<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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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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<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 1999 Annual Meeting of Shareholders of HON INDUSTRIES Inc. (the "Company")
will be held at the Holiday Inn, Highways 61 and 38 North, Muscatine, Iowa, on
Tuesday, May 11, 1999, beginning at 10:30 a.m., in order:
1. To elect four Directors, each for a term of three years.
2. To amend the Articles of Incorporation to increase the authorized shares
of the Company's Preferred Stock from 1,000,000 to 2,000,000.
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 12, 1999, 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,
James I. Johnson
Vice President, General Counsel and Secretary
March 26, 1999
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 26, 1999
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1999
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 11, 1999, at the Holiday Inn in Muscatine, Iowa, and
at any adjournment or postponement thereof (the "Annual Meeting").
There were shares of the Company's common stock, par value $1.00 per
share (the "Common Stock"), outstanding (the "Outstanding Shares") as of the
close of business on March 12, 1999 ("Record Date"). Shareholders shall be
entitled to cast one vote per share for election of Directors and one vote per
share on all other matters.
This Proxy Statement and the enclosed proxy card will be first mailed on or
about March 26, 1999, to the holders of shares on the Record Date (the
"Shareholders" or, individually, "Shareholder").
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 to which they
pertain and, thus, will not be counted in determining whether the election of
Directors or the amendment to the Articles of Incorporation to increase the
authorized shares of the Company's preferred stock, par value $1.00 per share
(the "Preferred Stock"), from 1,000,000 to 2,000,000 has been approved by the
requisite vote of Shareholders.
Except as described below, the affirmative vote of the holders of two-thirds of
the total Outstanding Shares entitled to vote is required to adopt any motion or
resolution or to take any action at any meeting of shareholders. The affirmative
vote of the holders of a majority of the total Outstanding Shares entitled to
vote is required and will be sufficient to take any of the following actions
submitted to a vote of shareholders: (1) any amendment to the Company's Articles
of Incorporation which has been approved or recommended by the Board of
Directors, other than certain such amendments that would amend, limit or
conflict with certain provisions governing shareholder voting requirements and
the Company's Board of Directors (including removal and election); (2) the
election of a class of Directors at any annual meeting of shareholders if (a) at
the annual meeting of shareholders in the third preceding year, an election of
such class was held but no Director of such class was elected because no
candidate received the requisite two-thirds vote, and (b) the term of such class
of Directors was extended for an additional term of three years; and (3) any
other motion, resolution or action which has been approved or recommended by the
Board of Directors of the Company (other than any such motion, resolution or
action regarding (a) the election or removal of Directors, (b) amendment of
certain portions of the Articles of Incorporation, (c) any Corporate Combination
(as defined in the Company's Articles of Incorporation), (d) any partial or
complete liquidation of the Company, (e) any liquidating dividend or
distribution or (f) any dissolution of the Company).
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, four Directors are to be elected to hold
office each for a term of three years and until their successors are elected and
shall qualify. The Board of Directors recommends the election of the four
nominees listed below. 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.
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 12, 1999
------------------------
AMOUNT AND
NATURE OF PERCENT
PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR NOMINATED FOR BENEFICIAL OF
NOMINEES EXPERIENCE DURING THE PAST FIVE YEARS AGE SINCE TERM EXPIRING OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
Cheryl A. Executive Vice President and Chief 45 -- 2002 -0- *
Francis Financial Officer, since 1995, R.R.
Donnelley & Sons Company (provider of
printing and related services to the
merchandising, magazine, book, directory
and financial markets); Vice President
and Treasurer, 1993-1995, FMC
Corporation (producer of machinery and
chemicals).
Robert L. Katz President, since 1953, Robert L. Katz 73 1995 2002 10,507 *
(1) and Associates (consultants on corporate
strategy); President, since 1975, CalTex
Investment Management Co. (venture
capital firm).
Richard H. Vice Chairman, since 1979, HON 66 1964 2002 3,365,565(3)(4) __%
Stanley (2) INDUSTRIES Inc.; Chairman, since 1998,
and President, 1986-1998, SC Companies,
Inc. (private holding company with
subsidiaries offering engineering,
environmental, and design-build
services); Chairman, since 1984, Stanley
Consultants, Inc. (international
consultants engineering, architecture,
planning and management).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 12, 1999
------------------------
AMOUNT AND
NATURE OF PERCENT
PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR NOMINATED FOR BENEFICIAL OF
NOMINEES EXPERIENCE DURING THE PAST FIVE YEARS AGE SINCE TERM EXPIRING OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
Brian E. President, Xerox Technology Enterprises, 51 1998 2002 3,643 *
Stern (5) since 1999; Senior Vice President of
Xerox Corporation 1996-1999; President,
Office Document Products Group,
1996-1999, and Corporate Vice President
of Xerox Corporation and President,
Personal Document Products Division,
1994-1996, Xerox Corporation (developer,
marketer, manufacturer, financier and
servicer of document processing products
and services).
