<PAGE> 1
SCHEDULE 14A
(RULE 14A)
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HMI INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
/X/ $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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(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):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
/ / 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
HMI INDUSTRIES INC.
3631 PERKINS AVENUE
CLEVELAND, OHIO 44114
(216) 432-1990
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 1996
To the stockholders of
HMI INDUSTRIES INC.
The Annual Meeting of stockholders of HMI INDUSTRIES INC. (the "Company")
will be held on Wednesday, January 24, 1996 at 10:00 A.M., local time, at the
administrative offices of the Company, 3631 Perkins Avenue, Cleveland, OH 44114
for the following purposes:
1. To elect three directors to hold office for the term expiring in
1999.
2. To ratify the selection by the Board of Directors of the firm of
Coopers & Lybrand as auditors of the Company for the year ending September
30, 1996.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business December 18, 1995 are
entitled to receive notice of and to vote at this meeting.
You are invited to attend the meeting and vote. Whether or not you attend
the meeting in person, you are requested to sign and date the enclosed proxy
card, and mail it to the Company in the enclosed envelope. If you attend the
meeting in person, you may withdraw your proxy and vote in person if you so
desire.
By Order of the Board of Directors
JOHN S. MEANY, JR.
Secretary
December 29, 1995
<PAGE> 3
HMI INDUSTRIES INC.
3631 PERKINS AVENUE
CLEVELAND, OHIO 44114
(216) 432-1990
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 1996
VOTING RIGHTS
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of HMI Industries Inc. (the "Company") of proxies in
accompanying form, both of which are first being mailed to stockholders on
approximately December 29, 1995. The record date for the meeting is December 18,
1995. At that date there were 4,911,530 shares of Common Stock issued and
outstanding. Each share entitles the holder to one vote on each matter to come
before the meeting. A majority of the Common Stock issued and outstanding is
necessary for a quorum at any meeting of shareholders. Provided a quorum is
present, the affirmative vote of a majority of shares present in person or by
proxy at the meeting will be sufficient to elect directors and to ratify the
selection of Coopers & Lybrand as auditors of the Company. Stockholders granting
a proxy to vote on one issue but abstaining as to the other will be counted for
purposes of the determination of a quorum. Officers and directors of the Company
currently own or control in excess of 60% of the outstanding shares of Common
Stock. Such shares are sufficient to elect the Company's nominees for directors
and ratify the designation of Coopers & Lybrand as auditors of the Company.
A stockholder giving a proxy may revoke the proxy by notice in writing or
in person to the Secretary of the Company before it is exercised. All proxies
given and not revoked will be voted at the meeting. If the stockholder has
indicated a choice on the proxy with respect to any matters to be voted upon,
the shares will be voted as specified. If no choice is specified, the shares
will be voted for the nominees for election to the Board of Directors and for
the ratification of Coopers & Lybrand as auditors of the Company. In the event
of the death, disqualification, or inability of any of the director nominees to
serve, the shares will be voted for the election of such other person as the
Board of Directors may recommend in place of such nominee. The Board of
Directors has no reason to believe that any of the nominees will not be a
candidate or will be unable to serve.
1
<PAGE> 4
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth the names and share ownership as of December
18, 1995 of those persons who, to the knowledge of the Company, are the
beneficial owners of more than 5% of the Company's outstanding Common Stock
based upon information furnished to the Company by such person. Each beneficial
owner has sole power to vote and dispose of the shares indicated, except as
otherwise stated.
<TABLE>
<CAPTION>
AMOUNT &
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNERS BENEFICIAL PERCENT OF
AS OF DECEMBER 18, 1995 OWNERSHIP COMMON STOCK
- - - - - - ---------------------------------------- -------------------- ---------------
<S> <C> <C>
Steeplechase Corp. (1) 1,704,750 34.71%
P.O. Box 2463, Station B
Richmond Hill, Ontario L4E 1A5
Barry L. Needler 1,866,750(2) 37.92%
P.O. Box 2463, Station B
Richmond Hill, Ontario L4E 1A5
Kirk W. Foley 648,054(3) 12.99%
34 Greensboro Drive
Rexdale, Ontario M9W 1E1
Amherst Tanti U.S. Inc. (4) 535,772 10.91%
3631 Perkins Avenue
Cleveland, Ohio 44114
John S. Meany, Jr. 380,854(5) 7.72%
9200 S. Winchester Ave.
Chicago, Illinois 60620
<FN>
- - - - - - ---------------
(1) Mr. Needler is the President and Chief Executive Officer of Steeplechase
Corp.
(2) Includes shares owned of record as follows: Fairway Inc. 150,750 shares,
Steeplechase Corp. 1,704,750 shares, and 11,250 shares subject to issuance
upon the exercise of stock options exercisable within 60 days of the date
hereof. Mr. Needler controls these corporations and serves as a Director and
Chief Executive Officer of these corporations.
