<PAGE>
HANDY & HARMAN
250 PARK AVENUE
NEW YORK, NY 10177
------------------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------------------
This Information Statement is being mailed on or about March 6, 1998 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9') of Handy & Harman, a New York corporation (the 'Company'), to
the holders of record of shares of common stock, par value $1.00 per share, of
the Company (the 'Shares'). You are receiving this Information Statement in
connection with the possible election of persons designated by WHX Corporation,
a Delaware corporation ('WHX'), to a majority of the seats on the Board of
Directors of the Company (the 'Board' or 'Board of Directors').
Pursuant to an Agreement and Plan of Merger, dated as of March 1, 1998, by
and among WHX, HN Acquisition Corp., a New York corporation and a wholly owned
subsidiary of WHX (the 'Purchaser'), and the Company, the Purchaser has
commenced a tender offer (the 'Offer') for all of the issued and outstanding
Shares at a price of $35.25 per Share, net to the seller in cash, and following
consummation of the Offer, the Purchaser will be merged with and into the
Company (the 'Merger'), with the Company surviving as a wholly owned subsidiary
of WHX.
The Merger Agreement provides that, promptly after the purchase of and
payment for a majority of the outstanding Shares pursuant to the Offer, WHX will
be entitled to designate such number of directors as will give WHX
representation on the Board proportionate to its ownership interest in the
Shares, rounded up to the next whole number. The Merger Agreement requires the
Company to use its best efforts to cause the WHX designees (the 'WHX Designees')
to be elected to the Board under the circumstances described therein. This
Information Statement is being mailed to shareholders of the Company pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning WHX, the
Purchaser and the WHX Designees has been furnished to the Company by WHX. The
Company assumes no responsibility for the accuracy or completeness of such
information.
<PAGE>
CERTAIN INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each issued and outstanding Share is entitled to one vote. As of
March 1, 1998, 12,132,288 Shares were issued and outstanding and 1,370,104
Shares were reserved for issuance upon the exercise of certain options
outstanding.
RIGHT TO DESIGNATE DIRECTORS; THE WHX DESIGNEES
The Merger Agreement provides that, subject to compliance with applicable
law, promptly upon the purchase of and payment by WHX for Shares pursuant to the
Offer which represent at least a majority of the outstanding Shares (on a fully
diluted basis), WHX will be entitled to designate such number of directors on
the Board as is equal to the product of the total number of directors on the
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser, WHX and any of their affiliates bears to the
total number of Shares then outstanding (such number being the 'Board
Percentage'); provided, however, that if the number of Shares purchased by WHX
or any of its subsidiaries equals or exceeds 50.01% of the outstanding Shares,
the Board Percentage will constitute at least a majority of the members of the
Board. The Company will, upon request of the Purchaser, use its best efforts to
cause the WHX Designees to satisfy the Board Percentage, including, without
limitation, increasing the size of the Board (which, pursuant to the Company's
Restated Certificate of Incorporation, as amended, has a maximum number of
twelve directors) and securing the resignations of incumbent directors.
Notwithstanding the foregoing, until the effective time of the Merger, the
Company will retain on the Board at least two directors who were directors of
the Company on the date of the Merger Agreement; provided, that subsequent to
the purchase of and payment for Shares pursuant to the Offer, WHX will always
have its designees represent at least a majority of the entire Board.
Set forth below is certain information with respect to the initial WHX
Designees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD
NAME AND PRINCIPAL BUSINESS ADDRESS AGE DURING THE PAST FIVE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Paul W. Bucha .................................. 54 Director of WHX; President of Paul W. Bucha &
Paul W. Bucha and Company, Inc. Company, Inc., an international marketing
Foot of Chapel Avenue consulting firm; President of BLHJ, Inc., an
Jersey City, New Jersey 07305 international consulting firm; President of
Congressional Medal of Honor Society of U.S.
since September 1995.
Robert A Davidow ............................... 55 Director of WHX; Private Investor; Director of
11601 Wilshire Boulevard Arden Group, Inc.
Suite 1940
Los Angeles, California 90025
Ronald LaBow ................................... 63 Chairman of the Board and Director of WHX;
110 East 59th Street President of Stonehill Investment Corp.;
New York, New York 10022 Director of Regency Equities Corp., a real
estate company.
Howard Mileaf .................................. 61 Vice President, Special Counsel of WHX since
110 East 59th Street April 1993; Trustee/Director of Neuberger &
New York, New York 10022 Berman Equity Mutual Funds.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD
NAME AND PRINCIPAL BUSINESS ADDRESS AGE DURING THE PAST FIVE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Stewart E. Tabin ............................... 41 Assistant Treasurer of WHX; Vice President of
110 East 59th Street Stonehill Investment Corp.
New York, New York 10022
Neale X. Trangucci ............................. 40 Assistant Treasurer of WHX; Vice President of
110 East 59th Street Stonehill Investment Corp.
New York, New York 10022
Marvin L. Olshan ............................... 70 Director and Secretary of WHX; Partner, Olshan
Olshan Grundman Frome & Rosenzweig LLP Grundman Frome & Rosenzweig LLP.
505 Park Avenue
New York, New York 10022
</TABLE>
WHX has advised the Company that each of the initial WHX Designees has
consented to serve on the Board of Directors of the Company and that, to the
best of its knowledge, none of the WHX Designees (i) has a family relationship
with any of the directors or executive officers of the Company, (ii)
beneficially owns any securities (or rights to acquire securities) of the
Company or (iii) has been involved in any transactions, or has any business
relationships with the Company or any of its directors, executive officers or
affiliates, of the type required to be disclosed pursuant to Rule 14f-1 under
the Exchange Act.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information concerning the current directors and executive officers
of the Company as of March 1, 1998 is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR OR OR OFFICER
EXECUTIVE OFFICER AGE POSITION WITH THE COMPANY SINCE
- ---------------------------------- --- ------------------------------------------------------------------- ----------
<S> <C> <C> <C>
Richard N. Daniel(1).............. 62 Chairman of the Board, Chief Executive Officer and Director 1974
Frank E. Grzelecki(1)............. 60 Vice Chairman of the Board and Director 1988
Robert D. LeBlanc................. 48 President, Chief Operating Officer and Director 1996
Clarence A. Abramson(3)........... 65 Director 1991
Robert E. Cornelia(1)(3).......... 64 Director 1991
Gerald G. Garbacz(2).............. 61 Director 1988
Gouverneur M. Nichols(1)(2)....... 79 Director 1973
Hercules P. Sotos(1)(3)........... 64 Director 1993
Elliot J. Sussman(2).............. 46 Director 1995
Roger E. Tetrault(2)(3)........... 56 Director 1996
Robert F. Burlinson............... 58 Vice President and Treasurer 1996
Paul E. Dixon..................... 53 Senior Vice President, General Counsel and Secretary 1992
Dennis C. Kelly................... 45 Controller 1993
Robert M. Thompson................ 65 Vice President 1984
Dennis R. Kuhns................... 39 Corporate Vice President 1997
</TABLE>
- ------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
RICHARD N. DANIEL has been a director of the Company since 1974 and
Chairman of the Board and Chief Executive Officer of the Company since May 1992.
