<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission Only
(As permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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:
- -------------------------------------------------------------------------------
5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
1) Amount previously paid:
- -------------------------------------------------------------------------------
2) Form, schedule or registration statement no.:
- -------------------------------------------------------------------------------
3) Filing party:
- -------------------------------------------------------------------------------
4) Date filed:
- -------------------------------------------------------------------------------
- ------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
[LOGO]
21250 HAWTHORNE BOULEVARD, SUITE 500
TORRANCE, CALIFORNIA 90503
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 1999
To the Stockholders of
Summa Industries:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Summa Industries, a Delaware corporation (the "Company"), will be
held on December 13, 1999 at 10:00 a.m., local time, at the Marriott Hotel, 3635
Fashion Way, Torrance, California (near the southeast corner of Hawthorne and
Torrance Boulevards, behind the Computax Building), for the following purposes:
1. to elect two members to the Company's Board of Directors, each to
serve for a three-year term; and
2. to transact such other business as may properly come before the Annual
Meeting and any adjournments and/or postponements thereof.
Holders of record of Summa Common Stock at the close of business on October
15, 1999 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting and at any adjournments and/or postponements thereof. A list of
holders of record of shares of Summa Common Stock at the close of business on
the Record Date will be available for inspection at the Company's headquarters
during ordinary business hours for the ten-day period prior to the Annual
Meeting. The Company's transfer books will not be closed.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED EACH OF THE PROPOSALS AS
BEING IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND HAS
UNANIMOUSLY RECOMMENDED THAT YOU VOTE FOR APPROVAL OF EACH SUCH PROPOSAL.
All stockholders are cordially invited to attend the Annual Meeting in
person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
YOU ARE REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. If you attend the Annual Meeting, you may revoke your proxy at any time
before it is voted and vote in person if you wish, even if you have previously
returned your proxy card.
By Order of the Board of Directors:
/s/ Trygve M. Thoresen
Trygve M. Thoresen
Secretary
October 28, 1999
Torrance, California
<PAGE>
SUMMA INDUSTRIES
21250 HAWTHORNE BOULEVARD, SUITE 500
TORRANCE, CALIFORNIA 90503
-------------------------------
PROXY STATEMENT
-------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 1999
INTRODUCTION
This Proxy Statement and the accompanying form of proxy are being sent to
stockholders of Summa Industries, a Delaware corporation ("Summa" or the
"Company"), on or about November 4, 1999. The accompanying proxy is solicited by
and on behalf of the Board of Directors of the Company for use at the Annual
Meeting of Stockholders (the "Annual Meeting") of Summa to be held on December
13, 1999 at 10:00 a.m., local time, at the Marriott Hotel, 3635 Fashion Way,
Torrance, California, and at any adjournments and/or postponements thereof.
All expenses associated with soliciting proxies, including the preparation,
assembly, printing and mailing of this Proxy Statement, will be borne by the
Company. It is contemplated that proxies will be solicited principally through
the use of the mail, but officers, directors and employees of the Company may
solicit proxies personally or by telephone or facsimile, without receiving
additional compensation therefor. The Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding these proxy materials to their principals.
RECORD DATE
Stockholders of Summa Common Stock of record at the close of business on
October 15, 1999 (the "Record Date") are entitled to notice of and to vote on
all matters presented at the Annual Meeting and at any adjournments and/or
postponements thereof. On the Record Date, there were 4,323,687 shares of Common
Stock outstanding, held by 448 stockholders of record and an estimated 1,800
additional beneficial owners.
VOTING; PROXIES
The presence, either in person or by proxy, of persons entitled to vote a
majority of the outstanding shares of Common Stock is necessary to constitute a
quorum for the transaction of business at the Annual Meeting and at any
adjournments and/or postponements thereof. On each matter to be considered at
the Annual Meeting, stockholders will be entitled to cast one vote for each
share of Common Stock held on the Record Date. In accordance with the Company's
Certificate of Incorporation, there will be no cumulative voting for the
election of directors.
For Proposal 1, the two director nominees receiving the highest number of
votes at the Annual Meeting with a quorum present or represented will be
elected. Abstentions and broker non-votes on Proposal 1 will be counted for
purposes of determining the presence or absence of a quorum, but will not
constitute a vote "for" or "against" the Proposal and will be disregarded in
calculating the votes cast as to the Proposal.
1
<PAGE>
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. Properly executed and returned proxies,
unless revoked, will be voted as directed by the stockholder, or, in the absence
of such direction, by the persons named therein FOR election of each director
nominee set forth in Proposal 1 in accordance with the recommendation of the
Board of Directors, and in the proxy holders' discretion as to other matters
that may properly come before the Annual Meeting. 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.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Two of the Company's seven directors, comprising one Class of the Board of
Directors of the Company, are to be elected at the Annual Meeting, each to serve
for a three-year term or until his successor is elected and qualified. Two of
the Company's seven directors will be elected at the next annual meeting, and
three directors will be elected at the subsequent meeting.
