<PAGE> 1
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 of 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
MASCO CORPORATION
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
MASCO CORPORATION
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(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 transactions 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.:
- - --------------------------------------------------------------------------------
(3) Filing party:
- - --------------------------------------------------------------------------------
(4) Date filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
MASCO CORPORATION
21001 Van Born Road
Taylor, Michigan 48180
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF MASCO CORPORATION:
The Annual Meeting of Stockholders of Masco Corporation will be held at the
offices of the Company, 21001 Van Born Road, Taylor, Michigan 48180, on
Wednesday, May 22, 1996 at 10:00 A.M., Eastern daylight time. The purposes of
the meeting, which are set forth in detail in the accompanying Proxy Statement,
are:
1. To elect three Class II Directors;
2. To consider and act upon the ratification of the selection of Coopers &
Lybrand L.L.P. as independent auditors for the Company for the year
1996; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 29, 1996 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournment thereof.
Your attention is called to the accompanying Proxy Statement and Proxy.
Whether or not you plan to be present at the meeting, you are requested to sign
and return the Proxy in the enclosed envelope to which no postage need be
affixed if mailed in the United States. Your prompt attention will be
appreciated. Prior to being voted, the Proxy may be withdrawn in the manner
specified in the Proxy Statement.
By Order of the Board of Directors
/s/ Eugene A. Garagaro, Jr.
EUGENE A. GARGARO, JR.
Secretary
April 29, 1996
<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
MASCO CORPORATION
May 22, 1996
GENERAL INFORMATION
The solicitation of the enclosed Proxy is made by the Board of Directors of
Masco Corporation (the "Company") for use at the Annual Meeting of Stockholders
of the Company to be held at its offices at 21001 Van Born Road, Taylor,
Michigan 48180, on Wednesday, May 22, 1996 at 10:00 A.M., Eastern daylight time,
and at any adjournment thereof.
The expense of this solicitation will be borne by the Company. Solicitation
will be by use of the mails, and executive officers and other employees of the
Company may solicit Proxies, without extra compensation, personally and by
telephone and other means of communication. In addition, the Company has
retained Morrow & Company, Inc. to assist in the solicitation of Proxies for a
fee of $8,000, plus expenses. The Company will also reimburse brokers and other
persons holding Company Common Stock in their names or in the names of their
nominees for their reasonable expenses in forwarding Proxies and Proxy materials
to beneficial owners.
Stockholders of record as of the close of business on March 29, 1996 will
be entitled to vote at the Annual Meeting. On that date, there were 160,332,787
shares of Company Common Stock, $1 par value, outstanding and entitled to vote.
Each share of outstanding Company Common Stock entitles the holder to one vote.
The shares represented by the Proxy will be voted as instructed if received
in time for the Annual Meeting. Any person signing and mailing the Proxy may,
nevertheless, revoke it at any time before it is exercised by written notice to
the Company (Attention: Eugene A. Gargaro, Jr., Secretary) at its executive
offices at 21001 Van Born Road, Taylor, Michigan 48180, or at the Annual
Meeting. This Proxy Statement and the enclosed Proxy are being mailed or given
to stockholders on or about April 29, 1996.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. The term of office of
the Class II Directors expires at the meeting and the number of Directors
constituting Class II has been increased from two to three. The Board of
Directors proposes the election of Dr. Lillian Bauder and John A. Morgan, who
are currently Directors, and also nominates Joseph L. Hudson, Jr. for election
to the Board. The Class II Directors will serve for a term expiring at the 1999
Annual Meeting or until their respective successors are elected and qualified.
The Class I and Class III Directors have been elected to serve for terms which
expire at the Annual Meetings of Stockholders in 1998 and 1997, respectively, or
until their respective
<PAGE> 4
successors are elected and qualified. The Board of Directors expects that the
persons named as proxies in the Proxy will vote the shares represented by each
Proxy for the election as Directors of the above nominees unless a contrary
direction is indicated. If prior to the meeting any nominee is unable or
unwilling to serve as a Director, which the Board of Directors does not expect,
the persons named as proxies will vote for such alternate nominee, if any, as
may be recommended by the Board of Directors.
Presence in person or by proxy of holders of a majority of outstanding
shares of Company Common Stock will constitute a quorum at the Annual Meeting.
Broker non-votes and abstentions will be counted toward the establishment of a
quorum. Assuming a quorum is present, Directors are elected by a plurality of
the votes cast. The three individuals who receive the largest number of votes
cast will be elected as Directors; therefore, shares not voted (whether due to
abstention or broker non-vote) do not affect the election of Directors.
Information concerning the nominees and continuing Directors is set forth
below.