Previously, Mr. Daniel was Chairman of the Board, President and Chief Executive
Officer of the Company. Mr. Daniel is also a director of the Treasurer's Fund,
Inc.
FRANK E. GRZELECKI has been a director of the Company since 1988 and Vice
Chairman of the Board since 1997. Previously, Mr. Grzelecki was President and
Chief Operating Officer of the Company from 1992 to 1997 and prior thereto, Vice
Chairman of the Board of the Company from 1989 to 1992. Mr. Grzelecki is also a
director of Chartwell Re Corporation, Barnes Group Inc., The Morgan Group, Inc.
and Spinnaker Industries, Inc.
ROBERT D. LEBLANC has been a director of the Company since 1997 and
President and Chief Operating Officer of the Company since 1997. Mr. LeBlanc was
Executive Vice President of the Company from 1996 to 1997. Prior to 1996, Mr.
LeBlanc was Executive Vice President of Elf Atochem North America, Inc.
CLARENCE A. ABRAMSON has been a director of the Company since 1991. Mr.
Abramson has been a healthcare industry consultant since January 1994 and is
President of Healthcare Ventures International, Inc., where he also serves as a
director. Mr. Abramson is also a director of PolyPharm Corp., Acorda
Therapeutics, Inc. and Gulfstream Pharmaceuticals, LLC. Previously, Mr. Abramson
was Vice President and Secretary of Merck & Co., Inc. (a major pharmaceutical
company) from 1990 to 1993.
ROBERT E. CORNELIA has been a director of the Company since 1991 and has
been a management consultant for over five years.
GERALD G. GARBACZ has been a director of the Company since 1988. Mr.
Garbacz has been President and Chief Executive Officer of Nashua Corporation
since January 1996, the Chairman of Nashua Corporation since June 1996 and the
Chairman of Cerion Technologies since May 1996. Previously, Mr. Garbacz was
Chairman, Chief Executive Officer and a director of Baker & Taylor, Inc. (a
distributor of books, video and other media materials) from March 1992 to July
1994 and Executive Vice President of W. R. Grace & Co. (a multinational company)
since prior to March 1992.
4
<PAGE>
GOUVERNEUR M. NICHOLS has been a director of the Company since 1973 and has
been a business consultant for over five years.
HERCULES P. SOTOS has been a director of the Company since 1993. Prior to
his retirement in 1995, Mr. Sotos was President of International Playtex Inc.
and Vice Chairman and a director of Playtex Products, Inc. (a manufacturer of
health and beauty aid products) since prior to January 1991. Mr. Sotos is also a
director of PNC Bank, New England.
ELLIOT J. SUSSMAN has been a director of the Company since 1995. Dr.
Sussman has been President and Chief Executive Officer and a director of Lehigh
Valley Health Network, Inc. and Lehigh Valley Hospital, Inc. since 1993 and has
been a Professor of Medicine at Pennsylvania State University since 1994.
Previously, Dr. Sussman was Associate Dean and Professor of Medicine at
University of Chicago since prior to January 1991. Dr. Sussman is also the
Chairman of the Board and President of PennHEALTH, Inc. d.b.a. PennCARE.
ROGER E. TETRAULT has been a director of the Company since 1996. Mr.
Tetrault has been Vice Chairman and Chief Executive Officer of McDermott
International, Inc. and J. Ray McDermott, S.A. since March 1997. Previously, Mr.
Tetrault was President of General Dynamics Land Systems, Inc. from 1993 to 1997
and President of the Electric Boat Division of General Dynamics Corporation from
1991 to 1993.
ROBERT F. BURLINSON has been Vice President of the Company since 1996 and
Vice President and Treasurer of the Company since 1997. Previously, Mr.
Burlinson was Senior Vice President, Chief Financial Officer and Treasurer of
The National Guardian Corporation from 1986 to 1995 and a director from 1991 to
1995.
PAUL E. DIXON has been Senior Vice President, General Counsel and Secretary
of the Company since 1997. Previously, Mr. Dixon was Vice President, General
Counsel and Secretary of the Company from 1993 to 1997, Vice President and
General Counsel of the Company from 1992 to 1993 and Senior Vice President and
General Counsel of The Warnaco Group, Inc. since prior to 1990.
DENNIS C. KELLY has been Controller of the Company since 1993. Previously,
Mr. Kelly was Assistant Controller of the Company from 1989 to 1993.
ROBERT M. THOMPSON has been Vice President of the Company since 1994.
Previously, Mr. Thompson was Group Vice President of the Company from 1984 to
1994.
DENNIS R. KUHNS has been Corporate Vice President since 1997. Previously,
Mr. Kuhns was President of the Specialty Wire Group of Maryland Specialty Wire,
a wholly owned subsidiary of the Company, since 1996.
FAMILY RELATIONSHIPS
There are no family relationships between any of the directors or executive
officers of the Company. The regular term of office for all directors and
executive officers is one year. There are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
such director or officer was elected to be a director or officer.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Executive Committee, Audit Committee
and Compensation Committee. The Board does not have a Nominating Committee.
The Executive Committee is empowered by the By-laws to act during the
intervals between meetings of the Board and to exercise all powers of the Board
in the management and direction of the business of the Company, except such
powers that by law or the Company's Certificate of Incorporation or By-laws may
not be delegated to the Executive Committee. The Executive Committee did not
meet during 1997.