Should any of the nominees decline or be unable to serve as a director, the
persons authorized in the proxy to vote on your behalf will vote for such
substitute nominees as may be recommended by the Company's existing Board of
Directors, unless other directions are given in the proxy. Each of the nominees
has consented to serve as a director if elected, and the Company knows of no
reason why any nominee listed below would not be available for election or, if
elected, would not be willing or able to serve. Unless otherwise directed in the
accompanying proxy, the persons named therein will vote FOR the election of the
two director nominees set forth below.
NOMINEES
The following table sets forth certain information concerning each of the
two nominees for election as directors of the Company:
<TABLE>
<CAPTION>
Name Position with the Company Director Since Age
----- ------------------------ -------------- ----
<S> <C> <C> <C>
David McConaughy Director 1990 67
Josh T. Barnes Director 1996 71
</TABLE>
David McConaughy is currently a Principal and Partner of Data Management
Resources, which supplies and maintains integrated business management systems.
Previously, Mr. McConaughy was on the faculty of the University of Southern
California Graduate School of Business, and has had a strategic planning
consulting practice. Mr. McConaughy holds a Masters in Business Administration
and a PhD in Administrative Science and Economics from The Ohio State
University. Mr. McConaughy is the Chairman of the Company's Audit Committee and
a member of the Company's Compensation Committee.
Josh T. Barnes became a director of the Company upon consummation of the
acquisition of LexaLite International Corporation by the Company in 1996. Mr.
Barnes founded LexaLite and lead the company as a director and Chief Executive
Officer from its formation in 1963 until his retirement in 1997. Mr. Barnes is a
registered professional mechanical engineer in Michigan, the holder of several
lighting related patents, a member of the Illuminating Engineering Society and
the Society of Plastic Engineers. Mr. Barnes recently completed two terms as the
Mayor of Charlevoix, Michigan and is a director and Chief Executive Officer of
Business Activities Corporation. Mr. Barnes is a graduate of the Lawrence
Institute of Technology (Civil) and the U.S. Army Corps of Engineers Officer
Candidate School.
2
<PAGE>
DIRECTORS NOT STANDING FOR ELECTION
<TABLE>
<CAPTION>
Name Position with the Company Age Director Since Term Expires
---- ------------------------- --- -------------- ------------
<S> <C> <C> <C> <C>
Michael L. Horst Director 53 1978 2000
William R. Zimmerman Director 72 1987 2000
James R. Swartwout Chairman, President, 53 1990 2001
Chief Executive Officer
& Chief Financial Officer
Byron C. Roth Director 36 1994 2001
Jack L. Watts Director 51 1999 2001
</TABLE>
Michael L. Horst is a real estate consultant, educator and developer, and
is currently a Vice President of the Urban Land Institute ("ULI"), a
not-for-profit research and education organization based in Washington, D.C.,
providing responsible leadership in the use of land. Mr. Horst also serves as an
Adjunct Professor on the faculty at the University of Southern California, is a
co-founder of the Shenoa Retreat and Learning Center in Northern California, and
serves on the board of directors of the Shenoa Retreat Center Owners
Association. Prior to joining ULI, Mr. Horst was an Affiliated Principal with
EDAW, Inc., San Francisco, California, where he practiced strategic planning and
urban design. Mr. Horst holds a Masters in Business Administration from Stanford
University and was a Loeb Fellow at the Harvard Graduate School of Design. Mr.
Horst is a member of the Company's Audit Committee.
William R. Zimmerman is the President of Zimmerman Holdings, Inc., a
private investment company. He has previously served as President of Monogram
Industries, Inc., President of Swedlow, Inc., and Executive Vice President of
Avery International. Mr. Zimmerman also serves as a director of Eagle Precision
Industries, Inc. and Oso Technologies. Mr. Zimmerman holds a Bachelor of Science
and a Masters degree in Industrial Management, both from the Sloan School of the
Massachusetts Institute of Technology. Mr. Zimmerman is a member of the
Company's Compensation Committee.
James R. Swartwout has been Chairman of the Board of Directors of the
Company 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, Mr. Swartwout was a principal in a private
leveraged buyout venture. From April 1984 to December 1986, Mr. Swartwout was
Executive Vice President of Delphian Corporation, Sunnyvale, California, a
manufacturer of analytical instruments, and had held management positions at
Farr Company, El Segundo, California, a manufacturer of industrial filtration
systems. He earlier worked for American Air Filter Co. and Eastman Kodak Co.,
and is a former U.S. Navy officer. Mr. Swartwout holds a Bachelor of Science
degree in Industrial Engineering from Lafayette College and a Masters in
Business Administration from the University of Southern California.
