<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
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 Section 240.14a-11(c) or Section 240.14a-12
SUMMA INDUSTRIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
SUMMA INDUSTRIES
1600 West Commonwealth Avenue
Fullerton, California 92633
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1995
To the Holders of Common Stock of SUMMA INDUSTRIES:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SUMMA
INDUSTRIES will be held at The Holiday Inn, 222 West Houston Avenue, Fullerton,
California 92632 on December 14, 1995 at 10:00 a.m., Pacific Standard Time, for
the following purposes:
1. To consider and vote upon a proposal to approve the Company's 1995
Stock Option Plan pursuant to which options to purchase up to 250,000
shares of the Company's Common Stock may be granted to directors,
officers and employees of, and consultants to, the Company.
2. To elect four (4) directors. Four (4) directors will continue for the
second year of their two (2) year term.
3. To transact such other business as may properly come before the Annual
Meeting and any continuation or adjournment thereof.
The Board of Directors has fixed the close of business on October 19, 1995
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting, and only shareholders of record at the
close of business on that date will be entitled to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. YOU ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING PRE-ADDRESSED, STAMPED ENVELOPE. Your proxy will not
be used if you are present at the Annual Meeting and desire to vote your shares
personally.
By Order of the Board of Directors
/s/ PAUL A. WALBRUN
_______________________________________
Paul A. Walbrun
Secretary
Fullerton, California
October 25, 1995
IMPORTANT: IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED SO THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED. PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY. NO POSTAGE REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE>
SUMMA INDUSTRIES
1600 West Commonwealth Avenue
Fullerton, California 92633
----------------------------------
PROXY STATEMENT
----------------------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 14, 1995
This Proxy Statement is being furnished to the shareholders of SUMMA
INDUSTRIES, a California corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Shareholders of the Company to be held at The Holiday Inn, 222
West Houston Avenue, Fullerton, California 92632 on December 14, 1995 at 10:00
a.m., Pacific Standard Time, and at any continuation or adjournment thereof.
This Proxy Statement, and the accompanying Notice of Annual Meeting and proxy
card, are first being mailed to shareholders on or about October 25, 1995. The
cost of soliciting proxies will be borne by the Company. In addition to the
solicitation of proxies by mail, solicitation may be made by telephone,
telegraph or personal interview by Directors, officers and other regular
employees of the Company, without extra compensation. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares and will be reimbursed
for their expenses.
VOTING RIGHTS
As of October 19, 1995, the record date for the determination of the
shareholders of the Company entitled to notice of and to vote at the Annual
Meeting, there were 1,541,930 shares of the Company's Common Stock outstanding.
Each share entitles the holder to one vote on each matter to come before the
Annual Meeting. In accordance with the Company's restated Articles of
Incorporation, there will be no cumulative voting for the election of directors.
The four nominees receiving the highest number of votes at the Annual Meeting
will be elected. In the event that anyone other than the four nominees listed
below should be nominated for election as a director, the persons named in the
accompanying proxy will have the authority, to be exercised in their discretion.
Properly executed and returned proxies, unless revoked, will be voted as
directed by the shareholder or, in the absence of such direction, by the persons
named therein FOR the approval of the 1995 Stock Option Plan and FOR the
election of the 4 director nominees listed below. As to any other business
which may properly come before the Annual Meeting, the proxyholders will vote in
accordance with their best judgment. A proxy may be revoked at any time before
it is voted by delivery of written notice of revocation to the Secretary of the
Company or by delivery of a subsequently dated proxy, or by attendance at the
Annual Meeting and voting in person. Attendance at the Annual Meeting without
also voting will not in and of itself constitute the revocation of a proxy.