The Audit Committee is empowered by the Board, under the Company's By-laws,
to review the scope and procedures to be followed in the conduct of the audit by
the Company's independent auditors and also to review the findings and
recommendations by the auditors resulting from the audit. The Committee also
meets with the auditors to review the adequacy of the Company's internal
controls and any significant changes in the accounting practices or audit
reporting requirements followed. The Committee also functions to approve the
professional services provided by the independent auditors, review the
independence of the auditors and consider the amount
5
<PAGE>
and relationships of the non-audit fees to the audit fees of the auditors. The
Audit Committee met two times during 1997.
The Compensation Committee, whose powers are discussed under 'Executive
Compensation' below, met seven times during 1997.
BOARD MEETINGS
The Board conducted eight meetings in person during 1997. Two additional
meetings were conducted by teleconference. During 1997, all of the directors
attended, in person or by teleconference, at least 75% of the total number of
meetings of the Board and of the Committees on which they serve.
COMPENSATION OF DIRECTORS
Each director of the Company, other than each officer who was also a
director, was compensated quarterly for all services as a director including
regular Board attendance at the rate of $23,400 per annum. Effective from
December 18, 1997, directors are also compensated $1,000 for each special
meeting of the Board attended in person and $500 for each special meeting
attended by telephone. Also, $1,000 is paid for each committee meeting attended
in person and $500 for each committee meeting attended by telephone if the
meeting is held on a date separate from a Board meeting.
The Company carries insurance providing indemnification, under certain
circumstances, to all the directors and officers of the Company for claims
against them by reason of, among other things, any act or failure to act in
their capacities as directors or officers. No sums have been paid to any past or
present director or officer of the Company under this or any prior
indemnification insurance policy.
The Handy & Harman Outside Director Stock Option Plan (the 'Directors'
Plan'), which was approved by the Company's shareholders in 1990, provides for
the granting of options to each non-employee member of the Board. The purpose of
the Directors' Plan is to foster and promote the long-term financial success of
the Company and materially increase shareholder value by enabling the Company to
attract and retain the services as directors of outstanding individuals whose
judgment, interest and special effort are essential to the successful conduct of
the Company's business and affairs.
The Directors' Plan provides for the granting of options to directors of
the Company (who are not employees of the Company) to acquire an aggregate of
100,000 Shares. The Directors' Plan provides that annual grants of options are
to be made on the first business day of each year to purchase an amount of
Shares determined by dividing 50% of the annual retainer fee of each outside
director by the fair market value of a Share on the date of grant. The options
are exercisable for ten years after the date of grant. The exercise price is
$1.00 per Share and upon exercise, payment must be made in full in cash or cash
equivalents. No options may be granted after September 28, 1999.
6
<PAGE>
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL HOLDERS & MANAGEMENT
The following table sets forth, as of March 1, 1998, certain information as
to those persons who were beneficial owners of more than 5% of the 12,132,288
Shares issued and outstanding as of such date and as to the Shares beneficially
owned by each of the Company's directors and named executive officers and by all
the Company's executive officers and directors as a group (as defined in Section
13(d)(3) of the Exchange Act):
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
OWNERSHIP CLASS
NAME OF BENEFICIAL OWNER (1)(6)(7) OUTSTANDING
- --------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Gabelli Funds, Inc. and affiliates(2) ............................... 1,225,426 10.1%
One Corporate Center
Rye, New York 10580-1434
Kennedy Capital Management, Inc.(3) ................................. 606,475 5.0
10829 Olive Blvd.
St. Louis, Missouri 63141
Neuberger & Berman, LLC and affiliates(4) ........................... 617,908 5.1
605 Third Avenue
New York, New York 10158-3698
WHX Corporation(5) .................................................. 1,649,455 13.6
HN Acquisition Corp.
110 East 59th Street
New York, New York 10022
Richard N. Daniel.................................................... 513,454 4.1
Frank E. Grzelecki................................................... 388,642 3.1
Clarence A. Abramson................................................. 5,264 *
Robert E. Cornelia................................................... 5,264 *
Gerald G. Garbacz.................................................... 7,177 *
Robert D. LeBlanc.................................................... 100,111 *
Gouverneur M. Nichols(6)............................................. 51,338 *
Hercules P. Sotos.................................................... 5,068 *
Elliot J. Sussman.................................................... 3,725 *
Roger E. Tetrault.................................................... 3,026 *
Robert F. Burlinson.................................................. 25,136 *
Paul E. Dixon........................................................ 68,340 *
Dennis C. Kelly...................................................... 45,178 *
Robert M. Thompson................................................... 39,924 *
Dennis R. Kuhns...................................................... 42,463 *
All Executive Officers and Directors as a Group (15 persons)......... 1,304,110 9.9
</TABLE>
- ------------------
* Less than 1%.
(1) As used herein, 'beneficial ownership' means the sole or shared power to
vote, or to direct the voting of, a security or the sole or shared
investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of, a security) held by contract,
arrangement, understanding, relationship or otherwise. In addition, for
purposes hereof, a person is deemed, as of any date, to have 'beneficial
ownership' of any security that such person has the right to acquire
within 60 days after such date.
(2) Based upon information obtained from the Statement on Schedule 13G, dated
February 23, 1998, filed by Gabelli Funds, Inc. and affiliates.
(3) Based upon information obtained from the Statement on Schedule 13G, dated
February 11, 1998, filed by Kennedy Capital Management, Inc.
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
(4) Based upon information obtained from the Statement on Schedule 13G, dated
January 27, 1998, filed by Neuberger & Berman, LLC and affiliates.
(5) Based upon information obtained from the Statement on Schedule 13D, dated
March 3, 1998, filed by WHX Corporation and HN Acquisition Corp.
(6) The Shares set forth in the table do not include 52,470 Shares owned by
the wife of a director, as to which the director has disclaimed beneficial
ownership.
(7) Figures shown include Shares issuable upon exercise of options (including
options which will become exercisable upon consummation of the Offer) as
follows: 402,500 Shares for Mr. Daniel, 90,000 Shares for Mr. LeBlanc,
348,500 Shares for Mr. Grzelecki, 60,250 Shares for Mr. Dixon, 25,000
Shares for Mr. Burlinson, 40,000 Shares for Mr. Kelly, 22,000 Shares for
Mr. Thompson, 40,000 Shares for Mr. Kuhns, 3,816 Shares for Mr. Abramson,
343 Shares for Mr. Garbacz, 3,068 Shares for Mr. Sotos, 1,725 Shares for
Mr. Sussman and 1,026 Shares for each of Mr. Cornelia and Mr. Nichols.
