<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Lynch Corporation
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Robert A. Hurwich
________________________________________________________________________________
Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X ] $125 per Exchange Act Rules 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 0-11:1
_______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
3) Filing Party:
_______________________________________________________________________
4) Date filed:
_______________________________________________________________________
<PAGE> 2
LYNCH CORPORATION
8 SOUND SHORE DRIVE
GREENWICH, CONNECTICUT 06830
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1995
____________________
To The Shareholders of April 10, 1995
LYNCH CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Lynch
Corporation, an Indiana Corporation, will be held at the Greenwich Public
Library, 101 West Putnam Avenue, Greenwich, Connecticut on Thursday, May 18,
1995, at 3:00 P.M. for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Information relating to the above matters is set forth in the attached
Proxy Statement. As fixed by the Board of Directors, only Shareholders of record
at the close of business of April 3, 1995 are entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournments thereof.
The Board of Directors encourages all shareholders to personally attend the
Annual Meeting. Your vote is very important regardless of the number of shares
you own. Shareholders who do not expect to attend are requested to promptly
date, complete and return the enclosed proxy card in the enclosed accompanying
postage-paid envelope in order that their shares of Common Stock may be
represented at the Annual Meeting. Your cooperation is greatly appreciated.
By Order of the Board of Directors
/s/ ROBERT A. HURWICH
ROBERT A. HURWICH
Secretary
IMPORTANT: YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE DATE, SIGN AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. YOUR
COOPERATION IS GREATLY APPRECIATED.
<PAGE> 3
LYNCH CORPORATION
8 SOUND SHORE DRIVE
GREENWICH, CONNECTICUT 06830
____________________
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors of Lynch
Corporation (the "Corporation") in connection with the solicitation of proxies
for use at the Annual Meeting of Shareholders to be held at the Greenwich Public
Library, 101 West Putnam Avenue, Greenwich, Connecticut on May 18, 1995, at 3:00
P.M. and at any adjournments thereof. This Proxy Statement and the accompanying
proxy is first being mailed to shareholders on or about April 10, 1995.
Only shareholders of record at the close of business on April 3, 1995 are
entitled to notice of, and to vote at, the Annual Meeting. As of the close of
business on such date, 1,378,658 shares of the Corporation's common stock, no
par value (the "Common Stock"), were outstanding and eligible to vote. Each
share of Common Stock is entitled to one vote on each matter submitted to the
shareholders. Where a specific designation is given in the proxy, the proxy will
be voted in accordance with such designation. If no such designation is made,
the proxy will be voted FOR the nominees for director named below, and in the
discretion of the proxies with respect to any other matter that is properly
brought before the Annual Meeting. Any shareholder giving a proxy may revoke it
at any time before it is voted at the Annual Meeting by delivering to the
Secretary of the Corporation a written notice of revocation or duly executed
proxy bearing a later date or by appearing at the Annual Meeting and revoking
his or her proxy and voting in person.
An automated system administered by the Corporation's transfer agent
tabulates the votes. Pursuant to the Indiana Business Corporation Law and the
By-laws of the Company, shares held by persons who abstain from voting on a
proposal will be counted in determining whether a quorum is present, but will
not be counted as voting either for or against such proposal. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to serve until the
next Annual Meeting of Shareholders and until their respective successors are
elected. Except where authority to vote for directors has been withheld, it is
intended that the proxies received pursuant to this solicitation will be voted
for the nominees named below. If for any reason any nominee shall not be
available for election, such proxies will be voted in favor of the remainder of
those named and may be voted for substitute nominees in place of those who
decline to be candidates. Management, however, has no reason to expect that any
of the nominees will be unavailable for election.
The election of directors shall be determined by a plurality of the votes
cast.
All of the nominees have served as directors of the Corporation since the
last annual meeting held May 5, 1994. The By-laws of the Corporation provide
that Board of Directors shall consist of no less than five and no more than
thirteen members and that any vacancies on the Board of Directors for whatever
cause arising, including newly-created directorships, may be filled by the
remaining directors until the next meeting of shareholders. Biographical
summaries and ages as of April 1, 1995 of the nominees are set forth below. Data
with respect to the number of shares of the Common Stock beneficially owned by
each of them appears on pages 4 through 5 of this Proxy Statement.
All such information has been furnished to the Corporation by the nominees.
