<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE LAMSON & SESSIONS CO.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
LAMSON & SESSIONS LOGO
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
March 18, 1998
To Our Shareholders:
On behalf of the Board of Directors and management, I cordially invite you
to attend the 1998 Annual Meeting of Shareholders to be held on Friday, April
24, 1998, at 9:00 a.m., local time, at The Renaissance Cleveland Hotel, 24
Public Square, Cleveland, Ohio 44113.
At this meeting, shareholders are expected to elect four directors for a
three-year term ending in the year 2001 and to approve the establishment of a
new Incentive Equity Plan to replace the Company's 1988 Incentive Equity
Performance Plan which expires in April 1998. The new Plan is designed to reward
key management personnel if they achieve performances which increase the value
of the Company to the shareholders. This new Plan will also provide management
employees with incentive equity opportunities which are competitive with those
offered by similarly situated companies and will recognize services which
contribute materially to the Company's success.
In addition, there will be a report on current developments in the Company
and an opportunity for questions of general interest to shareholders.
It is extremely important that your shares be represented at the meeting.
Whether or not you plan to attend in person, you are requested to mark, sign,
date and return the enclosed proxy promptly in the envelope provided.
Sincerely,
/s/ John B. Schulze
JOHN B. SCHULZE
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
LAMSON & SESSIONS LOGO
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1998
Notice is hereby given that the Annual Meeting of Shareholders of The
Lamson & Sessions Co. will be held at The Renaissance Cleveland Hotel, 24 Public
Square, Cleveland, Ohio 44113, on April 24, 1998, beginning at 9:00 a.m., local
time, for the purpose of considering and acting upon the following:
(1) The election of four directors in Class I for three-year terms expiring
in the year 2001;
(2) A proposal to approve the Company's 1998 Incentive Equity Plan; and
(3) Any other business as may properly come before the Annual Meeting or
any adjournment thereof.
Holders of Common Shares of record at the close of business on March 4,
1998 are entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.
By order of the Board of Directors.
/s/ John B. Schulze
JOHN B. SCHULZE
Chairman of the Board
and Chief Executive Officer
March 18, 1998
------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY, USING THE RETURN ENVELOPE ENCLOSED IN ORDER
THAT YOUR VOTE MAY BE COUNTED AT THE ANNUAL MEETING.
<PAGE> 4
LAMSON & SESSIONS LOGO
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 1998
DATE OF THE PROXY STATEMENT -- MARCH 18, 1998
GENERAL INFORMATION
GENERAL
This Proxy Statement is furnished to holders of Common Shares, without par
value (the "Common Shares"), of The Lamson & Sessions Co. (the "Company") in
connection with the solicitation of proxies by the Company's Board of Directors
for the Annual Meeting of Shareholders to be held at The Renaissance Cleveland
Hotel, 24 Public Square, Cleveland, Ohio 44113, on April 24, 1998, at 9:00 a.m.,
local time, and at any adjournment thereof (the "Meeting"). Only holders of
record of Common Shares at the close of business on March 4, 1998 will be
entitled to notice of, and to vote at the Meeting. To ensure adequate
representation at the Meeting, all shareholders are requested to mark, sign,
date and return promptly the enclosed proxy. The date of this Proxy Statement,
which includes the Notice of the 1998 Annual Meeting of Shareholders, is March
18, 1998, and it was first mailed to shareholders on or about March 18, 1998.
The Common Shares represented by the accompanying proxy will be voted in
accordance with the instructions thereon if the proxy is received by the Company
prior to the Meeting or by the Company's Secretary at the Meeting, provided that
it has been properly executed and has not been previously revoked. If no
instructions are given with respect to a specified matter to be acted upon, the
proxy will be voted in favor of such matter and in accordance with the best
judgment of the persons named as proxies in the proxy with respect to any other
matter which may properly come before the Meeting. Any person giving a proxy
pursuant to this solicitation may revoke such proxy at any time before it is
voted by giving
1
<PAGE> 5
notice to the Company in writing prior to or at the Meeting. The shares
represented by properly executed proxies not revoked will be voted on all
matters acted upon at the Meeting.
QUORUM REQUIREMENTS
Under the Company's Amended Code of Regulations, the holders of Common
Shares entitled to exercise 75% of the voting power of the Company, present in
person or by proxy, shall constitute a sufficient quorum to elect directors at
the meeting. For all other business which may be conducted at the Meeting, the
holders of Common Shares entitled to exercise two-thirds of the voting power of
the Company, present in person or by proxy, shall constitute a sufficient
quorum. The holders of a majority of the Common Shares represented at the
Meeting, whether or not a quorum is present, may adjourn the Meeting without
notice other than by announcement at the Meeting of the date, time and location
at which the Meeting will be reconvened.
VOTE REQUIRED
With respect to the election of directors, the four nominees within Class I
receiving the greatest number of votes at the Meeting will be elected as the
directors in Class I. (See "Election of Directors" following the section
"Ownership of the Company's Common Shares.") Shares represented by proxies which
are marked "abstain" on any proposal will be counted for the purpose of
determining the number of shares represented by proxy at the Meeting but not in
support of the proposal. Such proxies will thus have the same effect as if the
shares represented thereby were voted against those proposals marked "abstain."
Shares not voted on proxies returned by brokers will be treated as not
represented at the Meeting and will have no effect on the election of directors.
CUMULATIVE VOTING
If notice that cumulative voting is desired is given in writing by any
shareholder to the President, a Vice President or the Secretary not less than
forty-eight hours before the time fixed for holding the Meeting, and if an
announcement of the giving of such notice is made upon the convening of the
Meeting by the Chairman or Secretary or by or on behalf of the shareholder
giving such notice, each shareholder shall have the right to cumulate such
voting power as he or she possesses at such election and to give one nominee a
number of votes equal to the number of directors to be elected multiplied by the
number of shares held by such shareholder, or to distribute such votes on the
same basis among two or more nominees, as the shareholder sees fit. If voting
for the election of directors is cumulative, the persons named in the enclosed
proxy will vote the shares represented thereby and by other proxies held by them
so as to elect as many of the four nominees for Class I named below as possible.
SOLICITATION OF PROXIES
All reasonable expenses of soliciting proxies, including the cost of
preparing, assembling and mailing this Proxy Statement and the accompanying
proxy, will be borne by the Company. In addition to solicitation by mail,
proxies may be solicited personally, by telegram, telephone or personal
interview by an officer or regular employee of the Company. The Company will pay
the standard charges of brokerage firms and other nominees or fiduciaries for
sending the proxy materials to their principals who are beneficial owners of
Common Shares and entitled to vote at the Meeting. In addition, the Company has
retained Georgeson & Company Inc. to aid in the solicitation of proxies at an
anticipated fee of $6,500, plus reasonable expenses.
2
<PAGE> 6
OWNERSHIP OF THE COMPANY'S COMMON SHARES
The Board of Directors of the Company has fixed the close of business on
Wednesday, March 4, 1998, as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting. On the record
date, the Company had issued and outstanding 13,415,684 Common Shares, each of
which is entitled to one vote at the Meeting.
The following table sets forth as of January 12, 1998 (except as otherwise
noted), information with respect to beneficial ownership of the Company's Common
Shares by any shareholder known by the Company to beneficially own 5% or more of
the Company's outstanding Common Shares.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- ----------
<S> <C> <C>
Gabelli Funds, Inc.,
GAMCO Investors, Inc.
Mario J. Gabelli
655 Third Avenue
New York, New York 10017 1,683,728(1) 12.55%
David L. Babson & Co., Inc.
One Memorial Drive
Cambridge, Massachusetts 02142-1300 1,657,200(2) 12.35%
Pioneering Management Corporation
60 State Street
Boston, Massachusetts 02109 989,100(3) 7.37%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 927,300(4) 6.91%
The TCW Group, Inc.
865 South Figueroa Street
Los Angeles, California 90017 852,700(5) 6.36%
Farhad Fred Ebrahimi
475 Circle Drive
Denver, Colorado 80206 699,200(6) 5.21%
</TABLE>
- ---------------
(1) Mario J. Gabelli and various entities which he directly or indirectly
controls and for which he acts as chief investment officer reported the
ownership of such shares in a Schedule 13D dated March 12, 1997 which was
filed with the Securities and Exchange Commission (the "SEC").
(2) David L. Babson & Co., Inc. ("DLB"), in its capacity as investment advisor,
may be deemed the beneficial owner of 1,657,200 Common Shares, which are
owned by numerous investment counseling clients and which ownership is
reported in a Schedule 13G dated January 15, 1998, which was filed with the
SEC.
3
<PAGE> 7
(3) Pioneering Management Corporation ("Pioneering"), a registered investment
advisor, reported the beneficial ownership of such shares in a Schedule 13G
dated January 21, 1998 which was filed with the SEC. Pioneering disclaims
beneficial ownership of all such shares.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, reported the beneficial ownership (as of December 31, 1997) of such
shares in a Schedule 13G dated February 9, 1998 which was filed with the
SEC. All of such shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of the
DFA Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, as to all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
(5) The TCW Group, Inc., formerly known as TCW Management Company, the parent
holding company of Trust Company of the West (bank), TCW Asset Management
Company (registered investment advisor), and TCW Funds Management, Inc.
(registered investment advisor), reported the beneficial ownership of such
shares in a Schedule 13G dated February 12, 1998 which was filed with the
SEC. Each of the reporting persons disclaims beneficial ownership of all
such shares.
(6) Farhad Fred Ebrahimi reported the beneficial ownership of such shares in a
Schedule 13D dated January 6, 1998 which was filed with the SEC. The
reporting person claims beneficial ownership of all such shares.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Board of Directors has ten members and is divided into three classes.
Class I currently consists of four members, and Classes II and III currently
consist of three members each. A single class of directors is elected by the
shareholders annually for a three-year term. The terms of the following Class I
directors expire at the Meeting: James T. Bartlett, Francis H. Beam, Jr., Martin
J. Cleary, and William H. Coquillette. For election as Class I directors at the
Meeting, the Compensation and Organization Committee has recommended, and the
Board of Directors has approved, the re-nomination of Messrs. Bartlett, Beam,
Cleary and Coquillette to serve as directors for the three-year term of office
which will expire at the Annual Meeting of Shareholders in the year 2001. Each
director elected will serve until the term of office of the class to which he is
elected expires and until the election and qualification of his successor.
It is the intention of the persons named in the enclosed form of proxy to
vote such proxy as specified and if no specification is made, to vote such proxy
for the election of Messrs. Bartlett, Beam, Cleary and Coquillette as Class I
directors.
The Board of Directors has no reason to believe that the persons nominated
will not be available to serve. In the event that a vacancy among such original
nominees occurs prior to the Meeting, Common Shares represented by the proxies
so appointed will be voted for a substitute nominee or nominees designated by
the Board of Directors and for the remaining nominees.
Listed below are the names of the four nominees for election to the Board
of Directors in Class I, and those continuing directors in Classes II and III
who have previously been elected to terms which will expire in 1999 and in the
year 2000, respectively. Also listed is the year in which each first became a
director of the Company, the individual's principal occupation, information
relating to beneficial ownership of Common Shares of the Company as of January
12, 1998 and certain other information, based in part on
4
<PAGE> 8
data submitted by the directors. Except for Mr. Schulze, who beneficially owns
4.25% of the Company's Common Shares, no director or nominee beneficially owns
as much as one percent of the Company's Common Shares. Messrs. Abel and Allen,
executive officers of the Company, beneficially own 1.09% and 1.02%,
respectively, of the Company's Common Shares. All directors and officers as a
group beneficially own 9.33% of the Company's Common Shares.
