<PAGE> 1
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE LINCOLN ELECTRIC COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THE LINCOLN ELECTRIC COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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<PAGE> 2
THE LINCOLN ELECTRIC COMPANY
22801 ST. CLAIR AVENUE
CLEVELAND, OHIO 44117-1199
1994
NOTICE OF ANNUAL MEETING
------------------------
The Annual Meeting of Shareholders of The Lincoln Electric Company (the
"Company") will be held on Tuesday, May 24, 1994, at 7:00 P.M. at the offices of
the Company, 22801 St. Clair Avenue, Cleveland, Ohio for the following purposes:
(1) To elect six Directors, each to serve a term of three years and until a
successor shall have been elected;
(2) To consider and act upon the shareholder proposal set forth in the
accompanying proxy statement, if presented to the meeting; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 15, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
Dinner will be served in the Company Cafeteria at 5:45 P.M. prior to the
meeting.
Admission to the dinner and meeting will be by ticket only or upon
presentation of other acceptable identification. Please indicate on the proxy
card if you plan to attend, and a ticket of admission will be mailed to you.
ELLIS F. SMOLIK
Senior Vice President,
Secretary - Treasurer
April 25, 1994
PLEASE FILL OUT, SIGN AND MAIL THE ENCLOSED PROXY CARD.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 3
THE LINCOLN ELECTRIC COMPANY
22801 ST. CLAIR AVENUE
CLEVELAND, OHIO 44117-1199
1994
NOTICE OF ANNUAL MEETING
------------------------
TO PARTICIPANTS IN THE LINCOLN ELECTRIC COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Annual Meeting of Shareholders of The Lincoln Electric Company (the
"Company") will be held on Tuesday, May 24, 1994, at 7:00 P.M. at the offices of
the Company, 22801 St. Clair Avenue, Cleveland, Ohio for the following purposes:
(1) To elect six Directors, each to serve for a term of three years and
until a successor shall have been elected;
(2) To consider and act upon the shareholder proposal set forth in the
accompanying proxy statement, if presented to the meeting; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 15, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
As a participant in The Lincoln Electric Company Employee Stock Ownership
Plan, you may obtain the Proxy Statement of April 25, 1994 and the Annual Report
for 1993 from the Human Resources Department if you have not already received
these reports as a holder of Common Shares of stock issued under The Employees'
Stock Purchase Plan (Blue Shares).
Pursuant to the terms and conditions of the ESOP, you are entitled to
instruct National City Bank, the Trustee of the ESOP, on how to vote the shares
of Class A Common Stock allocated to your account with respect to the matters to
be presented to the shareholders at the Annual Meeting. Enclosed is a voting
instruction card for you to complete, execute and return in the enclosed postage
paid envelope. Upon receipt of the voting instructions, the Trustee will vote
the shares of Class A Common Stock allocated to your account as instructed. The
Trustee will not vote any shares allocated to a participant's or beneficiary's
account for which no instructions are received.
Should you have any questions relating to this matter, please write to the
attention of the Secretary of The Lincoln Electric Company, 22801 St. Clair
Avenue, Cleveland, Ohio 44117-1199.
The Administration Committee,
The Lincoln Electric Company
Employee Stock Ownership Plan
April 25, 1994
<PAGE> 4
THE LINCOLN ELECTRIC COMPANY
22801 ST. CLAIR AVENUE
CLEVELAND, OHIO 44117-1199
PROXY STATEMENT
---------------
APRIL 25, 1994
SOLICITATION AND REVOCATION OF PROXIES
--------------------------------------
This statement is furnished in connection with the solicitation by the
Board of Directors of The Lincoln Electric Company (the "Company") of proxies to
be used at the Annual Meeting of Shareholders of the Company to be held on May
24, 1994. If the enclosed proxy card is executed and returned, the shares
represented by it will be voted. A shareholder, without affecting any vote
previously taken, may revoke his proxy by the execution and delivery to the
Company of a later proxy with respect to the same shares, or by giving notice to
the Company in writing before or at the open meeting. The presence at the Annual
Meeting of the person appointing a proxy does not in and of itself revoke the
appointment.
OUTSTANDING SHARES AND VOTING RIGHTS
------------------------------------
At the close of business on April 15, 1994, the record date for the
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting, the Company had outstanding and entitled to vote 10,406,804 Common
Shares and 499,840 Class A Common Shares. Each Common Share and Class A Common
Share is entitled to one vote on each matter brought before the meeting.
In addition to the solicitation of proxies by the use of mails, the Company
may solicit the return of proxies by personal interview, telephone and telegram.
The cost of the solicitation of proxies will be borne by the Company. This Proxy
Statement and accompanying form of proxy are being first mailed to shareholders
on or about April 25, 1994.
ELECTION OF DIRECTORS
---------------------
[Proposal No. 1]
The Company's Code of Regulations, as amended (the "Regulations"), provides
for three classes of Directors whose terms expire in different years. The class
of Directors to be elected in 1994, who will hold their positions for a term of
three years and until the election of their successors, has been fixed at six.
Unless otherwise directed, proxies in accompanying form will be voted in favor
of electing to that class: Donald F. Hastings, Hugh L. Libby, David C. Lincoln,
G. Russell Lincoln, Henry L. Meyer III, and Frank L. Steingass. Messrs.
Hastings, Libby, Steingass, David C. Lincoln and G. Russell Lincoln have been
previously elected as Directors by the shareholders. Mr. Meyer is a new,
non-employee Director Nominee and also is currently the Chairman and Chief
Executive Officer of KeyCorp's largest bank, Society National Bank and Senior
Executive Vice President and Chief Banking Officer of KeyCorp. Mr. Meyer served
in many other executive positions with Society Corporation. He was elected Vice
Chairman, Chief Banking Officer and Director of Society Corporation in 1991 and
was elected Chief Executive Officer of Society National Bank in 1993 prior to
his election to Chairman of the Board in 1994.
