<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: ...........................................................
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- --------------------------------------------------------------------------------
<PAGE> 2
LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
March 22, 2000
To Our Shareholders:
On behalf of the Board of Directors and management of Lamson & Sessions, I
cordially invite you to attend the 2000 Annual Meeting of Lamson's shareholders
to be held on Friday, April 28, 2000, at 9:00 a.m., local time, at the Wyndham
Cleveland Hotel, 1260 Euclid Avenue, Cleveland, Ohio 44115.
At this meeting, shareholders are expected to elect three directors for a
three-year term ending in the year 2003 and to approve an increase in the number
of Common Shares covered by the 1998 Incentive Equity Plan.
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
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2000
Notice is hereby given that the Annual Meeting of Shareholders of The
Lamson & Sessions Co. will be held at the Wyndham Cleveland Hotel, 1260 Euclid
Avenue, Cleveland, Ohio 44115 on April 28, 2000, beginning at 9:00 a.m., local
time, for the purpose of considering and acting upon the following:
(1) The election of three directors in Class II for three-year terms
expiring in 2003;
(2) The proposal to increase by 650,000 the number of Common Shares covered
by The Lamson & Sessions 1998 Incentive Equity Plan; and
(3) Any other business as may properly come before the Annual Meeting or
any adjournment thereof.
If you were a shareholder of record at the close of business on March 1,
2000, you 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 22, 2000
------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY, USING THE RETURN ENVELOPE ENCLOSED SO THAT
YOUR VOTE WILL BE COUNTED AT THE ANNUAL MEETING.
<PAGE> 4
LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2000
DATE OF THE PROXY STATEMENT -- MARCH 22, 2000
GENERAL INFORMATION
INFORMATION ABOUT THE ANNUAL MEETING
Our Annual Meeting will be held on Friday, April 28, 2000, at 9:00 a.m.,
local time, at the Wyndham Cleveland Hotel, 1260 Euclid Avenue, Cleveland, Ohio
44115.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you this Proxy Statement and the enclosed proxy card because
Lamson's Board of Directors is soliciting your proxy to vote your shares at the
Annual Meeting. If you own Lamson common stock in more than one account, such as
individually and also jointly with your spouse, you may receive more than one
set of these proxy materials. To assist us in saving money and to provide you
with better shareholder services, we encourage you to have all your accounts
registered in the same name and address. You may do this by contacting Lamson's
Shareholder Relations Department at (216) 464-3400. This Proxy Statement
summarizes information that we are required to provide to you under the rules of
the Securities and Exchange Commission and which is designed to assist you in
voting your shares. On or about March 24, 2000, we began mailing these proxy
materials to all shareholders of record at the close of business on March 1,
2000.
PROPOSALS YOU MAY VOTE ON
1. The election of three directors in Class II, with terms expiring in
2003; and
2. An amendment to Lamson's 1998 Incentive Equity Plan that would increase
by 650,000 the number of Common Shares covered by the 1998 Incentive
Equity Plan.
The Board recommends you vote FOR each of the nominees for director and FOR
the amendment to the 1998 Incentive Equity Plan.
1
<PAGE> 5
INFORMATION ABOUT VOTING
Shareholders can vote on matters presented at the Annual Meeting in two
ways:
(a) By Proxy - You can vote by signing, dating and returning the enclosed
proxy card. If you do this, the individuals named on the card (your
"proxies") will vote your shares in the manner you indicate. You may
specify on your proxy card whether your shares should be voted for all,
some or none of the nominees for director and whether your shares
should be voted for or against the amendment to the 1998 Incentive
Equity Plan to be presented at the meeting. If you do not indicate
instructions on the card, your shares will be voted FOR the election of
the directors and FOR the Amendment to Lamson's 1998 Incentive Equity
Plan.
(b) In Person - You may come to the Annual Meeting and cast your vote
there.
You may revoke your proxy at any time before it is exercised by sending a
written notice of revocation to Lamson's Secretary, James J. Abel, prior to the
Annual Meeting.
Each share of Lamson common stock is entitled to one vote. As of March 1,
2000, there were 13,453,251 shares of common stock outstanding.
CUMULATIVE VOTING
Notice that cumulative voting is desired must be given to the President, a
Vice President or the Secretary of Lamson at least forty-eight hours before the
Annual Meeting. At the start of the Annual Meeting, Lamson's Chairman or
Secretary or the shareholder giving such notice must announce notice was given
that cumulative voting is desired. If the notice is properly given, each
shareholder will have the right to cumulate his or her voting power and cast all
of his or her votes for one or more of the nominees. 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 as possible of the three nominees for Class II.