8
<PAGE>
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee, which is comprised of four independent, non-employee
directors of the Company. The Compensation Committee is empowered by the Board
to review the salaries paid to the Company's officers each year and recommend to
the Board any adjustments that it deems appropriate. It also reviews the nature
and scope of the services rendered each year by the participants in the Handy &
Harman Management Incentive Plan of the Company and the corresponding benefits
derived by the Company from such services. Then, based on the review of
management recommendations, the Compensation Committee awards bonuses to the
participants in accordance with the Handy & Harman Management Incentive Plan.
The Committee also reviews and recommends to the Board the granting and awarding
of restricted stock under the Company's 1988 Long-Term Incentive Plan and the
granting of stock options and Stock Appreciation Rights (SARs) under the
Company's 1995 Omnibus Stock Incentive Plan.
SUMMARY COMPENSATION TABLE
The following table provides information on the compensation provided by
the Company to the Company's Chief Executive Officer and the next four most
highly paid executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------------
COMPENSATION RESTRICTED
------------------ STOCK OPTIONS ALL OTHER
SALARY BONUS AWARDS (3) SHARES COMPENSATION (1)
NAME & POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------------------------- ---- ------- ------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
R. N. Daniel................................... 1997 470,000 322,000 -- 160,000 8,660
Chairman and CEO 1996 470,000 170,000 208,069 50,000 7,834
1995 423,862 215,000 -- 30,000 6,186
F. E. Grzelecki................................ 1997 422,862 295,000 -- 150,000 6,795
Vice Chairman 1996 410,000 150,000 178,956 40,000 6,186
1995 363,860 190,000 -- 25,000 5,008
P. E. Dixon.................................... 1997 195,700 142,000 -- 25,000 3,446
Senior Vice President, 1996 179,000 70,000 57,369 15,000 3,195
General Counsel & Secretary 1995 164,346 80,000 -- 15,000 1,995
R. D. LeBlanc.................................. 1997 300,000 198,000 -- 40,000 109,690(2)
President and COO 1996 34,617 -- -- 50,000 70,000(2)
1995 -- -- -- -- --
R. F. Burlinson................................ 1997 165,000 84,000 -- 10,000 4,560
Vice President and Treasurer 1996 41,250 -- -- 15,000 10,000(3)
1995 -- -- -- -- --
</TABLE>
- ------------------
(1) Company matching contributions under the 401(k) Savings Plan for Messrs.
Daniel, Grzelecki, Dixon, LeBlanc and Burlinson: (A) for 1997 were $2,400,
$2,400, $2,400, $2,400 and $2,400; (B) for 1996 were $2,250, $2,250, $2,250,
$0 and $0; and (C) for 1995 were $2,250, $2,250, $1,282, $0 and $0,
respectively.
The Company maintains a supplemental life insurance program for its officers
providing a variable, appreciable life insurance policy on each participant
in an amount equal to four times annual base salary up to retirement and two
times such annual base salary after retirement. The program was funded by
the Company's purchasing individual insurance policies on the life of each
officer. The costs of this program for Messrs. Daniel, Grzelecki, Dixon,
LeBlanc and Burlinson: (A) for 1997 were $6,260, $4,395, $1,046, $1,200 and
$2,160; (B) for 1996 were $5,584, $3,936, $945, $0 and $0, respectively; and
(C) for 1995 were $3,936, $2,758, $713, $0 and $0, respectively.
(2) In connection with his employment with the Company, Mr. LeBlanc received
$91,090 for relocation in 1997 and a signing bonus which was received in the
amounts of $15,000 in 1997 and $70,000 in 1996. Mr. LeBlanc joined the
Company in November 1996.
(3) In connection with his employment with the Company, Mr. Burlinson received a
signing bonus of $10,000. Mr. Burlinson joined the Company in September
1996.
9
<PAGE>
BASE SALARIES
The base salary of each officer was increased based on the recommendations
of the Compensation Committee and an outside independent report. These increases
reflected input submitted by the Company's Chief Executive Officer and the
Compensation Committee's assessment of the individual performance contributions
of each officer over the past year. The base salary of each officer is
determined by the Compensation Committee annually. While the Committee uses the
benchmarks as a reference point, a particular officer's base salary may vary
depending upon his salary history, experience, performance and salary guidelines
imposed by the budget.
ANNUAL INCENTIVE AWARDS FOR 1997
The Company maintains the Handy & Harmon Management Incentive Plan (the
'Bonus Plan'), which is an annual incentive program that rewards selected
officers and other key employees each year based on their contributions to the
profits of the Company. Prior to the start of each Bonus Plan year, the Chief
Executive Officer recommends those officers designated as participants for the
upcoming year. Final selection of each participant rests with the Compensation
Committee. For the 1997 fiscal year, all officers were selected for
participation in the Bonus Plan.
The available incentive pool for officers and selected corporate management
participants is determined by a formula that represents 7 1/2% of consolidated
pre-tax earnings in excess of 15% of shareholders' equity. An individual
participant's award may not exceed 100% of the participant's salary in the
fiscal year for which the incentive award was earned. If the excess earnings
criterion is not met, at the sole discretion of the Compensation Committee,
based upon the recommendation of the Chief Executive Officer, an amount may be
provided for awards to participants to recognize overall effort of achieving
objectives which enhance the Company's long-term growth potential. However, any
discretionary award may not increase an employee's total incentive award under
this provision to an amount in excess of 25% of the participant's base salary.
For the 1997 fiscal year, corporate pre-tax earnings were in excess of the
minimum shareholders' equity requirement and incentive awards to officers ranged
from 20% to 69% of base salary.
STOCK OPTIONS
HANDY & HARMAN 1995 OMNIBUS STOCK INCENTIVE PLAN
(SUCCESSOR TO THE HANDY & HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN ADOPTED
IN 1991)
The Handy & Harman 1995 Omnibus Stock Incentive Plan (the 'Option Plan') is
intended to promote the interests of the Company and its shareholders by
providing officers and other employees of the Company (including directors who
are also employees of the Company) with appropriate incentives and rewards to
encourage them to enter into and continue in the employ of the Company and to
acquire a proprietary interest in the long-term success of the Company.