<PAGE> 4
<TABLE>
<CAPTION>
NAME; AGE; BUSINESS EXPERIENCE
AND PRINCIPAL OCCUPATION
FOR LAST 5 YEARS; AND DIRECTORSHIPS IN SERVED AS
PUBLIC CORPORATIONS AND INVESTMENT COMPANIES DIRECTOR FROM
--------------------------------------------
<S> <C>
Bradley J. Bell, 42
Vice President (since 1990) and Treasurer (since 1987) of Whirlpool Corporation,
manufacturer of household appliances; Director of The
Morgan Group, Inc, a subsidiary of the Corporation........................................... 1992
Morris Berkowitz, 72
Business Consultant (since 1984); Vice President (1970-1983) of LIN Broadcasting
Corporation, a corporation engaged in cellular telephone,
broadcasting and publishing activities....................................................... 1987
Richard J. Boyle, 60
Chairman and Chief Executive Officer of Spinnaker Industries, Inc. (formerly
Safety Railway Service Corporation), a subsidiary of the Corporation (since
1994); Managing Director of Boyle, Fleming, George & Co., Inc. (since 1993);
President and Chief Executive Officer of LTV Aerospace and Defense Company
(1990-1992), manufacturer of aircraft, missiles and specialty vehicles;
Corporate Vice President, Marketing and Business Development (1987-1990) of
Honeywell, Inc., provider of products and systems for the industrial, building,
space and marine markets; Director of Sierra Technologies,
FSI, Inc. and Key Bank of Washington......................................................... 1989
E. Val Cerutti, 55
Business Consultant (since 1992); President and Chief Operating Officer
(1975-1992) of Stella D'oro Biscuit Co., Inc., producer of bakery
products; Director of The Gabelli Convertible Securities Fund and
The Gabelli Gold Fund........................................................................ 1990
Paul J. Evanson, 53
President (since 1995) of Florida Power & Light Co.; Vice President, Finance and
Chief Financial Officer of FPL Group, Inc. (since 1992), parent company of
Florida Power & Light; President and Chief Operating Officer of the Corporation
(1988-1992); Chairman (1990-1992) and President (1988-1992) of Spinnaker
Industries, Inc., a subsidiary of the Corporation engaged in the manufacturing
of industrial process and air pollution equipment; Executive Vice President of
Moore McCormack Resources, Inc. (1986-1988), formerly a diversified construction
materials and natural resources company; Director of FPL Group, Inc., Florida
Power & Light
Company and Southern Energy Homes, Inc....................................................... 1988
2
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
NAME; AGE; BUSINESS EXPERIENCE
AND PRINCIPAL OCCUPATION
FOR LAST 5 YEARS; AND DIRECTORSHIPS IN SERVED AS
PUBLIC CORPORATIONS AND INVESTMENT COMPANIES DIRECTOR FROM
--------------------------------------------
<S> <C>
Mario J. Gabelli, 52
Chairman and Chief Executive Officer of the Corporation (since 1986);
Director of The Morgan Group, Inc., a subsidiary of the Corporation
(since 1994); Chairman and Chief Executive Officer of Gabelli
Funds, Inc., successor to The Gabelli Group, Inc. (since 1980), an
investment adviser and holding company for subsidiaries engaged in
various aspects of the securities business; Chairman, President and
Chief Investment Officer of Gabelli Global Multimedia Trust Inc.
(since 1984), Gabelli Gold Fund, Inc. (since 1994), Gabelli Global
Series Funds, Inc. (since 1993), Gabelli Investor Funds, Inc. (since
1993), Gabelli Equity Series Funds Inc. (since 1991), The Gabelli Value
Fund Inc. (since 1989), The Gabelli Series Funds, Inc. (since 1989),
and The Gabelli Equity Trust Inc. (since 1986); Trustee of The Gabelli
Money Market Funds (since 1992), The Gabelli Growth Fund
(since 1987) and The Gabelli Asset Fund (since 1986)......................................... 1986
Paul P. Woolard, 71
Business Consultant (since 1986); Senior Executive Vice President
(1975-1986) of Revlon, Inc.; President of Revlon Beauty Group of
Revlon, Inc., (1984-1986), manufacturer of cosmetics and fragrances;
Director of Chemex Pharmaceutical, Inc....................................................... 1968
</TABLE>
OPERATION OF BOARD OF DIRECTORS AND COMMITTEES
There were six (6) meetings of the Board of Directors during 1994, and the Board
acted twice by unanimous written consent.
The Board of Directors has established three standing committees, the
principal duties of which are described below:
Audit Committee: Recommends to the Board of Directors the appointment of
independent auditors; reviews annual financial reports to shareholders prior to
their publication; reviews the report by the independent auditors concerning
management procedures and policies; and determines whether the independent
auditors have received satisfactory access to the Corporation's financial
records and full cooperation of corporate personnel in connection with their
audit of the Corporation's records. The Audit Committee met 4 times during 1994.
The present members are Messrs. Berkowitz (Chairman) and Woolard.
