<PAGE>
INTERCO
I N C O R P O R A T E D
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of the stockholders of INTERCO INCORPORATED
will be held at 10 a.m. on Thursday, April 27, 1995, at the Rihga
Royal Hotel, 151 West 54th Street, New York, New York, for the
following purposes:
I. to elect nine directors;
II. to ratify the selection of independent
auditors; and
III. to transact such other business as may
properly come before the meeting.
Stockholders of record at the close of business on February 27,
1995, will be entitled to receive notice of and to vote during
the 1995 annual meeting and during any adjournment or
adjournments thereof.
By order of the Board of Directors,
/s/ D. A. Patterson
Duane A. Patterson,
Vice-President and Secretary
St. Louis, Missouri, March 22, 1995.
IMPORTANT
Whether or not you plan to attend the meeting, please complete,
date and sign the enclosed proxy form, and return it PROMPTLY
in the enclosed envelope, which requires no postage if
mailed in the United States.
PROXY STATEMENT
This proxy statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors<PAGE>
("Board") of INTERCO INCORPORATED ("INTERCO"), 101 South Hanley
Road, St. Louis, Missouri 63105, for use during the 1995 annual
meeting of stockholders and at any adjournments thereof, for the
purposes set forth in the accompanying notice of annual meeting
of stockholders. The cost of the solicitation will be borne by
INTERCO and will consist primarily of printing, postage and
handling, including the expenses of brokers, nominees and other
fiduciaries in forwarding proxy materials to beneficial owners;
and directors, officers and other employees of INTERCO may also
solicit proxies personally or by telephone. In addition, INTERCO
has engaged Morrow & Co. to assist in the solicitation from
brokers, bank nominees and institutional holders for a fee of
$5,000 plus out-of-pocket expenses. The notice of meeting, this
proxy statement and the form of proxy are expected to be mailed
to stockholders on or about March 22, 1995. A copy of INTERCO's
Annual Report containing financial statements for the calendar
year ended December 31, 1994, has been forwarded to all
registered stockholders under separate cover.
Voting Procedure
Stockholders of record at the close of business on February
27, 1995 ("record date") are entitled to vote during the 1995
annual meeting and may cast one vote for each share of INTERCO's
Common Stock ("Common Stock") held on the record date on each
matter that may properly come before the meeting. On the record
date there were 50,084,764 shares of Common Stock outstanding.
The holders of a majority of the outstanding shares of
Common Stock must be present or represented at the meeting for
there to be a quorum for the conduct of business. If a quorum is
present and/or represented at the meeting, then the nine nominees
for director who receive the highest numbers of votes of the
votes cast will be elected, and a majority of the votes cast will
be required to ratify the selection of independent auditors and
to take action on such other matters as may properly come before
the meeting. Shares represented by proxies which are marked
"withheld" as applied to voting for directors, "abstain" as to
the ratification of auditors or to deny discretionary authority
on any other matters will be counted as shares present for
purposes of determining the presence of a quorum; such shares
will also be treated as shares present and entitled to vote,
which will have the same effect as a vote against any such other
matters. Shares represented by proxy will be voted as directed on
the proxy forms and, if no direction is given, will be voted in
the election of directors for the persons nominated by the Board,
for ratification of the selection of independent auditors and in
the best judgment of the persons named in the proxies on such
other matters that may properly come before the meeting. Any
proxy given by a stockholder may be revoked at any time prior to
its use by execution of a later dated proxy, by a personal vote
at the meeting, or by written notice to the Secretary of INTERCO.
Security Ownership
Table 1 below sets forth information regarding the firms
that have reported beneficial ownership, including sole voting
and investment power except as otherwise indicated, of more than
5% of the Common Stock.
Table 1
Shares Percent
Class of Beneficially of
Name and Address Stock Owned (a) Class(a)
-----------------------------------------------------------------
Apollo Investment Fund,L.P.(b)
c/o CICB Bank and Trust
Company (Cayman) Limited
Edward Street, Georgetown,
Grand Cayman, Cayman Islands
British West Indies
and
Lion Advisors, L.P.(b) Common 33,981,920(b) 67.5%
Two Manhattanville Road
Purchase, NY 10577
The TCW Group, Inc.(c) Common 2,785,006(d) 5.4%
865 South Figueroa Street
Los Angeles, CA 90017
J. P. Morgan & Co. Incorporated Common 2,791,344(e) 5.6%
60 Wall Street,
New York, NY 10260
-----------
(a) Shares beneficially owned, above and below, are as of
January 31, 1995 and as defined by the Securities and
Exchange Commission ("SEC")Rule 13d-3 which provides in part
that persons are deemed the beneficial owners of securities
if they have or share the power to vote or dispose of the
securities or if they have the right to acquire the
securities within the next sixty days. Accordingly,
included, above and below, in shares beneficially owned are
shares of Common Stock that may be purchased upon exercise
of outstanding Series 1 and/or Series 2 warrants and
exercisable stock options, and such shares as may be so
purchased were deemed to be outstanding for purposes of
calculating percentages of outstanding shares.