Byron C. Roth is the Chairman and Chief Executive Officer of the investment
banking firm of Cruttenden Roth and the Chairman of RedChip.com. Previously, he
was Managing Director of Corporate Finance at Cruttenden Roth. Mr. Roth holds a
BBA from the University of San Diego and a Masters in Business Administration
from Cornell University.
Jack L. Watts was recently appointed by the Company's Board of Directors to
fill the vacancy created by the death of director Coalson C. Morris. Mr. Watts
has been the Chief Executive Officer of Portola Packaging, Inc., a manufacturer
of plastic packaging products, since 1986. Mr. Watts is also the Chief Executive
Officer of Sand Hill Systems, Inc., a new venture developing e-commerce tools
for non-internet businesses. Mr. Watts is a founding
3
<PAGE>
partner of The Portola Company, an investment partnership focused on
acquisitions. Prior to 1986, Mr. Watts was founder and Chairman of Faraday
Electronics, an original equipment manufacturer of software, computers and
terminals. Mr. Watts also serves as a director of Portola Packaging, Inc., Sand
Hill Systems, Inc., Portola Minerals Co., FloStor Engineering, and Fresco
Restaurant Co. Mr. Watts holds a Bachelor of Science degree in Industrial
Engineering from Oklahoma State University and a Masters in Business
Administration from Stanford University.
MEETINGS OF THE BOARD; COMMITTEES AND DIRECTOR COMPENSATION
During fiscal 1999, in addition to actions taken by unanimous written
consent, there were four meetings of the Company's Board of Directors. Each
director attended at least 75% of the total number of meetings of the Board of
Directors and the committees of the Board of Directors on which he serves, other
than Mr. Watts who was appointed to the Board of Directors subsequent to fiscal
year end. The Company has two standing committees, the Audit Committee and the
Compensation Committee. The principal duties of the Audit Committee are to
advise the Board on audit matters affecting the Company, including
recommendations as to the appointment of independent outside auditors, reviewing
with such auditors the scope of its audit engagement, meeting with the Company's
management and independent outside auditors to discuss matters relating to
internal accounting controls and results of audits performed. The principal
duties of the Compensation Committee are to administer the Company's executive
compensation programs, including establishing base salaries, discretionary
bonuses and stock option grants for executive officers. The current members of
the Audit Committee are Messrs. Horst and McConaughy, and the current members of
the Compensation Committee are Messrs. McConaughy and Zimmerman. During fiscal
1999, the Audit Committee held one meeting attended by all members, and the
Compensation Committee held two meetings attended by all members.
Non-employee directors of the Company receive a fee of $1,000 for each
Board meeting attended and are reimbursed for travel expenses connected with a
Board meeting. Non-employee directors serving on committees receive a $1,000 fee
for each committee meeting attended. In addition, directors who are not
employees of the Company are currently entitled to an annual grant of a
Nonstatutory Stock Option to acquire up to 4,000 shares of the Company's Common
Stock issued under the Company's stock option plans on the date of the Company's
annual meeting, with an exercise price equal to the average of the closing
prices on each of the trading days on which the stock trades, beginning on the
second day after release of annual earnings and ending on the second day prior
to the annual meeting. Non-employee directors serving on committees are
currently entitled to an annual grant of a Nonstatutory Stock Option to acquire
up to 2,000 additional shares, calculated in the same manner. During fiscal
1999, each outside director was granted a Nonstatutory Stock Option to acquire
up to 2,500 shares of the Company's Common Stock at $8.771 per share, except for
Mr. Watts who received an initial Nonstatutory Stock Option to acquire up to
5,000 shares of the Company's Common Stock at $12.50 per share upon his
appointment to the Board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth in the table below are the names, ages and offices held by the
executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- ---------
<S> <C> <C>
James R. Swartwout 53 Chairman, President,
Chief Executive Officer
& Chief Financial Officer
Trygve M. Thoresen 35 Vice President, Secretary &
General Counsel
Paul A. Walbrun 57 Vice President & Controller
</TABLE>
4
<PAGE>
James R. Swartwout has been Chairman of the Board of Directors of the
Company 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, Mr. Swartwout was a principal in a private
leveraged buyout venture. From April 1984 to December 1986, Mr. Swartwout was
Executive Vice President of Delphian Corporation, Sunnyvale, California, a
manufacturer of analytical instruments, and had held management positions at
Farr Company, El Segundo, California, a manufacturer of industrial filtration
systems. He earlier worked for American Air Filter Co. and Eastman Kodak Co.,
and is a former U.S. Navy officer. Mr. Swartwout holds a Bachelor of Science
degree in Industrial Engineering from Lafayette College and a Masters in
Business Administration from the University of Southern California.