Executive Compensation and Benefits Committee: Develops and makes
recommendations to the Board of Directors with respect to the Corporation's
executive compensation policies; recommends to the Board of Directors the
compensation to be paid to executive officers; administers the Lynch Corporation
401(k) Savings Plan and Bonus Plan, as summarized on pages 8 through 9 of this
Proxy Statement; and performs such other duties as may be assigned to it by the
Board of Directors. The Executive Compensation and Benefits Committee met 3
times during 1994. The present members are Messrs. Woolard (Chairman), and Bell.
Executive Committee: Exercises all the power and authority of the Board of
Directors, except as otherwise provided by Indiana law or by the By-laws of the
Corporation, in the management affairs of the Corporation during inter-
3
<PAGE> 6
vals between meetings of the Board of Directors. The Executive Committee met
once and acted once by Unanimous Written Consent during 1994. The present
members are Messrs. Gabelli (Chairman), Boyle, Cerutti and Evanson.
The Corporation does not have a nominating committee. Nominations for
directors and officers of the Corporation are matters considered by the entire
Board of Directors.
COMPENSATION OF DIRECTORS
Directors, who are not otherwise employees, receive an annual retainer of
$10,000 and a fee of $1,000 for each Board of Directors meeting and each
committee meeting (which lasts for at least one hour) the Director attends. In
addition, a non-employee director serving as a committee chairman receives an
additional $2,000 payment. A director who is an employee of the Corporation is
not compensated for services as a member of the Board of Directors or any
committee thereof. In addition, the Corporation purchases accident and
dismemberment insurance coverage of $100,000 for each member of the Board of
Directors and maintains a liability insurance policy which provides for
indemnification of each Director (and officer) against certain liabilities which
each may incur in his capacity as such. The Corporation is considering the
advisability of arrangements for directors to obtain equity interests in the
Corporation.
See Transactions With Certain Affiliated Persons at page 12 for certain
payments and warrants granted by Spinnaker Industries, Inc. ("Spinnaker") to a
company affiliated with Mr. Boyle. Mr. Bell is also a director and a member of
the Compensation Committee of The Morgan Group, Inc. ("Morgan Group") and
received the normal compensation payable to directors and committee members
thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 1995, certain information
with respect to all persons known to the Corporation to each beneficially own
more than 5% of the Common Stock of the Corporation, which is the only class of
voting stock of the Corporation outstanding. The table also sets forth
information with respect to the Corporation's Common Stock beneficially owned by
the directors, by each of the executive officers named in the Summary
Compensation Table on page 6 of this Proxy Statement, and by all directors and
executive officers as a group. The number of shares beneficially owned is
determined under rules of the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares to which a
person has the sole or shared voting or investment power or any shares which the
person can acquire within 60 days (e.g., through exercise of stock options or
conversions of securities). Except as otherwise indicated, the shareholders
listed in the table have sole voting and investment powers with respect to the
Common Stock set forth in the table. The following information is either
reflected in Schedule 13Ds and 13Gs or Form 3s and Form 4s that have been filed
with the Securities and Exchange Commission or which has otherwise been
furnished to the Corporation.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER* OF BENEFICIAL OWNERSHIP OF CLASS
----------------- ----------------------- --------
<S> <C> <C>
Bruce A. Ritzenthaler 120,148(1) 8.7
Dimensional Fund Advisors, Inc. 84,800(2) 6.2
Mario J. Gabelli 336,250(3) 24.4
Bradley J. Bell 725(4) **
Morris Berkowitz 100 **
Richard J. Boyle 1,400(5) **
E. Val Cerutti 500(4) **
Paul J. Evanson 5,000 **
Paul P. Woolard 1,903 **
Michael J. Small 43,128(6) 3.0
Robert E. Dolan 235(7) **
All Directors and Executive
Officers as a group (eleven in total) 389,241 27.4
</TABLE>
4
<PAGE> 7
______________
* The address of each holder of more than 5% of the Common Stock is as
follows: Bruce A. Ritzenthaler--7-A West Jackson Avenue, Naperville, IL 60540;
Dimensional Fund Advisors--1299 Ocean Avenue, Santa Monica, CA 90401; and Mr.
Gabelli--Corporate Center at Rye, Rye, NY 10580.
** Represents holdings of less than one percent.
(1) Does not include 2,200 shares registered in the name of Mr.
Ritzenthaler's wife with respect to which Mr. Ritzenthaler disclaims beneficial
ownership. Mr. Ritzenthaler is a private investor.