(b) Includes (i) 16,848,919 shares and (ii) warrants to purchase
145,439 shares beneficially held by Apollo Investment Fund,
L.P. ("Apollo") and (iii) 16,842,180 shares and (iv)
warrants to purchase 145,382 shares beneficially held by
Lion Advisors, L.P. ("Lion Advisors") for the benefit of an
investment account under management over which Lion Advisors
has sole voting and investment power. Lion Advisors is
affiliated with Apollo Advisors, L.P., the managing general
partner of Apollo. The Apollo Directors, identified below,
are associated with Apollo and Lion Advisors. See footnote
(a) to Table 2.
(c) Mr. Bruce A. Karsh, a director, is associated with The TCW
Group, Inc.
(d) Consists of 1,398,104 shares and warrants to acquire
1,386,902 additional shares.
(e) Sole voting power as to 1,587,432 shares and sole investment
power as to 2,791,344 shares.
------------
Table 2 below sets forth information regarding the
beneficial ownership of Common Stock by directors, nominees for
directors, executive officers named in the Summary Compensation
Table below ("Named Executive Officers"), and all directors and
executive officers as a group (20 persons) as of January 31,
1995. Except as noted below, all such persons possessed sole
voting and investment power with respect to the shares listed.
An asterisk (*) in the column listing the percentage of class
indicates that the person beneficially owned less than 1% of the
Common Stock as of January 31, 1995.
Table 2
Directors, Nominees Shares
for Directors and Class of Beneficially Percent of
Named Executive Officers Stock Owned (a)(b) Class
-----------------------------------------------------------------
L. D. Black Common 33,981,920 67.5%
C. M. Cogut Common 33,981,920 67.5
R. H. Falk Common 33,981,920 67.5
G. Ford Common 0 *
M. S. Gross Common 33,981,920 67.5
J. J. Hannan Common 33,981,920 67.5
J. J. Harris Common 33,981,920 67.5
D. P. Howard Common 20,000 *
B. A. Karsh Common 2,785,006 5.4
B. B. Kincaid Common 50,000 *
J. H. Kissick Common 33,981,920 67.5
D. E. Lasater Common 5,271 *
L. M. Liberman Common 5,328 *
R. B. Loynd Common 271,400 *
M. J. Morahan Common 148,167 *
D. A. Patterson Common 20,009 *
E. B. Siegel Common 33,981,920 67.5
E. F. Smith Common 0 *
K. S. Tyler Common 62,558 *
B. Vasiliou Common 86,627 *
Directors and
Executive Officers
as a group
(20 persons) Common 37,436,286 71.6
------------
(a) The shares listed as beneficially owned by Messrs. Black,
Cogut, Falk, Gross, Hannan, Harris, Kissick and Siegel
(collectively "Apollo Directors") are the shares and
warrants identified in Table 1 above as beneficially held by
Apollo and Lion Advisors, with which the Apollo Directors
are associated, and each Apollo Director disclaims personal
pecuniary interest in said shares and warrants; the shares
listed as beneficially owned by Messrs. Howard and Kincaid
consist of exercisable stock options to purchase such
shares; the shares listed as beneficially owned by Mr. Karsh
are the shares identified above as beneficially owned by The
TCW Group, Inc., with which Mr. Karsh is associated, and Mr.
Karsh disclaims personal pecuniary interest in said shares
and warrants; the shares listed as beneficially owned by
Mr. Lasater consist of 5,158 shares and warrants to purchase
113 additional shares; the shares listed as beneficially
owned by Mr. Liberman consist of 5,191 shares and warrants
to purchase 137 additional shares; the shares listed as
beneficially owned by Mr. Loynd consist of 21,400 shares and
exercisable stock options to purchase 250,000 additional
shares; the shares listed as beneficially owned by Mr.
Morahan consist of 86,406 shares and warrants to purchase
61,761 additional shares, with respect to which Mr. Morahan
has sole voting and investment power as to 23,958 of the
shares and 15,013 warrants and shared voting and investment
power as to 62,448 of the shares and 46,748 of the warrants;
Mr. Morahan disclaims personal pecuniary interest in 2,396
of the shares and 1,709 of the warrants; the shares listed
as beneficially owned by Mr. Patterson consist of 9 shares
and exercisable stock options to purchase 20,000 additional
shares; the shares listed as beneficially owned by Mr.
Tyler consist of 58 shares, with respect to which Mr. Tyler
has shared investment power only, and exercisable stock
options to purchase 62,500 additional shares; and the shares
listed as beneficially owned by Mr. Vasiliou consist of
50,518 shares and warrants to purchase 36,109 additional
shares.
(b) The shares listed as beneficially owned by directors and
executive officers as a group consist of 35,257,943 shares,
warrants to purchase 1,775,843 additional shares and
exercisable stock options to purchase 402,500 additional
shares.
____________
I. ELECTION OF DIRECTORS
Nominees and Continuing Directors
The terms of the 13 current directors end in 1995. As a
consequence of spin-off distributions of the common stock of
Converse Inc. and of The Florsheim Shoe Company, which
distributions were made to INTERCO stockholders during 1994,
INTERCO is now a smaller company than one year ago and, for such
reason, the Board of Directors unanimously determined that a
smaller number of directors should constitute the Board during
the ensuing year. In that connection, Messrs. Cogut, Falk,
Morahan, Siegel and Vasiliou are not standing for reelection.