<TABLE>
<CAPTION>
SHARES OF COMPANY
FIRST BECAME COMMON STOCK
AND HAS BENEFICIALLY
NAME, AGE, PRINCIPAL SERVED AS A OWNED AS OF
OCCUPATION AND OTHER DIRECTORSHIPS DIRECTOR SINCE MARCH 1, 1996
- - ------------------------------------------------------ -------------- -----------------
CLASS I (TERM TO EXPIRE AT 1998 ANNUAL MEETING)
<S> <C> <C>
Wayne B. Lyon, 63..................................... 1988 565,268
President and Chief Operating Officer of the
Company; director of Comerica Incorporated, Payless
Cashways, Inc. and Emco Limited
Arman Simone, 68...................................... 1952 to 1969 72,000
Retired, formerly President of Simone Corporation, and since 1972
commercial builders and developers
Peter W. Stroh, 68.................................... 1992 500
Chairman and Chief Executive Officer of The Stroh
Companies, Inc. (parent company of The Stroh Brewery
Company); director of NBD Bank (a subsidiary of
First Chicago NBD Corporation)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES OF COMPANY
FIRST BECAME COMMON STOCK
AND HAS BENEFICIALLY
NAME, AGE, PRINCIPAL SERVED AS A OWNED AS OF
OCCUPATION AND OTHER DIRECTORSHIPS DIRECTOR SINCE MARCH 1, 1996
- - ------------------------------------------------------ -------------- -----------------
CLASS II (NOMINEES FOR TERM TO EXPIRE AT 1999 ANNUAL MEETING)
<S> <C> <C>
Dr. Lillian Bauder, 56................................ 1992 1,500
President and Chief Executive Officer of Cranbrook
Educational Community; director of DTE Energy
Company (and its subsidiary The Detroit Edison
Company) and Comerica Bank (a subsidiary of Comerica
Incorporated)
Joseph L. Hudson, Jr., 64............................. -- 1,000*
Chairman of Hudson-Webber Foundation, a
philanthropic organization; formerly President and
Chief Executive Officer of The Detroit Medical
Center, President, Chairman and Chief Executive
Officer of The J.L. Hudson Company, and Vice
Chairman and a director of Dayton Hudson
Corporation; currently a director of NBD Bank (a
subsidiary of First Chicago NBD Corporation)
John A. Morgan, 65.................................... 1969 1,600
Partner, Morgan Lewis Githens & Ahn, investment
bankers; director of FlightSafety International,
Inc., MascoTech, Inc., McDermott International, Inc.
and TriMas Corporation
CLASS III (TERM TO EXPIRE AT 1997 ANNUAL MEETING)
Richard A. Manoogian, 59.............................. 1964 4,428,868
Chairman of the Board and Chief Executive Officer of
the Company and of MascoTech, Inc., and Chairman of
the Board of TriMas Corporation; director of First
Chicago NBD Corporation
Erwin L. Koning, 84................................... 1964 4,000
Retired, formerly Senior Vice President of NBD Bank
(now a subsidiary of First Chicago NBD Corporation)
</TABLE>
- - -------------------------
* Shares acquired after March 1, 1996.
For further information concerning the Directors' beneficial ownership of
Company Common Stock, see "Security Ownership of Management and Certain
Beneficial Owners." For further information concerning MascoTech, Inc. and
TriMas Corporation, see "Certain Relationships and Related Transactions."
The nominees and other Directors have been engaged during the past five
years in their current occupations as shown above.
3
<PAGE> 6
The Board of Directors held six meetings during 1995. The Audit Committee
of the Board of Directors, consisting of Dr. Bauder and Messrs. Koning, Morgan
and Stroh, held two meetings during 1995. It reviews and acts or reports to the
Board with respect to various auditing and accounting matters, including the
selection and fees of the Company's independent accountants, the scope of audit
procedures, the Company's internal audit program and results, the nature of
services to be performed by the independent accountants and the Company's
accounting practices. The Compensation Committee of the Board of Directors,
consisting of Messrs. Koning, Morgan and Simone, held five meetings during 1995.
It establishes and monitors executive compensation and administers and
determines awards and options granted under the Company's restricted stock
incentive and stock option plans. The Board of Directors recently established a
Nominating Committee, consisting of Dr. Bauder and Messrs. Morgan and Stroh, to
identify and consider candidates to serve as Directors of the Company. The
Nominating Committee will consider candidates for nominees for election as
Directors of the Company submitted by stockholders. Any stockholder who wishes
to have the Committee consider a candidate should submit the name of the
candidate, along with any biographical or other relevant information the
stockholder wishes the Committee to consider, to the Secretary of the Company at
the address appearing on the first page of this Proxy Statement.
Each Director (other than Messrs. Manoogian and Lyon, who are also Company
employees) receives an annual fee and $1,000 for each Board of Directors meeting
(and committee meeting if not held on a date on which the entire Board holds a
meeting) which the Director physically attends. The annual fee paid for 1995 was
$50,000.
4
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
Set forth below is information concerning beneficial ownership of Company
Common Stock as of March 1, 1996 by (i) each of the nominees and Directors, (ii)
each of the named executive officers, (iii) all current Directors and executive
officers of the Company as a group, and (iv) all persons known by the Company to
be the beneficial owners of five percent or more of Company Common Stock. Except
as indicated below, each person exercises sole voting and investment power with
respect to the shares listed.