INFORMATION REGARDING TABULATION OF THE VOTE
Lamson's policy is that all proxies, ballots and votes tabulated at a
meeting of the shareholders are confidential. Representatives of National City
Bank will tabulate votes and act as Inspectors of Election at the Annual
Meeting.
QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. Under
Lamson's Amended Code of Regulations, if shareholders holding 75% of the voting
power are present in person or by proxy, a quorum will exist to elect directors
at the meeting. For all other business that may be conducted at the Annual
Meeting, the holders of common stock entitled to exercise two-thirds of the
voting power of the Company, present in person or by proxy, shall constitute a
sufficient quorum. Abstentions are counted as present for establishing a quorum
but broker non-votes are not. A broker non-vote occurs when a broker votes on
some matters on the proxy card but not on others because the broker does not
have the authority to do so.
2
<PAGE> 6
The holders of a majority of the voting power represented at the Annual
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.
INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN
Election of Directors
The three nominees for directors receiving the greatest number of votes
will be elected at the meeting.
Amendment to the 1998 Incentive Equity Plan
Two-thirds of all the votes cast at the meeting will be required for the
approval of the amendment to Lamson's 1998 Incentive Equity Plan.
Abstentions and broker non-votes will have no effect on the result of the
vote on the two items to be presented at the meeting.
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
presented at the Annual Meeting other than the proposals discussed in this Proxy
Statement. Under our Code of Regulations, generally no business besides the two
items discussed in this proxy may be transacted at the meeting. However, if any
other matter properly comes before the Annual Meeting, your proxies will act on
such proposal in their discretion.
REVOCATION OF PROXY
If you give a proxy, you may revoke it at any time before it is exercised
by giving notice to Lamson's Secretary in writing prior to the Annual Meeting.
COSTS OF PROXY SOLICITATION
Lamson will pay all the costs of soliciting these proxies. 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. Lamson will also ask banks, brokers and other institutions, nominees
and fiduciaries to forward the proxy material to their principals and to obtain
authority to execute proxies, and reimburse them for expenses. In addition,
Lamson has also retained Georgeson Shareholder Communications, Inc. to aid in
the distribution and solicitation of proxies, and has agreed to pay Georgeson a
fee of approximately $6,500, plus reasonable expenses.
3
<PAGE> 7
INFORMATION ABOUT LAMSON COMMON STOCK OWNERSHIP
The following table sets forth as of December 31, 1999 (except as otherwise
noted), all persons we know to be "beneficial owners" of more than five percent
of Lamson's common stock. This information is based on Form 13F, Form 4,
Schedule 13G and Schedule 13G/A reports filed with the Securities and Exchange
Commission by each of the individuals or firms listed in the table below. If you
wish, you may obtain these reports from the Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
<S> <C> <C>
Gabelli Funds, Inc.,
GAMCO Investors, Inc.
Mario J. Gabelli 1,672,328(2) 12.43%
655 Third Avenue
New York, New York 10017
Farhad Fred Ebrahimi 1,568,400(3) 11.66%
475 Circle Drive
Denver, Colorado 80206
David L. Babson & Co., Inc. 1,265,200(4) 9.40%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Dimensional Fund Advisors Inc. 972,600(5) 7.23%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
J&W Seligman & Co. Incorporated 810,000(6) 6.02%
100 Park Avenue
New York, New York 10017
The Lamson & Sessions Co. Investment 682,756(7) 5.08%
Trust for Retirement Trusts
25701 Science Park Drive
Cleveland, Ohio 44122
</TABLE>
- ---------------
(1) "Beneficial Ownership" is a technical term broadly defined by the Securities
and Exchange Commission to mean more than ownership in the usual sense. So,
for example, you "beneficially" own Lamson common stock not only if you hold
it directly, but also if you indirectly (through a relationship, a position
as a director or trustee, or a contract or understanding), have (or share)
the power to vote the stock, or to sell it, or you have the right to acquire
it within 60 days.
(2) 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 (as of September 30, 1999) in a Form 13F which was
filed with the Securities and Exchange Commission on September 30, 1999.
