<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 Section 240.14a-11(c) or Section 240.14a-12
HON Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
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Notes:
<PAGE>
HON INDUSTRIES INC.
414 EAST THIRD STREET - P.O. BOX 1109
MUSCATINE, IA 52761-7109
319/264-7400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1995 Annual Meeting of Shareholders of HON INDUSTRIES Inc., an Iowa
corporation (the "Company"), will be held at the Holiday Inn, Highways 61 and 38
North, Muscatine, Iowa, on Tuesday, May 9, 1995, beginning at 10:30 a.m., in
order:
1. To elect each of four Directors for a term of three years.
2. To consider and act on a proposed 1995 Stock-Based Compensation Plan.
3. To transact any other business that may properly be brought before the
meeting or any adjournment thereof.
The holders of record as of the close of business on March 14, 1995, of HON
INDUSTRIES common stock, par value $1.00 per share, are entitled to vote at the
meeting.
We encourage you to attend the meeting. We want to keep you informed of the
Company's activities and progress.
BY ORDER OF THE BOARD OF DIRECTORS,
[SIGNATURE OF A. MOSBY HARVEY, JR.]
A. Mosby Harvey, Jr.
Vice President, General Counsel and Secretary
March 24, 1995
PLEASE MARK, SIGN, DATE, AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING.
<PAGE>
March 24, 1995
HON INDUSTRIES INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1995
GENERAL INFORMATION CONCERNING SOLICITATION OF PROXIES
This Proxy Statement is furnished by and on behalf of the Board of Directors of
HON INDUSTRIES Inc. (the "Company" or "HON INDUSTRIES") in connection with the
solicitation of proxies for use at the annual meeting of shareholders of the
Company to be held on May 9, 1995, at the Holiday Inn in Muscatine, Iowa, and at
any adjournment or postponement thereof (the "Annual Meeting").
There were 30,635,301 shares of the Company's common stock, par value $1.00 per
share (the "Common Stock") outstanding (the "Shares") as of the close of
business on March 14, 1995 ("Record Date"). This Proxy Statement and the
enclosed proxy card will be first mailed on or about March 24, 1995, to the
holders of Shares on the Record Date (the "Shareholders" or, individually,
"Shareholder"). Shareholders shall be entitled to cast one vote per share for
election of Directors and one vote per share on all other matters.
A Shareholder who gives a proxy may revoke it at any time prior to its exercise
by filing with the Secretary a written revocation or a duly executed proxy
bearing a later date. The proxy will be suspended if the Shareholder attends
the meeting and elects to vote in person. Proxies that are signed but unmarked
will be voted as recommended by the Board of Directors.
The Company will treat abstentions and broker non-votes as present at the Annual
Meeting solely for purposes of determining whether or not a quorum exists. Such
non-votes will not be considered to be voting on the matters as to which they
exist and, thus, will not be counted in determining whether such matters have
been approved by two-thirds of the Shares entitled to vote in the election of
Directors and by the majority of the Shares entitled to approve the 1995 Stock-
Based Compensation Plan.
The affirmative vote of the holders of a majority of the Shares entitled to vote
is required for adoption of motions, resolutions, and actions previously
recommended by a majority of the Board of Directors, except for changes in
voting requirements, election or removal of Directors, or approval of mergers,
consolidations, and certain other corporate combinations. Changes in voting
rights, election or removal of Directors, and motions, resolutions, and actions
not previously recommended by a majority of the Board of Directors require the
affirmative vote of the holders of two-thirds of the Shares entitled to vote.
Approvals of mergers, consolidations, and certain other corporate combinations
require the affirmative vote of an amount equal to all shares held by persons
who beneficially own 10 percent or more of the Company's outstanding Common
Stock plus two-thirds of the remaining outstanding Common Stock.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, four Directors are each to be elected to
hold office for terms of three years and until their successors are elected and
shall qualify. The Board of Directors recommends the election of the four
nominees listed on the following page. The named proxies intend to vote for the
election of the four nominees. If, at the time of the meeting, any of such
nominees should be unable or decline to serve, the discretionary authority
provided in the proxy will be exercised to vote for a substitute or substitutes,
unless otherwise directed. The Board of Directors has no reason to believe that
any substitute nominee or nominees will be required.
<PAGE>
Set forth below is certain information furnished to the Company by each nominee
and each Director continuing in office after the Annual Meeting.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 14, 1995
---------------------
AMOUNT AND
PRINCIPAL OCCUPATION AND NOMINATED NATURE OF PERCENT
BUSINESS EXPERIENCE DURING DIRECTOR FOR TERM BENEFICIAL OF
NOMINEES THE PAST FIVE YEARS AGE SINCE EXPIRING OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
W. James President, 1994- , 52 1988 1998 1,000 *
Farrell Illinois Tool Works Inc.
(ITW); Executive Vice
President and President,
1983-94, Specialty
Mechanical and Adhesive
Products Group, ITW
(highly engineered
products and systems).
Jack D. President and CEO, 1991- 57 1990 1998 74,767 *
Michaels (1) , President, 1990-91, HON
INDUSTRIES Inc.; President
and CEO, 1987-90, Hussmann
Corporation (food service
refrigeration equipment).
Michael S. Senior Vice President, 57 1980 1998 6,000 *
Plunkett (2) Engineering, Technology &
Human Resources,
1986- , and Director,
1986-93, Deere & Company
(mobile power machinery).
Herman J. Retired Vice Chairman of 78 1980 1998 2,000 *
Schmidt (3) Mobil Oil Corporation.
Director of various
corporations.
</TABLE>
2
<PAGE>
INCUMBENT DIRECTORS
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 14, 1995
---------------------
AMOUNT AND
PRINCIPAL OCCUPATION AND NATURE OF PERCENT
CONTINUING BUSINESS EXPERIENCE DURING DIRECTOR TERM BENEFICIAL OF
DIRECTORS THE PAST FIVE YEARS AGE SINCE EXPIRES OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
Robert W. Cox Counsel, Baker & McKenzie; 57 1994 1997 1,000 *
Chairman of the Policy
Committee, 1992-94,
Managing Partner and
Chairman of the Executive
Committee and the
Strategic Planning
Committee, 1984-92, Baker
& McKenzie (an
international law firm).
Stanley M. Howe Chairman, 1984- , 71 1958 1997 1,999,569(4)(5) 6.52%
President, 1964-90, CEO,
1979-91, HON INDUSTRIES
Inc.
Lee Liu (6) Chairman, President and 61 1990 1997 1,550(4) *
CEO, 1993- , President
and CEO, 1991-93,
Director, 1991-93, IES
Industries Inc.; Chairman
and CEO, 1995- ,
Chairman, President and
CEO, 1994-95, IES
Utilities; Chairman,
President, and/or CEO,
1990-93, various
affiliates or predecessor
companies to IES
Industries Inc. and IES
Utilities (energy,
transportation, and
telecommunications).
Lorne R. Waxlax (7) Executive Vice President, 61 1994 1997 2,900 *
Diversified Group,
1985-93, The Gillette
Company.
Celeste C. Michalski Assistant Comptroller, 52 1993 1996 700 *
1994- , NYNEX;
Comptroller, 1993-94, New
York Telephone, largest
operating company of
NYNEX; Vice President and
Controller, 1988-93,
Gencorp, Inc.
Richard H. Stanley Vice Chairman, 62 1964 1996 2,631,790(4)(8) 8.59%
1979- , HON
INDUSTRIES Inc.;
President, 1986- , SC
Companies, Inc.; Chairman,
1984- , Stanley
Consultants, Inc.
(international
engineering, architecture,
planning, and management);
President, 1984- ,
The Stanley Foundation
(private operating
foundation).
Jan K. Ver Hagen President and COO, October 57 1992 1996 1,000 *
1994- , Director,
October 1994- ,
Executive Vice President,
May 1994-October 1994,
United Dominion Industries
Ltd. (manufacturing,
engineering, and
construction); Vice
Chairman and Director,
1988-1994, Emerson
Electric Co.