</TABLE>
INCUMBENT DIRECTORS
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 12, 1999
------------------------
AMOUNT AND
NATURE OF PERCENT
CONTINUING PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR BENEFICIAL OF
DIRECTORS EXPERIENCE DURING THE PAST FIVE YEARS AGE SINCE TERM EXPIRES OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
Robert W. Chairman Emeritus, Baker & McKenzie (an 61 1994 2000 5,950 *
Cox (6) international law firm); Chairman of the
Policy Committee, 1992-1994; Chairman of
the Executive Committee, 1984-1992,
Baker & McKenzie.
Stanley M. Howe Chairman Emeritus, since 1996, Chairman, 75 1958 2000 2,931,834(3)(7) __%
1984-1996, President, 1964-1990, Chief
Executive Officer, 1979-1991, HON
INDUSTRIES Inc.
Lorne R. Waxlax Executive Vice President, 1985-1993, The 65 1994 2000 12,924 *
(8) Gillette Company (marketer and
manufacturer of personal care and use
products). Director of various
corporations.
Jack D. Chairman of the Board, since 1996, Chief 61 1990 2001 202,348(10) *
Michaels (9) Executive Officer, since 1991, President
since 1990, HON INDUSTRIES Inc.
W August President and Chief Executive Officer, 58 1998 2001 890 *
Hillenbrand since 1989, and Director, since 1972,
(11) Hillenbrand Industries, Inc. (marketer
and manufacturer of health care, funeral
service, and high security products,
services and support programs).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
AS OF MARCH 12, 1999
------------------------
AMOUNT AND
NATURE OF PERCENT
CONTINUING PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR BENEFICIAL OF
DIRECTORS EXPERIENCE DURING THE PAST FIVE YEARS AGE SINCE TERM EXPIRES OWNERSHIP CLASS
<S> <C> <C> <C> <C> <C> <C>
Moe S. Nozari Group Vice President, Consumer and 56 1998 2001 911 *
Office Markets Group, since 1996;
Division Vice President, Consumer
Markets, 1993-1996, 3M (marketer and
manufacturer of consumer, industrial and
life science products).
Frank S. Ptak Vice Chairman, since 1996, Executive 55 1998 2001 1,000 *
Vice President - Global Automotive and
Industrial Components, 1992-1996,
Illinois Tool Works Inc. (highly
engineered products and systems).
Celeste C. Adviser/Consultant, since 1997; Managing 56 1993 1999 6,871 *
Michalski (12) Director, Finance, 1996-1997,
Vice President-Collections -- Residence
and Business, 1995-1996, and Managing
Director, Productivity and Process
Improvement, 1995, Telecommunications
Group, NYNEX (telecommunications,
directory publishing and information
delivery services); and Assistant
Comptroller, 1994-1995, NYNEX.
</TABLE>
- ------------------------
* Less than 1 percent.
NOTES
(1) Dr. Katz is also a director of Newell Co., which has a class of securities
registered with the Securities and Exchange Commission. See "Certain
Relationships and Related Transactions."
(2) Mr. Stanley also serves as a Director of Dover Resources, Inc., a subsidiary
of Dover Corporation, a diversified manufacturer of industrial products.
(3) Figures include shares held by or for the benefit of certain family members
of Mr. Howe, 664,014 and Mr. Stanley, 185,472. Each Director disclaims
"beneficial ownership" of such respective shares.
(4) Includes 16,144 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 1,513,104 shares owned by The Stanley Foundation,
26,176 shares owned by E & M Charities, and 1,392,500 shares owned by the
Holthues Trust. Mr. Stanley is Chairman, President and a director of The
Stanley Foundation, a director of E & M Charities, and President and a
director of the Holthues Trust and, as such, shares voting and dispositive
powers as to shares held by such entities, of which he disclaims "beneficial
ownership."
(5) Mr. Stern is also a director of New England Business Service, Inc., which
has a class of securities registered with the Securities and Exchange
Commission.
(6) Mr. Cox is also a director of Carey International, Inc. and Homebase, Inc.,
each of which has a class of securities registered with the Securities and
Exchange Commission.
<PAGE>
(7) Includes 394,632 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. Mr. Howe disclaims "beneficial ownership" of
such shares held by the Foundation.
(8) Mr. Waxlax is also a director of Clean Harbors Inc., Pennzoil-Quaker State
Company, BJ's Wholesale Club Inc. and Homebase Inc., each of which has a
class of securities registered with the Securities and Exchange Commission.
(9) Mr. Michaels is also a director of Huffy Corporation and Snap-On
Incorporated, each of which has a class of securities registered with the
Securities and Exchange Commission.
