<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 / /
<TABLE>
<S> <C>
Check the appropriate box:
/ / 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 LINCOLN ELECTRIC COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FREDERICK G. STUEBER
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(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):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
/ / 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
[LINCOLN ELECTRIC LOGO]
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders, which will be held on May 28, 1996 at 4:00 p.m. at the Cleveland
Renaissance Hotel, 24 Public Square, Cleveland, Ohio 44113. A map showing the
location of the hotel is on the back cover. The meeting will convene in the
Ambassador Room.
The Notice of and the Proxy Statement for the Annual Meeting are enclosed.
Holders of Common Shares and Class B Common Shares will find enclosed a proxy
card and an envelope in which to return it. If you cannot attend, or if you plan
to be present but want the proxy holders to vote your shares, please sign, date
and return the card at your earliest convenience.
This is the first Annual Meeting to which we welcome our new shareholders,
holders of the Class A Common Shares issued and sold in 1995. Although such
shares vote only on certain matters specified in the charter, none of which
arise this year, we encourage you to attend the meeting and to review the
enclosed information.
Participants in the Company's Employee Stock Ownership Plan and the
Employee Savings Plan are also encouraged to return the voting instruction cards
applicable to such Plans, which are also enclosed.
Emma S. Lincoln, who has served the Company as a Director since 1989, is
not standing for reelection this year. It is the intention of the Board of
Directors to elect Mrs. Lincoln to the position of Director Emeritus in May. All
of us thank Mrs. Lincoln for her service to the Company and her commitment to
its mission.
Lincoln Electric has held its shareholder meetings as dinner meetings in
the past. In the interest of economy, we have decided that the dinner format
will not be followed this year. Therefore, no admission tickets to the meeting
are necessary. The meeting is expected to conclude no later than 5:30 p.m. We
look forward to seeing you.
Sincerely,
DONALD F. HASTINGS
Chairman and Chief Executive Officer
The Lincoln Electric Company
April 29, 1996
<PAGE> 3
[LINCOLN ELECTRIC LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
Notice is hereby given that the Annual Meeting of Shareholders of The Lincoln
Electric Company will be held at the Cleveland Renaissance Hotel, 24 Public
Square, Cleveland, Ohio 44113 on Tuesday, May 28, 1996 at 4:00 p.m. The
principal business of the meeting will be:
(a) To elect four directors, each to serve for a term of three years
and until his successor shall have been elected and qualified.
(b) To ratify and approve the selection of Ernst & Young LLP as
independent auditors of the Company for the year 1996; and
(c) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 19, 1996 as the
record date for the determination of those holders of Common Shares and Class B
Common Shares entitled to notice of, and to vote at, the meeting or any
adjournment thereof.
FREDERICK G. STUEBER
Senior Vice President, General
Counsel and Secretary
The Lincoln Electric Company
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
April 29, 1996
IMPORTANT - THE PROXY FOR HOLDERS OF COMMON SHARES
AND CLASS B COMMON SHARES IS ENCLOSED
PLEASE SIGN, DATE AND RETURN YOUR ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 4
THE LINCOLN ELECTRIC COMPANY
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
(216) 481-8100
---------------------------
PROXY STATEMENT
-------------------------
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
28, 1996. This Proxy Statement and the related form of proxy are being first
sent to shareholders on or about the date of this statement.
If the enclosed proxy card is signed and returned, the shares represented
by it will be voted as indicated thereon. 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.
At the close of business on April 19, 1996, 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 10,526,408 Common
Shares and 487,117 Class B Common Shares. Each Common Share and Class B Common
Share is entitled to one vote on each matter brought before the meeting. The
Company also had 13,880,171 Class A Common Shares outstanding on the record
date. Pursuant to the terms of the Class A Common Shares, holders thereof do not
participate in the election of directors and are not entitled to vote on the
other matter proposed for action at the Annual Meeting.
In addition to the solicitation of proxies by the use of the mails, the
Company may solicit the return of proxies in person and by telephone and
telecopy. Brokerage houses, banks and other custodians, nominees and fiduciaries
will be requested to forward soliciting material to the beneficial owners of
shares and will be reimbursed for their expenses. The cost of the solicitation
of proxies will be borne by the Company.
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 Restated Articles of Incorporation (the "Articles") and Code
of Regulations (the "Regulations"), properly signed proxies that are marked
"abstain" or are held in "street name" by brokers and not voted on one or more
of the items before the meeting (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 the election of Directors 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.
ELECTION OF DIRECTORS
---------------------
Item No. 1
The Company's Regulations provide for three classes of Directors whose
terms expire in different years. The class of Directors to be elected in 1996,
who will hold their positions for a term of three years and until the election
of their successors, has been fixed at four. Unless otherwise directed, proxies
in the accompanying form will be voted in favor of electing to that class: Harry
Carlson, David H. Gunning, Edward E. Hood, Jr. and Paul E. Lego, all of whom
have been previously elected as Directors by the shareholders. If any of the
Director nominees should become unavailable, it is intended that the proxies
will be voted as the Board of Directors shall determine. The Company has no
reason to believe that any of the Director nominees will be
<PAGE> 5
unavailable. Ohio's General Corporation Law provides that, a quorum being
present, the four Director nominees receiving the greatest number of votes will
be elected as Directors of the Company.
The following table sets forth information concerning the Director nominees
and the Directors whose terms of office will continue after the meeting:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
NOMINEES FOR TERMS ENDING IN 1999 CURRENT OCCUPATION
- ---------------------------------------------------------------------------------------------
<S> <C>
Harry Carlson Former Vice Chairman of the Company
Director since 1973
Member -- Finance Committee and
Audit Committee
Age -- 61
Mr. Carlson retired on June 30, 1995. Prior to that time, he served as Vice Chairman of the
Company.
- ---------------------------------------------------------------------------------------------
David H. Gunning Chairman, President and Chief Executive
Director since 1987 Officer of Capitol American Financial Corp.
Member -- Compensation Committee and (insurance company)
Finance Committee
Age -- 53
Mr. Gunning was elected Chairman, President and Chief Executive Officer of Capitol American
Financial Corp. in 1993. Prior to that time, he was a partner in the law firm of Jones,
Day, Reavis & Pogue.
- ---------------------------------------------------------------------------------------------
Edward E. Hood, Jr. Former Vice Chairman of the Board and
Executive
Director since 1993 Officer of The General Electric Company
Member -- Compensation Committee and
Finance Committee
Age -- 65
Mr. Hood retired from The General Electric Company in 1993. Mr. Hood is a director of
Flightsafety International, Inc., Lockheed Martin Corporation and Gerber Scientific Inc.
- ---------------------------------------------------------------------------------------------
Paul E. Lego President of Intelligent Enterprises
Director since 1993 (consulting)
Member -- Compensation Committee and
Finance Committee
Age -- 65
Mr. Lego has served as President of Intelligent Enterprises since 1993. Prior to that time,
he was Chairman and Chief Executive Officer of Westinghouse Electric Corporation. Mr. Lego
is Chairman of Commonwealth Aluminum Corp. and is a director of Consolidated Natural Gas
Company, PNC Bank Realty Holding Company and USX Corporation.