1
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information regarding the ownership of the
Company's Common Stock as of October 19, 1995, by each of the directors of the
Company, by each person or group known by the Company to be the beneficial owner
of more than 5% of the Company's outstanding Common Stock, and by all directors
and executive officers of the Company as a group. Except as otherwise noted and
subject to community property laws where applicable, each beneficial owner has
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Shares
------------
Beneficially Percent of
Name and Address of ------------ -----------
Beneficial Owner Owned Class /(1)/
- ------------------- ------------ -----------
<S> <C> <C>
Esther G. Smoot 86,250 5.6
224 Vista Court
Yountville, California 94599
Catherine M. Samuelson/(2)/ 83,883 5.4
545 Laguna Road
Pasadena, California 91105
Luis A. and Jacqueline E. Hernandez 81,000 5.3
3060 Gainsborough Road
Pasadena, CA 91107
Coalson C. Morris/(3)/ 8,445 0.5
Dale H. Morehouse/(3)//(4)//(5)/ 97,122 6.3
Michael L. Horst/(3)/ 8,606 0.6
William R. Zimmerman/(3)/ 7,525 0.5
James R. Swartwout/(3)/ 65,740 4.3
David McConaughy/(3)/ 10,000 0.6
Karl V. Palmaer/(3)//(6)/ 120,957 7.8
Byron C. Roth/(3)/ 7,500 0.5
All directors and officers as a 325,894 21.1
group/(3)/
</TABLE>
- --------------
/(1)/ The percentages shown include shares which each named shareholder has the
right to acquire within 60 days of the date hereof. In calculating
percentage ownership, all shares which a named shareholder has the right
to so acquire are deemed outstanding for the purpose of computing the
percentage ownership of that shareholder, but are not deemed outstanding
for the purpose of computing the percentage ownership by any other
shareholder.
/(2)/ Held as Trustee for the Catherine M. Samuelson Trust.
/(3)/ Includes currently exercisable stock options.
/(4)/ Includes shares held as Trustee for the Morehouse Family Revocable
Living Trust.
/(5)/ Includes shares held as Trustee for Dale H. Morehouse, Inc. Defined
Benefit Pension Trust.
/(6)/ Includes shares reserved but not yet issued, pursuant to the acquisition
of KVP Systems, Inc.
2
<PAGE>
APPROVAL OF 1995 STOCK OPTION PLAN
Description of the 1995 Stock Option Plan.
- ------------------------------------------
Under the Company's existing 1984 and 1991 Stock Option Plans, only 14,875
shares of Common Stock remain available for the grant of options. See
"Compensation of Executive Officers and Directors - Stock Option Plans". The
Company's Board of Directors believes it to be in the best interests of the
Company and its stockholders to increase the number of shares available for the
grant of options to provide incentives to officers and other key employees of
the Company to remain with and increase their efforts on behalf of the Company,
and to enable the Company's management to grant options to non-employee
directors, consultants, major vendors and others expected to provide significant
services to the Company. Accordingly, the 1995 Stock Option Plan (the "1995
Plan") was unanimously adopted by the Company's Board of Directors on October
18, 1995, and is being submitted to the Company's stockholders at the Annual
Meeting for their approval.
Subject to typical anti-dilution provisions for stock splits, stock dividends,
and the like, the 1995 Plan authorizes the grant of options to purchase an
aggregate of up to 250,000 additional shares of the Company's Common Stock. As
of October 19, 1995 the aggregate market value of these 250,000 shares of
Common Stock was $937,500, based upon the closing sale price of the Common Stock
on that date as reported on the NASDAQ National Market System. If an option
granted under the 1995 Plan expires or terminates, the shares subject to any
unexercised portion of that option will again become available for the issuance
of further options under the 1995 Plan. Options may be granted under the 1995
Plan Company which are intended to qualify as "incentive stock options" under
Section 422A of the Code ("Incentive Stock Options") or, alternatively, as stock
options which will not so qualify ("Nonstatutory Options"). The 1995 Plan will
terminate on October 18, 2005, and no options may be granted under the 1995 Plan
thereafter. As of the date of this Proxy Statement, no options had been granted
under the 1995 Plan.
The 1995 Plan will be administered by a the Board of Directors, or by a
committee consisting of at least three members of the Board of Directors who
have been appointed by the Board (the "Committee"). The Board or the Committee,
as the case may be, will have the authority to select the persons to receive
options granted under the 1995 Plan, the extent of their participation, and the
terms and conditions of each option, subject to certain limitations set forth in
the 1995 Plan. Full-time officers and employees of the Company or its divisions
and subsidiaries are eligible to be granted Incentive Stock Options under the
1995 Plan. No director who is not also a full time employee of the Company will
be eligible to receive Incentive Stock Options. In addition, full and part time
employees, officers, non-employee directors, consultants, major vendors, and
others expected to provide significant services to the Company may be granted
Nonstatutory Options under the 1995 Plan. The Company presently employs
approximately 168 persons on a full-time basis, all of whom except for the
members of the Committee, if there be one, will be eligible for selection as
participants in the 1995 Plan.