Trygve M. Thoresen joined the Company as Vice President, Secretary and
General Counsel upon consummation of the acquisition of Calnetics Corporation,
Chatsworth California, in October 1997. From January 1997 until October 1997,
Mr. Thoresen served as Vice President-Finance, General Counsel and Assistant
Secretary of Calnetics. Prior to that, from September 1992 until January 1997,
Mr. Thoresen was a corporate, mergers and acquisitions and securities attorney
with Gibson, Dunn & Crutcher LLP, Irvine, California. From August 1989 until May
1992, Mr. Thoresen attended Hastings College of the Law. Prior to law school,
Mr. Thoresen was a senior accountant at KPMG Peat Marwick LLP, and he is a
Certified Public Accountant in the State of California (currently inactive). In
addition, Mr. Thoresen holds a Bachelor of Arts degree in Business
Administration from the University of California, Santa Barbara.
Paul A. Walbrun has served as Vice President and Controller of the Company
since October 1997, and was Vice President, Secretary and Controller of the
Company from October 1994 until October 1997. From July 1994 until its sale in
June 1996, Mr. Walbrun served as Vice President and Controller of the Company's
former subsidiary, Morehouse-COWLES, Inc. Before joining the Company, Mr.
Walbrun was the Director of Financial Reporting for Bird Medical Technologies,
Inc. and Controller of Stackhouse, Inc., a Bird Medical Technologies
manufacturing subsidiary, and is a former U.S. Navy officer. Mr. Walburn holds a
Bachelor of Business Administration with accounting major from the University of
Wisconsin, Madison.
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth all compensation paid
or accrued by the Company for services rendered in all capacities during the
three fiscal years ended August 31, 1999 by the Chief Executive Officer and the
two other most highly compensated executive officers of the Company. There were
no other executive officers of the Company whose total salary and bonus exceeded
$100,000 in the 1999 fiscal year.
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------ ---------
Name and Stock LTIP All Other
- -------- Salary Bonus Other Awards Options Payouts Compensation
Principal Position Year $ $ $ $ #(2) $ $(3)
- ------------------ -------- ------- --------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Swartwout, 1999 250,000 120,000 --- --- 25,000 --- 9,420
Chairman, Chief 1998 183,333 75,000 --- --- 50,000 --- 9,332
Executive Officer & 1997 142,500 40,000 --- --- 25,000 --- 9,006
Chief Financial Officer
Trygve M. Thoresen, 1999 133,519 55,000 --- --- 16,000 --- 926
Vice President, Secretary 1998 120,000 45,000 --- --- 7,292 --- 1,018
& General Counsel(1) 1997 107,692 15,000 --- --- 64,615 --- 210
Paul A. Walbrun, 1999 91,364 35,000 --- --- 11,000 --- 649
Vice President & 1998 80,793 25,000 --- --- 12,000 --- 621
5
<PAGE>
Controller 1997 78,796 24,000 --- --- 10,000 --- 470
</TABLE>
- -------------------------
(1) In the 1997 fiscal year, Mr. Thoresen was employed by Calnetics Corporation
until its acquisition by the Company in October 1997. Therefore, compensation
information for Mr. Thoresen for the 1997 fiscal year relates to his employment
by Calnetics. In connection with the acquisition of Calnetics, 50,000 stock
options then held by Mr. Thoresen were converted into 64,615 options to purchase
shares of the Company's Common Stock.
(2) All options currently held by such executive officers consist solely of
Nonstatutory Stock Options.
(3) Includes payments for a long term disability insurance policy, a life
insurance policy, contributions to the Company's 401(k) Plan and/or automobile
allowance. In addition, Messrs. Thoresen and Walbrun each have use of a Company
automobile.
EMPLOYMENT AGREEMENTS
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, Mr. 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 Company's directors, 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. In January 1998, the Company and Mr.
Swartwout amended the employment agreement to provide for an annual base salary
of $200,000, as may be increased by the Board of Directors from time to time,
and to increase the potential annual bonus to up to 60% of base salary.
Pursuant to a change in control agreement originally entered into in
January 1997 between Trygve M. Thoresen and Calnetics Corporation and assumed by
the Company upon consummation of the acquisition of Calnetics, in the event that
there is a change in control of the Company and, thereafter, Mr. Thoresen is
terminated without cause or resigns from the successor for "good reason," the
successor will be required to pay Mr. Thoresen a lump sum distribution equal to
one year's salary and bonus.
STOCK OPTION PLANS
In 1984, the Board of Directors and stockholders of the Company approved
the Summa Industries 1984 Stock Option Plan (the "1984 Plan"), under which
options to acquire an aggregate of 25,000 shares of the Company's Common Stock
were available for grant to key employees, directors, consultants, vendors and
others. The 1984 Plan expired in 1994 and, therefore, no additional options may
be granted thereunder. As of August 31, 1999, options to acquire 15,500 shares
of Common Stock remained outstanding and exercisable, consisting of options to
purchase 12,500 shares granted to Mr. Swartwout and 3,000 to Mr. Walbrun. The
price at which such options may be exercised ranges from $3.50 to $5.00, the
market price of the stock on the date of grant. As of August 31, 1999, options
for 5,875 shares had been exercised under the 1984 Plan.