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 6
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1998 CURRENT OCCUPATION
<S> <C>
- ---------------------------------------------------------------------------------------------
Kathryn Jo Lincoln Vice Chair/Secretary of The Lincoln Institute
Director since 1995 of Land Policy and Vice President of The
Member -- Audit Committee and Lincoln Foundation, Inc. (non-profit
Nominating Committee corporations for educational purposes)
Age -- 41
- ---------------------------------------------------------------------------------------------
Frederick W. Mackenbach Former President and Chief Operating Officer
Director since 1992 of the Company
Member -- Finance Committee
Age -- 65
Mr. Mackenbach retired on March 31, 1996. He served as President of the Company from August
1, 1992 through his retirement date (and as Chief Operating Officer from November 1, 1992
until his retirement). Prior to that time, he served as President of Lincoln Electric
Mexicana S.A. de C.V. and President of Lincoln Electric South America, Inc.
- ---------------------------------------------------------------------------------------------
Lawrence O. Selhorst Chairman of the Board and Chief Executive
Director since 1992 Officer of American Spring Wire Corporation
Member -- Audit Committee and (manufacturer of specialty wires)
Nominating Committee
Age -- 63
Mr. Selhorst is a director of Park-Ohio Industries, Inc.
- ---------------------------------------------------------------------------------------------
Craig R. Smith Former Chairman and Chief Executive Officer
Director since 1992 of Ameritrust Corporation (banking)
Member -- Audit Committee and Finance
Committee
Age -- 70
Mr. Smith was Chairman and Chief Executive Officer of Ameritrust Corporation from 1990 until
his retirement in 1992; Retired Chairman and Chief Executive Officer, The Warner & Swasey
Company; Retired Chairman and prior thereto interim Chief Executive Officer, Ransburg
Corporation.
- ---------------------------------------------------------------------------------------------
Anthony A. Massaro President and Chief Operating Officer of the
Director since April 1, 1996 Company (effective April 1, 1996)
Member -- Finance Committee
Age -- 51
Mr. Massaro was elected President and Chief Operating Officer on April 1, 1996. From
September, 1995 through March 31, 1996, he served as Executive Vice President of the
Company directing international operations. Prior to that time he was President and Chief
Executive Officer of Lincoln Electric Europe. Mr. Massaro joined the Company in August 1993.
His previous business experience includes service as a President and an Executive Vice
President of Westinghouse Electric Corporation.
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE> 7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1997 CURRENT OCCUPATION
<S> <C>
- ---------------------------------------------------------------------------------------------
Donald F. Hastings Chairman of the Board and Chief Executive
Director since 1980 Officer of the Company
Age -- 67
Mr. Hastings was elected Chairman of the Board and Chief Executive Officer of the Company on
August 1, 1992. Prior to that time, he served as President and Chief Operating Officer of
the Company. Mr. Hastings is also a director of Society National Bank.
- ---------------------------------------------------------------------------------------------
Hugh L. Libby Former Chairman of the Board and Chief
Director since 1985 Executive Officer of Libby Corp.
Member -- Compensation Committee and (manufacturer of diesel/gas turbine generator
Nominating Committee sets and aircraft ground power units)
Age -- 70
- ---------------------------------------------------------------------------------------------
David C. Lincoln President, Arizona Oxides LLC (manufacturer
Director since 1958 of iron oxide pigments); Chairman of the
Member -- Compensation Committee, Board and Chief Executive Officer of Lincoln
Finance Committee, and Laser Co. (manufacturer of laser scanning
Nominating Committee equipment)
Age -- 70
- ---------------------------------------------------------------------------------------------
G. Russell Lincoln Chairman of the Board and Chief Executive
Director since 1989 Officer of Algan, Inc. (manufacturer of
Member -- Compensation Committee and industrial coatings and chemicals for the
Nominating Committee printing industry)
Age -- 49
- ---------------------------------------------------------------------------------------------
Henry L. Meyer, III Chairman of the Board, Society National Bank;
Director since 1994 Senior Executive Vice President and Chief
Member -- Finance Committee and Operating Officer of KeyCorp
Nominating Committee
Age -- 46
Mr. Meyer was elected President and Chief Operating Officer of Society National Bank in 1990
and Chief Executive Officer in 1993 prior to his election as Chairman of the Board and
Chief Executive Officer in 1994. Prior to his election in 1994 as Senior Executive Vice
President and Chief Banking Officer of KeyCorp (formerly known as Society Corporation), the
parent of Society National Bank, Mr. Meyer served as Vice Chairman of the Board and Executive
Vice President of Society Corporation.
- ---------------------------------------------------------------------------------------------
Frank L. Steingass Chairman of the Board and President of
Director since 1971 Buehler/Steingass, Inc. (commercial printers)
Member -- Audit Committee and Nominating
Committee
Age -- 56
</TABLE>
- --------------------------------------------------------------------------------
Except as otherwise indicated, each of the Directors and Director nominees
has had the principal occupation indicated for more than five years.
4
<PAGE> 8
FAMILY RELATIONSHIPS
The Company was founded by John C. Lincoln, and managed for many years by
his brother, James F. Lincoln. David C. Lincoln is the son of John C. Lincoln
and the father of Kathryn Jo Lincoln. G. Russell Lincoln and Frank L. Steingass
are the grandsons of James F. Lincoln, and first cousins; Harry Carlson is
married to a granddaughter of James F. Lincoln and is therefore related to Frank
L. Steingass and G. Russell Lincoln as a first cousin by marriage.
BOARD COMMITTEES
The Board of Directors maintains, among other committees, an Audit
Committee, a Finance Committee, a Nominating Committee and a Compensation
Committee, the members of which are identified on pages 2, 3 and 4 of this Proxy
Statement.
The Audit Committee met six times in 1995. 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 Compensation Committee met eight times in 1995. 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 Nominating Committee met five times in 1995. The Committee evaluates
the composition of the Board of Directors and makes recommendations to the Board
of Directors as to nominees (including any nomination of qualified candidates
submitted in writing by shareholders to the Secretary of the Company) for
Director to be submitted to the shareholders. The second function of the
Nominating Committee is to advise and make recommendations with respect to
executive officer positions in the Company.
The Finance Committee met six times in 1995. The Finance Committee
considers in more detail than is possible in full Board of Director meetings
matters relating to the financial operation of the Company. Deliberations of the
Finance Committee result in (i) a report to the Board of Directors accompanied
by any recommendations the Finance Committee deems appropriate; (ii) interaction
with management on matters under the purview of the Finance Committee; and (iii)
discussions with management on changes in such matters, which if appropriate are
reported to the Board of Directors.
COMPENSATION OF DIRECTORS
Those Directors who are not employees are paid an annual retainer of
$20,000, $10,000 of which is payable in restricted voting shares pursuant to the
Non-Employee Directors' Restricted Stock Plan. Such shares vest at the earlier
of three years, death or retirement from the Board of Directors. Pursuant to the
Plan, the Company during June 1995 issued 333 Common Shares to each of the
twelve non-employee directors serving at such time. The Company also issued 167
Common Shares to Mr. Carlson, in partial satisfaction of his annual retainer for
the second half of 1995, following his retirement on June 30, 1995.
