SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
x Filed by the registrant
x Definitive proxy statement
KATY INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
KATY INDUSTRIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
x $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the date of
its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
KATY INDUSTRIES, INC.
853 Dundee Avenue, Elgin, Illinois 60120
(312) 379-1121
_________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held
On August 23, 1994
To the Stockholders:
The annual meeting of stockholders of Katy Industries, Inc. will be
held at The Corporate Offices of Katy Industries, Inc., 853 Dundee Avenue,
Elgin, Illinois at 1:00 p.m. local time to consider and act upon the
following matters:
1. The election of eleven members of the Board of Directors to
serve for a term of one year.
2. A proposal to ratify the selection by the Board of Directors of
the firm of Deloitte & Touche as independent auditors of Katy
Industries, Inc. for the current year.
3. The transaction of such other business as may properly come
before the meeting.
The Board of Directors has fixed July 22, 1994 as the record date
for determining stockholders entitled to be notified of and to vote at the
meeting.
Whether or not you expect to attend the meeting, you are urged to
read the proxy statement, sign and date the enclosed proxy card and return
it promptly in the enclosed envelope.
By Order of the Board of Directors
Paul Kurowski
Secretary
July 27, 1994
THIS PAGE
INTENTIONALLY
LEFT BLANK
KATY INDUSTRIES, INC.
853 Dundee Avenue, Elgin, Illinois 60120
(312) 379-1121
_________________________________________
ANNUAL MEETING OF STOCKHOLDERS
To Be Held
On August 23, 1994
_________________________________________
PROXY STATEMENT
Solicitation of Proxies
This proxy statement is furnished in connection with the
solicitation of proxies in the accompanying form by the Board of Directors
of Katy Industries, Inc. ("Katy" or the "Company"), for the Annual Meeting
of Stockholders to be held on August 23, 1994. This proxy statement and
accompanying proxy card are being mailed to stockholders commencing on or
about July 27, 1994. The Annual Report to Stockholders for the year ended
December 31, 1993 (the "Annual Report"), which includes audited financial
statements of Katy and its consolidated subsidiaries, accompanies this
Proxy Statement.
Stockholders of record at the close of business on July 22, 1994 are
entitled to notice of and to vote at the Annual Meeting. As of such date,
there were outstanding and entitled to vote 9,017,387 shares of Common
Stock. Each share of Common Stock is entitled to one vote on each matter
to come before the meeting. The presence in person or by proxy of holders
of a majority of the aggregate outstanding shares of Common Stock will
constitute a quorum at the meeting. A stockholder executing and returning
a proxy has the power to revoke it by notice to the Secretary at any time
before the proxy is voted.
The persons named in the accompanying proxy will vote as directed in
the proxy. In the absence of direction, such persons will vote FOR the
election of the directors nominated by the Board of Directors in
connection with item (1) of the foregoing notice.
Directors will be elected by a plurality of the shares present in
person or by proxy and entitled to vote on the election of directors.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote
and will have no effect on the vote on the election of directors.
Abstentions may be specified on any matters to be voted upon other than on
the election of directors. Abstentions will be counted as present for
purposes of determining the existence of a quorum and will be treated as
a vote against such matter. Under the rules of the New York Stock
Exchange, brokers who hold shares in street name have the authority to
vote on certain routine matters when they have not received instructions
from beneficial owners. Brokers who hold shares of Katy Common Stock in
street name that do not receive instructions are entitled to vote on the
election of directors and will be counted for purposes of determining the
existence of a quorum. Under applicable Delaware law, a "broker non-vote"
(where a broker submits a proxy but does not have authority to vote a
customer's shares) on a non-routine matter is considered not entitled to
vote on that matter and thus is not counted in determining the existence
of a quorum for that matter and will have the same effect as a vote cast
against that matter.
Expenses of soliciting proxies will be borne by Katy. Solicitation
will be by mail except for any incidental solicitation by telephone,
telegram and personal calls by directors, officers and regular employees
of Katy. Katy will also reimburse brokers and certain other persons for
their charges and expenses in forwarding proxy material to their
principals.
ELECTION OF DIRECTORS
Eleven directors are to be elected at the Annual Meeting, each to
serve for a one year term ending at the time of the 1995 Annual Meeting or
until their successors shall be duly elected and qualified. The persons
named in the accompanying proxy intend to vote the shares represented by
the proxy for the election of the following eleven nominees: Jacob
Saliba, Philip E. Johnson, Wallace E. Carroll, Jr., Lelia Carroll, Denis
H. Carroll, Lutz Raettig, Charles W. Sahlman, Arthur R. Miller, William F.
Andrews, William H. Murphy and John R. Prann, Jr. For information
concerning these nominees for director, see "Information Concerning
Directors and Executive Officers", "Security Ownership of Management" and
"Security Ownership of Certain Beneficial Owners". All of the nominees
have indicated their willingness to serve as directors.