If, prior to the meeting, any of the nominees should be unable to serve as
a Director, an event which is not anticipated, the proxies will be voted in
favor of fixing the number of Directors at a lesser number (but not less than
three) or for a substitute nominee or nominees designated by the Board of
Directors, at the discretion of the persons appointed as proxy holders.
<PAGE> 5
<TABLE>
The following table sets forth certain information concerning each Nominee
and each Director whose term of office will continue after the meeting. It
includes those listed in the Summary Compensation Table, except for Mr. David J.
Fullen who owns 2,300 Common Shares.
<CAPTION>
COMMON SHARES REPORTED AS
BENEFICIALLY OWNED DIRECTLY OR
INDIRECTLY ON APRIL 15, 1994(1) PERCENTAGE OF
DIRECTOR ------------------------------------ (COMBINED)
NAME PRINCIPAL OCCUPATION SINCE AGE RESTRICTED(2) UNRESTRICTED OUTSTANDING SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR TERM ENDING IN 1997:
Donald F. Hastings Chairman of the Board and 1980 65 34,770(10)(11) 29,610 *
Chief Executive Officer of (13)
the Company (3)
Hugh L. Libby Chairman of the Board and 1985 68 -- 13,070 *
Chief Executive Officer of
Libby Corp. (Mfr. of
diesel/gas turbine
generator sets and aircraft
ground power units)
David C. Lincoln Chairman of the Board and 1958 68 -- 367,700 3.53%
Chief Executive Officer of -- 998,550(4) 9.60%
Lincoln Laser Co. (Mfr. of -- 30,000(5) *
laser scanning equipment) -- 20,000(6) *
-- 500,000(6) 4.80%
500,000(12) 4.80%
G. Russell Lincoln Chairman of the Board and 1989 47 -- 57,500(8) *
Chief Executive Officer of
Algan, Inc. (Mfr. of
industrial coatings and
chemicals for the printing
industry)
Henry L. Meyer III Chairman of the Board and 44 -- -- *
Chief Executive Officer of
Society National Bank
Frank L. Steingass Chairman of the Board and 1971 54 -- 106,262 1.02%
President of
Buehler/Steingass, Inc.
(Commercial printers)
DIRECTORS WHOSE TERM ENDS IN 1996:
Harry Carlson Vice Chairman of the 1973 59 24,820(10)(11) 39,650 *
Company
David H. Gunning Chairman, President & Chief 1987 51 -- 7,370(7) *
Executive Officer of
Capitol American Financial
Corp.
Edward E. Hood, Jr. Former Vice Chairman of the 1993 63 -- 1,000 *
Board and Executive Officer
of The General Electric
Company
Paul E. Lego Former Chairman and Chief 1993 63 -- 1,500 *
Executive Officer of the
Westinghouse Corp.
President of Intelligent
Enterprises (Consulting)
Emma S. Lincoln Retired--Formerly an 1989 71 -- 227,520(9) 2.19%
Attorney in private
practice
</TABLE>
2
<PAGE> 6
<TABLE>
The following table sets forth certain information concerning each Nominee
and each Director whose term of office will continue after the meeting. It
includes those listed in the Summary Compensation Table, except for Mr. David J.
Fullen who owns 2,300 Common Shares.
<CAPTION>
COMMON SHARES REPORTED AS
BENEFICIALLY OWNED DIRECTLY OR
INDIRECTLY ON APRIL 15, 1994(1) PERCENTAGE OF
DIRECTOR ------------------------------------ (COMBINED)
NAME PRINCIPAL OCCUPATION SINCE AGE RESTRICTED(2) UNRESTRICTED OUTSTANDING SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS WHOSE TERM ENDS IN 1995:
John Gonzalez Vice Chairman of the 1989 62 100 -- *
Company(3)
Frederick W. Mackenbach President and Chief 1992 63 15,564(10)(11) 42,310 *
Operating Officer(3) (13)
Lawrence O. Selhorst Chairman of the Board and 1992 61 -- 1,000 *
Chief Executive Officer of
American Spring Wire
Corporation (Mfr. of
specialty wires)
Craig R. Smith Self-employed--Formerly 1992 68 -- 3,550 *
Chairman and Chief
Executive Officer of
Ameritrust Corporation
Ellis F. Smolik Senior Vice President, 1973 74 -- (10) 17,576 *
Secretary-- Treasurer of
the Company (3)
Roger F. Young Senior Vice President of 1985 66 9,070 1,650 *
the Company(3)
<FN>
- --------------------------------------------------------------------------------
* Less than one percent
(1) The ownership reflected herein is reported in accordance with the beneficial ownership
rules under the Securities Exchange Act of 1934, under which a person is deemed to be
the beneficial owner of a security if he, directly or indirectly, has or shares voting
or investment power in respect of such security, or has the right to acquire such
ownership within 60 days.
(2) Purchased pursuant to the Employees' Stock Purchase Plan and subject to the Company's
option to repurchase upon the occurrence of certain events, including termination of
employment.