(3) Includes 535,772 shares owned of record by Amherst Tanti U.S. Inc.; 10,350
shares in a retirement fund; 65,312 shares subject to issuance upon the
exercise of stock options exercisable within 60 days of the date hereof;
11,345 shares of Common Stock which can be issued after January 1, 1996 when
phantom shares (plus accrued dividends) issued pursuant to Mr. Foley's
employment contract will vest (see "Compensation of Chief Executive Officer"
under the section entitled "Executive Compensation" regarding Mr. Foley's
deferral of vesting of a portion of his phantom shares); and 562 shares
owned by a member of Mr. Foley's immediate family, beneficial ownership of
which is disclaimed.
(4) Amherst Tanti U.S. Inc. is owned by Kirk W. Foley and his wife. Mr. Foley
serves as President of this corporation.
(5) Includes 22,500 shares subject to issuance upon the exercise of stock
options exercisable within 60 days hereof. Also includes 2,250 shares owned
as Custodian and 9,000 shares owned by members of Mr. Meany's immediate
family. Beneficial ownership of the latter 11,250 shares is disclaimed.
</TABLE>
2
<PAGE> 5
ELECTION OF DIRECTORS
At the time of the 1995 Annual Meeting of Stockholders the division of the
Board of Directors into three classes was approved, and three Class A directors
were elected for a one year term expiring at the time of the Annual Meeting in
1996. These directors have been nominated for a three year term expiring in
1999. Information regarding these nominees for election as director as well as
for those directors whose term of office will continue after the Annual Meeting
is as follows:
CLASS A DIRECTORS: TO SERVE FOR A THREE YEAR TERM EXPIRING IN 1999.
Moffat Dunlap, age 54, became a Director in 1993. Mr. Dunlap has been
President of Moffat Dunlap Real Estate Limited (real-estate broker for
residential estates) since 1972.
Grace McCarthy, age 68, became a Director in 1993. Mrs. McCarthy is a
former Deputy Premier of the Province of British Columbia and a former Leader of
the B.C. Social Credit Party. She served as Member of the Legislature for
British Columbia for 26 years. She has served as a Cabinet Minister holding
various portfolios including Economic Development, Tourism, Human Resources,
Fish and Wildlife and Provincial Secretary.
Ivan Winfield, age 61, became a director in 1995. He is an independent
business and financial consultant. Mr. Winfield was a partner of Coopers &
Lybrand (the Company's auditors) from 1970 to October 1, 1994. Mr. Winfield is a
trustee of Roulston Family of Mutual Funds (US).
CLASS B DIRECTORS: TERM EXPIRING IN 1997.
Robert J. Abrahams, age 69, became a Director in 1984. Mr. Abrahams has
been President of Crestwood Consultants, a financial consulting company, since
1988. Mr. Abrahams is also a Director of Regional Acceptance Corporation, a
consumer finance company dealing primarily in automobile finance. Mr. Abrahams
is also the President of Health-Mor Acceptance Corporation, a wholly-owned
subsidiary of the Company.
Donald L. Baker, age 66, became a Director in 1986. Mr. Baker joined
Complete Industrial Enterprises, Inc. (a distributor of electrical and
industrial equipment) in 1960. He was elected President of Complete Industrial
Enterprises, Inc. in 1985. Mr. Baker has also served as Mayor of Peru, Illinois
since 1965.
Frank M. Rasmussen, age 61 became a Director in 1994. Mr. Rasmussen is, and
has been since 1970, a Partner of Squire, Sanders & Dempsey, the Company's
principal law firm.
CLASS C DIRECTORS: TERM EXPIRING IN 1998.
Kirk W. Foley, age 53, became a Director in 1988. Mr. Foley has served as
Chairman and Chief Executive Officer of the Company since 1991. Mr. Foley served
as President and Chief Executive Officer of the Company from 1989 to 1991 and as
Vice Chairman from 1988 to 1991. Mr. Foley is also a director of Regional
Acceptance Corporation.
John S. Meany, Jr., age 50, became a Director in 1986. Mr. Meany is an
attorney in private practice and has served as Secretary of the Company since
July, 1995. Mr. Meany previously served as Secretary of the Company from 1986 to
1991, as Vice President-Legal of the Company from 1983 to 1990 and as Vice
President and General Counsel from 1990 to 1991.
Barry Needler, age 47, became a Director in 1989. Mr. Needler is a private
investor. Since 1991 he has been President and Chief Executive Officer of
Steeplechase Corp., an investment holding company, and since 1990 he has been
President and Chief Executive Officer of Fairway, Inc., a family management
company. Prior to 1990 Mr. Needler was Vice President of Fairway Inc. Mr.
Needler is the first cousin of Kevin Dow, who is Chief Financial Officer and
Vice President-Finance and Administration of the Company.
3
<PAGE> 6
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
The Company's Board of Directors held four regularly scheduled and three
special meetings during 1995. The Board has a standing Audit Committee,
Compensation Committee, Executive Committee, and an Omnibus Administration
Committee. During 1995, each director attended at least 75% of the meetings of
the Board and those committees on which the director served, except that Mr.
Rasmussen attended only 71% of the Board meetings held during 1995.
BOARD COMMITTEES
The Audit Committee is currently composed of Robert J. Abrahams, Donald L.