The Board of Directors and management gratefully acknowledge the
many contributions of those directors during the periods they
served on the Board.
Nominees
Nine directors are to be elected during the 1995 annual
meeting, to serve, subject to their earlier death, resignation or
removal, for terms of one year, ending at the 1996 annual
meeting, or until their successors are elected and qualify.
Certain information regarding the nine nominees is presented
below. Should any nominee become unable or unwilling to serve, an
event not anticipated to occur, proxies (except proxies marked to
the contrary) will be voted for another person designated by the
Board unless the Board shall have reduced the number of directors
to be elected.
INTERCO
Name, Age, Principal Occupation Director
or Position, Other Directorships Since
-----------------------------------------------------------------
Leon D. Black, 43 1992
Officer and director of Apollo
Capital Management, Inc. (a)
Director of Astrum International, Inc.,
Big Flower Press, Inc., Converse Inc.,
Gillett Holdings, Inc., The New
York Law Publishing Company and
Telemundo Group, Inc.
Michael S. Gross, 33 1992
Officer of Apollo Capital Management, Inc. (a)
Director of Buster Brown Apparel, Inc.,
Cole National Corporation, Converse Inc.,
The Florsheim Shoe Company and Hills Stores,
Inc., and member of the Supervisory Board of
Memorex-Telex N.V.
John J. Hannan, 42 1992
Officer and director of Apollo Capital
Management, Inc. (a)
Director of Aris Industries, Inc., Capital
Apartment Properties, Inc., Converse Inc.,
The Florsheim Shoe Company, Telemundo Group,
Inc., United Auto Group, Inc. and
Williamhouse Regency, Inc.<PAGE>
INTERCO
Name, Age, Principal Occupation Director
or Position, Other Directorships Since
-----------------------------------------------------------------
Joshua J. Harris, 30
Officer of Apollo Capital Management, Inc. (a)
Director of Converse Inc., The Florsheim Shoe
Company, The New York Law Publishing Company
and Webcraft Technologies, Inc., and a member
of the Supervisory Board of Memorex-Telex N.V.
Bruce A. Karsh, 39 1992
Managing Director of Trust Company of the West,
a provider of investment management services
Director of KinderCare Learning Centers and
Littelfuse, Inc.
John H. Kissick, 53 1992
Officer of Lion Capital Management, Inc. (a)
Director of Converse Inc., Family Restaurants,
Inc., The Florsheim Shoe Company and
Williamhouse Regency, Inc.
Donald E. Lasater, 69 1970
Retired, formerly Chairman of the Board
and Chief Executive Officer of
Mercantile Bancorporation, Inc., a bank
holding company
Director of General American Life
Insurance Company, A. P. Green
Industries, Inc., Illinois Power Company
and Illinova Corporation
Lee M. Liberman, 73 1985
Retired from and currently a consultant to
Laclede Gas Company, a gas public utility,
of which he was formerly Chairman of the
Board and Chief Executive Officer
Director of Angelica Corporation, Boatmen's
Bancshares, Inc., CPI Corporation,
D.T. Industries, Inc., Falcon Products
Company and Instituform Mid-America, Inc.
Richard B. Loynd, 67 1987
Chairman of the Board, President
and Chief Executive Officer of INTERCO (b)
Director of Converse Inc., Emerson Electric Co.,
The Florsheim Shoe Company and Hills Stores,
Inc.
------------
(a) Apollo Capital Management, Inc. ("Apollo Capital") is the
general partner of Apollo Advisors, L.P. ("Apollo
Advisors"), the managing general partner of Apollo, a
securities investment fund. Each of the Apollo Directors,
other than Mr. Kissick, is a limited partner of Apollo
Advisors and each holds a comparable position with Lion
Capital Management, Inc., a related company, which is the
general partner of Lion Advisors. Mr. Kissick is a
consultant to Apollo Capital.
(b) In 1991, a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code was filed on behalf
of INTERCO. A Chapter 11 Plan of Reorganization became
effective August 3, 1992, on which date INTERCO emerged from
Chapter 11.
------------
Each of the director nominees has held the same position or
other executive positions with the same employer during the past
five years except Mr. Kissick who has been associated with Apollo
Capital and associated entities since 1991 and, prior thereto, he
was a consultant with Kissick & Associates and a senior executive
of Drexel Burnham.
Compensation and Organization of Board of Directors
There were six meetings of the Board during the year ended
December 31, 1994, and all nominees who were directors during
1994 were present for at least 75% of the meetings of the Board
and committees of the Board on which they served except Messrs.
Black, Hannan and Kissick. Each director who is not an employee
of INTERCO or of a subsidiary of INTERCO is paid a monthly fee of
$1,750 and a fee of $1,000 plus expenses for each meeting of the
Board attended. In addition, for attending a meeting of a
committee of the Board, each is paid a fee of $700 plus expenses
if the director is a member of the committee or $950 plus
expenses if the director is the Chairman of the committee. Such
fees are not paid to directors who are employees of INTERCO or a
subsidiary of INTERCO.