Non-Employee Directors are also paid the following fees: Board meeting fee,
$1,000; annual retainer for each committee membership, $2,000; and committee
meeting fee, $800. Each committee chair is also paid an annual fee of $2,000.
For the last ten months of 1995, a committee of four non-employee directors
participated in a special assignment at the request of the full Board and served
on an advisory committee for the Chairman and Chief Executive Officer. The
purpose of the advisory committee was to make the combined management expertise
of certain non-employee directors readily available to the Chairman. The
non-employee directors serving on the Chairman's advisory committee received
$2,000 a month from March through December, 1995.
5
<PAGE> 9
Pursuant to the Non-Employee Directors' Deferred Compensation Plan adopted
in 1995, non-employee Directors of the Company have the opportunity to defer
payment of all or a portion of their annual cash compensation. Each Director may
elect to defer a specified dollar amount or percentage of his or her fees. The
deferral will be credited to his or her account and deemed invested in either an
obligation of the Company adjusted in accordance with the return of Standard &
Poor's 500 Composite Stock Index, as calculated quarterly, and/or an obligation
of the Company earning interest at a rate equal to the Moody's Corporate Average
Bond Index, adjusted on a quarterly basis. Payment of fees deferred under the
Plan, with earnings, will commence as of the earlier of termination of services
as a Director, death or a date not less than 2 years after such fees are
deferred as elected by the Director. At December 31, 1995 two Directors had
elected to defer compensation pursuant to such Plan.
The Company has established a Directors' Charitable Award Program for
non-employee Directors, funded through insurance policies on the lives of the
participating Directors. In 1995 the Company paid $35,000 in premiums on such
policies. The Program effective date is January 1, 1996. Upon the death of a
participating Director, the Company will donate an aggregate of $500,000 (in ten
annual installments) to one or more qualified charitable organizations
recommended by such Director and approved by the Company. The Directors derive
no financial benefit from the Program since all charitable deductions and cash
surrender value of life insurance policies accrue solely to the Company. All
non-employee Directors, other than David C. Lincoln, Emma Lincoln, Henry Meyer,
Larry Selhorst and Frank Steingass, currently participate in the Program. Five
years of service as a Director are required to vest benefits under the Program.
Eight meetings of the Board of Directors were held during 1995. Every
Director attended at least 75% of the aggregate number of meetings of the Board
of Directors and meetings of the committees of the Board of Directors on which
such Director served.
SECURITY OWNERSHIP OF MANAGEMENT AND
------------------------------------
CERTAIN BENEFICIAL OWNERS
-------------------------
The following table sets forth certain information regarding ownership of
the Company's equity securities as of March 31, 1996 by the Directors and
Director nominees, each of the Executive Officers named in the Summary
Compensation Table on page 10 and all Directors and Executive Officers as a
group. Also set forth on the next page is information with respect to any person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known to the Company as of March 31, 1996 to be
an owner of more than 5% of any class of the Company's voting securities. Except
as otherwise indicated, voting and investment power with respect to shares
reported in this table is not shared with others.
The Company has two classes of voting securities, Common Shares and Class B
Common Shares, which vote together as one class on all matters unless otherwise
provided by law. The Company also has one class of equity securities that only
votes in certain specified situations, Class A Common Shares. The rights of the
three classes of common equity are identical except as otherwise specified in
the Company's charter. Class B Common Shares have been issued by the Company
only to the trust established by the Company's profit-sharing plan, The Lincoln
Electric Employee Stock Ownership Plan (the "ESOP"). Aside from a small number
of shares distributed in kind to employees upon separation from the Company, the
trust holds of record all of the Class B Common Shares. Percentages of equity
ownership are set forth in the following table, including percentage ownership
by class for each of the three classes, and percentage ownership of all
outstanding voting shares, aggregating the Common Shares and Class B Common
Shares.
6
<PAGE> 10
BENEFICIAL OWNERSHIP TABLE
--------------------------
<TABLE>
<CAPTION>
VOTING SHARES NON-VOTING SHARES
---------------------------------------- ------------------------------
NON-OFFICER NUMBER OF PERCENT NUMBER OF PERCENT
DIRECTORS AND VOTING SHARES PERCENT OF VOTING NON-VOTING SHARES OF
DIRECTOR NOMINEES OWNED(1)(2) OF CLASS SHARES OWNED(1) CLASS
----------------- ------------- -------- --------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Harry Carlson.............. 139,997(3) 1.33% 1.27% 134,263(4) *
David H. Gunning........... 5,750(5) * * 0 *
Edward E. Hood, Jr......... 1,750 * * 1,000 *
Paul E. Lego............... 2,250 * * 1,500 *
Hugh L. Libby.............. 13,820 * * 13,070 *
David C. Lincoln........... 2,417,050(6) 22.97% 21.93% 979,807(7) 7.05%
Emma S. Lincoln............ 221,154(8) 2.10% 2.08% 225,252(9) 1.60%
G. Russell Lincoln......... 71,640(10) * * 70,890(11) *
Kathryn Jo Lincoln......... 3,450 * * 2,700 *
Henry L. Meyer, III........ 2,250(12) * * 1,500(13) *
Lawrence O. Selhorst....... 1,750 * * 1,000 *
Craig R. Smith............. 4,300(14) * * 3,550(15) *
Frank L. Steingass......... 108,724(16) 1.03% * 116,519(17) *
NAMED EXECUTIVE OFFICERS
------------------------
Donald F. Hastings......... 64,780(18)(19)(20) * * 67,888(19)(21) *
Frederick W. Mackenbach.... 60,314(19)(22) * * 60,314(19)(22) *
Anthony A. Massaro......... 1,584 * * 1,000 *
H. Jay Elliott............. 7,825(20) * * 7,000 *
David J. Fullen............ 2,300 * * 2,300 *
All Directors and
Executive Officers
as a group (32
persons)................. 3,179,011 30.22% 28.85% 1,738,326 12.52%
OTHER PERSONS
- -------------
The Lincoln Electric Company
Employee Stock Ownership Plan
22801 St. Clair Avenue
Cleveland, Ohio
44117-1199............... 481,472 98.84%** 4.42% NA NA
KeyCorp
127 Public Square
Cleveland, Ohio
44114-1306............... 704,172(23) 6.70% 6.40% NA NA
<FN>
- ---------------
* indicates less than 1%.
** indicates percentage ownership of Class B Common Shares
(1) Reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission (the "Commission"), under which a person
is deemed to be the beneficial owner of a security, for these purposes, if
he or she has or shares voting power or investment power in respect of such
security or has the right to acquire such security within 60 days.
(2) Includes Common Shares subject to forfeiture and restrictions on transfer
issued pursuant to the Company's Non-Employee Directors' Restricted Stock
Plan.
</TABLE>
7
<PAGE> 11
(3) Of the 139,997 shares, Mr. Carlson holds of record 66,725 shares and the
remaining 73,272 shares are held of record by his spouse. Mr. Carlson
disclaims beneficial ownership of the shares held by his spouse.