Baker (Chairman), Grace McCarthy and Ivan Winfield. The function of the Audit
Committee is to recommend to the Board of Directors the engagement of the
independent auditors; to review with the independent auditors the plan and scope
of the audit; to review the audit report with the independent auditors; to
review the financial statements and the scope and results of the independent
auditors' examinations and report such matters to the Board of Directors; and to
perform such other duties as may be required by the Board of Directors. The
Audit Committee held one meeting in 1995.
The Executive Committee is currently composed of Robert J. Abrahams, Kirk
W. Foley and Barry L. Needler (Chairman). The Executive Committee is authorized
to exercise, between meetings of the Board of Directors, the powers of the Board
of Directors in the management of business and affairs of the Company, except
for those powers reserved by law or resolution to the Board of Directors. The
Executive Committee also considers such other matters as may be referred to it
by the Board of Directors. The Executive Committee held one meeting in 1995.
The Omnibus Administration Committee (the "Omnibus Committee") is currently
composed of Robert J. Abrahams (Chairman), Moffat Dunlap, and John S. Meany, Jr.
The Omnibus Committee administers the Health-Mor Inc. 1992 Omnibus Long-Term
Compensation Plan and grants awards under the Omnibus Plan. The Omnibus
Committee did not meet in 1995.
The Compensation Committee is currently composed of Robert J. Abrahams
(Chairman), Donald L. Baker and Barry L. Needler. The Compensation Committee
considers matters relating to the compensation of senior officers of the Company
and subsidiaries, the employee benefit plans of the Company, and such other
matters as may be referred to it by the Board of Directors. The Compensation
Committee held two meetings in 1995.
COMPENSATION
A director who is an employee of the Company or a subsidiary is not
separately compensated for service as a director. Other directors receive a
retainer of $10,000 per year, payable quarterly, and $600 per meeting for each
committee meeting attended which is held on a day other than a day on which
there is a Board of Directors meeting. Ivan Winfield was not a director for the
first quarter of the 1995 fiscal year and his retainer fee was prorated to
$7,500 for his service as director for nine months of 1995.
Pursuant to the Company's Omnibus Plan, on the first business day of each
calendar year since 1992, each non-employee director automatically received an
option to purchase 9,000 shares of Common Stock of the Company (as adjusted for
stock splits). Beginning with the options issued in 1996, the number of shares
of Common Stock which can be purchased will be reduced to 6,000 shares.
CONSULTING AGREEMENTS
Several members of the Board of Directors have entered into consulting
contracts with the Company relating to various matters within their fields of
expertise. Information regarding these contracts follows.
4
<PAGE> 7
In 1990, the Company entered into a consulting agreement with Robert J.
Abrahams, a director of the Company, for consulting services relating to retail
financing programs for distributors of the Company's Consumer Goods Division. In
1991, this agreement was amended to include services to Health-Mor Acceptance
Corporation, a subsidiary of the Company. Mr. Abrahams is paid a total of
$50,000 per year, plus expenses, for such services. The consulting agreements
with Mr. Abrahams are for one year periods and are anticipated to be renewed. A
total of $50,000 was paid in fiscal 1995 under this agreement.
The Company pays a management fee in the amount of $25,000 per quarter to
Fairway Inc. for the consulting services of Mr. Needler relating to various
matters requested by the Company. Barry L. Needler, a director of the Company,
owns a majority of the outstanding shares of Fairway Inc. A total of $100,000
was paid to Fairway Inc. in 1995.
In January, 1995, the Company entered into a consulting agreement with Ivan
Winfield, a director of the Company, for services relating to issues involving
the capital structure of the Company, proposed acquisitions and divestitures and
such other matters as may be required by the Chief Executive Officer. Mr.
Winfield receives $2,500 per month, payable quarterly in a combination of shares
of the Company and cash, for his services. The number of shares to be received
is determined by the price of the Common Stock on the last day of the quarter. A
total of 1,300 shares were issued to Mr. Winfield in 1995, and the value of the
stock and cash paid to him in 1995 was $22,500.
In January, 1995, the Company entered into an agreement with John Meany, a
director of the Company, to act as Administrator of the Company's Profit Sharing
Plan. Mr. Meany receives $1,200 per month for such services. In September, 1995,
the Company entered into an agreement with Mr. Meany to act as corporate
Secretary of the Company and to oversee the functions of the corporate
Secretary's office. Mr. Meany receives $1,500 per month under this agreement. In
1995 the Company paid Mr. Meany a total of $ 12,300 under these agreements.
