may deem
necessary or desirable and as are consistent with the terms of the Plan,
including, without limitation, the following: (a) the employees and
advisory directors who shall be selected as Participants; (b) the nature
and extent of the Incentive Awards to be made to each employee and advisory
director (including the number of shares of Common Stock to be subject to
each Incentive Award, any exercise price, the manner in which an Incentive
Award will vest or become exercisable, and the form of payment for the
Incentive Award); (c) the time or times when Incentive Awards will be
granted to employees and advisory directors; (d) the duration of each
Incentive Award; and (e) the restrictions and other conditions to which
payment or vesting of Incentive Awards may be subject.
3.3 Amendments or Modifications of Awards. The Committee shall have
the authority to amend or modify the terms of any outstanding Incentive
Award granted to a Participant in any manner, provided that the amended or
modified terms are not prohibited by the Plan as then in effect, including,
without limitation, the authority to: (a) modify the number of shares or
other terms and conditions of an Incentive Award; (b) extend the term of an
Incentive Award; (c) accelerate the exercisability or vesting or otherwise
terminate any restrictions relating to an Incentive Award; (d) accept the
surrender of any outstanding Incentive Award; or (e) to the extent not
previously exercised or vested, authorize the grant of new Incentive Awards
in substitution for surrendered Incentive Awards. Modification of options
granted to nonemployee directors, other than advisory directors, may be
made only as necessary or desirable to comply with securities or income tax
law. No such amendment or modification shall become effective without
consent of the Participant except to the extent that such amendment
operates solely to the benefit of the Participant.
3.4 Indemnification of Committee Members. Each person who is or
shall have been a member of the Committee shall be indemnified and held
harmless by Guardsman from and against any cost, liability, or expense
imposed or incurred in connection with such person's or the Committee's
taking or failing to take any action under the Plan. Each such person
shall be justified in relying on information furnished in connection with
the Plan's administration by any appropriate person or persons.
3.5 Incentive Awards for Nonemployee Directors. Directors, other
than advisory directors, who are not also employees shall receive
nondiscretionary Stock Options awarded automatically under the terms of
subsection 5.5, and shall not receive other Incentive Awards.
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SECTION 4
Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in
subsection 4.2 of the Plan, a maximum of 470,000 shares of Common Stock
shall be available for Incentive Awards under the Plan. Such shares shall
be authorized and may be either unissued or treasury shares.
4.2 Adjustments. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares, or any other change
in the corporate structure or shares of Guardsman, the number and kind of
securities subject to and reserved under the Plan, together with applicable
exercise prices, shall be appropriately adjusted. No fractional shares
shall be issued pursuant to the Plan, and any fractional shares resulting
from adjustments shall be eliminated from the respective Incentive Awards,
with an appropriate cash adjustment for the value of any Incentive Awards
eliminated. If an Incentive Award is cancelled, surrendered, modified,
exchanged for a substitute Incentive Award, or expires or terminates during
the term of the Plan but prior to the exercise or vesting of the Incentive
Award in full, the shares subject to but not delivered under such Incentive
Award shall be available for other Incentive Awards.
SECTION 5
Stock Options
5.1 Grant. A Participant may be granted one or more Stock Options
under the Plan. Stock Options shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. In addition, the
Committee may vary, among Participants and among Stock Options granted to
the same Participant, any and all of the terms and conditions of the Stock
Options granted under the Plan. The Committee shall have complete
discretion in determining the number of Stock Options granted to each
Participant. The Committee may designate whether or not a Stock Option is
to be considered an incentive stock option as defined in Section 422(b) of
the Code.
5.2 Stock Option Agreements. Stock Options shall be evidenced by
Stock Option agreements containing such terms and conditions, consistent
with the provisions of the Plan, as the Committee shall from time to time
determine. Stock Options shall be subject to the terms and conditions set
forth in this Section 5.
5.3 Stock Option Price. The per share Stock Option price shall be
determined by the Committee, but shall be a price that is equal to or
higher than the par value of Guardsman's Common Stock; provided, however,
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that the per share Stock Option price for any shares designated as
incentive stock options shall be equal to or greater than one hundred
percent (100%) of the Market Value on the date of grant.