(3) On July 19, 1990, Messrs. Gonzalez, Smolik, and Young were elected Senior Vice
Presidents of the Company. Mr. Gonzalez was elected Vice Chairman of the Company on
September 24, 1991. On December 12, 1991, Mr. Hastings was appointed Chief Operating
Officer, in addition to his position as President; and on August 1, 1992, he was
elected Chairman of the Board and Chief Executive Officer of the Company. Mr.
Mackenbach was elected President of the Company on August 1, 1992 and Chief Operating
Officer on November 1, 1992.
(4) These shares are held by The Lincoln Foundation, Inc. of which David C. Lincoln is
President and a member of the Board of Trustees. Mr. Lincoln disclaims beneficial ownership
of such shares.
(5) These shares are held by The Lincoln Fund, a Lincoln family partnership of which David
C. Lincoln is Managing Director.
(6) These 500,000 shares are owned by Helen C. Lincoln, mother of David C. Lincoln. David
C. Lincoln and his mother share voting and investment power with respect to the 500,000
shares pursuant to a Power of Attorney granted to David C. Lincoln by Helen C. Lincoln.
The 20,000 shares are held in trust, of which David C. Lincoln is trustee, for the
benefit of Peter Kerr, nephew of David C. Lincoln. David C. Lincoln disclaims
beneficial ownership in any of these shares.
(7) Mr. Gunning shares voting and investment power with his wife, Robin Gunning, with
respect to 7,350 shares.
(8) G. Russell Lincoln holds 4,700 shares as custodian for his minor children, but
disclaims beneficial ownership of such shares.
(9) 209,020 shares are held by a trust created by James F. Lincoln, Jr. Emma S. Lincoln has
sole voting and investment power with respect to these shares.
(10) The above table excludes 496,300 shares of Class A Common Stock held by The Lincoln
Electric Company Employee Stock Ownership Plan ("ESOP"). The ESOP is administered by an
Administrative Committee appointed by the Board of Directors of the Company. Messrs.
Carlson, Hastings, Mackenbach, and Smolik have been appointed by the Board as members
of the Administrative Committee. The participants and beneficiaries are entitled to
direct the voting of the Class A Common Shares allocated to their respective accounts,
except that the Administrative Committee votes on matters concerning the exercise of
appraisal or dissenters' rights and the choice of consideration to be received by
shareholders in any transaction involving the Class A Common Shares. Consequently, the
Administrative Committee may be deemed in accordance with the beneficial ownership
rules of the Securities Exchange Act of 1934 to share beneficial ownership of the
496,300 shares of Class A Stock held by the ESOP. Messrs. Carlson, Hastings, Smolik,
and Mackenbach each disclaims beneficial ownership of such shares.
(11) The above tables excludes 131,860 shares of restricted Common Stock held by The
Lincoln Electric Company Voting Trust (the "Trust"), of which Messrs. Hastings, Mackenbach,
and Carlson are trustees. The Trust was established pursuant to the July 21, 1988
Amendment to the Employees' Stock Purchase Plan. Such trustees may be deemed to share
beneficial ownership of the 131,860 shares of Common Stock held in the Trust.
Messrs. Hastings, Mackenbach and Carlson each disclaims beneficial ownership
of such shares.
(12) 500,000 shares held by LFM, Inc., a corporation of which David C. Lincoln is
President. He disclaims any beneficial interest in these shares.
(13) The indicated shares include 10,000 and 5,000 shares of restricted stock for Messrs.
Hastings and Mackenbach, respectively, awarded in 1994 pursuant to the 1988 Incentive Equity Plan.
Such shares are subject to forfeiture on a pro-rated basis over a three-year period
beginning January 25, 1994.
</TABLE>
3
<PAGE> 7
<TABLE>
SHARE OWNERSHIP
---------------
Listed in the following table are those who, as of April 15, 1994, owned
beneficially more than five percent of the Company's outstanding Common and
Class A Common Shares, the Company's only classes of voting securities:
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES* PERCENTAGE
- ---------------------------------------- ----------------- ------------
<S> <C> <C>
Helen C. Lincoln 1,000,000(1)(4) 9.61%(4)
4800 N. 68th St., Apt. 359
Scottsdale, Arizona 85251
The Lincoln Foundation, Inc. (2) 998,550(4) 9.60%(4)
55 East Thomas Road
Phoenix, Arizona 85012
The Lincoln Electric Company 496,300(5) 99.29%(6)
Employee Stock Ownership Plan (5)
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
All Executive Officers and Directors 3,258,646(3)(4) 31.31%(4)
as a Group (27 in number)
<FN>
(1) Helen C. Lincoln and her son, David C. Lincoln, share voting and investment
power with respect to 500,000 of these shares pursuant to a Power of
Attorney granted by Helen C. Lincoln to David C. Lincoln. The other 500,000
shares are owned by LFM, Inc. a corporation in which Helen C. Lincoln is a
principal minority shareholder; and for which her son, David C. Lincoln,
serves as President.
(2) The Lincoln Foundation, Inc. is controlled by a Board of Trustees, of which
David C. Lincoln is President.
(3) Includes shares attributed to Executive Officers and Directors in accordance
with the beneficial ownership rules under the Securities Exchange Act of
1934.
(4) These disclosures relate to Common Shares only.
(5) The Class A Common Shares are held by the Trustee of the ESOP, National City
Bank, for the benefit of participants and beneficiaries in the ESOP. Except
in those instances in which the Administrative Committee of the ESOP may
vote on certain matters, participants and beneficiaries are entitled to
direct the voting of the Class A Common Shares allocated to their respective
accounts. (See Footnote 10 to Director/Director Nominee Table on Page 3 of
the Proxy Statement.) The Class A Common Shares from forfeited accounts are
voted by the Trustee in the same proportion as the Trustee votes the shares
allocated to the accounts of the participants and beneficiaries. As of
December 31, 1993, the ESOP held 496,300 Class A Common Shares.