On June 29, 1994, the Board of Directors adopted resolutions
restructuring the Company's Board of Directors. The resolutions included
amendments to the Company's By-laws eliminating the staggered term
structure of the Board of Directors and authorizing the Board of Directors
to establish the size of the Board of Directors by resolution. The Board
of Directors also adopted a resolution reducing the size of the Board of
Directors from fifteen to twelve members. Prior to the Board of
Directors' action, the Company's Board of Directors consisted of fifteen
members divided into three classes with each class serving a three year
term. As a result of the Board of Directors' action, the size of the
Board of Directors will be twelve members serving one year terms which
will expire upon the election of directors at the 1995 Annual Meeting or
until their successors shall be duly elected and qualified. Following the
Annual Meeting, a vacancy on the Board of Directors will exist. The Board
of Directors intends to fill this vacancy with a candidate expected to be
selected by the Board of Directors following the Annual Meeting.
On June 29, 1994, the Company announced that Jacob Saliba, who
retired as Chief Executive Officer last December, resigned as Chairman but
will continue to serve on the Board of Directors. Philip E. Johnson, a
director and member of the Executive Committee of Katy, was elected as
Chairman to succeed Mr. Saliba. Katy also announced on June 29, 1994 that
five former members of the Board of Directors had resigned to facilitate
the restructuring of Katy and that John R. Prann, Jr., President and
Chief Executive Officer of Katy, was appointed a member of the Board.
IT IS THE INTENTION OF THE PERSONS NAMED IN THE ENCLOSED FORM OF
PROXY TO VOTE "FOR" THE ELECTION OF THE ELEVEN NOMINEES FOR DIRECTOR
INDICATED ABOVE. IF ANY NOMINEE BECOMES UNAVAILABLE TO SERVE FOR ANY
REASON, THE PROXY WILL BE VOTED FOR A PERSON OR PERSONS TO BE SELECTED BY
THE BOARD OF DIRECTORS. NOTWITHSTANDING THE CURRENT VACANCY ON THE BOARD
OF DIRECTORS, PROXIES CANNOT BE VOTED FOR A NUMBER OF NOMINEES GREATER
THAN THE ELEVEN PERSONS NOMINATED BY THE BOARD OF DIRECTORS.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met eight times during 1992 and fifteen times
during 1993. Each director then in office attended at least 75% of those
meetings and of the meetings of the committees of the Board of which
he/she is a member. The Company's By-laws provide for an Executive
Committee to which the Board of Directors has assigned all powers
delegable by law. The Executive Committee met informally throughout the
year, held numerous telephone conferences at intervals between meetings of
the full Board of Directors and acted by unanimous consent without formal
meetings. The Executive Committee presently consists of Philip E.
Johnson, William H. Murphy, Charles W. Sahlman and Jacob Saliba. The
Board of Directors also has an Audit Committee and a Compensation
Committee. The Audit Committee presently consists of Charles W. Sahlman,
William F. Andrews, and William H. Murphy, none of whom was an officer or
employee of the Company during 1993. This Committee met four times during
1992 and once during 1993. The Audit Committee reviews the results of the
annual audit with the Company's independent auditors, reviews the scope
and adequacy of the Company's internal auditing procedures and its system
of internal controls, and reports its findings and recommendations to the
Board of Directors. The Compensation Committee presently consists of
Charles W. Sahlman, Chairman, Jacob Saliba, Denis H. Carroll, Philip E.
Johnson and William H. Murphy. This Committee, which reviews current and
deferred compensation of all officers of the Company and for certain
officers and key employees of its subsidiaries, held two meetings during
1992 and three meetings during 1993. The entire Board of Directors
considers and selects nominees for director and does not maintain a
separate nominating committee. The Company does not maintain a formal
procedure for the selection of nominees for director by stockholders.
However, stockholders may make nominations at the annual meeting.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of July 15, 1994 with
respect to those persons who are presently executive officers, directors
or nominees for director of Katy. Each officer holds office until the
next annual meeting of directors:
<TABLE>
<CAPTION>
Principal Occupation Period of
and Business Service
Experience During as Katy
Name Age the Past Five Years Directorships Director
<S> <C> <C> <C> <C>
Philip E. Johnson 46 1994 to present:
Chairman of the
Board of Katy
1993 to present:
Partner with
Bennington, Johnson,
Ruttum & Reeve,
attorneys at law
1980 to 1993:
Partner with Mosley,
Wells, Johnson &
Ruttum PC, attorneys
at law OEA, Inc. 1990 to
present
John R. Prann, Jr. 43 1993 to present:
President, Chief
Executive Officer
and Chief Operating
Officer of Katy
1992 to present:
President of CRL,
Inc., a diversified
holding company
1990 to 1991:
President of Profile
Gear, Inc., a
manufacturing
company,
Libertyville, IL
1987 to 1990:
Partner of Deloitte &
Touche - valuation
and appraisal
services, Chicago,
IL
1994 to present
Lelia Carroll 45 1992 to present:
Vice-Chairman and
Vice-President of
CRL, Inc., a
diversified holding
company
1987 to present:
Investor
1991 to present
Lutz R. Raettig 51 1988 to present:
Executive Vice
President and Head
of Investment
Banking, Commerzbank
AG, Frankfurt/Main,
Germany Schon & Cie, AG
European Meffanine Fund
Holding, Curacao European
Technology Ventures S.A.,
Luxemburg, Belgium
PMC, Personal
Management Consult GmbH,
Frankfurt, Germany
Mora Beteiligunj, AG, Frankfurt
Germany
1991 to present
Charles W. Sahlman 67 1987 to present:
President, Bee Gee
Holding Company,
Inc., a holding
company for
subsidiaries engaged
in the harvesting and
processing of seafood
1972 to present
Wallace E.