In December 1991, the Board of Directors and stockholders approved the
Summa Industries 1991 Stock Option Plan (the "1991 Plan") under which options to
acquire an aggregate of 150,000 shares of the Company's Common Stock may be
granted to key employees, directors, consultants, vendors and others, as
determined by the Board of Directors or the Compensation Committee. As of August
31, 1999, options to acquire 149,650 shares of Common Stock had been granted,
including options to purchase 25,000 shares granted to Mr. Swartwout and 21,000
to Mr. Walbrun. Options to acquire 350 shares of Common Stock remain available
for future grant. The
6
<PAGE>
price at which the options may be exercised ranges from $2.72 to $12.50, the
market price of the stock on the date of grant. During the fiscal year ended
August 31, 1999, options for 7,500 shares became exercisable. As of August 31,
1999, options for 79,401 shares were exercisable, and 41,750 had been exercised.
In December 1995, the Board of Directors and stockholders approved the
Summa Industries 1995 Stock Option Plan (the "1995 Plan") under which options to
acquire an aggregate of 250,000 shares of Common Stock may be granted to key
employees, directors, consultants, vendors, customers and others, as determined
by the Board of Directors or the Compensation Committee. In January 1998, the
Board of Directors and stockholders amended the 1995 Plan to increase the number
of shares of Common Stock that may be granted thereunder from 250,000 to
350,000, As of August 31, 1999, options to acquire 349,723 shares of Common
Stock had been granted, including options to purchase 75,000 shares granted to
Mr. Swartwout and 6,000 to Mr. Thoresen. Options to acquire 277 shares of Common
Stock remain available for future grant. The price at which options may be
exercised ranges from $3.613 to $14.563, the market price of the stock on the
date of grant. During the fiscal year ended August 31, 1999, options for 56,125
shares became exercisable. As of August 31, 1999, options for 176,175 shares
were exercisable, and 53,298 had been exercised.
In December 1998, the Board of Directors and stockholders approved the
Summa Industries 1999 Stock Option Plan (the "1999 Plan") under which options to
acquire an aggregate of 500,000 shares of Common Stock may be granted to key
employees, directors, consultants, vendors, customers and others, as determined
by the Board of Directors or the Compensation Committee. As of August 31, 1999,
options to acquire 41,000 shares of Common Stock had been granted, including
options to purchase 25,000 shares granted to Mr. Swartwout, 10,000 to Mr.
Thoresen and 5,000 to Mr. Walbrun. Options to acquire 459,000 shares of Common
Stock remain available for future grant. The price at which options may be
exercised ranges from $9.375 to $12.75, the market price of the stock on the
date of grant. As of August 31, 1999, no options were exercisable or had been
exercised.
STOCK OPTION GRANTS
The following table sets forth information concerning options granted to each of
the named executive officers during fiscal 1999.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------- Potential Realizable Value
Percentage at Assumed Annual Rates of
of Total Stock Price Appreciation for
Options Option Term ($)(2)
Granted to Exercise -----------------------------
Options Employees in Price Expiration
Name Granted(#)(1) Fiscal 1999(%) per Share($) Date 5% 10%
- ---- ------------- -------------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
James R. Swartwout 25,000 16.5 9.75 12/11/08 153,293 388,475
Trygve M. Thoresen 6,000 7.75 9/25/08 29,244 74,109
10,000 10.6 9.38 3/5/09 58,990 149,493
Paul A. Walbrun 6,000 7.75 9/25/08 29,244 74,109
5,000 7.3 9.38 3/5/09 29,495 74,747
</TABLE>
- -----------------
(1) All options granted in fiscal 1999 are Nonstatutory Stock Options with
exercise prices per share equal to the market price of the Company's Common
Stock on the date of grant. All of the options set forth in the table above vest
in one-forth increments commencing with the first anniversary of the grant date.
(2) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the date
of grant to the expiration date. These values are calculated pursuant to
requirements promulgated by the Securities and Exchange Commission and do not
reflect the Company's estimate
7
<PAGE>
of future stock price appreciation. Actual gains, if any, are dependent on the
future market price of the Common Stock.
