<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only(as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
HEIN-WERNER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HEIN-WERNER CORPORATION
2120 PEWAUKEE ROAD
WAUKESHA, WISCONSIN 53188
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1996
To the Shareholders of
Hein-Werner Corporation
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Hein-Werner Corporation, a Wisconsin corporation ("Corporation"), will be held
at the Midway Motor Lodge, 1005 South Moorland Road, Brookfield, Wisconsin, on
Thursday, April 25, 1996 at 10:00 A.M., local time, for the following purposes:
1. To elect one director to serve for a term of three years until the
annual meeting in 1999 and until his successor is duly elected and
qualified.
2. To ratify the selection of auditors for the 1996 fiscal year.
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment or postponement thereof.
Holders of Common Stock of record at the close of business on March 7, 1996,
will be entitled to notice of and to vote at the annual meeting.
A proxy for the meeting is enclosed and a proxy statement is attached to
this notice. Please fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and mail it promptly in the enclosed
envelope. Shareholders who execute proxies retain the right to revoke them at
any time before they are actually voted.
HEIN-WERNER CORPORATION
M. J. McSweeney
SECRETARY
Waukesha, Wisconsin
March 13, 1996
<PAGE>
HEIN-WERNER CORPORATION
2120 PEWAUKEE ROAD
WAUKESHA, WISCONSIN 53188
March 13, 1996
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 25, 1996
GENERAL INFORMATION
This proxy statement and the enclosed proxy are being furnished to
shareholders of Hein-Werner Corporation, a Wisconsin corporation (the
"Corporation"), beginning on or about March 13, 1996, in connection with the
solicitation by the Board of Directors of the Corporation (the "Board") of
proxies for use at the Annual Meeting of Shareholders to be held at 10:00 A.M.,
local time, on Thursday, April 25, 1996, at the Midway Motor Lodge, 1005 South
Moorland Road, Brookfield, Wisconsin, and at any adjournment or postponement
thereof (the "Meeting"), for the purposes set forth in the Notice of Annual
Meeting of Shareholders and this Proxy Statement.
Only shareholders of record at the close of business on March 7, 1996 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On such
date, there were 2,629,320 shares of Common Stock of the Corporation
outstanding. Shareholders will be entitled to one vote per share on each
proposal submitted for the consideration of the shareholders at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Corporation and not revoked will be voted in accordance with the
instructions contained therein. The shares represented by executed but unmarked
proxies will be voted FOR the person nominated for election as director, FOR the
ratification of the Corporation's selection of auditors for the 1996 fiscal year
and on such other business or matters which may properly come before the Meeting
in accordance with the best judgment of the persons named as proxies in the
enclosed form of proxy. Other than the matters described herein, the Board has
no knowledge of any matters to be presented for action by the shareholders at
the Meeting.
Execution of any proxy given in response to this solicitation will not
affect a shareholder's right to attend the Meeting and to vote in person.
Presence at the Meeting of a shareholder who has signed a proxy does not in
itself revoke such proxy. Each proxy granted may be revoked by the shareholder
granting it at any time before the exercise thereof by giving written notice to
such effect to the Secretary of the Corporation, by execution and delivery of a
subsequent proxy or by attendance and voting in person at the Meeting, except as
to any matter upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such party.
ELECTION OF DIRECTOR
The By-laws of the Corporation provide for five directors, divided into
three classes, with directors serving for separate and overlapping three-year
terms. The director to be elected at the Meeting will be elected to serve until
the 1999 annual meeting of shareholders and until his successor is duly elected
and qualified. It is intended that shares represented by proxies will be voted
for the nominee named below, who presently serves as a director of the
Corporation, except where authority is withheld by the shareholder. Management
has been informed that the nominee intends to serve on the Board if elected.
However, if the nominee is unable or unwilling to serve, proxies may be voted
for another person designated by management.
<PAGE>
The following table lists the person nominated for election as director and
each person whose term of office as a director will continue after the Meeting
and provides information given as of March 7, 1996, as to the age, principal
occupation and background for the last five years and period of service as a
director for each person.
