<PAGE> 1
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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
LeaRonal, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
LeaRonal Logo
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
LEARONAL, INC.
272 BUFFALO AVENUE
FREEPORT, NEW YORK 11520
---------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LeaRonal,
Inc. (the "Corporation") will be held at the Garden City Hotel, 45 Seventh
Street, Garden City, New York 11530, on Tuesday, July 15, 1997 at 10:00 A.M.
(Eastern Daylight Savings Time), for the following purposes:
(1) To elect nine directors to serve in accordance with the By-Laws of
the Corporation until the next Annual Meeting of Stockholders, and until
their successors are elected and qualified;
(2) To ratify the appointment of Ernst & Young as auditors of the
Corporation for the current fiscal year; and
(3) To transact such other business as may properly come before the
meeting and any adjournments thereof.
Stockholders of record at the close of business on June 6, 1997 shall be
entitled to notice of and to vote at the meeting. The transfer books will not be
closed.
By Order of the Board of Directors
DONALD
THOMSON,
Secretary
Dated: Freeport, New York
June 13, 1997
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. If you cannot attend the meeting, you are urged to
complete, date, sign and return the enclosed proxy at your earliest convenience.
A postpaid return envelope is enclosed for this purpose.
<PAGE> 3
LEARONAL, INC.
272 BUFFALO AVENUE
FREEPORT, NEW YORK 11520
---------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 15, 1997
---------------------------
This Proxy Statement is being furnished to stockholders in connection with
the solicitation of proxies by the Board of Directors of LeaRonal, Inc. (the
"Corporation") for the 1997 Annual Meeting of Stockholders to be held on July
15, 1997, and at any adjournments thereof. If a proxy in the accompanying form
is properly executed and returned, the shares represented thereby will be voted
as instructed in the proxy. Any proxy may be revoked by a stockholder prior to
its exercise upon written notice to the Secretary of the Corporation, or by a
stockholder's vote in person at the meeting. This Proxy Statement and the
enclosed form of proxy is intended to be mailed on or about June 13, 1997.
The purposes of the meeting are (1) to elect nine directors to serve in
accordance with the By-Laws until the next Annual Meeting of Stockholders and
until their respective successors have been elected and qualified; (2) to ratify
the appointment of Ernst & Young as auditors of the Corporation for the current
fiscal year; and (3) to transact such other business as may properly come before
the meeting and any adjournments thereof.
The cost of this solicitation will be paid by the Corporation. Such costs
include preparation, printing and mailing of the Notice of Annual Meeting, Proxy
Statement and the enclosed proxy. The solicitation will be conducted principally
by mail, although directors, officers and regular employees of the Corporation
and its subsidiaries may solicit proxies personally or by telephone or fax.
Arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries for proxy material to be sent to their principals and the
Corporation will reimburse such entities and persons for their related expenses.
The shares represented by all properly executed and returned proxies will
be voted, if received in time for the meeting, in accordance with the
instructions, if any, given thereon. Unless otherwise indicated, or if no
instructions are given, with respect to any proposal, the shares represented by
such proxies will be voted FOR such proposal. A proxy is revocable at any time
prior to being voted.
The Corporation had outstanding and entitled to vote on June 6, 1997, the
record date for the meeting, 8,547,721 shares of Common Stock, which is its only
voting security. Each share is entitled to one vote. The only individual
stockholders known to the Corporation to own of record or beneficially more than
5% of the outstanding shares of Common Stock are Barnet D. Ostrow, Fred I. Nobel
and Sol Berg. Information with respect to such ownership is set forth in the
table under "Security Ownership of Directors and Executive Officers".
<PAGE> 4
STOCKHOLDERS PROPOSALS
If a stockholder intends to present a proposal at the Corporation's 1998
Annual Meeting, the proposal must be received by the Corporation by February 21,
1998, for inclusion in the Proxy Statement and form of proxy relating to that
meeting.
ELECTION OF DIRECTORS
There are nine nominees for election to the Board of Directors, all of
which are presently serving in such capacity. The nominees, constituting the
entire Board of Directors, are to be elected at the Annual Meeting for a term of
one year, and until the election and qualification of their respective
successors. If no contrary instructions are indicated, the proxies will be voted
for the election of directors of the nominees named below. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve as a director. If any nominee shall be unable, for any reason, to accept
nomination or election, it is the intention of the persons named in the enclosed
form of proxy to vote the proxy for the nomination and election of such other
person or persons as the Board of Directors may designate.