Carroll, Jr. 56 1992 to present:
Chairman and
Vice-President of
CRL, Inc., a
diversified holding
company
1987 to present:
Investor
1991 to present:
Arthur R. Miller 43 1988 to present:
Partner with Holleb
& Coff, attorneys
at law
1977 to 1988:
Partner with Quinn,
Jacobs, Barry &
Miller, attorneys at
law
Schon & Cie, AG 1988 to
present
Jacob Saliba 80 1988 to 1994:
Chairman of the
Board of Katy
1988 to 1993
Chief Executive
Officer of Katy
1968 to 1988:
President of
Katy
Compaganie des
Entrepots et
Gares
Frigorifiques
C.E.G.F.
(U.S.A.), Inc.
Emerging
Germany Fund
Schon & Cie AG
Syratech
Corporation 1968 to
present
William F. Andrews 62 1992 to present:
Chairman and CEO of
Amdura Corporation
and Utica Corp.
1990 to 1991:
President and CEO
of UNR Industries,
a steel products
firm
1989 to 1990:
President of Massey
Investment Company,
a private investment
company
1986 to 1989:
Chairman, President
and CEO of SSMC,
Inc., a manufacturer
of consumer products Johnson
Controls
Navistar
Harley Davidson
Southern New
England Tele-
communications
Corporation
Corrections
Corp. of
America
MB
Communications 1991 to
present
Denis H. Carroll 55 1992 to present:
President CRL
Industries, Inc., a
diversified holding
company
1970 to 1992:
President of American
Couplings Company, a
brass hose couplings
manufacturer
1980 to present:
Vice President of
CRL, Inc., a
diversified holding
company Versa Technol-
ogies, Inc. 1974 to
present
William H. Murphy 62 1992 to present:
Retired
1988 to 1992:
President of
Katy
1974 to 1988:
Vice President,
Treasurer and
Controller of
Katy Schon & Cie, AG
1979 to
present
Glenn W. Turcotte
53 1992 to present:
Executive Vice
President of Katy
1983 to present:
President of Glit
Division of Hallmark
Holdings, Inc., a
subsidiary of Katy
N/A
Robert M. Baratta 64 1993 to present:
Vice President of Katy
President of Katy
Seghers, Inc. and
Savannah Energy
Systems Company,
subsidiaries of Katy N/A
Michael G. Gordono 54 1993 to present:
Vice President of Katy
1987 to 1993:
President of Beehive
Machinery, Inc., a
subsidiary of Katy
N/APaul Kurowski 52 1994 to present:
Chief Financial
Officer, Treasurer
and Secretary
1993 to 1994:
Secretary, Acting
Chief Financial
Officer and Treasurer
of Katy
1977 to 1993:
Director of Taxes and
Assistant Treasurer N/A
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of July 18, 1994, the number of
shares of Common Stock of Katy beneficially owned by all directors
individually, each of the named current executive officers listed in the
"Summary of Cash and Certain Other Compensation" table and by all
directors and executive officers as a group. Unless otherwise indicated,
the nature of beneficial ownership is that of sole voting power and sole
investment power.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Beneficial of
Name Ownership Class
<S> <C> <C>
William F. Andrews None
Denis H. Carroll (1)
(see pages 9 - 12)
Lelia Carroll
(see pages 9 - 12)
Wallace E. Carroll, Jr. (see pages 9 - 12)
Philip E. Johnson (1)
(see pages 9 - 12)
Arthur R. Miller
(see pages 9 - 12)
William H. Murphy
1,600
*Lutz R. Raettig None
Charles W. Sahlman None
Jacob Saliba
3,216
*John R. Prann, Jr.
None
Glenn W. Turcotte None
Robert M. Baratta None
Michael G. Gordono None
Paul Kurowski
8 *
All directors and
executive officers of
Katy as a group (20
persons) 4,568,061 (2) 50.7%
<FN>
* Indicates 1% or less
</TABLE>
(1) Denis H. Carroll and Philip E. Johnson are trustees of an
irrevocable trust established by Lelia H. Carroll, for the benefit
of her descendants, that holds 500 shares of common stock of
Sterling-Salem Corporation. Katy owns 80% of that corporation's
outstanding common shares and the trust described above owns the
remaining 20% of the outstanding shares. Sterling Salem Corporation
has approximately $25,000 of assets, consisting of land, and does
not currently conduct business.