(3) Farhad Fred Ebrahimi reported the beneficial ownership of such shares on a
Form 4 which was filed with the Securities and Exchange Commission on
January 10, 2000. The reporting person claims beneficial ownership of all
such shares.
4
<PAGE> 8
(4) David L. Babson & Co., Inc., in its capacity as investment advisor, may be
deemed the beneficial owner of 1,265,200 Common Shares, which are owned by
numerous investment counseling clients and which ownership is reported in a
Schedule 13G/A which was filed with the Securities and Exchange Commission
on February 1, 2000.
(5) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, reported the beneficial ownership of such shares in a Schedule 13G
which was filed with the Securities and Exchange Commission on February 3,
2000. 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.
(6) J&W Seligman & Co. Incorporated ("JWS") reported the ownership of such
shares in a Schedule 13G/A filed with the Securities and Exchange Commission
on February 10, 2000. The Schedule 13G/A was also filed on behalf of William
C. Morris, who may be deemed to control JWS.
(7) The Lamson & Sessions Co. Investment Trust for Retirement Trusts reported
the ownership of such shares (as of July 8, 1998) in a Schedule 13G filed
with the Securities and Exchange Commission on August 7, 1998.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Nominees for Directors
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 II
directors expire at the Annual Meeting: John C. Dannemiller, George R. Hill and
D. Van Skilling. For election as Class II directors at the meeting, the
Compensation and Organization Committee has recommended, and the Board of
Directors has approved, the re-nomination of Messrs. Dannemiller, Skilling and
Dr. Hill to serve as directors for the three-year term of office which will
expire at the Annual Meeting of Shareholders in 2003. 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.
The directors to be elected will be elected by a plurality of the votes
cast for directors. It is the intention of the persons named in the enclosed
proxy to vote such proxy as specified and, if no specification is made, to vote
such proxy for the election of Messrs. Dannemiller, Skilling and Dr. Hill as
Class II directors. The Board of Directors recommends that you vote FOR the
three nominees for director.
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 Annual Meeting, shares of common stock of Lamson
(the "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.
5
<PAGE> 9
Listed below are the names of the three nominees for election to the Board
of Directors in Class II and those continuing directors in Classes I and III,
who have previously been elected to terms which will expire in 2001 and 2002,
respectively. Also listed is the year in which each individual first became a
director of the Company, the individual's principal occupation, information
relating to the individual's beneficial ownership of Common Shares of the
Company as of March 14, 2000 and certain other information, based in part on
data submitted by the directors. Except for Mr. Schulze, who beneficially owns
5.03% of the Company's Common Shares, no director or nominee beneficially owns
as much as one percent of the Company's Common Shares. Mr. Abel, an executive
officer of the Company, beneficially owns 1.97% of the Company's Common Shares.
All directors and officers as a group beneficially own 12.3% of the Company's
Common Shares.
NOMINEES FOR ELECTION AT THE MEETING
<TABLE>
<CAPTION>
COMMON
NAME, AGE YEAR FIRST SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) OTHER DIRECTORSHIPS DIRECTOR OWNED(2)
-------------------- ------------------- ------------ ------------
<S> <C> <C> <C>
CLASS II: TERM EXPIRES IN 2000
John C. Dannemiller (61) Applied Industrial Technologies 1988 41,785
Chairman of the Board Applied First Star Bank Corporation
Industrial Technologies
(Formerly Bearings, Inc.,
Distributor of bearings, power
transmission components and
related products)
George R. Hill (58) None 1990 43,171
Senior Vice President, The
Lubrizol Corporation (Full
service supplier of performance
chemicals to worldwide
transportation and industrial
markets)
D. Van Skilling (66) First American Financial 1989 53,190
Retired Chairman and Chief Corporation U.S. Business Bank
Executive Officer, Experian
Information Solutions, Inc.
(Supplier of credit, marketing
and real estate information and
decision support systems)
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
COMMON
NAME, AGE YEAR FIRST SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) OTHER DIRECTORSHIPS DIRECTOR OWNED(2)
-------------------- ------------------- ------------ ------------
<S> <C> <C> <C>
CLASS I: TERM EXPIRES IN 2001
James T. Bartlett (62) Keithley Instruments, Inc. 1997 16,099
Managing Director, Primus Oglebay Norton Company
Venture Partners (Private
investments firm)
Francis H. Beam, Jr. (64) Advanced Lighting Technologies, 1990 27,815
Retired President, Pepper Inc.