Options granted under the 1995 Plan will become exercisable in accordance with
the terms of the grant made by the Board or the Committee, as set forth in a
written stock option agreement to be entered into by all participants receiving
options granted under the 1995 Plan. The Board or the Committee will have
discretionary authority to select participants from among eligible persons and
to determine at the time an option is granted whether it is intended to be an
Incentive Stock Option or a Nonstatutory Option, and when and in what increments
shares covered by the option may be purchased. Options may be granted on terms
providing that they will be exercisable either in whole or in part at any time
or times during their respective terms, or only in specified percentages at
stated time periods or intervals during the term of the option. While the 1995
Plan does not limit the number of shares as to which options may be granted to
any one participant (including executive officers and directors of the Company),
it does provide that no employee may be granted Incentive Stock Options which
first become exercisable in any calendar year to purchase shares of Common Stock
having a fair market value (determined at the time of the grant of the option)
in excess of $100,000, reduced by the fair market value (similarly determined)
of any shares subject to incentive stock options granted under any other plan of
the Company which also become exercisable in such calendar year.
3
<PAGE>
The Board or Committee may in its discretion also include in a stock option
agreement a provision making the exercise price of any option granted under the
1995 Plan payable in full (i) by cash, by surrender of shares of the Company's
Common Stock having a market value equal to the aggregate exercise price of all
shares to be purchased, by cancellation of indebtedness owed by the Company to
Optionee, or by any combination of the foregoing, or (ii) by a full recourse
promissory note executed by the optionee. If payment is made by means of a
promissory note, the shares purchased generally would be held in pledge to
secure payment of the note. Unless and until the purchaser defaulted under the
promissory note or governing instruments, the shares so pledged would remain
registered in the name of the purchaser, and the purchaser would be entitled to
vote the shares and to receive all dividends and any other amounts accruing as a
result of his or her ownership of such shares.
If an optionee's employment is terminated other than for cause, the employee
will have the right to exercise his option to the extent then exercisable, at
any time within a three (3) month period thereafter, to the extent he was
entitled to exercise the option prior thereto. If an optionee dies while still
employed, or within the period of time after his voluntary retirement specified
in his option agreement, the option may be exercised at any time within twelve
(12) months thereafter by his estate of by the person or persons to whom his
rights under the option passed by will or the laws of descent or distribution,
but only to the extent such option was exercisable by him on that date. The
Board of Directors or the Committee may accelerate the time at which options may
be exercised. Options granted under the 1995 Plan will not be transferable
except by will and the laws of descent and distribution. During the life of the
person to whom the option is granted, that person alone may exercise it.
Within the limits of the 1995 Plan, the Board or Committee may also modify,
extend or renew outstanding options or accept the cancellation of outstanding
options (to the extent not previously exercised) for the granting of new options
in substitution therefor. However, no modification of an option which alters or
impairs any rights or obligations under any option previously granted may be
made without the consent of the optionee.
For employees holding more than ten percent (10%) of the total combined voting
power of all classes of outstanding stock, the purchase price of each option
granted under the 1995 Plan cannot be less than 110% of the fair market value
per share of the Company's Common Stock subject thereto on the date of the
grant. For all other participants, the option exercise price may not be less
than the fair market value per share of the Company's Common Stock subject
thereto on the date of the grant in the case of Incentive Stock Options, nor
less than 85% of the fair market value per share of the Company's Common Stock
on the date of grant in the case of Nonstatutory Options. Upon exercise of an
option, the exercise price shall be payable to the company in full. The fair
market value per share will generally be the closing bid quotation for a share
of the Company's Common Stock on the date an option is or was granted under the
1995 Plan. If there is no market price available on such date, the fair market
value per share will be determined on the basis of factors deemed relevant by
the Committee, including without limitation the book value of the shares on such
date and the earnings of the Company.
The Board of Directors may, without affecting any outstanding options, from
time to time revise or amend the 1995 Plan, and may suspend or discontinue it at
any time. However, no such revision or amendment may either increase the number
of shares subject to the 1995 Plan (with the exception of adjustments resulting
from changes in capitalization) or change the class of participants eligible to
receive options granted under the 1995 Plan without shareholder approval.