NOMINEES FOR ELECTION AT THE MEETING
<TABLE>
<CAPTION>
NAME, AGE YEAR FIRST COMMON SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) DIRECTOR OWNED
-------------------- OTHER DIRECTORSHIPS ---------- -------------
<S> <C> <C> <C>
CLASS I: TERM EXPIRES IN 1998
James T. Bartlett (60) Keithley Instruments, Inc. 1997 4,224
Managing Director, Primus Oglebay Norton Company
Venture Partners (Private
investments firm)
Francis H. Beam, Jr. (62) Advanced Lighting 1990 14,384
President, Pepper Capital Corp. Technologies, Inc.
(Venture capital firm)
Martin J. Cleary (62) Guardian Life Insurance 1989 33,000
Vice Chairman, The Richard E. Company of America
Jacobs Group (Real estate
developer)
William H. Coquillette (48) None 1997 1,022
Partner, Jones, Day, Reavis &
Pogue (Law firm)
</TABLE>
CONTINUING DIRECTORS
<TABLE>
<S> <C> <C> <C>
CONTINUING CLASS III: TERM EXPIRES IN 1999
A. Malachi Mixon, III (57) Invacare Corporation 1990 65,336
Chairman of the Board and Chief NCS Healthcare, Inc. The
Executive Officer, Invacare Sherwin Williams Company
Corporation (Manufacturer and Cleveland Clinic Foundation
distributor of home healthcare
products)
John C. Morley (66) AMP Incorporated 1996 5,425
President, Evergreen Ventures Cleveland-Cliffs, Inc.
Ltd. (Private investment Ferro Corporation
company)
John B. Schulze (60) None 1984 610,865(2)(3)
Chairman of the Board,
President and Chief Executive
Officer of the Company
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
NAME, AGE YEAR FIRST COMMON SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) OTHER DIRECTORSHIPS DIRECTOR OWNED
-------------------- ------------------- ---------- -------------
<S> <C> <C> <C>
CONTINUING CLASS II: TERM EXPIRES IN 2000
John C. Dannemiller (59) Applied Industrial Technologies 1988 31,774
Chairman of the Board, Star Bank Holding Co.
President and Chief Executive
Officer, Applied Industrial
Technologies (Formerly
Bearings, Inc., Distributor of
bearings, power transmission
components and related
products)
George R. Hill (56) None 1990 32,128
Senior Vice President, The
Lubrizol Corporation (Full
service supplier of performance
chemicals to worldwide
transportation and industrial
markets)
D. Van Skilling (64) First American Financial 1989 32,823
Chairman of the Board and Chief Corporation
Executive Officer, Experian
Information Solutions, Inc.
(Supplier of credit, marketing
and real estate information and
decision support systems)
All present directors and 1,342,287(2)(3)
executive officers as a group
(20 persons)
</TABLE>
- ---------------
(1) Each director and nominee either has held the position shown or has had
other executive positions with the same employer or its subsidiary for more
than five years other than (a) Mr. Skilling who was the Executive Vice
President of TRW Information Systems and Services, TRW Inc., until September
1996 (Manufacturer of high technology products for space, defense,
automotive and information systems markets), and (b) Mr. Morley who was the
President and Chief Executive Officer of Reliance Electric Company until
June 1995 (Manufacturer of electrical and telecommunications equipment and
systems).
(2) Includes the following number of Common Shares which are not owned of record
but which could be acquired by the individual within 60 days after January
12, 1998 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze -- 442,965 and all directors and executive
officers as a group -- 893,760.
(3) Includes shares held jointly or in the name of the director's spouse, minor
children, or relatives sharing his home, reporting of which is required by
applicable rules of the SEC. Unless otherwise indicated, or in the case of
joint ownership, the listed individuals possess sole voting power and sole
investment power with respect to such shares. The figure for Mr. Schulze
includes 22,900 shares owned by his wife, as to which he has disclaimed
beneficial ownership. No other director or executive officer has disclaimed
beneficial ownership of any shares.
6
<PAGE> 10
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
Each of the Committees described below reports to the Board of Directors at
the next meeting of the Board following a Committee meeting:
THE AUDIT COMMITTEE: Messrs. Beam (Chairman), Cleary, Morley and Dr. Hill
currently are the members of the Audit Committee, which held three meetings
during 1997. The functions of the Audit Committee include recommending to the
Board of Directors the appointment of the Company's independent auditors and
reviewing the proposed audit programs (including both independent and internal
audits) for each fiscal year, the results of these audits, and the adequacy of
the Company's system of internal control. The Audit Committee also reviews the
Form 10-K annual report to the SEC. The Audit Committee meets privately with the
independent auditors and with the Company's internal auditors at each of its
meetings.
THE COMPENSATION AND ORGANIZATION COMMITTEE: Messrs. Skilling (Chairman),
Bartlett, Beam, Dannemiller and Mixon currently are the members of the
Compensation and Organization Committee, which held two meetings during 1997.
The Compensation and Organization Committee considers all material matters
relating to the compensation policies and practices of the Company, and
administers the Company's incentive plans and base salary policies as they
relate to the executive officers of the Company. The Committee also reviews and
recommends candidates for election to the Board of Directors and appointments to
any Committee of the Board. This Committee will consider any nominee recommended
by a shareholder of the Company. A resume of the candidate's business experience
and background should be directed in writing to the attention of the Secretary
of the Company.
The Board of Directors held five meetings in 1997. Mr. Dannemiller attended
fewer than 75% of the aggregate of the meetings of the Board and Committee on
which he serves.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive any separate fees
or other remuneration for serving as a director or a member of any Committee of
the Board. Nonemployee directors are each paid an annual retainer of $12,500 in
respect of service on the Board of Directors and receive an additional fee of
$1,200 for each Board or Board Committee meeting attended. Each of the Chairmen
of the Audit Committee and the Compensation and Organization Committee receives
an additional annual fee of $1,500. The Company has established a Deferred
Compensation Plan for Nonemployee Directors, under which directors may elect to
defer their annual retainer and meeting fees. Under this Plan, deferred fees may
be invested by the trustee, at a director's option, in either a money market
fund or Common Shares of the Company. If a director elects to have this deferred
compensation invested in Common Shares of the Company, the director will receive
an additional sum, also invested in Common Shares, equal to 25% of the deferred
amount.
Nonemployee directors of the Company are provided with certain retirement
and death benefits under the Company's Outside Directors' Benefit Program (the
"Program"). All nonemployee directors who have completed an aggregate of one
year of continuous service are eligible to participate. The Program generally
provides for normal retirement benefits payable upon attainment of age seventy
and completion of five years of continuous service. The Program also contains
provisions for early retirement benefits, vested deferred retirement benefits,
disability retirement benefits and survivors' benefits upon the death of a
participant. Participants in the Program or their beneficiaries are eligible to
receive benefits in an amount equal to the annual retainer being paid to the
participant for service as a nonemployee
7
<PAGE> 11
director at the time he ceases to be a nonemployee director, with such
adjustments as are necessary based on the date of retirement or death.
Retirement or death benefits under the Program are payable for a ten-year period
on a quarterly basis, commencing upon the date of retirement or death. Either
the participant, the participant's beneficiary or the Company can elect that
such retirement or death benefits be paid in an actuarially-equivalent, lump sum
payment.
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN. The Company's Nonemployee
Directors Stock Option Plan (the "Directors Plan"), approved by the Company's
shareholders in 1994, authorizes the grant of options to nonemployee directors
for the purchase of Common Shares. The Directors Plan provides that each year on
the Monday following the Annual Meeting of Shareholders, each individual
elected, reelected or continuing as a nonemployee director automatically
receives a nonqualified option to purchase 1,000 Common Shares. The exercise
price for such options is the average of the high and low prices at which the
Common Shares traded on the New York Stock Exchange, Inc. ("NYSE") on the date
of grant. Options become exercisable one year after the date of grant and expire
ten years after the date of the grant. The Board of Directors has reserved
60,000 Common Shares for issuance under the Directors Plan.
Options granted to a nonemployee director must be exercised within 36
months of retirement as a director. Upon the death of a nonemployee director,
the director's legal representative or heirs will have twelve months within
which to exercise those options which were exercisable at the time of death.
If a director resigns, or ceases to serve as a nonemployee director for any
reason other than retirement or death, only those options exercisable on the
date of termination will be exercisable. Such options may be exercised within
ninety days after termination.
In the event of a "change in control" or upon a "potential change in
control" (each as defined in the Directors Plan) of the Company, all stock
options fully vest and become exercisable.
Pursuant to the Directors Plan, on April 28, 1997 each nonemployee director
was granted a nonqualified option to purchase 1,000 Common Shares at an exercise
price of $7.563 per share. These options are scheduled to become exercisable on
April 28, 1998.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by the Company's
five most highly compensated executive officers (the "Named Executive Officers")
with respect to the fiscal year shown for services rendered to the Company and
its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------------
ANNUAL AWARDS PAYOUTS
COMPENSATION ---------- -----------
---------------------------------- SECURITIES PERFORMANCE ALL OTHER
OTHER ANNUAL UNDERLYING UNIT COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) PAYOUTS (1)(2)
--------------------------- ---- ------ ----- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John B. Schulze.............. 1997 $395,000 $ -- $-- 70,000 $ -- $28,118
Chairman of the Board,..... 1996 395,000 163,000 -- 65,000 105,000 27,924
President and Chief........ 1995 380,000 359,000 -- 80,000 105,000 44,191
Executive Officer
James J. Abel................ 1997 250,000 -- -- 31,000 -- 10,344
Executive Vice
President,............... 1996 235,000 79,500 -- 27,000 67,500 10,130
Secretary, Treasurer....... 1995 220,000 170,000 -- 36,000 67,500 10,166
and Chief Financial Officer
Charles E. Allen............. 1997 156,000 -- -- 10,000 -- 14,801
Senior Vice President...... 1996 150,000 38,600 -- 10,000 37,500 14,608
1995 150,000 90,000 -- 15,000 37,500 14,659
A. Corydon Meyer............. 1997 143,000 -- -- 10,000 -- 7,612
Vice President............. 1996 135,000 20,300 -- 10,000 22,500 7,376
Lamson Home Products (3)... 1995 122,000 33,000 -- 15,000 18,000 7,360
Norman P. Sutterer........... 1997 135,000 -- -- 10,000 -- 12,443
Vice President............. 1996 120,000 37,600 -- 10,000 18,000 3,083
Carlon Telecom Systems
(3)...................... 1995 106,700 67,000 -- 15,000 18,000 2,822
</TABLE>
- ---------------
(1) Includes split dollar life insurance premium payments paid for Mr. Schulze,
Mr. Abel, Mr. Allen, Mr. Meyer and Mr. Sutterer in 1997 of $23,368, $5,594,
$10,051, $2,862 and $7,693, respectively; in 1996 of $23,424, $5,530,
$10,108, $2,876 and $-0-, respectively; and, in 1995 of $39,691, $5,666,
$10,159, $2,887 and $-0-, respectively.
(2) Includes matching contributions equal to 50% of the first 6% of an
employee's compensation contributed to the Company's 401(k) Deferred Savings
Plan, which is available to all salaried employees. The matching
contributions made by the Company under the Plan to the accounts of: Mr.