(4) Of the 134,263 shares, Mr. Carlson holds of record 66,141 shares and the
remaining 68,122 shares are held of record by his spouse. Mr. Carlson
disclaims beneficial ownership of the shares held by his spouse.
(5) Of the 5,750 shares, Mr. Gunning shares voting and investment power with
his spouse as to 5,000 shares.
(6) Of the 2,417,050 shares, David C. Lincoln holds of record 368,450 shares.
The remaining 2,048,600 shares are held of record as follows: 998,550
shares by The Lincoln Foundation, Inc., of which Mr. Lincoln is President
and a member of the Board of Trustees, as to which shares Mr. Lincoln
disclaims beneficial ownership; 500,000 shares by the Estate of Helen C.
Lincoln, of which Mr. Lincoln is a co-administrator, as to which shares Mr.
Lincoln disclaims beneficial ownership; 500,000 shares by LFM, Inc., a
corporation of which Mr. Lincoln is President, as to which shares Mr.
Lincoln disclaims beneficial ownership; 30,000 shares by The Lincoln Fund,
a Lincoln family partnership of which Mr. Lincoln is Managing Director;
20,000 shares by a trust of which Mr. Lincoln is a trustee, for the benefit
of his nephew, as to which shares Mr. Lincoln disclaims beneficial
ownership; and 50 shares by Mr. Lincoln's spouse, as to which shares he
disclaims beneficial ownership.
(7) Of the 979,807 shares, David C. Lincoln holds of record 367,700 shares. The
remaining 612,107 shares are held of record as follows: 109,572 shares by
The Lincoln Foundation, Inc., of which Mr. Lincoln is President and a
member of the Board of Trustees, as to which shares Mr. Lincoln disclaims
beneficial ownership; 54,866 shares by the Estate of Helen C. Lincoln, of
which Mr. Lincoln is a co-administrator, as to which shares Mr. Lincoln
disclaims beneficial ownership; 397,619 shares by LFM, Inc., a corporation
of which Mr. Lincoln is President, as to which shares Mr. Lincoln disclaims
beneficial ownership; 30,000 shares by The Lincoln Fund, a Lincoln family
partnership of which Mr. Lincoln is Managing Director; 20,000 shares by a
trust of which Mr. Lincoln is a trustee, for the benefit of his nephew, as
to which shares Mr. Lincoln disclaims beneficial ownership; and 50 shares
by Mr. Lincoln's spouse, as to which shares he disclaims beneficial
ownership.
(8) Of the 221,154 shares, Emma S. Lincoln holds of record 19,250 shares. The
remaining 201,904 shares are held of record by The James F. Lincoln, Jr.
Trust, under which Mrs. Lincoln may be deemed to share voting and
investment power. See footnote 23 below.
(9) Of the 225,252 shares, Emma S. Lincoln holds of record 18,500 shares. The
remaining 206,752 shares are held of record by The James F. Lincoln, Jr.
Trust, under which Mrs. Lincoln may be deemed to share voting and
investment power.
(10) Of the 71,640 shares, G. Russell Lincoln holds of record 58,250 shares.
4,700 shares are held of record by three trusts, as to each of which Mr.
Lincoln is a trustee, for the benefit of his minor children. Mr. Lincoln is
also a trustee of 8,690 shares for the Laura P. Heath Family Trust. Mr.
Lincoln disclaims beneficial ownership of the shares held by the trusts.
(11) Of the 70,890 shares, Mr. Lincoln holds of record 57,500 shares. The
balance are held by four trusts, as set forth in footnote 10.
(12) Of the 2,250 shares, 1,500 are held of record by a trust established by Mr.
Meyer and his spouse under which Mr. Meyer may be deemed to share voting
and investment power. See footnote 23 below.
(13) Held of record by a trust established by Mr. Meyer and his spouse under
which Mr. Meyer may be deemed to share voting and investment power.
(14) Of the 4,300 shares, Craig R. Smith holds of record 750 shares. The
remaining 3,550 shares are held of record by a trust established by Mr.
Smith, under which he has sole voting authority and shared investment
authority.
(15) Held of record by a trust established by Mr. Smith, under which he has sole
voting authority and shared investment authority.
8
<PAGE> 12
(16) Of the 108,724 shares, Mr. Steingass holds of record 76,425 shares. The
remaining 32,299 shares are held of record as follows: 26,000 are held by a
trust under which the trustee has sole voting authority and shared
investment authority with Mr. Steingass; 900 shares by Buehler/Steingass,
Inc., a corporation of which Mr. Steingass is Chairman of the Board and
President, as to which shares Mr. Steingass disclaims beneficial ownership;
and 5,399 shares by Mr. Steingass' spouse, as to which shares Mr. Steingass
disclaims beneficial ownership.
(17) Of the 116,519 shares, Mr. Steingass holds of record 79,156 shares. The
remaining 37,363 shares are held of record as follows: 26,000 are held by a
trust under which the trustee has sole voting authority and shared
investment authority with Mr. Steingass; 564 shares by Buehler/Steingass,
Inc., a corporation of which Mr. Steingass is Chairman of the Board and
President, as to which shares Mr. Steingass disclaims beneficial ownership;
and 10,799 shares by Mr. Steingass' spouse, as to which shares Mr.
Steingass disclaims beneficial ownership.
(18) Of the 64,780 shares, Mr. Hastings holds of record 64,720 shares and the
remaining 60 shares are held of record by his spouse. Mr. Hastings
disclaims beneficial ownership of the shares held by his spouse.
(19) The indicated shares include 13,334 and 6,668 shares of restricted stock
for Messrs. Hastings and Mackenbach, respectively, awarded in 1994 pursuant
to the 1988 Incentive Equity Plan. One-half of the total for each of Mr.
Hastings and Mr. Mackenbach is in Common Shares; the other half for each
individual is in Class A Common Shares. One-half of the totals listed above
vested in January 1996. The balance of Mr. Mackenbach's shares vested on
his retirement date, March 31, 1996, pursuant to the terms of his
Retirement Agreement. The balance of Mr. Hastings' shares vest in January
1997.
(20) The indicated shares do not include 481,472 Class B Common Shares held of
record 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 Class B
Common Shares allocated to their respective accounts. Class B 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 March 31, 1996, the ESOP held 481,472 Class B
Common Shares. The ESOP is administered by an Administrative Committee
appointed by the Board of Directors of the Company. Messrs. Hastings and
Elliott have been appointed by the Board of Directors as members of the
Administrative Committee. Except as provided above, 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 B Common Shares.
Consequently, the Administrative Committee may be deemed in accordance with
the beneficial ownership rules of the Commission to share beneficial
ownership of the 481,472 Class B Common Shares held by the ESOP. Messrs.
Hastings and Elliott disclaim beneficial ownership of such shares.
(21) Of the 67,888 shares, Mr. Hastings holds of record (or through Company
plans) 67,828 shares and the remaining 60 shares are held of record by his
spouse. Mr. Hastings disclaims beneficial ownership of the shares held by
his spouse.