5.4 Medium and Time of Payment. The exercise price for each share
purchased pursuant to a Stock Option granted under the Plan shall be
payable in cash or, if the Committee consents, in shares of Common Stock
(including Common Stock to be received upon a simultaneous exercise) or
other consideration substantially equivalent to cash. The time and terms
of payment may be amended with the consent of a Participant before or after
exercise of a Stock Option, but such amendment shall not reduce the Stock
Option price. The Committee may from time to time authorize payment of all
or a portion of the Stock Option price in the form of a promissory note or
installments according to such terms as the Committee may approve. The
Board may restrict or suspend the power of the Committee to permit such
loans and may require that adequate security be provided.
5.5 Stock Options Granted to Nonemployee Directors.
(a) Automatic Grants. Options shall be granted to
nonemployee directors on March 1 and September 1 of each year,
and no discretionary options shall be granted to such directors
under the Plan. The number of shares subject to options granted
on September 1, 1995, shall be 2,755 shares. The number of
shares to be subject to options granted on each succeeding option
date during the term of the Plan thereafter shall be 105% of the
previous period's grant, with the result rounded up or down to
the nearest 5 share increment. This provision for automatic
grants shall be effective when there are insufficient shares
available for such automatic grants under prior Guardsman stock
option plans. The provisions of this subsection 5.5 shall not
apply to advisory directors who are eligible to receive
discretionary Incentive Awards under the Plan.
(b) Price and Terms. The price shall be 100% of the Market
Value as of the date of the grant and may be paid in cash or
shares of Common Stock. The term shall be ten years, except that
the option shall cease and be of no effect if the director is
terminated for cause.
(c) New Directors. Any new nonemployee director elected or
appointed other than on a grant date shall receive, as of the
date of his or her election or appointment, an option for the
number of shares granted to a nonemployee director as of the
previous grant date. The option price for such new Director
shall be the higher of the market value as of the date of grant
or the market value as of the prior grant date.
5.6 Limits on Exercisability. Stock Options shall be exercisable for
such periods as may be fixed by the Committee, not to exceed 10 years from
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the date of grant. At the time of the exercise of a Stock Option, the
holder of the Stock Option, if requested by the Committee, must represent
to Guardsman that the shares are being acquired for investment and not with
a view to the distribution thereof. The Committee may in its discretion
require a Participant to continue the Participant's service with Guardsman
and its Subsidiaries for a certain length of time prior to a Stock Option
becoming exercisable and may eliminate such delayed vesting provisions. No
Stock Option issued to directors and employees subject to Section 16 of the
Act shall be exercisable during the first six months of its term.
5.7 Restrictions on Transferability.
(a) General. Unless the Committee otherwise consents or
unless the Stock Option agreement or grant provide otherwise:
(i) no Stock Options granted under the Plan may be sold,
exchanged, transferred, pledged, assigned, or otherwise alienated
or hypothecated except by will or the laws of descent and
distribution; and (ii) all Stock Options granted to a Participant
shall be exercisable during the Participant's lifetime only by
such Participant, his guardian, or legal representative.
(b) Other Restrictions. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to
the exercise of a Stock Option under the Plan as the Committee
deems advisable, including, without limitation, restrictions
under applicable federal or state securities laws.
5.8 Termination of Employment or Directorship.
(a) General. If an employee Participant ceases to be
employed by or a director of Guardsman or one of its Subsidiaries
for any reason other than the Participant's death, disability,
Retirement, or termination for cause, the Participant may
exercise his Stock Options only for a period of three months
after such termination of employment status, but only to the
extent the Participant was entitled to exercise the Stock Options
on the date of termination, unless the Committee otherwise
consents or the terms of the Stock Option agreement or grant
provide otherwise. For purposes of the Plan, the following shall
not be deemed a termination of employment status: (i) a transfer
of an employee from Guardsman to any Subsidiary; (ii) a leave of
absence, duly authorized in writing by Guardsman, for military
service or for any other purpose approved by Guardsman if the
period of such leave does not exceed 90 days; (iii) a leave of
absence in excess of 90 days, duly authorized in writing by
Guardsman, provided that the employee's right to reemployment is
guaranteed either by statute or contract; or (iv) a termination
of employment with continued service as a director or officer.
(b) Death. If a Participant dies either while an employee
of Guardsman or one of its Subsidiaries or after the termination
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of employment other than for cause but during the time when the
Participant could have exercised a Stock Option under the Plan,
the Stock Option issued to such Participant shall be exercisable
by the personal representative of such Participant or other
successor to the interest of the Participant for one year after
the Participant's death, but only to the extent that the
Participant was entitled to exercise the Stock Option on the date
of death or termination of employment, whichever first occurred,
unless the Committee otherwise consents or the terms of the Stock
Option agreement or grant provide otherwise.