Schulze, Mr. Abel, Mr. Allen, Mr. Meyer and Mr. Sutterer in 1997 totaled
$4,750, $4,750, $4,750, $4,750 and $4,750, respectively; in 1996 totaled
$4,500, $4,500, $4,500, $4,500 and $3,083, respectively; and, in 1995
totaled $4,500, $4,500, $4,500, $4,473 and $2,822, respectively.
(3) Lamson Home Products and Carlon Telecom Systems are business units of the
Company.
9
<PAGE> 13
STOCK OPTIONS
The following table sets forth information concerning stock option grants
made to the Named Executive Officers during fiscal year 1997 pursuant to the
Company's 1988 Incentive Equity Performance Plan (the "1988 Plan").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ------------------------------------------------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANT
OPTIONS GRANTED TO EXERCISE DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ------ ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
John B. Schulze................... 70,000 27.89% $7.938 02/27/07 $208,600
James J. Abel..................... 31,000 12.35% $7.938 02/27/07 92,380
Charles E. Allen.................. 10,000 3.98% $7.938 02/27/07 29,800
A. Corydon Meyer.................. 10,000 3.98% $7.938 02/27/07 29,800
Norman P. Sutterer................ 10,000 3.98% $7.938 02/27/07 29,800
</TABLE>
- ---------------
(1) Options are exercisable after February 27, 1998 and then only as follows:
one-third on each anniversary of the grant date over three years, with the
number of shares vested in each year rounded to the nearest whole share. In
the event of a "change in control" or "potential change in control" (each as
defined in the 1988 Plan) of the Company, all stock options fully vest and
become exercisable and all awards of stock may be cashed out on the basis of
the highest price paid or offered for Common Shares during the preceding
60-day period.
(2) The present value determinations in this column were made pursuant to rules
promulgated by the SEC using a Black-Scholes option pricing model and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's Common Shares. The actual value, if any, an executive
officer may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance that the value realized by an executive officer will be at or near
the value estimated by the Black-Scholes model. The estimated values under
that model are based on arbitrary assumptions as to variables such as
interest rates, stock price volatility, time of exercise and dividend yield.
The Company determined the estimated values using volatility assumptions
based on 36 months of stock prices; interest rate assumptions based on the
five-year Treasury Strip Yield, as reported in The Wall Street Journal; a
dividend yield assumption of zero; and an assumed time of exercise of the
option of five years.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information about stock options exercised
during fiscal year 1997 by the Named Executive Officers and the fiscal year-end
value of unexercised options held by the Named Executive Officers. All of such
options were granted under either the 1988 Plan or the Company's 1978 Stock
Option Plan, which expired in 1988.
10
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS HELD AT
JANUARY 3, 1998(#) JANUARY 3, 1998(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John B. Schulze....... 12,500 $7,031 397,966 113,334 $156,693 $ --0--
James J. Abel......... -- -- 134,600 49,000 45,387 --0--
Charles E. Allen...... 3,000 2,157 104,933 16,667 38,597 --0--
A. Corydon Meyer...... -- -- 39,633 16,667 8,115 --0--
Norman P. Sutterer.... -- -- 43,133 16,667 10,805 --0--
</TABLE>
- ---------------
(1) Based on the closing price on the NYSE--Composite Transactions of the
Company's Common Shares on January 2, 1998 (the last trading day in fiscal
year 1997) of $5.8125.
PENSION BENEFITS
The following table shows the estimated annual pension benefits under The
Lamson & Sessions Co. Salaried Employees' Retirement Plan ("Lamson & Sessions
Plan"), that would be payable to employees in various compensation
classifications upon retirement at age sixty-five during the year 1997.
<TABLE>
<CAPTION>
ANNUAL NORMAL RETIREMENT BENEFITS
FOR YEARS OF CREDITED SERVICE INDICATED
AVERAGE ANNUAL -----------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $ 25,000 $ 33,333 $ 41,667 $ 50,000
150,000 37,500 50,000 62,500 75,000
200,000 50,000 66,667 83,333 100,000
250,000 62,500 83,333 104,167 125,000
300,000 75,000 100,000 125,000 150,000
350,000 87,500 116,667 145,833 175,000
400,000 100,000 133,333 166,667 200,000
450,000 112,500 150,000 187,500 225,000
500,000 125,000 166,668 208,333 250,000
550,000 137,500 183,335 229,166 275,000
600,000 150,000 200,000 250,000 300,000
650,000 162,500 216,668 270,833 325,000
700,000 175,000 233,335 291,666 350,000
750,000 187,500 250,000 312,500 375,000
800,000 200,000 266,668 333,333 400,000
850,000 212,500 283,335 354,166 425,000
900,000 225,000 300,000 375,000 450,000
</TABLE>
The amounts listed in the table are computed on a straight-life annuity
basis and are subject to an offset for Social Security benefits. These amounts
have been determined without regard to the maximum benefit limitations for
defined benefit plans and the limitations on compensation imposed by the
Internal Revenue Code of 1986, as amended (the "Code"). The Code places
limitations on the amount of compensation that may be taken into account in
calculating pension benefits and on the amount of pensions that may be paid
under federal income tax qualified plans such as the Lamson & Sessions Plan. For
benefits accruing in plan years beginning after 1997, no more than $160,000
(indexed for inflation)
11
<PAGE> 15
in annual compensation may be taken into account. However, under the
Supplemental Executive Retirement Plan agreements, ("SERPS") described below,
participating executives will receive the amounts to which they otherwise would
have been entitled under the Lamson & Sessions Plan provided they meet the terms
of the applicable SERP.
The amounts shown in the column under the heading "Average Annual
Compensation" are based on the highest five consecutive years of compensation
during the last ten years prior to retirement and include salary, overtime and
bonuses, but exclude commissions and stock option awards. Normal retirement
benefits under the Lamson & Sessions Plan are equal to the greater of (a) 50% of
a participant's average annual compensation based on the highest five
consecutive years during the last ten years prior to retirement less 50% of the
participant's primary Social Security benefit or (b) $3,600 times a fraction,
the denominator of which is 30 and the numerator of which is the participant's
number of years of service up to 30.
Messrs. Schulze, Abel, Allen, Meyer and Sutterer are participants in the
Lamson & Sessions Plan with 10, 7, 29, 8 and 9 years of credited service,
respectively, under the Plan. The Company has entered into amended and restated
SERPS with Messrs. Schulze, Abel and Allen. Messrs. Schulze and Abel will not be
able to achieve thirty years of service on their normal retirement dates.
The SERPS provide that the executive will receive, upon normal retirement,
a supplemental retirement benefit equal to the difference between (i) the amount
that would have been payable to the executive under the Lamson & Sessions Plan,
without regard to any federal statutory limitation on the annual amount of
benefits payable under the Lamson & Sessions Plan and the amount of compensation
taken into account in calculating benefits under the Lamson & Sessions Plan, as
if the executive had completed thirty years of service with the Company, and
(ii) the amount actually payable to the executive under the Lamson & Sessions
Plan or under any other applicable plan for which the executive meets the
eligibility requirements. The SERPS also provide for, among other things,
disability benefits and benefits in the event the executive's employment with
the Company is terminated under certain circumstances prior to retirement and in
the event of the executive's death prior to retirement under certain
circumstances. Under the SERPS, executives will also be reimbursed for the
amount of taxes payable on benefits received under the SERPS in the event
federal tax provisions, relating to compensation paid in connection with a
"change in control" of the Company, become applicable.
AGREEMENTS WITH CERTAIN OFFICERS
The Company has entered into agreements with Messrs. Schulze, Abel, Allen,
Meyer and Sutterer (the "Employment Agreements"), which specify certain
financial arrangements that the Company will provide upon the termination of
such individuals' employment with the Company under circumstances involving a
"change in control" (as defined in the Employment Agreements) of the Company.
The Employment Agreements are intended to ensure continuity and stability of
senior management of the Company.
Each of the Employment Agreements provides that, in the event of a "change
in control" of the Company, the individual would continue employment with the
Company in the individual's then current position for a term ranging from two to
three years following the "change in control." Following a "change in control"
the individual would be entitled during the ensuing period of employment to
receive base compensation and to continue to participate in incentive and
employee benefit plans consistent with past practices. Upon the occurrence of a
"change in control" followed by (i) a significant adverse change in
12
<PAGE> 16
the nature or scope of the individual's duties or compensation, (ii) the
individual's determination of being unable effectively to carry out the current
duties and responsibilities, (iii) relocation of the individual's principal work
location to a place more than fifty miles from the principal work location
immediately prior to the "change in control," (iv) the liquidation, merger or
sale of the Company (unless the new entity assumes the Employment Agreement) or
(v) a material breach of the Employment Agreement, the individual would be
entitled to resign and would be entitled to receive a lump sum payment equal to
the present value of the then current base compensation and incentive
compensation (based on historical experience) that would be payable during the
balance of the remaining period of employment. The individual would also be
entitled to continue to participate in employee benefit plans consistent with
past practices for the remaining period of employment provided in his Employment
Agreement. The amount of benefits that an individual may receive pursuant to his
Employment Agreement is capped to avoid any payments constituting an "excess
parachute payment" as defined in the Code.
None of the Employment Agreements creates employment obligations for the
Company unless a "change in control" has occurred, prior to which time the
Company and the individual each reserves the right to terminate the employment
relationship. Both before and after the occurrence of a "change in control" the
Company may terminate the employment of any of such individuals for "cause."
The Company has established trust agreements pursuant to which amounts
payable under the SERPS, the Employment Agreements and certain expenses incurred
by the officers in enforcing their rights under these arrangements, must be
deposited by the Company in trust and expended by the trustee for such purposes.
Such trusts are revocable, but upon the occurrence of certain "change in
control" events affecting the Company, will become irrevocable. The trusts are
currently nominally funded, but the Company is obligated to fund them fully upon
the occurrence of the "change in control" events.
The Company has also entered into Indemnification Agreements with each
current member of the Board of Directors as well as each of the Company's
executive officers. These agreements provide that, to the extent permitted by
Ohio law, the Company will indemnify the director or officer against all
expenses, costs, liabilities and losses (including attorneys' fees, judgments,
fines or settlements) incurred or suffered by the director or officer in
connection with any suit in which the director or officer is a party or
otherwise involved as a result of the individual's service as a member of the
Board of Directors or as an officer if the individual's conduct that gave rise
to such liability meets certain prescribed standards.
COMPENSATION COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY
The Compensation and Organization Committee of the Board of Directors (the
"Committee") is composed entirely of nonemployee directors and has been
delegated the responsibility of approving the cash and non-cash compensation of
all executive officers of the Company and making recommendations to the Board of
Directors with respect to the establishment of the Company's executive
compensation plans. No member of the Committee has interlocking relationships,
reporting of which is required by applicable rules of the SEC.
In administering the various executive compensation plans, the aim of the
Committee is to attract and retain key executives critical to the long-term
success of the Company, to create incentives for executives to achieve long-term
strategic management objectives that enhance shareholder value, to
13
<PAGE> 17
provide a balance between annual and long-term forms of compensation and, above
all, to ensure that total compensation is performance-oriented and related to
Company goals and objectives, using measurable criteria to the extent possible.
The Committee has considered the impact of Section 162(m) of the Code,
which disallows a deduction to publicly-held companies for compensation paid to
any executive officer whose compensation exceeds $1 million and has concluded
that this Section will not affect compensation paid to any executive officer in
1997.