Capital Corp. (Venture capital
firm)
Martin J. Cleary (65) Guardian Life Insurance Company 1989 35,000
President and Chief Operating of America Cleveland Indians
Officer, The Richard E. Jacobs Baseball Co., Inc.
Group (Real estate developer)
William H. Coquillette (50) None 1997 12,117
Partner, Jones, Day, Reavis &
Pogue (Law firm)
CLASS III: TERM EXPIRES IN 2002
A. Malachi Mixon, III (59) Invacare Corporation NCS 1990 76,730
Chairman of the Board and Chief Healthcare, Inc. The Sherwin
Executive Officer, Invacare Williams Company Cleveland
Corporation (Manufacturer and Clinic Foundation
distributor of home healthcare
products)
John C. Morley (68) Cleveland-Cliffs, Inc. Ferro 1996 16,561
President, Evergreen Ventures Corporation
Ltd. (Private investment
company)
John B. Schulze (62) None 1984 747,633(3)
Chairman of the Board,
President and Chief Executive
Officer of the Company
All present directors and 1,828,998
executive officers as a group
(19 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 Septem-
7
<PAGE> 11
ber 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
14, 2000 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze -- 541,633 and all other directors and executive
officers as a group -- 592,331.
(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 Securities and Exchange Commission (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 30,000 shares owned by
his wife, to which he has disclaimed beneficial ownership. No other director
or executive officer has disclaimed beneficial ownership of any shares.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors oversees the business and affairs of Lamson and
monitors the performance of management. The Board met six times during 1999.
The Board has two committees: the Audit Committee and the Compensation and
Organization Committee. Each committee reports to the Board at the next meeting
of the Board following a committee meeting. The Audit Committee and the
Compensation and Organization Committee each held two meetings in 1999.
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
THE AUDIT COMMITTEE: The Audit Committee consists solely of independent
directors. Messrs. Beam (Chairman), Cleary, Morley and Dr. Hill currently are
the members of the Audit Committee. The functions of the Audit Committee include
(i) recommending to the Board of Directors the appointment of the Company's
independent auditors, (ii) reviewing the independence of the outside auditors,
(iii) reviewing the proposed audit programs (including both independent and
internal audits) and the results of the independent and internal audits, (iv)
reviewing the adequacy of the Company's systems of internal accounting controls,
(v) reviewing the recommendations of the outside auditors, (vi) reviewing the
annual financial statements of the Company prior to the filing of such
statements with the SEC and, (vii) reviewing such other matters in relation to
the accounting, auditing and financial reporting practices and procedures of the
Company as the Audit Committee may deem desirable in connection with its other
review functions. The Audit Committee meets privately with the independent
auditors and with the Company's internal audit group 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. 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 Compensation and Organization Committee also reviews and recommends
candidates for election to the Board of Directors and
8
<PAGE> 12
appointments to any committee of the Board. The Compensation and Organization
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 Lamson's Secretary.
COMPENSATION OF LAMSON'S DIRECTORS
Directors who are employees of Lamson 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 for
their 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. Lamson has established a Deferred Compensation
Plan for nonemployee directors, under which directors may elect to defer their
annual retainers 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.
Lamson's nonemployee directors 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 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: Lamson'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,
re-elected or continuing as a nonemployee director automatically receives a
nonqualified option to purchase 2,000 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. 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 160,000 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.
9
<PAGE> 13
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" of the Company (as defined in the
Directors Plan), all stock options fully vest and become exercisable.
Pursuant to the Directors Plan, on April 26, 1999 each nonemployee director
was granted a nonqualified stock option to purchase 2,000 Common Shares at an
exercise price of $5.625 per share. These stock options are scheduled to become
exercisable on April 26, 2000.