(22) Of the 60,314 shares, 14,298 shares are held of record by Mr. Mackenbach
and the remaining 46,016 shares are held of record by Mr. Mackenbach and
his spouse, as Trustees of the Mackenbach Community Trust.
(23) As of December 31, 1995, the Schedule 13G filed by KeyCorp reports that of
the 704,172 shares included within the Schedule, KeyCorp shares investment
power with respect to 456,015 shares and it shares voting power with
respect to 172,003 shares. Included within the total for which it shares
investment power are 26,000 Common Shares held in trust for Mr. Steingass
and 3,550 Common Shares held in trust for Mr. Smith. KeyCorp reports that
it has sole investment power with respect to 246,377 shares and it has sole
voting power with respect to 408,762 shares. Included within the latter
totals are the shares held by The James F. Lincoln, Jr. Trust referenced in
footnote 8 above, as well as 1,500 Common Shares held of record by a trust
established by Mr. Meyer and his spouse. KeyCorp also has sole voting power
for the 26,000 Common Shares held in trust for Mr. Steingass for which he
shares investment authority.
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------------
----------------------------------------------- LONG-TERM
OTHER RESTRICTED INCENTIVE
NAME AND PRINCIPAL ANNUAL STOCK PLAN ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) PAYOUTS(2) COMPENSATION
------------------ ---- -------- -------- ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald F. Hastings 1995 $550,000 $350,000 $ 32,475(3)
Chairman of the Board and 1994 702,400 100,000 $ 207(4) $182,500 18,794(3)
Chief Executive Officer 1993 652,400
Anthony A. Massaro 1995 300,000 75,000 108,528(6) 9,749(7)
President and 1994 288,000 60,000 70,117(8) 49,371(9)
Chief Operating Officer (5) 1993 177,000(10) 498(8) 49,526(9)
H. Jay Elliott 1995 255,000 75,000
Vice President, Chief 1994 228,016 40,000
Financial Officer and 1993 104,095(11)
Treasurer
David J. Fullen 1995 164,580 115,000
Executive Vice President 1994 144,982 144,684
Engineering and Marketing 1993 118,678 118,066
- ---------------
Frederick W. Mackenbach 1995 338,750 175,000 1,017,204(12)
Former President and 1994 427,400 75,000 207(4) 91,250 $ 59,020 5,000(13)
Chief Operating Officer (12) 1993 392,400 70,005 12,000(13)
Harry Carlson 1995 340,000 1,195,000(14)
Former Vice Chairman (14) 1994 267,400 25,000 207(4)
1993 256,400
<FN>
- ---------------
(1) As of December 31, 1995, Messrs. Hastings and Mackenbach held 13,334 and
6,668 shares of restricted stock with an aggregate market value,
respectively, of $320,016 and $160,032. Dividends are payable on such
shares of common stock at the same rate as dividends on the other shares of
the Company's common stock. One half of the shares of restricted stock held
by Mr. Hastings and Mr. Mackenbach at the end of 1995 vested in January
1996; the balance of those shares held by Mr. Hastings will vest in January
1997. The balance of the shares held by Mr. Mackenbach vested upon his
retirement in March 1996. See footnote 12 below.
(2) Indicated amounts reflect delivery of Common Shares in April 1993 and 1994
pursuant to Deferred Stock Award Agreement issued under the 1988 Incentive
Equity Plan. See footnote 12 below.
(3) Indicated amounts reflect life insurance premiums paid by the Company.
(4) Indicated amounts reflect state and local taxes and social security
payments made on behalf of Messrs. Hastings, Mackenbach and Carlson with
respect to taxable income that relates to a purchase of shares in May 1994
under the Employee Stock Purchase Plan. All participants in the Plan who
purchased shares in 1994 were treated identically with respect to these tax
payments.
(5) Mr. Massaro became President and Chief Operating Officer on April 1, 1996.
(6) Indicated amount is the aggregate, net of tax adjustments, of payments made
to Mr. Massaro under his expatriate agreement, including cost of living
adjustments and housing payments. The agreement ended in 1995.
(7) Indicated amount reflects moving expenses and payments related thereto.
(8) Indicated amounts reflect the following payments by the Company to or on
behalf of Mr. Massaro in 1994: housing payments in the amount of $49,585,
tax equalization payments in the amount of $20,256 and payment of spouse
travel costs in the amount of $276. The 1993 amount reflects reimbursement
of taxes.
(9) Indicated amounts reflect the following payments by the Company to or on
behalf of Mr. Massaro in 1994: cost of living payment in the amount of
$49,155; life insurance premium payment in the amount
</TABLE>
10
<PAGE> 14
of $216, and the following payments in 1993: payment of relocation costs in
the amount of $20,000; prepayment of 1994 foreign assignment premium in the
amount of $28,800; payment of life insurance premiums in the amount of $72;
and wage index adjustment of $654.
(10) Mr. Massaro's salary reflects the commencement of his employment on August
1, 1993. Prior to that date, Mr. Massaro was a consultant to the Company
and his compensation while a consultant is included in the table.
(11) Mr. Elliott's salary reflects the commencement of his employment on July
12, 1993.
(12) Mr. Mackenbach entered into a Retirement Agreement in November 1995
pursuant to which he resigned as an officer and retired as an employee
effective March 31, 1996. Pursuant to Mr. Mackenbach's Retirement
Agreement, the Company agreed to pay $128,439 in salary for January through
March of 1996, and, thereafter, for a three year period, $296,255 annually
in addition to pension benefits, which were also adjusted. See "Pension
Benefits." The Retirement Agreement also specified that (i) the Company
will repurchase at book value the 20,328 shares of common stock paid out to
Mr. Mackenbach in 1992, 1993 and 1994 under the 1988 Incentive Equity Plan
within 90 days following his retirement, and (ii) forfeiture restrictions
on the 6,668 shares of restricted stock held by Mr. Mackenbach pursuant to
a 1994 award agreement would lapse on his retirement date.
(13) Indicated amounts reflect monthly furniture allowance of $1,000 provided in
lieu of relocation expense reimbursement, payable June 1992 through May
1994.
(14) Mr. Carlson retired on June 30, 1995. In conjunction therewith, the Company
entered into a deferred compensation agreement pursuant to which the
Company agreed to pay Mr. Carlson $795,000 over a four-year period. In
addition, Mr. Carlson was paid $400,000 in July 1995 in connection with a
four-year consulting agreement. Certain adjustments were also made in Mr.
Carlson's pension benefits. See "Pension Benefits."
COMPENSATION COMMITTEE
----------------------
REPORT ON EXECUTIVE COMPENSATION
--------------------------------
The Compensation Committee of the Board of Directors consists solely of
non-employee Directors. Its primary charge is to determine and report to the
Board of Directors 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 Compensation Committee makes
recommendations to the Board of Directors concerning the Company's employee
benefit programs, other than health and welfare programs. The Chief Executive
Officer determines the compensation of the other executives 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 1994 with
respect to 1995 compensation. The Compensation Committee will also comment on
its efforts more generally to adopt executive compensation policies that meet
the needs of the Company's changing corporate profile and its increased size and
complexity.