(10) Includes 136,000 shares owned by Jachris L.L.C. Mr. Michaels is co-manager
of Jachris L.L.C., and, as such, shares voting and dispositive powers as to
the shares held by such entity. Mr. Michaels disclaims "beneficial
ownership" of such shares held by the corporation.
(11) Mr. Hillenbrand is also a director of DPL Inc., which is the parent company
of The Dayton Power and Light Company, and has a class of securities
registered with the Securities and Exchange Commission.
(12) Ms. Michalski is not standing for re-election as a Director of the Company.
BENEFICIAL OWNERS OF COMMON STOCK
The following table sets forth information known as of March 12, 1999, 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> <C>
State Farm Insurance Companies 7,366,400 __%
One State Farm Plaza
Bloomington, Illinois 61701
Terrence L. and Loretta B. Mealy 3,434,008 __%
301 East Second Street
Muscatine, Iowa 52761
George J. Koenigsaecker III 97,717 *
David C. Stuebe 8,230 *
Thomas K. Miller 14,140 *
James I. Johnson 115 *
All Directors and Officers as a Group (1) 6,696,282 __%
</TABLE>
- ------------------------
* Less than 1 percent.
NOTES
(1) Includes shares held by or for the benefit of certain family members of Mr.
Howe (664,014), Mr. Michaels (136,000) and Mr. Stanley (185,472), as to
which they disclaim "beneficial ownership." See Note (3) and Note (10) of
"Proposal 1 No. 1--Election of Directors."
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and officers, and persons who own more than 10 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 Forms 5 were required, during the fiscal year ended January 2, 1999,
all Section 16(a) filing requirements applicable to its officers, Directors, and
greater than 10 percent beneficial owners were complied with.
BOARD MEETINGS, COMMITTEES, AND FEES
The Board of Directors held four regular meetings, two special meetings and two
telephone meetings during the last fiscal year. The Board has three standing
committees which deal with audit matters, compensation, and corporate
governance, including nominations to the Board. Each Director has attended at
least 75 percent of all committee and Board meetings during the last fiscal
year.
The Audit Committee consists of Celeste C. Michalski, Robert L. Katz, Frank S.
Ptak, and Brian E. Stern. 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 Lorne R. Waxlax,
W August Hillenbrand, and Richard H. Stanley. 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 Robert W.
Cox, Stanley M. Howe, and Moe S. Nozari. 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. See "Deadline For Shareholder Proposals For
2000 Annual Meeting."
Each non-employee Director receives an annual retainer of $20,000. Non-employee
Directors can acquire Common Stock in several ways. Under the amended and
restated 1997 Equity Plan for Non-Employee Directors of HON INDUSTRIES Inc. (the
"Director Plan"), Directors are entitled to receive up to 100 percent of their
retainers and other fees in the form of shares of Common Stock. In addition,
each non-employee Director is eligible to receive awards of options to purchase
Common Stock of the Company, restricted stock or common stock grants, or any
combination thereof, or such amounts as the Board of Directors may authorize
under the Director Plan. In 1998, each non-employee Director was granted 500
shares of Common Stock of the Company, except Stanley M. Howe, who was granted
300 shares (prorated for the portion of the year after which Mr. Howe became a
non-employee Director), under the Director Plan. All shares of Common Stock
issued in lieu of cash retainer amounts or other Directors' fees (as described
below) have heretofore been issued pursuant to the Company's amended and
restated 1995 Stock-Based Compensation Plan (the "Restated Stock-Based
Compensation Plan") or the Director 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 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 Board or committee meeting held by
telephone conference or meetings attended at the request of the Chairman of the
Board. Directors are also paid travel and related expenses for meetings
attended. Directors who are employees of the Corporation do not receive
additional compensation for service on the Board of Directors.
<PAGE>
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. The agreement has been renewed for 1999. In 1998, the Company
paid Robert L. Katz and Associates a total consulting fee of $60,000, plus
$14,200.03 of expense reimbursement, for services rendered.