After incorporating remaining 'shares available for options' from the
predecessor plan (i.e., the Company's 1991 Long-Term Incentive Stock Option
Plan), the combined number of Shares subject to award under this Option Plan
adopted at the 1995 Annual Meeting of Shareholders shall not exceed 1,000,000
Shares. The Compensation Committee of the Board of Directors may grant options,
stock appreciation rights (tandem or standalone), Shares of restricted or
phantom stock and stock bonuses, in such amounts and with such terms and
conditions as the Compensation Committee shall determine, subject to the
provisions of the Option Plan. Through 1997 only options have been awarded under
the successor and predecessor plans. Certain shares under option with a term of
3 years become exercisable based on the Company's stock attaining specific
trading prices. The remaining Shares under option with terms of 7 years and 10
years become exercisable cumulatively at the
10
<PAGE>
rate of 50% and 25% per year (20% for predecessor plan awarded options),
respectively. Successor and predecessor plan transactions are as follows:
<TABLE>
<CAPTION>
SHARES SHARES UNDER OPTION WEIGHTED
AVAILABLE --------------------------- AVERAGE
FOR OPTION SHARES RANGE OF PRICE EXERCISE PRICE
---------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995............................... 253,200 716,000 $ 9.625-16.625 $ 13.74
Increase in Shares subject to award.................... 746,800 -- -- --
Options granted........................................ (162,000) 162,000 15.125-15.438 15.13
Options exercised...................................... - (22,800) 9.625-12.937 12.25
Options expired........................................ 28,200 (28,200) 11.313-16.625 13.67
---------- --------- -------------- --------------
Balance, December 31, 1995............................. 866,200 827,000 $ 9.625-16.625 $ 14.06
Options granted........................................ (260,000) 260,000 17.75-18.625 17.92
Options exercised...................................... -- (78,500) 9.625-16.625 12.80
Options expired........................................ 48,800 (48,800) 12.625-16.625 13.20
---------- --------- -------------- --------------
Balance, December 31, 1996............................. 655,000 959,700 $ 9.625-18.625 $ 15.25
Options granted........................................ (581,200) 581,200 16.565-22.719 21.77
Options exercised...................................... -- (112,750) 9.625-17.75 13.24
Options expired........................................ 45,050 (45,050) 12.063-17.75 15.16
---------- --------- -------------- --------------
Balance, December 31, 1997............................. 118,850 1,383,100 $12.563-22.719 $ 18.157
---------- --------- -------------- --------------
---------- --------- -------------- --------------
</TABLE>
During 1997, options to purchase 581,200 Shares were awarded. As of
December 31, 1997, options to purchase 1,383,100 Shares were outstanding and no
SARs had been issued. The exercise price of each option cannot be less than 100%
of the fair market value of a Share at the time the option is granted.
The predecessor plan, which covered a maximum of 1,000,000 Shares, was
approved at the 1991 Annual Meeting of Shareholders. Such plan permitted the
grant of non-qualified stock options and SARs. Outstanding Shares under option
for this plan were incorporated into the Plan, as stated above.
During 1997, options were granted to the executive officers named below.
SARs may be granted under the Option Plan, but no such rights are outstanding.
Set forth below is information concerning stock option grants to any named
executive officer who was granted a stock option during 1997:
STOCK OPTION GRANTS 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES
------------------------------------------------------------ OF STOCK PRICE
# OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTION
UNDERLYING GRANTED TO TERM(1)($)
OPTION/ EMPLOYEES IN EXERCISE OR EXPIRATION --------------------
SARS GRANTED FISCAL YEAR BASE PRICE($) DATE 5% 10%
------------- ------------ ------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
R. N. Daniel.................... 100,000 17 22.71875 09/25/00 -- 188,000
60,000 10 22.71875 09/25/04 555,000 1,293,000
F. E. Grzelecki................. 100,000 17 22.71875 09/25/00 -- 188,000
50,000 9 22.71875 09/25/04 462,500 1,077,500
P. E. Dixon..................... 25,000 4 22.71875 09/25/04 231,250 538,750
R. D. LeBlanc................... 40,000 7 22.71875 09/25/04 370,000 862,000
R. F. Burlinson................. 10,000 2 22.71875 09/25/04 92,500 215,500
</TABLE>
- ------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
(Footnote continued on next page)
11
<PAGE>
(Footnote continued from previous page)
No gain to the optionee is possible without an increase in stock price which
will benefit all shareholders commensurately.
The exercise price of the options granted is equal to the market value of the
Shares on the date of the grant. Options with expiration date of 9/25/00
become exercisable based on the Company's stock attaining specified trading
prices. Options with an expiration date of 9/25/04 become exercisable at the
cumulative rate of 50% per year on each of the first anniversary dates.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FOR YEAR-END OPTION/SAR VALUES
The following table provides information with respect to options exercised
by any named executive officer during 1997. In addition, this table provides the
number and information with respect to unexercised options to purchase Shares as
of December 31, 1997:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY(2)
OPTIONS/SARS(1) OPTIONS/SARS
AT YEAR-END(#) AT YEAR-END($)
--------------------- ---------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ --------------- ----------- --------------------- ---------------------
<S> <C> <C> <C> <C>
R. N. Daniel........................ -- -- 197,500/205,000 3,747,000/2,850,000
F. E. Grzelecki..................... 19,000 172,322 166,500/182,000 3,107,000/2,501,000
P. E. Dixon......................... 7,750 44,345 12,500/47,750 233,000/707,000
R. D. LeBlanc....................... -- -- 12,500/77,500 198,500/1,066,500
R. F. Burlinson..................... -- -- 3,750/21,250 62,800/306,300
</TABLE>
- ------------------
(1) No stock appreciation rights are outstanding.
(2) The value of the unexercised in-the-money options is calculated by
multiplying the number of underlying Shares by the difference between the
closing price of the Shares on the New York Stock Exchange at December 31,
1997 ($34.50) and the exercise price for these Shares. These values have not
been realized.