In addition, INTERCO has a retirement plan for non-employee
directors. Under the plan, a director who is not an employee of
INTERCO or of a subsidiary of INTERCO and who has reached age 62
or older and has served as a director for at least five years
will, after termination of service as a director, receive for
life a percentage of the monthly fee for directors in effect at
the time of termination of service. Such percentage is 50% for
five years' service and increases 10% for each additional year of
service to 100% for ten or more years' service.
The Board has a number of standing committees, including an
Audit Committee and an Executive Compensation and Stock Option
Committee. The Board does not currently have a Nominating
Committee.
The Audit Committee, which currently consists of Mr.
Liberman, Chairman, and Messrs. Lasater and Morahan, and which
met four times during the year ended December 31, 1994:
recommends the selection and retention of independent
accountants; reviews auditing and financial accounting and
reporting matters, the adequacy of internal accounting controls
and asset security, audit fees and expenses, and compliance with
the code of corporate conduct; and counsels regarding auditing
and financial accounting and reporting matters.
The Executive Compensation and Stock Option Committee, which
currently consists of Mr. Lasater, Chairman, and Messrs. Cogut,
Gross, Karsh and Kissick, and which met four times during the
year ended December 31, 1994: reviews and recommends
compensation of officers and directors; administers
supplementary retirement, performance incentive and stock option
plans; and counsels regarding compensation of other key
employees, management development and succession, and major
personnel matters.
Certain Business Relationships
INTERCO is a party to a Consulting Agreement with Apollo
Advisors pursuant to which Apollo Advisors provides corporate
advisory, financial and other consulting services to INTERCO.
Fees under the Agreement are payable at an annual rate of
$500,000 plus out-of-pocket expenses for a term ending December
31, 1995 and the Consulting Agreement is automatically renewable
for successive one-year terms unless terminated by the Board.
INTERCO has also granted registration rights to Apollo with
regard to the Common Stock.
Executive Compensation
The following table shows compensation awarded to, earned by
or paid to the Chief Executive Officer, the four most highly
compensated executive officers of INTERCO other than the Chief
Executive Officer who were serving at December 31, 1994, and two
former executive officers who would have been among the said four
most highly compensated but were not serving as executive
officers of INTERCO at December 31, 1994.<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------------------------------
Annual Compensation / Awards / Payouts /
---------------------------------------------/----------------/-----------------/
/ Other / / / All
/ Annual / Securities / / Other
/ Compen- / Underlying / LTIP / Compen-
Name and Year / Salary Bonus sation / Options / Payouts / sation
Position (a) / $ $ $ / # / $ / $(b)
- -------------------------------------/--------------------------------------------/----------------/----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard B. Loynd 1994 / 678,742 426,875 0 / 0 / 0 / 72,865
Chairman and Chief 1993 / 652,011 608,170 284,082 / 250,000 / 0 / 75,114
Executive Officer 1992 / 530,844 478,850 719 / 0 / 1,500,000 / 21,214
/ / / /
K. Scott Tyler, Jr. 1994 / 140,000 327,771 0 / 50,000 / 0 / 28,242
President, The 1993 / 131,000 379,778 0 / 0 / 0 / 0
Lane Company, 1992 / 104,167 298,412 0 / 125,000 / 0 / 0
Incorporated / / / /
/ / / /
Brent B. Kincaid 1994 / 246,604 208,258 0 / 50,000 / 0 / 5,015
President, Broyhill 1993 / 229,150 245,750 0 / 0 / 0 / 4,140
Furniture 1992 / 171,887 71,454 0 / 100,000 / 0 / 4,212
Industries, Inc. / / / /
/ / / /
David P. Howard 1994 / 171,173 72,969 0 / 40,000 / 0 / 5,452
Vice-President, 1993 / 137,500 85,997 0 / 0 / 0 / 200
Controller prior 1992 / 110,417 71,656 0 / 40,000 / 0 / 200
to 8/1/94, Chief / / / /
Financial Officer / / / /
from 7/10/94 / / / /
/ / / /
Duane A. Patterson 1994 / 164,212 54,063 0 / 20,000 / 0 / 7,095
Vice-President and 1993 / 150,400 91,777 0 / 0 / 0 / 6,995
Secretary 1992 / 117,675 80,240 0 / 40,000 / 0 / 6,995
/ / / /
Gilbert Ford 1994 / 288,243 0 0 / 0 / 0 / 0
Chairman and 1993 / 279,038 312,793 0 / 0 / 0 / 31,249
President, 1992 / 211,173 254,793 0 / 100,000 / 0 / 25,286
Converse Inc., / / / /
a subsidiary prior / / / /
to 11/17/94 / / / /
/ / / /
Eugene F. Smith 1994 / 185,996 75,467 0 / 0 / 0 / 300,300
Executive Vice- 1993 / 266,083 219,404 439 / 0 / 0 / 8,170
President prior to 1992 / 213,750 169,931 250 / 80,000 / 500,000 / 6,705
9/1/94, Chief / / / /
Financial Officer / / / /
prior to 7/10/94 / / / /
/ / / /
- -------------------------------------/--------------------------------------------/----------------/-----------------/----------
</TABLE>
-------------
(a) The fiscal year of INTERCO was changed effective December
31, 1992, from one ending on the last Saturday in February
to one corresponding to the calendar year; therefore, 1994
refers to the twelve-month calendar year ended December 31,
1994, 1993 refers to the twelve-month calendar year ended<PAGE>
December 31, 1993, and 1992 refers to the ten-month
transition fiscal year ended December 31, 1992.