<TABLE>
<CAPTION>
SHARES OF COMPANY COMMON PERCENTAGE OF COMPANY COMMON
NAME AND ADDRESS STOCK BENEFICIALLY OWNED STOCK BENEFICIALLY OWNED
- - --------------------------------------- ------------------------ ----------------------------
<S> <C> <C>
Dr. Lillian Bauder..................... 1,500 *
Joseph L. Hudson, Jr................... 1,000** *
Erwin L. Koning........................ 4,000 *
Wayne B. Lyon(1)(2).................... 565,268 *
Richard A. Manoogian(1)(2)............. 4,428,868 2.7%
John A. Morgan......................... 1,600 *
Arman Simone........................... 72,000 *
Peter W. Stroh......................... 500 *
Frank M. Hennessey(2).................. 113,720 *
Raymond F. Kennedy(2).................. 408,200 *
Richard G. Mosteller(2)................ 234,683 *
All 19 current Directors and executive
officers of the Company as a group
(excluding subsidiary, divisional and
group executives)(1)(2).............. 8,364,401 5.1%
FMR Corp.(3)
82 Devonshire Street
Boston, Massachusetts 02109.......... 16,737,477 10.4%
</TABLE>
- - -------------------------
* Less than one percent
** Shares acquired after March 1, 1996.
(1) Shares owned by Mr. Manoogian and by all Directors and executive officers of
the Company as a group include in each case an aggregate of 2,340,200 shares
owned by charitable foundations for which Mr. Manoogian serves as a
director. Shares owned by Mr. Lyon and by all Directors and executive
officers of the Company as a group include in each case 28,448 shares owned
by a charitable foundation for which Mr. Lyon serves as a director. Shares
owned by all Directors and executive officers of the Company as a group
include 25,530 shares held by trusts for which an executive officer serves
as a trustee. The directors of the foundations and the trustees share voting
and investment power with respect to shares owned by the foundations and
trusts, but Messrs. Manoogian, Lyon and the executive officer each disclaims
beneficial ownership of such shares.
5
<PAGE> 8
(2) Includes shares which may be acquired on or before April 29, 1996 upon
exercise of stock options (1,057,740 shares for Mr. Manoogian, 316,125
shares for Mr. Lyon, 191,310 shares for Mr. Kennedy, 25,000 shares for Mr.
Hennessey, 184,722 shares for Mr. Mosteller and 2,217,234 shares for all
Directors and executive officers as a group) as well as unvested restricted
stock award shares held under the Company's stock incentive plans (57,387
shares for Mr. Manoogian, 39,316 shares for Mr. Lyon, 163,979 shares for Mr.
Kennedy, 85,710 shares for Mr. Hennessey, 27,344 shares for Mr. Mosteller
and 494,706 shares for all Directors and executive officers as a group).
Holders exercise neither voting nor investment power over unexercised option
shares, and have sole voting but no investment power over unvested
restricted shares.
(3) Based on a Schedule 13G dated April 9, 1996 and filed with the Securities
and Exchange Commission by FMR Corp. and certain of its affiliates, these
shares were owned at March 31, 1996 by two subsidiaries and an affiliate of
FMR Corp. which provide investment advisory services to investment companies
and institutional accounts. According to the filing, FMR Corp., through
wholly owned subsidiaries, has sole dispositive power over 16,737,477 shares
and sole voting power over 766,509 shares, but no voting power over the
balance of the shares held by various investors. An affiliate of FMR Corp.
has sole voting and investment power over 26,000 shares. Members of the
Edward C. Johnson 3d family may be deemed, under the Investment Company Act
of 1940, to form a controlling group with respect to FMR Corp.
Mr. Manoogian may be deemed a controlling person of the Company by reason
of his significant ownership of Company Common Stock and his positions as a
Director and an executive officer of the Company.
EXECUTIVE COMPENSATION COMMITTEE REPORT
One of Masco Corporation's primary business objectives is to maximize
long-term stockholder returns. To achieve this objective, the Company believes
that it is necessary to attract, retain and motivate the highest quality
management team possible that can conceptualize, strategize and tactically
implement business development, product development, manufacturing technologies
and marketing and service programs to generate long-term profit growth.
Establishing compensation programs generally and determining the
compensation of individual executive officers are complex matters involving
numerous issues and a variety of data. The approach of the Compensation
Committee, which is composed entirely of outside, non-employee Directors, is
primarily subjective in nature. The Committee identifies relevant factors to be
considered, such as the need to be competitive in the market for executive
talent and to provide incentives and rewards for individual and corporate
performance. However, the Committee maintains a flexible approach that is based
on the exercise of judgment and discretion and reflects the Company's
entrepreneurial operating environment and long-term performance orientation.
Precise formulas, targets or goals are not utilized and specific weights are not
assigned to the various factors. The Committee focuses on the Company's goal of
long-term enhancement of stockholder value by stressing long-term goals and by
using stock-based incentive programs with extended vesting schedules. The
Compensation Committee believes that
6
<PAGE> 9
the use of such incentives to retain and motivate individuals who have developed
the skills and expertise required to lead the Company is key to the Company's
success.