(2) Includes all shares beneficially owned by members of the Carroll
family who serve on the Board of Directors as set forth under
"Security Ownership of Certain Beneficial Owners".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes set forth as of July 18, 1994, certain
information regarding the beneficial ownership of those persons or
entities, including certain members of the family of Wallace E. Carroll,
former Chairman of the Board of Katy, since deceased, and related
entities, who are known to be the beneficial owners of more than five
percent (5%) of the Common Stock of Katy.
The following table reflects multiple counting of shares of the
Common Stock of Katy where more than one of the persons identified below
may be deemed to be a beneficial owner of such shares. Reference should
be made to the notes below for a description of the nature of the
beneficial ownership reported in the table below.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of Beneficial of
Of Beneficial Owner Ownership Notes Class
<S> <C> <C> <C>
Denis H. Carroll
c/o CRL Industries, Inc.
2345 Waukegan Rd.
Suite S-200 (1)(2)(7)(8)
Bannockburn, IL 60015 3,419,402 (9)(10)(11) 37.9%
Barry J. Carroll
c/o Carroll International Corp.
2430 Des Plaines Ave., Suite 303 (1)(3)(7)(8)
Des Plaines, IL 60018 3,272,677 (9)(10)(11) 36.3%
Wallace E. Carroll, Jr.
c/o CRL, Inc.
6300 S. Syracuse, Suite 300 (1)(4)(7)
Englewood, CO 80111 3,032,985 (9)(10)(11) 33.6%
Lelia Carroll
c/o CRL, Inc.
6300 S. Syracuse, Suite 300 (1)(5)(7)(8)
Englewood, CO 80111 3,067,064 (9)(10)(11) 34.0%
Philip E. Johnson
c/o Bennington, Johnson, Ruttum
& Reeve
370 17th Street, #2480 (1)(6)(7)
Denver, CO 80202 3,759,798 (8)(9)(10)(11) 41.7%
CRL, Inc.
6300 S. Syracuse, Suite 300
Englewood, CO 80111 2,052,500 (9) 22.8%
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434 1,145,500 (12) 12.7%
</TABLE>
(1) Wallace E. Carroll, Jr., Denis H. Carroll, Barry J. Carroll and
Lelia Carroll are the children of Wallace E. Carroll and Lelia H.
Carroll. Philip E. Johnson is the former husband of Lelia Carroll.
Wallace E. Carroll, Jr., Denis H. Carroll, Lelia Carroll and Philip
E. Johnson are directors of Katy.
Certain members of the Carroll family, including Wallace E. Carroll,
Jr., Denis H. Carroll, Lelia Carroll and Philip E. Johnson and
members of their immediate families (the "Reporting Persons"),
beneficially owning 4,401,775 shares of Katy Common Stock or 48.8%
of the outstanding shares, have jointly filed a Statement on
Schedule 13D reporting their beneficial ownership. Certain other
members of the Carroll family, including Barry J. Carroll and
members of his immediate family (the "BJC Persons"), beneficially
owning 3,272,677 shares of Katy Common Stock or 36.3% of the
outstanding shares (which includes certain shares of which Barry J.
Carroll and members of his immediate family share beneficial
ownership with certain of the Reporting Persons), have jointly filed
a separate Statement on Schedule 13D reporting their beneficial
ownership. Information concerning the BJC Persons is as reported on
an Amendment No. 3 to a Statement on Schedule 13D filed on June 9,
1994 by such persons.
All members of the Carroll family and the trusts and other entities
controlled by them are parties to a Stock Purchase Agreement dated
as of January 1, 1983, pursuant to which, among other things, each
party has a right of first refusal to acquire certain shares of Katy
Common Stock proposed to be sold by other parties thereto at the
then current market value for such shares.
(2) Denis H. Carroll holds 1,734 shares and may be deemed to
beneficially own 6,164 shares held by his wife, Patricia S. Carroll,
and 10,884 shares held by his children and in a custodial account
for his children. Denis H. Carroll disclaims beneficial ownership
of shares held by his wife and such shares are excluded from his
reported beneficial ownership.
(3) Barry J. Carroll holds 7,874 shares and may be deemed to
beneficially own 6,164 shares held by his wife, Barbara P. Carroll
and 6,772 shares held by his children and in a custodial account for
his children. As the sole general partner of the BJC Partnership,
Ltd., Barry J. Carroll may be deemed to beneficially own 3,780
shares held by such partnership. As the controlling stockholder of
Carroll International Corporation, Barry J. Carroll may be deemed to
beneficially own 200,000 shares held by such corporation.
(4) Wallace E. Carroll, Jr. holds 119,100 shares and may be deemed to
beneficially own 6,164 shares held by his wife, Amelia M. Carroll,
and 13,254 shares held by his children and in custodial accounts
for his children. As the sole general partner of the WEC, Jr.
Partnership, Ltd., Wallace E. Carroll, Jr. may be deemed to
beneficially own 16,504 shares held by such partnership.