LONG-TERM INCENTIVE PLAN
The Company's 1988 Long-Term Incentive Plan (the 'LTIP') is a
performance-based restricted stock plan where every other year key executives
earn the right to receive Shares based on achievement of pre-established
financial and individual performance goals. LTIP participants are selected by
the Compensation Committee and include the Chief Executive Officer and the next
four highest paid officers. No Shares of restricted stock were awarded in 1997.
The LTIP establishes overlapping cycles with each cycle encompassing five
fiscal years. Shares of restricted stock are awarded based on the results
attained on the selected performance measures over the first three years of a
cycle (the 'Performance Period'). The subsequent two-year time frame represents
the period when restrictions lapse and the stock is earned (the 'Earn-out
Period'). Shares are earned-out at the rate of 50% per year. Awards are
generally made in the year immediately following the third year of each
Performance Period. During the Earn-out Period, the Shares are held by the
Company in escrow for the executive. The executive receives dividends on the
restricted stock during the two-year Earn-out Period. See 'Identity and
Background-- Arrangements with Executive Officers, Directors or Affiliates of
the Company' in the attached Schedule 14D-9.
The number of restricted Shares granted for each cycle is determined by a
formula that considers the executive's base salary, the market value of the
Shares and the executive's duties and responsibilities. The grant guidelines
were developed by an independent compensation consultant hired by the Company.
Long-term objectives are established under the LTIP which reflect both
quantitative and qualitative measures. Results achieved on the quantitative
component determine 70% of the restricted Share award and results achieved on
the qualitative component determine 30% of the award.
12
<PAGE>
The quantitative measures include the following:
-- Average Annual Return on Shareholders' Equity
-- Average Annual Operating Income
Qualitative performance measures include specific goals developed under
several categories. Each goal is also weighted according to its relative
importance to the executive's position.
At the end of each three year cycle, the Compensation Committee determines
the number of Shares to be awarded to each executive based upon the actual
performance compared to the objectives.
Based on the four cycles completed under the LTIP covering the ten year
period from 1987 through 1997, a total of 135,775 Shares have been awarded, net
of forfeitures as of December 31, 1997. The number of key management
participants in each cycle has been between 20 and 35. Additional information
for the fifth and sixth cycles under the LTIP is contained in the attached
Schedule 14D-9.
PENSIONS
The Company maintains the Handy & Harman Pension Plan, a defined benefit
pension plan, which provides benefits generally to most salaried employees. The
annual benefit for each participant that retires at normal retirement age (age
65) with at least 25 years of service is equal to 50% of career average pay
minus $1,125. A proportionately reduced benefit is provided for retirement at
age 65 with less than 25 years of service. The formula is applied to earnings
averaged over the period from January 1, 1998 to retirement, with a minimum of
five years of earnings included in the average. This definition of average
earnings was amended in 1997. Prior to the amendment, the benefit was based on
the earnings averaged over the period from January 1, 1993 to retirement, with a
minimum of five years of earnings included in the average. Plan benefits accrued
prior to October 31, 1992 are subject to annual cost of living adjustments up to
a maximum of 4% per year.
Career average pay under the Handy & Harman Pension Plan only includes
salary and excludes bonuses or other incentive compensation. The Company
maintains the Supplemental Executive Retirement Plan (the 'SERP') to provide
corporate officers the amount of reduction in their formula pension benefits
under the Handy & Harman Pension Plan on account of the limitation on pay under
Section 401(a)(17) of the Internal Revenue Code (which for 1998 is $160,000),
and the limitation on benefits under Section 415 of the Internal Revenue Code of
1986, as amended (the 'Code') (which for 1998 is $130,000). The SERP also
applies the Handy & Harman Pension Plan formula to the Career Average Pay (as
defined in the SERP) after including 25% of the amounts received under the
Company's Bonus Plan for services in 1995 and subsequently (50% for services
prior to 1995). Amounts received under the SERP are not subject to cost of
living increases.
The following table shows the projected annual retirement benefits, payable
on the basis of ten years of certain payments and thereafter for life, to each
of the individuals listed in the 'Summary Compensation Table' above at age 65
assuming continuation of employment to age 65. The amounts shown under the
Salary column below reflect the current rate of salary as plan compensation for
Messrs. Daniel, Grzelecki, Dixon, LeBlanc and Burlinson of $470,000, $430,000,
$205,000, $300,000 and $165,000, respectively, and include the benefits payable
under both the Handy & Harman Pension Plan and the SERP. The amount of benefits
shown under the Bonus column below would be payable under the SERP and assumes
continuation of the amount of bonus for 1997 shown in the 'Summary Compensation
Table' above.
<TABLE>
<CAPTION>
SERVICE AT ANNUAL RETIRMENT BENEFITS FROM:
NORMAL RETIREMENT NORMAL -------------------------------
NAME DATE RETIREMENT DATE SALARY BONUS TOTAL
- ------------------------------------- ----------------- --------------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
R. N. Daniel......................... October 1, 2000 29 yrs. $233,875 $33,780 $267,655
F. E. Grzelecki...................... July 1, 2002 13 yrs. 111,215 19,188 130,403
P. E. Dixon.......................... September 1, 2009 16 yrs. 10 mos. 68,256 11,951 80,207
R. D. LeBlanc........................ July 1, 2014 17 yrs. 8 mos. 105,210 17,491 122,701
R. F. Burlinson...................... December 1, 2004 8 yrs. 3 mos. 26,854 3,465 30,319
</TABLE>
In 1992, the Company adopted a supplemental executive plan (the
'Supplemental Plan') to provide the Company a further means to retain and
encourage the productive efforts of Mr. Grzelecki. The Supplemental Plan
provides for the accrual and immediate vesting of a monthly pension of $6,000
per month for Mr. Grzelecki, to be paid for life commencing on the later of July
1, 1997 and Mr. Grzelecki's departure from the Company. The
13
<PAGE>
pension provides for benefits on the basis of a ten year certain payment and for
life thereafter. The Company and Mr. Grzelecki have agreed to convert the term
of the payment pursuant to the Supplemental Plan from the longer of his life or
ten years to the longer of his life or the life of his spouse, at an actuarially
equivalent monthly amount. By action of the Compensation Committee, the Company
has waived the requirement that Mr. Grzelecki depart the Company and authorized
payments to begin effective March 1, 1998. The Company has purchased annuity
policies to provide a source of funds to satisfy the Company's obligation to pay
Mr. Grzelecki, although the Company continues to be responsible for payments
under the Supplemental Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
AGREEMENTS
In 1989, the Company entered into an agreement with Mr. Daniel (the 'Daniel
Agreement') which replaced a prior agreement with Mr. Daniel. The Daniel
Agreement provides for a three-year period of employment commencing on May 1,
1989, which was extended May 1 of each year from 1992 to 1996 for an additional
three-year term. In May 1997, the Daniel Agreement was further extended for a
term ending on April 30, 2000. If not further extended, the Daniel Agreement
will terminate at the end of its current term. Effective October 1, 1995, the
Board set Mr. Daniel's base salary at $470,000 per annum, which amount may be
increased at the discretion of the Board. Mr. Daniel is also entitled to
participate in the Company's benefit plans, including the Bonus Plan and the
Option Plan. Prior to a recent amendment to the Daniel Agreement discussed
below, the Daniel Agreement provided that if the Company terminates the Daniel
Agreement other than for Cause (as defined therein) or Mr. Daniel terminates it
for Good Reason (as defined therein), the Company is obligated to pay Mr. Daniel
a lump sum amount equal to the sum of (i) the base salary he would receive to
the end of the then current employment period and (ii) an amount equal to the
Bonus Plan payments he received with respect to the most recent calendar year,
multiplied by the remaining years of the employment period or portions thereof.