<TABLE>
<CAPTION>
DIRECTOR
NAME SINCE AGE PRINCIPAL OCCUPATION; BACKGROUND
- --------------------------- ----------- --- -------------------------------------------------------------------
<S> <C> <C> <C>
NOMINEE WHOSE TERM EXPIRES IN 1999
O.A. Friend 1983 66 Chairman of National Teleservice, Inc. (provider of long distance
telephone service), and President of Walden Financial Corporation
(leasing company), both of Winona, Minnesota; consultant to the
Corporation until June, 1990.
DIRECTORS WHOSE TERM WILL EXPIRE IN 1997
J.L. Dindorf 1976 55 President and Chief Executive Officer of the Corporation.
D.J. Schuetz 1977 71 President and Chairman of the Board, Monark Supply Company,
Milwaukee, Wisconsin (distributor of automotive parts and
supplies).
DIRECTORS WHOSE TERM EXPIRES IN 1998
J.S. Jones 1975 58 President, Gardner Industries, Inc., Horicon, Wisconsin
(manufacturer of original equipment components).
M.J. McSweeney 1982 57 Partner, Foley & Lardner, Milwaukee, Wisconsin (law firm).
</TABLE>
Directors are elected by a plurality of the votes cast by the holders of the
Corporation's Common Stock at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted at the Meeting, whether due
to abstention, broker nonvotes or otherwise, will have no impact on the election
of the director.
BOARD OF DIRECTORS
The Board has standing audit, compensation and executive committees, but
does not have a standing nominating committee. The audit committee, which met
two times in 1995, is charged with the responsibilities of reviewing with the
Corporation's independent public accountants, the plan and scope of their audit
and findings and conclusions of their engagement; reviewing the Corporation's
procedures for internal auditing, the adequacy of its system of internal
controls and the accounting principles and policies of the Corporation;
reviewing and evaluating the independence of the independent accountants and
approving services rendered by such accountants; and recommending to the Board
the engagement, continuation or discharge of the Corporation's independent
public accountants. The audit committee currently consists of Messrs. Friend and
Jones. The principal function of the compensation committee, which met two times
in 1995, is to advise the Board on matters relating to the compensation of the
Corporation's officers. The compensation committee currently consists of Messrs.
Schuetz and McSweeney. The executive committee is empowered to act on behalf of
the Board on certain matters
2
<PAGE>
including the election of the principal officers and the filling of vacancies on
the committees designated by the Board. The executive committee held one meeting
in 1995 and currently consists of Messrs. Dindorf, Jones and Schuetz.
During 1995, the Board held five meetings. No director failed to attend at
least 75% of the aggregate of (a) the total number of meetings of the Board and
(b) the total number of meetings held by all committees of the Board on which
the director served during 1995.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
MANAGEMENT
The following table sets forth as of March 7, 1996, the number of shares of
the Corporation's Common Stock beneficially owned by each director and nominee,
each of the executive officers named in the Summary Compensation Table set forth
below, and all of the directors and executive officers as a group. Except as
otherwise indicated in the footnotes, all of the persons listed below have sole
voting and investment power over the shares of Common Stock identified as
beneficially owned.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
J. L. Dindorf 38,934(1) 1.5%
O. A. Friend 53,601 2.0%
J. S. Jones 19,206 *
M. J. McSweeney 6,835 *
D. J. Schuetz 21,884(2) *
J. P. Barthelme 400 *
R. D. Liegel 8,802(3) *
All directors and executive officers as a group (9
persons) 153,072 5.8%
</TABLE>
- ------------------------
* Less than one percent.
(1) All of these shares are held with Mr. Dindorf's wife. Mr. Dindorf shares
voting and investment power over these shares.
(2) Includes 2,008 shares held by Mr. Schuetz as controlling shareholder of Five
Fifty-Five Investment Co., Inc. Mr. Schuetz shares voting and investment
power over these shares.
(3) Includes 1,002 shares held by Mr. Liegel's wife. Mr. Liegel shares voting
and investment power over these shares.