STOCK OPTION EXERCISES
The following table sets forth information regarding options exercised
during fiscal 1999 by executive officers of the Company, as well as the
aggregate value of unexercised options held by each executive officer at August
31, 1999. The Company has no stock appreciation rights, either freestanding or
in tandem with options.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options
Options at Fiscal Year End(#) at Fiscal Year End ($)(1)
Shares ----------------------------- ------------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
James R. Swartwout --- --- 62,500 75,000 611,038 423,475
Trygve M. Thoresen --- --- 66,438 21,469 635,022 97,368
Paul A. Walbrun --- --- 16,000 25,000 138,508 160,950
</TABLE>
- ---------------------
(1) Calculated based upon the closing price of the Company's Common Stock as
reported on The Nasdaq National Market on August 31, 1999, which was $14.563 per
share.
401(K) PLAN
The Company has adopted and maintains a Section 401(k) Plan (the "401(k)
Plan") in compliance with relevant ERISA regulations. The 401(k) Plan allows
employees to defer specified percentages of their compensation in a tax-deferred
trust. The Company may make matching contributions to the 401(k) 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 1999 was $699,000. Each of the named executive officers participates in
the 401(k) Plan.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company has adopted and maintains an Employee Stock Ownership Plan (the
"ESOP"). Under the ESOP, the Company may make contributions to the ESOP trust
for purchases of shares of the Company's Common Stock, or may contribute Common
Stock directly to the ESOP trust. The shares are then allocated by the ESOP
trustee to each participant based on the ratio that such participant's
compensation bears to the total compensation for all applicable participants.
The total cash contribution by the Company to the ESOP in fiscal 1999 was
$278,000. None of the named executive officers participated in the ESOP during
fiscal 1999.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee appointed by the Board of Directors generally
administers the Company's executive compensation programs. The Compensation
Committee consists solely of outside directors. It is the policy of the
Compensation Committee to establish compensation levels for executive officers
which reflect the Company's overall performance, responsibilities and
contributions to the long-term growth and profitability of the Company. The
Compensation Committee determines 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 the
executive officers have contributed to forming a strong management team, and
other factors which the committee believes are indicative of the Company's
ongoing ability to achieve its long-term growth and profit objectives. In
determining the base salary and bonus for James R. Swartwout, the Chief
Executive Officer of the Company, the Compensation Committee considered the
foregoing factors. From time to time, the Compensation Committee makes its
decisions
8
<PAGE>
in concert with all outside members of the Board of Directors.
BASE SALARY AND DISCRETIONARY BONUS. The principal component of the
compensation of the executive officers is their base salaries. The Compensation
Committee also retains discretion to award bonuses based on corporate or
individual performance. The Compensation Committee 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 incentivize the Chief Executive Officer and, to a lesser
extent, the other executive officers. Throughout the year, the members of the
Compensation Committee review the corporate and individual performance factors
described above. The Compensation Committee, 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 the Chief Executive
Officer and the other executive officers.
STOCK OPTIONS. The Compensation Committee also considers the grant of stock
options to the Company's key employees, including the executive officers. The
purpose of the stock option program is to provide incentives to the Company's
management and other employees to work to maximize stockholder value. The option
program also utilizes vesting periods to encourage key employees to continue in
the employ of the Company. Individual amounts of stock option grants to
executive officers are derived based upon review of competitive compensation
practices with respect to the same or similar executive positions, overall
corporate performance and individual performance.
COMPENSATION COMMITTEE:
David McConaughy
William R. Zimmerman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. McConaughy and Zimmerman
served as members of the Compensation Committee. Neither member of the
Compensation Committee was or is an officer or employee of the Company. The
Compensation Committee reviews the performance and establishes the compensation
of Messrs. Swartwout, Thoresen and Walbrun. There are no compensation committee
interlocks between the Company's Compensation Committee and other entities
involving the Company's executive officers and committee members who serve as
executive officers or committee members of such other entities.
9
<PAGE>
STOCK PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG SUMMA INDUSTRIES,
PEER GROUP INDEX AND RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
----------------------------FISCAL YEAR ENDING----------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 8/31/1994 8/31/1995 8/30/1996 8/29/1997 8/31/1998 8/31/1999
Summa Ind 100.00 82.61 104.35 108.70 132.61 253.26
Peer Group Index 100.00 109.55 114.72 138.45 135.80 147.87
Russell 2000 Index 100.00 128.00 134.00 172.77 139.25 139.25
</TABLE>
Note:
The peer group index is derived from the following peer group selected by the
Company in good faith: Alltrista Corporation; Atlantis Plastics Inc.; Channell
Commercial Corporation; Core Materials Corp.; Eagle Pacific Industries, Inc.;
Furon Co.; Lamson & Sessions Co.; Lund International Holdings; Myers Industries
Inc.; Raven Industries Inc.; Reunion Industries Inc.; Rotonics Manufacturing
Inc.; Spartech Corp.; Triple S Plastics Inc.; Tuscarora Inc.; and Uniroyal
Technologies Corp. Members of the peer group are more similar to the Company in
lines of business, size and market capitalization than any readily available
industry index of which the Company is aware.
