<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:
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(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
TO THE OWNERS OF COMMON STOCK
OF HON INDUSTRIES Inc.:
The 1996 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 14, 1996, beginning at 10:30 a.m., in
order:
1. To elect each of three Directors for a term of three years.
2. 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 15, 1996, of the
Company's Common Stock, par value $1.00 per share, are entitled to vote at the
meeting.
You are encouraged to attend the meeting. We want to keep you informed of the
Company's activities and progress.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ A. Mosby Harvey, Jr.
A. Mosby Harvey, Jr.
Vice President, General Counsel and Secretary
March 29, 1996
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>
HON INDUSTRIES Inc.
414 EAST THIRD STREET
MUSCATINE, IOWA 52761
March 29, 1996
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1996
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 14, 1996, at the Holiday Inn in Muscatine, Iowa, and
at any adjournment or postponement thereof (the "Annual Meeting").
There were 30,290,764 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 15, 1996 ("Record Date"). This Proxy Statement and the
enclosed proxy card will be first mailed on or about March 29, 1996, 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.
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 a total number of shares 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.
ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, three 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 three
nominees listed on the following page. The named proxies intend to vote for the
election of the three 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.
2
<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 15, 1996
---------------------------------
AMOUNT AND NATURE OF
PRINCIPAL OCCUPATION AND NOMINATED FOR BENEFICIAL OWNERSHIP PERCENT OF
BUSINESS EXPERIENCE DURING DIRECTOR SINCE TERM EXPIRING CLASS
NOMINEES THE PAST FIVE YEARS AGE
<S> <C> <C> <C> <C> <C> <C>
Robert L. Katz (1) President, 1953- , 70 1995 1999 1,000 *
Robert L. Katz and
Associates (consultants on
corporate strategy).
Celeste C. Michalski Vice President-Collections 53 1993 1999 1,598 *
- Residence and Business,
November 1995- , and
Managing Director,
Productivity and Process
Improvement, July
1995-November 1995,
Telecommunications Group,
NYNEX (telecommunications,
directory publishing, and
information delivery
services); and Assistant
Comptroller, 1994-June
1995, NYNEX; Comptroller,
1993-94, New York
Telephone, largest
operating company of NYNEX;
Vice President and
Controller, 1988-93,
Gencorp, Inc.
Richard H. Vice Chairman, 1979- , 63 1964 1999 2,621,790(2)(3) 8.66%
Stanley 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).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
INCUMBENT DIRECTORS
COMMON STOCK
AS OF MARCH 15, 1996
--------------------
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>
W. James President and CEO, September 53 1988 1998 1,000 *
Farrell 1995- , Director,
September 1995- ,
President, 1994-95, 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- , 58 1990 1998 78,610 *
Michaels (4) President, 1990-91, HON
INDUSTRIES Inc.
Michael S. Senior Vice President, 58 1980 1998 6,117 *
Plunkett (5) Engineering, Technology &
Human Resources,
1986- , and Director,
1986-93, Deere & Company
(mobile power machinery).
Herman J. Retired Vice Chairman of 78 1980 1998 2,398 *
Schmidt (6) Mobil Oil Corporation.
Director of various
corporations.
Robert W. Counsel, Baker & McKenzie; 58 1994 1997 1,998 *
Cox 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. Chairman, 1984- , 72 1958 1997 1,781,361(2)(7) 5.88%
Howe President, 1964-90, CEO,
1979-91, HON INDUSTRIES Inc.
Lee Liu (8) Chairman, President and CEO, 62 1990 1997 1,748(2) *
1993- , President and CEO,
1991-93, Director, 1991-93,
IES Industries Inc.;
Chairman, President and CEO,
1994- , IES Utilities;
Officer, 1990-93, various
affiliates or predecessor
companies to IES Industries
Inc. and IES Utilities
(energy, transportation, and
telecommunications).
Lorne R. Retired Executive Vice 62 1994 1997 3,298 *
Waxlax (9) President, Diversified
Group, of The Gillette
Company (marketer and
manufacturer of personal
care and use products).