5
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of December 18, 1995, information
concerning the number of Common Shares beneficially owned by each nominee
individually, each named executive officer, and by all executive officers and
directors as a group. The totals shown below for each person and for the group
include shares held personally, shares held by immediate family members, and
shares acquirable within sixty days of the date hereof by the exercise of stock
options and the vesting of phantom shares granted under the Company's Omnibus
Long-Term Compensation Plan.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP(1)
---------------------------------------
DIRECT EXERCISABLE
NAME OF BENEFICIAL OWNER OWNERSHIP OPTIONS(2) TOTAL PERCENT(3)
- - - - - - ------------------------------ --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Robert J. Abrahams 28,175 22,500 50,675 *
Bill Adams 0 0 0 *
Donald L. Baker 143,536(4) 20,250 163,786 3.32%
Kevin Dow (5) 17,075 9,466 26,541 *
Moffat Dunlap 0 6,750 6,750 *
William Duvall 0 12,656 12,656 *
Kirk W. Foley 582,742(6) 65,312 648,054 12.99%
Grace McCarthy 1,100 6,750 7,850 *
John S. Meany, Jr. 358,354(7) 22,500 380,854 7.72%
Barry L. Needler (5) 1,855,500(8) 11,250 1,866,750 37.92%
Ivan Winfield 1,300 0 1,300 *
Frank M. Rasmussen 0 2,250 2,250 *
All Executive Officers and 2,987,782 179,684 3,167,466 62.08%
Directors as a Group
<FN>
- - - - - - ---------------
(1) Each person has sole voting and investment power with respect to all shares
shown except as indicated below.
(2) Represents shares subject to stock options that are currently exercisable or
become exercisable within 60 days hereof.
(3) Unless otherwise indicated, the percentage of Common Stock owned is less
than one percent of the Common Stock outstanding.
(4) Includes 138,136 shares owned by Mr. Baker's wife, beneficial ownership of
which is disclaimed. Mr. Baker owns 2,700 shares jointly with his wife.
(5) Mr. Dow and Mr. Needler are first cousins.
(6) Includes 535,772 shares owned by Amherst Tanti U.S. Inc., 10,350 shares in a
retirement fund and also includes 562 shares owned by a member of Mr.
Foley's immediate family. Beneficial ownership of such 562 shares is
disclaimed. Also includes 11,345 shares which can be issued after January 1,
1996 when 10,929 phantom shares, plus accrued dividends, will vest. It is
estimated that these accrued dividends will purchase an additional 416
shares of Common Stock.
(7) Includes 2,250 shares owned as custodian and 9,000 shares owned by members
of his immediate family. Beneficial ownership of such 11,250 shares is
disclaimed by Mr. Meany.
(8) Shares are owned of record by Fairway Inc. (150,750 shares) and Steeplechase
Corp. (1,704,750 shares). Both corporations are controlled by Mr. Needler.
</TABLE>
6
<PAGE> 9
EXECUTIVE COMPENSATION
INTRODUCTION
The following table sets forth the respective amounts of compensation of
the Chief Executive Officer and the four most highly compensated executive
officers of the Company for each of the years 1993, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(4)
ANNUAL COMPENSATION --------------------------
------------------------- STOCK PHANTOM
NAME AND INCENTIVE OPTIONS(#) STOCK($) ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) (3) (5) COMPENSATION(6)
- - - - - - ------------------------- ------ ---------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kirk W. Foley(7) 1995 $368,316 $382,121 40,000 $ 1,734,375 $ 4,790(8)
Chairman & Chief 1994 $227,008 $ 0 0 $ 0 $ 0
Executive Officer 1993 $195,600 $ 0 0 $ 0 $ 100,000(9)
Bill Adams (10) 1995 $158,420 $100,000 0 $ 0 $ 12,000
President, Bliss 1994 $158,400 $ 42,188 0 $ 0 $ 42,500(11)
Manufacturing 1993 $ 24,480 $ 0 0 $ 0 $ 0
Kevin Dow 1995 $126,300 $ 71,875 0 $ 0 $ 775
Chief Financial Officer & 1994 $115,400 $ 87,141 0 $ 0 $ 733
Vice President, Finance & 1993 $112,689 $ 39,286 0 $ 0 $ 733
Administration
William Duvall 1995 $158,400 $ 0 0 $ 0 $ 12,000
Chief Executive Officer, 1994 $159,405 $ 0 0 $ 0 $ 23,911
Bliss Mfg. 1993 $302,697 $ 36,289 0 $ 0 $ 30,000
Dennis Mansour (12) 1995 $ 76,875 $ 42,425 0 $ 0 $ 775
Corporate Controller & 1994 $ 88,200 $ 51,791 0 $ 0 $ 733
Treasurer 1993 $ 87,700 $ 14,365 3,000 $ 0 $ 733
<FN>
- - - - - - ---------------
(1) Salary amounts include automobile allowance and automobile insurance.
Amount for Kirk Foley also includes $10,500 as an allowance for living
expenses paid pursuant to his employment agreement with the Company.
(2) Amounts paid in the fiscal year pursuant to the Company's Incentive Bonus
Plans. Incentive bonuses are calculated on a calendar year basis. The
Company made no restricted stock awards nor provided any other benefits
reportable as other Annual Compensation pursuant to Securities and Exchange
Commission ("SEC") regulations to the named executive officers during the
years shown.
(3) Reflects the number of shares of Common Stock of the Company covered by
stock options granted during the year. No stock appreciation rights
("SAR"), either in conjunction with or separate from stock options, were
granted to the named executives during the years shown.
(4) The Company maintains plans under which stock options may be awarded. The
Company does not, however, make "long term compensation awards" as that
term is used in applicable SEC rules, because the amount of Company
incentive awards is not measured by performance of the Company over longer
than a one-year period.