The present compensation arrangement for executive officers consists of a
blend of base salary, annual cash bonus and long-term (up to ten-year)
incentives utilizing Company Common Stock. The Committee uses a variety of
resources, including published compensation surveys, as it considers information
concerning current compensation practices within the Company's industries
(including companies that are included in the Standard & Poor's Building
Materials Index). In addition, the compensation policies and practices of
corporations in other industries which are similar to the Company in terms of
revenues and market value, because the Committee believes that the Company
competes with such companies for executive talent. Although the Committee
reviews such information for general guidance, it does not specifically target
compensation of the executive officers to compensation levels at other
companies.
Annual cash compensation consists of salary and bonus. Base salaries are
usually adjusted annually by establishing ranges for increases for executive
officers that reflect inflation, promotions and merit and that are similar to
the ranges established for other corporate office employees. Bonuses are
determined annually in a similar manner. The salary ranges reflect changes
observed in general compensation levels of salaried employees, and in
particular, within the geographic area of the Company's corporate office and
within the Company's industries. In addition, the Company's performance for the
particular year and the Company's prospects are more significant factors in
determining ranges for year-end bonuses than in determining salary ranges. In
connection with the payment of bonuses, corporate performance goals are
considered by the Committee in light of general economic conditions, and include
items such as comparisons of year-to-year operating results, market share
performance and the achievement of budget objectives and forecasts. However, the
Committee does not generally identify specific goals that must be satisfied in
order for bonuses to be paid. Salary and bonus determinations are subject to
variances from the established ranges for a variety of subjective factors such
as an individual's contribution to the performance of the Company and its
affiliates in addition to the competitive considerations noted above. In
general, the potential bonus opportunity for executive officers is up to fifty
percent of base salary.
Restricted stock awards and stock options granted under the 1991 Long Term
Stock Incentive Plan (the "1991 Plan") are used as part of the Company's
long-term incentive arrangements, which focus the recipient on long-term
enhancement in stockholder value and help retain key employees. Factors reviewed
by the Committee in determining whether to grant options and awards are
generally the same factors considered in determining salaries and bonuses
described above. The Committee believes that the level of restricted stock
awards and stock option grants must be sufficient in size and potential value to
provide a strong incentive and to reinforce the individual's commitment to the
Company. The history of restricted stock awards and stock option grants
previously granted to an executive is also a factor in determining new awards
and grants. In general, the potential opportunity for annual restricted stock
awards under the Company's restricted stock award program is up to thirty
percent of base salary. In addition, supplemental restricted stock awards are
granted periodically. The Committee recognizes that the dollar value of these
stock-based incentives can appreciate to substantial amounts as a result of the
Company's extended vesting schedule, since there is a longer time period for the
Company's stock price
7
<PAGE> 10
to appreciate when compared to the shorter vesting schedule used by many other
companies which enable individuals to receive their incentives in a shorter time
period.
Restricted stock awards granted under the 1991 Plan generally vest in ten
percent annual installments over a period of ten years from the date of grant.
In general, vesting is contingent on a continuing employment or consulting
relationship with the Company. The 1991 Plan provides, however, that all shares
vest immediately upon death, permanent and total disability or the occurrence of
certain events constituting a change in control of the Company. Each of the
named executive officers received restricted stock awards in early 1995 in
conjunction with awards made to other key corporate office employees based on
the financial performance of the Company during 1994. During 1995, Mr. Kennedy
and Mr. Hennessey also received restricted stock awards under the 1991 Plan for
100,000 shares and 50,000 shares, respectively. These awards, designated as
"career awards," were granted in order to provide additional incentives to the
recipients and assure the continuation of their services to the Company until
retirement. These career awards vest over a three-year period only if the
recipient retires from the Company after reaching age 65, subject to the Plan's
provisions for earlier vesting as discussed above.
Original stock option grants made under the 1991 Plan generally vest in
installments beginning in the third year and extending through the eighth year
after grant and, unless otherwise provided, may be exercised until the earlier
of ten years from the date of grant or, as to the number of shares then
exercisable, the termination of the employment or consulting relationship of the
participant. The Committee may permit Company Common Stock to be used in payment
of federal, state and local withholding tax obligations attributable to the
exercise of stock options and may accept the surrender of an exercisable stock
option and authorize payment by the Company of an amount equal to the difference
between the option exercise price of the stock and its then fair market value.
Recipients of stock options are eligible to receive restoration options. A
restoration option is granted when a participant exercises an original stock
option and pays the exercise price by delivering shares of Company Common Stock.
The restoration option is granted equal to the number of shares delivered by the
participant and does not increase the number of shares covered by the original
stock option. The exercise price is 100 percent of the fair market value of
Company Common Stock on the date the restoration option is granted so that the
participant benefits only from subsequent increases in the Company's stock
price. The Committee believes that restoration options help to align more
closely the interests of executives with the long-term interests of stockholders
and allow executives to maintain the level of their equity-based interest in the
Company through a combination of direct stock ownership and stock options. No
restoration options were granted to the named executive officers in 1995. The
1991 Plan also provides that, upon the occurrence of certain events constituting
a change in control of the Company, all stock options previously granted
immediately become fully exercisable and all restricted stock awards immediately
vest. Generally, if a participant incurs an excise tax under Section 4999 of the
Internal Revenue Code in connection with a payment or distribution following a
change in control, the 1991 Plan provides that the participant will receive an
additional payment as reimbursement for such excise tax.