(5) Lelia Carroll holds 125,064 shares. Lelia Carroll may also be
deemed to beneficially own 1,800 shares held in custodial accounts
for the benefit of her children. As the sole general partner of the
LCJ Partnership, Ltd., Lelia Carroll may be deemed to be the
beneficial owner of 19,552 shares directly beneficially owned by
such partnership.
(6) Philip E. Johnson holds 5,550 shares. Gage Partnership, Ltd., Gage
Partnership 1989, Ltd. and Gage Partnership 1990, Ltd. hold 7,691,
2,207 and 5,252 shares, respectively. As the sole general partner
of such partnerships, Philip E. Johnson may be deemed to
beneficially own all shares held by such partnerships.
(7) Certain Carroll family trusts for the benefit of Denis H. Carroll
and his descendants (the "DHC '57 Trust" and "DHC '58 Trust") hold
2,151 and 372,120 shares, respectively. The trustees of such trusts
are Denis H. Carroll, Philip E. Johnson and Arthur R. Miller.
Accordingly such persons may be deemed to share beneficial ownership
of the shares beneficially owned by such trusts. Certain Carroll
family trusts for the benefit of Lelia Carroll and her descendants
(the "LC '57 Trust" and "LC '58 Trust") hold 2,151 and 82,020
shares, respectively. The trustees of such trusts are Lelia
Carroll, Philip E. Johnson and Amelia M. Carroll. Accordingly such
persons may be deemed to share beneficial ownership of shares
beneficially owned by such trusts. Certain Carroll family trusts
for the benefit of Wallace E. Carroll, Jr. and his descendants (the
"WEC, Jr. '57 Trust" and "WEC, Jr. '58 Trust") hold 2,151 and
372,121 shares, respectively. The trustees of such trusts are
Wallace E. Carroll, Jr., Arthur R. Miller and Amelia M. Carroll.
Accordingly, such persons may be deemed to share beneficial
ownership of shares beneficially owned by such trusts. A Carroll
family trust for the benefit of Barry J. Carroll and his descendants
("BJC '58 Trust") holds 20,000 shares. The trustees of such trusts
are Barry J. Carroll, Barbara P. Carroll and Megan E. Carroll.
Accordingly, such persons may be deemed to share beneficial
ownership of shares beneficially owned by such trusts. The DHC '57
Trust, the LC '57 Trust, the WEC, Jr. '57 Trust and the BJC '57
Trust (another Carroll Family trust for the benefit of Berry J.
Carroll and his descendants which currently holds no shares
directly) are collectively referred to as the "'57 SubTrusts." The
DHC '58 Trust, the LC '58 Trust, the WEC, Jr. '58 Trust and the BJC
'58 Trust are collectively referred to as the "'58 SubTrusts."
Arthur R. Miller disclaims beneficial ownership of shares
beneficially owned by the '57 SubTrusts and '58 SubTrusts for which
he serves as a trustee.
(8) Certain Carroll family trusts for the benefit of the descendants of
Wallace E. Carroll (the "'61 Trust," "'62 Trust" and "'78 Trust")
hold 60,787, 288,405 and 30,000 shares, respectively. The trustees
of such trusts are Denis H. Carroll, Philip E. Johnson and Barry J.
Carroll. Accordingly, such persons may be deemed to share
beneficial ownership of shares beneficially owned by such trusts.
Certain trusts created for the benefit of the descendants of
Wallace E. Carroll, Jr. (collectively, the "W.E.C. Jr. Trusts") each
hold 1,000 and 774 shares, respectively. Barry J. Carroll and Lelia
Carroll serve as trustees and each may be deemed to share beneficial
ownership of the shares held by the W.E.C. Jr. Trusts.
(9) CRL, Inc. directly owns 718,680 shares and indirectly beneficially
owns an additional 1,333,820 shares through its wholly-owned
subsidiaries. Certain Carroll family trusts for the benefit of
Lelia Carroll and her descendants (the "LC '54 Trust" and the "LC
'55 Trust), the '57 SubTrusts, the '58 SubTrusts, Barry J. Carroll,
Denis H. Carroll, Wallace E. Carroll, Jr., Lelia Carroll and The
Wallace E. Carroll Estate, which hold all of the outstanding stock
of CRL, may be deemed to share beneficial ownership of the shares
indirectly beneficially owned by CRL. Lelia Carroll, Brooke H.
Johnson, the daughter of Lelia Carroll, and Amelia M. Carroll serve
as trustees of the LC '54 Trust and the LC '55 Trust and may be
deemed to share beneficially ownership of the shares deemed
beneficially owned by such trusts.
(10) The Carroll Foundation, a Colorado private foundation (the
"Foundation"), holds 40,908 shares. The administrators of the
Foundation, Barry J. Carroll, Denis H. Carroll and Lelia Carroll may
be deemed to share beneficial ownership of the shares held by the
Foundation. As the general partners of Gage Partnership, 1991,
Ltd., Philip E. Johnson, Denis H. Carroll, Barry J. Carroll,
Wallace E. Carroll, Jr. and Lelia Carroll may be deemed to share
beneficial ownership of the 19,406 shares held by such partnerships.