(c) Disability. If a Participant ceases to be an employee
of Guardsman or one of its Subsidiaries due to the Participant's
disability, the Participant may exercise a Stock Option for a
period of one year following such termination of employment, but
only to the extent that the Participant was entitled to exercise
the Stock Option on the date of such event, unless the Committee
otherwise consents or the terms of the Stock Option agreement or
grant provide otherwise.
(d) Participant Retirement. If a Participant Retires as an
employee of Guardsman or one of its Subsidiaries, any Stock
Option granted under the Plan may be exercised during the
remaining term of the Stock Option, unless the terms of the Stock
Option agreement or grant provide otherwise.
(e) Termination for Cause. If a Participant is terminated
for cause, the Participant shall have no further right to
exercise any Stock Option previously granted.
(f) Directors. A Participant who is or becomes a
nonemployee director shall continue to be able to exercise his or
her options throughout their term unless the Participant's
directorship is terminated for cause, or the option agreement
provides otherwise. In the event of the Director's death or
disability, his or her options shall be exercisable throughout
their term by the legal representative or successor in interest
to the options held by the Director.
SECTION 6
Restricted Stock
6.1 Grant. A Participant may be granted Restricted Stock under the
Plan. Restricted Stock shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by
the Committee in its sole discretion. The Committee may impose such
restrictions or conditions, consistent with the provisions of the Plan, to
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the vesting of Restricted Stock as it deems appropriate. No more than one-
half of the total shares available for Incentive Awards under the Plan
shall be awarded in the form of Restricted Stock. Forfeited Restricted
Stock shall again become available for awards of Restricted Stock.
6.2 Restricted Stock Agreements. Awards of Restricted Stock shall be
evidenced by Restricted Stock agreements containing such terms and
conditions, consistent with the provisions of the Plan, as the Committee
shall from time to time determine. Unless a Restricted Stock agreement
provides otherwise, Restricted Stock Awards shall be subject to the terms
and conditions set forth in this Section 6.
6.3 Termination of Employment or Officer Status.
(a) General. In the event of termination of employment
during the Restricted Period for any reason other than death,
disability, Retirement, or termination for cause, then any shares
of Restricted Stock still subject to restrictions at the date of
such termination shall automatically be forfeited and returned to
Guardsman; provided, however, that in the event of a voluntary or
involuntary termination of the employment of a Participant by
Guardsman, the Committee may, in its sole discretion, waive the
automatic forfeiture of any or all such shares of Restricted
Stock and/or may add such new restrictions to such shares of
Restricted Stock as it deems appropriate. For purposes of the
Plan, the following shall not be deemed a termination of
employment: (i) a transfer of an employee from Guardsman to any
Subsidiary; (ii) a leave of absence, duly authorized in writing
by Guardsman, for military service or for any other purpose
approved by Guardsman if the period of such leave does not exceed
90 days; (iii) a leave of absence in excess of 90 days, duly
authorized in writing by Guardsman, provided that the employee's
right to reemployment is guaranteed either by statute or
contract; and (iv) a termination of employment with continued
service as a director or officer.
(b) Death, Retirement, or Disability. Unless the Committee
otherwise consents or unless the terms of the Restricted Stock
agreement or grant provide otherwise, in the event a Participant
terminates his or her employment with Guardsman because of death,
disability, or Retirement during the Restricted Period, the
restrictions applicable to the shares of Restricted Stock shall
terminate automatically with respect to that number of shares
(rounded to the nearest whole number) equal to the total number
of shares of Restricted Stock granted to such Participant
multiplied by the number of full months that have elapsed since
the date of grant divided by the maximum number of full months of
the Restricted Period. All remaining shares shall be forfeited
and returned to Guardsman; provided, however, that the Committee
may, in its sole discretion, waive the restrictions remaining on
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any or all such remaining shares of Restricted Stock either
before or after the death, disability, or Retirement of the
Participant.
(c) Termination for Cause. If a Participant's employment
is terminated for cause, the Participant shall have no further
right to exercise or receive any Restricted Stock, and all
Restricted Stock still subject to restrictions at the date of
such termination shall automatically be forfeited and returned to
Guardsman.