OTHER BENEFICIAL OWNERS
The following table sets forth the number of shares of the Corporation's
Common Stock beneficially owned by the persons known to the Corporation to own
more than five percent (5%) of its outstanding
3
<PAGE>
Common Stock as of December 31, 1995. The information is based on reports on
Schedules 13G filed with the Securities and Exchange Commission or other
reliable information. The table indicates whether the person has sole or shared
investment and voting power with respect to such shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
------------------------------------------------------------------------
SOLE POWER SHARED POWER
------------------- ------------------------ PERCENT
VOTING INVESTMENT VOTING INVESTMENT AGGREGATE OF CLASS
------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts Mutual Life -- -- 716,994 716,994 716,994 21.4%(2)
Insurance Company (1)
MassMutual Corporate Investors
MassMutual Participation Investors
1295 State Street
Springfield, MA 01111
Athey Products Corporation(3)
1839 South Main Street
Wake Forest, NC 27587
and -- -- 335,054 335,054 335,054 12.7%
Orton/McCullough Crane (3)
Company, Inc.
1211 West 22nd Street
Oak Brook, IL 60521
Wanger Asset Management, L.P.(4) -- -- 247,344(5) 247,344(5) 247,344(5) 9.4%
Wanger Asset Management, Ltd.
Ralph Wanger
227 West Monroe, Suite 3000
Chicago, IL 60606
Acorn Investment Trust, Series -- -- 214,160(5) 214,160(5) 214,160(5) 8.1%
Designated Acorn Fund
227 West Monroe, Suite 3000
Chicago, IL 60606
Dimensional Fund Advisors Inc.(6)(7) 119,840 172,385 -- -- 172,385 6.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ------------------------
(1) Massachusetts Mutual Life Insurance Company, MassMutual Corporate Investors
and MassMutual Participation Investors each own $1,500,000 principal amount
of the Corporation's 8% Convertible Subordinated Notes due September 1, 1999
("Notes"). The table represents the aggregate number of shares of Common
Stock which may be acquired by the parties upon conversion of the Notes
based at the current conversion price. In the event of conversion at the
current conversion price of $6.28 per share, each party will have sole power
to vote and dispose of approximately 238,998 shares of Common Stock, or
approximately 7.1% of the issued and outstanding shares (calculated in
accordance with footnote 2 below). The conversion price is subject to
adjustment under certain circumstances. These parties are reported in the
aggregate because they may be regarded as a group for reporting purposes. In
September 1989, the Company issued $8,500,000 of its Notes, of which
$4,500,000 remains outstanding.
4
<PAGE>
(2) For purposes of calculating the percent of class owned by such person or
group, the shares of Common Stock which may be acquired upon conversion of
such person's or group's Notes at the current conversion price are deemed to
be outstanding.
(3) Athey Products Corporation ("Athey") and Orton/McCullough Crane Company,
Inc. ("Orton") are reported in the aggregate because they may be regarded as
a group for reporting purposes. John F. McCullough, the principal
shareholder and officer of Orton, is a director and the owner of 39.71% of
the voting stock of Athey. Of the 335,054 shares of Common Stock for which
the parties have reported as sharing voting and investment power, Athey has
reported holding 218,964 shares and Orton has reported holding 116,090
shares.
(4) Wanger Asset Management, Ltd. is the sole general partner of Wanger Asset
Management, L.P. and Ralph Wanger is the principal shareholder of Wagner
Asset Management, Ltd.
(5) Wanger Asset Management, L.P. and Acorn Investment Trust, Series Designated
Acorn Fund share voting and investment power over 214,160 shares of Common
Stock. Acorn Investment Trust, Series Designated Acorn Fund is a registered
investment company. Wanger Asset Management, L.P. is the investment advisor
of Acorn Investment Trust, Series Designated Acorn Fund.
(6) The reported shares are held in the portfolios of advisory clients of
Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor. Dimensional disclaims beneficial ownership of such shares.
(7) Persons who are officers of Dimensional also serve as officers of DFA
Investment Dimensions Group Inc. (the "Fund") and The DFA Investment Trust
Company (the "Trust"), each a registered open-end management investment
company. In their capacity as officers of the Fund and the Trust, these
persons vote 15,493 additional shares of Common Stock which are owned by the
Fund and 37,053 shares which are owned by the Trust. Dimensional has sole
dispositive power over such shares and they are included under such column.