EXECUTIVE OFFICER BASE COMPENSATION
Each executive officer's base salary is reviewed by the Committee at the
time of the officer's annual performance review. The base salary is recommended
to the Committee by the Chairman of the Board and Chief Executive Officer (the
"Chairman") and falls within a salary range for each officer's job function that
has been established by an independent executive compensation consultant, based,
in part, on information collected by the consultant concerning compensation for
executives with similar responsibilities at companies with comparable size and
geographic location. Typically salaries fall throughout the range and are not
based on an arbitrary percentage of the highest salary within the range. In each
case, the Committee reviews the recommendation of the Chairman and approves the
salary only after making an independent assessment of the individual executive's
performance.
Mr. Schulze's compensation is based upon the same factors considered with
regard to executive officer compensation generally. The components making up his
1997 compensation included base salary and stock options. Fifty-five percent of
Mr. Schulze's base salary represented his target award under the Short-Term
Incentive Plan, the achievement of which was contingent upon the attainment of
specific earnings-per-share goals. The Committee's award of stock options to Mr.
Schulze under the 1988 Plan was based on the same methodology used to calculate
the awards of options to other executive officers under the 1988 Plan and
designed to further align Mr. Schulze's interests with those of other
shareholders of the Company.
In determining Mr. Schulze's compensation, the Committee considered the
Company's performance. The Committee discusses and approves priorities
recommended by Mr. Schulze at the beginning of the year and discusses his
performance with respect to these priorities periodically during the year and at
the end of the year.
Mr. Schulze is not present when the Committee reviews his performance and
determines his compensation.
SHORT-TERM INCENTIVE COMPENSATION
Under the Company's Short-Term Incentive Plan, target award levels are
established annually by the Committee for each executive officer of the Company.
Mr. Schulze's award is based solely on the financial performance of the Company
expressed in terms of earnings per share. Other executive officers' achievement
of target awards is based 80% on the financial performance of the Company and
individual business units and 20% on the achievement of specific personal goals
and objectives. In 1997, the Company's Short-Term Incentive Plan provided target
award opportunities for executive officers that ranged from 35 to 55 percent of
base salary, although amounts could vary above and below that range depending
upon Company and business unit performance and individual accomplishment.
However, no
14
<PAGE> 18
bonuses were paid for 1997 under the Short-Term Incentive Plan due to the
Company's requirement of a minimum level of earnings per share to fund awards.
STOCK OPTIONS AND LONG-TERM INCENTIVE COMPENSATION
The Committee also is charged with the responsibility of administering the
1988 Plan, under which stock options are granted to executive officers and other
employees of the Company. The Committee believes that stock options align the
interests of the executive officers with those of the shareholders, providing a
way in which the executive officers can build a meaningful stake in the Company.
Accordingly, the Committee has approved the implementation of stock ownership
guidelines for the executive officers that are to be achieved over a fixed
period of time. The guidelines are based on each executive officer's respective
salary compensation level and they will be reviewed by the Committee at
appropriate intervals.
The Committee fixes the terms, vesting requirements and the size of the
grants of stock options awarded to the executive officers without regard to the
amount of options or the expiration dates of options already held by executive
officers. The size of each grant is based on the duties, responsibilities,
performance and experience of the executive officer and his anticipated
contribution to the Company. Options granted to executive officers vest
one-third on each anniversary over three years, with the number of shares vested
in each year rounded to the nearest whole share.
Because stock options under the 1988 Plan and grants under the Company's
Long-Term Incentive Plan are both forms of long-term executive compensation,
grants under both plans are generally considered at the same time. Awards under
the Long-Term Incentive Plan are made in the form of performance units payable
upon the achievement of three-year corporate goals, currently expressed in terms
of earnings per share. The Committee determines the goals under which these
awards are made from year to year. The Committee did not approve the grant of
performance units to executive officers for 1997.
COMPENSATION AND ORGANIZATION COMMITTEE
D. Van Skilling, Chairman
John C. Dannemiller
James T. Bartlett
A. Malachi Mixon, III
Francis H. Beam, Jr.
15
<PAGE> 19
COMPANY STOCK PERFORMANCE
The following performance graph compares the five year cumulative return
from investing $100 on December 31, 1992 in each of the Company's Common Shares,
the Standard & Poor's Electrical Equipment Index and the Standard & Poor's 500
Index, with dividends assumed to be reinvested when received.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
Standard &
Poor's
Electrical Standard &
Measurement Period Lamson & Equipment Poor's 500
(Fiscal Year Covered) Sessions Index Index
<S> <C> <C> <C>
12/92 100 100 100
12/93 84 121 110
12/94 107 122 112
12/95 138 171 153
12/96 129 232 189
12/97 103 327 252
</TABLE>
There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
performance graph above. The Company does not make or endorse any predictions as
to future stock performance.
16
<PAGE> 20
SECURITY OWNERSHIP OF MANAGEMENT
Each of the Named Executive Officers beneficially owned the number of
Common Shares indicated opposite his name as of January 12, 1998. Except for Mr.
Schulze who beneficially owns 4.25% and Messrs. Abel and Allen who beneficially
own 1.09% and 1.02%, respectively, of the Company's Common Shares, none of the
other Named Executive Officers beneficially owns as much as one percent of the
Company's Common Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP(1)(2)
---- -----------------
<S> <C>
John B. Schulze............................... 610,865
James J. Abel................................. 156,933
Charles E. Allen.............................. 147,166
A. Corydon Meyer.............................. 47,406
Norman P. Sutterer............................ 53,170
</TABLE>
- ---------------
(1) Includes the following number of Common Shares which are not owned of record
but which could be acquired by the individual within 60 days after January
12, 1998 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze--442,965; Mr. Abel--153,933; Mr. Allen--111,599;
Mr. Meyer--46,299 and Mr. Sutterer--49,799.
(2) Includes shares held jointly or in the name of the officer's spouse, minor
children, or relatives sharing his home, reporting of which is required by
applicable rules of the SEC. Unless otherwise indicated, or in the case of
joint ownership, the listed individuals possess sole voting power and sole
investment power with respect to such shares. The figure for Mr. Schulze
includes 22,900 shares owned by his wife, as to which he has disclaimed
beneficial ownership. No other Named Executive Officer has disclaimed
beneficial ownership of any shares.
CERTAIN BUSINESS RELATIONSHIPS
During the past fiscal year, the Company, in the normal course of business,
utilized the services of the law firm of Jones, Day, Reavis & Pogue in which Mr.
Coquillette is a partner. The Company plans to continue using the services of
the firm in 1998.
APPROVAL OF THE COMPANY'S 1998 INCENTIVE EQUITY PLAN
(PROPOSAL NO. 2)
GENERAL
The 1988 Plan, which was approved by shareholders at the Company's 1988
annual meeting of shareholders, has served the Company's objective of advancing
the interests and long-term success of the Company by encouraging stock
ownership among executives and key managerial employees and, correspondingly,
increasing their personal involvement with the future of the Company. The Board
of Directors unanimously adopted The Lamson & Sessions Co. 1998 Incentive Equity
Plan (the "Plan") on February 26, 1998, subject to approval by the Company's
shareholders at the Meeting, in order to further serve this objective.
17
<PAGE> 21
The Board of Directors believes it to be in the best interest of the
Company to approve the Plan. The principal reason for adopting the Plan is to
ensure that the Company has a mechanism for equity-based incentive compensation
when the 1988 Plan expires. Such a mechanism will enhance the Company's ability
to design compensatory awards appropriate to the Company's needs and financial
condition while attracting and retaining key officers and employees. Because
benefits earned under awards granted under the Plan may extend over a period of
years into the future, the Plan is designed so that certain awards would qualify
under Section 162(m) of the Code and the Company would be allowed a tax
deduction for certain future compensation over $1 million that could be paid, or
otherwise taxable, to persons named in the Summary Compensation Table and
employed by the Company at the end of the applicable year. Qualifying
performance-based compensation is not subject to this deduction limit if certain
requirements are met. The Plan is also designed to comply with revised Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
On March 10, 1998, the closing price of the Common Shares on the NYSE was
$7.44 per share.
A summary description of the Plan is set forth below. The full text of the
Plan is annexed to this Proxy Statement as Appendix A, and the following summary
is qualified in its entirety by reference to Appendix A.
SUMMARY OF THE PLAN
General. Under the Plan, the Committee is authorized to make awards of
options to purchase Common Shares ("Option Rights"), awards of Tandem
Appreciation Rights and/or Free-Standing Appreciation Rights ("Appreciation
Rights"), awards of restricted shares ("Restricted Shares"), awards of deferred
shares ("Deferred Shares") and awards of performance shares ("Performance
Shares") and performance units ("Performance Units"). The terms applicable to
awards of the various types, including those terms that may be established by
the Committee when making or administering particular awards, are set forth in
detail in the Plan.
Shares Available Under the Plan. Subject to adjustment as provided in the
Plan, the number of Common Shares that may be issued or transferred (a) upon the
exercise of Option Rights or Appreciation Rights, (b) as Restricted Shares, (c)
as Deferred Shares, (d) in payment of Performance Shares or Performance Units
that have been earned, or (e) in payment of dividend equivalents paid with
respect to awards made under the Plan may not exceed 650,000 in the aggregate.
Such Common Shares may be shares of original issuance or treasury shares or a
combination of both. Upon the payment of any option price by the transfer to the
Company of Common Shares or upon satisfaction of any withholding amount by means
of transfer or relinquishment of Common Shares, only the net number of Common
Shares actually issued or transferred by the Company will be deemed to have been
issued or transferred under the Plan.
Limitations on Specific Kinds of Awards. In addition to the general
limitation on the number of Common Shares available under the Plan, the Plan
specifically limits the number of Restricted Shares that are not conditioned on
attainment of Management Objectives (described below) plus the number of
Deferred Shares (after taking forfeitures into account) to 225,000 in the
aggregate, subject to adjustment. Additionally, the Plan provides for certain
specific limits and other requirements in order that awards of Option Rights,
Appreciation Rights, Performance Shares and Performance Units may qualify as
performance-based compensation for the purpose of Section 162(m) of the Code. No
participant may be granted Option Rights and Appreciation Rights, in the
aggregate, for more than 250,000 Common Shares
18
<PAGE> 22
during any period of 3 years, subject to adjustment. Moreover, no participant
may receive in any calendar year an award of Performance Shares or Performance
Units having an aggregate maximum value as of their respective dates of grant
over $500,000.
Eligibility. Officers, including officers who are members of the Board of
Directors, and other key employees of the Company and its subsidiaries may be
selected by the Committee to receive benefits under the Plan. The Committee may
also make awards under the Plan to a person who has agreed to commence serving
in any such capacity within 90 days of the date of grant.
Option Rights. The Committee may grant Option Rights, which entitle the
optionee to purchase a specified number of Common Shares at a price equal to or
greater than market value at the date of grant. The option price is payable in
cash, by the transfer to the Company of nonforfeitable unrestricted Common
Shares owned by the optionee having a value at the time of exercise equal to the
option price, by any other legal consideration the Committee may deem
appropriate, or by a combination of such payment methods. Any grant may provide
for deferred payment of the option price from the proceeds of sale through a
bank or broker of some or all of the Common Shares to which the exercise
relates.