Director of various
corporations.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 15, 1996
--------------------
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>
Jan K. Ver
Hagen (10) President and COO, October 58 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.
NOTES
(1) Dr. Katz is also a director of Newell Co. and Inmac Corp., each of which
has a class of securities registered with the Securities and Exchange
Commission. See "Certain Relationships and Related Transactions" on page
8.
(2) Figures include shares held by or for the benefit of the spouse and/or
children of Mr. Howe, 1,100,650; Mr. Liu, 550; and Mr. Stanley, 89,736.
Each Director disclaims "beneficial ownership" of such respective shares.
(3) 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 2,380,052 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) Mr. Michaels is also a director of Huffy Corporation, which has a class of
securities registered with the Securities and Exchange Commission.
(5) 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.
(6) Mr. Schmidt is also a director of H.J. Heinz Co. and MAPCO Inc., each of
which has a class of securities registered with the Securities and Exchange
Commission.
(7) Includes 181,528 shares owned by The Howe Foundation. Mr. Howe is
President 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."
(8) 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.
(9) Mr. Waxlax is also a director of Amtrol Inc., Clean Harbors Inc., Quaker
State Corporation, and Waban, Inc., each of which has a class of securities
registered with the Securities and Exchange Commission.
5
<PAGE>
(10) Mr. Ver Hagen is also a director of Wolverine Tube, Inc., which has a class
of securities registered with the Securitites and Exchange Commission. He
has declined to stand for re-election in order to pursue other interests.
At the time of the Shareholders' Meeting, the Board of Directors is
expected to amend the Company's By-laws to reduce the total number of
Directors from 12 to 11.
BENEFICIAL OWNERS OF COMMON STOCK
The following table sets forth information known as of March 15, 1996, 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. For
information regarding Director stock ownership, see "Election of Directors."
<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 12.16%
One State Farm Plaza
Bloomington, Illinois 61701
Bandag, Incorporated 2,395,000 7.91%
Bandag Center
Muscatine, Iowa 52761
The Stanley Foundation 2,380,052(1) 7.86%
216 Sycamore Street
Muscatine, Iowa 52761
Stanley M. Howe 1,781,361(2) 5.88%
1124 Oakland Drive
Muscatine, Iowa 52761
Terrance L. and Loretta B. Mealy 1,646,504 5.44%
301 East Second Street
Muscatine, Iowa 52761
George J. Koenigsaecker III 31,617 *
E. William Housh 4,933 *
David C. Stuebe -0- *
All Directors and Officers as a Group 398,755(3) 1.32%
- ------------------
</TABLE>
* Less than 1 percent.
6
<PAGE>
NOTES
(1) Richard H. Stanley, a Director of the Company, is President and a director
of The Stanley Foundation. As such, he shares voting and dispositive
powers regarding the shares owned by the Foundation, of which he disclaims
"beneficial ownership."
(2) Includes 181,528 shares owned by The Howe Foundation. Mr. Howe, a Director
and Chairman of the Company, is President of The Howe Foundation. As such,
he shares voting and dispositive powers regarding the shares owned by the
Foundation, of which he disclaims "beneficial ownership." Includes shares
held by or for the benefit of the spouse and/or children of Mr. Howe, as to
which such Director disclaims "beneficial ownership" (See Note (2) on page
5).
(3) After elimination of duplication caused by shared voting or dispositive
powers of certain stock listed in the above table. Includes shares held by
or for the benefit of the spouses and/or children of Messrs. Liu and
Stanley, respectively, as to which each such Director disclaims "beneficial
ownership" (See Note (2) on page 5).
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 30, 1995,
all Section 16(a) filing requirements applicable to its officers, Directors, and
greater than ten percent beneficial owners were complied with, except Mr. Liu
inadvertently failed to timely file one report on Form 4 in March 1995 covering
separate transactions in Company securities held by him and his wife.
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. Each Director has
attended at least 75 percent of all committee and Board meetings.