The Company has a longstanding commitment to incentive based compensation
exemplified by its cash bonus program. For many years the Company has
administered a discretionary employee bonus program featuring a cash
distribution determined on the basis of a formula that takes into account
individual earnings and the results of a merit review process. Virtually all
domestic employees participate in the program, and efforts have been made to
include employees of foreign subsidiaries, where appropriate. The costs of this
program, net of hospitalization costs but inclusive of payroll taxes, was $66.4
million in 1995, $59.6 million in 1994 and $53.5 million in 1993.
11
<PAGE> 15
The Committee reviewed at some length in 1994 the implications of the
discretionary bonus program for senior management compensation. The Committee
sought to establish base rate compensation for elected management approximating
the median for comparable positions at comparable companies; the Committee also
wanted to reaffirm, together with the Chief Executive Officer, that cash
incentives for officers were based on fairly established targets and fell within
appropriate parameters across the board. Independent consultants assisted the
Committee in its review. The result of the Committee's 1994 study was to include
within the Company's cash program for 1995 a Management Incentive Plan for
executives.
Pursuant to this Plan, base salaries are established based on market
medians tempered by individual circumstances. The market for these purposes
consists of durable goods manufacturers with comparable sales. Cash awards are
then made annually based on the level of achievement against predetermined
financial performance targets established by the Chief Executive Officer and the
Compensation Committee of the Board of Directors. Each participant's award is
segmented to reflect that individual's responsibilities, with weighting on
corporate or regional results accordingly. A maximum target award fund is
established yearly. Maximum awards, if achieved, are designed to place
individual participants at approximately the 75th percentile in the market for
their respective positions as determined by the Compensation Committee. The
awards for the five most highly compensated executive officers are subject to
determination by the Compensation Committee, with the balance of the awards
determined upon recommendation by the CEO and review by the Compensation
Committee.
Adoption of the Management Incentive Plan for 1995 resulted in the
reduction of the base salaries for the Chief Executive Officer and the Chief
Operating Officer. It also led, however, to certain upward adjustments for other
elected officers. Maximum target awards were received by plan participants in
1995 due to the Company's financial performance.
The Compensation Committee also initiated in 1994 a review of the cash
bonus program for foreign subsidiaries, which resulted in the adoption in 1995
of a program that will be applicable in 1996. The program establishes a bonus
pool for various regions based on a percentage of operating profit, which is
then adjusted based on actual results against various performance objectives.
Although the program was not formally in place in 1995, the payout of $6,644,000
in cash bonuses to foreign subsidiaries last year was consistent with the
program's parameters.
The Compensation Committee administers the 1988 Incentive Equity Plan (the
"IEP"), which is applicable to 2,000,000 shares. At the end of 1995, 1,899,952
shares remained available for award and issuance (949,976 Common Shares and
949,976 Class A Common Shares). Awards under the IEP, 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.
CEO COMPENSATION
In 1995 the base compensation of Mr. Hastings was reduced from $700,000 to
$550,000. This reduction followed the adoption of the Management Incentive Plan
referenced above. Mr. Hastings' maximum cash target award under the Plan was
$350,000, which was received due to the Company's performance on a consolidated
basis. His total cash compensation, therefore, increased from $800,000 in 1994
(including a $100,000 bonus) to $900,000 in 1995 (including a $350,000 plan
award).
Mr. Hastings' base salary will not change in 1996, and his maximum bonus
award has been increased to $400,000, which places approximately 40% of his
total compensation at risk, depending on corporate performance.
OTHER EXECUTIVE OFFICERS
The base salaries of Messrs. Mackenbach, Massaro, Elliott and Fullen were
established under the 1995 Management Incentive Plan, as discussed above. Mr.
Mackenbach's salary was reduced from $475,000 to $338,750. His cash target award
under the Plan was $175,000, which was paid due to consolidated results. The
12
<PAGE> 16
salaries of Messrs. Massaro, Elliott and Fullen did not change following
adoption of the Management Incentive Plan. An aggregate of $265,000 was paid in
1995 to Messrs. Massaro, Elliott and Fullen as the maximum target award, which
means approximately 37% of their total compensation was at risk. The Committee
believes that the Management Incentive Plan is an important addition to the
Company's longstanding incentive compensation system.
1993 TAX ACT
The $1 million limitation of deductibility for executive compensation
imposed by the Omnibus Budget Reconciliation Act of 1993 has no immediate
applicability to the Company. The Compensation Committee's general philosophy
will be to "qualify" future long-term incentive plans for tax deductibility
wherever appropriate, recognizing that, under certain circumstances, the limit
may be exceeded.
The foregoing report has been furnished by the Compensation Committee.
<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>
CERTAIN LEGAL MATTERS
---------------------
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 (the "Commission") and to furnish copies of these reports to the
Company. Based on a review of these reports, the Company believes that for 1995
all filing requirements were met on a timely basis except that Mr. Massaro and
Mr. Ronald A. Nelson (Vice President, Machine Research and Development)
purchased a relatively small number of shares in the Company's 1995 public
offering, 400 shares and 280 shares, respectively, and did not report such
purchases until their respective Form 5 year end filings.
On April 26, 1996, the Company disclosed that it had agreed to settle
litigation arising out of the 1988 Incentive Equity Plan initiated by Ellis F.
Smolik, a former Officer and Director, on behalf of a proposed class of present
and former employees. Conditional upon the approval of the fairness of the
settlement by Cuyahoga County Common Pleas Court, the Company agreed to settle
the action at an after-tax cost of approximately $2.1 million. Included within
that cost is the value of non-qualified options to purchase a total of 77,430
Class A Common Shares at $30 per share, and 85,292 Class A Common Shares at $34
per share. None of the executive officers named in the Summary Compensation
Table on page 10 would participate in the settlement except Mr. Fullen, who
would receive options valued at $89,022. None of the Directors of the Company
would participate in the settlement.
13
<PAGE> 17
PENSION BENEFITS
Pension benefits for the Executive Officers of the Company are provided
under two defined benefit programs: the retirement annuity program (the
"Retirement Annuity Program"), which has been in effect since 1936; and a
supplemental executive retirement plan (the "SERP"), which became effective
January 1, 1994. Participation in the SERP is limited to individuals who have
been chosen for participation by the Compensation Committee.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
- --------------------------------------
The following table shows the estimated annual pension benefits provided
under the SERP, which would be payable to employees in various compensation
classifications upon retirement on December 31, 1995, at age 60 after selected
periods of service:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
3 HIGHEST YEARS YEARS OF SERVICE
IN 7-YEAR PERIOD ---------------------------------------------------------------------------------------------------------
PRECEDING
RETIREMENT 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
125,000 $ 12,706 $ 21,737 $ 30,768 $ 39,800 $ 48,831
150,000 $ 18,125 $ 28,962 $ 39,800 $ 50,637 $ 61,475
175,000 $ 23,543 $ 36,187 $ 48,831 $ 61,475 $ 74,118
200,000 $ 28,962 $ 43,412 $ 57,862 $ 72,312 $ 86,762
225,000 $ 34,381 $ 50,637 $ 66,893 $ 83,150 $ 99,406
250,000 $ 39,800 $ 57,862 $ 75,925 $ 93,987 $112,050
300,000 $ 50,637 $ 72,312 $ 93,987 $115,662 $137,337
400,000 $ 72,312 $101,212 $130,112 $159,012 $187,912
500,000 $ 93,987 $130,112 $166,237 $202,362 $238,487
600,000 $115,662 $159,012 $202,362 $245,712 $289,062
700,000 $137,337 $187,912 $238,487 $289,062 $339,637
800,000 $159,012 $216,812 $274,612 $332,412 $390,212
900,000 $180,687 $245,712 $310,737 $375,762 $440,787
1,000,000 $202,362 $274,612 $346,862 $419,112 $491,362
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
3 HIGHEST YEARS
IN 7-YEAR PERIOD
PRECEDING
RETIREMENT 40 YRS. 45 YRS.