Option Rights granted under the Plan may be Option Rights that are intended
to qualify as incentive stock options ("Incentive Stock Options") within the
meaning of Section 422 of the Code or Option Rights that are not intended to so
qualify or combinations thereof. The Committee may, at or after the date of
grant of any Option Rights (other than Incentive Stock Options), provide for the
payment of dividend equivalents to the optionee in cash or additional Common
Shares on a current, deferred or contingent basis or may provide that such
equivalents be credited against the option price. The Committee may condition
the exercise of Option Rights on the achievement of Management Objectives.
No Option Right may be exercised more than ten years from the date of
grant. Each grant must specify the period of continuous employment with the
Company or any subsidiary that is necessary before the Option Rights will become
exercisable and may provide for the earlier exercise of such Option Rights in
the event of a "change of control" of the Company. Successive grants may be made
to the same optionee whether or not Option Rights previously granted remain
unexercised. The exercise of an Option Right cancels, on a share-for-share
basis, any Tandem Appreciation Right.
Appreciation Rights. Appreciation Rights provide participants an
alternative means of realizing the benefits of Option Rights. A Tandem
Appreciation Right is a right to receive from the Company up to 100 percent of
the spread between the option price and the current value of the Common Shares
underlying the option. The amount is determined by the Committee and the right
is exercisable only when the related Option Right is also exercisable, the
spread is positive and the recipient surrenders the related Option Right for
cancellation. A Free-Standing Appreciation Right is the right to receive a
percentage of the spread at the time of exercise. When computing the spread for
a Free-Standing Appreciation Right, the base price must be equal to or greater
than the market value of the underlying Common Shares on the date of grant.
Successive grants may be made to the same recipient even if that individual
already has unexercised Free-Standing Appreciation Rights. No Free-Standing
Appreciation Right may be exercised more than ten years from the date of grant.
Any grant of Appreciation Rights may specify any or all of the following:
(1) that the amount payable on exercise of an Appreciation Right may be paid by
the Company in cash, in Common Shares, or in any combination thereof, and the
right to elect among those alternatives may be given to the participant or
retained by the Committee, (2) a maximum amount payable on exercise, (3) waiting
periods before exercise, (4) permissible exercise dates or periods, (5) whether
the Appreciation Right may be
19
<PAGE> 23
exercised only on or after a "change in control" of the Company, (6) whether
dividend equivalents may be paid in cash or in Common Shares, and (7) Management
Objectives that must be achieved as a condition to exercise such rights.
Restricted Shares. An award of Restricted Shares involves the immediate
transfer by the Company to a participant of ownership of a specific number of
Common Shares in consideration of the performance of services. The participant
is entitled immediately to voting, dividend and other ownership rights in such
shares, but the Committee may require that any dividends be automatically
deferred and reinvested in additional Restricted Shares. The transfer may be
made without additional consideration or in consideration of a payment by the
participant that is less than current market value, as the Committee may
determine. The Committee may condition the award on the achievement of
Management Objectives.
Restricted Shares must be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for a period of not less than three
years to be determined by the Committee. An example would be a provision that
the Restricted Shares would be forfeited if the participant ceased to serve the
Company as an officer or key employee during a specified period of years. In
order to enforce these forfeiture provisions, the transferability of Restricted
Shares will be prohibited or restricted in a manner and to the extent prescribed
by the Committee for the period during which the forfeiture provisions are to
continue. The Committee may provide for a shorter period during which the
forfeiture provisions are to apply in the event of a "change in control" of the
Company.
Deferred Shares. An award of Deferred Shares constitutes an agreement by
the Company to deliver Common Shares to the participant in the future in
consideration of the performance of services, but subject to the fulfillment of
such conditions during the deferral period as the Committee may specify. During
the deferral period, the participant has no right to transfer any rights under
his or her award, has no rights of ownership in the Deferred Shares and no right
to vote them, but the Committee may, at or after the date of grant, authorize
the payment of dividend equivalents on such shares on a current, deferred or
contingent basis, either in cash or additional Common Shares. Awards of Deferred
Shares may be made without additional consideration or in consideration of a
payment by the participant that is less than the market value per share at the
date of grant.
Deferred Shares must be subject to a deferral period, as determined by the
Committee at the date of grant, except that the Committee may provide for the
earlier termination of such period in the event of a "change in control" of the
Company.
Performance Shares and Performance Units. A Performance Share is the
equivalent of one Common Share, and a Performance Unit is the equivalent of
$1.00. The number of Performance Shares or Performance Units is specified by the
Committee and may be adjusted to reflect changes in compensation or other
factors (unless the adjustment for certain participants would cause an award to
lose its Section 162(m) exemption).
A recipient must meet one or more Management Objectives within a specified
performance period. Such performance period may be subject to earlier
termination in the event of a "change in control" of the Company. A minimum
level of acceptable achievement may also be established by the Committee. If by
the end of the performance period the participant has achieved the specified
Management Objectives, he or she will be deemed to have fully earned the
Performance Shares or Performance Units. If the participant has not achieved the
Management Objectives, but has attained or exceeded the predeter-
20
<PAGE> 24
mined minimum, he or she will be deemed to have partly earned the Performance
Shares and/or Performance Units (the amount earned to be determined in
accordance with a formula).
To the extent earned, the Performance Shares and/or Performance Units will
be paid to the participant at the time and in the manner determined by the
Committee in cash, Common Shares or in any combination thereof (the Committee
may give either the participant or the Committee the right to choose the form of
payment). Dividend equivalents on Performance Shares may be paid in cash or
additional Common Shares on a current, deferred or contingent basis. The
Committee may specify a maximum amount payable under any grant of Performance
Shares or Performance Units.
Management Objectives. The Committee may establish performance objectives
for participants who have received awards of Performance Shares or Performance
Units or, if so determined, Option Rights, Appreciation Rights, Restricted
Shares or dividend credits. Section 162(m) of the Code requires that the Plan
and the performance measures which must be attained to earn compensation under
performance-based awards be disclosed to and approved by shareholders. Such
performance measures, or "Management Objectives," may be described either in
terms of Company-wide objectives or objectives that are related to performance
of the individual participant or the division, subsidiary, department or
function within the Company or a subsidiary in which the participant is
employed. The Management Objectives applicable to any award to a participant who
is or is likely to become a "covered employee" within the meaning of Section
162(m) of the Code will be based on specified levels of, or growth in, one or
more of the following criteria:
<TABLE>
<S> <C>
(1) cash flow/net assets ratio;
(2) debt/capital ratio;
(3) return on total capital;
(4) return on equity;
(5) earnings per share growth;
(6) revenue growth; and
(7) total return to shareholders.
</TABLE>
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may modify such Management Objectives or
the related minimum acceptable level of achievement, in whole or in part, as the
Committee deems appropriate and equitable, except in the case of a "covered
employee" where such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.
Transferability. Except as otherwise determined by the Committee, no
Option Right, Appreciation Right or other award under the Plan is transferable
by a participant other than by will or the laws of descent and distribution.
Except as otherwise determined by the Committee, only the participant (or the
participant's guardian or legal representative in the event of the participant's
legal incapacity) may exercise Option Rights or Appreciation Rights during the
participant's lifetime.
The Committee may specify at or after the date of grant that Option Rights,
Appreciation Rights, Restricted Shares, Deferred Shares, Performance Shares and
Performance Units are transferable by a participant to members of the
participant's immediate family, without payment by the transferee, if reasonable
prior notice of the transfer was given to the Company, and the transfer was made
according
21
<PAGE> 25
to the terms and conditions specified by the Committee or the Company. Any
transferee will be subject to the same terms and conditions under the Plan as
the participant.
The Committee may specify that part or all of the Common Shares that are
(i) to be issued or transferred by the Company upon exercise of Option Rights or
Appreciation Rights, upon termination of the deferral period applicable to
Deferred Shares or upon payment under any grant of Performance Shares or
Performance Units or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer in the case of Restricted Shares, shall
be subject to further restrictions on transfer.
Adjustments. The number, kind, and price of shares covered by outstanding
Option Rights, Appreciation Rights, Deferred Shares and Performance Shares and
the prices per share applicable thereto, are subject to adjustment in the event
of stock dividends, splits and combinations, changes in capital structure of the
Company, mergers, spin-offs, partial or complete liquidation, and similar
events. If any such event occurs, the Committee has discretion to substitute for
any or all outstanding awards under the Plan such alternative consideration as
it, in good faith, may determine to be equitable in the circumstances and may
require the surrender of all awards so replaced. The Committee may also make or
provide for such adjustments in the numbers of shares available under the Plan
and available for specific kinds of awards under the Plan as the Committee may
determine appropriate to reflect any such transaction or event.
Change in Control. A definition of "Change in Control" is specifically
included in the Plan. This definition can be found in the full text of the Plan
attached hereto as Appendix A.
Certain Terminations of Employment. If a participant holding (a) an Option
Right or Appreciation Right that is not fully and immediately exercisable, (b)
Restricted Shares where the restrictions on transfer have not yet lapsed, (c)
Deferred Shares where the deferral period is not complete, (d) Performance
Shares or Performance Units that have not been fully earned, or (e) Common
Shares distributed under the Plan and subject to continuing restrictions,
terminates employment by reason of death, disability, normal retirement, early
retirement approved by the Company, or entry into public service or leave of
absence approved by the Company, or in the event of hardship or other special
circumstances, the Committee may take any action it deems equitable or in the
Company's best interest.
Foreign Employees. The Committee may provide for special terms for awards
to participants who are foreign nationals or who are employed by the Company or
any of its subsidiaries outside of the United States of America, as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom.
Administration and Amendments. The Plan will be administered by a
committee of the Board of Directors (or subcommittee thereof) consisting of not
less than three "Nonemployee Directors" within the meaning of Rule 16b-3 under
the Exchange Act.
The Committee's interpretation of the Plan and related agreements and
documents is final and conclusive. The Plan may be amended from time to time by
the Committee. However, any amendment which must be approved by the shareholders
of the Company in order to comply with applicable law or the rules of any
national securities exchange upon which the Common Shares are traded or quoted
will not be effective unless and until such approval has been obtained in
compliance with such applicable law or rules. Presentation of the Plan or any
amendment thereof for shareholder approval is not to be
22
<PAGE> 26
construed to limit the Company's authority to offer similar or dissimilar
benefits through plans that are not subject to shareholder approval.
The Committee may not, without the further approval of the shareholders of
the Company, authorize the amendment of any outstanding Option Right to reduce
the option price. Furthermore, no Option Right may be canceled and replaced with
awards having a lower option price without further approval of the shareholders.
The Committee may require participants, or permit participants to elect, to
defer issuance of shares or the settlement of cash awards and may provide for
payment of interest or dividend equivalents on the deferred amounts. The
Committee may also condition any award on the surrender or deferral by a
participant of his or her right to receive a cash bonus or other compensation.
Termination. No grant under the Plan may be made more than 10 years after
the Plan is approved by the shareholders, but all grants made on or before the
10th anniversary will continue in effect after that date subject to the terms of
those grants and this Plan.
PLAN BENEFITS
Owing to the discretion to be exercised by the Committee in administering
the Plan, it is not possible to determine in advance how the several types of
awards authorized under the Plan will be allocated among eligible participants.
The following table, however, shows the benefits, consisting of Option Rights,
that would have been awarded under the Plan during fiscal year 1997 had the Plan
been in effect at that time and assuming the Committee had made awards
comparable to those actually made under the 1988 Plan.