The Audit Committee consists of Richard H. Stanley, Celeste C. Michalski, and
Jan K. Ver Hagen, and it met four times during the last fiscal year. The
Committee recommends selection of independent auditors and verifies auditors'
performance, fees, and audit plans. 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 Robert W. Cox, W.
James Farrell, and Lee Liu, 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 Lorne R.
Waxlax, Robert L. Katz, Michael S. Plunkett, and Herman J. Schmidt, 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 an annual retainer of $20,000, of which $2,000
must be in the form of the Company's Common Stock. At the Director's election,
additional retainer fees may be taken in the form of Company Common Stock. All
shares of Company Common Stock issued in lieu of cash Director's fees are issued
pursuant to the Company's 1995 Stock-Based Compensation Plan. Each Director
also receives $1,000 for each regular or special Board meeting, $1,000 for each
special committee meeting, and $500 for each regular meeting of a committee of
which the Director is a member. Directors also receive
7
<PAGE>
an additional $1,000 for each meeting attended if they are required to travel
six hours or more on a round trip basis. Each Director receives a $500 fee for
each telephone conference meeting. Directors are also paid travel and related
expenses for meetings attended.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 15, 1995, Robert L. Katz and Associates, of which Dr. Katz is
President, entered into a one-year agreement with the Company to provide certain
consulting services for $5,000 per month. The agreement also provides for
reimbursement of travel expenses and other reasonable out-of-pocket costs
incurred on the Company's behalf and is automatically renewed each year unless
notice of cancellation is given no later than 90 days prior to the end of the
one-year term. In 1995, the Company paid Robert L. Katz and Associates a total
consulting fee of $5,000 for services rendered.
REQUIRED VOTE
Approval of the election of the above nominees as Directors requires the
affirmative vote of the holders of two-thirds of the Shares present or
represented and entitled to vote at the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES AS DIRECTORS. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to, earned by, or paid
to the Company's CEO and the other four most highly compensated executive
officers of the Company for the years indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
------------ ------------
Name and Fiscal Other Restricted All Other
Principal Year Salary/1/ Bonus/2/ Annual Stock LTIP Compen-
Position Compen- Awards/4/ Payouts/5/ sation/6/
sation/3/
($) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Jack D. Michaels 1995 413,333 128,000 17,364 283,592 92,240
President and CEO 1994 385,000 327,000 20,442 318,022 16,745
1993 366,667 285,000 12,830 23,017
George J. 1995 235,405 69,000 8,452 51,163
Koenigsaecker III 1994 227,000 150,000 18,390 15,937
President, The HON Company 1993 221,001 109,000 9,031 7,610
David C. Stuebe 1995 206,668 100,000 900
Vice President and CFO 1994 50,000 25,000 73,484 144
E. William Housh 1995 204,022 41,000 19,185 36,862
Senior Vice President, 1994 201,433 108,000 31,955 16,993
Strategic Alliance 1993 193,114 96,000 51,490 15,159 24,520
Stanley M. Howe 1995 150,000 55,000 59,320 285,581 14,648
Chairman 1994 150,000 126,000 33,778 285,581 16,980
1993 166,667 105,000 10,609 285,581 23,321
- --------------------------
</TABLE>
NOTES
/1/ These figures and others on this Table include amounts deferred, if any, in
respect of fiscal 1995, 1994, and 1993 compensation but do not include any
interest that may have accrued on any deferred compensation under the Company's
Salary Deferral Plan. The Plan permits an executive to elect to defer any
combination of salary, bonus, or LTIP income. The Plan provides for interest to
be paid on any deferred amounts at an annual rate, compounded quarterly, equal
to one-half percent below the prime rate of The Northern Trust Company, Chicago,
Illinois, effective as of the first business day of the year.
/2/ The figures for bonuses reflect the awards of executive bonuses for the
relevant fiscal years under the Company's Executive Bonus Plan. The executive
bonuses are payable in three installments over three fiscal years, subject
generally to a participant's continued employment with the Company at the time
of payment. Mr. Stuebe became employed by the Company in fiscal 1994. The
amounts included for Mr. Stuebe reflect executive bonus payments of $25,000 and
$100,000 for fiscal 1994 and 1995, respectively, that the Company agreed to pay
in connection with his acceptance of employment.