(b) Amounts shown for 1994 consist of the following: life
insurance premiums for Mr. Loynd $72,865; annual
contribution to the Broyhill Furniture Industries, Inc.
Profit Sharing Retirement Plan for Mr. Kincaid $4,715;
purchase price paid to Mr. Smith upon INTERCO's purchase of
40,000 exercisable stock options in accordance with
provisions of the 1992 Plan (as hereinafter defined) for
the difference between the stock option exercise price and
the market value per share of the Common Stock at the date
of the purchase $300,000; "split dollar" life insurance
premiums, substantial percentages of which will be
recovered at age 65 or death of the executive, for Mr.
Tyler $28,242, Mr.Howard $5,152 and Mr. Patterson $6,795;
and matching contributions of $300 each to 401(k) savings
plans for Messrs. Kincaid, Howard, Patterson and Smith.
--------------
Executive Compensation and Stock Option Committee
Report on Executive Compensation
Among its responsibilities, the Executive Compensation and Stock
Option Committee ("Committee") of INTERCO's Board of Directors
("Board") reviews the compensation of the officers of INTERCO and
its primary operating companies and makes recommendations to the
Board concerning executive compensation matters.
In its deliberations the Committee is guided by certain
fundamental considerations, including:
o the need to attract and to retain talented key
executives;
o the need to provide both annual and long-term
incentives to focus executive performance on the
achievement of company objectives; and
o the need to provide compensation opportunities
that align executive compensation with the
interests of the stockholders.
Early in 1994, base salary rates of the Chief Executive Officer
("CEO") and other Named Executive Officers were increased,
establishing the CEO's annual salary at $678,742 for the year.
The increases in annual salary rates, 4.12% for the CEO and 5.17%
for all Named Executive Officers as a group, were based on
recommendations of the CEO and were designed to adjust for
inflation and, in the instances of operating personnel, to reflect
the improved sales and earnings performance, up 8% and 30%
respectively, in 1993. Later in the year, consistent with
recommendations of the CEO, salary rates of three other Named
Executive Officers were increased further to reflect promotions
and assumptions of increased responsibilities.
Further, existing annual incentive plans for key personnel
(including the CEO and other Named Executive Officers) were
continued in effect. Those plans utilized sales and pre-tax
earnings as objectives, with pre-tax earnings weighted more
heavily. Under the provisions of the plan applicable in 1994 to
key personnel (including the CEO) based at the corporate offices,
plan participants could earn a bonus equal to percentages of their
base salaries (the target percentage of the CEO's being 50% and
those of other Named Executive Officers ranging from 25% to 40%)
depending totally upon INTERCO's degree of achievement against
budgeted objectives (sales and pre-tax earnings), which were met
in 1994. Target percentages were payable when objectives were
met; lower or greater percentages (to a maximum of 150% of target)
were payable for degrees of achievement below or above budgeted
objectives.
For 1994, pursuant to discretionary plan provisions and consistent
with recommendations of the CEO, the Committee awarded certain key
personnel, including the CEO and certain other Named Executive
Officers, additional bonus amounts, ranging from 11% to 25% of
performance amounts earned, to reflect what the Committee deter-
mined to be meritorious performance during the year. For 1994,
the CEO earned a bonus of $426,875 including the additional bonus
amount at the 25% level and, of such amount, payment of $222,165
was deferred for payment after the CEO has ceased to be the CEO or
a Named Executive Officer pursuant to a plan provision that
requires deferral to the extent all or any portion of a bonus
amount is not immediately deductible as compensation expense by
INTERCO for federal income tax purposes. To amounts so deferred
interest is credited at INTERCO's effective borrowing rate for the
period of deferral.
To provide added incentives for key personnel, during 1994 stock
options to purchase 862,000 shares of Common Stock were granted
pursuant to the 1992 Plan, of which 160,000 were granted to Named
Executive Officers as shown below. The option exercise prices
equaled or exceeded the market price per share of Common Stock on
the dates of grant. Further, as a result of the 1994 spin-off
distributions of the common stock of Converse Inc. and The
Florsheim Shoe Company, the Committee reduced the option exercise
prices of all unexercised stock options outstanding following the
distributions pursuant to the antidilution provisions of the 1992
Plan and in accordance with certain accounting profession
directives. To the extent that positive differences between
option exercise prices and the market value per share of Common
Stock prior to the spin-off distributions were not preserved in
the adjustment of option exercise prices, optionees will receive
cash payments from INTERCO approximating the portions of the
differences not so preserved when and if said options are
exercised in the future.