(5) Phantom shares were deemed issued October 4, 1994 when Mr. Foley signed his
employment agreement with the Company. The shares vest in installments of
21,857, plus shares deemed purchased with accrued dividends, on each of
June 30, 1995, January 1 and June 30, 1996 and January 1, 1997, with the
final installment of 37,572 shares, plus shares deemed purchased with
dividends, vesting on January 1, 1999. See "Compensation of the
</TABLE>
7
<PAGE> 10
Chief Executive Officer" regarding the deferral of vesting of a portion of
the phantom shares vesting January 1, 1996.
(6) Except as otherwise noted, reflects contributions made by the Company or a
subsidiary under defined contribution plans maintained by the Company and a
subsidiary.
(7) Amounts shown as a salary for Mr. Foley for 1993 and 1994 represent
compensation paid to him as President of HMI Inc., a subsidiary of the
Company. The amount shown as salary for 1995 represents compensation paid
to Mr. Foley as President of HMI Inc. and as Chairman and Chief Executive
Officer of the Company.
(8) Premiums on life insurance paid pursuant to Mr. Foley's employment
agreement.
(9) Reflects the forgiveness of $100,000 of principal by the Company under a
$400,000 loan made to Mr. Foley in 1993. The loan provided for forgiveness
of $100,000 of principal on September 30, 1993 if the earnings for the year
ended September 30, 1993 exceeded $1.13 per share. The outstanding
principal amount of $300,000 was repaid by Mr. Foley in 1994.
(10) Mr. Adams' employment at Bliss Manufacturing Company began August 1, 1993.
(11) Includes a relocation allowance of $12,500 for Mr. Adams' relocation to
Youngstown, Ohio.
(12) Mr. Mansour resigned effective July 31, 1995.
1992 OMNIBUS LONG-TERM COMPENSATION PLAN
On February 6, 1992, the stockholders of the Company adopted the Omnibus
Long-Term Compensation Plan (the "Plan"). The purpose of the Plan is to advance
the long-term interests of the Company by motivating executive personnel by
means of long-term stock based or derivative compensation, to align the
interests of participants with those of the stockholders, and to permit the
Company to attract and retain directors and executive personnel.
The Plan provides for the grant of the following types of awards: stock
options, including incentive stock options; stock appreciation rights, in tandem
with stock options or freestanding; common stock awards; phantom stock and
performance shares. Awards are determined by the Omnibus Committee.
Through September 1995, the Committee awarded 421,750 shares in the form of
stock options to participants which included 271,750 shares to persons who are
Directors of the Company. Of the 421,750 shares awarded, 94,000 were awarded in
fiscal 1995. The Company did not reprice any options in fiscal 1995.
The following table sets forth certain information regarding stock options
granted to the executive officers named in the Summary Compensation Table during
fiscal 1995. Kirk Foley was the only executive officer who received stock
options in 1995.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
% OF TOTAL FOR OPTION TERM
OPTIONS EXERCISE ---------------------
OPTIONS GRANTED TO PRICE EXPIRATION 5% 10%
NAME GRANTED EMPLOYEES (2) DATE ($) ($)
- - - - - - ------------------- ------- ---------- -------- ----------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kirk W. Foley (1) 20,000 50% $15.67 October 4, 2004 $138,618 $406,363
20,000 50% $17.60 January 3, 2005 $169,246 $477,998
<FN>
- - - - - - ---------------
(1) Stock options were granted pursuant to Mr. Foley's Employment Agreement with
the Company.
(2) Stock options granted to Mr. Foley have an exercise price equal to 110% of
fair market value on the date of grant. The first options granted in 1995
were deemed to have been
</TABLE>
8
<PAGE> 11
issued on the date the Employment Agreement was signed, but with the option
price determined by reference to the fair market value on August 4, 1994,
the date on which the details of the Employment Agreement were finalized.
The other options were deemed to have been granted on January 3, 1995, the
first business day of the calendar year.
The following table sets forth information regarding stock option
transactions under the Plan with respect to the named executive officers during
fiscal 1995 and information regarding stock options held at the end of the
fiscal year. Dennis Mansour, who resigned as an executive officer effective July
31, 1995, was the only named executive officer to exercise stock options in
1995.
AGGREGATED OPTION EXERCISES IN FISCAL 1995/OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
SHARES SEPTEMBER 30, 1995(1) OPTIONS AT SEPTEMBER 30, 1995(2)
ACQUIRED VALUE ----------------------------------- -----------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - - - - ---------------- ------------- ------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
K.W. Foley 0 0 65,312 8,438 $ 162,832 $54,282
B. Adams 0 0 0 0 $ 0 $ 0
K. Dow 0 0 9,644 4,781 $ 69,119 $34,265
B. Duvall 0 0 12,656 4,219 $ 90,706 $30,237
D. Mansour 5,719 $45,292(3) 0 2,906 $ 0 $17,597
<FN>
- - - - - - ---------------
(1) There were no SARs outstanding at September 30, 1995 and none granted during
the fiscal year.
(2) The "value of unexercised in-the-money options at September 30, 1995" was
calculated by determining the difference between the fair market value of
the underlying shares of Common Stock at September 30, 1995 ($14.50 per
share) and the exercise price of the option. An option is "in-the-money"
when the fair market value of the underlying shares of Common Stock exceeds
the exercise price of the option.