(6) These disclosures relate to Class A Common Shares only; which, on an
adjusted basis, represent 4.55% of the total voting power of the Company.
*Unless otherwise indicated, voting and investment power with respect to shares
reported in the table is not shared with others.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
-------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers to file reports of ownership and changes in ownership
with respect to the securities of the Company with the Securities and Exchange
Commission and to furnish copies of these reports to the Company. Based on a
review of these reports, the Company believes that during 1993, all filing
requirements were met on a timely basis except as follows: Donald F. Hastings,
Frederick W. Mackenbach and Harry Carlson each filed a Form 5 in early 1994
applicable to the purchase of 400 Common Shares on a post-split basis in May,
1993 (and for
4
<PAGE> 8
Mr. Carlson, the Form 5 also applied to two gifts in December, 1993 of 500
Common Shares each); and Frank L. Steingass filed a Form 5 in 1994 that
reported the purchase of 6,000 Common Shares in October, 1993.
BOARD COMMITTEES AND AUDITORS
-----------------------------
The Audit Committee of the Board of Directors is composed of Emma S.
Lincoln, Chairman, Lawrence O. Selhorst, Craig R. Smith, and Frank L. Steingass.
The Audit Committee recommends engagement of the independent auditors, reviews
the arrangement and scope of the audit, reviews the financial statements and
performance of the independent auditors, reviews the activities and
recommendations of the Company's internal auditors, considers comments made by
the independent auditors with respect to the Company's system of internal
accounting control, reviews internal accounting procedures and controls with the
Company's financial and accounting staff and reviews non-audit services provided
by the Company's independent auditors. The Audit Committee met four times in
1993.
The Company's auditors continue to be Ernst & Young. A representative is
expected to attend the meeting, who will have an opportunity to make a statement
if he desires and will be available to respond to appropriate questions.
The Compensation Committee of the Board of Directors is composed of David
H. Gunning, Chairman, Edward E. Hood, Jr., Paul E. Lego, Hugh L. Libby, David C.
Lincoln, Emma S. Lincoln, and G. Russell Lincoln. The Compensation Committee
reviews the salary levels of the Executive Officers and administrative personnel
of the Company, including all compensation arrangements, the Retirement Annuity
Program and all other employee benefit programs, other than health and welfare
programs. The Compensation Committee met six times in 1993.
The Nominating Committee of the Board of Directors is composed of G.
Russell Lincoln, Chairman, Hugh L. Libby, David C. Lincoln, Lawrence O.
Selhorst, Frank L. Steingass, and George E. Willis. The Committee evaluates the
composition of the Board of Directors and makes recommendations to the Board as
to nominees (including any nomination of qualified candidates submitted in
writing by the shareholders to the Corporate Secretary) for Director to be
submitted to the shareholders. The second function of the Nominating Committee
is to advise and make recommendations with respect to senior officer positions
in the Company. The Nominating Committee met four times in 1993.
The Finance Committee of the Board of Directors is composed of David C.
Lincoln, Chairman, Harry Carlson, David L. Gunning, Edward E. Hood, Jr., Paul E.
Lego, Frederick W. Mackenbach, Craig R. Smith, Ellis F. Smolik and George E.
Willis. The Committee considers in greater depth than possible in full Board
meetings matters relating to financial operation of the Company. Deliberations
of the Committee will result in (a) a report to the Board accompanied by any
recommendations the Committee deems appropriate; and (b) interaction with
management on matters under the purview of the Committee and working with
management on changes in these matters which if appropriate will be reported to
the Board. The Finance Committee met six times in 1993.
DIRECTORS' MEETINGS AND FEES
----------------------------
Each Director who is an employee of the Company is paid $400 per meeting,
while those Directors who are not employees are paid as follows:
<TABLE>
<S> <C>
Annual Retainer..................................................... $ 10,000
Board Meeting Fee................................................... $ 800
Annual Retainer for Each Committee Membership....................... $ 2,000
Committee Meeting Fee............................................... $ 400
</TABLE>
In addition, the Chairman of a Board Committee will receive an additional
$400 per meeting. Six meetings of the Board of Directors were held during 1993.
5
<PAGE> 9
DIRECTOR/OFFICER RELATIONSHIPS
------------------------------
Three Directors are related to G. Russell Lincoln as follows: Emma S.
Lincoln, stepmother; Frank L. Steingass, first cousin; and Harry Carlson, first
cousin by marriage. Three other Directors are related to Emma S. Lincoln as
follows: David C. Lincoln, first cousin by marriage; Frank L. Steingass, nephew
by marriage; and Harry Carlson, nephew by marriage.