Under the Daniel Agreement, he also becomes entitled to additional pension
benefits under the Company's pension plans (the 'Pension Plan') and to receive
title to a Company car. In addition, the Daniel Agreement provides that if any
payments under the Daniel Agreement or any other payments or benefits received
or to be received by Mr. Daniel would be subject to the excise tax imposed by
Section 280G and Section 4999 of the Code, the Company will reimburse Mr. Daniel
for any such excise tax (and any income and excise tax due with respect to such
reimbursement). The Company has also agreed to an amendment to the Daniel
Agreement providing that, when his employment by the Company ends for whatever
reason (other than for Cause), he and his wife would be entitled to medical
benefits during their lives without cost to them in the same manner as then
currently provided for active senior officers of the Company. On January 26,
1998, the Company amended the Daniel Agreement to provide that in the event that
Mr. Daniel's employment is terminated by the Company (other than for Cause) or
by Mr. Daniel for Good Reason, then the employment term shall continue through
the third anniversary of the date of termination of Mr. Daniel's employment. On
February 26, 1998, the Company restated the January 26th amendment to the Daniel
Agreement to provide that any dispute or controversy between the Company and Mr.
Daniel will be settled by arbitration, and that the Company will pay any fees
incurred by Mr. Daniel in good faith in connection with such arbitration.
The Company entered into an agreement with Frank E. Grzelecki as of July 1,
1989 (the '1989 Agreement') providing for the employment of Mr. Grzelecki. The
1989 Agreement provides that Mr. Grzelecki is entitled to an annual base salary,
currently set at $430,000, as well as participation in the Bonus Plan, the
Pension Plan and the other employee benefit and insurance plans of the Company.
The 1989 Agreement also provides that if, after a Change in Control of the
Company (as defined in the 1989 Agreement), Mr. Grzelecki's position, duties,
responsibilities, status with the Company, base salary, employee benefits or
location are changed in a manner materially adverse to his interest, then he may
designate such change as an event which 'triggers' a three-year period of
guaranteed employment by the Company. If the Company terminates Mr. Grzelecki
without cause within such three-year period, or if Mr. Grzelecki elects to
terminate his employment for any reason, the Company is obligated to pay Mr.
Grzelecki a lump sum amount equal to the sum of (i) the base salary he would
receive to the end of the employment period and (ii) an amount equal to the
bonus payment he received for the last calendar year, multiplied by the number
of years (or portions thereof) remaining in the employment period. Mr. Grzelecki
also becomes entitled to additional pension benefits under the Pension Plan. The
Company entered into an amendment to the 1989 Agreement, dated as of July 1,
1989, to: (i) conform the definition of 'change in control' to the broader
definition contained in the Company's employee benefit plans; and (ii) provide
that the Company would reimburse Mr. Grzelecki for any excise tax (and any
income and excise tax due with respect to
14
<PAGE>
such reimbursement) imposed on payments made to Mr. Grzelecki in connection with
a 'Change in Control' of the Company pursuant to Section 280G and Section 4999
of the Code.
In November 1995, the Company entered into a new amended and restated
agreement with Mr. Grzelecki (the '1995 Agreement') which replaced a 1994
agreement with Mr. Grzelecki but did not supersede or replace the 1989
Agreement. The 1995 Agreement provides that, when his employment by the Company
ends, he will be entitled to severance rights of one year's salary as well as:
(i) medical benefits for him and his wife during their lives without cost to
them in the same manner as then currently provided for active senior officers of
the Company, (ii) certain adjustments of the exercise periods of outstanding
stock options and (iii) subject to limitations, office space and secretarial
services for a four-year period. On January 26, 1998, the Company entered into a
Confirmation Agreement with Mr. Grzelecki which confirmed that both the 1989
Agreement and amendment thereto and the 1995 Agreement remained in effect and
that if Mr. Grzelecki's employment terminated under circumstances entitling him
to a severance payment following a Change in Control under the 1989 Agreement
and amendment thereto, he would not also be entitled to a severance payment
equal to one year's salary under the 1995 Agreement (although he would remain
entitled to the other benefits provided by the 1995 Agreement). On February 26,
1998, the Company restated the Confirmation Agreement to provide that any
dispute or controversy between the Company and Mr. Grzelecki will be settled by
arbitration, and that the Company will pay any fees incurred by Mr. Grzelecki in
good faith in connection with such arbitration.
In 1996, the Company entered into an employment agreement with Robert D.