</TABLE>
- ----------------
* Less than 1 percent.
3
<PAGE>
NOTES
(1) Mr. Michaels is also a director of Huffy Corporation, which has a class of
securities registered with the Securities and Exchange Commission.
(2) Mr. Plunkett is also a director of Bank One, Quad Cities, NA, which has a
class of securities registered with the Securities and Exchange Commission.
(3) Mr. Schmidt is also a director of H.J. Heinz Co., MAPCO Inc., Seligman
Select Municipal Fund, Inc., Seligman Quality Municipal Fund, Inc.,
Seligman Mutual Funds, and Tri-Continental Corporation, each of which has a
class of securities registered with the Securities and Exchange Commission.
(4) Figures include shares held by or for the benefit of the spouse and/or
children of Mr. Howe, 1,180,447; Mr. Liu, 550; and Mr. Stanley, 89,736.
Each Director disclaims beneficial ownership of such respective shares.
(5) Includes 186,528 shares owned by The Howe Foundation. Mr. Howe is
President and a director of The Howe Foundation and, as such, shares voting
and dispositive powers as to shares held by such entity, of which he
disclaims "beneficial ownership."
(6) Mr. Liu is also a director of Eastman Chemical Company and Principal
Financial Group, each of which has a class of securities registered with
the Securities and Exchange Commission.
(7) Mr. Waxlax is also a director of Waban, Inc., Clean Harbors Inc., and
Amtrol Inc., each of which has a class of securities registered with the
Securities and Exchange Commission.
(8) Includes 13,072 shares beneficially and indirectly owned by Mr. Stanley as
co-trustee of the C. Maxwell Stanley and Elizabeth M. Stanley Real Estate
Trust. Also includes 2,390,052 shares owned by The Stanley Foundation and
23,498 shares owned by E & M Charities. Mr. Stanley is President and a
director of The Stanley Foundation and a director of E & M Charities and,
as such, shares voting and dispositive powers as to shares held by such
entities, of which he disclaims "beneficial ownership." See "Beneficial
Owners of Common Stock" on the following page.
4
<PAGE>
BENEFICIAL OWNERS OF COMMON STOCK
The following table sets forth information known as of March 14, 1995, with
respect to any person who is known to the Company to be the beneficial owner of
more than 5 percent of the Company's Common Stock. The table also includes any
non-Director executive officers included in the Summary Compensation Table.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C>
State Farm Insurance Companies 3,683,200 12.02%
One State Farm Plaza
Bloomington, Illinois 61701
Bandag, Incorporated 2,395,000 7.82%
Bandag Center
Muscatine, Iowa 52761
The Stanley Foundation 2,390,052 7.80%
216 Sycamore Street
Muscatine, Iowa 52761
Stanley M. Howe 1,999,569 6.52%
1124 Oakland Drive
Muscatine, Iowa 52761
Terrance L. and Loretta B. Mealy 1,646,064 5.37%
301 East Second Street
Muscatine, Iowa 52761
George J. Koenigsaecker III 25,175 *
R. Michael Derry 4,655 *
E. William Housh 4,093 *
All Directors and Officers as a Group 4,594,631 (1) 14.99%
</TABLE>
- -------------
* Less than 1 percent.
NOTES
(1) After elimination of duplication caused by shared voting or dispositive
powers of certain stock listed in the above table.
5
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock, and to furnish the Company with copies of all such
reports they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended December 31, 1994,
all Section 16(a) filing requirements applicable to its officers, Directors, and
greater than ten percent beneficial owners were complied with.
BOARD MEETINGS, COMMITTEES, AND FEES
The Board of Directors held four regular meetings and one special meeting during
the last fiscal year. The Board has three standing committees which deal with
audit matters, compensation, and nominations to the Board.
The Audit Committee consists of Richard H. Stanley, W. James Farrell, and
Celeste C. Michalski, and it met five times during the last fiscal year. The
Committee recommends selection of independent auditors and verifies auditors'
performance, fees, and audit plans prior to the audit. The Committee also
reviews the annual financial statements, the auditors' management letter with
both outside auditors and management, the annual pension and profit-sharing
audits, nonaudit services provided by outside auditors, the Company's insurance
coverage, and any other financial matters as directed by the Board.
The Human Resources and Compensation Committee is comprised of Lee Liu, Robert
W. Cox, and Herman J. Schmidt, and it met four times during the last fiscal
year. The Committee reviews executive compensation, benefit programs for all
employees, management's recommendations on election of officers, and human
resources development.
The Public Policy and Corporate Governance Committee is comprised of Jan K. Ver
Hagen, Michael S. Plunkett, and Lorne R. Waxlax, and it met four times during
the last fiscal year. The Committee monitors social accountability, recommends
changes in Board size, oversees committee jurisdiction and assignments, and
proposes nominees for election to the Board of Directors. The Committee will
consider candidates for Board membership recommended in writing by Shareholders
by the deadline for Shareholder proposals.
Each outside Director receives a quarterly retainer of $4,500. Each Director
receives $1,000 for each Board meeting and for each special meeting of a
committee of which the Director is a member (or $2,000 in each case if more than
six hours of round-trip travel time is required). Each Director receives a $500
fee for each telephone conference meeting. Directors are also paid travel and
related expenses for meetings attended.
REQUIRED VOTE
The election of the above nominees as Directors requires the affirmative vote of
the holders of two-thirds of the Shares present or represented and entitled to
vote at the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES AS DIRECTORS. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
6
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth the compensation awarded to, earned by, or paid
to the Company's CEO and the other four most highly compensated executive
officers of the Company for the years indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
------------ ------------
Name and Fiscal Other Restricted LTIP All Other
Principal Year Salary Bonus/1/ Annual Stock Payouts/4/ Compen-
Position ($) ($) Compen- Awards/3/ ($) sation/5/
sation/2/ ($) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C>
Jack D. Michaels 1994 385,000 327,000 20,442 318,022 16,745
President and CEO 1993 366,667 285,000 12,830 23,017
1992 350,000 250,000 13,091 25,379
George J. 1994 227,000 150,000 18,390 15,937
Koenigsaecker III 1993 221,001 109,000 9,031 7,610
Senior Vice President 1992 143,336 120,000 30,423 148,085
E. William Housh 1994 201,433 108,000 31,955 16,993
President, The HON 1993 193,114 96,000 51,490 15,159 24,520
Company 1992 191,000 85,000 13,712 24,413
Stanley M. Howe 1994 150,000 126,000 33,778 285,581 16,980
Chairman 1993 166,667 105,000 10,609 285,581 23,321
1992 216,667 150,000 12,488 23,008
R. Michael Derry 1994 172,267 57,000 12,768 159,011 16,745
Senior Vice President, 1993 167,667 55,000 10,910 20,408
Administration 1992 160,667 50,000 8,590 19,000
- ----------------------
</TABLE>
NOTES
/1/ The figures for executive bonuses reflect the awards of bonuses for the
relevant fiscal years under the Company's Executive Bonus Plan. The bonuses are
payable in three installments over a two-year period, subject generally to a
participant's continued employment with the Company at the time of payment.
/2/ The figures in this column reflect cash profit-sharing payments; one-time,
lump-sum salary payments; interest on LTIP Payouts; and relocation expenses.
The cash profit-sharing payments are made under the Company's Cash Profit-
Sharing Plan, a plan generally applicable to all members. The profit-sharing
payments made in the 1994, 1993, and 1992 fiscal years were as follows: Mr.
Michaels - $9,368; $12,830; $13,091; Mr. Koenigsaecker - $9,450; $4,510; $-0-;
Mr. Housh - $9,450; $13,061; $13,712; Mr. Howe - $9,368; $10,609; $12,488; and
Mr. Derry - $9,368; $10,910; $8,590. Cash profit-sharing is earned on a non-
fiscal year cycle. The one-time, lump-sum salary payments in 1994 were as
follows: Mr. Michaels - $7,500; Mr. Koenigsaecker - $8,940; Mr. Housh - $6,050;
and Mr. Derry - $3,400. Mr. Howe received no lump-sum payment. The figures
also reflect interest payments for fiscal year 1994 on LTIP Payouts to Messrs.