LeWa Company ("LeWa") holds 416,338 shares and may be deemed to
indirectly beneficially own 15,450 shares held by one of its wholly-
owned subsidiaries. Barry J. Carroll, Denis H. Carroll, Wallace E.
Carroll, Jr., Lelia Carroll and the '62 Trust, which hold all of the
outstanding stock of LeWa, may be deemed to share beneficial
ownership of the shares held and indirectly beneficially owned by
LeWa.
(11) Lelia H. Carroll, the surviving wife of Wallace E. Carroll, Sr.,
holds 69,762 shares. Such shares are not reflected in the aggregate
Carroll family ownership referred to above and are not reflected in
the beneficial ownership reported by each of the children of Lelia
H. Carroll. The Wallace E. Carroll Estate (the "Estate") holds
53,598 shares. The administrators of the Estate, Barry J. Carroll,
Denis H. Carroll, Philip E. Johnson and Lelia H. Carroll, may be
deemed to share beneficial ownership of the shares held by the
Estate. The Marital Trust created under the Will of Wallace E.
Carroll is the direct beneficial owner of 55,121 shares. The
trustees of the Marital Trust are Denis H. Carroll, Philip E.
Johnson, Barry J. Carroll and Lelia H. Carroll and as a result such
persons may be deemed the beneficial owners of shares directly
beneficially owned by the Marital Trust. Neither Lelia H. Carroll,
the Wallace E. Carroll Estate nor the Marital Trust created under
the Will of Wallace E. Carroll are members of the reporting groups
filing the Statements on Schedule 13D referred to in note (1) above.
(12) Beneficial ownership is as reported on an Amendment No. 8 to
Statement on Schedule 13D dated June 30, 1994 filed by the Gabelli
Funds, Inc. and related parties.
Compliance with Section 16
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Katy's directors, executive officers and persons
who beneficially own greater than 10% of Katy's Common Stock to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "Commission"), and copies of such reports with
the New York Stock Exchange and Katy. Based solely upon its review of
copies of the Section 16 reports, the Company believes that during its
fiscal years ended December 31, 1992 and 1993, all of its directors,
executive officers and greater than 10% beneficial owners were in
compliance with their Section 16 filing requirements other than the
following (i) the Estate of Wallace E. Carroll, Sr., which inadvertently
failed to timely file a Form 5 reporting an intra-family transfer of
shares for no consideration, (ii) Lelia H. Carroll, who inadvertently
failed to timely file a Form 5 reporting an intra-family transfer of
shares for no consideration, and (iii) John R. Prann, Jr., Paul Kurowski,
Robert M. Baratta and Michael G. Gordono, each of whom inadvertently
failed to timely file a Form 3 upon becoming an executive officer of the
Company. All of the above filings were subsequently made by such persons.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows, for the years ending December 31, 1993,
1992 and 1991, the cash compensation paid by Katy and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to
Katy's current and former Chief Executive Officer, the four other most
highly compensated executive officers and one former executive officer.
Katy has not granted any stock options or restricted stock awards and has
not paid any long-term incentive compensation nor made any long-term
incentive awards to such executive officers during such periods.
<TABLE>
<CAPTION>
Annual Compensation
---------------------------
All Other
Name and Principal Position Year Salary Bonus Compensation (a)
- - --------------------------- ------ -------- -------- ----------------
<S> <C> <C> <C> <C>
John R. Prann (b)
President, Chief Executive 1993 $159,786 $ 35,000 $ 7,973
Officer and Chief Operating
Officer
Jacob Saliba
Chief Executive Officer 1993 386,719 40,000 907,275 (c)
Chief Executive Officer 1992 423,008 10,000 4,092
Chief Executive Officer 1991 375,000 20,200 -
Glenn W. Turcotte
Executive Vice-President 1993 164,904 124,769 2,579
Vice-President 1992 110,000 144,000 9,370
Robert M. Baratta
Vice President 1993 111,500 15,000 2,530
Michael G. Gordono
Vice President 1993 139,461 15,000 1,189
Paul Kurowski
Secretary, Treasurer and
Chief Financial Officer 1993 109,500 25,000 3,468
J. Russell Jones (d)
Chief Financial Officer,
Vice-President,
and Treasurer 1993 135,000 - 200,259 (e)
Vice-President and Treasurer 1992 92,102 8,000 5,176
Treasurer 1991 85,000 4,800 -
<FN>
(a) Includes non-cash compensation consisting of personal use of
corporate automobiles, club dues and medical expenses. To the
extent used, such benefits are treated as additional wages for
withholding and income tax purposes. Amounts included for Mr.
Saliba and Mr. Jones also include retirement payments described in
the notes below.
(b) Commenced employment on April 14, 1993. John R. Prann, Jr.'s salary
and bonus were paid by CRL, Inc., a diversified holding company
owned by members of the Carroll Family, for which Mr. Prann serves
as President. All amounts paid by CRL, Inc. to Mr. Prann for his
services as an executive officer of Katy were reimbursed to CRL,
Inc. by Katy.