6.4 Restrictions on Transferability.
(a) General. Unless the Committee otherwise consents or
unless the terms of the Restricted Stock agreement or grant
provide otherwise: (i) shares of Restricted Stock shall not be
sold, exchanged, transferred, pledged, assigned, or otherwise
alienated or hypothecated during the Restricted Period except by
will or the laws of descent and distribution; and (ii) all rights
with respect to Restricted Stock granted to a Participant under
the Plan shall be exercisable during the Participant's lifetime
only by such Participant, his or her guardian, or legal
representative.
(b) Other Restrictions. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to
an award of Restricted Stock under the Plan as the Committee
deems advisable, including, without limitation, restrictions
under applicable federal or state securities laws.
6.5 Legending of Restricted Stock. Any certificates evidencing
shares of Restricted Stock awarded pursuant to the Plan shall bear the
following legend:
The shares represented by this certificate were issued
subject to certain restrictions under the Guardsman Products,
Inc. 1995 LONG-TERM INCENTIVE PLAN (the "Plan"). A copy of the
Plan is on file in the office of the Secretary of Guardsman.
This certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes a
prohibition against the sale or transfer of the stock represented
by this certificate except in compliance with that agreement, and
that provides for forfeiture upon certain events.
6.6 Representations and Warranties. A Participant who is awarded
Restricted Stock shall represent and warrant that the Participant is
acquiring the Restricted Stock for the Participant's own account and
investment and without any intention to resell or redistribute the
Restricted Stock. The Participant shall agree not to resell or distribute
such Restricted Stock after the Restricted Period except upon such
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conditions as Guardsman may reasonably specify to ensure compliance with
federal and state securities laws.
6.7 Rights as a Stockholder. A Participant shall have all voting,
dividend, liquidation, and other rights with respect to Restricted Stock
held of record by such Participant as if the Participant held unrestricted
Common Stock; provided, however, that the unvested portion of any award of
Restricted Stock shall be subject to any restrictions on transferability or
risks of forfeiture imposed pursuant to subsections 6.1 and 6.4 of the
Plan. Unless the Committee otherwise determines or unless the terms of the
Restricted Stock agreement or grant provide otherwise, any noncash
dividends or distributions paid with respect to shares of unvested
Restricted Stock shall be subject to the same restrictions as the shares to
which such dividends or distributions relate.
SECTION 7
Stock Awards
7.1 Grant. A Participant may be granted one or more Stock Awards
under the Plan in lieu of, or as payment for, the rights of a Participant
under any other compensation plan, policy, or program of Guardsman or its
Subsidiaries. Stock Awards shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by
the Committee in its sole discretion.
7.2 Rights as a Stockholder. A Participant shall have all voting,
dividend, liquidation, and other rights with respect to shares of Common
Stock issued to the Participant as a Stock Award under this Section 7 upon
the Participant becoming the holder of record of the Common Stock granted
pursuant to such Stock Awards; provided, however, that the Committee may
impose such restrictions on the assignment or transfer of Common Stock
awarded pursuant to a Stock Award as it deems appropriate.
SECTION 8
Stock Appreciation Rights
8.1 Grant. The Committee may grant Stock Appreciation Rights to
individuals granted related options under the Plan.
8.2 Restrictions. A Stock Appreciation Right may be granted
simultaneously with or subsequent to the option to which the right is
related, but each Stock Appreciation Right must relate to a particular
option. In exchange for the surrender in whole or in part of the right to
exercise the related option to purchase shares of Common Stock, the
exercise of a Stock Appreciation Right shall entitle a Plan participant to
an amount equal to the appreciation in value of the shares covered by the
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related option surrendered. Such appreciation in value shall be equal to
the excess of the market value of such shares at the time of the exercise
of the Stock Appreciation Right over the option price of such shares.
Stock Appreciation Rights may be exercised only when the related option
could be exercised and only when the market price of the stock subject to
the option exceeds the exercise price of the option. Neither a Stock
Appreciation Right nor any related stock option issued to officers and
directors subject to Section 16 of the Securities and Exchange Act of 1934
shall be exercisable during the first six months of the terms of the
respective right or option.
8.3 Payment. Upon the exercise of a Stock Appreciation Right,
payment by Guardsman may be made in cash, in shares of Common Stock, or
partly in cash and partly in shares of Common Stock. The Committee shall
have sole discretion to determine the form of payment made upon the
exercise of a Stock Appreciation Right. If payment is made in shares of
Common Stock, such shares shall be valued at their market value as of the
date of surrender of the right to exercise the option. When an
appreciation right is exercised pursuant to an option, the shares subject
to the underlying option shall no longer be available for grant of
Incentive Awards under the Plan.