23
<PAGE> 27
NEW PLAN BENEFITS
1998 INCENTIVE EQUITY PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF UNITS (1)
----------------- -------------------
<S> <C>
John B. Schulze 70,000
Chairman of the Board, President and
Chief Executive Officer
James J. Abel 31,000
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
Charles E. Allen 10,000
Senior Vice President
A. Corydon Meyer 10,000
Vice President-Lamson Home Products
Norman P. Sutterer 10,000
Vice President-Carlon Telecom Systems
Executive Officer Group(2) 179,000
Non-Executive Director Group 0
Non-Executive Officer Employee Group 63,000
</TABLE>
- ---------------
(1) Number of Common Shares underlying Option Rights
(2) Includes five executives listed above
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the Federal income tax consequences of
certain transactions under the Plan based on Federal income tax laws in effect
on January 1, 1998. This summary is not intended to be complete and does not
describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
Non-Qualified Stock Options. In general, (i) no income will be recognized
by an optionee at the time a non-qualified Option Right is granted; (ii) at the
time of exercise of a non-qualified Option Right, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (iii) at the time of sale of shares
acquired pursuant to the exercise of a non-qualified Option Right, appreciation
(or depreciation) in value of the shares after the date of exercise will be
treated as a capital gain (or loss).
Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an Incentive Stock Option. If Common
Shares are issued to the optionee pursuant to the exercise of an Incentive Stock
Option, and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one year after the
transfer of such shares to the
24
<PAGE> 28
optionee, then upon sale of such shares, any amount realized in excess of the
option price will be taxed to the optionee as a capital gain and any loss
sustained will be a capital loss.
If Common Shares acquired upon the exercise of an Incentive Stock Option
are disposed of prior to the expiration of either holding period described
above, the optionee generally will recognize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value
of such shares at the time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the option price paid for
such shares. Any further gain (or loss) realized by the participant generally
will be taxed as a capital gain (or loss).
Appreciation Rights. No income will be recognized by a participant in
connection with the grant of a Tandem Appreciation Right or a Free-Standing
Appreciation Right. When the Appreciation Right is exercised, the participant
normally will be required to include as taxable ordinary income in the year of
exercise an amount equal to the amount of cash received and the fair market
value of any unrestricted Common Shares received on the exercise.
Restricted Shares. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares (reduced by any amount paid by the participant for such
Restricted Shares) at such time as the shares are no longer subject to
forfeiture or restrictions on transfer for purposes of Section 83 of the Code
("Restrictions"). However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of transfer of the shares will have taxable
ordinary income on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to the Restrictions)
over the purchase price, if any, of such Restricted Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares that are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.
Deferred Shares. No income generally will be recognized upon the award of
Deferred Shares. The recipient of a Deferred Share award generally will be
subject to tax at ordinary income rates on the fair market value of
nonrestricted Common Shares on the date that such shares are transferred to the
participant under the award (reduced by any amount paid by the participant for
such Deferred Shares).
Performance Shares and Performance Units. No income generally will be
recognized upon the grant of Performance Shares or Performance Units. Upon
payment in respect of the earn-out of Performance Shares or Performance Units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any nonrestricted Common Shares received.
TAX CONSEQUENCES TO THE COMPANY OR SUBSIDIARY
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an "excess parachute
payment" within the meaning of Section 280G of the Code and is not disallowed by
the $1 million limitation on certain executive compensation under Section 162(m)
of the Code.
25
<PAGE> 29
REQUIRED VOTE
Approval of the Plan requires the affirmative vote of the holders of
two-thirds of the Common Shares issued and outstanding and entitled to vote at
the Meeting, whether present in person or by proxy.
THE DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THE LAMSON & SESSIONS CO.
1998 INCENTIVE EQUITY PLAN.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC, the NYSE and the Pacific Exchange, and to provide the
Company with copies of such reports.
Based solely on review of the copies of such reports furnished to the
Company, or written representation that no forms were required to be filed, the
Company believes that during the year ended January 3, 1998, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than ten percent beneficial owners were complied with.
INDEPENDENT AUDITORS
For many years the firm of Ernst & Young LLP ("Ernst & Young"), Cleveland,
Ohio, has served as independent auditors to the Company. In February 1997, Ernst
& Young was reappointed by the Board of Directors of the Company, on the
recommendation of the Audit Committee, as the Company's independent auditors for
the fiscal year ended January 3, 1998. Representatives of Ernst & Young are
expected to be present at the Meeting and will have the opportunity to make a
statement if they so desire. They are expected to be available to respond to
proper questions regarding the independent auditors' responsibilities.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the Annual Meeting of
Shareholders to be held in April 1999, must be received by the Company's
Secretary at its principal office in Cleveland, Ohio, not later than November
18, 1998 for inclusion in the Company's Proxy Statement and form of proxy
relating to the 1999 Annual Meeting of Shareholders. Each proposal submitted
should be accompanied by the name and address of the shareholder submitting the
proposal and the number of Common Shares owned. If the proponent is not a
shareholder of record, proof of beneficial ownership should also be submitted.
All proposals must be a proper subject for consideration and comply with the
proxy rules of the SEC.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the Meeting other than as herein presented. However, if any other matter
is properly brought before the Meeting the persons appointed as proxies in the
accompanying proxy will have discretion to vote or act thereon according to
their best judgment.
26
<PAGE> 30
The Company's 1997 Annual Report, including financial statements, has been
mailed contemporaneously with this Proxy Statement.
By Order of the Board of Directors.
/s/ James J. Abel
JAMES J. ABEL
Executive Vice President, Secretary,
Treasurer and Chief Financial
Officer
27
<PAGE> 31
APPENDIX A
THE LAMSON & SESSIONS CO.
1998 INCENTIVE EQUITY PLAN
1. PURPOSE. The Lamson & Sessions Co. 1998 Incentive Equity Plan (the
"Plan") is intended to encourage key executives and managerial employees of The
Lamson & Sessions Co. (the "Company") and its subsidiaries to become owners of
stock of the Company in order to increase their interest in the Company's
long-term success, to provide incentive equity opportunities that are
competitive with other similarly situated corporations and to stimulate the
efforts of such employees by giving suitable recognition for services that
contribute materially to the Company's success.
2. DEFINITIONS. For purposes of the Plan, the following terms are defined
as set forth below:
"APPRECIATION RIGHT" means a right granted pursuant to Section 5 of this
Plan, and includes both Tandem Appreciation Rights and Free-Standing
Appreciation Rights.
"BASE PRICE" means the price to be used as the basis for determining the
Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" has the meaning provided in Section 13 of this Plan.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
"COMMITTEE" means the committee (or subcommittee) described in Section
17(a) of this Plan.
"COMMON SHARES" means (i) common shares, without par value, of the Company
and (ii) any security into which such common shares may be converted by reason
of any transaction or event of the type referred to in Section 11 of this Plan.
"COVERED EMPLOYEE" means a Participant who is, or is determined by the
Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
"DATE OF GRANT" means the date specified by the Committee on which a grant
of Option Rights, Appreciation Rights, Performance Shares or Performance Units
or a grant or sale of Restricted Shares or Deferred Shares becomes effective
(which date may not be earlier than the date on which the Committee takes action
with respect thereto).
"DEFERRAL PERIOD" means the period of time during which Deferred Shares
are subject to deferral limitations under Section 7 of this Plan.
"DEFERRED SHARES" means an award made pursuant to Section 7 of this Plan
of the right to receive Common Shares at the end of a specified Deferral Period.
"DIRECTOR" means a member of the Board of Directors of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
A-1
<PAGE> 32
"FREE-STANDING APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right.
"INCENTIVE STOCK OPTIONS" means Option Rights that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision.
"IMMEDIATE FAMILY" has the meaning stated in Rule 16a-1(e) of the
Securities and Exchange Commission promulgated under Section 16 of the Exchange
Act (or any successor rule to the same effect), as in effect from time to time.
"MANAGEMENT OBJECTIVES" means any performance objectives established by
the Committee pursuant to Section 9 of this Plan for Participants who have
received grants of Performance Shares or Performance Units or, when so
determined by the Committee, Option Rights, Appreciation Rights, Restricted
Shares or dividend credits pursuant to this Plan.
"MARKET VALUE PER SHARE" means, as of any particular date, the fair market
value of the Common Shares as determined by the Committee.
"OPTIONEE" means the optionee named in an agreement evidencing an
outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.
"OPTION RIGHT" means the right to purchase Common Shares upon exercise of
an option granted pursuant to Section 4 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to receive
benefits under this Plan and who is at the time an officer, including without
limitation an officer who may also be a member of the Board, or other key
employee of the Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the Date
of Grant.
"PERFORMANCE PERIOD" means, in respect of a Performance Share or
Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
"PERFORMANCE SHARE" means a bookkeeping entry that records the equivalent
of one Common Share awarded pursuant to Section 8 of this Plan.
"PERFORMANCE UNIT" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"RESTRICTED SHARES" means Common Shares granted or sold pursuant to
Section 6 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in such Section 6 has expired.
"RULE 16B-3" means Rule 16b-3 of the Securities and Exchange Commission
promulgated under Section 16 of the Exchange Act (or any successor rule to the
same effect), as in effect from time to time.
"SPREAD" means the excess of the Market Value per Share on the date when
an Appreciation Right is exercised over the Option Price or Base Price provided
for in the related Option Right or Free-Standing Appreciation Right,
respectively.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Company has a direct or
indirect ownership or other equity interest except that for
A-2
<PAGE> 33
purposes of determining whether any person may be a Participant for purposes of
any grant of Incentive Stock Options "Subsidiary" means any corporation in which
the Company owns or controls, directly or indirectly, more than 50 percent of
the total combined voting power represented by all classes of stock issued by
such corporation at the time of such grant.
"TANDEM APPRECIATION RIGHT" means an Appreciation Right granted pursuant
to Section 5 of this Plan that is granted in tandem with an Option Right.
"VOTING POWER" means, at any time, the total votes relating to the
then-outstanding securities entitled to vote generally in the election of
Directors.
"VOTING STOCK" means, at any time, then-outstanding securities entitled to
vote generally in the election of Directors.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 11 of this Plan, the
number of Common Shares that may be issued or transferred (i) upon the exercise
of Option Rights or Appreciation Rights, (ii) as Restricted Shares and released
from substantial risks of forfeiture thereof, (iii) as Deferred Shares, (iv) in
payment of Performance Shares or Performance Units that have been earned, or (v)
in payment of dividend equivalents paid with respect to awards made under this
Plan may not exceed in the aggregate 650,000 Common Shares. Such shares may be
shares of original issuance or treasury shares or a combination of the
foregoing. Upon the payment of any Option Price by the transfer to the Company
of Common Shares or upon satisfaction of any withholding amount by means of
transfer or relinquishment of Common Shares, there will be deemed to have been
issued or transferred under this Plan only the net number of Common Shares
actually issued or transferred by the Company.
(b) Notwithstanding anything in this Section 3 or elsewhere in this Plan to
the contrary, and subject to adjustment as provided in Section 11 of this Plan,
(i) the aggregate number of Common Shares actually issued or transferred by the
Company upon the exercise of Incentive Stock Options may not exceed 650,000
Common Shares, (ii) the number of Restricted Shares that are not conditioned on
the attainment of Management Objectives plus the number of Deferred Shares may
not (after taking any forfeitures into account) exceed in the aggregate 225,000
Common Shares and (iii) no Participant shall be granted Option Rights and
Appreciation Rights, in the aggregate, for more than 250,000 Common Shares
during any period of 3 years.