Assumes $100 Invested on September 1, 1994
Assumes Dividends Reinvested
Fiscal Year Ending August 31, 1999
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by, among others,
(i) all persons or groups known by the Company to be beneficial owners of more
than 5% of the Common Stock, (ii) each director of the Company and each nominee
for director, (iii) each executive officer of the Company named in the Summary
Compensation Table above, and (iv) all directors and executive officers as a
group. Unless otherwise indicated in the footnotes, each person listed below has
sole voting and investment power with respect to the shares beneficially owned
by such person, subject to applicable community property laws, and the address
of each such person is care of the Company, 21250 Hawthorne Boulevard, Suite
500, Torrance, California 90503.
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Name and Address of Beneficial Owner Owned(1) Class(%)
- ------------------------------------ ------------- --------
<S> <C> <C>
Summa Industries Employee Stock Ownership Trust(2) 596,336 13.8
Summa Industries 401(k) Plan Trust(3) 118,903 2.8
Michael L. Horst(4) 23,221 *
William R. Zimmerman(4) 15,025 *
James R. Swartwout(4)(5) 141,650 3.2
David McConaughy(4) 17,500 *
Byron C. Roth(4) 17,500 *
Josh T. Barnes(4)(6) 120,384 2.8
Jack Watts (4) 5,000 *
Trygve M. Thoresen(4)(5) 70,788 1.6
Paul A. Walbrun(4)(5) 23,320 *
All directors and executive
officers as a group (9 persons)(4)(5) 434,388 9.5
</TABLE>
- ----------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission, based on information
furnished by each person listed. Ownership shown include shares which each named
stockholder has the right to acquire within sixty days of the Record Date. In
calculating percentage ownership, all shares which a named stockholder has the
right to so acquire are deemed outstanding for the purpose of computing the
percentage ownership of that person, but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person. Listed
persons may disclaim beneficial ownership of certain shares.
(2) Consists entirely of shares of the Company's Common Stock held in trust for
participants in the Company's Employee Stock Ownership Plan ("ESOP"). The ESOP
is administered by a committee comprised of three Company employees, and the
trustee of the ESOP trust is Comerica Bank - California. The trustee has voting
and limited investment power over any shares held by the ESOP trust that have
not been allocated to individual
11
<PAGE>
participant's accounts. The administrator has the power to direct the trustee as
to the voting of any such unallocated shares held by the ESOP trust. The
administrator and the trustee disclaim beneficial ownership of shares held by
the ESOP trust (except shares, if any, allocated to a person's individual
account under the ESOP), and the ESOP shares are not reported as beneficially
owned by the administrator or the trustee (except shares, if any, allocated to a
person's individual account under the ESOP).
(3) Consists entirely of shares of the Company's Common Stock held in trust for
participants in the Company's 401(k) Plan. Participants in the 401(k) Plan may
elect to have up to 25% of their contributions allocated to the purchase of
shares of the Company's Common Stock. The 401(k) Plan is administered by the
Company, and the trustee of the 401(k) Plan trust is Delaware Charter Guarantee
& Trust Company, a wholly owned subsidiary of The Principal Financial Group.
With limited exceptions, the administrator has the power to direct the trustee
as to the voting of any shares of the Company's Common Stock held in the 401(k)
Plan trust. The administrator and the trustee disclaim beneficial ownership of
shares held by the 401(k) Plan trust (except shares, if any, allocated to a
person's individual account under the 401(k) Plan), and the 401(k) Plan shares
are not reported as beneficially owned by the administrator or the trustee
(except shares, if any, allocated to a person's individual account under the
401(k) Plan).
(4) Includes currently exercisable stock options to purchase shares of the
Company's Common Stock and/or options that will be exercisable within sixty days
of the Record Date.
(5) Includes shares of the Company's Common Stock held in trust for such
participant in the Company's 401(k) Plan.
(6) Includes 17,000 shares held by a charitable remainder trust and 57,790
shares held by several living trusts over which Mr. Barnes has voting and/or
investment control. Does not include shares, the quantities of which, if any,
are unknown to Mr. Barnes, held by certain children and/or grandchildren of Mr.
Barnes and with respect to which he has no control or pecuniary interest and
disclaims beneficial ownership.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is obligated to pay fees and commissions on sales of certain
products to one of its directors pursuant to pre-existing agreements with a
subsidiary of the Company acquired in fiscal 1997. The Company made a one-time
payment of $365,000 in fiscal 1997 to modify such agreements. Total fees and
commission paid in fiscal 1999 were $172,207. The agreements continue until
2009.
The former president of a subsidiary of the Company is a director of and
owns approximately nine percent of the stock of and has guaranteed payment of
certain indebtedness of a vendor to the Company pursuant to a long-standing
business relationship which pre-dates the acquisition of that subsidiary. For
its fiscal year ended August 31, 1999, the subsidiary purchased $1,079,134 in
services from that vendor. The amounts paid for such purchases are considered to
be at commercially competitive rates.