The Committee has reviewed the regulations relating to Internal Revenue
Code Section 162(m), which limits the deductibility of annual executive
compensation in excess of $1,000,000 for the five
8
<PAGE> 11
highest paid executives. The Committee intends to continue arrangements so that
stock options granted under the Company's existing stock incentive plan are
deductible compensation under the regulations and has restructured
determinations for cash bonuses to make them performance-based and therefore
deductible. The Committee continues to believe that it is in the Company's
interest to retain flexibility in its compensation program, and although the
remaining compensation will in some circumstances exceed the limitation of
Section 162(m), the Committee believes that the tax deduction lost on account of
such compensation will be insignificant for the foreseeable future.
COMPENSATION OF CEO
Mr. Manoogian's salary and bonus of approximately $1.4 million has been
reduced at his request, effective January 1, 1996, to $1 per year. Mr. Manoogian
requested the Compensation Committee of the Board of Directors to implement this
reduction to reflect his commitment to enhance stockholder value and his
personal disappointment with the Company's stock price performance in recent
years. The Compensation Committee, in acceding to this request, considered
alternative compensation arrangements for Mr. Manoogian based upon the Board's
own desire to improve stockholder value in the future, and accordingly on April
18, 1996 granted Mr. Manoogian a ten-year option to purchase 1,000,000 shares of
Company Common Stock. This option, however, will become exercisable only if the
price of Company Common Stock exceeds $41 per share within three years of the
date of grant or, if that target is not exceeded, exceeds $50 per share within
five years of the date of grant. The exercise price for this option is not set
at the current market price of the stock but, rather, is $41 or $50 per share,
based on whether the three-year or five-year target is exceeded. Since the
closing price of Company Common Stock was $27 7/8 per share on the date of grant
for this option, the exercise price represents a requirement for a minimum 47%
or 79% increase, respectively, from the market value of Company Common Stock on
the date of grant. Mr. Manoogian can benefit from the option grant only by the
amount of any price appreciation above the target exercise price (i.e. above $41
if the three-year target is exceeded, or above $50 if the three-year target is
not exceeded but the five-year target is). The option will expire unexercised if
neither target price is achieved. The Compensation Committee, in approving this
reduction and grant of Mr. Manoogian's performance stock option, indicated that
during 1996 it intends to evaluate additional types of performance-driven
incentive arrangements for the Company's senior management.
Compensation decisions for 1995 for all executives, including Mr.
Manoogian, the Chairman of the Board and Chief Executive Officer, are generally
based on the criteria described above. Mr. Manoogian's salary increase is within
the range of increases established by the Committee and reflects inflation and
the other factors that are used to establish the range of increases for
executive officers and other corporate office employees. Bonuses were reduced
for Mr. Manoogian and most other executive officers in light of the Company's
financial performance in 1995.
Erwin L. Koning
John A. Morgan
Arman Simone
9
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes the annual and long-term compensation of the
Company's chief executive officer and the other four highest paid executive
officers (collectively, the "named executive officers") for 1995, 1994 and 1993.
Mr. Manoogian's salary and bonus of approximately $1.4 million has been reduced
at his request, effective January 1, 1996, to $1 per year. Mr. Manoogian
requested the Compensation Committee of the Board of Directors to implement this
reduction to reflect his commitment to enhance stockholder value and his
personal disappointment with the Company's stock price performance in recent
years. For further information concerning this action and related arrangements,
see "Executive Compensation Committee Report."
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUSES AWARDS(1) OPTIONS COMPENSATION(2)
- - --------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian, 1995 $972,000 $382,000 $ 558,000 0 $ 210,000
Chairman of the Board 1994 930,000 477,000 220,000 0 214,000
and Chief Executive 1993 908,000 294,000 0 0 68,000
Officer(3)
Wayne B. Lyon, 1995 $767,000 $302,000 $ 440,000 0 $ 160,000
President and Chief 1994 734,000 377,000 175,000 0 163,000
Operating Officer(4) 1993 699,000 323,000 173,250 126,125(5) 54,000
Raymond F. Kennedy, 1995 $675,000 $301,000 $3,699,000 100,000 $ 121,000
Executive Vice President 1994 578,000 298,000 137,000 30,773(5) 118,000
and President -- Building 1993 546,000 268,000 135,450 0 42,000
Products
Frank M. Hennessey, 1995 $401,000 $228,000 $2,156,000 100,000 $ 27,000
Executive Vice
President(6)
Richard G. Mosteller, 1995 $512,000 $226,000 $ 294,000 0 $ 106,000
Senior Vice President -- 1994 490,000 251,000 117,000 27,000(5) 109,000
Finance(4) 1993 466,000 215,000 116,550 17,000(5) 41,000
</TABLE>
- - -------------------------
(1) This column sets forth the dollar value, as of the date of grant, of
restricted stock awarded under the Company's 1991 Long Term Stock Incentive
Plan (the "1991 Plan"). In general, restricted stock awards granted to date
vest over a period of ten years from the date of grant with ten percent of
each award vesting annually and vesting is contingent on a continuing
employment or consulting relationship with the Company. The restricted stock
awards made to Messrs. Kennedy and Hennessey in 1995 are principally "career
grants," which generally vest over a three-year period only following their
retirement from the Company after reaching age 65, as described under
"Executive Compensation Committee Report." The following number of shares
were awarded to
10
<PAGE> 13
the named executive officers in 1995: Mr. Manoogian - 21,470 shares; Mr.