(c) Notwithstanding any other provision of this Plan to the contrary, in no
event shall any Participant in any calendar year receive an award of Performance
Shares or Performance Units having an aggregate maximum value as of their
respective Dates of Grant in excess of $500,000.
4. OPTION RIGHTS. The Committee may from time to time authorize grants to
Participants of options to purchase Common Shares upon such terms and conditions
as the Committee may determine in accordance with the following provisions:
(a) Each grant will specify the number of Common Shares to which it
pertains subject to the limitations set forth in Section 3 of this Plan.
(b) Each grant will specify an Option Price per Common Share, which will be
equal to or greater than the Market Value per Share on the Date of Grant.
A-3
<PAGE> 34
(c) Each grant will specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Common Shares that are already owned by the Optionee and have a
value at the time of exercise that is equal to the Option Price, (iii) any other
legal consideration that the Committee may deem appropriate, including without
limitation any form of consideration authorized under Section 4(d) below, on
such basis as the Committee may determine in accordance with this Plan and (iv)
any combination of the foregoing. For purposes of this Section 4, constructive
delivery of shares will be deemed equivalent to actual delivery.
(d) On or after the Date of Grant, the Committee may determine that payment
of the Option Price of any Option Right (other than an Incentive Stock Option)
may also be made in whole or in part in the form of Restricted Shares or other
Common Shares that are subject to risk of forfeiture or restrictions on
transfer. Unless otherwise determined by the Committee on or after the Date of
Grant, whenever any Option Price is paid in whole or in part by means of any of
the forms of consideration specified in this Section 4(d), the Common Shares
received by the Optionee upon the exercise of the Option Rights will be subject
to the same risks of forfeiture or restrictions on transfer as those that
applied to the consideration surrendered by the Optionee except that such risks
of forfeiture and restrictions on transfer will apply only to the same number of
Common Shares received by the Optionee as applied to the forfeitable or
restricted Common Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the Option Price from the
proceeds of sale through a broker of some or all of the Common Shares to which
the exercise relates.
(f) Successive grants may be made to the same Participant regardless of
whether any Option Rights previously granted to such Participant under the Plan
or any similar predecessor plan remain unexercised.
(g) Each grant will specify the period or periods of continuous employment
of the Optionee by the Company or any Subsidiary that are necessary before the
Option Rights or installments thereof will become exercisable, and any grant may
provide for the earlier exercise of such Option Rights in the event of a "Change
in Control."
(h) Any grant of Option Rights may specify Management Objectives that must
be achieved as a condition to the exercise of such rights.
(i) Option Rights granted under this Plan may be (i) options, including
without limitation Incentive Stock Options, that are intended to qualify under
particular provisions of the Code (ii) options that are not intended so to
qualify, or (iii) combinations of the foregoing.
(j) On or after the Date of Grant of any Option Rights other than Incentive
Stock Options, the Committee may provide for the payment to the Optionee of
dividend equivalents on such Option Rights in cash or Common Shares on a
current, deferred or contingent basis, or the Committee may provide that such
equivalents will be credited against the Option Price.
(k) The exercise of an Option Right will result in the cancellation on a
share-for-share basis of any Tandem Appreciation Right authorized under Section
5 of this Plan.
(l) No Option Right granted under this Plan may be exercised more than 10
years from the Date of Grant.
A-4
<PAGE> 35
(m) Each grant of Option Rights will be evidenced by an agreement executed
on behalf of the Company by any officer of the Company and delivered to and
accepted by the Optionee and containing such terms and provisions, consistent
with this Plan, as the Committee may approve.
5. APPRECIATION RIGHTS.
(a) The Committee may authorize the granting (i) to any Optionee, of Tandem
Appreciation Rights in respect of Option Rights granted under this Plan, and
(ii) to any Participant, of Free-Standing Appreciation Rights. A Tandem
Appreciation Right is a right of the Optionee, exercisable by surrender of the
related Option Right, to receive from the Company an amount determined by the
Committee, which will be expressed as a percentage of the Spread (not exceeding
100 percent) at the time of exercise. Tandem Appreciation Rights may be granted
at any time prior to the exercise or termination of the related Option Rights
except that a Tandem Appreciation Right awarded in relation to an Incentive
Stock Option must be granted concurrently with such Incentive Stock Option. A
Free-Standing Appreciation Right is a right of the Participant to receive from
the Company an amount determined by the Committee, which will be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of exercise.
(b) Each grant of Appreciation Rights may utilize any or all of the
authorizations, and will be subject to all of the requirements contained in the
following provisions:
(i) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in Common Shares or
in any combination of the foregoing and may either grant to the Participant
or retain in the Committee the right to elect among those alternatives.
(ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee on
the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and
permissible exercise dates or periods.
(iv) Any grant may specify that such Appreciation Right may be
exercised only in the event of, or earlier in the event of, a "Change in
Control."
(v) Any grant may provide for the payment to the Participant of
dividend equivalents on the grant in cash or Common Shares on a current,
deferred or contingent basis.
(vi) Any grant may specify Management Objectives that must be achieved
as a condition of the exercise of such rights.
(vii) Each grant of Appreciation Rights will be evidenced by an
agreement executed on behalf of the Company by an officer of the Company
and delivered to and accepted by the Participant, which agreement will
describe such Appreciation Rights, identify the related Option Rights (if
applicable), state that such Appreciation Rights are subject to all the
terms and conditions of this Plan, and contain such other terms and
provisions, consistent with this Plan, as the Committee may approve.
(c) Any grant of Tandem Appreciation Rights will provide that such Rights
may be exercised only at a time when the related Option Right is also
exercisable and at a time when the Spread is positive, and by surrender of the
related Option Right for cancellation.
(d) Regarding Free-Standing Appreciation Rights only:
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(i) Each grant will specify in respect of each Free-Standing
Appreciation Right a Base Price, which will be equal to or greater than the
Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant regardless
of whether any Free-Standing Appreciation Rights previously granted to the
Participant remain unexercised; and
(iii) No Free-standing Appreciation Right granted under this Plan may
be exercised more than 10 years from the Date of Grant.
6. RESTRICTED SHARES. The Committee may also authorize the grant or sale of
Restricted Shares to Participants upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(a) Each such grant or sale will constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to dividend, voting and
other ownership rights, subject to the substantial risk of forfeiture and
restrictions on transfer referred to below.
(b) Each such grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each such grant or sale will provide that the Restricted Shares covered
by such grant or sale will be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code, except (if the Committee so
determines) in the event of a "Change in Control", for a period of not less than
3 years to be determined by the Committee on the Date of Grant.
(d) Each such grant or sale will provide that, during the period for which
such substantial risk of forfeiture is to continue, the transferability of the
Restricted Shares will be prohibited or restricted in the manner and to the
extent prescribed by the Committee on the Date of Grant. Such restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee.
(e) Any such grant or sale may be further conditioned upon the attainment
of Management Objectives that, if achieved, will result in termination or early
termination of the restrictions applicable to such shares. Each grant may
specify, in respect of such Management Objectives, a minimum acceptable level of
achievement and may set forth a formula for determining the number of Restricted
Shares on which restrictions will terminate if performance is at or above the
minimum level, but falls short of full achievement of the specified Management
Objectives.
(f) Any such grant or sale may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Shares, which may be subject to the same restrictions as the underlying award or
such other restrictions as the Committee may determine.
(g) Each such grant or sale will be evidenced by an agreement executed on
behalf of the Company by any officer of the Company and delivered to and
accepted by the Participant and containing such terms and provisions, consistent
with this Plan, as the Committee may approve. Unless otherwise directed by the
Committee, all certificates representing Restricted Shares, together with a
stock power
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endorsed in blank by the Participant with respect to such shares, will be held
in custody by the Company until all restrictions on such Restricted Shares
lapse.
7. DEFERRED SHARES. The Committee may also authorize grants or sales of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine in accordance with the following provisions:
(a) Each such grant or sale will constitute the agreement by the Company to
deliver Common Shares to the Participant in the future in consideration of the
performance of services, subject to the fulfillment during the Deferral Period
of such conditions as the Committee may specify.
(b) Each such grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each such grant or sale will be subject to a Deferral Period fixed by
the Committee on the Date of Grant, and any such grant or sale may provide for
the earlier termination of such period in the event of a "Change in Control."
(d) During the Deferral Period, the Participant will not have any right to
transfer any rights under the subject award, will not have any rights of
ownership in the Deferred Shares and will not have any right to vote such
shares, but the Committee may on or after the Date of Grant authorize the
payment of dividend equivalents on such shares in cash or additional Common
Shares on a current, deferred or contingent basis.
(e) Each such grant or sale will be evidenced by an agreement executed on
behalf of the Company by any officer of the Company and delivered to and
accepted by the Participant and containing such terms and provisions, consistent
with this Plan, as the Committee may approve.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Committee may also authorize
grants of Performance Shares and Performance Units that will become payable to a
Participant upon achievement of specified Management Objectives upon such terms
and conditions as the Committee may determine in accordance with the following
provisions:
(a) Each such grant will specify the number of Performance Shares or
Performance Units to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors, except that no
such adjustment will be made in the case of a Covered Employee where such action
would result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code.
(b) The Performance Period with respect to each Performance Share or
Performance Unit will be determined by the Committee on the Date of Grant, and
may be subject to earlier termination in the event of a "Change in Control"
except that no such acceleration will be made in the case of a Covered Employee
where such action would result in the loss of the otherwise available exemption
of the award under Section 162(m) of the Code.
(c) Each grant of Performance Shares or Performance Units will specify
Management Objectives that, if achieved, will result in payment or early payment
of the award, and each grant may specify in respect of such specified Management
Objectives a minimum acceptable level of achievement below which no payment will
be made and will set forth a formula for determining the amount of any payment
to
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be made if performance is at or above such minimum level, but falls short of
full achievement of the specified Management Objectives.
(d) Each such grant will specify the time and manner of payment of
Performance Shares or Performance Units that have been earned. Any grant may
specify that any such amount may be paid by the Company in cash, Common Shares
or any combination of cash and Common Shares and may either grant to the
Participant or reserve to the Committee the right to elect among those
alternatives.
(e) Any grant of Performance Shares may specify that the amount payable
with respect to such grant may not exceed a maximum specified by the Committee
on the Date of Grant. Any grant of Performance Units may specify that the amount
payable, or the number of Common Shares issued, with respect to the grant may
not exceed maximums specified by the Committee on the Date of Grant.
(f) On or after the Date of Grant of Performance Shares, the Committee may
provide for the payment to the Participant of dividend equivalents on such
Performance Shares in cash or additional Common Shares on a current, deferred or
contingent basis.
(g) Each grant of Performance Shares or Performance Units will be evidenced
by an agreement executed on behalf of the Company by any officer of the Company
and delivered to and accepted by the Participant and stating that the
Performance Shares or Performance Units are subject to all of the terms and
conditions of this Plan and such other terms and provisions, consistent with
this Plan, as the Committee may approve.
9. MANAGEMENT OBJECTIVES.
(a) Management Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the individual
Participant or the Subsidiary, division, department or function within the
Company or Subsidiary in which the Participant is employed. The Management
Objectives applicable to any award to a Covered Employee will be based on
specified levels of or growth in one or more of the following criteria:
(i) cash flow/net assets ratio;
(ii) debt/capital ratio;
(iii) return on total capital;
(iv) return on equity;
(v) earnings per share growth;
(vi) revenue growth; and
(vii) total return to shareholders.