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
-------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- -----------
---------------------------------- RESTRICTED SECURITIES PERFORMANCE ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING UNIT COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(3) OPTION(#) PAYOUTS (1)(2)
------------------ ---- -------- -------- ------------ ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Schulze.............. 1999 $395,000 $465,000 $-- 80,000 $-- $ 29,939
Chairman of the Board,...... 1998 395,000 380,000 -- 70,000 -- 28,049
President and Chief......... 1997 395,000 -- -- 70,000 -- 28,118
Executive Officer
James J. Abel................ 1999 260,000 178,500 -- $15,300 40,000 -- 87,478(3)
Executive Vice President,... 1998 260,000 101,400 -- 20,280 35,000 -- 111,750
Secretary, Treasurer........ 1997 250,000 -- -- 31,000 -- 10,344
and Chief Financial Officer
Charles E. Allen............. 1999 156,000 107,000 -- 10,000 -- 15,693
Senior Vice President....... 1998 156,000 93,500 -- -- -- 14,720
1997 156,000 -- -- 10,000 -- 14,801
Donald A. Gutierrez.......... 1999 165,000 82,980 -- 5,532 20,000 -- 32,660(3)
Vice President.............. 1998 155,000 58,500 -- 6,300 20,000 -- 35,325
Carlon (4).................. 1997 145,000 -- -- 3,500 -- 2,957
Norman P. Sutterer........... 1999 153,000 94,800 -- 1,200 18,000 -- 18,853(3)
Vice President.............. 1998 143,000 79,000 -- 1,000 20,000 -- 17,468
Lamson Home Products (4).... 1997 135,000 -- -- 10,000 -- 12,443
</TABLE>
- ---------------
(1) Includes split dollar life insurance premium payments paid for Mr. Schulze,
Mr. Abel, Mr. Allen, Mr. Gutierrez and Mr. Sutterer in 1999 of $25,139,
$6,178, $10,893, $-0-, and $8,047, respectively; in 1998 of $23,249, $5,550,
$10,040, $-0- and $7,668, respectively; and, in 1997 of $23,368, $5,594,
$10,051, $-0- 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:
10
<PAGE> 14
Mr. Schulze, Mr. Abel, Mr. Allen, Mr. Gutierrez and Mr. Sutterer in 1999
totaled $4,800, $4,800, $4,800, $5,000, and $4,806, respectively; in 1998
totaled $4,800, $4,800, $4,680, $3,825 and $4,750, respectively; and in
1997 totaled $4,750, $4,750, $4,750, $2,957 and $4,750, respectively.
(3) Pursuant to the implementation of stock ownership guidelines for the
Company's executive officers by the Compensation and Organization Committee
of the Company's Board of Directors, Messrs. Abel, Gutierrez and Sutterer
each elected to defer a portion of their 1999 annual bonuses pursuant to the
Company's Deferred Compensation Plan for Executive Officers. The deferred
amounts are invested in Common Shares of the Company. Accordingly, income
amounts deferred by Messers Abel, Gutierrez and Sutterer are $76,500,
$27,660 and $6,000, respectively. In addition, for those officers who elect
to defer a portion of their bonus, the Company matches 20% of the deferred
amount and uses such amount to issue restricted shares to the executive.
(4) Carlon and Lamson Home Products are business units of the Company.
STOCK OPTIONS
The following table sets forth information concerning stock option grants
made to the Named Executive Officers during fiscal year 1999 pursuant to the
Company's 1998 Incentive Equity Plan (the "1998 Plan").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
---------------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANT
OPTIONS GRANTED TO EXERCISE DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ---------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John B. Schulze............... 80,000 24.81% $4.968 2/25/09 $204,800
James J. Abel................. 40,000 12.40% 4.968 2/25/09 102,400
Charles E. Allen.............. 10,000 3.10% 4.968 2/25/09 25,600
Donald A. Gutierrez........... 20,000 6.20% 4.968 2/25/09 51,200
Norman P. Sutterer............ 18,000 5.58% 4.968 2/25/09 46,080
</TABLE>
- ---------------
(1) Options are exercisable after February 24, 2000 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" of the Company (as defined in the 1998
Plan, as amended), 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
11
<PAGE> 15
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 60 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 1999 by the Named Executive Officers and the fiscal year-end
values of unexercised options held by the Named Executive Officers. All of such
options were granted under the Company's 1988 Incentive Equity Performance Plan
and the 1998 Plan.
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
SHARES JANUARY 1, 2000(#) JANUARY 1, 2000(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John B. Schulze......... -- -- 468,300 150,000 $40,250 $--0--
James J. Abel........... -- -- 184,933 73,667 15,700 --0--
Charles E. Allen........ -- -- 103,266 13,334 9,530 --0--
Donald A. Gutierrez..... -- -- 13,666 33,334 --0-- --0--
Norman P. Sutterer...... -- -- 60,634 34,666 2,510 --0--
</TABLE>
- ---------------
(1) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Company's Common Shares on December 31, 1999 (the last
trading day in fiscal year 1999) of $4.875.
12
<PAGE> 16
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 1999.