Lyon - 16,940 shares; Mr. Kennedy - 131,990 shares; Mr. Hennessey - 76,940
shares; and Mr. Mosteller - 11,300 shares. As of December 31, 1995, the
aggregate number and market value of unvested restricted shares of Company
Common Stock held by each of the named executive officers under the 1991
Plan and prior plans were: Mr. Manoogian - 65,558 shares valued at
$2,057,000; Mr. Lyon - 48,125 shares valued at $1,510,000; Mr. Kennedy -
169,935 shares valued at $5,332,000; Mr. Hennessey - 86,982 shares valued at
$2,729,000; and Mr. Mosteller - 31,942 shares valued at $1,002,000. As of
December 31, 1995, Mr. Manoogian held 10,000 restricted shares of MascoTech
common stock granted under the Company's Restricted Stock (Industries)
Incentive Plan valued at $109,000. Recipients of restricted stock awards
have the right to receive dividends on unvested shares.
(2) This column includes (a) Company contributions and allocations under the
Company's defined contribution retirement plans for the accounts of each of
the named executive officers (for 1995: Mr. Manoogian - $67,000; Mr. Lyon -
$53,000; Mr. Kennedy - $47,000; Mr. Hennessey - $27,000; and Mr. Mosteller -
$35,000), and (b) cash payments made pursuant to certain tandem rights
associated with the annual vesting of certain restricted stock awards
granted in 1989 (in 1995: Mr. Manoogian - $143,000; Mr. Lyon - $107,000; Mr.
Kennedy - $74,000; and Mr. Mosteller - $71,000). For further information
regarding these rights, see "Certain Relationships and Related
Transactions."
(3) Does not reflect salary and bonus Mr. Manoogian received from MascoTech as
its Chairman of the Board and Chief Executive Officer ($570,000 for 1995) or
from TriMas as its Chairman of the Board ($100,000 for 1995).
(4) The information does not include directors fees received by Mr. Mosteller
from MascoTech or by Mr. Lyon from Emco Limited. See "Certain Relationships
and Related Transactions."
(5) No original stock options were granted in 1994 or 1993. Options shown in
those years consist solely of restoration options granted upon the exercise
of previously held stock options. As described in more detail under
"Executive Compensation Committee Report," a restoration option does not
increase the number of shares covered by the original option or extend the
term of the original option.
(6) Mr. Hennessey became an executive officer in 1995. Consequently, the table
does not set forth information for prior years, but information for 1995
includes the entire year.
11
<PAGE> 14
Option Grant Table
The following table sets forth information concerning options granted to
the named executive officers in 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO OPTION TERM(2)
GRANTED EMPLOYEES EXERCISE EXPIRATION ------------------------
NAME IN 1995(1) IN 1995 PRICE DATE 5% 10%
- - ----------------------- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian 0
Wayne B. Lyon 0
Raymond F. Kennedy 100,000 48.75% $28 1/4 05/18/05 $1,777,000 $4,502,000
Frank M. Hennessey 100,000 48.75% $28 1/4 05/18/05 $1,777,000 $4,502,000
Richard G. Mosteller 0
</TABLE>
- - -------------------------
(1) All of the options shown in the table were granted under the 1991 Plan at
the market price on the date of grant and vest in installments beginning in
the third year and extending through the eighth year after grant, and may be
exercised until the earlier of ten years from the date of grant or, as to
the number of shares then exercisable, the termination of the employment or
consulting relationship. The Compensation Committee may permit Company
Common Stock to be used to satisfy federal, state and local withholding tax
obligations attributable to the exercise of options, and may accept the
surrender of an exercisable option and authorize the payment by the Company
of an amount equal to the difference between the option exercise price of
the stock and its then fair market value. For further information, see
"Executive Compensation Committee Report."
(2) These amounts are based on assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and Company Common Stock holdings will
depend on overall market conditions and the future performance of the
Company and its Common Stock. There can be no assurance that the amounts
reflected in this table will be realized.
Year-End Option Value Table
The following table sets forth information concerning the value at December
31, 1995 of unexercised options held by each of the named executive officers
under the Company's stock option plans. The value of unexercised options
reflects the increase in market value of Company Common Stock from the date of
grant through December 31, 1995 (the closing price of Company Common Stock on
December 29, 1995, the last trading day of 1995, was $31 3/8 per share). The
value actually realized upon future option exercises by the named executive
officers will depend on the value of Company Common Stock at the time of
exercise.