Michaels and Howe of $3,574 and $24,410, respectively. Also included are
relocation expense reimbursements of $4,521 and $30,423 in the 1993 and 1992
fiscal years for Mr. Koenigsaecker and $16,455 and $38,429 in the 1994 and 1993
fiscal years for Mr. Housh.
/3/ In the 1993 and 1992 fiscal years, Mr. Michaels received $3,400 and $9,350
in lieu of but equal to dividends on the unvested portion of his 1990 restricted
stock award, all of which became vested during the 1993 fiscal year. In the
1994, 1993, and 1992
7
<PAGE>
fiscal years, Mr. Koenigsaecker received $1,031; $1,688; and $1,744 in lieu of
but equal to dividends on the unvested portion of his 1992 restricted stock
award, all of which will become vested in the 1995 fiscal year.
/4/ These payouts vested in the designated fiscal periods. The payouts for Mr.
Michaels and Mr. Derry represent cumulative appreciation over a five-year period
starting January 1, 1990 on 200,000 units and 100,000 units, respectively, of
permanent capital of HON INDUSTRIES Inc. and, at the direction of the Board of
Directors, have been partially or wholly paid in 1995, rather than in three
payments over a two-year period as otherwise specified by the Executive Long-
Term Incentive Compensation Plan. Mr. Michaels received a payout of $268,022
in 1995 and will receive the remaining $50,000 in three installments over a two-
year period. Mr. Howe's payout represents cumulative appreciation over the
five-year period starting January 1, 1989 on 600,000 units of permanent capital
of HON INDUSTRIES Inc., as reflected in the following accruals by the Company
which were disclosed (except for 1992) in the Company's proxy statements for the
following fiscal years: 1989 - $93,300; 1990 - $171,384; 1991 - $143,451; 1992
- - $196,183; and 1993 - $252,425. Of the total earned of $856,743, one-third was
paid in 1994, one-third has been paid in 1995, and one-third will be paid in
1996. See discussion of Executive Long-Term Incentive Compensation Plan on page
12 of the Report of the Human Resources and Compensation Committee on Executive
Compensation.
/5/ Included are Company contributions to the HON Members Company Ownership
Plan and the HON INDUSTRIES Inc. Profit-Sharing Retirement Plan, as well as the
dollar value of Company-paid life insurance premiums under the HON INDUSTRIES
Inc. Flexible Benefits Plan, all of which are generally applicable to all
members. The amounts paid under the HON Members Company Ownership Plan in the
1994, 1993, and 1992 fiscal years were as follows: Mr. Michaels - $3,007,
$4,690, $4,606; Mr. Koenigsaecker - $3,007, $1,485, and $-0-; Mr. Housh -
$3,007, $4,690, $4,606; Mr. Howe - $3,007, $4,690, $4,606; and Mr. Derry -
$3,007, $4,134, $3,833. The amounts paid under the HON INDUSTRIES Inc. Profit-
Sharing Retirement Plan in the 1994, 1993, and 1992 fiscal years were as
follows: Mr. Michaels - $12,838, $17,978, $18,105; Mr. Koenigsaecker - $12,582,
$6,009, $-0-; Mr. Housh - $12,582, $18,980, $19,530; Mr. Howe - $12,838,
$17,978, $18,105; and Mr. Derry - $12,838, $15,850, $15,069. The dollar value
of Company-paid life insurance premiums under the HON INDUSTRIES Inc. Flexible
Benefits Plan in the 1994, 1993, and 1992 fiscal years were as follows: Mr.
Michaels - $900, $349, $2,668; Mr. Koenigsaecker - $348, $116, $-0-; Mr. Housh -
$1,404, $850, $277; Mr. Howe - $1,135, $653, $297; and Mr. Derry - $900, $424,
$98.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR /1/
<TABLE>
<CAPTION>
Number of Performance Estimated Future Payouts Under
Shares, or Non-Stock
Units, or Other Period Price-Based Plans/4/
Name Other Until
Rights/2/ Maturation or Threshold/5/ Target/6/ Maximum/7/
Payout/3/ ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Jack D. Michaels 200,000 Five Years - - - - 320,000 - - - -
George J. Koenigsaecker, III 50,000 Five Years - - - - 80,000 - - - -
25,000 Five Years - - - - 180,000 - - - -
E. William Housh - - - - - - - - - - - - - - - - - - - -
Stanley M. Howe - - - - - - - - - - - - - - - - - - - -
R. Michael Derry 50,000 Five Years - - - - 80,000 - - - -
</TABLE>
8
<PAGE>
______________
NOTES
/1/ The performance criterion is the appreciation in permanent capital in the
business unit as to which the long-term incentive award is granted.
Appreciation is measured on a net cumulative basis over the award period. Under
the Company's Executive Long-Term Incentive Compensation Plan, permanent capital
may be defined by the Board of Directors and generally means total assets less
current liabilities (excluding current portions of long-term debt and capital
lease obligations). Appreciation is defined as after-tax net income exclusive
of non-operating items such as gains and losses from sales of assets and sales,
transfers, or redemptions of permanent capital, and certain other extraordinary
and non-operating items.
/2/ Awards under the Company's Executive Long-Term Incentive Compensation Plan
are based upon appreciation on units of permanent capital of HON INDUSTRIES Inc.
or one of its business units. Each unit of permanent capital is equal to one
dollar. All listed awards are based upon the financial and business performance
of the Company, except for Mr. Koenigsaecker's 25,000 unit award which is based
upon the financial and business performance of The HON Company, a business unit
of the Company.
/3/ An award normally is made for a period of five fiscal years, unless another
period is designated by the Board of Directors. An award is subject to
forfeiture if a participant's employment ends prior to the award vesting for any
reason other than death, disability, change in control, or retirement after age
62. Payouts are made in three equal installments over a two-year period, unless
otherwise determined by the Board of Directors.
/4/ An award payout is equal to the net cumulative appreciation (or
depreciation) on units of permanent capital. An award payout is designed to
correlate directly to the financial performance of the relevant business unit.
/5/ Threshold amounts are not specified under the Company's Executive Long-Term
Incentive Compensation Plan but as a practical matter are zero, since a
participant will not receive any award payout if there is no net cumulative
appreciation or net growth over the award period in the permanent capital of the
relevant business unit.
/6/ Target amounts for each officer are based on historical and projected net
cumulative appreciation on the permanent capital of these business units, with
reference to the immediately preceding fiscal year.
/7/ Maximum amounts are not specified under the Company's Executive Long-Term
Incentive Compensation Plan but are dependent upon the net cumulative
appreciation or net growth in the permanent capital of the relevant business
unit, which is itself based on such business unit's financial and business
performance and is governed by such practical limitations as the size of the
market, the rigors of competition, and the business unit's manufacturing
capacity.
PERFORMANCE GRAPH
The comparative performance of the Company's Common Stock against the indexes as
depicted in the following graph is dependent on the price of the stock at a
particular measurement point in time. Since individual stocks are more volatile
than broader stock indexes, the perceived comparative performance of the
Company's Common Stock may vary based on the strength or weakness of the stock
price at the new measurement point used in each future proxy statement graph.
For this reason, the Company does not believe that the graph should be
considered as the sole indicator of Company performance.