(2) Because of its investment and/or voting power over shares of Common
Stock of the Corporation held in the accounts of its investment advisory
clients, Dimensional Fund Advisors, Inc., an investment adviser ("Dimensional"),
is deemed to be the beneficial owner of 85,200 shares. Dimensional disclaims
beneficial ownership of all such shares.
(3) Includes 315,846 shares of Common Stock owned directly by Mr. Gabelli
including 2,709 held for the benefit of Mr. Gabelli under the Corporation's
401(k) Savings Plan, and 20,000 shares of Common Stock owned by certain family
trusts.
(4) Jointly owned with wife and sharing voting and investment power.
(5) Includes 400 shares registered in the name of Mr. Boyle's wife with
respect to which Mr. Boyle shares voting and investment power.
(6) Represents options to purchase shares of Common Stock currently
exercisable or exercisable within 60 days.
(7) Includes 35 shares registered in the name of Mr. Dolan's children with
respect to which Mr. Dolan has voting and investment power.
______________
Spinnaker is a majority-owned subsidiary of the Corporation whose stock is
traded in the over-the-counter market and which is listed in the National
Association of Securities Dealers Automated Quotations (NASDAQ). Mr. Gabelli and
certain family trusts beneficially own 36,900 shares (2.2% of the outstanding
shares) of Spinnaker's Common Stock. He may also be deemed to be a beneficial
owner of 1,506,042 shares (83.2% of the outstanding shares) of Spinnaker's
Common Stock owned by the Corporation (through Lynch Manufacturing Corporation,
a wholly-owned subsidiary of the Corporation) by virtue of his ownership of
24.4% of the shares of the Common Stock of the Corporation. Mr. Gabelli,
however, specifically disclaims beneficial ownership of all shares of the Common
Stock of Spinnaker held by the Corporation. A company affiliated with Mr. Boyle
owns warrants to purchase 452,629 shares (20%) of Spinnaker Common Stock. Mr.
Evanson owns 1,500 shares of Spinnaker Common Stock. Mr. Dolan owns 750 shares
of Spinnaker Common Stock.
Morgan Group is a 47% owned subsidiary of the Corporation whose stock is
traded on the American Stock Exchange. Mr. Gabelli beneficially owns 10,000
shares (0.7%) of Morgan Group's Class A Common Stock. He may also be deemed to
be a beneficial owner of 1,447,208 shares of Morgan Group's Series A Redeemable
Preferred Stock owned by the Corporation and a beneficial owner of 1,200,000
shares of Morgan Group's Class B Common Stock owned by the Corporation, by
virtue of his ownership of 24.4% of the shares of Common Stock of the
Corporation owned by the Group Affiliates. Mr. Gabelli, however, specifically
disclaims beneficial ownership of all shares of Morgan Group stock held by the
Corporation. Mr. Bell beneficially owns 10,000 shares (0.7%) of Morgan Group's
Class A Common Stock, including options to acquire 8,000 shares.
Mr. Woolard owns 200 shares of Morgan Group's Class A Common Stock.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following tables set forth compensation received by the Corporation's
Chief Executive Officer and each of the other executive officers of the
Corporation for the last three fiscal years and certain information as to stock
options:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
NAME AND LONG TERM ALL OTHER
PRINCIPAL COMPENSATION AWARDS COMPENSATION
POSITION YEAR SALARY($) BONUS($)(1) STOCK UNDERLYING OPTIONS ($)(2)
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mario J. Gabelli 1994 150,000 0 -- 200
Chief Executive Officer,
Chairman of the Board 1993 150,000 250,000 -- 200
Chairman of the Executive
Committee 1992 150,000 100,000 -- 200
Michael J. Small3 1994 191,538 0 37,000 --
Office of the President
Robert E. Dolan 1994 140,096 0 -- 200
Chief Financial Officer 1993 125,096 50,000 -- 200
1992 104,469 15,000 -- 200
Robert A. Hurwich3 1994 107,538 0 -- --
Vice President-Administration,
Secretary, General Counsel
Joseph H. Epel 1994 90,000 0 -- 200
Treasurer 1993 85,012 9,000 -- 200
1992 83,164 4,000 -- 200
</TABLE>
_______________
(1) Bonuses earned during any fiscal year are generally paid during the
following fiscal year.
(2) The compensation reported represents contributions made by the
Corporation to the Lynch Corporation 401(k) Savings Plan. The amount of
perquisites, as determined in accordance with the rules of the Securities and
Exchange Commission relating to Executive Compensation did not exceed 10% of
salary and bonus for 1994.