(c) Retired effective November 30, 1993. On March 15, 1993, the Board
of Directors approved a retirement compensation program for Katy's
Chief Executive Officer, Jacob Saliba, Katy's former Chairman and
Chief Executive Officer, under which a payment of $895,803, was paid
on November 30, 1993.
(d) Retired effective December 31, 1993.
(e) Includes $192,038 paid to J. Russell Jones under the terms of a
retirement program.
</TABLE>
Compensation of Directors
Directors who are not employees of Katy or its subsidiaries receive
an annual retainer of $9,000 for service on the Board of Directors and up
to $2,000 for attendance at each meeting of the Board or a committee
thereof. Directors who are officers are not separately compensated as
directors.
Retirement/Compensation Program
Katy's Board of Directors has authorized a retirement/compensation
program for eligible home office employees on such terms and conditions to
be established by the Board at its discretion.
BOARD OF DIRECTORS' COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors (the
"Compensation Committee") presents the following report on executive
compensation:
In 1992 and 1993, the Compensation Committee consisted of Charles W.
Sahlman, Chairman, Denis H. Carroll, Philip E. Johnson, William H. Murphy
and Jacob Saliba. The Compensation Committee makes decisions on executive
officer compensation and reports its decisions to the Board of Directors.
The Compensation Committee also seeks approval of the Board of Directors
on all aspects of compensation for the Chief Executive Officer ("CEO").
Compensation Philosophy
The goals of the Company's compensation program are to align the
economic interest of executive officers with those of stockholders,
including Company financial objectives and market performance. The
Compensation Committee seeks to adjust compensation levels, through
competitive base salaries and bonus payments, based on individual and
Company performance. The Compensation Committee reviews the executive
compensation program annually in view of the Company's annual strategic
and financial objectives and performance.
Compensation Program Components
Annual compensation for the Company's CEO and executive officers,
including those listed in the "Summary of Cash and Certain Other
Compensation" table, consists of two primary elements, base salary and
annual cash bonuses. Salary and bonus levels reflect job responsibility,
seniority, Compensation Committee judgments of individual effort and
performance and the Company's financial and market performance, in light
of the competitive environment in which the Company operates.
Annual cash compensation is also influenced by the compensation
practices of comparable companies so that the Company remains reasonably
competitive in the market. While competitive pay practices are viewed as
important, the Compensation Committee believes that the most important
considerations in setting annual compensation are individual merit and the
Company's financial and market performance. In considering the Company's
financial and market performance, the Compensation Committee reviews,
among other things, net income and revenues of the Company and share price
performance relative to comparable companies and historical performance.
Chief Executive Officer Compensation
John R. Prann, Jr. became President in April 1993 and CEO in
December 1993, and also currently serves as the President of CRL, Inc., a
diversified holding company owned by members of the Carroll Family. Mr.
Prann's salary and bonus for 1993 were based upon his experience and
qualifications, responsibilities, individual effort and performance as
well as the Company's performance.
Jacob Saliba served as CEO in 1992 and until his retirement in 1993.
Mr. Saliba's salary and bonus for 1992 and 1993 were based upon his
experience and qualifications, responsibilities, individual effort and
performance as well as the Company's performance. Mr. Saliba's
compensation for 1993 included a retirement compensation program payment
in the amount of $895,803 approved by the Compensation Committee for Mr.
Saliba's prior performance, commitment and dedication to the Company
during his tenure. In particular, the Compensation Committee recognized
Mr. Saliba's 25 years of service and contributions to the growth of the
Company during his tenure.
Summary
The Compensation Committee believes that the total compensation
program for executive officers of the Company is appropriately related to
individual performance and Katy's performance, including financial results
of Katy and stockholder value. The Compensation Committee also believes
Katy's compensation program is competitive with comparable companies and
provides appropriate incentives for Katy's executive officers to work
towards continued improvement in Katy's overall performance.
Compensation Committee of the Board of Directors:
Charles W. Sahlman
Denis H. Carroll
Philip E. Johnson
William H. Murphy
Jacob Saliba
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following is a description of certain relationships that exist
with regard to certain members of the Compensation Committee of Katy's
Board of Directors and certain of its executive officers who also serve or
served as executive officers of, or transacted business with, Katy, its
subsidiaries or certain related entities.
Charles W. Sahlman is President of Bee Gee Holdings, Inc. ("Bee
Gee") (a 37.5% Katy subsidiary) and of C.E.G.F. (USA), Inc. ("C.E.G.F.")
(a 95% Katy subsidiary) and is a former Executive Vice President of Katy.
Prior to 1993 C.E.G.F. was a 25% Katy subsidiary; in February, 1993 Katy
purchased a 20% interest in C.E.G.F. from Bee Gee; and in March, 1994 Katy
purchased a 50% interest in C.E.G.F. from a third party. These
transactions resulted in C.E.G.F. becoming a 95% Katy subsidiary. In 1989
Katy loaned C.E.G.F. $4,197,000, at prime interest rate plus 3/4%,
maturing at December 31, 1994.