9
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN /1/
Among HON INDUSTRIES Inc., S & P 500 Index, and Office Furniture
Industry Group /2/
TOTAL RETURN
[PERFORMANCE GRAPH APPEARS HERE]
This graph assumes $100 invested on December 28, 1989, in HON INDUSTRIES
Inc. Common Stock, and $100 invested on December 31, 1989, in each of S &
P 500 Stocks and Office Furniture Industry Group Stocks.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD OFFICE FURNITURE
FISCAL YEAR COVERED HON INDUSTRIES INC. S & P 500 INDEX INDUSTRY GROUP
<S> <C> <C> <C>
Measurement Pt-12/28/89 $100.00 $100.00 $100.00
12/28/90 86.49 93.44 88.16
12/27/91 117.19 118.02 108.28
12/31/92 145.71 123.29 126.34
12/31/93 169.87 131.99 177.49
12/30/94 170.97 129.96 153.08
- -----------
</TABLE>
NOTES
/1/ The Total Return figures for each year assume reinvestment of dividends and
are based upon the closing stock price on the last trading day of the Company's
fiscal year for the Company and the last trading day of December for each
corresponding year for both the S & P 500 Index and Office Furniture Industry
Group.
/2/ The Office Furniture Industry Group is a composite peer index selected by
the Company and weighted by market capitalization. The companies include Herman
Miller, Inc.; Kimball International, Inc.; La-Z-Boy Chair Co.; Shelby Williams
Industries, Inc.; and TAB Products Company.
10
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REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF HON INDUSTRIES INC.
ON EXECUTIVE COMPENSATION
OVERALL POLICY. The Company's executive compensation program is designed to be
linked to Company performance. To this end, the Company has developed an
overall compensation strategy and specific compensation plans that tie executive
compensation to the Company's success in meeting its business goals and
objectives.
The executive compensation strategy is designed to: (i) ensure the total
program will be able to attract, motivate, and retain executives of the highest
quality; (ii) relate total compensation to individual executive performance and
the performance of the business unit he or she manages; and (iii) provide
incentives for high levels of performance.
The Company also believes executive compensation should be subject to objective
review. For this reason, the Human Resources and Compensation Committee of the
Board of Directors was established and has now been in operation for many years.
All matters pertaining to executive compensation are submitted to the outside
Directors of the Board for approval following review and recommendation by the
Committee.
Operating within the framework of a statement of duties and responsibilities
established by the Board of Directors, the Committee's role is to assure the
Company's: (1) compensation strategy is aligned with the long-term interest of
the Shareholders; (2) compensation structure is fair and reasonable; and (3)
compensation reflects both Company and individual performance. The Committee
utilizes comparative compensation surveys developed by independent organizations
in discharging its responsibilities.
For purposes of administering awards under the Company's Executive Bonus and
Executive Long-Term Incentive Compensation Plans, the Committee has reviewed the
federal income tax legislation adopted during 1993 limiting the deductibility of
certain executive compensation in excess of $1 million. The Committee has
determined that it is highly unlikely that payouts under the Corporation's
existing programs would be affected by this limitation during 1995. The
Committee expects to continue to monitor the impact of this legislation in
future years.
The Committee is comprised of three Directors, none of whom are current or
former members of the Company. There are no interlocking Board memberships
between the Company and the outside Directors. The Committee met four times
during fiscal 1994.
EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation program
consists of the following components:
Base Salary. Base salaries are initially determined by evaluating the
responsibilities of a position, the experience of a candidate, his or her prior
compensation, and compensation for positions having similar scope and
accountability within the Company. Basic comparisons are made to similar size
companies in the durable goods manufacturing industry, based upon surveys
prepared by reputable independent organizations. In general, the Company uses
as a guide the middle range of base compensation in such surveys. While some of
the companies in the peer group chosen for comparison of shareholder returns in
the performance graph on page 10 may be included in the surveys considered by
the Committee in setting executives' salaries, there is no set peer group
against which those salaries are measured. Instead, the Company reviews broader
based data for the durable goods manufacturing industry and, when available,
industry specific data relative to a particular position. Salary adjustments
are usually made annually for executive officers by considering an executive's
performance, changes in his or her responsibilities, and by reference to salary
surveys for comparably situated executives with companies of similar size in the
durable goods manufacturing industry. In 1994, in deference to a corporate-wide
program designed to contain salaries generally, Mr. Michaels declined a
competitive increase in his salary that was based upon such a comparison.
Executive Bonus Plan. There are currently 55 members participating in the
Company's Executive Bonus Plan ("Bonus Plan"). Bonuses are normally awarded
annually based upon the Company's or an operating unit's prior fiscal year
performance. The goals of the Bonus Plan are to motivate and reward Company,
business unit, and individual accomplishments. Performance criteria include:
(i) return on assets/equity level and trend, (ii) market share level and trend,
(iii) significant actions and accomplishments which promote long-term growth and
profitability, (iv) achievement of annual strategic objectives, and (v) pursuit
and achievement of the Company's Vision Statement, which states: HON INDUSTRIES
SHALL BE PROFITABLE, BE ECONOMICALLY SOUND, PURSUE SOUND GROWTH, BE A SUPPLIER
OF QUALITY PRODUCTS AND SERVICES, BE A GOOD PLACE TO WORK, AND
11
<PAGE>
BE A RESPONSIBLE CORPORATE CITIZEN. Primary among these performance criteria are
profitable sales growth, return on assets/equity and achievement of related
strategic objectives.
The level of an individual award is determined by the potential impact an
executive has over the realization of Company profits and growth. Bonus awards
cannot exceed 100 percent of base salary for the Chairman of the Board and the
President and CEO, 75 percent of base salary for the head of an operating
company, 50 percent of base salary for any other officer, or 25 percent of base
salary for any other participant. In 1994, the awards earned by executive
officers under the Bonus Plan ranged from 16 percent to 76 percent of base
salary.
Each award is paid in three installments over two years: (1) the first
installment is equal to one-half of the award; and (2) the second and third
installments are each equal to one-fourth of the award. In order to earn and
receive payment, the participant must be employed with the Company through the
date of payment of each installment. Bonuses are awarded and paid in cash. If
Shareholders approve the 1995 Stock-Based Compensation Plan, then the Committee
may change the Bonus Plan to permit the Companys use of Common Stock as well as
cash to satisfy its obligations thereunder.
Executive Long-Term Incentive Compensation Plan. There are currently 17
participants in the Company's Executive Long-Term Incentive Compensation Plan
("LTIP"), including operating company presidents and certain key corporate
officers. Its purpose is to focus the attention of senior executives on the
long-term health of the Company. An additional purpose is to strengthen the
ability of the Company to attract, motivate, and retain senior executives of
high caliber.
Awards made under the LTIP are in the form of rights to the appreciation, over a
five-year period, in the value of units of permanent capital of the Company
and/or one of its operating companies. Awards are granted at the discretion of
the Board of Directors. The size of an award is dependent upon the impact the
executive has on the long-term realization of Company and/or business unit sales
and profits. The ultimate value of an award payout is dependent on the
financial performance of the Company and/or the applicable business unit.
Rights to award payouts become vested at the end of the award period or on
death, disability, retirement at age 62, or change in corporate control. Award
payouts are made in cash in three equal installments over two years unless the
Board of Directors approves a different payout schedule. If Shareholders
approve the 1995 Stock-Based Compensation Plan, then the Committee may change
the LTIP to permit the Companys use of Common Stock as well as cash to satisfy
its obligations thereunder.
CEO COMPENSATION. In determining Jack D. Michaels' compensation, the Committee
considers the Company's success in meeting its performance goals in the areas of
profitability, return on equity, sales growth, financial soundness, member
relations, and corporate citizenship, as well as the assessment of the Committee
and the Board of Directors of Mr. Michaels' individual performance. The
Committee also considers the compensation levels of chief executive officers as
shown by reputable independent surveys for organizations of equivalent size in
the durable goods manufacturing industry. Overall, profitable sales growth,
return on equity and achievement of related strategic business objectives are
the primary measures of the CEO's performance. In recent years, the Company has
achieved record performance by these measures and believes these results would
not have been attained without the excellent performance by the CEO in
member/employee relations.
The Company achieved very positive results in fiscal 1994 under Mr. Michaels'
leadership. Net income, net sales, and earnings per share reached all-time
highs. Year over year, the Company had a 20 percent increase in net income, an
8.4 percent increase in net sales, and a 29 percent return on average equity.