REQUIRED VOTE
Approval of the election of the above nominees as Directors requires the
affirmative vote of the holders of two-thirds of the total Outstanding Shares
entitled to vote at the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES AS DIRECTORS. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
<PAGE>
EXECUTIVE COMPENSATION
THE FOLLOWING TABLE SETS FORTH THE COMPENSATION AWARDED TO, EARNED BY, OR PAID
TO THE COMPANY'S CHIEF EXECUTIVE OFFICER AND THE OTHER FOUR MOST HIGHLY
COMPENSATED EXECUTIVE OFFICERS OF THE COMPANY (DETERMINED BY REFERENCE TO 1998)
FOR THE YEARS INDICATED:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------------------------------
COMPENSATION AWARDS PAYOUTS
--------------------------------- -------------------------- -----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL FISCAL SALARY(1) BONUS(2) SATION(3) AWARDS(4) SARS(5) PAYOUTS(6) SATION(7)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack D. Michaels 1998 493,000 490,442 9,848 809,965 203,138
Chairman, President and 1997 471,667 490,196 16,836 45,000 465,283 234,368
Chief Executive Officer 1996 448,333 460,000 10,852 152,684 135,879
George J. 1998 307,270 238,095 8,344 98,800 89,240
Koenigsaecker III 1997 293,333 255,128 13,347 30,000 323,309 106,568
President, The HON 1996 258,611 210,000 7,846 58,708
Company
David C. Stuebe 1998 240,333 173,974 9,848 72,551
Vice President and 1997 227,333 174,030 10,632 15,000 82,639
Chief Financial Officer 1996 216,667 165,000 10,430 38,692
Thomas K. Miller 1998 156,083 71,296 24,796 17,160 35,234
Vice President, 1997 152,333 71,572 15,248 7,000 39,628
Marketing and 1996 149,766 66,000 11,064 34,161
International
James I. Johnson 1998 161,200 73,672 26,548 576
Vice President, General 1997 51,669 8,000
Counsel and Secretary(8) 1996
</TABLE>
- ------------------------
NOTES
(1) These figures and others on this Table include amounts deferred, if any, in
respect of fiscal 1998, 1997, and 1996 compensation but do not include any
interest that may have accrued on any deferred compensation under the
Company's Salary Deferral Plan (the "Deferral Plan"). The Deferral Plan
permits an executive to elect to defer any combination of salary, bonus, or
LTIP income. The Deferral Plan provides for interest to be paid on any
deferred amounts at an annual rate, compounded monthly, equal to one percent
above 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 February following the fiscal year for which they are
earned, subject generally to a participant's continued employment with the
Company at the time of payment.
(3) The figures in this column reflect cash profit-sharing payments, interest on
LTIP Payouts, interest on deferred compensation and relocation expenses. In
the 1998, 1997, and 1996 fiscal years, the Company made the following payments
under the Cash Profit-Sharing Plan: Mr. Michaels - $9,848; $10,632; $8,880;
Mr. Koenigsaecker - $8,344; $9,080; $7,846; Mr. Stuebe - $9,848; $10,632;
$8,880; Mr. Miller - $9,848; $10,632; $8,880; and Mr. Johnson - $-0-; $-0-;
$-0-. The Company's Cash Profit-Sharing Plan is generally applicable to all
members after completing one year of service. Cash profit-sharing is earned on
a non-fiscal year cycle. Interest payments for fiscal years 1997 and 1996 on
LTIP Payouts
<PAGE>
to Mr. Michaels were $6,204 and $1,972, respectively; in fiscal years 1997 and
1996, interest payments on LTIP Payouts to Mr. Miller were $4,616 and $2,184,
respectively; and in fiscal year 1997, interest payments on an LTIP Payout to
Mr. Koenigsaecker were $4,267. In fiscal year 1998, interest payments on
deferred compensation for Mr. Miller were $14,948. The Company made a taxable
relocation expense reimbursement of $26,548 in the 1998 fiscal year for Mr.
Johnson and $1,550 in the 1996 fiscal year for Mr. Stuebe.
(4) The amounts shown in this column are based upon the closing price of the
Company's unrestricted Common Stock on February 11, 1998, the date the
restricted stock was granted. These shares were a one-time grant to make up a
short fall in retirement benefits due to the absence of an ERISA Supplemental
Retirement Plan at the Company prior to 1995. As of the end of fiscal 1998,
Mr. Michaels held an aggregate of 24,922 shares of restricted stock valued at
$596,570; Mr. Koenigsaecker held an aggregate of 3,040 shares of restricted
stock valued at $72,770; and Mr. Miller held an aggregate of 528 shares of
restricted stock valued at $12,639. These restricted shares cannot be sold or
otherwise transferred while the participant is employed by the Company.
Dividends are paid on the restricted stock reported in this column.
(5) These numbers represent options for shares of the Common Stock of the
Company granted pursuant to the Company's Restated Stock-Based Compensation
Plan.
(6) These payouts vested in the designated fiscal periods. The 1997 LTIP Payout
for Mr. Michaels represents cumulative appreciation over a five-year period
starting January 1, 1993 on 300,000 units of permanent capital of HON
INDUSTRIES Inc. and, at the discretion of the Board of Directors, has been
wholly paid in fiscal 1998. The appreciation consisted of $62,880 in 1993,
$84,442 in 1994, $73,495 in 1995, $113,746 in 1996 and $130,720 in 1997. See
discussion of Executive Long-Term Incentive Compensation Plan of the "Report
of the Human Resources and Compensation Committee of the Board of Directors of
the Company on Executive Compensation."