William H. Murphy was President, Chief Financial Officer and Chief
Operating Officer of Katy through the year ended December 31, 1992.
Jacob Saliba was the Chairman of the Board of Directors of Katy
through June 29, 1994 and was Chief Executive Officer of Katy through
November 30, 1993.
Philip E. Johnson is the current Chairman of the Board of Directors
of Katy. Mr. Johnson was a partner in the Denver law firm of Mosley,
Wells, Johnson & Ruttum, P.C. which acted as counsel to Katy and its
subsidiaries during 1992 and 1993. See also "Certain Relationships and
Related Transactions".
John R. Prann Jr., Katy's President, Chief Operating Officer and
Chief Executive Officer, is also serving as President and a director of
CRL, Inc., a Carroll family-owned company. Wallace E. Carroll, Jr. and
Lelia Carroll, directors of Katy, also serve as Chairman and Vice
President, and Vice Chairman and Vice President of CRL, Inc.,
respectively.
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the Standard & Poor (S&P) Composite 500 Stock
Index and the cumulative total return of the S&P Conglomerate Index for
the years 1988 through 1993.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG KATY INDUSTRIES, INC.,
S&P 500 INDEX AND S&P CONGLOMERATE INDEX
1988 1989 1990 1991 1992 1993
Katy Industries, Inc. 100 132.65 88.10 99.71 115.04 145.91
S&P 500 100 124.56 104.46 113.24 139.57 184.98
S&P Conglomerate 100 131.68 127.58 166.47 179.20 197.26
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Katy is a joint venture partner with a major American oil company
and a Japanese concern in an Indonesian oil and gas exploration project.
During 1988 Katy assigned to certain entities controlled by the Carroll
family, the right to receive fifty percent (50%) of Katy's revenues from
the project after recovery of Katy's invested costs, which assignment was
in consideration of past acts of financial support by those entities.
Arthur R. Miller, a director of Katy, is a partner in the Chicago
law firm of Holleb & Coff which acted as general counsel to Katy and its
subsidiaries during 1993 and 1992 and continues to serve in such capacity.
During 1993 and 1992 Katy paid $1,090,000 and $756,000, respectively, in
legal fees to Holleb & Coff.
Philip E. Johnson, Chairman of the Board of Directors of Katy, was
a partner in the Denver law firm of Mosley, Wells, Johnson & Ruttum, P.C.
which acted as counsel to Katy and its subsidiaries during 1993 and 1992.
During 1993 and 1992 Katy paid $276,000 and $37,119, respectively in legal
fees to Mosley, Wells. Mr. Johnson is currently a partner in the Denver
law firm of Bennington, Johnson, Ruttum & Reeve which currently acts as
counsel to Katy and its subsidiaries.
In 1989 Katy loaned C.E.G.F., then a 25% owned subsidiary of Katy,
$4,197,000 at prime interest rate plus 3/4%, maturing at December 31,
1994. In February, 1993 Katy purchased a 20% interest in C.E.G.F. from
Bee Gee and in March, 1994 Katy purchased a 50% interest in C.E.G.F. from
a third party. These transactions resulted in C.E.G.F. becoming a 95%
Katy subsidiary. Charles W. Sahlman, a Katy director, is President of Bee
Gee and C.E.G.F.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche to audit the
accounts of the Company for the current fiscal year. Deloitte & Touche
was the firm of independent auditors selected by the Board of Directors to
audit the accounts of the company for the 1993 and 1992 fiscal years.
Deloitte & Touche, which has no other relationship with the Company, also
serves as independent auditors for other corporations owned by Carroll
family interests. It is intended that the shares represented by proxies
will be voted FOR the ratification of the selection of Deloitte & Touche
unless otherwise specified in the space provided in the proxy. In the
event that the stockholders fail to ratify the selection of Deloitte &
Touche as independent auditors of the Company for the current year, the
Board of Directors would reconsider such selection.
A representative of Deloitte & Touche is expected to be present at
the Annual Meeting, with the opportunity to make a statement if so desired
and to answer appropriate questions from the floor.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors does
not know of any matters to be presented to the meeting other than the
election of directors and the ratification of independent auditors.
However, if other matters come before the meeting, it is the intention of
the persons named on the accompanying proxy to vote on such matters in
accordance with their best judgment.
PROPOSALS OF STOCKHOLDERS FOR 1995 ANNUAL MEETING
Proposals which stockholders intend to present at the 1995 Annual
Meeting of stockholders must be received by the Secretary of the Company
at its executive offices, 853 Dundee Avenue, Elgin, Illinois 60120, not
later than December 1, 1994 to be considered for inclusion in the proxy
materials for the 1995 Annual Meeting. Effective September 1, 1994, the
address for the Company's executive offices will be 6300 S. Syracuse Way,
Suite 300, Englewood, CO 80111.
By Order of the Board of Directors
KATY INDUSTRIES, INC.
Paul Kurowski
Secretary
July 27, 1994
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