Set forth below is the principal occupation, business experience and other
affiliations during the last five years for each person nominated for reelection
to the Board of Directors. All ages given are as of the record date.
BARNET D. OSTROW
Mr. Ostrow, age 83, has served as a director of the Corporation since 1953.
He is presently Chairman of the Board of Directors and formerly served as
President and Chief Executive Officer of the Corporation.
FRED I. NOBEL
Mr. Nobel, age 79, has served as a director of the Corporation since 1953.
He is presently Vice Chairman of the Board of Directors and formerly served as
Executive Vice President and Secretary of the Corporation.
RONALD F. OSTROW
Mr. Ostrow, age 53, has served as a director of the Corporation since 1975.
He is presently President and Chief Executive Officer of the Corporation. Mr.
Ronald F. Ostrow is the son of Mr. Barnet D. Ostrow.
RICHARD KESSLER
Mr. Kessler, age 58, has served as a director of the Corporation since
1987. He is presently Executive Vice President and Chief Operating Officer of
the Corporation.
SOL BERG
Mr. Berg, age 72, has served as a director of the Corporation since 1972.
Mr. Berg is a private investor.
CARL N. GRAF
Mr. Graf, age 70, has served as a director of the Corporation since 1992.
He was the President and Chief Operating Officer of W.R. Grace & Co. from 1981
through January, 1987 and a member of the Board of Directors of Spire Corp. from
1987 through the present.
IRWIN LIEBER
Mr. Lieber, age 58, has served as a director of the Corporation since 1980.
He was the founder, and has been the Chief Investment Officer of GeoCapital
Corp. from October 1979 to the present.
2
<PAGE> 5
ARTHUR M. WINSTON
Mr. Winston, age 53, has served as a director of the Corporation since
1980. He has served as an Investment Manager for Glickenhaus & Co. from April
1991 to the present, as Vice President, Goldman, Sachs & Co. from October 1989
to April 1991, and as General Partner, Glickenhaus & Co. from October 1988 to
April 1989. Mr. Winston also serves on the Board of Directors of Hi-Shear
Industries, Inc.
KENNETH L. STEIN
Mr. Stein, age 59, has served as a director of the Corporation since 1987.
Mr. Stein is a partner of Greenfield Stein & Senior, LLP, which serves as
general counsel to the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE.
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the ownership
of the Corporation's common stock as of June 6, 1997, the record date, by (i)
each director, (ii) each of the six most highly compensated executive officers
of the Corporation, and (iii) all directors and executive officers of the
Corporation as a group. As of the record date, the directors and executive
officers of the Corporation as a group (15 persons) beneficially owned 2,493,645
shares of common stock, or approximately 29.17% of the common stock outstanding
and entitled to vote at the Annual Meeting, not including an aggregate of 50,063
shares of common stock that such persons may acquire pursuant to options
exercisable within 60 days of the record date.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
-----------------------
BENEFICIALLY OWNED(1)
-----------------------
BENEFICIAL OWNER NUMBER PERCENT
--------------------------------------------------------- ---------- -------
<S> <C> <C>
Barnet D. Ostrow(2)(3)(4)................................ 747,522 8.75
Fred I. Nobel(3)(5)...................................... 846,272 9.90
Ronald F. Ostrow(2)(6)................................... 297,663 3.48
Richard Kessler(7)....................................... 46,367 *
Donald Thomson(8)........................................ 30,807 *
David L. Rosenthal(9).................................... 10,914 *
David Schram(10)......................................... 5,333 *
James Martin(11)......................................... 2,908 *
Carl Fiore(12)........................................... 1,475 *
Michael Toben(13)........................................ 843 *
Sol Berg(3).............................................. 496,346 5.81
Carl N. Graf(14)......................................... 500 *
Irwin Lieber(15)......................................... 390 *
Arthur M. Winston(16).................................... 4,680 *
Kenneth L. Stein(17)..................................... 1,625 *
All present directors and officers as a group
(15 persons)........................................... 2,493,645 29.17
</TABLE>
- ---------------
* less than 1%
(1) This table is based upon information supplied by directors and executive
officers. All directors and officers have the sole investment and voting
power over their respective shares, except as otherwise indicated.