(3) Messrs. Small and Hurwich joined the Corporation in January 1994, and
February 1994, respectively. Philip J. Lombardo, who by agreement served in the
Office of the President from January to June 1994, was paid $90,000 in 1994.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED
------------------------------------------------------------------------------ ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM
--------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
GRANTED FISCAL YEAR PRICE EXPIRATION
NAME (#) ($/SH) DATE 5%($) 10%($)
(A) (B) (C) (D) (E) (F) (G)
---- ------------ ---------------- ---------------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Small(1) 37,000 60%2 $23.125 1/18/99 236,393 522,369
</TABLE>
__________________
(1) The options set forth in the table were the first installment granted
to Mr. Small pursuant to an employment agreement for Mr. Small to serve in the
Office of the President. In addition, the employment agreement provides for two
additional option installments each for 12,256 shares, which will have exercise
prices equal to the closing prices of the Corporation stock on January 18, 1995
($33.25), and January 18, 1996, respectively, vest over a 12 month period from
the pricing date, and expire on January 17, 1999 (subject to earlier termination
in case of termination of employment).
(2) The remaining options granted in 1994 were to Philip J. Lombardo, who
by agreement served in the Office of President from January to June 1994. Those
options also have an exercise price of $23.125 per share and expire January 17,
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS/SARS AT
OPTIONS/SARS AT 12/31/94 12/31/94 ($)
SHARES ------------------------ -----------------------------
ACQUIRED
ON VALUE
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ($) ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
---- -------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Michael J. Small(1) -- -- 37,000 254,375
</TABLE>
____________________
(1) See Footnote 1 to the table "Options Granted in Last Fiscal Year."
In January 1994 the Corporation entered into a three-year employment
agreement with Michael J. Small to serve in the Office of President. Mr. Small
also became President and Chief Executive Officer of Lynch Multimedia
Corporation and receives a base salary of $200,000. If he is dismissed without
good cause during the term of the agreement, he is entitled to receive one
year's base salary, plus accrued bonuses.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND BENEFITS COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Executive Compensation and Benefits Committee ("Committee") of the
Board of Directors is responsible for developing and making recommendations to
the Board of Directors with respect to the Corporation's executive compensation
policies and administrating the various executive compensation plans. In
addition, the Committee recommends to the Board of Directors the annual
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Corporation, as well as to other key employees. The
Committee is comprised of two independent, non-employees who have no
interlocking relationships as defined by the Securities and Exchange Commission.
The objectives of the Corporation's executive compensation program are to:
o Support the achievement of desired Corporation performance.
o Provide compensation that will attract and retain superior talent and
reward performance.
o Ensure that there is appropriate linkage between executive compensation
and the enhancement of shareholder value.
o Evaluate the effectiveness of the Corporation's incentive arrangements.
The executive compensation program is designed to provide an overall level
of compensation opportunity that is competitive with companies of comparable
size, capitalization and complexity. Actual compensation levels, however, may be
greater or less than average competitive levels based upon annual and long-term
Company performance and specific issues peculiar to the Corporation, as well as
individual performance. The Committee uses its discretion to recommend executive
compensation at levels warranted in its judgment by corporate and individual
performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Corporation's executive officer compensation program is comprised of
base salary, cash bonus compensation, Executive Stock Purchase Loan Plan, Lynch
Corporation 401(k) Savings Plan, and other benefits generally available to
employees of the Corporation. In connection with recruiting for the Office of
the President in 1994, the Corporation also awarded stock options. See page 7 of
this Proxy Statement.
BASE SALARY
Base salary levels for the Corporation's executive officers are intended to
be competitive. In recommending salaries the Committee also takes into account
individual experience and performance and specific issues particular to the
Corporation. A summary of the compensation awarded to the Chief Executive
Officer and certain other executive officers is set forth in the "Summary
Compensation Table" on page 6 of this Proxy Statement.
BONUS PLAN
The Corporation has in place a bonus plan that is based on an objective
measure of corporate performance and on subjective evaluation of individual
performance for its executive officers and other key personnel. In general, the
plan provides for an annual bonus pool equal to 20% of the excess of (i) the
consolidated pre-tax profits of the Corporation for a calendar year over (ii)
25% of the Corporation's shareholders' equity at the beginning of such year
8
<PAGE> 11
adjusted for dividends paid during the year. The Executive Compensation and
Benefits Committee at its discretion may take into consideration other factors
and circumstances in awarding bonuses such as progress toward achievement of
strategic goals and qualitative aspects of management performance. A summary of
bonuses awarded to the Chief Executive Officer and certain other executive
officers is set forth in the "Summary Compensation Table" on page 6 of this
Proxy Statement. No bonuses were awarded to executive officers for 1994.