In the event that the Company should elect to dissolve, merge or consolidate
with any other corporation, sell substantially all of its assets to another
person or entity, or enter into any other reorganization in a transaction in
which the Company is not the surviving corporation, the date of exercisability
of each option outstanding under the 1995 Plan will be accelerated to a date
prior to such transaction unless provision is made in connection with such
transaction for the assumption of the option or substitution of new options with
appropriate adjustments by the surviving corporation.
The foregoing description of the 1995 Plan is only a summary of the principle
terms of the 1995 Plan, does not purport to be complete, and reference is made
to the 1995 Plan which sets forth in detail all of the terms and conditions upon
which options can be granted thereunder. A complete copy of the 1995 Plan will
be provided without charge, upon written or oral request, to any shareholder to
whom this Notice of Annual Meeting and Proxy Statement is being sent, addressed
to Corporate Secretary, SUMMA INDUSTRIES, 1600 West Commonwealth Avenue,
Fullerton, California 92633; telephone (714) 738-5000.
4
<PAGE>
Federal Income Tax Consequences of the 1995 Plan.
- -------------------------------------------------
Except under the circumstances described below, neither the grants nor the
exercise of an Incentive Stock Option will result in the recognition of taxable
income to the Optionee. Correspondingly, the Company will not be entitled to a
deduction for federal income tax purposes either at the time an Incentive Stock
Option is granted or when the optionee exercises the Incentive Stock Option or
subsequently sells the option shares.
If the optionee does not dispose of the shares acquired upon exercise of an
Incentive Stock Option until at least two years after the date the option was
granted and at least one year after the date of exercise of the option, any gain
on the sale will be taxed to the optionee as long-term capital gain. However,
the excess of the market value of the shares of Common Stock acquired upon
exercise over the option exercise price constitutes an "item of tax preference"
which is subject to the "alternative minimum tax" provisions of the Internal
Revenue Code, unless the disposition of the shares received upon exercise
results in ordinary income to the optionee.
If an optionee disposes of shares acquired upon the exercise of an Incentive
Stock Option granted under the 1995 Plan sooner than two years after the date of
grant, or within one year after exercise of the option, any gain realized will
generally be taxed as ordinary income in the year of such disposition, in an
amount equal to the difference between the exercise price and either the value
of the shares at the time of exercise or the sale price, whichever is less. The
balance of the optionee's gain, if any, on the disposition of the shares will be
taxable as long-term capital gain, provided the holding period for long-term
capital assets, currently six months, has been satisfied. On any disposition of
shares which does not qualify for incentive stock option treatment under the
Internal Revenue Code, the Company will be entitled to a deduction for federal
income tax purposes equal to the amount of ordinary income taxed to the
optionee.
At the time of the grant of a Nonstatutory Option, the optionee will recognize
no taxable income, and the Company will not be entitled to a deduction, as long
as such options are not actively traded on an established market and their fair
market value cannot otherwise be measured with reasonable accuracy. However,
upon the exercise of a Nonstatutory Option the optionee will recognize taxable
income in the amount by which the then fair market value of the shares of the
Company's Common Stock acquired upon exercise exceeds the aggregate exercise
price therefor, with the Company being entitled to a compensation deduction for
federal income tax purposes in an equal amount. The amount of such taxable
income will be characterized as compensation income to the optionee. Persons
that may be subject to the application of the provisions of Section 16(b) are
subject to certain additional rules.
Upon subsequent disposition of shares of Common Stock acquired upon exercise
of a Nonstatutory Option, the optionee will recognize capital gain or loss in an
amount equal to the difference between the proceeds received upon disposition
and the basis for the shares (the basis being equal to the sum of the price paid
for the shares upon exercise and the amount of ordinary income recognized on
account thereof), provided that the shares were held as a capital asset. Any
capital gain or loss to the optionee will be characterized as long or short
term, depending upon whether the holding period for long-term capital gain
treatment, currently six months, has been met.