(7) 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 for the 1998,
1997, and 1996 fiscal years were as follows: Mr. Michaels - $838; $3,211;
$2,976; Mr. Koenigsaecker - $831; $3,211; $2,976; Mr. Stuebe - $660; $3,211;
$2,976; Mr. Miller - $458; $3,211; $2,976; and Mr. Johnson - $-0-; $-0-; $-0-.
Amounts paid under the HON Members Company Ownership Plan in 1998 were lower
than in prior years because the shares of Common Stock reserved for issuance
under this plan were exhausted prior to the end of the year and the Company
determined not to make additional contributions. This plan was merged into the
HON INDUSTRIES Inc. Profit-Sharing Retirement Plan and that plan was amended
to add substitute benefits. The amounts paid under the HON INDUSTRIES Inc.
Profit-Sharing Retirement Plan for the 1998, 1997, and 1996 fiscal years were
as follows: Mr. Michaels -$15,056; $13,634; $12,328; Mr. Koenigsaecker -
$13,452; $12,541; $11,138; Mr. Stuebe - $15,396; $13,634; $12,328; Mr. Miller
- $15,781; $13,634; $11,001; and Mr. Johnson - $-0-; $-0-; $-0-. The dollar
value of Company-paid life insurance under the HON INDUSTRIES Inc. Flexible
Benefits Plan in the 1998, 1997, and 1996 fiscal years were as follows: Mr.
Michaels - $1,404; $1,404; $900; Mr. Koenigsaecker - $576; $576; $576; Mr.
Stuebe - $900; $900; $900; Mr. Miller - $1,404; $900; $792; and Mr. Johnson -
$576; $-0-; $-0-. This column also includes amounts equal to the value of
Company Common Stock paid in respect of the 1998, 1997, and 1996 fiscal years
under the Company's ERISA Supplemental Retirement Plan, as follows: Mr.
Michaels - $185,840; $216,119; $119,675; Mr. Koenigsaecker - $74,381; $90,240;
$44,018; Mr. Stuebe - $55,595; $64,894; $22,488; Mr. Miller - $17,591;
$21,883; $19,392; and Mr. Johnson - $-0-; $-0-; $-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 for years prior to 1997 and a $160,000 earnings cap for 1998. The number
of shares of Company Common Stock to be paid is determined by dividing the
value of such benefits by the average of the closing prices of a share of the
Company's Common Stock for each trading day of the last calendar quarter of
the most recent calendar year immediately preceding the date of payment, with
cash payable in lieu of any fractional share. The amount included in this
column as compensation under the ESRP is equal to the closing price of the
shares on the date they are paid. The shares for 1998 were paid on February
26, 1999. The Common Stock is issued under the Company's Restated Stock-Based
Compensation Plan, and may not be transferred while the recipient remains
employed by the Company.
(8) Mr. Johnson was employed by the Company commencing on September 8, 1997.
<PAGE>
STOCK OPTIONS
There were no grants of stock appreciation rights or stock options to the Named
Executive Officers for the year ended January 2, 1999.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named Executive
Officers concerning the exercise of options and the unexercised options held as
of January 2, 1999. None of the Named Executive Officers exercised any stock
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT FISCAL YEAR-END(2)
AT FISCAL YEAR-END(1) (#) ($)
-------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Jack D. Michaels -0- 45,000 N/A N/A
George J. Koenigsaecker III -0- 30,000 N/A N/A
David C. Stuebe -0- 15,000 N/A N/A
Thomas K. Miller -0- 7,000 N/A N/A
James I. Johnson -0- 8,000 N/A N/A
</TABLE>
- ------------------------
(1) The number of unexercised options includes non-qualified stock options
granted under the Company's Restated Stock-Based Compensation Plan. No SARs
were issued or outstanding as of January 2, 1999 under the Restated
Stock-Based Compensation Plan.
(2) As of January 2, 1999, the per share exercise price of the unexercised
options outstanding exceeded fair market value of a share of the underlying
Common Stock represented by the option.
<PAGE>
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
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HON INDUSTRIES INC. OFFICE FURNITURE S & P 500 INDEX
INDUSTRY GROUP*
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $100.65 $85.60 $101.36
1995 $88.96 $91.59 $139.31
1996 $126.33 $140.72 $171.19
1997 $225.55 $214.35 $228.23
1998 $190.88 $222.22 $293.36
</TABLE>
*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 Inc.; Shelby Williams Industries, Inc. and
TAB Products Company. When sufficient stock price history is available,
Steelcase Inc. and Knoll Inc. will also be included.
The total return assumes $100.00 invested in the Company's Common Stock on
January 1, 1994, and in each of the S & P 500 Index and Office Furniture
Industry Group Stocks on December 31, 1993. 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 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.