Beneficial ownership of shares is reported in the foregoing tables and
footnotes in accordance with the beneficial ownership rules promulgated by the
Securities and Exchange Commission. The ownership information set forth in the
foregoing tables reflects the effects of the Corporation's 5% stock dividend
which was paid on January 26, 1996 to shareholders of record on January 5, 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation earned in each of the last three fiscal years by the Corporation's
Chief Executive Officer and each of its two other most highly compensated
executive officers (such persons are sometimes referred to as the "named
executive officers"). The Corporation has only two executive officers other than
the Chief Executive Officer whose total annual salary and bonus exceeded
$100,000 in fiscal 1995.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------ PAYOUTS
--------------------------------------- RESTRICTED SECURITIES --------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION(2) AWARDS OPTIONS PAYOUTS COMPENSATION(3)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------------- ---- ----------- ------ --------------- ----------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph L. Dindorf, 1995 $267,496 0 0 0 0 0 $26,600
President and Chief 1994 260,000 0 0 0 0 0 25,900
Executive Officer 1993 256,667 0 0 0 0 0 20,100
Jean P. Barthelme, 1995 $281,500(1) 0 0 0 0 0 $ 2,600
Vice President and 1994 275,900(1) 0 0 0 0 0 3,000
President, European 1993 272,400(1) 0 0 0 0 0 0
Operations
Reinald D. Liegel, 1995 $122,300 0 0 0 0 0 $ 2,000
Senior Vice President -- 1994 119,600 0 0 0 0 0 2,200
Technology 1993 118,100 0 0 0 0 0 0
</TABLE>
- ------------------------
(1) Mr. Barthelme's salary is paid in Swiss Francs. For the years 1995, 1994 and
1993 he was paid SFr 324,666, SFr 318,300 and SFr 314,200, respectively. For
comparison purposes, these amounts have been converted to U.S. dollars using
the exchange rate in effect on December 31, 1995.
(2) Certain personal benefits provided by the Corporation to the named executive
officers are not included in the table. The aggregate amount of such
personal benefits for each named executive officer in each year reflected in
the table did not exceed the lesser of $50,000 or 10% of the sum of such
officer's salary and bonus in such respective year.
(3) Consists solely of contributions by the Corporation to the Corporation's
profit sharing plan (the "Plan") for all of the named executives, except Mr.
Dindorf. Each year the Corporation may contribute between 5% and 16% of its
net income before taxes for the prior fiscal year if it is in excess of
various levels, which amount, if any, is allocated among participants by
means of a formula based on individual compensation and years of service
with the Corporation, subject to certain limits. The amounts reported for
Mr. Dindorf represent contributions by the Corporation to the Plan and the
value of the annual insurance premiums paid by the Corporation with respect
to term life insurance for the benefit of Mr. Dindorf, respectively, as
follows: 1995: $2,600 and $24,000; 1994: $3,000 and $22,900; and 1993: $-0-
and $20,100.
STOCK OPTIONS
The Corporation has in effect the 1987 Stock Option and Incentive Plan
pursuant to which options to purchase Common Stock may be granted to key
employees of the Corporation and its subsidiaries. No options were granted to
any of the named executive officers in fiscal year 1995. The following table
sets forth information regarding the exercise of stock options by each of the
named executive officers during the 1995 fiscal year and the fiscal year-end
value of unexercised options held by such officers.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN 1995
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END(#) FISCAL YEAR-END ($)
ACQUIRED VALUE ------------------------------- -----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE(1) EXERCISABLE UNEXERCISABLE
- -------------------- ------------------- ------------- ------------ ----------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Dindorf -- -- 23,153 23,152 (2) (2)
J. P. Barthelme -- -- 4,631 4,630 (2) (2)
R. D. Liegel -- -- 8,683 8,682 (2) (2)
</TABLE>
- ------------------------
(1) The number of securities underlying unexercised options reported does not
reflect the effects of the Corporation's 5% stock dividend which was paid on
January 26, 1996.
(2) Not Applicable. The fair market value of the underlying Common Stock at
fiscal year-end was less than the exercise price of the options.
COMPENSATION OF DIRECTORS
The Corporation's standard method of compensating directors is to pay each
director who is not also an officer of the Corporation a retainer of $8,000 per
year, payable quarterly. In addition, a director is entitled to a fee of $650
for each Board meeting attended and $600 for each committee meeting attended.