(3) On January 24, 1995 Mr. Mansour exercised options to purchase 2,813 shares
of Common Stock at $7.333 per share, and 750 shares of Common Stock at
$9.167 per share. On July 24, 1995 he exercised options to purchase 1,406
shares of Common stock at $7.333 per share, and 750 shares of Common Stock
at $9.167 per share. The fair market value of the Common Stock on January
24, 1995 was $15.875 per share, and the fair market value of the Common
Stock on July 24, 1995 was $15.50 per share.
</TABLE>
REPORT OF COMPENSATION AND OMNIBUS COMMITTEES
The Compensation and Omnibus Committees of the Board of Directors have
furnished the following reports on Executive Compensation:
Report of the Compensation Committee
The Compensation Committee of the Board of Directors is responsible for
setting the compensation of executive officers and key employees of the Company
and its subsidiaries. The Compensation Committee consists of Robert J. Abrahams,
Donald L. Baker and Barry L. Needler.
The Compensation Committee annually reviews compensation of the Chief
Executive Officer, other executive officers and key employees of the Company and
its subsidiaries. The Compensation Committee meets periodically during the year
to monitor performance and fix awards based on performance standards and to
review compensation decisions. The Committee's policy in evaluating and
compensating executive officers and key employees is to consider the performance
of the Company as a whole, the performance of the business unit for which the
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<PAGE> 12
individual has responsibility and the individual's contribution toward the
Company's attainment of established Company and individual goals. Factors
considered in evaluating performance are both subjective (such as the
individual's performance and development) and objective (such as the attainment
of specified financial goals).
The composition of compensation varies broadly among executive officers and
key employees of the Company based on their responsibilities and the business
unit to which they are assigned. Generally, base salary is targeted at
competitive rates believed by the Committee members to be necessary in their
experience to retain qualified personnel. The Company maintains an Incentive
Bonus Plan under which participating employees may be eligible for a bonus if
the pre-tax profits of the Company for the year exceed a specified target which
is established annually by the Compensation Committee. For 1995, the target was
changed from an after-tax to a pre-tax amount in order to put more emphasis on
meeting operating goals, and to remove from consideration those factors over
which the Company has no control, such as tax rates. The minimum pre-tax profit
to be attained was fixed at $7.5 million as compared with an after-tax profit of
$3.23 million for 1994. The maximum bonus payable to an individual is a
percentage of base salary. Maximum incentive bonuses range from 25% to 150% of
base salary. Bonuses are based on varying performance criteria, including the
Company's pre-tax profits, return on assets, divisional net contribution, cost
containment programs and departmental gross margins. Specific incentive
performance criteria for each participating individual are determined by the
Committee at the beginning of the year based upon the individual's duties. Key
employees of subsidiaries who do not participate in the Incentive Bonus Plan
have bonus or incentive arrangements based on criteria deemed by the
Compensation Committee to be effective in aligning the financial interest of the
employee with those of Company's stockholders. Among the criteria that are
utilized in incentive compensation of key employees of subsidiaries include
percentage of profits or net income, commissions based on sales, net profit
contribution, and balance sheet measures such as inventory and account
receivable turnover and working capital improvements. From time to time, the
Company engages outside compensation consultants to provide information and
advice about competitive levels of compensation and particular compensation
techniques.
In carrying out its responsibilities for 1995, the Compensation Committee
will be considering the following:
1. Progress made by the Company in attainment of specified operating
goals, such as manufacturing improvements, necessary to enable the Company
to improve profitability.
2. The Company's historical policies and practices for the
compensation of officers and key managers.
3. Individual recommendations of the Company's Chief Executive Officer
concerning compensation of individual key employees.
4. The performance of key employees in accomplishing specific
objectives established for them by the Company.
5. Changes in revenue and pre-tax income from the prior year for the
Company and certain operating segments.
Compensation of the Chief Executive Officer.
Mr. Foley's compensation is paid pursuant to his employment agreement with
the Company, which was approved by stockholders at the 1995 annual meeting. In
the 1995 fiscal year, Mr. Foley was paid total salary of $368,316 and a bonus of
$382,121 relating to the 1994 calendar year. His bonus for the 1995 calendar
year will be determined in January by the Compensation Committee. Pre-tax
profits of the Company and rate of return on invested assets will be utilized to
determine 50% and 40%, respectively, of the bonus. The remaining 10% will be
based on the Committee's subjective evaluation of the chief executive officer's
performance.
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<PAGE> 13
Mr. Foley's employment agreement also provides that he is to receive
options to purchase 20,000 shares of Common Stock on the first business day of
each year through 1998. The option price will be equal to 110% of the fair
market value on the date of grant, and the options are immediately exercisable.
The period of exercisability will be determined by the Omnibus Committee and may
last for up to ten years. Mr. Foley's contract also provided that he receive
125,000 shares of phantom stock. The phantom stock vests in increments of 21,857
shares on each of June 30, 1995, January 1 and June 30, 1996, and January 1 and
June 30, 1997. The final 37,571 shares will vest January 1, 1999. Dividends that
would have been paid had the phantom shares been issued will be used to
"purchase" additional phantom shares, which will vest on the same schedule as
the other phantom shares. Mr. Foley has advised the Company that he will defer
the vesting of one half of the phantom shares and accrued dividends scheduled to
vest on January 1, 1996 for three years.