Under the Bonus Plan, Mr. Michaels received a 1994 award of $327,000 as compared
to a 1993 award of $285,000. Mr. Michaels' bonus was in recognition of the
strong Company performance in fiscal 1994 and his leadership in positioning the
Company for profitable growth in the future.
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
Lee Liu, Chairperson
Robert W. Cox
Herman J. Schmidt
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SALARY DEFERRAL PLAN
The Company's Salary Deferral Plan allows Directors and officers to defer
receiving any or all current compensation until specific future years chosen by
them. During the deferral period, interest is credited to an individual's
account at a rate one-half of one percent below the prime interest rate.
CHANGE IN CONTROL EMPLOYMENT AGREEMENTS
The Company has entered into change in control employment agreements with
corporate officers and certain other key employees. According to the
Agreements, a change in control occurs when a third person or entity becomes the
beneficial owner of 20 percent or more of the Company's common stock or when
more than one-third of the Company's Board of Directors is composed of persons
not recommended by at least three-fourths of the incumbent Board of Directors.
Upon a change in control, an executive has a two-year employment contract with
the Company, and all his or her benefits are vested under Company plans. If, at
any time within two years of the change in control, his or her position, salary,
bonus, place of work or Company-provided benefits are modified, or employment is
terminated by the Company for any reason other than cause or by the executive
for good reason, as such terms are defined in the Agreement, then the executive
is entitled to receive a severance payment equal to two times the sum of (i) the
executives annual base salary and (ii) the average of the executives annual
bonuses for the prior two years.
PROPOSAL NO. 2 - ADOPTION OF THE 1995 STOCK-BASED COMPENSATION PLAN
GENERAL
As described in this Proxy Statement under the caption "Report of the Human
Resources and Compensation Committee," the Company's executive compensation
program is designed to be linked to Company performance. The Bonus Plan and the
LTIP provide for performance-based compensation payable in cash. Consistent
with the purposes of those plans, and any compensation programs of a similar
nature that might be adopted by the Company in the future, the Board of
Directors is proposing for Shareholder approval the 1995 Stock-Based
Compensation Plan (the "1995 Plan"). This will allow existing plans to pay
awards thereunder to participants partly or all in shares of Common Stock rather
than entirely in cash.
Also, non-employee directors will be able to elect to receive all or a portion
of their annual retainers in the form of shares of Common Stock. Eight non-
employee directors and approximately 80 employees are eligible to participate in
the 1995 Plan. Reference is made to Exhibit A to this Proxy Statement for the
complete text of the 1995 Plan which is summarized below.
DESCRIPTION OF THE 1995 PLAN
Administration. The 1995 Plan will be administered by the Human Resources and
Compensation Committee of the Board of Directors (the "Committee") consisting of
not less than three directors who are not eligible to receive discretionary
awards under the 1995 Plan or any other plan of the Company.
Subject to the express provisions of the 1995 Plan, and except for shares of
Common Stock granted to non-employee directors in lieu of all or a portion of
their annual retainers, the Committee has the authority to select eligible
officers and other key employees who will receive awards and determine all of
the terms and conditions of each award. To the extent determined by the
Committee, awards will be evidenced by a written agreement containing such
provisions not inconsistent with the 1995 Plan as the Committee deems
appropriate. The Committee will also have authority to prescribe rules and
regulations for administering the 1995 Plan and to decide questions of
interpretation or application of any provision of the 1995 Plan. Except with
respect to grants to executive officers of the Company, the Committee may
delegate some or all of its power and authority to administer the 1995 Plan to
the President and Chief Executive Officer or other executive officer of the
Company.
13
<PAGE>
Available Shares. Under the 1995 Plan, upon approval of the 1995 Plan by
shareholders, as of January 1, 1995 and the first day of each subsequent
calendar year during the term of the 1995 Plan, one-half of one percent (.5%) of
the issued and outstanding shares of Common Stock, plus any shares previously
available under the 1995 Plan but not subject to grants thereunder, will be
available for awards to officers, other key employees, and non-employee
directors. The number of shares available under the 1995 Plan will be subject
to adjustment in the event of a stock split, stock dividend, recapitalization,
reorganization, merger or other similar event or change in capitalization.
Change in Control. In the event of certain acquisitions of 20 percent or more
of the Common Stock; or if two-thirds or more of the Company's Board of
Directors consists of persons who have not been approved by the incumbent Board
of Directors; or if shareholders of a reorganization, merger, or consolidation
(unless the Company's shareholders receive 50 percent or more of the stock of
the surviving company); or if shareholders approve a liquidation, dissolution,
or sale of all or substantially all of the Company's assets, all awards will be
"cashed-out" by the Company, except, in the case of a merger or similar
transaction in which the shareholders receive publicly traded common stock; then
all awards will vest and will represent a right to acquire the appropriate
number of shares of common stock received in the merger or similar transaction.
Effective Date, Termination and Amendment. If approved by Shareholders, the 1995
Plan will become effective as of May 9, 1995 and will terminate ten years
thereafter, unless terminated earlier by the Board of Directors. The Board of
Directors may amend the 1995 Plan at any time except that, without the approval
of the shareholders of the Company, no amendment may, among other things, (i)
increase the number of shares of Common Stock available under the 1995 Plan, or
(ii) extend the term of the 1995 Plan.
Bonus Stock and Restricted Stock Awards. The 1995 Plan provides for the grant
of (i) bonus stock awards, which are vested upon grant, although they may be
subject to limitations on transfer, and (ii) restricted stock awards which are
vested only upon satisfaction of certain conditions and may not be transferred
prior to the time the restrictions. Shares of restricted stock will be non-
transferable and, except to the extent otherwise determined by the Committee,
subject to forfeiture if the holder does not remain continuously in the
employment of the Company during the restriction period. Unless otherwise
determined by the Committee, the holder of a restricted stock award will have
rights as a shareholder of the Company, including the right to vote and receive
dividends with respect to the shares of restricted stock.
Performance Share Awards. The 1995 Plan also provides for the grant of
performance shares. Each performance share is a right, contingent upon the
attainment of performance measures within a specified performance period, to
receive a share of Common Stock, which may be subject to restrictions, or the
fair market value of such performance share in cash. Prior to the settlement of
a performance share award in shares of Common Stock, the holder of such award
will have no rights as a shareholder of the Company with respect to the shares
of Common Stock subject to the award. Performance shares will be non-
transferable and, except to the extent otherwise determined by the Committee,
subject to forfeiture if the specified performance measures are not attained
during the applicable performance period.
Grants of Shares to Non-Employee Directors. Each non-employee director will be
allowed to elect to receive shares of Common Stock with a fair market value
equal to all or a portion of the director's then annual retainer for the period
commencing on the date of each annual meeting of the Company's shareholders.
Any such election must be made at least six months prior to its effective date,
and once made will be irrevocable.
Federal Income Tax Consequences. The following is a brief overview of the U.S.
federal income tax consequences generally arising with respect to awards under
the 1995 Plan.
A participant receiving restricted stock, will not recognize taxable income at
the time of the grant, and the Company will not be entitled to a tax deduction
at such time, unless the participant makes an election to be taxed at the time
restricted stock is granted. If such election is not made, the participant will
recognize taxable income at the time the restrictions lapse in an amount equal
to the excess of the fair market value of the shares at such time over the
amount, if any, paid for such shares. The amount of ordinary income recognized
by a participant by making the above-described election or upon the lapse of the
restrictions generally is deductible by the Company as compensation expense,
except to the extent the $1 million deduction limit of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), applies. In addition, a
participant receiving dividends with respect to restricted stock for which the
above-described election has not
14
<PAGE>
been made and prior to the time the restrictions lapse will recognize taxable
compensation, rather then dividend income, in an amount equal to the dividends
paid, and the Company generally will be entitled to a corresponding deduction,
except to the extent the deduction limit of Section 162(m) of the Code apply.