(b) If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may in its discretion modify such
Management Objectives or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee where such action would result in the loss of the
otherwise available exemption of the award under
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Section 162(m) of the Code. In such case, the Committee shall not make any
modification of the Management Objectives or minimum acceptable level of
achievement.
10. TRANSFERABILITY.
(a) Except as otherwise determined by the Committee, no Option Right,
Appreciation Right or other award granted under this Plan may be transferred by
a Participant other than by will or the laws of descent and distribution. Except
as otherwise determined by the Committee, Option Rights and Appreciation Rights
may be exercised during a Participant's lifetime only by the Participant or, in
the event of the Participant's legal incapacity, by the Participant's guardian
or legal representative acting in a fiduciary capacity on behalf of the
Participant under state law and court supervision.
(b) Any grant or award made under this Plan may provide that all or any
part of the Common Shares that are (i) to be issued or transferred by the
Company upon the exercise of Option Rights or Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares, or upon
payment under a grant of Performance Shares or Performance Units, or (ii) no
longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6 of this Plan, will be subject to further
restrictions upon transfer.
(c) Notwithstanding the provisions of Section 10(a), if so determined by
the Committee in its discretion on or after the Date of Grant, Option Rights,
Appreciation Rights, Restricted Shares, Deferred Shares, Performance Shares and
Performance Units will be transferable by a Participant, without payment of
consideration therefor by the transferee, to any one or more members of the
Participant's Immediate Family (or to one or more trusts established solely for
the benefit of one or more members of the Participant's Immediate Family or to
one or more partnerships in which the only partners are members of the
Participant's Immediate Family), except that (i) no such transfer will be
effective unless reasonable prior notice of such transfer is delivered to the
Company and such transfer is thereafter effected in accordance with any terms
and conditions that have been made applicable to such transfer by the Company or
the Committee and (ii) any such transferee will be subject to the same terms and
conditions under this Plan as the Participant.
11. ADJUSTMENTS. The Committee may make or provide for such adjustments in the
(a) number of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Deferred Shares and Performance Shares granted under this Plan, (b)
Option Price or Base Price provided in any outstanding Option Right or
Appreciation Right, and (c) kind of shares covered by such awards, as the
Committee in its sole discretion may in good faith determine to be equitably
required in order to prevent dilution or enlargement of the rights of
Participants that otherwise would result from (i) any stock dividend, stock
split, combination of shares, re-capitalization or other change in the capital
structure of the Company, (ii) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation of the
Company or other distribution of assets, issuance of rights or warrants to
purchase securities of the Company, or (iii) any other corporate transaction or
event having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of all
awards so replaced. Moreover, the Committee may on or after the Date of Grant
provide in the agreement evidencing any award under this Plan that the holder of
the award may elect to receive an equivalent award in respect of securities of
the surviving entity of any merger, consolidation or other transaction or event
having a similar effect, or the Committee may provide that the
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holder will automatically be entitled to receive such an equivalent award. The
Committee may also make or provide for such adjustments in the number of shares
specified in Section 3 of this Plan as the Committee in its sole discretion may
in good faith determine to be appropriate in order to reflect any transaction or
event described in this Section 11 except that any such adjustment to the number
specified in Section 3(b)(i) may be made only if and to the extent that such
adjustment would not cause any Option Right intended to qualify as an Incentive
Stock Option to fail so to qualify. This Section 11 may not be construed to
permit the re-pricing of any Option Right in the absence of any of the
circumstances described above in contravention of Section 18(b) of this Plan.
12. FRACTIONAL SHARES. The Company will not be required to issue any fractional
Common Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.
13. CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control" means
the occurrence at any time of any of the following events:
(a) The Company is merged or consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock immediately prior to such transaction;
(b) The Company sells or otherwise transfers all or substantially all of
its assets to any other corporation or other legal person, and less than a
majority of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock immediately prior to such sale or
transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
securities representing 15% or more of the Voting Power;
(d) The Company files any report, proxy statement or other document with
the Securities and Exchange Commission pursuant to the Exchange Act disclosing
that a change in control of the Company has or may have occurred or will or may
occur in the future pursuant to any then-existing contract or transaction; or
(e) If during any period of two consecutive years, individuals who at the
beginning of any such period constitute the Directors cease for any reason to
constitute at least a majority of Directors, unless the election, or the
nomination for election by the Company's shareholders, of each Director first
elected during such period was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at the beginning of any such
period.
Notwithstanding the foregoing provisions of Section 13(c) and (d) above, a
"Change in Control" will not be deemed to have occurred for purposes of this
Plan solely because (i) the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 80% or more of the voting securities,
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or (iii) any Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company either files or becomes obligated to file a report
or proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 15% of the Voting Power or otherwise, or
because the Company reports that a change in control of the Company has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership.
14. WITHHOLDING TAXES. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any payment made or
benefit realized by a Participant or other person under this Plan, and the
amounts available to the Company for such withholding are insufficient, it will
be a condition to the receipt of such payment or the realization of such benefit
that the Participant or such other person make arrangements satisfactory to the
Company for payment of the balance of such taxes required to be withheld. At the
discretion of the Committee, such arrangements may include relinquishment of a
portion of such benefit. The Company and any Participant or such other person
may also make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.
15. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE. Notwithstanding any other provision of this Plan to the contrary, in
the event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Company, leave of absence
to enter public service with the consent of the Company or other leave of
absence approved by the Company, or in the event of hardship or other special
circumstances, of a Participant who holds an Option Right or Appreciation Right
that is not immediately and fully exercisable, any Restricted Shares as to which
the substantial risk of forfeiture or the prohibition or restriction on transfer
has not lapsed, any Deferred Shares as to which the Deferral Period is not
complete, any Performance Shares or Performance Units that have not been fully
earned, or any Common Shares that are subject to any transfer restriction
pursuant to Section 10(b) of this Plan, the Committee may, in its sole
discretion, take any action that it deems to be equitable under the
circumstances or in the best interests of the Company, including without
limitation waiving or modifying any limitation or requirement with respect to
any award under this Plan.
16. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals, or who are
employed by the Company or any Subsidiary outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to, or amendments, restatements or alternative versions
of, this Plan as it may consider necessary or appropriate for such purposes
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Secretary or other appropriate officer of the Company may
certify any such document as having been approved and adopted in the same manner
as this Plan. No such special terms, supplements, amendments, restatements or
alternative versions may include any provisions that are inconsistent with the
terms of this Plan, as then in effect, unless this Plan could have been amended
to eliminate such inconsistency without further approval by the shareholders of
the Company.
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17. ADMINISTRATION OF THE PLAN.
(a) This Plan will be administered by a committee of the Board (or a
subcommittee thereof) composed of not less than three members of the Board, each
of whom will be a "Non-Employee Director" within the meaning of Rule 16b-3. A
majority of the Committee will constitute a quorum, and the acts of the members
of the Committee who are present at any meeting of the Committee at which a
quorum is present, or acts unanimously approved by the members of the Committee
in writing, will be the acts of the Committee.
(b) The interpretation and construction by the Committee of any provision
of this Plan or of any agreement, notification or document evidencing the grant
of Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares,
Performance Shares or Performance Units and any determination by the Committee
pursuant to any provision of this Plan or of any such agreement, notification or
document will be final and conclusive. No member of the Committee will be liable
for any such action taken or determination made in good faith.
18. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the Committee except that
any amendment that must be approved by the shareholders of the Company in order
to comply with applicable law or the rules of any national securities exchange
upon which the Common Shares are traded or quoted will not be effective unless
and until such approval has been obtained in compliance with such applicable law
or rules. Presentation of this Plan or any amendment of this Plan for
shareholder approval will not be construed to limit the Company's authority to
offer similar or dissimilar benefits under other plans without shareholder
approval.
(b) The Committee shall not, without the further approval of the
shareholders of the Company, authorize the amendment of any outstanding Option
Right to reduce the Option Price. Furthermore, no Option Right may be cancelled
and replaced with awards having a lower Option Price without further approval of
the shareholders of the Company. This Section 18(b) is intended to prohibit the
repricing of "underwater" Option Rights and shall not be construed to prohibit
the adjustments provided for in Section 11 of this Plan.
(c) The Committee may require Participants, or may permit Participants to
elect, to defer the issuance of Common Shares or the settlement of awards in
cash under the Plan pursuant to such rules, procedures or programs as it may
establish for purposes of this Plan. The Committee may also provide that
deferred issuances and settlements include the payment or crediting of interest
on the deferred amounts, or the payment or crediting of dividend equivalents
where the deferred amounts are denominated in Common Shares.
(d) This Plan will not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any Subsidiary
and will not interfere in any way with any right that the Company or any
Subsidiary would otherwise have to terminate any Participant's employment or
other service at any time.
(e) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify under particular provisions of the Code from
so qualifying, such provision of this Plan will be null and void with respect to
such Option Right except that such provision will remain in effect with respect
to other Option Rights, and there will be no further effect on any provision of
this Plan.
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(f) The Committee may condition the grant of any award or combination of
awards authorized under this Plan on the surrender or deferral by the
Participant of his or her right to receive a cash bonus or other compensation
otherwise payable by the Company or a Subsidiary to the Participant.
19. TERMINATION. No grant may be made under this Plan more than 10 years after
the date on which this Plan is first approved by the shareholders of the
Company, but all grants made on or prior to such date will continue in effect
after that date subject to the terms of those grants and of this Plan.
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Lamson Sessions Logo
25701 Science Park Drive
Cleveland, Ohio 44122
-----------------------------
P
R
O
X
Y
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints J. J.
Abel, C. E. Allen and L.L. Spencer, and
each of them, as proxies, each with the
power to appoint a substitute, and
hereby authorizes them to represent and
to vote, as designated below, all the
Common Shares of The Lamson & Sessions
Co. held of record by the undersigned
on March 4, 1998 at the Annual Meeting
of Shareholders to be held on April 24,
1998 or any adjournment thereof.
1. ELECTION OF CLASS I DIRECTORS:
TO VOTE FOR ALL NOMINEES LISTED BELOW* [ ] TO WITHHOLD
AUTHORITY [ ]
for all nominees listed below
James T. Bartlett, Francis H. Beam, Jr., Martin J. Cleary, William
H. Coquillette
*To withhold authority to vote for any individual nominee
listed above, write that nominee's name on the space provided
below.
-------------------------------------------------------------------
2. APPROVAL OF THE LAMSON & SESSIONS CO. 1998 INCENTIVE EQUITY
PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the persons named as proxies above are
authorized to vote upon any other matter as may properly come
before the Annual Meeting or any adjournment thereof.
(Continued and to be signed on the other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY NO. (proxy -- continued from other side) NO. OF
SHARES
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR THE ELECTION OF
DIRECTORS AND FOR APPROVAL OF THE COMPANY'S 1998 INCENTIVE EQUITY
PLAN.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title or
capacity. If a corporation, please sign in corporate name by
authorized officer and give title. If a partnership, please sign in
partnership name by authorized person.
DATED , 1998
-------------------------------
Signature
-------------------------------
Second Signature if held
jointly
PLEASE MARK, SIGN, DATE
AND
RETURN THIS PROXY
PROMPTLY
USING THE ENCLOSED
ENVELOPE