LeBlanc, President of the Company (the 'LeBlanc Agreement'), which provided for
a 30-month period of employment commencing on November 11, 1996 as Executive
Vice President of the Company (Mr. LeBlanc was appointed President of the
Company in July 1997). Mr. LeBlanc received a signing bonus of $85,000 and
receives a salary under the contract of $300,000 per annum, which amount may be
increased at the discretion of the Board. Mr. LeBlanc is entitled to participate
in the Bonus Plan, the LTIP and the Option Plan, as well as in the SERP, the
Executive Post-Retirement Life Insurance Program (the 'Life Insurance Program')
and all of the Company's employee benefit plans. If the Company should terminate
the LeBlanc Agreement other than for Cause or Disability (each as defined
therein) or death, the Company will continue to pay Mr. LeBlanc's salary for the
longer of twelve months and the remaining life of the agreement. Mr. LeBlanc
will also continue to participate in the SERP, the Life Insurance Program and in
all other employee benefit plans of the Company for the remainder of the
employment period. If Mr. LeBlanc were to receive payments under the LeBlanc
Agreement, he would not be entitled to receive any payments under the
Supplemental Agreement (as hereinafter defined).
In May 1997, the Company entered into an additional agreement (the
'Supplemental Agreement') with Mr. LeBlanc, providing that if at any time within
two years following a Change in Control of the Company (as defined in the
Supplemental Agreement) the Company terminates Mr. LeBlanc's employment (other
than for Disability or Cause, as such terms are defined in the Supplemental
Agreement), or if Mr. LeBlanc terminates his employment for Good Reason (as
defined in the Supplemental Agreement), Mr. LeBlanc will be entitled to receive
a lump sum cash payment equal to one year's base salary, and to receive, for
twelve months following his termination of employment, life, medical and dental
insurance benefits substantially similar to those which he was receiving
immediately prior to the notice of termination given with respect to such
termination. The Supplemental Agreement also provides that if any payment made
to Mr. LeBlanc under the Supplemental Agreement is subject to the excise tax
provisions of Section 280G or Section 4999 of the Code, the Company will reduce
such payment to the extent necessary to avoid such payment being subject to such
excise tax. On February 26, 1998, the Company amended the Supplemental Agreement
to provide that any dispute or controversy between the Company and Mr. LeBlanc
will be settled by arbitration, and that the Company will pay any fees incurred
by Mr. LeBlanc in good faith in connection with such arbitration.
In May 1997, the Company also entered into certain agreements (the 'Change
in Control Agreements'), with each of Paul E. Dixon, Senior Vice President,
General Counsel and Secretary of the Company, Robert F. Burlinson, Vice
President and Treasurer of the Company and Dennis C. Kelly, Controller of the
Company, and in February 1998, entered into a Change in Control Agreement with
Dennis R. Kuhns, Corporate Vice President (each, an 'Executive'), providing that
if, any time within two years following a Change in Control of the Company (as
defined in the Change in Control Agreements), the Company terminates the
Executive's employment (other than for Disability or Cause, as such terms are
defined in the Change in Control Agreements) or if the Executive terminates his
employment for Good Reason (as defined in the Change in Control Agreements), the
Executive will be entitled to receive a lump sum cash payment equal to one
year's base salary,
15
<PAGE>
and to receive, for twelve months following the Executive's termination of
employment, life, medical and dental insurance benefits substantially similar to
those which the Executive was receiving immediately prior to the notice of
termination given with respect to such termination. Each Change in Control
Agreement also provides that if any payment made to the Executive under the
Executive's Change in Control Agreement is subject to the excise tax provisions
of Section 280G and Section 4999 of the Code, the Company will reduce such
payment to the extent necessary to avoid such payment being subject to such
excise tax. On February 26, 1998, the Company amended and restated each Change
in Control Agreement to conform the definition of 'Change in Control' to the
broader definition contained in the Company's employee benefits plans and to
provide that any dispute or controversy between the Company and an Executive
will be settled by arbitration (and that the Company will pay any fees incurred
by such Executive in good faith in connection with such arbitration). At the
February 26, 1998 meeting of the Compensation Committee of the Board of
Directors, the Compensation Committee resolved to amend Mr. Dixon's Change in
Control Agreement to provide for a bonus equal to $250,000 to be paid to Mr.
Dixon within three business days following a Change in Control (as defined in
Mr. Dixon's Change in Control Agreement).
In 1986, the Company entered into an agreement with Robert M. Thompson (the
'Thompson Agreement'), providing for the employment of Mr. Thompson at an annual
base salary, currently set at $175,000, as well as participation in the Bonus
Plan, the Pension Plan and the other employee benefit and insurance plans of the
Company. The Thompson Agreement also provides that if, after a Change in Control
of the Company (as defined in the Thompson Agreement), Mr. Thompson's position,
duties, responsibilities, status with the Company, base salary, employee
benefits or location are changed in a manner materially adverse to Mr.
Thompson's interest, then he may designate such change as an event which
'triggers' a three-year period of guaranteed employment by the Company. If the
Company terminates Mr. Thompson without cause within such three-year period, or
if Mr. Thompson elects to terminate his employment for any reason, the Company
is obligated to pay Mr. Thompson a lump sum amount equal to the sum of (i) the
base salary he would receive to the end of the employment period and (ii) an
amount equal to the bonus payment he received for the last calendar year,
multiplied by the number of years (or portions thereof) remaining in the
employment period. Mr. Thompson also becomes entitled to continued participation
in the Company's medical and accident insurance programs for the three years
after the change in control as well as additional pension benefits under the
Pension Plan. In December 1988, the Board authorized amendments to the Thompson
Agreement to (i) conform the definition of 'change in control' to the broader
definition contained in the Company's employee benefit plans; and (ii) provide
that the Company reimburse Mr. Thompson for any excise tax (and any income and
excise tax due with respect to such reimbursement) imposed on payments made to
him in connection with a change in control of the Company pursuant to Section
280G and Section 4999 of the Code. On February 26, 1998, the Company amended the
Thompson Agreement to provide that any dispute or controversy between the
Company and Mr. Thompson will be settled by arbitration, and that the Company
will pay any fees incurred by Mr. Thompson in good faith in connection with such
arbitration.
For certain information with respect to payments that may be required to be
made to senior executives of the Company pursuant to the foregoing agreements in
connection with the consummation of the Offer, the Merger and other transactions
contemplated by the Merger Agreement, see the attached Schedule 14D-9 of the
Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the issued and
outstanding Shares, to file with the SEC and the New York Stock Exchange initial
reports of ownership and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company, officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
officers, directors and greater than 10% beneficial owners were complied with
during 1997, other than Dr. Elliot Sussman, who inadvertently filed a late Form
4 on February 3, 1998.
16