EXECUTIVE STOCK PURCHASE LOAN PLAN
In December 1994, the Corporation adopted the Executive Stock Purchase Loan
Plan ("Stock Loan Plan"). The Stock Loan Plan is intended to encourage stock
ownership in the Corporation by its executive officers. The Corporation may loan
up to one hundred percent (100%) of the purchase price of the shares to officers
of the Corpora-tion selected by the Chairman of the Board (who is not eligible
to participate). The maximum amount of loans under the Stock Loan Plan is
$100,000 per year ($30,000 per officer per year) and $200,000 in total, which
amounts may be increased by the Board of Directors. Loans will bear interest
(currently 6.34% per annum) and will be collateralized by the shares so acquired
until the loan has been repaid. The shares may be put to the Corporation in full
satisfaction of the loan principal. To date, no such loans have been made to any
individual under the Stock Loan Plan. The Stock Loan Plan replaces the Executive
Stock Purchase Program with respect to the Corporation's Common Stock (which had
not been utilized) and Convertible Debentures (pursuant to which Messrs. Dolan
and Epel had each purchased in 1991 $55,000 principal amount of Debentures with
the assistance of a $22,344 loan).
LYNCH CORPORATION 401(K) SAVINGS PLAN
All employees of the Corporation and its subsidiaries are eligible to
participate in the Lynch Corporation 401(k) Savings Plan, other than those
employed in the Corporation's telephone operations, Brown-Bridge, and those
covered by a collective bargaining agreement, after having completed one year of
service (as defined in the Plan) and having reached the age of 18.
The 401(k) Plan permits employees to make contributions by deferring a
portion of their compensation. Participating employees also share in
contributions made by their respective employers. The annual mandatory employer
contribution to each participant's account is equal to 25% of the first $800 of
the participant's contribution. In addition, the employer may make a
discretionary contribution of up to 75% of the first $800 of the participant's
contribution. No such discretionary contribution was made in 1994. A
participant's interest in both employee and employer contributions and earnings
thereupon are fully vested at all times.
Employee and employer contributions are invested in guaranteed investment
contracts, certain mutual funds or Common Stock of the Corporation, as
determined by the participants. With respect to the individuals listed in the
Summary Compensation Table, employer contributions of $200 were paid to the
accounts of each of Messrs. Gabelli, Dolan, and Epel, and each of such
individuals had the following amount deferred under the Plan during 1994, which
amounts have been included for such individual in the Summary Compensation
Table: Mr. Gabelli, $9,240; Mr. Dolan, $9,240; and Mr. Epel $990.
BENEFITS
The Corporation provides medical life insurance and disability benefits to
the executive officers (excluding Mr. Gabelli) that are generally available to
Corporation employees. The amount of perquisites, as determined in accordance
with the rules of the Securities and Exchange Commission relating to executive
compensation, did not exceed 10% of salary and bonus for fiscal 1994.
9
<PAGE> 12
CHIEF EXECUTIVE OFFICER COMPENSATION
The following table sets forth compensation received by Mr. Gabelli since
1986 when Mr. Gabelli became Chairman and Chief Executive Officer of the
Corporation:
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Salary 0 0 60,000 90,000 90,000 90,000 150,000 150,000 150,000
Bonus 0 0 30,000 0 0 0 100,000 250,000 0
</TABLE>
After considering improved financial performance as reflected by the
increase in private market value, as well as public market value and improved
return on shareholder equity, the Committee recognizes that Mr. Gabelli's 1991
and prior years' compensation is materially below that of chief executive
officers of comparable companies, even after considering that Mr. Gabelli's
service to the Corporation is not full time. In addition, the Committee wants to
make more of Mr. Gabelli's compensation "at risk" through use of bonus or other
incentive pay. Accordingly, the Committee kept Mr. Gabelli's salary for 1994 at
its 1993 and 1992 level, and continues to study alternatives to provide Mr.
Gabelli and the executive staff with incentive compensation to maximize the
intrinsic value of the Corporation's assets, as well as the market price of the
Corporation's stock and properly recognize the role of leadership in developing
existing businesses and in making strategic acquisitions. The Corporation had a
good year in 1994 and executive officers, including Mr. Gabelli, made
substantial contributions to the Corporation's performance. However, the bonus
formula described earlier did not produce a bonus pool for the corporate staff
in 1994, and no bonuses were awarded.
Paul P. Woolard, Chairman
Bradley J. Bell
Members of the Executive Compensation
and Benefits Committee
10
<PAGE> 13
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock of the Corporation for the last five fiscal years ended December
31, 1994 with the cumulative total return on the broad market as measured by the
American Stock Exchange Market Value Index, and the peer group, as measured by
the Amex Service Industry Subindex over the same period (assuming the investment
of $100 in the Corporation's Common Stock, and each of the indexes on December
31, 1989, and reinvestment of all dividends).