12
<PAGE> 15
DECEMBER 31, 1995 OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995
------------------------------- -------------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- - ------------------------------ ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Richard A. Manoogian.......... 240,000 1,017,740 $ 2,550,000 $ 7,237,000
Wayne B. Lyon................. 180,000 286,125 $ 1,913,000 $ 1,638,000
Raymond F. Kennedy............ 220,000 171,310 $ 1,588,000 $ 1,078,000
Frank M. Hennessey............ 125,000 25,000 $ 472,000 $ 159,000
Richard G. Mosteller.......... 90,000 169,722 $ 956,000 $ 1,314,000
</TABLE>
Retirement Plans
The executive officers participate in pension plans maintained by the
Company for certain of its salaried employees. The following table shows
estimated annual retirement benefits payable for life at age 65 for various
levels of compensation and service under these plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
-------------------------------------------------------------------
REMUNERATION(2) 5 10 15 20 25 30
- - --------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $11,290 $ 22,580 $ 33,870 $ 45,161 $ 56,451 $ 67,741
400,000 22,580 45,161 67,741 90,321 112,902 135,482
600,000 33,870 67,741 101,611 135,482 169,352 203,223
800,000 45,160 90,321 135,482 180,643 225,803 270,964
1,000,000 56,451 112,902 169,352 225,803 282,254 338,705
1,200,000 67,741 135,482 203,223 270,964 338,705 406,446
</TABLE>
- - -------------------------
(1) The plans provide for credit for employment with any of the Company,
MascoTech, TriMas and their subsidiaries. Vesting occurs after five full
years of employment. The benefit amounts set forth in the table above have
been converted from the plans' calculated five-year certain and life benefit
and are not subject to reduction for social security benefits or for other
offsets, except to the extent that pension or equivalent benefits are
payable under a MascoTech or TriMas plan. The table does not depict Internal
Revenue Code limitations on tax-qualified plans because one of the plans is
a non-qualified plan established by the Company to restore for certain
salaried employees (including the named executive officers) benefits that
are otherwise limited by the Code. For each year of credited service prior
to July 1, 1971 there is an additional annual benefit equal to .2 of 1
percent of final average earnings in excess of $9,000. Approximate years of
credited service for the named executive officers participating in the plan
are: Mr. Manoogian and Mr. Mosteller - 30 (the maximum credited service);
Mr. Lyon - 24; Mr. Kennedy - 18; and Mr. Hennessey - 6.
13
<PAGE> 16
(2) For purposes of determining benefits payable, remuneration is equal to the
average of the highest five consecutive January 1 annual base salary rates
paid by the Company prior to retirement.
Under the Company's Supplemental Executive Retirement and Disability Plan,
certain officers and other key executives of the Company, or any company in
which the Company or a subsidiary owns at least 20 percent of the voting stock,
may receive retirement benefits in addition to those provided under the
Company's other retirement plans and supplemental disability benefits. Each
participant is designated by the Compensation Committee or the Chairman of the
Board (and approved by the Compensation Committee in the case of the Company
officers) to receive annually upon retirement on or after the age of 65, an
amount which, when combined with benefits from the Company's other retirement
plans and for most participants any retirement benefits payable by reason of
employment by prior employers, equals 60 percent of the average of the
participant's highest three years' cash compensation received from the Company
(limited to base salary and regular year-end cash bonus). Participants are
limited to an annual payment under this plan, which when combined with benefits
under the Company's non-qualified plan, may not exceed a maximum, currently
$377,454. A participant may also receive supplemental medical benefits. A
participant who has been employed at least two years and becomes disabled prior
to retirement will receive annually 60 percent of the participant's total
annualized cash compensation in the year in which the participant becomes
disabled, subject to certain limitations on the maximum payment and reduced by
benefits payable pursuant to the Company's long-term disability insurance and
similar plans. Upon a disabled participant's reaching age 65, the participant
receives the annual cash benefits payable upon retirement, as determined above.
A surviving spouse will receive reduced benefits upon the participant's death.
Participants are required to agree that they will not engage in competitive
activities for at least two years after termination of employment, and if
employment terminates by reason of retirement or disability, during such longer
period as benefits are received under this plan. The named executive officers
participate in this plan.
14
<PAGE> 17
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on Company Common Stock with the cumulative total return of the Standard
& Poor's 500 Stock Index ("S&P 500 Index"), the Standard & Poor's Building
Materials Index ("S&P Building Materials Index") and an index (the "Combined
Index") consisting of an equally weighted average of the S&P Building Materials
Index and the Standard & Poor's Household Furnishings & Appliances Index for the
period from January 1, 1991 through December 31, 1995. The Combined Index
reflects the Company's two primary business lines during the preceding five
fiscal years. In late November 1995, the Company's Board of Directors approved a
formal plan to dispose of the Company's home furnishings businesses, and such
businesses are being treated as discontinued operations. Since the Company's
businesses will consist of home improvement and building products, the Company
believes that a comparison to the S&P Building Materials Index will be more
appropriate. The graph assumes investments of $100 on December 31, 1990 in
Company Common Stock, the S&P 500 Stock Index, the S&P Building Materials Index
and the Combined Index, and the reinvestment of dividends.