Recommendation
- --------------
The Company's Board of Directors has unanimously recommended that the
Company's stockholders vote FOR approval of the 1995 Plan. Approval of the 1995
Plan by the Company's stockholders will require the affirmative vote of the
holders of a majority of the shares of Common Stock represented in person or by
proxy at the Annual Meeting and entitled to vote. As of the record date for the
Annual Meeting, the Company's management and nominees for election to the Board
at the Annual Meeting, owned or had voting control over an aggregate of 237,770
shares, or approximately 15% of the outstanding shares, of the Company's Common
Stock. Each of these individuals has indicated his intention to vote all of his
respective shares in favor of approval of the 1995 Plan. Accordingly, approval
of the 1995 Plan by the stockholders of the Company will require the affirmative
vote of 533,196 additional shares of Common Stock.
5
<PAGE>
ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting. The persons named in
the accompanying proxy will vote for the persons hereafter named to serve as
directors for a term of two years, or until their successors are duly elected
and qualified. Although it is not presently contemplated that any nominee will
decline or be unable to serve as a Director, in either such event, the proxies
will be voted by the proxy holders for such other persons as may be designated
by the present Board of Directors.
NOMINEES
The following table sets forth certain information regarding each of the four
nominees of the Board of Directors for election as a director at the Annual
Meeting. Directors are nominated to serve for two years.
<TABLE>
<CAPTION>
Name Positions with SUMMA INDUSTRIES Age
- ---- ------------------------------- ---
<S> <C> <C>
Dale H. Morehouse Director, Former Chairman of the Board of 62
the Company
William R. Zimmerman Director 68
David McConaughy Director, Audit Committee Member 63
Byron C. Roth Director, Audit Committee Member 32
</TABLE>
CONTINUING DIRECTORS
The following table sets forth certain information regarding each of the four
directors whose terms expire in December 1996.
<TABLE>
<CAPTION>
Positions with SUMMA INDUSTRIES
-------------------------------
<S> <C> <C>
Coalson C. Morris Director 79
Michael L. Horst Director, Audit Committee Member 49
James R. Swartwout Chairman, Chief Executive Officer, Chief 49
Financial Officer
Karl V. Palmaer Director, Technical Consultant 74
</TABLE>
6
<PAGE>
Coalson C. Morris has been a director of the Company since 1968. He currently
serves as Chairman of the Board of PMC Mortgage Corporation.
Dale H. Morehouse has been a director of the Company since 1975. He served as
Chairman of the Board and Chief Executive Officer of the Company from February
1987 until his retirement in August 1990. He held several offices with the
Company from 1983 to 1987. Mr. Morehouse currently manages a medical
information services business in Northern California.
Michael L. Horst has been a director of the Company since 1978. He is an
independent consultant specializing in strategic planning in real estate. He
was formerly a Senior Vice President of PBR, a community planning consulting
firm. In addition, Mr. Horst is a founding principal of International Tourism
and Resort Advisors, a resort development consulting firm, serves as a lecturer
at the University of Southern California, and is a founder of Shenoa, a retreat
and learning center.
William R. Zimmerman, the President of Zimmerman Holdings, Inc., a private
investment company, has served on the Board of the Company since 1987. He is a
former executive officer of Monogram Industries, Inc., Swedlow, Inc. and Avery
International.
James R. Swartwout has been Chairman of the Board of Directors since August
1990, and Chief Executive Officer since July 1990. Prior to that he was
President and Chief Operating Officer since August 1989. He joined the Company
in October 1988 as its Executive Vice President and Chief Operating Officer.
Before joining the Company, Swartwout was a principal in a private leveraged
buyout venture. From April, 1985 to October, 1988, Mr. Swartwout was Executive
Vice President of Delphian Corporation, Sunnyvale, CA, a manufacturer of
analytical instruments, and had held management positions at Farr Company, El
Segundo, California, a manufacturer of industrial filtration systems and
filters.
David McConaughy has been on the Board of the Company since 1990. Mr.
McConaughy is currently the majority owner and President of Data Management
Resources, which supplies and maintains integrated business management systems.
Previously, Mr. McConaughy, who holds a PhD. in Administrative Science and
Economics, was on the faculty of the University of Southern California Graduate
School of Business, and has had a strategic planning consulting practice.
Karl V. Palmaer is a founder of KVP Systems, Inc., and has been a director
since 1993. Mr. Palmaer is active as a technical consultant to the Company.
Byron C. Roth is President of Cruttenden Roth, Investment Bankers, since 1993.
Previously, he was Managing Director of Corporate Finance, there. Prior to
joining Cruttenden, Mr. Roth was Vice President, Corporate Finance, with R.G.