/3/ The figures in this column reflect cash profit-sharing payments; one-time,
lump-sum salary payments; interest on LTIP Payouts; and relocation expenses. In
the 1995, 1994, and 1993 fiscal years, the Company made the following payments
under the Cash Profit-Sharing Plan: Mr. Michaels - $8,572; $9,368; $12,830; Mr.
Koenigsaecker - $8,452; $9,450; $4,510; Mr. Housh - $8,454; $9,450; $13,061; and
Mr. Howe - $8,572; $9,368; $10,609. As a new employee, Mr. Stuebe was not
eligible for, and
9
<PAGE>
did not receive any cash profit-sharing payments in fiscal 1994 or 1995. The
Company's Cash Profit-Sharing Plan is generally applicable to all members. Cash
profit-sharing is earned on a non-fiscal year cycle. One-time, lump-sum salary
payments were made in 1994 in lieu of permanent salary increases, as follows:
Mr. Michaels - $7,500; Mr. Koenigsaecker - $8,940; Mr. Stuebe - $-0-; Mr. Housh
- - $6,050; and Mr. Howe - $-0-. Interest payments for fiscal years 1995 and 1994
on LTIP Payouts to Mr. Michaels were $8,792 and $3,574, and for Mr. Howe were
$50,748 and $24,410, respectively. The Company made taxable relocation expense
reimbursements of $10,731; $16,455; and $38,429 in the 1995, 1994, and 1993
fiscal years for Mr. Housh; a reimbursement of $73,484 in the 1994 fiscal year
for Mr. Stuebe; and a reimbursement of $4,521 in the 1993 fiscal year for Mr.
Koenigsaecker.
/4/ In the 1993 fiscal year, Mr. Michaels received $3,400 in lieu of, but in
rate and amount equal to, dividends on the unvested portion of his 1990
restricted stock award, the final portion of which vested during the 1993 fiscal
year. In the 1995, 1994, and 1993 fiscal years, Mr. Koenigsaecker received
$225; $1,031; and $1,688 in lieu of, but in rate and amount equal to, dividends
on the unvested portion of his 1992 restricted stock award, the final portion of
which vested in the 1995 fiscal year. No restricted stock awards to any
executive officer are currently outstanding.
/5/ These payouts vested in the designated fiscal periods. The 1995 LTIP payout
for Mr. Michaels represents cumulative appreciation over a five-year period
starting January 1, 1991 on 200,000 units of permanent capital of HON INDUSTRIES
Inc., and at the direction of the Board of Directors has been wholly paid in
fiscal 1996. The 1994 payout for Mr. Michaels represents cumulative
appreciation over a five-year period starting January 1, 1990 on 200,000 units
of permanent capital of HON INDUSTRIES Inc., and at the direction of the Board
of Directors, was wholly paid in 1995 and 1996. 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 was paid in 1995, and
one-third has been paid in 1996. See discussion of Executive Long-Term
Incentive Compensation Plan on page 13 hereof.
/6/ 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 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 1995, 1994,
and 1993 fiscal years were as follows: Mr. Michaels - $3,003; $3,007; $4,690;
Mr. Koenigsaecker - $3,003; $3,007; $1,485; Mr. Housh - $3,003; $3,007; $4,690;
and Mr. Howe - $3,003; $3,007; $4,690. The amounts paid under the HON
INDUSTRIES Inc. Profit-Sharing Retirement Plan in the 1995, 1994, and 1993
fiscal years were as follows: Mr. Michaels - $11,645; $12,838; $17,978; Mr.