<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>
$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 1998, no more than $160,000
(indexed for inflation) 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.
13
<PAGE> 17
Messrs. Schulze, Abel, Allen, Gutierrez and Sutterer are participants in
the Lamson & Sessions Plan with 12, 9, 31, 3 and 11 years of credited service,
respectively, under the Lamson & Sessions 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" (as defined in the SERPS) of the Company, become applicable.
AGREEMENTS WITH CERTAIN OFFICERS
Lamson has entered into agreements with Messrs. Schulze, Abel, Allen,
Gutierrez and Sutterer (the "Executive Change-in-Control 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 Executive Change-in-Control
Agreements) of the Company. The Executive Change-in-Control Agreements are
intended to ensure continuity and stability of senior management of the Company.
Each of the Executive Change-in-Control 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 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 Executive
Change-in-Control Agreement) or (v) a material breach of the Executive
Change-in-Control 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). 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 Executive Change-in-Control
Agreement. In the case of a "change in control," the Executive Change-in-Control
Agreements also provide for protection of certain retirement benefits which
would have been earned during the years for which severence was paid and
14
<PAGE> 18
reimbursement for any additional tax liability incurred as a result of excise
taxes imposed or payments deemed to be attributable to the "change in control."
The Executive Change-in-Control Agreements do not create 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 Executive Change-in-Control 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 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
1999.
15
<PAGE> 19
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
1999 compensation included base salary and stock options. Sixty 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 1998 Plan was based on the same methodology used to calculate
the awards of options to other executive officers under the 1998 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 determines priorities with
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 percent on the financial performance of the Company
and individual business units and 20 percent on the achievement of specific
personal goals and objectives. In 1999, the Company's Short-Term Incentive Plan
provided target award opportunities for executive officers that ranged from 35
to 60 percent of base salary, although amounts could vary above and below that
range depending upon Company and business unit performance and individual
accomplishment.
STOCK OPTIONS AND LONG-TERM INCENTIVE COMPENSATION
The Committee also is charged with the responsibility of administering the
1998 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
16
<PAGE> 20
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 1998 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 1999.
COMPENSATION AND ORGANIZATION COMMITTEE
D. Van Skilling, Chairman John C. Dannemiller
James T. Bartlett A. Malachi Mixon, III
Francis H. Beam, Jr.
17
<PAGE> 21
COMPANY STOCK PERFORMANCE
In previous years, the Company has presented a graph comparing its
performance (as measured by a five year cumulative return on the Common Shares)
to indices of companies classified under Standard & Poor's as manufacturers of
electrical equipment and to companies classified under Standard & Poor's 500
Index. The Company has decided for the fiscal year 1999 to present a graph
comparing its performance to that of the Standard & Poor's Small Industrials
Index and the Russell 2000 Index. The Company believes that these indices
provide a more relative comparison to the Company's performance.
In order to allow comparison to last year's performance indices, the
Company has provided last year's indices in addition to the more relevant
indices. The following graph compares the five year cumulative return, including
reinvestment of dividends, from investing $100 on December 31, 1994 in stock or
index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH]
<TABLE>
<CAPTION>
THE LAMSON & S&P 500 RUSSELL 2000
SESSIONS ------- ------------ S&P ELECTRICAL S&P SMALLCAP
COMPANY EQUIPMENT 600 INDUSTRIALS
------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
12/94 100 100 100 100 100
12/95 129 138 127 140 124
12/96 121 169 155 190 143
12/97 97 226 204 268 167
12/98 85 290 191 359 164
12/99 81 351 188 538 187
</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.
18
<PAGE> 22
SECURITY OWNERSHIP OF MANAGEMENT
Each of the Named Executive Officers beneficially owned the number of
Common Shares indicated opposite his name as of January 14, 2000. Except for Mr.
Schulze who beneficially owns 5.03% and Mr. Abel who beneficially owns 1.97% 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......................... 747,633
James J. Abel........................... 292,393
Charles E. Allen........................ 145,500
Donald A. Gutierrez..................... 37,717
Norman P. Sutterer...................... 97,620
</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
14, 2000 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze -- 541,633; Mr. Abel -- 220,266; Mr. Allen --
109,933; Mr. Gutierrez -- 26,999 and Mr. Sutterer -- 76,633.
(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 30,000 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 2000.