(See "Report of the Human Resources and Compensation Committee of the Board of
Directors of HON INDUSTRIES Inc. on Executive Compensation -- Overall Policy".)
A participant receiving bonus stock, including the shares awarded to non-
employee directors, will recognize taxable income at the time the bonus stock is
awarded in an amount equal to the then fair market value of such stock. This
amount is deductible by the Company as compensation expense, except to the
extent the deduction limit of Section 162(m) of the Code applies.
A participant receiving performance shares will not recognize taxable income
upon the grant of such shares and the Company will not be entitled to a tax
deduction at such time. Upon the settlement of performance shares, the
participant will recognize ordinary income in an amount equal to the fair market
value of any shares delivered and any cash paid by the Company. This amount is
deductible by the Company as compensation expense, except to the extent the
deduction limit of Section 162(m) of the Code applies.
The following table sets forth the maximum number of shares of stock which could
be granted during a year if a non-employee director elects to receive all of the
director's annual retainer in shares of common stock.
1995 PLAN
Position Shares
-------- ------
All Non-Employee Directors as a Group (9 persons)............. 4,797
Common Stock would be granted with a value equal to up to $16,000. Based on a
market price of $29.375 per share on March 14, 1995 and a current annual cash
retainer of $16,000, a non-employee director could elect to receive as many as
544 shares of Common Stock and be paid in cash for any remaining fraction of a
share.
REQUIRED VOTE
The adoption of the 1995 Plan requires the affirmative vote of the holders of a
majority of Shares present or represented and entitled to vote at the Annual
Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
APPROVE THE 1995 PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
15
<PAGE>
INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP, the Company's independent auditors, are
expected to be present at the Annual Meeting. They will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals by Shareholders intended to be presented at the 1996 Annual Meeting
must be received at the Company's executive offices no later than November 25,
1995, to be included in the proxy statement and proxy form.
OTHER MATTERS
The Board of Directors knows of no other matters that will be brought before the
Annual Meeting, but, if other matters properly come before the meeting, it is
intended that the persons named in the proxy will vote the proxy according to
their best judgment.
The entire cost of soliciting proxies for the Annual Meeting is paid by the
Company. No solicitation other than by mail is contemplated.
ON WRITTEN REQUEST TO THE UNDERSIGNED AT 414 EAST THIRD STREET, P.O. BOX 1109,
MUSCATINE, IA 52761-7109, THE COMPANY WILL PROVIDE, WITHOUT CHARGE TO THE
SHAREHOLDER, A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE COMPANY'S MOST RECENT FISCAL YEAR.
Information set forth in this proxy statement is as of March 14, 1995, unless
otherwise noted.
[SIGNATURE OF A. MOSBY HARVEY, JR.]
A. Mosby Harvey, Jr.
Vice President, General Counsel and Secretary
March 24, 1995
THE ANNUAL REPORT TO SHAREHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994, WHICH INCLUDES FINANCIAL STATEMENTS, IS BEING MAILED TO
SHAREHOLDERS OF THE COMPANY TOGETHER WITH THIS PROXY STATEMENT. THE ANNUAL
REPORT DOES NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATION OF PROXIES.
16
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EXHIBIT A
HON INDUSTRIES INC.
1995 STOCK-BASED COMPENSATION PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1995 Stock-Based Compensation Plan (the
"Plan") of HON INDUSTRIES Inc. (the "Company") and its subsidiaries from time to
time (individually a "Subsidiary" and collectively the Subsidiaries") are (i) to
align the interests of the Company's shareholders and the recipients of awards
under this Plan by increasing the proprietary interest of such recipients in the
Company's growth and success, (ii) to advance the interests of the Company by
attracting and retaining officers and other key employees and well-qualified
persons who are not officers or employees of the Company for service as
directors of the Company and (iii) to motivate such employees and Non-Employee
Directors to act in the long-term best interests of the Company's shareholders.
For purposes of this Plan, references to employment by the Company shall also
mean employment by a Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AGREEMENT" shall mean the written agreement evidencing an award
hereunder between the Company and the recipient of such award.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not subject
to a Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this
Plan.
"CHANGE IN CONTROL" shall have the meaning set forth in Section
5.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Committee designated by the Board,
consisting of three or more members of the Board, each of whom shall be (i) a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act
and (ii) an "outside director" within the meaning of Section 162(m) of the Code,
subject to any transition rules applicable to the definition of outside
director.
"COMMON STOCK" shall mean the common stock, $1.00 par value per share,
of the Company.
"COMPANY" has the meaning specified in Section 1.1.
"DISABILITY" shall mean the inability of the holder of an award to
perform substantially such holder's duties and responsibilities for a continuous
period of at least six months, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" shall mean the average of the high and low
transaction prices of a share of Common Stock as reported in the National
Association of Securities Dealers Automated Quotation National Market System on
the date as of which such value is being determined, or, if there are no
reported transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that if Fair Market Value for any
date cannot be so determined, Fair Market Value shall be determined by the
Committee by whatever means or method as the Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
"INCUMBENT BOARD" shall have the meaning set forth in Section
5.8(b)(2) hereof.
<PAGE>
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is
not an officer or employee of the Company or any Subsidiary.
"PERFORMANCE MEASURES" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include, but are not limited to, the attainment by a share of Common Stock of a
specified Fair Market Value for a specified period of time, earnings per share,
return on equity, earnings of the Company, revenues, market share, cash flows or
cost reduction goals, or any combination of the foregoing and any other criteria
and objectives established by the Committee. In the sole discretion of the
Committee, the Committee may amend or adjust (upward and downward) the
Performance Measures or other terms and conditions of an outstanding award in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in law or accounting principles.
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment
of specified Performance Measures within a specified Performance Period, to
receive one share of Common Stock, which may be Restricted Stock, or in lieu
thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares
under this Plan.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject
to a Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under
this Plan.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock
Award.
"TAX DATE" shall have the meaning set forth in Section 5.5.
1.3 ADMINISTRATION. This Plan shall be administered by the Committee. Any one or
a combination of the following awards may be made under this Plan to eligible
officers and other key employees of the Company and its Subsidiaries: (i) Stock
Awards in the form of Restricted Stock or Bonus Stock and (ii) Performance
Shares. The Committee shall, subject to the terms of this Plan, select eligible
officers and other key employees for participation in this Plan and determine
the form, amount and timing of each award to such persons and, if applicable,
the number of shares of Common Stock or the number of Performance Shares subject
to such an award, the time and conditions of settlement of the award and all
other terms and conditions of the award, including, without limitation, the form
of the Agreement evidencing the award. The Committee shall, subject to the terms
of this Plan, interpret this Plan and the application thereof, establish rules
and regulations it deems necessary or desirable for the administration of this
Plan and may impose, incidental to the grant of an award, conditions with
respect to the award, such as limiting competitive employment or other
activities. All such interpretations, rules, regulations and conditions shall be
conclusive and binding on all parties.
The Committee may delegate some or all of its power and authority
hereunder to the President and Chief Executive Officer or other executive
officer of the Company as the Committee deems appropriate; provided, however,
that the Committee may not delegate its power and authority with regard to (i)
the grant of an award under this Plan to any person who is a "covered employee"
within the meaning of Section 162(m) of the Code or who, in the Committee's
judgment, is likely to be a covered employee at any time during the period an
award hereunder to such employee would be outstanding or (ii) the selection for
participation in this Plan of an officer or other person subject to Section 16
of the Exchange Act or decisions concerning the timing, pricing or amount of an
award to such an officer or other person.