Koenigsaecker - $11,331; $12,582; $6,009; Mr. Housh - $11,331; $12,582; $18,980;
and Mr. Howe - $11,645; $12,838; $17,978. The dollar value of Company-paid
life insurance under the HON INDUSTRIES Inc. Flexible Benefits Plan in the 1995,
1994, and 1993 fiscal years were as follows: Mr. Michaels - $900; $900; $349;
Mr. Koenigsaecker - $576; $348; $116; Mr. Stuebe - $900; $ 144; $ -0-; Mr. Housh
- - $1,404; $1,404; $850; and Mr. Howe - $-0-; $1,135; $653. This column also
includes amounts equal to the value of Company Common Stock paid in respect of
the 1995 fiscal year under the Company's ERISA Supplemental Retirement Plan, as
follows: Mr. Michaels - $78,692; Mr. Koenigsaecker - $36,253; Mr. Stuebe - $-0-;
Mr. Housh - $21,124; and Mr. Howe - $-0-. Under this Plan, certain executives
receive certain benefits in the form of Company Common Stock equal in value to
benefits they would have received under certain Company ERISA plans and the
Company's Cash Profit-Sharing Plan but for a $150,000 earnings cap. The number
of shares of Company Common Stock to be paid is determined by dividing the value
of such benefits by the average of the closing prices of a share of the
Company's Common Stock for each trading day of the last calendar quarter of the
most recent calendar year immediately preceding the date of payment, with cash
payable in lieu of any fractional share. The common stock is issued under the
Company's 1995 Stock-Based Compensation Plan and may not be transferred while
the recipient remains employed by the Company.
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Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Performance
Graph and the Report of the Human Resources and Compensation Committee of the
Board of Directors of the Company on Executive Compensation shall not be
incorporated by reference into any such filings.
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
S & P 500 INDEX, OFFICE FURNITURE INDUSTRY GROUP AND THE COMPANY
TOTAL RETURN
STOCK PRICE PLUS REINVESTED DIVIDENDS
[PERFORMANCE GRAPH APPEARS HERE]
HONI S&P OFIG*
------------------------------------
12/28/90 100.00 100.00 100.00
12/27/91 135.50 126.31 122.82
12/31/92 168.47 131.95 143.30
12/31/93 196.40 141.25 201.30
12/30/94 197.67 139.08 173.61
12/29/95 174.72 186.52 185.89
/*/The Office Furniture Industry Group is a composite peer index constructed by
the Company and weighted by market capitalization, which includes the following
companies, but from which the Company has been excluded: Herman Miller, Inc.;
Kimball International, Inc.; La-Z-Boy Chair Co.; Shelby Williams Industries,
Inc.; and TAB Products Company.
The total return assumes $100 invested in the Company's Common Stock on December
28, 1990, and in each of S&P 500 Index and Office Furniture Industry Group
Stocks on December 31, 1990. It includes reinvestment of dividends and is based
on 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.
The comparative performance of the Company's Common Stock against the indexes as
depicted in this 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 this graph should be considered as the
sole indicator of Company performance.
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REPORT OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF THE COMPANY
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. In discharging
its responsibilities, the Committee utilizes comparative compensation surveys
developed by independent professional organizations. These surveys do not
necessarily include the companies used in the peer index in the Performance
Graph. The Committee believes that a broad basis for comparison, i.e., durable
goods manufacturing companies of similar size, provides a better basis for
salary determination since the peer group itself does not include several of the
Company's direct competitors that are privately held.
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
adopted the following practice: if payouts to any individual executive under the
Company's programs are affected by this limitation, then the Committee will in
the exercise of its discretion defer making payment of certain incentive
compensation to future years. 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 1995.
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 11 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
reviews are conducted 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.
Executive Bonus Plan. For fiscal 1995, there were 53 participants 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
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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 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 Vice President and CFO and
operating company presidents, 50 percent of base salary for any other officer,
or 25 percent of base salary for any other participant. In 1995, the awards
earned by executive officers under the Bonus Plan ranged from 14.5 percent to
47.6 percent of base salary.
Each award is paid in three installments over three fiscal 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. In
lieu of cash payments, executives may elect to take shares of the Company's
Common Stock pursuant to the terms of the 1995 Stock-Based Compensation Plan.