Board members are also reimbursed for reasonable travel, lodging and related
expenses incurred in connection with attendance at such meetings.
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Corporation has in effect a Change of Control Agreement with Mr.
Dindorf. The Change of Control Agreement provides that in the event of the
termination of Mr. Dindorf's employment with the Corporation for any reason
(other than his death or disability), including voluntary termination by Mr.
Dindorf, within two years following a change of control of the Corporation, Mr.
Dindorf shall be entitled to a lump sum payment from the Corporation equal to
200% of his total compensation during the twelve-month period immediately
preceding such change in control. For purposes of the Change of Control
Agreement, a change of control is defined as the acquisition, by any person,
organization or association of persons or organizations, of more than 30% of the
voting stock of the Corporation. In the event that any such person, organization
or association acquires more than 50% of the Corporation's voting stock, the
period within which termination of employment gives rise to payment under the
Change of Control Agreement is the shorter of one year following acquisition of
such stock or two years following a change in control.
7
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing the general compensation policies of the Corporation and the total
compensation opportunities and awards for its executive officers. The
Compensation Committee recommends to the Board of Directors compensation amounts
and award levels for executive officers of the Corporation and its subsidiaries.
In making compensation recommendations, the Committee takes into account the
recommendations of Mr. Dindorf, except regarding his own compensation, as well
as the results of published compensation surveys and reports. The following
report was prepared by the current members of the Compensation Committee.
OVERALL COMPENSATION POLICY
The executive compensation program of the Corporation is closely aligned
with corporate performance and returns to shareholders. Accordingly, a
significant portion of executive compensation is based on meeting specified
corporate pre-tax profit performance goals and appreciation in the Corporation's
stock price. The Corporation's overall compensation philosophy is to offer a
competitive compensation package that recognizes individual contribution to the
Corporation, personal performance and overall business results. The Compensation
Committee looks primarily to corporate performance over the last few years in
setting the compensation of executive officers for the following year and in
determining specific compensation components. The objectives of this strategy
are to attract and retain high quality executives, to motivate executives to
achieve the goals inherent in the Corporation's business strategy and to link
executive and shareholder interests through equity based plans.
The Corporation's executive compensation program consists of three principal
components: base salary, annual bonus opportunity and stock option grants.
BASE SALARIES
The Compensation Committee establishes base salaries for executive officers
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to surveys and other data setting forth salary
levels for comparable positions at other companies in the industry. The
Committee recognizes geographic differences in determining salary range
structures. Financial results as well as nonfinancial measures are considered.
Using these salary ranges as a guide, the Compensation Committee conservatively
sets salary levels slightly below the median base salaries for companies
comparable in size and industry to the Corporation. Annual salary adjustments
are based on individual performance, position tenure, internal comparability
considerations, competitive data and the Corporation's earnings performance.
With respect to the base salary paid to Mr. Dindorf in 1995, the
Compensation Committee believes that his compensation should be heavily
influenced by the Corporation's performance. Naturally there is some
subjectivity in setting his salary, but the major elements of his compensation
package are directly tied to the Corporation's performance. In making Mr.
Dindorf's salary determination, the Compensation Committee takes into account
the salaries paid to CEO's of comparable companies and their performance
according to data obtained by the Committee, his years of service to the
Corporation and its business judgment of Mr. Dindorf's essential ability to lead
and coordinate the business activities of the Corporation. Mr. Dindorf received
a modest salary increase in 1995, but did not receive a salary increase in 1994.
Similarly, the other named executive officers received salary increases in 1995,
did not receive a salary increase in 1994, but received modest increases in June
1993 in recognition of their service to the
8
<PAGE>
Corporation and the Committee's belief that the executives have the ability to
influence the Corporation's long-term growth and profitability. This is
consistent with the Corporation's overriding compensation philosophy that
executive compensation generally depends on the Corporation's performance.