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 executive officers and directors, and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file reports of beneficial ownership and changes
in beneficial ownership (Forms 3, 4 and 5) with the Securities and Exchange
Commission. Officers, directors and such more than ten percent beneficial owners
are required to furnish the Secretary of the Company with copies of all such
forms which they file.
To the Company's knowledge, bases solely upon the Company's review of such
reports or written representations from certain reporting persons that no
reports were required, the Company believes that during fiscal 1999, all of its
directors and executive officers complied with Section 16(a) requirements,
except reports filed
12
<PAGE>
late on Form 5 by Josh Barnes and Byron Roth relating to stock options received
and/or exercised and beneficial ownership thereof.
INDEPENDENT AUDITORS
Arthur Andersen LLP was the Company's independent auditors for the fiscal
year ended August 31, 1999 and may be engaged to audit the Company's financial
statements for the fiscal year ending August 31, 2000. One or more
representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting, and to be available to respond to questions. These representatives will
have an opportunity to make a statement.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1999 ("Annual Report"), which contains audited financial statements of the
Company, has been mailed concurrently with the mailing of the Notice of Annual
Meeting and Proxy Statement to all stockholders entitled to notice of and to
vote at the Annual Meeting. The Annual Report is not incorporated by reference
into this Proxy Statement and is not considered proxy solicitation material. ANY
STOCKHOLDER WHO HAS NOT RECEIVED A COPY OF THE ANNUAL REPORT MAY OBTAIN ONE AT
NO CHARGE BY WRITING TO THE SECRETARY OF THE COMPANY AT THE ADDRESS GIVEN ON THE
FIRST PAGE OF THIS PROXY STATEMENT. THE COMPANY WILL FURNISH TO ANY STOCKHOLDER
OF THE COMPANY ANY SPECIFIC EXHIBIT(S) TO THE ANNUAL REPORT UPON WRITTEN REQUEST
AND UPON PAYMENT OF THE COMPANY'S REASONABLE COSTS TO FURNISH SUCH EXHIBIT(S).
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's Annual
Meeting of Stockholders for the 2000 fiscal year must be received in writing by
the Secretary of the Company at the address given on the first page of this
Proxy Statement not later than July 6, 2000.
Stockholders who do not present proposals for inclusion in the proxy
statement for the Company's Annual Meeting of Stockholders for the 2000 fiscal
year but who still intend to submit a proposal at the 2000 annual meeting must
comply with the detailed notice procedures set forth in the Company's bylaws in
a timely manner (received by the Company not less than twenty nor more than
sixty days prior to the meeting). A complete copy of the Company's bylaws will
be provided without charge, upon written or oral request, to any stockholder to
whom this Proxy Statement is being sent. Requests should be made to the
Corporate Secretary of the Company at 21250 Hawthorne Boulevard, Suite 500,
Torrance, California 90503; telephone (310) 792-7024; facsimile (310) 792-7079;
email [email protected].
13
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors:
/s/ Trygve M. Thoresen
Trygve M. Thoresen
Secretary
Torrance, California
October 28, 1999
14
<PAGE>
PROXY
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
SUMMA INDUSTRIES
21250 HAWTHORNE BLVD., SUITE 500, TORRANCE, CA 90503
ANNUAL MEETING OF STOCKHOLDERS, MONDAY, DECEMBER 13, 1999
The undersigned hereby appoints James R. Swartwout and Trygve M. Thoresen,
or either of them, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of Summa Industries ("Summa") held of record by the
undersigned on October 15, 1999 at the Annual Meeting of Stockholders to be held
on December 13, 1999, and at any adjournments and/or postponements thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH DIRECTOR NOMINEE AND FOR EACH OF THE OTHER PROPOSALS SET FORTH
HEREON. The following matters are proposed by the Company.
IMPORTANT-THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE
PROPOSAL 1: ELECTION OF ONE CLASS OF DIRECTORS as follows:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY for all nominees
NOMINEES: CLASS: DAVID MCCONAUGHY AND JOSH T. BARNES, EACH FOR A THREE-YEAR
TERM
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, MARK FOR ABOVE AND
CROSS OUT THE NAME(S) OF THE NOMINEES WITH RESPECT TO WHOM AUTHORITY IS
WITHHELD.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
PROPOSAL 2: In their discretion, the Proxies are authorized to vote upon all
other business as may properly come before the meeting and any
adjournments and/ or postponements thereof.
DATED
-----------------------------------,
1999
-----------------------------------
SIGNATURE
-----------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS
BELOW. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, AS
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 OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY BY USING THE ENCLOSED
ENVELOPE.