A-2
<PAGE>
No member of the Board of Directors or Committee, and neither the
President and Chief Executive Officer nor any other executive officer to whom
the Committee delegates any of its power and authority hereunder, shall be
liable for any act, omission, interpretation, construction or determination made
in connection with this Plan in good faith, and the members of the Board of
Directors, the Committee, the President and Chief Executive Officer or other
executive officer shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys'
fees) arising therefrom to the full extent permitted by law, except as otherwise
may be provided in the Company's Articles of Incorporation, By-laws, and under
any directors' and officers' liability insurance that may be in effect from time
to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such officers or
other key employees of the Company and its Subsidiaries as the Committee in its
sole discretion may select from time to time. The Committee's selection of a
person to participate in this Plan at any time shall not require the Committee
to select such person to participate in this Plan at any other time. Non-
Employee Directors shall be eligible to participate in this Plan in accordance
with Article IV.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 5.7, the
total number of shares of Common Stock available for all grants of awards under
this Plan in any calendar year, shall be one-half of one percent (.5%) of the
outstanding and issued Common Stock as of January 1 of such year beginning
January 1, 1995, plus the number of shares of Common Stock which shall have
become available for grants of awards under this Plan in any and all prior
calendar years, but which shall not have become subject to any award granted in
any prior year.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
II. STOCK AWARDS
2.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards to
such eligible persons as may be selected by the Committee. The Agreement
relating to a Stock Award shall specify whether the Stock Award is a Restricted
Stock Award or Bonus Stock Award. Stock Awards may be made in satisfaction of
the Company's obligations under the Company's Executive Bonus Plan, its
Executive Long-Term Incentive Compensation Plan or any other Plan of a similar
nature that may be adopted by the Company.
2.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award remains continuously in the employment of the Company
during the specified Restricted Period and for the forfeiture of the shares of
Common Stock subject to such award (x) if specified Performance Measures are not
satisfied or met during the specified Restriction Period or (y) if the holder of
such award does not remain continuously in the employment of the Company during
the specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods. Notwithstanding the foregoing, Bonus Stock Awards may be
subject to restrictions on sale or transfer as the Committee may determine.
(c) Share Certificates. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award shall be registered in the
holder's name and may bear a legend, in addition to any legend required pursuant
to Section 5.6, indicating that the ownership of the shares represented by such
certificate is subject to the restrictions, terms and conditions
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of this Plan and the Agreement relating to the Restricted Stock Award. During
any period for which a Bonus Stock Award is subject to any restriction on sale
or transfer, a certificate or certificates representing such award shall be
registered in the holder's name and may bear a legend, in addition to any legend
required pursuant to Section 5.6, indicating that the ownership of the shares
represented by such certificate is subject to such restrictions. All such
certificates shall be deposited with the Company, together with stock powers or
other instruments of assignment (including a power of attorney), each endorsed
in blank with a guarantee of signature if deemed necessary or appropriate, which
would permit transfer to the Company of all or a portion of the shares of Common
Stock subject to the Restricted Stock Award in the event such award is forfeited
in whole or in part. Upon termination of any applicable Restriction Period (and
the satisfaction or attainment of applicable Performance Measures), upon the
expiration of any restriction on sale applicable to a Bonus Stock Award or upon
the grant of a Bonus Stock Award not subject to any restrictions, in each case
subject to the Company's right to require payment of any taxes in accordance
with Section 5.5, a certificate or certificates evidencing ownership of the
requisite number of shares of Common Stock shall be delivered to the holder of
such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise
set forth in the Agreement relating to a Restricted Stock Award, and subject to
the terms and conditions of a Restricted Stock Award, the holder of such award
shall have all rights as a shareholder of the Company, including, but not
limited to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment applicable to all holders of Common Stock;
provided, however, that a distribution with respect to shares of Common Stock,
other than a distribution in cash, shall be deposited with the Company and shall
be subject to the same restrictions as the shares of Common Stock with respect
to which such distribution was made.
2.3 TERMINATION OF EMPLOYMENT. Subject to Section 5.8, all the terms relating to
the satisfaction of Performance Measures and the termination of the Restriction
Period relating to a Restricted Stock Award, or any cancellation or forfeiture
of such Restricted Stock Award upon a termination of employment with the Company
of the holder of such Restricted Stock Award, whether by reason of Disability,
retirement, death or other termination, shall be set forth in the Agreement
relating to such Restricted Stock Award.
III. PERFORMANCE SHARE AWARDS
3.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
3.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be subject
to the following terms and conditions and shall contain such additional terms
and conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The number
of Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if specified
Performance Measures are not satisfied or met during the specified Performance
Period.
(c) Settlement of Vested Performance Share Awards. The Agreement
relating to a Performance Share Award (i) shall specify whether such award may
be settled in shares of Common Stock (including shares of Restricted Stock) or
cash or a combination thereof and (ii) may specify whether the holder thereof
shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on any deferred
dividend equivalents, with respect to the number of shares of Common Stock
subject to such award. If a Performance Share Award is settled in shares of
Restricted Stock, a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 2.2(c) and the holder of such
Restricted Stock shall have such rights of a shareholder of the Company as
determined pursuant to Section 2.2(d). Prior to the settlement of a Performance
Share Award in shares of Common Stock, including Restricted Stock, the holder of
such award shall have no rights as a shareholder of the Company with respect to
the shares of Common Stock subject to such award.
3.3 TERMINATION OF EMPLOYMENT. Subject to Section 5.8, all the terms relating to
the satisfaction of Performance Measures and the termination of the Performance
Period relating to a Performance Share Award, or any cancellation or forfeiture
of such
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Performance Share Award upon a termination of employment with the Company of the
holder of such Performance Share Award, whether by reason of Disability,
retirement, death or other termination, shall be set forth in the Agreement
relating to such Performance Share Award.
IV. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
4.1 ELIGIBILITY. Each Non-Employee Director shall be eligible to elect to
receive shares of Common Stock in accordance with this Article IV.
4.2 TIME AND MANNER OF ELECTION. At least six (6) months prior to the date of
any annual meeting of shareholders of the Company during the term of this Plan,
Non-Employee Directors may file with the Committee or its designee a written
election to receive shares of Common Stock in lieu of all or a portion of such
Non-Employee Director's future annual retainer, paid quarterly, exclusive of
meeting or committee fees. Notwithstanding the foregoing, an election made by
(i) a Non-Employee Director in respect of the annual retainer payable for the
period beginning on the date of the 1995 annual meeting of the shareholders of
the Company or (ii) an individual who becomes a Non-Employee Director on a date
less than six months prior to any annual meeting of shareholders, shall become
effective on the first business day that is six months after the date
("Effective Date") such Non-Employee Director files such election, and such
election shall be applicable only to the portion of such Non-Employee Director's
annual retainer determined by multiplying such annual retainer by a fraction,
the numerator of which is the number of calendar days from and including the
Effective Date to and including the last day for which such Annual Retainer is
payable and the denominator is 365. An election pursuant to this Section, once
made, shall be irrevocable in respect to the annual retainer for which made.
The shares to be issued pursuant to this Section shall be issued on
each date on which an installment of the Non-Employee Director's annual retainer
would otherwise be payable in cash. The number of such shares to be issued shall
be determined by dividing the amount of the then payable installment of the
annual retainer subject to an election under this Section by the Fair Market
Value of a share of Common Stock on such date. Any fraction of a share shall be
disregarded and the remaining amount of the annual retainer shall be paid in
cash.
V. GENERAL
5.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
shareholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the 1995 annual meeting of shareholders, shall become
effective on the date of such approval. This Plan shall terminate 10 years after
its effective date unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any award granted prior to
termination.
Awards hereunder may be made at any time prior to the termination of
this Plan, provided that no award may be made later than 10 years after the
effective date of this Plan. In the event that this Plan is not approved by the
shareholders of the Company, this Plan and any awards hereunder shall be void
and of no force or effect.
5.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of shareholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act and Section
162(m) of the Code; provided, however, that no amendment shall be made without
shareholder approval if such amendment would (a) increase the maximum number of
shares of Common Stock available for issuance under this Plan (subject to
Section 5.7) or (b) extend the term of this Plan. No amendment may impair the
rights of a holder of an outstanding award without the consent of such holder.