3
<PAGE> 6
(2) Ronald F. Ostrow is the son of Barnet D. Ostrow. No other family
relationships exist between or among any of the directors and officers.
(3) The indicated individuals may be deemed to be "controlled persons" of the
Corporation by reason of share ownership. The address of Messrs. Barnet D.
Ostrow and Fred I. Nobel is c/o LeaRonal, Inc., 272 Buffalo Avenue,
Freeport, New York 11520 and the address of Mr. Sol Berg is 515 Madison
Avenue, 38th Floor, New York, New York 10022.
(4) Includes 6,000 shares beneficially owned by Barnet D. Ostrow and his wife
as partners of Ostrow Properties Limited Partnership #1 and Ostrow
Properties Limited Partnership #2.
(5) Includes 3,000 shares beneficially owned by Fred I. Nobel and his wife as
partners of Nobel Limited Partnership. In addition, Mr. Nobel disclaims
beneficial ownership of 9,375 shares owned by his wife.
(6) Includes (i) 175,781 shares held in trust for the benefit of Ronald F.
Ostrow, as to which Kenneth L. Stein and Ronald F. Ostrow are trustees and
share voting and investment power (as to which Mr. Stein has no beneficial
interest), and (ii) 97,000 shares beneficially owned by Ronald F. Ostrow as
a limited partner of Ostrow Properties Limited Partnership #1; does not
include (i) 83,103 shares owned by Ronald F. Ostrow's children and (ii)
9,400 shares that may be acquired within 60 days by exercise of stock
options.
(7) Does not include (i) an aggregate of 3,786 shares owned by Mr. Kessler's
children in which Mr. Kessler disclaims beneficial ownership, and (ii)
11,100 shares that may be acquired within 60 days by exercise of stock
options.
(8) Does not include 3,750 shares that may be acquired within 60 days by
exercise of stock options.
(9) Does not include 10,125 shares that may be acquired within 60 days by
exercise of stock options.
(10) Does not include 3,719 shares that may be acquired within 60 days by
exercise of stock options.
(11) Does not include 3,969 shares that may be acquired within 60 days by
exercise of stock options.
(12) Does not include 250 shares that may be acquired within sixty (60) days by
exercise of stock options.
(13) Does not include 1,500 shares that may be acquired within sixty (60) days
by exercise of stock options.
(14) Does not include 1,250 shares that may be acquired within 60 days by
exercise of stock options.
(15) Does not include 2,500 shares that may be acquired within 60 days by
exercise of stock options.
(16) Glickenhaus & Co. is an investment management company. Includes an
aggregate of 2,601 shares held for Mr. Winston's children, of which Mr.
Winston is custodian. Does not include 2,500 shares that may be acquired
within 60 days by exercise of stock options.
(17) Includes 1,000 shares held by Vanguard Discount Brokerage Services for Mr.
Stein's benefit under his firm's retirement plan.
4
<PAGE> 7
OTHER SECURITY OWNERSHIP
To the best knowledge of the Corporation, at May 31, 1997 (in addition to
those directors specified above) the following persons beneficially owned (as
that term is defined by the Securities and Exchange Commission) more than 5% of
the common stock outstanding and entitled to vote at the Annual Meeting:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY
OWNED(1)
-----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Societe Generale Asset Management Corp.(2)................................ 577,500 6.76
1221 Avenue of the Americas
New York, N.Y. 10020
</TABLE>
- ---------------
(1) Based on Schedules 13G filed with the Securities and Exchange Commission by
such beneficial owners and additional information received from each as of
May 31, 1997.
(2) Societe Generale Asset Management Corp. (the "Advisor") is an investment
advisor registered under Section 203 of the Investment Advisors Act of 1940,
as amended. The Advisor, by virtue of its powers under its investment
advisory contracts with advisory clients, including SoGen International
Fund, Inc., an investment company registered under Section 8 of the
Investment Company Act of 1940, as amended, may be deemed to be a beneficial
owner of such shares.
MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE
During the fiscal year ended February 28, 1997, the Board of Directors held
four meetings. Each director attended at least 75 percent of these meetings, as
well as the meetings of the Committees of which he was a member.