INVESTMENT OF $100 ON DECEMBER 31, 1989
WITH REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
MEASUREMENT
(FISCAL YEAR COVERED) LYNCH BROAD PEER
<S> <C> <C> <C>
1989 100 100 100
1990 58.1 81.51 78.68
1991 64.29 104.51 111.1
1992 99.05 105.62 120.76
1993 87.62 126.23 157.78
1994 114.29 114.73 132.08
</TABLE>
11
<PAGE> 14
TRANSACTIONS WITH CERTAIN AFFILIATED PERSONS
On January 19, 1994, Mr. Gabelli purchased 100,000 shares of Common Stock
from the Corporation at $22.875 per share, the closing price of the stock on
American Stock Exchange on that date, for a total consideration of $2,287,500,
which was described in the Corporation's 1994 Proxy Statement and ratified by
shareholders at the 1994 Annual Meeting held on May 5, 1994. Mr. Gabelli is
affiliated with various entities which he directly or indirectly controls and
which are engaged in various aspects of the securities business, such as an
investment advisor to various institutional and individual clients including
registered investment companies and pension plans, as a broker-dealer, and as
managing general partner of various private investment partnerships. During
1994, the Corporation and its subsidiaries engaged in various transactions with
certain of these entities and the amount of commissions, fees, and other
remuneration paid to such entities was less than $60,000. Pursuant to Indiana
law and the Corporation's Articles of Incorporation, the Corporation reimbursed
Mr. Gabelli for legal fees of $391,575 incurred in connection with a regulatory
inquiry.
In June 1994, Spinnaker and a company affiliated with Mr. Boyle ("BF")
entered into a Management Agreement (the "Management Agreement"), pursuant to
which BF agreed to provide to Spinnaker operations management, strategic
planning, acquisition analysis and implementation, investment banking and
financial advisory services and supervision of Spinnaker's financial reporting
and regulatory obligations. Mr. Boyle, a director of the Corporation, is a
director, chief executive officer and a principal owner of BF and pursuant to
the Management Agreement became a director and Chairman of the Board of
Spinnaker.
The Management Agreement has an initial term of one year, and is
automatically renewable for a term of one additional year unless either party
gives notice of termination not less than 90 days prior to the end of the first
anniversary of the Agreement. Thereafter, the Agreement is terminable on 90
days' notice by either party. The Management Agreement provided that BF will
receive an initial management fee of $200,000 per year ($111,667 in 1994), plus
reimbursement of expenses (including expenses incurred in connection with
negotiating the arrangements).
Spinnaker and BF also entered into a Warrant Purchase Agreement (the
"Warrant Purchase Agreement"), pursuant to which BF received a Warrant (the "A
Warrant") to purchase 452,629 shares of Common Stock of Spinnaker for a price of
$4.00 per share (adjusted for the three for two stock split in December 1994) on
or before June 10, 1999. BF may also receive a warrant to purchase 300,000
additional Spinnaker shares at $13.33 per share (adjusted for the stock split)
under certain circumstances.
When Spinnaker acquired an 80.1% interest in Brown-Bridge Industries, Inc.,
an acquisition opportunity developed by BF prior to entering into the Management
Agreement, certain affiliates of BF loaned Spinnaker $322,000 at an interest
rate of 18% to help Spinnaker fund its portion of Spinnaker's acquisition and
acquired 6.2% of the Brown-Bridge stock on the same terms and conditions as
Spinnaker. Those affiliates can require Brown-Bridge or Spinnaker to purchase
their Brown-Bridge stock interest between September 1998 and September 2000 at
75% of the then fair market value thereof, with Spinnaker having the option to
issue its stock therefor.
Mr. Lombardo, who by agreement served as a member of the Office of the
President from January to June 1994, has an 80% interest in a partnership and a
51% interest in a corporation, each of which owns and operates a television
station in which the Corporation has 20% and 49% interests, respectively. The
first station was purchased in 1987, and the second station was purchased on
March 1, 1994 pursuant to a contract entered into in 1992. In 1994 the
Corporation loaned the corporation, pursuant to the preexisting contract, $13
million to fund the purchase of the second television station, of which $11
million had been repaid by December 31, 1994. The largest aggregate principal
amount outstanding from the entities to the Corporation was approximately $15.6
million at March 15, 1994 at a weighted average interest rate of approximately
11.4%.