OTHER DIRECTORSHIPS
-------------------
The following Directors or Nominees serve on Boards of Directors of other
publicly held companies as listed below:
<TABLE>
<S> <C>
David H. Gunning Capitol American Financial Corp., OH
Edward E. Hood, Jr. Flightsafety International, Inc., NY
Martin Marietta Corporation, MD
Paul E. Lego Consolidated Natural Gas Company, PA
PNC Bank Realty Holding Company Board, PA
USX Corporation, PA
Lawrence O. Selhorst R B & W Corporation, Mentor, OH
</TABLE>
EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS OR DIRECTOR NOMINEES
------------------------------------------
<TABLE>
<CAPTION>
EXECUTIVE
NAME TITLE AGE OFFICER SINCE
---- ----- --- -------------
<S> <C> <C> <C>
Paul J. Beddia Vice President, Human Resources 60 1989
Dennis D. Crockett (1) Vice President, Consumables R&D 51 1993
James R. Delaney (2) President & C.O.O. Lincoln Electric South 45 1988
America
H. Jay Elliott (3) Chief Financial Officer 52 1993
David J. Fullen Vice President, Machine & Motor Divisions 62 1989
Harry C. Handlin (4) President & C.O.O. Lincoln Electric North 63 1989
America
Anthony A. Massaro (5) President and Chief Executive Officer 50 1993
of Lincoln Electric Europe
William I. Miskoe Senior Vice President, International; 81 1969
President &
C.O.O. Lincoln Electric International
Incorporated
Richard C. Ulstad (6) Vice President, Manufacturing, Electrode 54 1992
Division
John H. Weaver Sales Manager, International; President & 55 1993
C.O.O.
Lincoln Electric Far East Corporation
<FN>
PRIOR CAPACITIES IN WHICH SERVED DURING THE PAST FIVE YEARS:
(1) Chief Engineer, Consumables Research and Development.
(2) Vice President & General Manager, Lincoln Electric Mexicana.
(3) As Assistant Comptroller of The Goodyear Tire & Rubber Company, Mr. Elliott
had responsibilities at various times for Corporate Strategic Planning,
Finance Director of North American Tires, and International Vice President
-- Finance.
(4) Vice President -- Sales.
(5) As a corporate officer at Westinghouse Electric Corporation, Mr. Massaro
served as Vice President and then as President and a Member of the
Management Committee with responsibilities worldwide.
(6) Superintendent, Electrode Division.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
===========================================================================================================
NAME AND PRINCIPAL ANNUAL COMPENSATION (1) LONG TERM COMPENSATION($) ALL OTHER
POSITION YEAR SALARY BONUS LTIP Payouts (3) COMPENSATION (4)
===========================================================================================================
(4)
<S> <C> <C> <C> <C> <C>
Donald F. Hastings 1993 $ 650,000 (2) $ 2,400
Chairman of the Board 1992 539,024 2,800
Chief Executive Officer 1991 325,815 2,400
Frederick W. Mackenbach 1993 390,000 $ 70,005 14,400 (5)
President 1992 211,936 $ 53,554 82,832 8,600 (5)
Chief Operating Officer 1991 79,963 74,829
Harry Carlson, Jr. 1993 254,000 2,400
Vice Chairman 1992 254,000 2,800
1991 251,842 2,400
John Gonzalez 1993 240,000 2,400
Vice Chairman 1992 240,000 2,800
1991 146,221 80,038 2,400
David J. Fullen 1993 118,678 118,066
Vice President 1992 112,686 86,946
Machine and Motor Divisions 1991 109,283 72,715
<FN>
(1) Figures shown do not reflect the annual reduction for medical insurance coverage purchased on behalf of
Mackenbach, Gonzalez, and Fullen. Coverage for Mr. Carlson was provided through his spouse.
(2) At Mr. Hastings' request, his 1993 salary, as shown above, was reduced by $30,970 to reflect the amount
expended to refurbish his office at the Company.
(3) Indicated amounts reflect delivery of Common Shares in April, 1992 and April, 1993 pursuant to Deferred
Stock Award Agreement issued under the 1988 Incentive Equity Plan.
(4) Indicated amounts represent Directors' fees paid during the year, except as otherwise noted.
(5) Indicated amounts include monthly furniture allowance of $1,000, provided in lieu of relocation expense
reimbursement, payable June, 1992 through May, 1994.
===============================================================================================================
</TABLE>
7
<PAGE> 11
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
--------------------------------
The Compensation Committee of the Board of Directors is a Committee of the
Board of Directors which consists solely of non-employee Directors. Its primary
charge is to determine and report to the Board on the compensation (or method of
calculation thereof) for the Chairman and Chief Executive Officer and each other
executive who is among the five highest paid executives. In addition, the
Committee makes recommendations to the Board concerning the Company's employee
benefit programs, other than health and welfare programs. The Chief Executive
Officer determines the compensation of the other executive officers, subject to
Compensation Committee oversight.
EXECUTIVE COMPENSATION POLICY
- -----------------------------
The practice of the Compensation Committee is to establish executive
compensation during the fourth quarter of each year for the succeeding year.
Therefore, this report deals primarily with actions taken late in 1992 with
respect to 1993 compensation. At that time, Mr. Hastings had recently become
Chairman and Mr. Mackenbach, President. Mr. Hastings' principal responsibilities
were to enhance profitability of domestic operations, to appoint new leadership
for the Company's European operations, to rationalize all non-U.S. operations so
as to reduce losses, and, thereafter, to create profits, and to plan for the
identification and training of the next generation of leaders for the Company.
The Company has a longstanding commitment to incentive based compensation
exemplified by its cash bonus program. All full time employees, except for the
executives who administer the program, are generally eligible for the annual
bonus. The program features a cash distribution determined on the basis of a
formula that takes into account individual earnings and the results of a merit
review process. The year-end incentive cash bonus for all eligible employees was
approximately $50.2 million in 1993, $44.1 million in 1992 and $45.0 million in
1991. Over 95% of the bonus was paid to domestic employees. In order to assure
the fairness of the merit rating system, the Chairman, President and Vice
Chairmen, who administer the process, are excluded from participation. Their
compensation was established based on varying factors including market
comparisons, judgment as to internal equity and individual performance and past
compensation history. The market comparisons were made by selecting companies
with comparable sales, total assets and capitalization. The comparisons were not
made by reference to the Russell 2000, which is one of the indices used in the
stock performance graph.