Donald E. Lasater, Chairman Bruce A. Karsh
Craig M. Cogut John H. Kissick
Michael S. Gross
Compensation Committee Interlocks and Insider Participation
Messrs. Cogut, Gross and Kissick, directors and members of
the Executive Compensation and Stock Option Committee of the
Board, are associated with Apollo Advisors and Apollo. INTERCO is
a party to a Consulting Agreement with Apollo Advisors pursuant to
which Apollo Advisors provides corporate advisory, financial and
other consulting services to INTERCO. Fees under the Agreement
for a term ending on December 31, 1995 are payable at an annual
rate of $500,000 plus out-of-pocket expenses and the Consulting
Agreement is automatically renewable for successive one-year terms
unless terminated by the Board. INTERCO believes that the terms
of this agreement are as favorable to INTERCO as could be received
from unaffiliated third parties. INTERCO has also granted
registration rights to Apollo with respect to the Common Stock.
Stock Options
The following table contains information concerning stock
option grants made during the year ended December 31, 1994, pur-
suant to the INTERCO INCORPORATED 1992 Stock Option Plan ("1992
Plan").
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
% of Potential
Total Realizable
Options Value at Assumed
Number of Granted Exer- Annual Rates of
Securities to cise Stock Price
Underlying Employees or Appreciation for
Options in Base Expira- Option Term (b)
Granted Fiscal Price tion __________________
Name #(a) Year ($/Sh) Date 5%($) 10%($)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. B. Loynd 0 -- -- -- -- --
K. S. Tyler, Jr. 50,000 5.8% 6.906 12/20/03 178,250 450,500
B. B. Kincaid 50,000 5.8% 6.906 12/20/03 178,250 450,500
D. P. Howard 20,000 2.3% 14.25(c) 08/09/03 71,720 180,620
20,000 2.3% 6.906 12/20/03 71,300 180,200
D. A. Patterson 20,000 2.3% 6.906 12/20/03 71,300 180,200
G. Ford 0 -- -- -- -- --
E. F. Smith 0 -- -- -- -- --
-----------
</TABLE>
(a) The grants become exercisable, in cumulative installments
and at various dates, during 1995-1999, subject to
provisions of the 1992 Plan that would accelerate the
exercisability in the event of a change of control of
INTERCO. As defined, a change of control includes an
acquisition by a person or group of 20% or more of the
Common Stock or combined voting power, a change in the
composition of at least a majority of the Board, or
stockholder approval of a reorganization, merger or
consolidation resulting in former stockholders' retaining
50% or less of the combined voting power.
(b) The value, if any, one may realize upon exercise of a stock
option depends on the excess of the then current market
value per share over the exercise price per share. There is
no assurance that the values to be realized upon exercise of
the stock options listed above will be at or near the
amounts shown.
(c) As a result of the 1994 spin-off distributions of the common
stock of Converse Inc. and The Florsheim Shoe Company, the
exercise prices of all unexercised options outstanding
following the distributions, were reduced pursuant to the
antidilution provisions of the 1992 Plan. The adjustment in
this instance was from $14.25 per share to $6.885 per share.
-------------
The following table contains information concerning
unexercised stock options held as of December 31, 1994. No stock
options were exercised by Named Executive Officers during the
year ended December 31, 1994.
AGGREGATED FY-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End (a)
------------------------ ------------------------
Exercisable Unexercisable Exercisable Unexercisable
Name # # $ $
-----------------------------------------------------------------
R. B. Loynd 250,000 0 841,750 0
K. S. Tyler, Jr. 62,500 112,500 210,438 210,438
B. B. Kincaid 50,000 100,000 168,350 168,350
D. P. Howard 20,000 60,000 67,340 67,340
D. A. Patterson 20,000 40,000 67,340 67,340
G. Ford 0 0 0 0
E. F. Smith 0 0 0 0
----------
(a) Based on the $6.75 per share closing price of the Common
Stock on the New York Stock Exchange on December 30, 1994.
----------
Retirement Plans
Messrs. Loynd, Howard and Patterson are participants in that
segment of the INTERCO INCORPORATED Retirement Plan which applies
to corporate office employees. The plan is a noncontributory,
defined benefit pension plan designed to provide retirement
benefits upon normal retirement at age 65. Covered remuneration is
base salary and incentive compensation and, based on straight life
annuity, annual benefits at normal retirement are the greater of
(a) the sum of 1.1% of final average compensation (the highest five
consecutive calendar years of the last 10 years) multiplied by
credited service up to a maximum of 35 years and 0.45% of final
average compensation in excess of "covered compensation" as defined
by the IRS multiplied by credited service up to a maximum of 35
years, without deduction for Social Security benefits, or (b) a
total of career average accruals for each year of plan
participation equal to 1.95% of covered remuneration without
deduction for Social Security benefits. Messrs. Loynd, Howard and
Patterson, respectively, have 7, 9 and 31 years credited service
under the plan and estimated annual benefits payable to Mr. Loynd
at retirement and to Messrs. Howard and Patterson at normal
retirement are $119,139, $108,153 and $99,463, respectively,
assuming continuation of current covered remuneration.