5.3 AGREEMENT. Each award under this Plan shall be evidenced by an Agreement
setting forth the terms and conditions applicable to such award. No award shall
be valid until an Agreement is executed by the Company and the recipient of such
award and, upon execution by each party and delivery of the Agreement to the
Company, such award shall be effective as of the effective date set forth in the
Agreement.
5.4 NON-TRANSFERABILITY OF PERFORMANCE SHARES. No Performance Share, and to the
extent provided pursuant to Section 2.2(c), no Bonus Stock Award, shall be
transferable other than (i) by will, the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company or (ii)
as otherwise permitted under Rule 16b-3 under the
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Exchange Act as set forth in the Agreement relating to such award. Each such
award may be settled during the participant's lifetime only by the holder or the
holder's legal representative or similar person. Except as permitted by the
second preceding sentence, no such award may be sold, transferred, assigned,
pledged, hypothecated, encumbered or otherwise disposed of (whether by operation
of law or otherwise) or be subject to execution, attachment or similar process.
Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any such award, it and all rights thereunder shall
immediately become null and void.
5.5 TAX WITHHOLDING. The Company shall have the right to require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
pursuant to an award made hereunder, payment by the holder of such award of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arising in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery to the Company of previously
owned whole shares of Common Stock (which the holder has held for at least six
months prior to the delivery of such shares and for which the holder has good
title, free and clear of all liens and encumbrances) having an aggregate Fair
Market Value, determined as of the Tax Date, equal to the amount necessary to
satisfy any such obligation, (C) authorizing the Company to withhold whole
shares of Common Stock which would otherwise be delivered having an aggregate
Fair Market Value, determined as of the Tax Date, or withhold an amount of cash
which would otherwise be payable to a holder, equal to the amount necessary to
satisfy any such obligation, or (D) any combination of (A), (B) and (C), in each
case to the extent set forth in the Agreement relating to the award; provided,
however, that the Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (B)-(D) and that in the case of a holder who
is subject to Section 16 of the Exchange Act, the Company may require that the
method of satisfying such an obligation be in compliance with Section 16 and the
rules and regulations thereunder. An Agreement may provide for shares of Common
Stock to be delivered or withheld having an aggregate Fair Market Value in
excess of the minimum amount required to be withheld, but not in excess of the
amount determined by applying the holder's maximum marginal tax rate. Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.
5.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
5.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding Stock Award, and the
terms of each outstanding Performance Share shall be appropriately adjusted by
the Committee. The decision of the Committee regarding any such adjustment shall
be final, binding and conclusive. If any such adjustment would result in a
fractional security being (i) available under this Plan, such fractional
security shall be disregarded, or (ii) subject to an award under this Plan, the
Company shall pay the holder of such award, in connection with the first vesting
or settlement of such award, in whole or in part, occurring after such
adjustment, an amount in cash determined by multiplying (i) the fraction of such
security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A)
the Fair Market Value on the vesting or settlement date over (B) the exercise or
base price, if any, of such award.
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5.8 CHANGE IN CONTROL.
(a) (1) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive shares of Common Stock
that are registered under Section 12 of the Exchange Act, (i) the Restriction
Period applicable to any outstanding Restricted Stock Award shall lapse, (ii)
the Performance Period applicable to any outstanding Performance Share shall
lapse, (iii) the Performance Measures applicable to any outstanding Restricted
Stock Award (if any) and to any outstanding Performance Share shall be deemed to
be satisfied at the maximum level, (iv) any other restrictions on sale or
transferability shall terminate and (v) there shall be substituted for each
share of Common Stock available under this Plan, whether or not then subject to
an outstanding award, the number and class of shares into which each outstanding
share of Common Stock shall be converted pursuant to such Change in Control.
(2) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(1) or (2) below, or in
the event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive consideration other
than shares of Common Stock that are registered under Section 12 of the Exchange
Act, each outstanding award shall be surrendered to the Company by the holder
thereof, and each such award shall immediately be cancelled by the Company, and
the holder shall receive, within ten days of the occurrence of a Change in
Control pursuant to Section (b)(1) or (2) below or within ten days of the
approval of the shareholders of the Company contemplated by Section (b)(3) or
(4) below, a cash payment from the Company in an amount equal to, in the case of
a Restricted Stock Award or Performance Share Award, the number of shares of
Common Stock or the number of Performance Shares, as the case may be, then
subject to such award, multiplied by the greater of (A) the highest per share
price offered to shareholders of the Company in any transaction whereby the
Change in Control takes place or (B) the Fair Market Value of a share of Common
Stock on the date of occurrence of the Change in Control. The Company may, but
is not required to, cooperate with any person who is subject to Section 16 of
the Exchange Act to assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section 16 and the rules and
regulations thereunder.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or
more of either (i) the then outstanding shares of Common Stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of d irectors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 5.8(b); or
(2) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least two-thirds of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least three-quarters of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50
percent of, respectively, the then outstanding shares of Common Stock, and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's
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assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20 percent or more of,
respectively, the then outstanding shares of Common Stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
5.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right to
participate in this Plan. Neither this Plan nor any award made hereunder shall
confer upon any person any right to continued employment by the Company, any
Subsidiary or any affiliate of the Company or affect in any manner the right of
the Company, any Subsidiary or any affiliate of the Company to terminate the
employment of any person at any time without liability hereunder.
5.10 RIGHTS AS SHAREHOLDER. No person shall have any right as a shareholder of
the Company with respect to any shares of Common Stock or other equity security
of the Company which is subject to an award hereunder unless and until such
person becomes a shareholder of record with respect to such shares of Common
Stock or equity security.
5.11 GOVERNING LAW. This Plan, each award hereunder and the related Agreement,
and all determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Iowa and construed in accordance therewith
without giving effect to principles of conflicts of laws.
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HON INDUSTRIES INC.
COMMON STOCK PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS ON MAY 9, 1995.
The undersigned acknowledges receipt of a Notice of Annual Meeting and Proxy
Statement dated March 24, 1995, and appoints Stanley M. Howe and Richard H.
Stanley, or either of them, with full power of substitution, as the proxies and
attorneys of the undersigned, to vote all shares of common stock, par value
$1.00 per share, of HON INDUSTRIES Inc. which the undersigned is entitled to
vote at the annual meeting of shareholders of HON INDUSTRIES Inc. to be held at
Muscatine, Iowa, on May 9, 1995, at 10:30 a.m. and any adjournment thereof. The
proxies are directed to vote as checked on the reverse side on the following
matters or otherwise in their discretion.
PROPOSAL NO. 1--ELECTION OF DIRECTORS--NOMINEES: For three-year terms: W. James
Farrell, Jack D. Michaels, Michael S. Plunkett, Herman J.
Schmidt.
PROPOSAL NO. 2--ADOPTION OF 1995 STOCK-BASED COMPENSATION PLAN.
The Board of Directors knows of no other matters that may properly be, or that
are likely to be, brought before the meeting. However, if any other matters are
properly brought before the meeting or any adjournment thereof, the proxies
will vote on such matters in their discretion.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND
RETURN THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFICALLY DIRECTED
HEREIN, OR, WHEN NO DIRECTION IS GIVEN, FOR BOTH PROPOSALS.
- --------------------------------------------------------------------------------
PROPOSAL NO. 1--ELECTION OF DIRECTORS (SEE REVERSE) For Withheld
[_] [_]
Vote withheld from the following nominee(s):
PROPOSAL NO. 2--1995 STOCK-BASED COMPENSATION PLAN For Against Abstain
[_] [_] [_]
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN, AND MAIL IN ENCLOSED RETURN ENVELOPE.
Dated _________________________________, 1995
------------------------------------------------
------------------------------------------------
Signature(s) of Shareholder(s)
[_] Individual [_] Corporation [_] Partnership
[_] Other ____________________________
(Please date this proxy and sign exactly as your
name or names appear hereon. If you sign as
attorney, executor, administrator, trustee,
guardian, custodian, or corporate official,
please give your full title in such capacity.)