Dickinson and Company.
Dale H. Morehouse and Michael L. Horst are cousins. Karl V. Palmaer is the
father of Eric K. Palmaer, a Vice President of the Company. There are no family
relationships among any of the other executive officers or directors of the
Company.
SPECIAL COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors has an Audit Committee consisting of Messrs.
McConaughy, Horst, and Roth. There are no other committees.
The function of the Audit Committee is to advise the Board on audit matters
affecting the Company, including recommendations as to the appointment of
independent auditors of the Company and reviewing with such auditors the scope
and results of their examination of the financial statements of the Company.
During the fiscal year ended August 31, 1995, this Committee held one meeting
attended by all members.
The Board of Directors met four times during the fiscal year ended August 31,
1995. Each nominee who is an incumbent Director attended at least 75% of the
total of all meetings held during the year by the Board of Directors.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the information regarding
compensation for services in all capacities paid or accrued for the fiscal years
indicated by the Company to the Company's Chief Executive Officer. No other
executive officer of the Company or any of its subsidiaries received cash
compensation in excess of $100,000 for the fiscal year ended August 31, 1995.
<TABLE>
<CAPTION>
Long Term
Compensation
Name and Principal Stock Awards All Other
Position Year Salary ($) Bonus ($) Awards/(1)/ Options (#) Compensation ($)/(2)/
- ----------------------------- ---- ---------- --------- ----------- ------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Swartwout, 1995 132,083 26,250 23,750 --- 9,150
Chairman, CEO 1994 121,792 33,600 12,000 --- 8,934
1993 114,000 40,000 --- --- 7,000
</TABLE>
- --------------
/(1)/ Includes stock grant of 5,000 shares in 1995 and 2,000 shares in 1994
valued at the average of the high and the low trading price of the
Company's stock on the date of the grant.
/(2)/ Includes payments for a long term disability insurance policy and
contribution under the Company's 401(k) Plan.
EMPLOYMENT AGREEMENT
In March, 1994, the Company entered into an employment agreement with James
R. Swartwout, under which he is to be paid an annual base salary to be
determined by the Board of Directors, and an annual bonus of up to 40% of his
base salary, to be determined by the Board of Directors based upon the
performance of the Company during the preceding fiscal year, payable in cash or
stock at his election. In the event of his termination, other than for cause,
Swartwout is entitled to severance pay equal to six months of his current
compensations. In the event of a "change in control" of the Company (defined as
the acquisition by a person or group of either 30% or more of the Company's
voting power or the right to elect a majority of the directors of the Company,
the sale of 50% or more of the total fair market value of the Company's assets,
or a specified change in the composition of the Company's Board of Directors),
and regardless of whether his employment is terminated as a result of such
event, Mr. Swartwout would be entitled to receive as a special bonus an amount
equal to two year's base salary at the level then being paid to him.
401(K) PLAN
The Company has Section 401(k) Plans benefitting substantially all employees
in compliance with relevant ERISA regulations. The plans allow employees to
defer specified percentages of their compensation, as defined, in a tax-exempt
trust. The Company is required to make matching contributions, as defined, to
the plan and may make additional profit-sharing contributions at the discretion
of the Board of Directors. The total company contribution to all employees'
401(k) accounts in fiscal 1995 was $85,000.
STOCK OPTION PLANS
In 1984, the Board of Directors and shareholders of SUMMA approved the SUMMA
INDUSTRIES 1984 Stock Option Plan (the "1984 Plan"), under which options to
acquire an aggregate of 25,000 shares of SUMMA INDUSTRIES Common Stock may be
granted to key employees, as determined by the Compensation Committee of the
Board of Directors. At October 19, 1995, options to acquire 24,625 shares of
Common Stock were outstanding, including options to purchase 12,500 shares
granted to Mr. Swartwout. Options for 375 shares of the Company's stock remain
available under the 1984 Plan for future grant. The price at which the options
may be exercised ranges from $1.50 to $5.00, the market price of the stock on
the respective dates of grant.