Mr. Tyler is a participant in that segment of the INTERCO
INCORPORATED Retirement Plan which applies to employees of The Lane
Company, Incorporated. The plan is a noncontributory, defined
benefit pension plan designed to provide retirement benefits upon
normal retirement at age 65. Covered remuneration is base salary
and
incentive compensation and, based on a straight life annuity,
annual benefits, at normal retirement, are equal to the greater of
(a) the sum of 0.65% of an average of the highest five consecutive
years (of the last 10 years) of covered remuneration and 0.65% of
the said average in excess of the greater of (i) 10,000 or (ii) 50%
of "covered compensation" as defined by the IRS, multiplied by
years of credited service (not to exceed 35 years), without
deduction for Social Security benefits, or (b) $28 multiplied by
years of credited service. Mr. Tyler has 26 years credited service
under the plan and estimated annual benefits payable upon the
retirement of Mr. Tyler at normal retirement are $210,000, assuming
continuation of current covered remuneration.
Benefits payable pursuant to provisions of company-sponsored
retirement plans may be limited by applicable laws and regulations.
Supplemental retirement plans have been adopted providing for
payments from general funds to certain executives, including the
CEO and Named Executive Officers, of any retirement income that
would otherwise be payable pursuant to the retirement plans in the
absence of any such limitations. With respect to Mr. Loynd,
following retirement he will also receive under the supplemental
plan an amount equal to the difference, if any, between (i) the
benefits he would have received had he continued until retirement
as a participant in the Converse Inc. Retirement Plan (in which Mr.
Loynd was formerly an active participant) and (ii) the total of the
benefits he will receive from the Converse Inc. Retirement Plan and
the INTERCO INCORPORATED Retirement Plan. With respect to Messrs.
Tyler and Kincaid, the supplemental plans provide for payments,
commencing at age 65 after 30 or more years service, equal to the
differences, if any, between (i) the total of the straight life
annuities from their base retirement plans plus social security
benefits and (ii) 50% of an average of the highest five consecutive
years (of the last 10 years) of covered remuneration.
Employment and Incentive Agreements
INTERCO has agreements, which expire August 3, 1995, with Mr.
Patterson and two other officers who are not Named Executive
Officers which provide that in the event of a change of control the
officer will remain employed in the same position for a period of
three years following the change of control and receive during that
period minimum annual compensation equal to the officer's highest
salary and annual bonus paid within one year and three years,
respectively, prior to the change of control. If prior to the
expiration of such period, the officer is discharged without cause
or the officer terminates his employment for good reason (including
a reduction in compensation or position), the officer is to receive
a lump-sum payment equal to three years' compensation and pension
benefits and to receive continued coverage under applicable welfare
benefit plans for three years. Under the agreements, a change of
control includes an acquisition by a person or group of 20% or more
of the Common Stock or combined voting power, a change in the
composition of at least a majority of the Board, or stockholder
approval of a reorganization, merger or consolidation resulting in
former stockholders' retaining 50% or less of the combined voting
power.
Each of the Named Executive Officers serving at December 31,
1994 is a participant in an annual incentive compensation plan
under which the officer may earn a bonus during and payable
following the close of the calendar year ending December 31, 1995,
contingent upon the achievement of certain financial objectives by
the company as a whole for Messrs. Loynd, Howard and Patterson and
by their respective operating companies for Messrs. Tyler and
Kincaid.
<PAGE>16
Performance Graph
The following graph shows the cumulative total stockholder
returns (assuming reinvestment of dividends) during two periods,
following assumed investment of $100 each in shares of the Common
Stock that were outstanding on February 23, 1990, and on August 3,
1992. As detailed below, all shares of Common Stock ($0.10 per
share stated value)("Old Common Stock ") that were outstanding and
that traded during the period of February 23, 1990 through June 26,
1992 (when trading in the Old Common Stock was suspended
permanently by the New York Stock Exchange) were cancelled prior
to August 3, 1992, pursuant to provisions of an order of the U.S.
Bankruptcy Court and a Chapter 11 Plan of Reorganization, and
shares of Common Stock ($1.00 per share stated value)("New Common
Stock") that are currently outstanding are shares that were issued
to former creditors or their assigns onand after August 3, 1992,
and after cancellation of the Old Common Stock, pursuant to
provisions of the same order of the Bankruptcy Court and Chapter 11
Plan of Reorganization. The indices shown below are included for
comparative purposes only and do not necessarily reflect INTERCO's
opinion that such indices are an appropriate measure of the
relative performance of the Common Stock.
<TABLE>
<CAPTION>
/==================================================================================================================================/
/ 2/23/90 / 2/22/91 / 2/28/92 / 6/26/92 / / 8/3/92 / 12/31/92 / 12/31/93 / 12/31/94/
<S> <C> <C> <C> <C> <C> <C> <C> <C>
/---------------------------------------------------------/---------/---------/---------/-/--------/----------/----------/---------/
/INTERCO INCORPORATED Common Stock o 100 / 46 / 42 / 0 / / 100 / 110 / 154 / 132/
/---------------------------------------------------------/---------/---------/---------/-/--------/----------/----------/---------/
/S&P 500 Index [] 100 / 113 / 127 / 124 / / 100 / 103 / 110 / 108/
/---------------------------------------------------------/---------/---------/---------/-/--------/----------/----------/---------/
/Dow Jones Home Furnishings & Appliances Index + 100 / 83 / 146 / 131 / / 100 / 107 / 152 / 122/
/==================================================================================================================================/
</TABLE>
-------------
(a) That which appears to the left of the vertical double bar in
the Performance Graph, above, is a comparison of (i) the
cumulative total return of the Old Common Stock outstanding
prior to INTERCO's emergence from Chapter 11 reorganization,
that is during the period of February 23, 1990 through June
26, 1992 when trading in such shares was suspended
permanently, with (ii) the Standard & Poor's 500 Index, and
(iii) the Dow Jones Home Furnishings Sector Index. Pursuant
to provisions of an order of the Bankruptcy Court and the
Bankruptcy Court-confirmed Chapter 11 Plan of Reorganization,
all shares of Old Common Stock outstanding on and prior to
June 26, 1992 were cancelled prior to the August 3, 1992
effective date of the said Plan of Reorganization, and no
distributions were made on account of interests in those
former securities.