The key performance measure used by the Compensation Committee in
determining base salary and other discretionary amounts paid directly or
indirectly to Mr. Foley was the Committee's assessment of Mr. Foley's present
and future ability and dedication to enhancing the value of the Company through
his leadership and vision. During Mr. Foley's tenure as chief executive officer,
the market value of the Company has increased by approximately 250%.
Report of the Omnibus Committee
Executive officers and other key employees may receive incentive
compensation in the form of stock options and other stock-based awards under the
Company's Omnibus Long-Term Compensation Plan (the "Plan"). The Plan is
administered by the Omnibus Committee comprised of Robert J. Abrahams, Moffat
Dunlap, and John S. Meany, Jr. The number of options are determined by the
Omnibus Committee, in its discretion, based upon recommendations of the Chief
Executive Officer and the Omnibus Committee's assessment of the individual's
potential contribution to the Company, the individual's current level of stock
ownership or number of outstanding stock options and the relative number of
options granted to other employees having comparable responsibilities with the
Company. Options are not granted on a regular schedule. Instead, they are
granted on a case by case basis when, in the judgment of the Omnibus Committee,
upon the recommendation of the Chief Executive Officer, the performance,
responsibilities or other factors associated with a key employee make the use of
this incentive tool appropriate. The Omnibus Committee believes stock options
are an effective way of retaining key personnel since each option grant vests
ratably over a four year period. Since options are granted at fair market value,
the Omnibus Committee believes stock options serve as a long term incentive
rather than as current compensation. The incentive aligns the objectives of the
employee with those of the stockholders of the Company.
<TABLE>
<S> <C>
For the Compensation Committee For the Omnibus Committee
Robert J. Abrahams Robert J. Abrahams
Donald L. Baker Moffat Dunlap
Barry L. Needler John S. Meany, Jr.
</TABLE>
COMPENSATION AND OMNIBUS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert J. Abrahams, Chairman of the Compensation Committee and also
Chairman of the Omnibus Committee, provides consulting services to the Company
and its finance company subsidiaries (Health-Mor Acceptance Corporation, HMI
Acceptance Corporation and Health-Mor Acceptance PTY Ltd.) and serves as
President of these subsidiaries. He received $50,000 for these services in
fiscal 1995. Fairway Inc., a company controlled by Barry L. Needler, provides
management consulting services to the Company and received $100,000 in 1995. Mr.
Needler is Vice Chairman of the Company and is a member of the Compensation
Committee. Mr. Meany, a member of the Omnibus Committee, has served as Secretary
of the Company since July, 1995
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<PAGE> 14
and until 1991 had served as Secretary, Vice President-Legal and General Counsel
of the Company. Mr. Meany also provides consulting services to the Company
regarding the administration of its Profit Sharing Plan. He received a total of
$12,300 in fiscal 1995 for these services.
PERFORMANCE COMPARISONS
The following chart compares the cumulative shareholder return of the
Company for the five years ended September 30, 1995 to the AMEX Composite Index,
the NASDAQ National Market Composite Index and a Company-determined peer group.
The Company's Common Stock currently trades on the NASDAQ National Market
System. Until December 19, 1994, the Company's Common Stock traded on the
American Stock Exchange. Therefore, both indexes are included in this chart. The
chart assumes the investment of $100 on September 30, 1990 and the immediate
reinvestment of all dividends. The ten companies making up the peer group are in
industries believed to be comparable to the Company's lines of business and the
peer group, in the aggregate, is believed to approximate the Company's mix of
consumer and industrial business.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HMI INDUSTRIES INC., AMEX MARKET INDEX,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
HMI INDUSTRIES $100 $140 $156 $356 $369 $395
AMEX MARKET INDEX 100 120 125 147 150 180
NASDAQ 100 134 132 172 182 221
PEER GROUP INDEX 100 154 158 227 254 245
</TABLE>
The Company business consists of two segments: a Consumer Goods segment and
a Manufactured Products segment. The peer companies include companies believed
to be in similar lines of business as the Company. The companies in the peer
group are: Amcast Industrial Corporation, Black and Decker Corporation, Material
Sciences Corporation, National Presto Industries Inc., Rival Co., SPS
Technologies Inc., Steel Technologies Inc., Sunbeam
12
<PAGE> 15
Corporation, Toastmaster Inc. and Worthington Industries Inc. Some of the
Company's direct competitors are divisions of larger corporations, privately
held corporations or foreign corporations and are not included in the peer
comparisons since the pertinent information is not available to the public.
RELATED TRANSACTIONS
In March 1988, the Company and Amherst Tanti US Inc. ("Amherst Tanti")
entered into an agreement under which Amherst Tanti provided the Company with
the consulting services of Mr. Foley as Chairman and Chief Executive Officer of
the Company. Amherst Tanti is owned by Mr. Foley and his wife. As a result of
the execution of the employment agreement between Mr. Foley and the Company, the
agreement with Amherst Tanti was terminated. In fiscal 1995, the Company paid
Amherst Tanti, under the agreement as then in effect, a total of $8,900.