ANNUAL BONUS
The Corporation's executive officers may receive annual cash bonuses under
the Corporation's annual cash bonus plan, which is intended to focus on
short-term or annual business results. The Corporation will award bonuses in any
year in which the Corporation's consolidated pre-tax earnings equal or exceed a
specified amount. The bonus plan sets forth a formula that determines the amount
of the bonus based on specified pre-tax earnings levels and multipliers for the
President and Vice Presidents of the Corporation. Accordingly, bonuses vary with
pre-tax earnings and an evaluation of individual performance. If the Corporation
does not reach its overall performance goal, no bonuses will be paid. However,
special awards may be granted for exemplary individual performance.
In 1995, 1994 and 1993, the Corporation did not meet the minimum pre-tax
earnings level or achieve any other specified goals relating to the
Corporation's pre-tax earnings. Therefore, Mr. Dindorf received no annual bonus
for such years. Similarly, no bonuses were paid to any of the other named
executive officers.
STOCK OPTION GRANTS
The Corporation's 1987 Stock Option and Incentive Plan is designed to align
the interest of executives with those of the Corporation's shareholders. Options
granted by the Corporation have a per share exercise price of not less than the
fair market value of a share of Common Stock on the date of grant and,
accordingly, the value of the option will depend on the future market value of
the Common Stock. The options become exercisable pursuant to a specified vesting
schedule. Vesting schedules are designed to encourage the creation of
shareholder value over the long term since the full benefit of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years. Stock options are granted to the CEO and other executives primarily
based on the executive's ability to influence the Corporation's long-term growth
and profitability. No options were granted to Mr. Dindorf or the other named
executive officers in 1995, 1994 or 1993.
OTHER EMPLOYEE BENEFITS
The Compensation Committee's policy with respect to other employee benefit
plans is to provide benefits in recognition of overall corporate performance.
The Corporation has a profit sharing plan pursuant to which it makes
contributions for the benefit of its employees (including its executive
officers) in any year in which the Corporation's net income before taxes exceeds
specified levels. The Corporation will make a $96,600 contribution to the profit
sharing plan in 1996, based upon 1995 earnings. In 1995, the Corporation made a
$21,250 contribution to the profit sharing plan and a special contribution of
$93,750 in the form of 18,750 shares of the Corporation's Common Stock (valued
at the 1994 year-end closing price of $5.00 per share) in light of the fact that
the Corporation had not made a contribution to the profit sharing plan in recent
years and the Corporation's return to profitability in 1994. For 1993, the
Corporation made no contributions to the profit sharing plan because the
Corporation did not attain the minimum specified levels.
SECTION 162(m) LIMITATIONS
Section 162(m) of the Internal Revenue Code generally limits the corporate
deduction for compensation paid to executive officers named in the proxy
statement to $1 million unless certain requirements
9
<PAGE>
are met. The Compensation Committee has carefully considered the impact of this
new tax code provision. At this time, no executives will earn compensation in
excess of the $1 million cap limitation. The Compensation Committee, however,
will continue to monitor the impact of Section 162(m).
CONCLUSION
The Corporation's compensation program is designed so that a significant
portion of the Corporation's executive compensation is at risk subject to
individual and corporate performance and stock price appreciation.
HEIN-WERNER CORPORATION
COMPENSATION COMMITTEE
Maurice J. McSweeney
Donald J. Schuetz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. McSweeney and Schuetz. Mr.
McSweeney serves as Secretary of the Corporation. He is also a partner in the
law firm of Foley & Lardner, Milwaukee, Wisconsin, which has served as legal
counsel to the Corporation for many years.
10
<PAGE>
PERFORMANCE INFORMATION
The following graph compares the yearly percentage change during the last
five years in the Corporation's cumulative total shareholder return on the
Common Stock with the cumulative total return of companies on the American Stock
Exchange Market Value Index (Broad Market) and companies in a peer group
selected in good faith by the Company (Peer Group). The total return information
presented in the graph assumes the reinvestment of dividends. The companies in
the Peer Group are: Acme-Cleveland Corporation, Brown & Sharpe Manufacturing
Company, Cincinnati Milacron Inc., Gleason Corporation, Monarch Machine Tool
Company, Snap-on Incorporated and Stanley Works. All of these companies are in
the machine tool industry. The returns of each component company in the Peer
Group have been weighted based on such company's relative market capitalization.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Hein-Werner Corp. 100.00 91.12 91.53 72.07 96.32 87.88
Peer Group 100.00 122.20 131.56 153.52 139.37 195.80
Broad Market 100.00 128.22 129.57 154.86 140.75 177.93
</TABLE>
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 25, 1983, the Corporation acquired the business assets and
operations of the Winona Van Norman Division of Winvan, Inc. ("Winona Van
Norman"), from O. A. Friend. Mr. Friend was subsequently elected to the Board.