12
<PAGE> 15
INDEPENDENT AUDITORS
Representatives of Ernst & Young, LLP, the Corporation's auditors for 1994,
are expected to be available at the Annual Meeting with the opportunity to make
a statement if they desire to do so and to answer appropriate questions. The
Corporation has not yet selected a principal auditor for 1995. As the
Corporation has occasionally done in the past, it is considering whether to
interview other major independent auditing firms, in addition to Ernst & Young,
for the position for 1995. In March 1994, the Morgan Group, a publicly traded
subsidiary of the Corporation, appointed Arthur Andersen LLP to replace Ernst &
Young as its independent auditors for 1994.
SECTION 16(A) REPORTING
Section 16(a) of the Securities and Exchange Acts of 1934, as amended,
requires the Corporation's directors, executive officers and holders of more
than 10% of the Corporation's Common Stock to file with the Securities and
Exchange Commission and American Stock Exchange initial reports of ownership and
reports of changes in the ownership of Common Stock and other equity securities
of the Company. Such persons are required to furnish the Corporation with copies
of all Section 16(a) filings. Based solely on the Corporation's review of the
copies of such filings it has received and written representations of directors
and officers, the Corporation believes that during the fiscal year ended
December 31, 1994, its officers, directors, and 10% shareholders are in
compliance with all Section 16(a) filing requirements applicable to them, except
with respect to the redemption in October 1994 of convertible debentures held by
certain family trusts of which Mr. Gabelli is trustee. Although all the
transactions of these trusts were included in Mr. Gabelli's individual filing,
which was filed in a timely manner in November 1994, separate reports for each
trust were inadvertently not filed until January 1995.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1996 Annual
Meeting of Shareholders must be received by the Office of the Secretary, Lynch
Corporation, 8 Sound Shore Drive, Greenwich, Connecticut 06830, by no later than
December 13, 1994, for inclusion in the Corporation's proxy statement and form
of proxy relating to the 1995 Annual Meeting.
MISCELLANEOUS
The Board of Directors knows of no other matters which are likely to come
before the Annual Meeting. If any other matters should properly come before the
Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote on such matters in accordance with their best judgment.
The solicitation of proxies is made on behalf of the Board of Directors of
the Corporation, and the cost thereof will be borne by the Corporation. The
Corporation has employed the firm of Morrow & Co. Inc., 345 Hudson Street, New
York, New York, 10014 to assist in this solicitation at a cost of $3,500, plus
out-of-pocket expenses. The Corporation will also reimburse brokerage firms and
nominees for their expenses in forwarding proxy material to beneficial owners of
the Common Stock of the Corporation. In addition, officers and employees of the
Corporation (none of whom will receive any compensation therefor in addition to
their regular compensation) may solicit proxies. The solicitation will be made
by mail and, in addition, may be made by telegrams and personal interviews, and
the telephone.
13
<PAGE> 16
ANNUAL REPORT
The Corporation's Annual Report to Shareholders for the fiscal year ended
December 31, 1994, has been sent herewith to each shareholder. Such Annual
Report, however, is not to be regarded as part of the proxy soliciting material.
By Order of the Board of Directors
ROBERT A. HURWICH
Secretary
Dated: April 10, 1995
14
<PAGE> 17
LYNCH CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of LYNCH CORPORATION (the "Corporation") hereby
appoints Joseph H. Epel and Robert A. Hurwich, or any one of them (each with
power to act alone and with power of substitution), Proxies of the undersigned,
with authority to vote at the Annual Meeting of Shareholders of the Corporation
to be held May 18, 1995 and at any adjournments thereof, all the shares of
Common Stock of the Corporation which the undersigned would be entitled to vote
if then personally present, upon the matter specified hereon, and, in their
discretion, upon such other matters that may properly come before the Annual
Meeting, and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BY THE SHAREHOLDER, BUT IF NO INSTRUCTIONS ARE GIVEN, THIS
PROXY WILL BE VOTED FOR THE FOLLOWING NOMINEES FOR DIRECTOR.
(continued and to be signed on reverse side)
- - --------------------------------------------------------------------------------
LYNCH CORPORATION
1. ELECTION OF DIRECTORS DULY NOMINATED:
FOR WITHHOLD Bradley J. Bell, Morris Berkowitz, Richard J. Boyle,
E. Val Cerutti, Paul J. Evanson, Mario J. Gabelli and
Paul P. Woolard. (INSTRUCTION: To withhold authority
to vote for one or more individual nominees, write
such name or names on the space provided below.)
[] [] ------------------------------------------------------
Please sign exactly as your name appears on this Proxy. All joint owners must
sign. When acting as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized person. If a partnership, please sign in
full partnership name by authorized person.
Dated:_________________________________________, 1995
_______________________________________________(L.S.)
(Signature of Shareholder)
_______________________________________________(L.S.)
(Signature of Shareholder)
PLEASE DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
- - --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