8
<PAGE>
In December 1991, the Board of Directors and shareholders approved the SUMMA
INDUSTRIES 1991 Stock Option Plan (the "1991 Plan") under which options to
acquire an aggregate of 150,000 shares of the SUMMA INDUSTRIES Common Stock may
be granted to key employees, directors, consultants, vendors, and others, as
determined by the Board of Directors. At October 19, 1995, options to acquire
135,500 shares of the Company's Common Stock were outstanding, including options
to purchase 25,000 shares grated to Mr. Swartwout. Options to acquire 14,500
shares of the Company's Common Stock remain available under the 1991 Plan for
future grant. The price at which the options may be exercised ranges from 2.72
to 6.50, the market price of the stock on the respective dates of grant.
No options were granted to Mr. Swartwout under either the 1984 Plan or the
1991 Plan during the fiscal year ended August 31, 1995.
DIRECTOR COMPENSATION
Non-employee directors receive a fee of $250 for each Board Meeting attended
and are reimbursed for travel expenses connected with a Board Meeting. No
additional fees are paid to directors for serving on committees. During the
fiscal year ended August 31, 1995, each of the 7 outside directors was awarded
an option to purchase 2,500 shares of the Company's common stock at an exercise
price of $4.75, the closing price of the stock on the date of the grant. In
addition, Mr. Roth, upon being elected to fill the vacancy on the Board, was
granted options to purchase 5,000 shares of the Company's common stock at an
exercise price of $5.75, the closing price of the stock on the date of the
grant.
EMPLOYEE STOCK OPTION EXERCISES
Aggregated Option Exercises Last Fiscal Year and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised in-the
Number of Unexercised Money Options at Fiscal
Shares Options at Fiscal Year End Year End ($)/(1)/
Acquired on Value --------------------------------- ------------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------- ---------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James R. Swartwout 0 N.A. 34,375 3,125 $63,000 $4,000
- ----------
</TABLE>
/(1)/ Calculated based on the closing price of the Company's Common Stock as
reported on the NASDAQ National Market System on August 31, 1995 which
was $4.75.
COMPENSATION COMMITTEE REPORT
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Company's Board of Directors has not established a formal Compensation
Committee. Rather, the entire Board, with the exception of Mr. Swartwout,
reviews the performance and establishes the compensation of Mr. Swartwout, the
Company's only executive officer. With the exception of Messrs. Swartwout and
Palmaer, none of the members of the Company's Board of Directors is an employee
of the Company, and none of the Company's non-employee directors has any
material interest in or relationship with the Company other than by virtue of
his position as a director and shareholder.
Report on Annual Compensation of Executive Officers
---------------------------------------------------
It is the policy of the Company's Board of Directors to establish compensation
levels for Mr. Swartwout, the Company's Chief Executive Officer (the "CEO"),
which reflects the Company's overall performance and Mr. Swartwout's
performance, responsibilities and contributions to the long-term growth and
profitability of the Company. The Board determines Mr. Swartwout's compensation
based on its evaluation of the Company's overall performance, including various
quantitative factors, primarily the Company's financial performance, sales and
earnings against the Company's operating plan, as well as various qualitative
factors such as new product development, the Company's product and service
quality, the extent to which Mr. Swartwout has contributed to forming a strong
management team and other factors which the Board believes are indicative of the
Company's ongoing ability to achieve its long-term growth and profit objectives.
9
<PAGE>
The principal component of the compensation of Mr. Swartwout is his base
salary. The Board also retains the discretion to award bonuses based on
corporate or individual performance. The Board evaluates the practices of
various industry groups, market data, including data obtained from time to time
from outside compensation consultants, and other economic information to
determine the appropriate ranges of base salary levels which will enable the
Company to retain and incentivise Mr. Swartwout. Throughout the year, the Board
members review the corporate and individual performance factors described above.
The Board, based upon its review of performance for the previous year, and its
review of the Company's operating plan, establishes salary levels and awards any
bonuses to Mr. Swartwout. In 1995, Mr. Swartwout's annual salary was set at
$135,000, which represented an increase of approximately 8% over the prior
year's salary.
The Board also annually considers grants of stock options for the Company's
key employees, including Mr. Swartwout. The purpose of the stock option program
is to provide incentives to the Company's management to work to maximize
shareholder value. The option program also utilizes vesting periods to
encourage key employees to continue in the employ of the Company. Individual
amounts of annual stock option grants are derived based upon review of
competitive compensation practices with respect to the same or similar executive
positions, overall corporate performance and individual performance.