(b) Pursuant to provisions of an order of the Bankruptcy Court
and the Bankruptcy Court-confirmed Chapter 11 Plan of
Reorganization, as of the August 3, 1992 effective date of
the said Plan of Reorganization, shares of New Common Stock
currently outstanding were issued to former creditors or
their assigns of INTERCO and its subsidiaries and that which
appears to the right of the vertical double bar in the
Performance Graph, above, is a comparison of (i) the
cumulative total return of the New Common Stock outstanding
subsequent to INTERCO's emergence from Chapter 11
reorganization, that is during the period of August 3, 1992
through December 31, 1994, with (ii) the Standard & Poor's
500 Index, and (iii) the Dow Jones Home Furnishings Sector
Index.
(c) In previous years, the comparisons included the Dow Jones
Apparel (includes footwear) Sector Index which index is not
included above because, as a result of the spin-off
distributions of the common stock of Converse Inc. and The
Florsheim Shoe Company, INTERCO is no longer engaged in the
manufacture or sale of footwear.
____________
II. TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS
Upon recommendation of its Audit Committee, the Board
continued the engagement of KPMG Peat Marwick LLP, certified
public accountants, as independent auditors for the calendar year
ending December 31, 1995, and has unanimously recommended that the
stockholders ratify that action. A formal statement by
representatives of KPMG Peat Marwick LLP is not planned for the
annual meeting; however, as in years past, such representatives
are expected to be present during the meeting and to respond to
appropriate questions.
VOTE REQUIRED. A majority of the votes cast during the
meeting, a quorum being present, is required to ratify the
engagement of independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
RATIFICATION.
III. STOCKHOLDER PROPOSALS
Neither the Board nor management knows of any matters other
than those items set forth above that will be presented for
consideration during the 1995 annual meeting. However, if other
matters should properly come before the meeting, it is intended
that the persons named in the proxies will vote, act and consent
in accordance with their best judgment with respect to any such
matters.
Stockholder proposals submitted for inclusion in INTERCO's
proxy materials for the 1996 annual meeting should be addressed to
the Secretary of INTERCO and must be received at INTERCO's
executive offices not later than November 24, 1995. Upon receipt
of any such proposal, INTERCO will determine whether or not to
include such proposal in the proxy statement and proxy form in
accordance with SEC regulations governing the solicitation of
proxies.
By order of the Board of Directors,
/s/ D. A. Patterson
Duane A. Patterson,
Vice-President and Secretary
St. Louis, Missouri, March 22, 1995.<PAGE>
INTERCO INCORPORATED
Proxy for 1995 Annual Meeting of Stockholders
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints M. S. Gross, R. B. Loynd and D. A.
P Patterson, and each of them with power of substitution, proxy or
R proxies to represent the undersigned, and to vote all shares of
O Common Stock the undersigned would be entitled to vote, at the
X Annual Meeting of Stockholders of INTERCO INCORPORATED to be held
Y on April 27, 1995, and at any adjournment thereof, upon the items
set forth in the proxy statement for the meeting and identified
below.
The Board of Directors recommends a vote FOR
I. Election of Directors (Change of Address)
Nominees:L. D. Black, M. S. Gross, J. J. Hannan, __________________
J. J. Harris, B. A. Karsh, J. H. Kissick, __________________
D. E. Lasater, L. M. Liberman and R. B. Loynd__________________
(If you have written
II. Ratification of Selection of Auditors in the above space,
please mark the
III. In their discretion, upon such other matters corresponding box
as may properly come before the meeting. on the reverse of
this card.)
/------------/
Please specify your choices by marking the appropriate /See Reverse /
boxes on the reverse side and return promptly. / Side /
/------------/
INTERCO INCORPORATED SHARES IN YOUR NAME
Proxy for 1995 Annual Meeting
1. Election of FOR WITHHELD II. Ratification FOR AGAINST ABSTAIN
Directors of Selection
(see reverse) [ ] [ ] of Auditors [ ] [ ] [ ]
FOR, except vote withheld from the following nominee(s):
_____________________________________________
Please mark your votes as
[X] shown to the left.
Change
of [ ]
Address
SIGNATURE(S) _______________________________ DATE_____________
SIGNATURE(S) _______________________________ DATE _____________
(Please sign exactly as name appears above. Executors,
Administrators, Trustees, Etc., should so indicate.)<PAGE>