Executive Long-Term Incentive Compensation Plan. There are currently 14
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 unless another period is designated by the Board of Directors,
in the value of units of permanent capital of the Company and/or one of its
operating companies. Appreciation is measured on a net cumulative basis over
the award period. Under the LTIP, 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. Each unit of permanent capital is equal to one dollar. 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. Maximum amounts are not
specified, 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. The ultimate value of an award
payout, which is equal to the net cumulative appreciation, if any, on units of
permanent capital, is dependent on the financial performance of the Company
and/or the applicable business unit.
Rights to award payouts become vested, unless participant's employment has been
terminated previously, 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 three fiscal years unless the Board of
Directors approves a different payout schedule. In lieu of payments, executives
may elect to receive shares of the Company's Common Stock pursuant to the terms
of the 1995 Stock-Based Compensation Plan.
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.
Although net sales reached an all-time high in the 1995 fiscal year, the Company
experienced a 24.1 percent decrease in net income and a 22 percent decrease in
earnings per share. The Company's average return on average shareholders equity
was 20 percent in fiscal 1995 compared to 29 percent for fiscal 1994.
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Under the Bonus Plan, Mr. Michaels received an award of $128,000 in respect of
fiscal 1995 compared to an award of $327,000 for fiscal 1994, reflecting the
decline in Company earnings offset by Mr. Michaels' contributions to the
Company's sales performance in fiscal 1995, and his leadership in strategically
positioning the Company for profitable growth in the future.
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
Robert W. Cox, Chairperson
W. James Farrell
Lee Liu
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 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, or
upon the occurrence of certain business combinations involving the Company.
Upon a change in control, a two-year employment contract between the Company and
each such executive becomes effective, and all his or her benefits become vested
under Company plans. In addition, the executive becomes entitled to certain
benefits if, at any time within two years of the change in control, any of the
following occurs: (i) employment is terminated by the Company for any reason
other than cause or disability of the executive, or (ii) employment is
terminated by the executive for good reason, as such terms are defined in the
agreement. In such circumstances, the executive is entitled to receive his or
her annual salary through the date of termination, a bonus equal to the average
of the executive's annual bonuses for the prior two years prorated based on the
length of employment during the year in which termination occurs, and a
severance payment equal to two times the sum of (i) the executive's annual base
salary and (ii) the average of the executive's annual bonuses for the prior two
years. The executive will also be entitled to a continuation of certain
employee benefits for two years, or longer if comparable benefits are not
otherwise available to the executive. The executive will be entitled to receive
reimbursement for any legal fees and expenses, plus interest thereon, that may
be incurred in enforcing or defending his or her employment agreement. All of
the executive officers named in the Summary Compensation Table have executed
such agreements.
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 1997 ANNUAL MEETING
Proposals by Shareholders intended to be presented at the 1997 Annual Meeting
must be received at the Company's executive offices no later than November 28,
1996, to be included in the proxy statement and proxy form.
14
<PAGE>
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 15, 1996, unless
otherwise noted.
A. Mosby Harvey, Jr.
Vice President, General Counsel and Secretary
March 29, 1996
THE ANNUAL REPORT TO SHAREHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 30, 1995, 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.
15
<PAGE>
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HON INDUSTRIES INC.
COMMON STOCK PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS ON MAY 14, 1996.
The undersigned acknowledges receipt of a Notice of Annual Meeting and Proxy
Statement dated March 29, 1996, and appoints Stanley M. Howe and Jack D.
Michaels, 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 14, 1996, 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--ELECTION OF DIRECTORS--NOMINEES:
For three-year terms: Robert L. Katz, Celeste C. Michalski, and
Richard H. Stanley
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.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFICALLY DIRECTED
HEREIN. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
------------------------------------------------------------------------
For Withheld
PROPOSAL--ELECTION OF DIRECTORS (SEE REVERSE) [_] [_]
For, except vote withheld from the following
nominee(s): ______________________________
------------------------------------------------------------------------
PLEASE DATE, SIGN, AND MAIL IN ENCLOSED RETURN ENVELOPE.
Dated ________________________________, 1996
________________________________________________
________________________________________________
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.)
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