DIRECTORS' COMPENSATION AND CONSULTING ARRANGEMENTS
Non-employee directors, except Mr. Stein, received annual fees of $11,000
each, paid in equal quarterly installments. Directors receive no additional
compensation for participation on committees of the Board. Mr. Stein is a
partner of Greenfield Stein & Senior, LLP, which serves as general counsel to
the Corporation. Directors who are employees of the Corporation receive no fees
for attending Board or committee meetings.
Messrs. Barnet D. Ostrow and Fred I. Nobel have consulting agreements with
the Corporation pursuant to which they earned fees of $135,000 and $130,000
respectively, in the Corporation's last fiscal year. Additionally, they are
provided with medical insurance. The current term of each agreement ends
February 28, 1998 and may be renewed for successive additional periods of one
year each.
Non-employee directors are eligible to participate in the 1990 Nonqualified
Stock Option Plan. During the Corporation's last fiscal year, no options were
granted to non-employee directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee consists of Messrs. Lieber and Winston. The Committee
meets annually to review the auditor's reports to the Board of Directors,
financial statements and internal accounting controls. It also monitors the
independence and fees of the independent auditors and recommends further
appointments thereof.
5
<PAGE> 8
The Executive Compensation Committee consists of Messrs. Berg, Lieber and
Graf. The Committee recommends compensation for officers of the Corporation and
administers the 1996 Long-Term Incentive Plan.
The Stock Option Committee is composed of Messrs. Lieber and Winston, who
are independent non-employee directors, and Ronald F. Ostrow, the Corporation's
chief executive officer.
The Corporation does not have a standing nominating committee. However,
Messrs. Berg, Nobel and Barnet D. Ostrow recommend new directors and changes in
the composition of the Board of Directors.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Corporation's Board of Directors approves all compensation of the
Corporation's officers, including the chief executive officer, based on the
recommendations of the Compensation Committee, except that all grants of stock
options under the Corporation's stock incentive plan are approved solely by the
Stock Option Committee. The Compensation Committee is composed exclusively of
independent, non-employee directors who are not eligible to participate in any
executive compensation program, except the 1990 Nonqualified Stock Option Plan
previously approved by the stockholders of the Corporation.
The Corporation's compensation program is intended to enable the
Corporation to compete effectively with other firms in attracting, retaining and
motivating executives of the caliber needed for the future success of the
Corporation's business. This program contains three components: (i)
contractually based compensation; (ii) annual incentive compensation; and (iii)
longer-term incentives in the form of nonqualified stock options and
contributions to the 401(k) Employees Savings Plan. The annual incentive
compensation and nonqualified stock options are primarily dependent on the
Corporation's earnings and profitability as well as the returns realized by the
Corporation's stockholders.
A. Base Compensation
An officer's base compensation is contractually determined, subject to
increases based on a number of factors including, but not limited to: (i) an
assessment of performance over time; (ii) competence; and (iii) potential.
Adjustments to each officer's base compensation are made annually in connection
with annual performance reviews.
B. Annual Incentive Compensation -- Bonus
The Corporation's annual incentive compensation program provides for the
payment of bonuses to the officers and certain other employees on an individual
basis. Such awards are based upon the Corporation's overall earnings growth, a
comparison of the Corporation's earnings in the last fiscal year with those of
the immediately preceding fiscal year, as well as individual performance. The
intent is to motivate and reward performance.
A specified bonus for each officer is first approved by the Compensation
Committee and then submitted for approval to the Board of Directors. In
contrast, the total available bonus pool for other employees is approved by the
Compensation Committee and the Board of Directors and distributed at the
discretion of the Corporation's President in consultation with the other
officers.
C. Longer-Term Incentives -- Nonqualified Stock Options/401K Plan
These incentives are designed to coordinate the longer-term interests of
the Corporation and its stockholders with those of the Corporation's key
employees, officers and directors. The Stock Option Committee meets periodically
to grant nonqualified stock options to key employ-
6
<PAGE> 9
ees, officers and directors pursuant to the 1990 Nonqualified Stock Option Plan.
The plan is intended to provide such individuals with additional incentive to
advance the interests of the Corporation as stock options only produce value to
such individuals if the price of the Corporation's common stock appreciates.