The Committee favors establishing an element of incentive compensation for
the Chairman and possibly the other senior executives who do not participate in
the bonus program. However, after an initial attempt to create such an
arrangement in the fall of 1992 with respect to the Chairman based on specified
earnings criteria, the Committee subsequently abandoned the arrangement as
unworkable in the context of the Company's financial and operating challenges.
The Committee administers the 1988 Incentive Equity Plan, which is
applicable to 1,000,000 shares. At the end of 1993, 968,000 shares remained
available for award and issuance. Awards under the Plan, which are to be made
only to officers and other key employees who are responsible for or contribute
to the management, growth and/or profitability of the Company, may be of four
types: (i) stock options; (ii) stock appreciation rights attached to such
options; (iii) restricted stock; and (iv) deferred stock. The first program,
implemented under the Plan in 1988, provided for deferred stock awards. That
program was completed as of December 31, 1991. Four members of management
satisfied performance targets at the time of completion of the initial program,
and the deferred payouts of the 32,000 shares that vested as a result thereof
are occurring in three yearly installments in April of each of 1992, 1993 and
1994. No new awards were made under the Plan during 1993.
C. E. O. COMPENSATION
- ---------------------
The 1993 compensation of Mr. Hastings was established at $650,000 shortly
after he became Chairman and Chief Executive Officer. Therefore, the
compensation determination was not related in any meaningful
8
<PAGE> 12
way to his performance in that office or to the profitability of the Company
during 1992. Mr. Hastings also participated on a regular basis in the Company's
employee benefit programs, other than the bonus program. Mr. Hastings' 1993
compensation was determined largely by reference to the median total cash pay
for chief executives of Fortune 500 companies of comparable size and complexity
to the Company, as well as by reference to historical compensation for the
Chairman's position at the Company. As noted above, an attempt to craft an
alternative base plus incentive compensation system for Mr. Hastings was
initiated, but subsequently abandoned by the Committee.
It is the intention of the Committee to administer the Chairman's future
salary and any incentive compensation based on clearly established performance
objectives related to the principal responsibilities previously outlined,
including objectives related to improving shareholder value.
OTHER EXECUTIVE OFFICERS
- ------------------------
The 1993 compensation of Mr. Frederick W. Mackenbach, the President and
Chief Operating Officer, was determined to be $390,000. He participated on a
regular basis in the Company's employee benefit programs, with the exception of
the cash bonus. In 1993, Mr. Mackenbach also received $70,005 in common shares
of the Company pursuant to a deferred stock award agreement issued under the
1988 Incentive Equity Plan. As reported last year, the Committee decided in 1992
that the compensation of the two Vice Chairmen should be based on a fixed salary
without any contingent element or eligibility for bonus. This policy was
continued throughout 1993.
Mr. David J. Fullen, Vice President of the Machine and Motors Divisions, is
the only executive officer named in the Summary Compensation Table who was
eligible to participate in the Company's annual cash bonus program for 1993. His
inclusion in the table results from the bonus paid to him, which was determined
in accordance with management's standard procedures.
It was recognized in 1993 that the international demands of the Company
required additional senior management, and as a result a decision was made to
hire two executive officers in 1993. Mr. Anthony A. Massaro was hired to focus
on the Company's international operations. Mr. H. Jay Elliott was also hired as
International Chief Financial Officer. The annual salaries for these individuals
for 1993 were determined to be $240,000 and $220,000, respectively. Neither
individual participated in the annual bonus program. The foregoing report has
been furnished by the Compensation Committee which is comprised of the following
individuals:
<TABLE>
<S> <C>
David H. Gunning, Chairman David C. Lincoln
Edward E. Hood, Jr. Emma S. Lincoln
Paul E. Lego G. Russell Lincoln
Hugh L. Libby
</TABLE>
CUMULATIVE SHAREHOLDER
RETURN AND PERFORMANCE PRESENTATION
-----------------------------------
Shown is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Company's Common Shares against the
cumulative total return of the S&P Composite -- 500 Stock Index and The Russell
2000 Stock Index for the five-year calendar period commencing January 1, 1989
and ending December 31, 1993. A compatible peer-group index for the welding
industry, in general, was not readily available as the industry is comprised of
a relatively small number of competitors, many of which either are based
overseas and/or privately-held and not actively traded in the United States. The
Russell 2000 represents a developed index based on a concentration of companies
having relatively small market capitalization, published by the Frank Russell
Company.
9
<PAGE> 13
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lincoln 100.00 116.09 109.10 99.17 97.92 79.71
S&P 500-Comp 100.00 131.60 127.51 166.18 178.79 196.71
Russell 2000 100.00 116.24 93.55 136.62 161.79 192.36
</TABLE>
TRANSACTIONS
------------
Buehler/Steingass, Inc., of which Frank L. Steingass, a Director of the
Company, is President and a principal shareholder, received approximately
$626,305.39 for printing catalogs and other materials for the Company during
1993. It is anticipated that Buehler/Steingass, Inc. will continue to provide
printing services to the Company in 1994 on miscellaneous matters.
Henry L. Meyer III, a Director Nominee, is Chairman and Chief Executive
Officer of Society National Bank ("SNB"). SNB serves as the agent bank for the
Company's $230 million Credit Agreement, a principal credit facility of the
Company in which ten institutions participate. SNB has made the largest
commitment thereunder, in the amount of $45 million.