<PAGE>
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
independent review. All matters pertaining to executive compensation are
submitted to the non-employee Directors of the Board for approval following
review and recommendation by the Human Resources and Compensation Committee (the
"Committee"). The Committee is comprised of three non-employee Directors, which
met four times during fiscal 1998.
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 broad-based, comparative
compensation surveys of the durable goods manufacturing industry developed by
independent professional organizations.
In 1993, changes were made to the federal corporate income tax law that limit
the ability of public companies to deduct compensation in excess of $1 million
paid annually to each of the chief executive officer and the other four most
highly compensated executive officers. There are exemptions from this limit,
including exemptions for compensation that is based on the attainment of
performance goals that are established by the Committee and approved by the
Company's shareholders. It is the Committee's policy to seek to qualify
executive compensation for deductibility where practicable and to the extent
that such policy is consistent with the Company's overall objectives in
attracting, motivating, and retaining its executives. The Committee intends that
awards of stock options and stock appreciation rights ("SARs") under the
Restated Stock-Based Compensation Plan will qualify for deductibility. Finally,
as it deems necessary, the Committee may consider the deferral of payment of any
nondeductible compensation to the chief executive officer and the other four
highest paid executives until the payment of such compensation is determined to
be tax deductible by the Company.
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 and comparable companies. In general, the
Company uses as a guide the middle range of base compensation in surveys of the
durable goods manufacturing industry. While some of the companies in the peer
group chosen for comparison of shareholder returns in the Performance Graph on
the preceding page 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. In prior years, salary reviews have been
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. The Company has adopted a policy that an
executive's eligibility for an increase will not be on an annual basis, but will
be reviewed on an individual basis. That review will include factors such as
level of job performance, job content, current level of compensation compared to
market survey data, time since last increase, equity with similar positions and
market factors.
EXECUTIVE BONUS PLAN. For fiscal 1998, there were 77 participants in the
Company's Executive Bonus Plan, as amended ("Bonus Plan"). The purpose of the
annual incentive bonus program is to motivate and reward executive management so
that they consistently achieve specific financial and non-financial objectives.
These objectives include, for example,
<PAGE>
achievement of annual profitability and return on asset goals by operating
units, and meeting personal achievement objectives established for each
participant based upon the participant's position and responsibilities. A target
bonus level, stated as a percent of annual base salary, is established for each
executive and approved by the Committee and the Board. The Bonus Plan objectives
are reviewed and approved annually by the Chairman, President and Chief
Executive Officer and the Vice President, Member and Community Relations, and
are then approved by the Committee and the Board. Bonuses are normally awarded
annually based upon achievement of Bonus Plan objectives measured over the
Company's fiscal year. The bonus awards for each fiscal year for participants
are approved by the Committee and the Board of Directors.
In order to earn and receive payment, the participant must be employed with the
Company through the date of payment. 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 Restated Stock-Based Compensation
Plan. The Bonus Plan provides that any award will be paid by March 1 of the next
succeeding year.
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN. There are currently 9
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 financial performance of the Company and 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 otherwise 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. 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 during the period, 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 Restated Stock-Based Compensation Plan.
In 1998, no LTIP grants were made to any executive officers.
RESTATED STOCK-BASED COMPENSATION PLAN. The Restated Stock-Based Compensation
Plan authorizes, among other things, the grant of stock options and SARs to
participants, including the Company's executives. The grant of stock options and
SARs is intended to further the growth, development, and financial success of
the Company by providing additional incentives to key employees and assist them
to become owners of capital stock of the Company and thus to benefit directly
from its growth, development and financial success. Stock option grants will
also enable the Company to attract and retain the services of executives
considered essential to the long-range success of the Company by providing them
with a competitive compensation package and an opportunity to become owners of
capital stock of the Company.
As of the fiscal year ended 1998, there were 14 participants in the Restated
Stock-Based Compensation Plan. In 1998, stock options were awarded to 3 key
executives who participate in the Restated Stock-Based Compensation Plan. Awards
were based on market survey data on long-term incentive compensation for
executives in similar positions and individual performance of each executive.
The Company's policy is that participants receiving grants under the Restated
Stock-Based
<PAGE>
Compensation Plan do not receive awards under the LTIP in the same year. Stock
option grants are generally made to those individuals who have the ability
through their leadership, strategic planning and actions to impact the long-term
performance of the Company and, consequently, its stock price.
EXECUTIVE STOCK OWNERSHIP POLICY. The Company has adopted an Executive Stock
Ownership Policy based upon the belief that key executives who can impact
shareholder value through their achievements should own significant amounts of
the Company Common Stock. Under this Policy, guidelines are provided for
executives to acquire and hold a recommended amount of Common Stock of the
Company based on their position, responsibilities, length of service and
compensation level. Such Common Stock ownership will align the interests of key
executives with shareholder interests and provide a personal benefit for the
success of the Company. The exercise of stock options provides one of several
means by which key executives can satisfy this Policy.