SECTION 9
Tax Benefit Rights
9.1 Grant. A Participant may be granted Tax Benefit Rights under the
Plan to encourage a Participant to exercise Stock Options and provide
certain tax benefits to Guardsman. A Tax Benefit Right entitles a
Participant to receive from Guardsman or a Subsidiary a cash payment not to
exceed the amount calculated by multiplying the ordinary income, if any,
realized by the Participant for federal tax purposes as a result of the
exercise of a nonqualified stock option, or the disqualifying disposition
of shares acquired under an incentive stock option, by the maximum federal
income tax rate (including any surtax or similar charge or assessment) for
corporations, plus the applicable state and local tax imposed on the
exercise of the Stock Option or the disqualifying disposition.
9.2 Restrictions. A Tax Benefit Right may be granted under the Plan
only with respect to a stock option issued and outstanding or to be issued
under the Plan or any other plan of Guardsman or its Subsidiaries that has
been approved by the stockholders as of the date of the Plan and may be
granted concurrently with or after the grant of the stock option. Such
rights with respect to outstanding stock options shall be issued only with
the consent of the Participant if the effect would be to disqualify an
incentive stock option, change the date of grant or the exercise price, or
otherwise impair the Participant's existing stock options. A stock option
to which a Tax Benefit Right has been attached shall not be exercisable by
a director or officer subject to Section 16 of the Act for a period of six
months from the date of the grant of the Tax Benefit Right.
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9.3 Terms and Conditions. The Committee shall determine the terms
and conditions of any Tax Benefit Rights granted and the Participants to
whom such rights will be granted with respect to stock options under the
Plan or any other plan of Guardsman. The Committee may amend, cancel,
limit the term of, or limit the amount payable under a Tax Benefit Right at
any time prior to the exercise of the related stock option, unless
otherwise provided under the terms of the Tax Benefit Right. The net
amount of a Tax Benefit Right, subject to withholding, may be used to pay a
portion of the stock option price, unless otherwise provided by the
Committee.
SECTION 10
Change in Control
10.1 Acceleration of Vesting. If a Change in Control of Guardsman
shall occur, then, unless the Committee or the Board otherwise determines
with respect to one or more Incentive Awards, without action by the
Committee or the Board (a) all outstanding Stock Options shall become
immediately exercisable in full and shall remain exercisable during the
remaining term thereof, regardless of whether the Participants to whom such
Stock Options have been granted remain in the employ or service of
Guardsman or any Subsidiary; and (b) all other outstanding Incentive Awards
shall become immediately fully vested and nonforfeitable.
10.2 Cash Payment for Stock Options. If a Change in Control of
Guardsman shall occur, then the Committee, in its sole discretion, and
without the consent of any Participant affected thereby, may determine that
some or all Participants holding outstanding Stock Options shall receive,
with respect to some or all of the shares of Common Stock subject to such
Stock Options, as of the effective date of any such Change in Control of
Guardsman, cash in an amount equal to the greater of the excess of (a) the
highest sales price of the shares on the New York Stock Exchange on the
date immediately prior to the effective date of such Change in Control of
Guardsman or (b) the highest price per share actually paid in connection
with any Change in Control of Guardsman over the exercise price per share
of such Stock Options.
SECTION 11
General Provisions
11.1 No Rights to Awards. No Participant or other person shall have
any claim to be granted any Incentive Award under the Plan, and there is no
obligation of uniformity of treatment of Participants or holders or
beneficiaries of Incentive Awards under the Plan. The terms and conditions
of Incentive Awards of the same type and the determination of the Committee
to grant a waiver or modification of any Incentive Award and the terms and
conditions thereof need not be the same with respect to each Participant.
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11.2 Withholding. Guardsman or a Subsidiary shall be entitled to (a)
withhold and deduct from future wages of a Participant (or from other
amounts that may be due and owing to a Participant from Guardsman or a
Subsidiary), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all federal, state, and local
withholding and employment-related tax requirements attributable to an
Incentive Award, including, without limitation, the grant, exercise, or
vesting of, or payment of dividends with respect to, an Incentive Award or
a disqualifying disposition of Common Stock received upon exercise of an
incentive stock option; or (b) require a Participant promptly to remit the
amount of such withholding to Guardsman before taking any action with
respect to an Incentive Award. Unless the Committee determines otherwise,
withholding may be satisfied by withholding Common Stock to be received
upon exercise or by delivery to Guardsman of previously owned Common Stock.