D. Chief Executive Officer Compensation
Mr. Ronald F. Ostrow's compensation results from his participation in the
same compensation program as the other executives of the Corporation. The bonus
paid to Mr. Ostrow for the fiscal year ended February 28, 1997 was greater than
the amount paid for the prior fiscal year, reflecting the improved performance
of the Corporation in that year.
Executive Compensation Committee
Sol Berg
Irwin Lieber
Carl Graf
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Corporation's Chief Executive Officer and the other five highest paid
officers, as well as the total compensation paid to each for the Corporation's
most recent three fiscal years:
LEARONAL, INC.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
--------------------------------- -----------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION ENDED ($) ($) ($)(5) (#) ($)(6)
- ------------------------------ ----- -------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald F. Ostrow.............. 2/97 429,000 103,000 84,517(1) 150,000 0
President and 2/96 385,000 100,000 142,446(1) 0
Chief 2/95 342,004 80,000 5,000 0
Executive Officer
Richard Kessler............... 2/97 291,500 72,000 141,294(2) 100,000 4,831
Executive Vice 2/96 264,000 70,000 57,461(2) 5,022
President and 2/95 236,500 56,000 9,000 5,309
Chief Operating
Officer
Donald Thomson................ 2/97 187,000 47,925 40,083(3) 50,000 4,831
Vice President- 2/96 170,500 47,500 34,134(3) 5,022
Technology 2/95 148,720 38,000 26,237(3) 5,000 5,309
and Secretary
David L. Rosenthal............ 2/97 220,000 52,000 21,018(4) 75,000 4,831
Vice President- 2/96 198,000 50,000 25,536(4) 5,022
Finance 2/95 176,000 40,000 8,000 5,309
and Treasurer
James Martin.................. 2/97 165,330 21,000 35,000 4,831
Vice President 2/96 145,200 20,000 5,022
2/95 129,250 16,000 5,000 4,915
David Schram.................. 2/97 176,550 23,500 35,000 4,831
Vice President 2/96 154,000 22,500 5,022
2/95 132,000 18,000 5,000 5,045
</TABLE>
- ---------------
(1) Includes $65,625 and $121,250, for 1997 and 1996, respectively, representing
the difference between the price paid on exercise of common stock options
and the market price on the date of exercise.
7
<PAGE> 10
(2) Includes $119,789 and $44,438, for 1997 and 1996, respectively, representing
the difference between the price paid on exercise of common stock options
and the market price on the date of exercise.
(3) Includes $32,654, $27,188 and $19,219 for 1997, 1996 and 1995, respectively,
representing the difference between the price paid on exercise of common
stock options and the market price on the date of exercise.
(4) Includes $13,500 and $20,438, for 1997 and 1996, respectively, representing
the difference between the price paid on exercise of common stock options
and the market price on the date of exercise.
(5) The only Other Annual Compensation for each of the named officers was in the
form of perquisites and was less than the level required for reporting
purposes.
(6) Consists of contributions by the Corporation to a 401(k) Employees Savings
Plan equal to 50% of the first 4% of the employee's contribution and a pro
rated share of any discretionary contributions made by the Corporation.
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
during the Corporation's last fiscal year, including the potential realizable
value of each grant assuming that the market value of the Corporation's common
stock appreciates in value from the date of the grant to the expiration of the
10 year option period at annualized rates of 5% and 10%, in each case compounded
annually over the life of the option. The value indicated is a net amount, since
the aggregate exercise price has been deducted from the final appreciated value
in accordance with Securities and Exchange Commission regulations. These assumed
rates of appreciation have been specified by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict future
prices of the Corporation's common stock. The Corporation has also elected to
provide a separate column indicating the potential realizable value of each
grant assuming that the market value of the Corporation's common stock
appreciates at the Corporation's historic rate of appreciation, 6.9% over the 10
year period ended April 11, 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
- ------------------------------------------------------------------------------- RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR HISTORIC
GRANTED TO OPTION PERIOD STOCK
EMPLOYEES EXERCISE (10 YR.) APPRECIATION
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------- RATE
NAME GRANTED(#) YEAR ($/SHARE) DATE 5.0%($) 10.0%($) 6.9%($)
- ------------------------- ------------ ----------- ----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald F. Ostrow......... 150,000 31.58 24.50 04/10/06 2,311,575 5,857,950 3,493,455
Richard Kessler.......... 100,000 21.05 24.50 04/10/06 1,541,050 3,905,300 2,328,970
Donald Thomson........... 50,000 10.53 24.50 04/10/06 770,525 1,952,650 1,164,485
David L. Rosenthal....... 75,000 15.79 24.50 04/10/06 1,155,788 2,928,975 1,746,728
James Martin............. 35,000 7.37 24.50 04/10/06 539,368 1,366,855 815,140
David Schram............. 35,000 7.37 24.50 04/10/06 539,368 1,366,855 815,140
</TABLE>
All grants were made at 100% of fair market value as of date of grant. The
assumed annual rates of appreciation of 5% and 10% would result in the price of
the Corporation's common
stock increasing to $39.91 and $63.58, respectively, over the ten year option
period.