During 1988, the Company advanced an aggregate of $334,123 to Amherst Tanti
in order for that corporation to purchase 33,250 shares of Common Stock of the
Company on the American Stock Exchange. As a result of stock splits, the number
of shares purchased with this loan has increased to 74,812 shares. This loan is
interest free, and will be forgiven as the after-tax earnings of the Company,
exclusive of capital gains and losses and extraordinary items, reach certain
levels. To the extent not completely forgiven, any remaining principal will be
due in 1998. Amherst Tanti is not entitled to receive debt forgiveness for the
same earnings of the Company for which Kirk Foley receives an incentive bonus
pursuant to his employment contract. No amounts were forgiven in fiscal 1995.
In 1989, the Company advanced an aggregate of $203,401 to three companies
(The Doctor's Business Center, Ltd., PSL Pacific Systems, Ltd., and JCL Medical
Systems, Ltd.), which at the time of the advances were controlled by Kirk W.
Foley and the family of Barry L. Needler. In accordance with the terms of the
Agreement for these advances, collectability is assured by these directors or
corporations they control. The advance bears interest at Canadian prime plus one
and one-half percent (9.5% at September 30, 1995). The balance at September 30,
1995 was $295,587.
During its 1995 fiscal year the Company paid $331,802 in legal fees to
Squire, Sanders & Dempsey. Frank M. Rasmussen, a director of the Company, is a
partner of that firm.
The Company has also entered into consulting contracts with Fairway Inc.,
Robert J. Abrahams, Ivan Winfield and John S. Meany, Jr. Please refer to the
section entitled "Committees and Compensation of the Board of Directors" for
further details.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company, on the recommendation of its Audit
Committee, has selected Coopers & Lybrand, independent certified public
accountants, to audit the accounts of the Company for the year ended September
30, 1996. Coopers & Lybrand, which has no other relationship to the Company,
served as the Company's auditors in 1995. It is intended that the shares
represented by proxies in the accompanying form will be voted for the
ratification of the selection of Coopers & Lybrand unless otherwise specified in
the space provided on the proxy. A representative of Coopers & Lybrand will
attend this meeting with the opportunity to make a statement and to respond to
appropriate questions from stockholders.
PROPOSALS OF STOCKHOLDERS
Proposals which stockholders intend to present at the 1997 annual meeting
of stockholders must be received by the Secretary of the Company at its
executive offices at 3631 Perkins Avenue, Cleveland, Ohio 44114 no later than
August 31, 1996.
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OTHER MATTERS; SOLICITATION OF PROXIES
As of the time of preparation of this proxy statement, the Board of
Directors knows of no matters other than those described herein. However, if any
other matter properly comes before the meeting or any adjournment thereof, the
person or persons voting the proxies will vote them in accordance with their
best judgment.
Costs of solicitation will be borne by the Company. Solicitation will be by
mail, except for any incidental personal solicitation made by directors,
officers and regular employees of the Company.
By Order of the Board of Directors
JOHN S. MEANY, JR.
Secretary
December 29, 1995
Cleveland, Ohio
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<PAGE> 17
HMI INDUSTRIES INC.
ANNUAL MEETING OF STOCKHOLDERS, JANUARY 24, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kirk W. Foley and Kevin Dow, or either of
them, with power of substitution, attorneys and proxies for and in the name and
place of the undersigned, to vote the number of shares that the undersigned
would be entitled to vote if then personally present at the Annual Meeting of
Stockholders of HMI Industries Inc., to be held at the administrative offices of
the Company, 3631 Perkins Avenue, Cleveland, OH 44114 on Wednesday, January 24,
1996, at 10:00 A.M., and at any adjournment thereof upon the matters set forth
in the Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged, as follows:
<TABLE>
<S> <C> <C>
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as noted to the contrary below) to vote for all nominees listed below
</TABLE>
NOMINEES: Moffat Dunlap, Grace McCarthy, Ivan Winfield
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE FOLLOWING LINE:
- - - - - - --------------------------------------------------------------------------------
2. Ratification of the selection of Coopers & Lybrand as auditors of the Company
for the fiscal year 1996.
<TABLE>
<S> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
3. In their discretion, the Proxies are authorized to vote upon all other
matters properly brought before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED IN THE SPACE
PROVIDED. TO THE EXTENT NO DIRECTIONS ARE GIVEN THEY WILL BE VOTED FOR THE
ELECTION OF ANY OR ALL OF THE NOMINEES FOR DIRECTOR AND IN FAVOR OF PROPOSAL 2,
AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS PROPERLY BROUGHT
BEFORE THE MEETING AND ANY ADJOURNMENT THEREOF.
Dated , 19
----------------------------------
----------------------------------
Where stock is registered jointly
in names of two or more persons,
all should sign. Signature should
correspond exactly with the name
on the stock certificate. Persons
signing in a representative
capacity should indicate that
capacity.
I DO / / DO NOT / /
PLAN TO ATTEND THE
ANNUAL MEETING IN PERSON.
Proxy Card