In order to preserve certain beneficial arrangements for Winona Van Norman, the
Corporation has entered into certain transactions with Mr. Friend. The
Corporation is leasing Winona Van Norman's manufacturing facility from Mr.
Friend under a ten-year extendable lease providing for annual rental payments of
$194,100, adjusted every year for inflation. The lease also contains provisions
under which the Corporation has the option or may be required to purchase the
facility for its fair market value.
M. J. McSweeney, a director and Secretary of the Corporation, is a partner
of Foley & Lardner, attorneys, Milwaukee, Wisconsin. Foley & Lardner has served
as legal counsel to the Corporation for many years.
INDEPENDENT PUBLIC ACCOUNTANTS
Management will propose the adoption of a resolution ratifying the Board's
decision to continue the employment by the Corporation of KPMG Peat Marwick LLP
as the Corporation's auditors for the 1996 fiscal year. If the shareholders fail
to ratify such employment, the directors will consider appointment of other
auditors. Representatives of KPMG Peat Marwick LLP are expected to be present at
the Meeting and will have the opportunity to make a statement if they so desire.
Such representatives are also expected to be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Proposals by shareholders sought to be included in the Corporation's proxy
materials for its 1997 annual meeting of shareholders must be received by the
Corporation no later than November 13, 1996.
MISCELLANEOUS
Receipt at the Meeting of reports from the management of the Corporation
will not constitute approval or disapproval of any matters referred to in such
reports.
The Company's executive officers and directors are required to file under
the Securities Exchange Act of 1934 reports concerning their ownership of
Company equity securities with the Securities and Exchange Commission and the
Company. Based solely upon information provided to the Company by individual
directors and executive officers, the Company believes that during the fiscal
year ended December 31, 1995 all filing requirements applicable to executive
officers and directors have been complied with.
The Corporation will bear the cost of preparing and mailing the proxy, proxy
statement and other materials which may be sent to the shareholders in
connection with this solicitation. Solicitation will be by
12
<PAGE>
mail, except that certain officers and regular employees of the Corporation may
make additional solicitations by telephone, telegraph or personal calls. The
Corporation may also reimburse persons holding stock in their names or in the
names of nominees for their expenses in sending proxies and proxy material to
principals.
HEIN-WERNER CORPORATION
M. J. McSweeney
SECRETARY
Waukesha, Wisconsin
March 13, 1996
13
<PAGE>
HEIN-WERNER CORPORATION
Waukesha, Wisconsin
Proxy for Annual Meeting of Shareholders, April 25, 1996
The undersigned, having received the Notice of Meeting
and Proxy Statement and Annual Report for 1995, hereby appoints
J.L. DINDORF AND M.J. McSWEENEY, and each of them, proxies with
power of substitution to vote for the undersigned at the annual
meeting of the shareholders of Hein-Werner Corporation on April
25, 1996, at 10:00 A.M., local time, and any adjournments or
postponements thereof, as follows:
1. ELECTION OF DIRECTOR:
FOR O.A. Friend // WITHHOLD AUTHORITY //
to vote for O.A. Friend
2. Ratification of KPMG Peat Marwick LLP as the Corporation's auditors:
FOR // AGAINST // ABSTAIN //
(Continued, and TO BE SIGNED, on the other side.)
HEIN-WERNER CORPORATION
3. In their judgment on any other matters which may properly
come before the meeting or any adjournment or postponement
thereof. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE NOMINEE LISTED IN THE ELECTION OF DIRECTOR AND
FOR PROPOSAL 2.
Dated___________________________, 1996
Signed________________________________
Signed________________________________
Please sign name exactly as it appears
hereon. When signed as attorney,
executor, trustee, guardian, etc.,
give full title as such. For joint
accounts each owner should sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