The options granted may not be exercised sooner than the fifth (5th)
anniversary of the date of grant nor later than the tenth (10th) anniversary
thereof.
8
<PAGE> 11
In the Corporation's last fiscal year, options were granted covering
475,000 shares of common stock.
All options expire 10 years from the date of grant. Additionally,
unexercised options granted under the 1996 Long-Term Incentive Plan will expire
if the option holder voluntarily terminates his or her employment or the
Corporation terminates such employment "for cause" as defined in the Plan.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning stock options
exercised in the fiscal year ended February 28, 1997, including the "value
realized" upon exercise (the difference between the exercise price of the shares
acquired and the market value at the date of exercise), and the value of the
unexercised "in-the-money" options held at February 28, 1997 (the difference
between the exercise price of all such options held and the market value of the
shares covered by such options at February 28, 1997).
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTIONS
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS
ON EXERCISE REALIZED OPTIONS AT FY-END
NAME (#) ($) AT FY-END($) ($)
- -------------------------------------- --------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Ronald F. Ostrow (1).................. 5,000 65,625 46,875 511,406
Richard Kessler (2)................... 7,344 119,789 46,531 519,106
Donald Thomson........................ 2,656 32,654 19,219 197,035
David L. Rosenthal.................... 1,000 13,500 38,000 422,563
James Martin.......................... 0 0 15,875 171,063
David Schram(3)....................... 350 4,638 16,525 180,731
</TABLE>
- ---------------
(1) On June 4, 1997, Mr. Ostrow exercised stock options on 6,250 shares at $9.25
per share, 2,650 shares at $10.625 per share and 600 shares at $13.875 per
share which resulted in gains of $112,500, $44,056 and $8,025, respectively,
representing the difference between the prices paid for such common stock
and the market price on the date of exercise.
(2) On May 29, 1997, Mr. Kessler exercised stock options on 2,500 shares at
$9.25 per share and on 1,000 shares at $10.625 per share which resulted in
gains of $42,813 and $15,750, respectively, representing the difference
between the prices paid for such common stock and the market price on the
date of exercise.
(3) On May 8, 1997 Mr. Schram exercised options on 500 shares at $9.25 per share
which resulted in a gain of $7,438 representing the difference between the
price paid for such common stock and the market price on the date of
exercise.
PENSION ARRANGEMENTS
On May 11, 1990, the Board of Directors of the Corporation ratified the
adoption of a 401(k) Employees Savings Plan (the "401(k) Plan"). The 401(k) Plan
is a Corporation-sponsored savings plan. The purpose of the 401(k) Plan is to
enable employees of the Corporation to accumulate savings on a tax-deferred
basis. All employees of the Corporation are eligible to participate in the
401(k) Plan, provided they are 21 years of age and have completed one (1) year
of service. Under the 401(k) Plan, eligible employees may contribute from 1% to
15% of their gross taxable income and the Corporation presently makes a matching
contribution equal to 50% of the first 4% of the employees' contribution.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
The Corporation has employment agreements with each of its officers, the
terms of which presently expire on February 28, 1998, subject to earlier
termination in specified circumstances. Each agreement provides for the payment
of a specified minimum salary and other benefits to the extent provided by the
Corporation to all of its officers. The agreements also provide for automatic
renewals for additional periods of three years unless either party gives written
notice of termination six month prior to the expiration of any term.