All of the transactions reported above were carried out in the ordinary
course of business upon terms no less favorable to the Company than would apply
to similar transactions with unrelated companies.
The Company maintains an employee loan program to facilitate the purchase
of Common Shares pursuant to the Employees' Stock Purchase Plan. Loans secured
by pledges of Common Shares are made in amounts up to approximately 65% of the
price at which Shares are sold under the Plan. During the 1993 fiscal
10
<PAGE> 14
year, indebtedness to the Company pursuant to this program reached $223,900 and
$238,596 for each of Donald F. Hastings and Roger F. Young, respectively. As of
April 15, 1994, neither individual had an outstanding loan balance owed to the
Company.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
------------------------------------
Jones, Day, Reavis & Pogue, of which David H. Gunning, a Director of the
Company and Chairman of the Compensation Committee, formerly was a partner,
provided legal services on behalf of the Company during 1993 on a variety of
matters.
RETIREMENT ANNUITY PROGRAM
--------------------------
The Lincoln Electric Company has maintained a Qualified Retirement Annuity
Program to provide retirement benefits for most of its employees since 1936.
Under this Program, each employee accumulates 2 1/2% of each year's base
compensation in the form of an annuity payable at normal retirement age (age
60). In addition to the 2 1/2% accumulation each year, the Company has granted,
on a number of occasions, additional past service benefits (Past Service
Supplemental Benefits). This Program also provides accumulated benefits to
employees eligible at disability retirement, to eligible spouses of deceased
employees or former employees, and to eligible employees who terminate
employment. Benefits under this Program are in addition to those payable from
the Social Security Administration.
The anticipated retirement benefits under this Retirement Annuity Program
for the five highest paid Executive Officers and all Executive Officers as a
group are as follows:
<TABLE>
<CAPTION>
ANNUAL RETIREMENT
ANNUITY PROGRAM
NAME BENEFITS
---- -----------------
<S> <C>
1. Donald F. Hastings....................................... $ 92,217.02(3)
2. Frederick W. Mackenbach.................................. $ 64,386.21(1)
3. Harry Carlson............................................ $ 64,259.52(2)
4. John Gonzalez............................................ $ 75,654.43(1)
5. David J. Fullen.......................................... $ 59,072.79(1)
<FN>
(1) Messrs. Gonzalez, Mackenbach and Fullen are currently not receiving benefits
but are beyond Normal Retirement Age. The amounts shown represent those
benefits available on December 31, 1993 on a Single Life Basis.
(2) Mr. Carlson is currently under normal retirement age. The amount shown
represents that anticipated at normal retirement age assuming current
compensation continues unchanged to that date, and the benefit is payable on
a Single Life basis.
(3) The benefits shown for Mr. Hastings are the amounts currently being received
as a 100% Joint & Survivor basis.
</TABLE>
TABULATION OF VOTING
--------------------
At the annual meeting, the results of shareholder voting will be tabulated
by the inspector of elections appointed for the annual meeting. Under Ohio law
and the Company's Amended and Restated Articles of Incorporation and
Regulations, properly executed proxies that are marked "abstain" or are held
in "street name" by brokers and not voted on one or more of the items (if
otherwise voted on at least one item) will be counted for purposes of
determining whether a quorum has been achieved at the annual meeting. Votes
withheld in respect of Item 1 will not be counted in determining the election
of Directors. Abstentions and broker non-votes in respect of Item 2 will have
the same effect as votes against such item.
11
<PAGE> 15
SHAREHOLDER PROPOSAL
--------------------
Allen Wolff, who is the owner of 800 Common Shares of the Company, has
submitted a proposal for consideration and vote of the shareholders at the
Annual Meeting. The proponent's address will be furnished promptly upon receipt
of any oral or written request. Approval of the Shareholder Proposal requires
the affirmative vote of the holders of a majority of the Common Shares and Class
A Common Shares voting together as one class at the Annual Meeting.
SUMMARY OF PROPOSAL
AND SUPPORTING STATEMENT OF PROPONENT
-------------------------------------
Briefly, the proposal would eliminate the counting of any returned proxies
for which shareholders do not actually designate "for" or "against" any
particular proposal or issue and virtually eliminate any discretionary voting of
proxies by management. It is the opinion of the proponent that while pertinent
provisions of Federal and Ohio Securities laws allow companies to exercise
discretionary voting privileges with respect to undesignated or unmarked
ballots, such provisions do not purport to constitute required practices.
Mr. Wolff states, "It seems very undemocratic to count unvoted ballots one way
or another. I cannot find in the By-Laws of this Corporation, any
authorization for counting unmarked ballots. Accordingly, the proposal allows
for counting only those shares actually voting for or against a proposal.
Therefore, be it resolved that, "NO UNVOTED BALLOTS SHALL BE COUNTED IN VOTING
FOR THE MEMBERS OF THE BOARD OF DIRECTORS NOR FOR ANY OTHER ISSUE PLACED
BEFORE THE STOCKHOLDERS OF THIS CORPORATION."
STATEMENT AND RECOMMENDATION OF THE BOARD OF DIRECTORS
------------------------------------------------------
Management and the Board of Directors believe that the procedures currently
employed for the voting and tabulation of proxies are both expedient and in full
compliance with Federal proxy rules promulgated by the Securities and Exchange
Commission and Ohio law. As set forth below, the Board of Directors recommends
that shareholders vote AGAINST the proposal.