CHIEF EXECUTIVE OFFICER 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 Chief Executive
Officer's performance.
In November 1998, Mr. Michaels' base salary was increased from $488,000 to
$518,000. This increase reflected the overall performance and growth of the
Company since his previous increase in August 1997.
In the 1998 fiscal year, net sales reached $1.69 billion and net income and
earnings per share increased 22.3 percent and 18.6 percent, respectively, to
levels which set new records for the Company. The Company's return on average
shareholders equity was 25.2 percent in fiscal 1998.
Under the Bonus Plan, Mr. Michaels received an award of $490,442 in respect of
fiscal 1998 compared to an award of $490,196 for fiscal 1997. The award for 1998
reflected the record Company earnings and sales, the successful attainment of
other strategically important objectives, including achievement of his personal
Board-approved objectives, and Mr. Michaels' leadership in strategically
positioning the Company for profitable growth in the future.
Under the Restated Stock-Based Compensation Plan, Mr. Michaels was granted a
one-time restricted stock award of 24,922 shares of Common Stock of the Company.
These shares were awarded to make up a short fall in retirement benefits due to
the absence of an ERISA Supplemental Retirement Plan ("ESRP") at the Company
until 1995. Subject to certain exceptions set forth in the grant, the
restrictions on transfer of these shares will expire on August 30, 2002. Mr.
Michaels did not receive an award in fiscal year 1998 under the LTIP.
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
Lorne R. Waxlax, Chairperson
W August Hillenbrand
Richard H. Stanley
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998, the Human Resources and Compensation Committee was comprised
of Messrs. Waxlax, Hillenbrand, and Stanley, none of whom is a current or former
officer of the Company. There are no interlocking board memberships between
officers of the Company and any member of the Committee.
<PAGE>
PROPOSAL NO. 2 - AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF PREFERRED STOCK FROM 1,000,000 TO 2,000,000
On November 10, 1998, the Board of Directors adopted, subject to Shareholder
approval, an amendment to the Company's Articles of Incorporation to increase
the authorized number of shares of Preferred Stock, par value $1.00 per share
("Preferred Stock"), from 1,000,000 to 2,000,000 shares. As of the Record Date,
no shares of Preferred Stock were issued. In addition, 200,000 shares of
Preferred Stock, designated by the Board of Directors as Series A Preferred
Stock, have been reserved for issuance in connection with the Company's
shareholder rights plan. If this amendment is approved by the Shareholders, an
additional 1,000,000 shares of Preferred Stock will be available for issuance.
The Board believes it is in the best interests of the Company and its
shareholders to increase the authorized number of shares of Preferred Stock. The
additional shares will provide an adequate supply of Preferred Stock for
possible future transactions, such as the sale of stock to raise additional
capital, acquisitions of other businesses or properties where the use of
Preferred Stock is deemed advantageous, for use in connection with the Company's
shareholder rights plan, and for other general corporate purposes.
The Company has no present plan to issue the shares of Preferred Stock proposed
to be authorized. The Board would have sole discretion, however, to authorize
the issuance of the additional shares of Preferred Stock from time to time for
any corporate purpose without further action by the shareholders and to
designate such shares in one or more series with such preferences, limitations
and relative rights as the Board may designate, except as required by the New
York Stock Exchange, Inc. or any other national securities exchange on which the
Company's stock may in the future be traded or other applicable laws or
regulations. The additional shares of Preferred Stock, like the currently
authorized shares, would not have pre-emptive rights.
POTENTIAL ANTI-TAKEOVER EFFECTS
The Company's Articles of Incorporation and By-laws and the Iowa Business
Corporation Act contain provisions that could make more difficult or delay the
acquisition or control of the Company by various means such as a tender offer,
open market purchases, a merger, proxy contest or otherwise. These provisions
include, among other things, a super majority vote requirement for actions of
the shareholders with respect to the approval of certain business combinations
and having a classified Board of Directors. The purposes of these provisions are
to discourage certain types of transactions which may involve an actual or
threatened change in control of the Company and encourage persons seeking to
acquire control of the Company to consult first with the Board of Directors to
negotiate the terms of any proposed business combination or offer. The
provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover that does not contemplate the acquisition of
all outstanding shares or is otherwise unfair to shareholders of the Company, or
an unsolicited proposal for the restructuring or sale of all or part of the
Company.
The additional authorized shares of Preferred Stock could also be used to
discourage persons from attempting to gain control of the Company by diluting
the voting power of shares then outstanding or increasing the voting power of
persons who would support the Board of Directors in opposing a takeover bid or a
solicitation in opposition to management. The Company is not currently aware of
any effort to obtain control of the Company and has no plan to use the new
shares for purposes of discouraging any such effort.