PROPOSED AMENDMENT TO THE COMPANY'S 1998 INCENTIVE EQUITY PLAN
(PROPOSAL NO. 2)
GENERAL
The Lamson & Sessions Co. 1998 Incentive Equity Plan ("Original Plan") was
approved by the Company's shareholders on April 24, 1998. On February 23, 2000,
the Board of Directors, approved an amendment to the Original Plan, subject to
shareholder approval at the 2000 Annual Meeting. The proposed amendment would
increase the number of shares to be issued under the Original Plan from 650,000
to 1,300,000, thereby making 650,000 additional shares available for grant under
the Original Plan, as amended. The additional shares represent less than 5% of
the issued and outstanding stock of the Company. To date, options to acquire
approximately 650,000 Common Shares have been granted under the Original Plan.
Accordingly, the Board of Directors believes that an increase in the maximum
19
<PAGE> 23
number of shares, under the Original Plan, as amended, should be granted in
light of the Company's present intention to continue granting awards in order to
assist the Company in developing and maintaining strong management. The proposed
amendment also conforms the definition of "Change in Control" to the definition
of "Change in Control" in other plans and agreements of the Company. If the
proposed amendment is not approved, the Original Plan remains in effect.
A summary description of the Original Plan, as amended (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 1,300,000 (650,000 of which
were approved by shareholders in 1998 and 650,000 of which are being added by
the proposed amendment)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 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.
20
<PAGE> 24
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 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
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<PAGE> 25
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 predetermined 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.
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<PAGE> 26
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:
(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.
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 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.
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<PAGE> 27
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, 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 l6b-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 construed to limit the
Company's authority to offer similar or dissimilar benefits through plans that
are not subject to shareholder approval.
Consistent with the Company policy against repricing "underwater" options,
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
24
<PAGE> 28
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 the terms of
those grants and this Plan.
General. The closing price of the Common Shares of the Company on March 1,
2000, on the New York Stock Exchange was $7.875 per share.
PLAN BENEFITS
It is not possible to determine the future awards that will be received by
participants in the Plan. Set forth in the table below are the number of
Non-Qualified Stock Options and Restricted Shares that were granted under the
Plan during the Company's fiscal year 1999 and through February 23, 2000, to
each of (i) the chief executive officer and the four most highly compensated
executive officers of the Company, (ii) all present executive officers as a
group and (iii) all employees, including all present officers who are not
executive officers, as a group.
PLAN BENEFITS
1998 INCENTIVE EQUITY PLAN
<TABLE>
<CAPTION>
STOCK OPTIONS RESTRICTED SHARES GRANTED
GRANT/AWARD ------------- --------------------------
NAME AND POSITION DATE(1) GRANTED NUMBER VALUE ($)(2)
----------------- ----------- ------------- -------- --------------
<S> <C> <C> <C> <C>
John B. Schulze........................ 2000 90,000 0 --
Chairman of the Board, President 1999 80,000 0 --
and Chief Executive Officer
James J. Abel.......................... 2000 40,000 2,309 15,300
Executive Vice President, Secretary, 1999 40,000 4,082 20,280
Treasurer and Chief Financial Officer
Charles E. Allen....................... 2000 10,000 0 --
Senior Vice President 1999 10,000 0 --
Donald A. Gutierrez.................... 2000 25,000 835 5,532
Vice President, Carlon 1999 20,000 1,268 6,300
Norman P. Sutterer..................... 2000 20,000 181 1,200
Vice President, Lamson Home Products 1999 18,000 201 1,000
Executive Officer Group(3)............. 2000 243,000 5,988 39,671
1999 220,000 8,717 43,306
Non-Executive Director Group........... 2000 0 0 --
1999 0 0 --
Non-Executive Officer Employee Group... 2000 131,800 0 --
1999 102,500 0 --
</TABLE>
- ---------------
(1) Reflects grants of options on February 25, 1999, priced at $4.968, and
February 23, 2000, priced at $6.625, respectively.
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<PAGE> 29
(2) Reflects value on date of award.
(3) 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, 2000. 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 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
26
<PAGE> 30
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 of the earn-out of Performance Shares or Performance Units, the
recipient general in respect 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.