- ----------------- ----------------- -----------------
<S> <C> <C>
125,000 $ 57,862 $ 66,862
150,000 $ 72,312 $ 83,112
175,000 $ 86,762 $ 99,362
200,000 $101,212 $115,612
225,000 $115,662 $131,862
250,000 $130,112 $148,112
300,000 $159,012 $180,612
400,000 $216,812 $245,612
500,000 $274,612 $310,612
600,000 $332,412 $375,612
700,000 $390,212 $440,612
800,000 $448,012 $505,612
900,000 $505,812 $570,612
1,000,000 $563,612 $635,612
</TABLE>
The compensation covered by the SERP is salary and bonus. The compensation
covered by the SERP is the same as the amounts shown in the salary and bonus
columns of the Summary Compensation Table on page 10. Credited service for SERP
purposes for Messrs. Hastings, Massaro, Elliott, Fullen and Carlson is 40(5/12),
26(5/12), 29(5/12), 40(6/12) and 45 years respectively.
Benefits under the SERP are based upon 1.445% of the average annual
compensation for the 3 highest years in the 7-year period preceding retirement
multiplied by the covered employee's years of service until the end of the year
in which age 65 is attained, except that the maximum benefit may not exceed 65%
of the average annual compensation for the 3 highest years used in the
calculation. The benefits payable under the SERP are reduced by the maximum
Social Security benefit payable in the year of retirement and the table reflects
such reduction. The amounts reflected in the table will be reduced by the single
life benefits payable under the Retirement Annuity Program, the lifetime benefit
equivalence of any account balance under the ESOP and other qualified plan
benefits paid by previous employers. Benefits under the plan are also reduced if
the covered employee has participated in the plan for fewer than 8 years at the
time of retirement. Participants are credited with only 20% of the net amount of
the benefit otherwise payable under the plan when they first become
participants, and in each of the next seven years an additional 10% of the net
amount of the benefit will become payable upon retirement. Years of service
after the end of the year in which age 67 is attained are disregarded for this
purpose. Messrs. Hastings' and Fullen's participation factors will be limited to
40% and
14
<PAGE> 18
70%, respectively, if they remain employed unless the Board of Directors acts
pursuant to its discretionary authority under the SERP to increase such
participation factors. The table reflects the benefits payable on a single life
basis without reduction for this participation factor.
In conjunction with Mr. Carlson's retirement, the Board of Directors
increased his credited years of service to 45 years and increased his
participation factor to 50%. Mr. Mackenbach's Retirement Agreement adjusted his
annual single life benefit under the SERP from $76,660 to $130,721. No years of
service or participation factor adjustments were made nor are any applicable
given the foregoing adjustment. Mr. Mackenbach's adjusted annual single life
benefit under the SERP is not reduced by any other benefits payable to him, i.e.
social security or company benefits.
RETIREMENT ANNUITY PROGRAM
- --------------------------
Under the Retirement Annuity Program, each employee accumulates 2.5% of
each year's base compensation in the form of an annuity payable at normal
retirement age (age 60). In addition to the 2.5% accumulation each year, the
Company has granted, on a number of occasions, additional past service benefits.
The Program also provides accumulated benefits to employees eligible for
disability retirement, to eligible spouses of deceased employees or former
employees, and to eligible employees who terminate employment. Benefits under
the Program are in addition to those payable under Social Security.
The anticipated retirement benefits under the Retirement Annuity Program
for the named Executive Officers with the highest compensation for 1995 are as
follows:
<TABLE>
<CAPTION>
ANNUAL RETIREMENT
NAME ANNUITY PROGRAM BENEFITS
---- ------------------------
<S> <C>
1. Donald F. Hastings....................................... $ 99,564.26 (1)
2. Anthony A. Massaro....................................... 40,896.00 (2)
3. H. Jay Elliott........................................... 31,274.04 (2)
4. David J. Fullen.......................................... 80,208.77 (3)
5. Frederick W. Mackenbach.................................. 72,018.48 (1)
6. Harry Carlson............................................ 58,530.72 (1)
<FN>
- ---------------
(1) The benefits shown for Mr. Hastings and Mr. Carlson are the amounts
currently being received on a 100% joint and survivor basis. The amount for
Mr. Mackenbach is the benefit that he began to receive following his March
31, 1996 retirement on a 100% joint and survivor basis.
(2) Mr. Massaro and Mr. Elliott are currently under normal retirement age. The
amounts shown represent those anticipated at normal retirement age assuming
current compensation continues unchanged to that date and the benefits are
payable on a single life basis.
(3) Mr. Fullen is not receiving benefits currently, but is beyond normal
retirement age. The amounts shown represent those benefits available on
December 31, 1995 on a single life basis.
</TABLE>
15
<PAGE> 19
CUMULATIVE SHAREHOLDER
----------------------
RETURN AND PERFORMANCE PRESENTATION
-----------------------------------
Shown below 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, 1991
and ending December 31, 1995. A compatible peer-group index for the welding
industry, in general, was not readily available because the industry is
comprised of a relatively small number of competitors, many of which either are
based overseas and/or are 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.
FIVE-YEAR PERFORMANCE COMPARISON
LECO Common, S&P 500, Russell 2000
Composite Indices
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(Fiscal Year Covered) LINCOLN S&P 500-COMP RUSSELL 2000
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 92.91 130.33 146.04
1992 87.04 140.22 172.94
1993 73.47 154.27 205.63
1994 165.35 156.37 201.93
1995 219.02 214.92 259.27
</TABLE>
CALENDAR YEAR ENDED DECEMBER 31
Note: Assumes that the value of the investment in Lincoln Common Shares and
each index was $100 at 12/31/90 and that all dividends were reinvested.
TRANSACTIONS
Buehler/Steingass, Inc., of which Frank L. Steingass, a Director of the
Company, is President and a principal shareholder, received approximately
$825,361.50 for printing catalogs and other materials for the
16
<PAGE> 20
Company during 1995. It is anticipated that Buehler/Steingass, Inc. will
continue to provide printing services to the Company in 1996 on miscellaneous
matters.
Henry L. Meyer, III, a Director of the Company, is Chairman and Chief
Executive Officer of Society National Bank ("SNB"). SNB serves as the agent bank
for the Company's $200 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 $42 million. SNB has provided other
credit facilities to or on behalf of the Company in the aggregate amount of
approximately $17 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.