Guardsman may establish such rules and procedures concerning timing of any
withholding election as it deems appropriate to comply with Rule 16b-3
under the Act.
11.3 Compliance With Laws; Listing and Registration of Shares. All
Incentive Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to all applicable
laws, rules, and regulations, and to the requirement that if at any time
the Committee shall determine, in its discretion, that the listing,
registration, or qualification of the shares covered thereby upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the grant of such Incentive Award or
the issue or purchase of shares thereunder, such Incentive Award may not be
exercised in whole or in part, or the restrictions on such Incentive Award
shall not lapse, unless and until such listing, registration,
qualification, consent, or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
11.4 Limit on Plan Awards. No Participant shall be eligible to
receive Incentive Awards under the Plan which in the aggregate constitute
more than 25% of the total Incentive Awards granted under the Plan.
11.5 No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent Guardsman or any Subsidiary from adopting or
continuing in effect other or additional compensation arrangements,
including the grant of stock options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in
specific cases.
11.6 No Right to Employment. The grant of an Incentive Award shall
not be construed as giving a Participant the right to be retained in the
employ of Guardsman or any Subsidiary. Guardsman or any Subsidiary may at
any time dismiss a Participant from employment, free from any liability or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any written agreement with a Participant.
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11.7 Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Delaware and applicable federal
law.
11.8 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.
11.9 Advisory Director. References to employment, as the context
requires, shall be deemed to include service to Guardsman as an advisiory
director.
SECTION 12
Termination and Amendment
The Board may terminate the Plan at any time, or may from time to
time amend the Plan as it deems proper and in the best interests of
Guardsman, provided that without stockholder approval no such amendment
may: (a) materially increase either the benefits to Participants under the
Plan or the number of shares that may be issued under the Plan;
(b) materially modify the eligibility requirements; (c) modify the formula
grant provisions of subsection 5.5 with respect to nonemployee directors
more than once in any six month period, or (d) impair any outstanding
Incentive Award without the consent of the Participant, except according to
the terms of the Plan or the Incentive Award. No termination, amendment,
or modification of the Plan shall become effective with respect to any
Incentive Award previously granted under the Plan without the prior written
consent of the Participant holding such Incentive Award unless such
amendment or modification operates solely to the benefit of the
Participant.
SECTION 13
Effective Date and Duration of the Plan
This Plan shall take effect upon approval by the stockholders at
the 1995 Annual Meeting of Stockholders or any adjournment thereof or at a
Special Meeting of Stockholders. Unless earlier terminated by the Board of
Directors, the Plan shall terminate on May 10, 2005. No Incentive Award
shall be granted under the Plan after such date.
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[Company logo]
April 3,1995
Notice of
Annual Meeting
and
Proxy Statement
Annual Meeting of
Stockholders
May 11, 1995
GUARDSMAN PRODUCTS, INC.
GRAND RAPIDS, MICHIGAN
GUARDSMAN PRODUCTS, INC. Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints CHARLES E. BENNETT and PAUL K. GASTON
Proxies, each with full power of substitution, and hereby authorizes them
to represent and to vote as designated below, all of the shares of Common
Stock of Guardsman Products, Inc. which the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held on May 11, 1995, and at
any adjournment thereof.
1. ELECTION OF FOR ALL nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all nominees
contrary below) ___ listed below ___
K. Kevin Hepp George R. Kempton James L. Sadler Robert W. Schult
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
___________________________________________________________________________
2. Proposal to approve the amendment to the Company's Certificate of
Incorporation to increase in the number of shares of authorized Common
Stock to 30,000,000 shares.
____ FOR ____ AGAINST ____ ABSTAIN
3. Proposal to approve the 1995 Long-Term Incentive Plan.
____ FOR ____ AGAINST ____ ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon all other
matters that may be presented at the meeting.
The Board of Directors Recommends a Vote "For" Items 1, 2 and 3.
(To be dated and signed on the reverse side.)
The shares represented by this Proxy will be voted as specified. If no
specification is made, the shares will be voted for election of the board
of nominees as directors, for approval of each of the proposals listed, and
in accordance with the judgment of the Proxies with respect to any other
matter which may come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
Dated: ____________________, 1995
____________________________________
Signature
____________________________________
Signature, if held jointly
NOTE: Signatures should be identical with the name typed on the Proxy.
Joint owners should each sign personally. Persons signing as attorney,
executor, administrator, trustee or guardian should give full title as
such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