The Board proposes that Article Fourth, Section 4.01 of the Company's Articles
of Incorporation be amended to read as follows:
"The aggregate number of shares which the Corporation shall have the
authority to issue is 202,000,000 shares, consisting of 2,000,000 shares
designated as "preferred stock" or "preferred shares," with a par value of $1.00
per share, and 200,000,000 shares designated as "common stock" or "common
shares," with a par value of $1.00 per share."
Under the Company's Articles of Incorporation, the affirmative vote of a
majority of the total outstanding shares of Common Stock entitled to vote is
required for approval of the above-described amendment.
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF
PREFERRED STOCK FROM 1,000,000 TO 2,000,000. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
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 Arthur Andersen 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 2000 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 2000 Annual Meeting
must be received at the Company's executive offices no later than November 27,
1999, to be included in the proxy statement and proxy form. All shareholder
notice of proposals submitted outside the processes of Rule 14a-8 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended,
must be received by March 12, 2000 to be considered for presentation at the
Annual Meeting of Shareholders in 2000. In addition, any shareholder proposals
must comply with the informational requirements contained in the Company's
By-laws in order to be presented at the 2000 Annual Meeting.
<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 ANY
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 12, 1999, unless
otherwise noted.
James I. Johnson
Vice President, General Counsel and Secretary
March 26, 1999
THE ANNUAL REPORT TO SHAREHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
JANUARY 2, 1999, 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.
<PAGE>
<TABLE>
<S> <C> <C>
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HON INDUSTRIES Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
For Withhold For All
1. ELECTION OF DIRECTORS: FOR THE THREE-YEAR TERMS: All All Except vote withheld from the following nominee(s).
NOMINEES: Cheryl A. Francis, Robert L. Katz,
Richard H. Stanley and Brian E. Stern. / / / / / / _________________________________________
(Nominee Exception)
For Against Abstain
2. Amendment of the Articles of Incorporation to
increase the Authorized Shares of Preferred Stock / / / / / /
from 1,000,000 to 2,000,000. Dated: ___________________ , 1999
- --------------------------------------------------------------------
__________________________________________________
THIS SPACE RESERVED FOR ADDRESSING _________________________________________________
(key lines do not print) Signature of Shareholder(s)
/ / Individual / / Corporation / / Partnership
- -------------------------------------------------------------------- / / Other ________________________________________
(Please date this proxy and sign exactly as your
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFICALLY names appear hereon. If you sign as attorney,
DIRECTED HEREIN. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE executor, administrator, trustee, guardian,
VOTED FOR THE PROPOSALS. custodian, or corporate official, please give your
full title in such capacity.)
- --------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE>
HON INDUSTRIES Inc.
COMMON STOCK PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS ON MAY 11, 1999
The undersigned acknowledges receipt of a Notice of Annual Meeting and Proxy
Statement dated March 26, 1999, and appoints Jack D. Michaels and James I.
Johnson, 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 11, 1999, at 10:30 a.m. and any
adjournment thereof. The proxies are directed to vote as checked on the
reverse side on the proposed matters or otherwise in their discretion.
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.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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<PAGE>
<TABLE>
<S> <C> <C>
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HON INDUSTRIES Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
For Withhold For All
1. ELECTION OF DIRECTORS: FOR THE THREE-YEAR TERMS: All All Except vote withheld from the following nominee(s).
NOMINEES: Cheryl A. Francis, Robert L. Katz,
Richard H. Stanley and Brian E. Stern. / / / / / / _________________________________________
(Nominee Exception)
For Against Abstain
2. Amendment of the Articles of Incorporation to
increase the Authorized Shares of Preferred Stock / / / / / /
from 1,000,000 to 2,000,000. Dated: ___________________ , 1999
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__________________________________________________
THIS SPACE RESERVED FOR ADDRESSING _________________________________________________
(key lines do not print) Signature of Shareholder(s)
/ / Individual / / Corporation / / Partnership
- -------------------------------------------------------------------- / / Other ________________________________________
(Please date this proxy and sign exactly as your
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFICALLY names appear hereon. If you sign as attorney,
DIRECTED HEREIN. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE executor, administrator, trustee, guardian,
VOTED FOR THE PROPOSALS. custodian, or corporate official, please give your
full title in such capacity.)
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FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
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<PAGE>
HON INDUSTRIES, Inc.
HON INDUSTRIES INC. PROFIT-SHARING RETIREMENT PLAN
COMMON STOCK PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS ON MAY 11, 1999
The undersigned acknowledges receipt of a Notice of Annual Meeting and Proxy
Statement dated March 26, 1999, and appoints Jack D. Michaels and James I.
Johnson, 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 11, 1999, at 10:30 a.m. and any
adjournment thereof. The proxies are directed to vote as checked on the
reverse side on the proposed matters or otherwise in their discretion.
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.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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