REQUIRED VOTE
The approval of the Amendment to the 1998 Incentive Equity 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 BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORT COMPLIANCE
Section 16(a) of the Exchange Act requires Lamson'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 Securities and Exchange Commission, the New York Stock
Exchange and the Pacific Stock Exchange, and to provide Lamson 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 1, 2000, 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 1999, 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 1, 2000. Representatives of Ernst & Young are
27
<PAGE> 31
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 2001, must be received by the Company's
Secretary at its principal office in Cleveland, Ohio, not later than November
25, 2000 for inclusion in the Company's Proxy Statement and Form of Proxy
relating to the Annual Meeting of Shareholders in the year 2001. 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 Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the Annual Meeting other than as herein presented. However, if any other
matter is properly brought before the Annual Meeting, the persons appointed as
proxies in the accompanying proxy will have discretion to vote or act hereon
according to their best judgment.
The Company's 1999 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
28
<PAGE> 32
APPENDIX A
THE LAMSON & SESSIONS CO.
1998 INCENTIVE EQUITY PLAN
(AS AMENDED AND RESTATED AS OF APRIL 28, 2000)
SECTION 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.
SECTION 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.
A-1
<PAGE> 33
"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.
"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.
A-2
<PAGE> 34
"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
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.
SECTION 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
1,300,000 (650,000 of which were approved by the shareholders in 1998 and
650,000 of which are being added as of April 28, 2000) 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.
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<PAGE> 35
(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.
2. Section 13 of the Plan is hereby amended and restated to read in its
entirety as follows:
(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.
SECTION 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.
(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
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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.
(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.
SECTION 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.
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(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:
(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.
SECTION 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
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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 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.
SECTION 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.
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(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.
SECTION 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 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.
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(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.
SECTION 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;
(a) revenue growth; and
(b) 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 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.
SECTION 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
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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.
SECTION 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,
recapitalization 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 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.
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SECTION 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.
SECTION 13. CHANGE IN CONTROL.
For purposes of this Plan, a "Change in Control" shall be deemed to have
occurred if any of the following events shall occur:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
15% or more of either: (i) the then-outstanding shares of common stock of
the Company (the "Company Common Stock") or (ii) the combined voting power
of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors ("Voting Stock"); provided, however,
that for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary of the Company, or (4) any acquisition by any
Person pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 13; or
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason
(other than death or disability) to constitute at least a majority of the
Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director,
without objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the meaning of
Rule 14a-11 of the Exchange Act) with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors of the
Company; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Company
Common Stock and Voting Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions relative to each
other as their ownership, immediately prior to such Business Combina-
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tion, of the Company Common Stock and Voting Stock of the Company, as the
case may be, (ii) no Person (excluding any entity resulting from such
Business Combination or any employee benefit plan (or related trust)
sponsored or maintained by the Company or such entity resulting from such
Business Combination) beneficially owns, directly or indirectly, 15% or
more of, respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination, or the combined voting
power of the then-outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination
and (iii) at least a majority of the members of the Board of Directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board of Directors of the Company, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
SECTION 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.
SECTION 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.
SECTION 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
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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.
SECTION 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.
SECTION 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.
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(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.
(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.
SECTION 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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DETACH CARD
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LAMSON&SESSIONS LOGO
25701 Science Park Drive
Cleveland, Ohio 44122
The undersigned hereby appoints James J. Abel, Charles E. Allen and Lori L.
Spencer, and each of them, as proxies, each with the power to appoint a
substitute. The undersigned hereby authorizes the proxies 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 1, 2000, at the Annual Meeting of
Shareholders to be held on April 28, 2000 and at any adjournment(s) thereof.
<TABLE>
<S> <C>
1. ELECTION FOR CLASS II DIRECTORS: [ ] TO WITHHOLD AUTHORITY: [ ]
TO VOTE FOR ALL NOMINEES LISTED BELOW*: for all nominees listed below
</TABLE>
JOHN C. DANNEMILLER GEORGE R. HILL D. VAN SKILLING
*To withhold authority to vote for any individual nominee listed above, write
that nominee's name on the space provided below.
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2. Increase by 650,000 the number of Common Shares covered by 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(s) thereof.
(Continued and TO BE SIGNED on the other side)
<PAGE> 47
DETACH CARD
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(proxy -- continued from other side)
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 THE AMENDMENT TO LAMSON'S
1998 INCENTIVE EQUITY PLAN.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. When signing as attorney, executor,
administrator, trustee, guardian, etc., give full
title as such. 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 __________, 2000
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Signature
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Second signature, if held jointly
[ ] PLEASE CHECK THIS BOX IF YOU
PLAN TO ATTEND THE ANNUAL
MEETING OF SHAREHOLDERS.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