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's composite return as an index
assuming $100 invested on August 31, 1990. Also depicted are the CRSP indices
for NASDAQ Stock Market (U.S. Companies), and a peer group, NASDAQ Non-Financial
Stocks.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
SUMMA INDUSTRIES
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period SUMMA NASDAQ NASDAQ
(Fiscal Year Covered) INDUSTRIES STOCKMARKET NON-FINANCIAL STOCKS
- --------------------- ---------- ----------- --------------------
<S> <C> <C> <C>
Measurement Pt- 1990 $100.0 $100.0 $100.0
FYE 1991 $187.5 $141.9 $141.1
FYE 1992 $212.5 $153.9 $145.6
FYE 1993 $300.0 $203.0 $191.2
FYE 1994 $287.5 $211.4 $194.9
FYE 1995 $250.0 $284.0 $261.1
</TABLE>
10
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership an changes in ownership (Forms 3, 4 and
5) with the Securities and Exchange Commission. Officers, directors and
greater-than-ten-percent holders are required to furnish the Company with copies
of all such forms which they file.
To the Company's knowledge, based solely on the Company's review of such
reports or written representations from certain reporting persons that no Forms
5 were required to be filed by those persons, the Company believes that during
the fiscal year ended August 31, 1995, all filing requirements applicable to its
officers, directors, and other persons subject to Section 16 of the Exchange Act
were complied with.
INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP were independent public auditors for the
Company for the year ended August 31, 1995. Representatives of Arthur Andersen
LLP are expected to be at the Annual Meeting and will have the opportunity to
make a statement, if they so desire, and will be available to respond to
appropriate questions.
ANNUAL REPORT
The Company's annual report for the year ended August 31, 1995 is being mailed
herewith to all shareholders. Any shareholder who has not received a copy of
this report may obtain one by writing to the Company. Copies of the Company's
Annual Report on Form 10K, filed with the Securities & Exchange Commission, are
available upon written request at no charge.
PROPOSALS OF SECURITIES HOLDERS
The Board of Directors anticipates that the 1996 Annual Meeting of
Shareholders will be held in December, 1996. Shareholders who wish to submit
proposals proper for inclusion in proxy materials mailed by the Company in
connection with such meeting, must forward them to the Secretary of the Company
at the address given on the first page of this proxy statement so that they are
received no later than July 16, 1996.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action at
the meeting. However, if any matters not included in this Proxy Statement
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy to vote under the authority therein given in accordance with
his or their best judgment.
By Order of the Board of Directors
/s/ PAUL A. WALBRUN
___________________________________
Paul A. Walbrun
Secretary
October 25, 1995
11
<PAGE>
[LOGO of SUMMA]
SUMMA INDUSTRIES
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Swartwout as attorney-in-fact and
proxy for the undersigned, will full power of substitution, to represent the
undersigned and vote, as designed below, all of the shares of Common Stock of
SUMMA INDUSTRIES (the "Company") which the undersigned is entitled to vote at
the Company's Annual Meeting of Shareholders to be held on December 14, 1995,
or at any adjournment or continuation thereof.
1. PROPOSAL TO APPROVE THE COMPANY'S 1995 STOCK OPTION PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
2. ELECTION OF DIRECTORS:
[_] FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY
(except as marked to the to vote for the nominees listed below
contrary below)
Dale H. Morehouse, William R. Zimmerman, David McConaughy, Byron C. Roth
(INSTRUCTION: To withhold authority to vote for any nominee, write the
nominee's name in the space below.)
- --------------------------------------------------------------------------------
3. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournment or continuation thereof.
(Continued on reverse side)
[LOGO of SUMMA]
(Continued from reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN
SPECIFIED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR APPROVAL OF THE 1995 STOCK OPTION PLAN AND FOR THE
ELECTION AS DIRECTORS OF THE 4 NOMINEES LISTED ABOVE, AND IN ACCORDANCE WITH
THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS TO COME BEFORE THE ANNUAL
MEETING.
Dated_____________________ , 1995
_________________________________
Signature
_________________________________
Signature (if held jointly)
Please sign exactly as name
appears below, date and return
this card promptly using the
enclosed envelope. Executors,
administrators, guardians,
officers of corporations, and
others signing in a fiduciary
capacity should state their full
titles as such.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