PERFORMANCE COMPARISON
The graph and table on the following page compare the cumulative total
stockholder return on the Corporation's common stock from February 29, 1992
through February 28, 1997 (as measured by dividing (i) the sum of (A) the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the Corporation's share price at
the end and the beginning of the period; by (ii) the share price at the
beginning of the period) with the Standard & Poors Specialty Chemicals Index and
the Russell 2000, using data supplied by Star Services, Inc. The graph and table
assume an investment of $100 in the Corporation's common stock and each index on
February 29, 1992, as well as the reinvestment of dividends. The stock price
performance on the graph and table below is not necessarily indicative nor is it
intended to forecast the future performance of the Corporation's common stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG LEARONAL, INC., THE RUSSELL 2000 INDEX
AND THE S & P CHEMICALS (SPECIALITY) INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S & P CHEMICALS
(FISCAL YEAR COVERED) LEARONAL INC. RUSSELL 2000 (SPCLTY)
<S> <C> <C> <C>
2/92 100 100 100
2/93 105 108 110
2/94 103 130 130
2/95 138 128 114
2/96 190 165 152
2/97 177 185 146
</TABLE>
RATIFICATION
OF
APPOINTMENT
OF
AUDITORS
Subject to the approval of the stockholders at the Annual Meeting, the
Board of Directors of the Corporation has engaged the firm of Ernst & Young to
audit the books, records and accounts of the Corporation for the current fiscal
year. Ernst & Young has acted in that capacity for several years.
Representatives of Ernst & Young are expected to be present at the Annual
10
<PAGE> 13
Meeting of Stockholders, will have the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
The Corporation has no knowledge of any other matters to be presented at
the meeting. If, however, other matters are presented at the meeting, it is the
intention of the persons named in the enclosed proxy to act in their discretion
on such other matters as may properly come before the meeting and any
adjournments thereof.
The Annual Report to Stockholders for the fiscal year ended February 28,
1997 was mailed on or about June 6, 1997 to all stockholders of record on June
5, 1997. Such Annual Report is not incorporated herein by reference and is not
to be deemed part of this Proxy Statement.
By Order of the Board of Directors
DONALD THOMSON,
Secretary
Dated: Freeport, New York
June 13, 1997
11
<PAGE> 14
PROXY PROXY
LEARONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of LeaRonal, Inc., hereby appoints BARNET D. OSTROW
and FRED I. NOBEL, and each of them, attorneys and proxies, with full power of
substitution, to vote at the Annual Meeting of Stockholders to be held at the
Garden City Hotel, 45 Seventh Street, Garden City, New York 11530, on Tuesday,
July 15, 1997 at 10:00 A.M. (Eastern Daylight Savings Time), and at any
adjournments thereof, in the name of the undersigned and with the same force
and effect as the undersigned could do if personally present, upon the matters
set forth below as indicated.
(CONTINUED ON OTHER SIDE)
<PAGE> 15
LEARONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
1. ELECTION OF DIRECTORS:
Barnet D. Ostrow, Fred I. Nobel, Ronald F. Ostrow,
Richard Kessler, Sol Berg, Carl N. Graf, Irwin
Lieber, Arthur M. Winston and Kenneth L. Stein.
INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
in the space provided below:
-------------------------------------------------
FOR ALL
FOR WITHHELD EXCEPT
/ / / / / /
2. RATIFICATION OF SELECTION OF AUDITORS:
the proposal to ratify the appointment of Ernst &
Young as auditors of the Corporation for the
current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, to act on any other matters which may properly
come before the meeting and any adjournments thereof.
The shares represented by this Proxy
will be voted at the meeting. IF NO
CONTRARY INSTRUCTIONS ARE INDICATED,
THIS PROXY SHALL BE DEEMED TO GRANT
AUTHORITY TO VOTE "FOR" ALL NOMINEES
AS DIRECTORS AND "FOR" THE PROPOSAL
TO RATIFY THE APPOINTMENT OF ERNST &
YOUNG AS AUDITORS OF THE CORPORATION
FOR THE CURRENT FISCAL YEAR.
(Please sign here exactly as your name
appears hereon. When signing as attorney,
executor, administrator, trustee, guardian,
or in any other representative capacity,
please give your full title.)
Dated: , 1997
------------------------------------------------------------
(please date this Proxy)
Signature of Stockholder:
-----------------------------------------------
PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS ABOVE.