As a convenience to each shareholder, each of the proxy cards indicates in
boldface type the manner in which it will be voted on each matter before the
meeting, if no other definitive direction is made. For example, the proxy card
for the 1994 Annual Meeting of Shareholders states, "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 THE ELECTION
OF THE DIRECTOR NOMINEES NAMED HEREIN AND AGAINST THE SHAREHOLDER PROPOSAL."
The Company believes that shareholders who utilize this convenience do so with
full knowledge of how their shares will be voted.
The proposal, if adopted, would require that executed proxy cards that are
returned without specific "for", "against", or "abstain" designations be treated
as abstentions. The Company has no cost effective means for ensuring that such
abstentions were, in fact, intended by the shareholder to be abstentions.
Additionally, management believes that the ease of the current procedures
results in higher responses than would be expected if shareholders were required
to mark each item on the proxy card.
The Corporation does not believe that the proposal improves the governance
process. To the contrary, the proposal would eliminate a convenient means of
tabulating votes. Accordingly, the Board of Directors recommends that
shareholders vote AGAINST the shareholder proposal.
12
<PAGE> 16
OTHER MATTERS
-------------
The Board of Directors knows of no other matters which are likely to be
brought before the meeting, but if any such matters properly come before the
meeting, the persons named in the enclosed proxy, or their substitutes, will
vote the proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS
---------------------
Any proposal by shareholders intended to be presented at next year's Annual
Meeting of Shareholders, to be held in May of 1995, must be received by the
Company for inclusion in the Proxy Statement of the Company relating to such
meeting on or before December 26, 1994.
ELLIS F. SMOLIK
Senior Vice President
Secretary - Treasurer
April 25, 1994
13
<PAGE> 17
THE LINCOLN ELECTRIC COMPANY
PROXY FOR 1994 ANNUAL MEETING OF SHAREHOLDERS
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints Donald F. Hastings and Ellis F.
P Smolik, and each of them, as Proxies, with full power of
R substitution, to vote and act on behalf of the undersigned at the
O Annual Meeting of Shareholders of The Lincoln Electric Company to be
X held at the offices of the Company, 22801 St. Clair Avenue,
Y Cleveland, Ohio on May 24, 1994, at 7:00 P.M. or at any adjournment
thereof, in connection with:
(1) Election of Directors for term ending 1997, Nominees:
Donald F. Hastings, Hugh L. Libby, David C. Lincoln,
G. Russell Lincoln, Henry L. Meyer III, Frank L. Steingass
(2) SHAREHOLDER PROPOSAL:
NO UNVOTED BALLOTS SHALL BE COUNTED IN VOTING FOR THE
MEMBERS OF THE BOARD OF DIRECTORS NOR FOR ANY OTHER
ISSUE PLACED BEFORE THE STOCKHOLDERS OF THIS
CORPORATION.
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 THE ELECTION OF THE DIRECTOR NOMINEES LISTED ABOVE AND AGAINST THE
SHAREHOLDER PROPOSAL.
SEE REVERSE
SIDE
<PAGE> 18
<TABLE>
<S> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. Election of / / / /
Directors
(see reverse)
For, except vote withheld from the following nominee(s):
_________________________________________________________________
FOR AGAINST ABSTAIN
2. No unvoted ballots shall / / / / / /
be counted in voting for the
members of the Board of
Directors nor for any other
issue placed before the
stockholders of
this Corporation.
3. In its discretion, the
Proxies are authorized to
vote upon such other
business as may properly
come before this meeting.
Change (change of address)
of / / _____________________________________
Address _____________________________________
_____________________________________
Attend _____________________________________
Meeting / /
(If you have written in the above
space, please mark the corresponding
box on this card.)
SIGNATURE(S) ___________________________________________________________________ DATE ______________
SIGNATURE(S) ___________________________________________________________________ DATE ______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
</TABLE>
<PAGE> 19
THE LINCOLN ELECTRIC EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTION CARD FOR 1994 ANNUAL MEETING OF SHAREHOLDERS
THE LINCOLN ELECTRIC COMPANY
____________________________________________________________________________
(1) ELECTION OF DIRECTORS FOR TERM ENDING 1997:
Donald F. Hastings, Hugh L. Libby, David C. Lincoln, G. Russell Lincoln,
Henry L. Meyer, III, Frank L. Steingass
/ / For electing each of the Nominees listed / / WITHHOLD AUTHORITY
with respect to the term ending in 1997 to vote for all nominees
(except as written on the line provided
below).
INSTRUCTION: To withhold authority to vote for any individual Nominee(s), print
that Nominee's name(s) on the line provided below:
_____________________________________________________________________________
(2) SHAREHOLDER PROPOSAL:
NO UNVOTED BALLOTS SHALL BE COUNTED IN VOTING FOR THE MEMBERS OF THE BOARD
OF DIRECTORS NOR FOR ANY OTHER ISSUE PLACED BEFORE THE STOCKHOLDERS OF
THIS CORPORATION.
/ / FOR / / AGAINST / /ABSTAIN
(3) In its discretion, the Trustee of the ESOP, National City Bank, is
authorized to vote upon such other business as may properly come before
this meeting.
____________________________________________________________________________
This Voting Instruction Card, when properly executed, will be voted in the
manner directed herein by the undersigned participant or beneficiary.
PLEASE SIGN AND MAIL THIS VOTING INSTRUCTION CARD TO NATIONAL CITY BANK IN
THE ENCLOSED ENVELOPE-NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Signature ___________________________________________ Date _________, 1994