APPOINTMENT OF INDEPENDENT AUDITORS
-----------------------------------
Item No. 2
A proposal will be presented at the Annual Meeting to ratify the
appointment of the firm of Ernst & Young LLP as independent auditors to examine
the books of account and other records of the Company for the fiscal year ending
December 31, 1996. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting. Such representatives will have an opportunity to
make a statement if they so desire and are expected to be available to respond
to appropriate questions. Although such ratification is not required by law, the
Board of Directors believes that shareholders should be given this opportunity
to express their views on the subject. While not binding on the Board of
Directors, the failure of the shareholders to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors would be considered by the Board
of Directors in determining whether or not to continue the engagement of Ernst &
Young LLP. Ratification requires the affirmative vote of the majority of the
Common Shares and Class B Common Shares present or represented, and entitled to
vote on the matter at the Annual Meeting, taken together as a single class.
Unless otherwise directed, proxies in the accompanying form will be voted for
ratification of the appointment of Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS YOUR COMPANY'S INDEPENDENT AUDITORS.
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 1997, must be received by the
Company, addressed to its principal executive offices at 22801 St. Clair Avenue,
Cleveland, Ohio 44117-1199, Attention: Secretary, for inclusion in the Proxy
Statement of the Company relating to such meeting on or before December 30,
1996.
THE LINCOLN ELECTRIC COMPANY
Frederick G. Stueber
Secretary
By Order of the Board of Directors
Cleveland, Ohio
April 29, 1996
17
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RENAISSANCE CLEVELAND HOTEL
TOWER CITY CENTER, 24 PUBLIC SQUARE, CLEVELAND, OH 44113
TELEPHONE (216) 696-5600 FAX (216) 696-0432
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FROM THE HOTEL TO TURNPIKE EAST
Go out garage to your right, the sec-
ond traffic light is Ontario, go right on
Ontario, pass Gateway and enter the
ramp to the right, take I-77 S. to
[MAPS] I-80/I-90 Turnpike.
FROM THE HOTEL TO TURNPIKE WEST
Go out garage to your right, the sec-
ond traffic light is Ontario, go right,
pass Gateway and enter the on ramp
to the right, take I-71 S. 3/4 of a mile,
it will split/take I-90 W. to Turnpike.
COMING FROM THE EAST COMING FROM THE WEST FROM 1-71 NORTH TO HOTEL
Take I-90 W. to Route 2 to the W. 3rd Take I-90 E. to I-71 N. Stay on Stay on I-71 N. to the Ontario exit
St. exit. Go left on W. 3rd to the end I-71 N. to the Ontario exit 171B. Take 171 B. Take Ontario N. to St. Clair, left
of the street, the Hotel is at the end of Ontario N. to St. Clair, left on St. Clair on St. Clair to W. 6th, left on W. 6th
the street at W. 3rd and Superior. to W. 6th, left on W. 6th two blocks to two blocks to Superior and left on
Superior and left on Superior two Superior two blocks. The hotel is on
blocks. The hotel is on the corner of the corner of W. 3rd and Superior.
W. 3rd and Superior.
FROM I-77 TO HOTEL
Exit on E. 9th, go north to St. Clair.
Go left on St. Clair to W. 6th, left on
W. 6th two blocks to Superior. Go left
on Superior two blocks. The Hotel is
on the corner of W. 3rd and Superior.
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THE LINCOLN ELECTRIC COMPANY
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
P The undersigned hereby appoints Donald F. Hastings, H. Jay Elliott
R and Frederick G. Stueber, and each of them, as Proxies, with full
O power of substitution, to vote and act on behalf of the undersigned
X at the Annual Meeting of Shareholders of The Lincoln Electric
Y Company to be held at the Cleveland Renaissance Hotel on May 28,
1996, at 4:00 p.m., or at any adjournment thereof, on all matters
coming before the meeting.
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Election of Directors for term ending 1999 (change of address)
______________________________________
Nominees: Harry Carlson, David H. Gunning, ______________________________________
______________________________________
Edward E. Hood, Jr. and Paul E. Lego ______________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
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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 FOR RATIFICATION OF THE INDEPENDENT
AUDITORS (Item 2).
_______________
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| SEE REVERSE |
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[ X ] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
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<CAPTION>
DIRECTORS RECOMMEND A VOTE FOR DIRECTORS RECOMMEND A VOTE FOR
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FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification [ ] [ ] [ ]
Directors of Independent
(see reverse) Auditors
For, except vote withheld from the following nominee(s):
________________________________________________________
Change
of [ ]
Address
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SIGNATURE(S)_________________________________________________________ DATE __________ In their discretion, the Proxies are
authorized to vote upon
SIGNATURE(S)_________________________________________________________ DATE __________ such other business as may properly
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. come before this meeting.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
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THE LINCOLN ELECTRIC EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTION CARD FOR 1996 ANNUAL MEETING OF
SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
Election of Directors for term ending 1999
Nominees: Harry Carlson, David H. Gunning, Edward E. Hood, Jr. and
Paul E. Lego
THIS VOTING INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT OR BENEFICIARY.
In its discretion, the Trustee of the ESOP is authorized to vote upon such other
business as may properly come before this meeting.
________________
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| SEE REVERSE |
| SIDE |
|________________|
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[ X ] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
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<CAPTION>
DIRECTORS RECOMMEND A VOTE FOR DIRECTORS RECOMMEND A VOTE FOR
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FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification [ ] [ ] [ ]
Directors of Independent
(see reverse) Auditors
For, except vote withheld from the following nominee(s):
________________________________________________________
Change
of [ ]
Address
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SIGNATURE ___________________________________________________________ DATE __________
NOTE: PLEASE SIGN AND MAIL THIS VOTING INSTRUCTION CARD TO SOCIETY NATIONAL BANK IN THE
ENCLOSED ENVELOPE -- NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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THE LINCOLN ELECTRIC EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTION CARD FOR 1996 ANNUAL MEETING OF
SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
Election of Directors for term ending 1999
Nominees: Harry Carlson, David H. Gunning, Edward E. Hood, Jr. and
Paul E. Lego
THIS VOTING INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT OR BENEFICIARY.
In its discretion, the Trustee of the ESOP is authorized to vote upon such other
business as may properly come before this meeting.
________________
| |
| SEE REVERSE |
| SIDE |
|________________|
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DETACH CARD
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[ X ] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
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<CAPTION>
DIRECTORS RECOMMEND A VOTE FOR DIRECTORS RECOMMEND A VOTE FOR
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FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification [ ] [ ] [ ]
Directors of Independent
(see reverse) Auditors
For, except vote withheld from the following nominee(s):
________________________________________________________
Change
of [ ]
Address
</TABLE>
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SIGNATURE ___________________________________________________________ DATE __________
NOTE: PLEASE SIGN AND MAIL THIS VOTING INSTRUCTION CARD TO SOCIETY NATIONAL BANK IN THE
ENCLOSED ENVELOPE -- NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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