<TABLE>
<CAPTION>
Average of
S&P Building
Materials and
S&P House-
hold Furn
ishings & Ap- S&P Building
Measurement Period S&P 500 In- pliances Materials In-
(Fiscal Year Covered) MASCO dex Indices dex
<S> <C> <C> <C> <C>
1990 100.00 100.00 100.00 100.00
1991 140.55 130.00 144.99 142.90
1992 180.84 139.67 173.94 182.51
1993 229.82 153.53 231.47 225.75
1994 145.94 155.50 180.76 166.74
1995 205.93 213.21 230.57 225.39
</TABLE>
The table below sets forth the value, as of December 31 of each of the
years indicated, of $100 investments made on December 31, 1990 in Company Common
Stock, the S&P 500 Index, the S&P Building Materials Index and the Combined
Index, and reinvestment of dividends.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
MASCO $100.00 $140.55 $180.84 $229.82 $145.94 $205.93
S&P 500 Index 100.00 130.00 139.67 153.53 155.50 213.21
Average of S&P Building Materials
and S&P Household Furnishings
& Appliances Indices 100.00 144.99 173.94 231.47 180.76 230.57
S&P Building Materials Index 100.00 142.90 182.51 225.75 166.74 225.39
</TABLE>
15
<PAGE> 18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Koning, Morgan and Simone. From time to time Morgan Lewis Githens & Ahn ("Morgan
Lewis"), of which Mr. Morgan is a partner, performs investment banking and other
related services for the Company and MascoTech, Inc. During 1995 the Company
retained Merrill Lynch & Co. and Morgan Lewis to assist the Company with the
divestiture of its Home Furnishings Group. Such assistance included the
evaluation of alternatives for the divestiture, the development and
implementation of strategies, the negotiation of the sale of the Home
Furnishings Group, and the valuation of the Home Furnishings Group and the
consideration to be received by the Company. Following the completion of the
divestiture, the Company and Morgan Lewis expect to establish an appropriate fee
for services provided during 1995 and 1996, including the firm's assistance with
the Home Furnishings Group divestiture, based on the contribution of such
services to the Company generally and to such divestiture. The payment of any
such fee will require the prior approval of the Company's other outside
Directors. Eugene A. Gargaro, Jr., an executive officer of the Company, serves
on the Compensation Committees of the Boards of Directors of MascoTech and
TriMas. Mr. Gargaro is of counsel to Dykema Gossett PLLC, a law firm which
provides legal services to the Company from time to time, for certain matters on
which he worked as a partner at the firm prior to his employment with the
Company in October 1993. He receives no compensation from the firm. Richard A.
Manoogian, an executive officer of MascoTech and TriMas, is Chairman of the
Board and Chief Executive Officer of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MASCOTECH, INC.
The Company owns approximately 45 percent of the outstanding voting common
stock of MascoTech (formerly Masco Industries, Inc.), which was created by the
Company in its 1984 restructuring. As part of the restructuring, the Company
entered into certain agreements with MascoTech.
MascoTech Corporate Services Agreement
Under a Corporate Services Agreement, the Company provides MascoTech and
its subsidiaries with office space for its executive offices, use of the
Company's data processing equipment and services, certain research and
development services, corporate administrative staff and other support services
in return for MascoTech's payment of an annual base service fee of .8 percent of
its consolidated annual net sales, subject to adjustments. This agreement also
provides for various license rights and confidential treatment of information
which may arise from the Company's performance of research and development
services on behalf of MascoTech. MascoTech paid the Company approximately $9
million for 1995 under this agreement, which is terminable by MascoTech at any
time and by the Company at the end of any calendar year, in each case upon at
least 90 days notice.
16
<PAGE> 19
MascoTech Corporate Opportunities Agreement
The Company and MascoTech are parties to a Corporate Opportunities
Agreement which addresses potential conflicts of interest with respect to future
business opportunities. This agreement materially restricts the ability of
either party to enter into acquisitions, joint ventures or similar transactions
involving businesses in which the other party is engaged without the consent of
the other party. It will continue in effect until one year after the termination
of the Corporate Services Agreement and thereafter will be renewed automatically
for one-year periods, subject to termination by either party at least 90 days
prior to any such scheduled renewal date.
MascoTech Stock Repurchase Agreement
Under a Stock Repurchase Agreement, the Company has the right to sell to
MascoTech, at a price based on fair market value, shares of MascoTech common
stock upon certain events that would result in the Company's ownership of
MascoTech common stock exceeding 49 percent of MascoTech's then outstanding
shares. The Company has advised MascoTech that it intends to exercise such right
whenever necessary to prevent its ownership of MascoTech common stock from
exceeding 49 percent of the MascoTech common stock then outstanding.
MascoTech Assumption and Indemnification Agreement
Under an Assumption and Indemnification Agreement, MascoTech assumed, and
agreed to indemnify the Company against, all of the liabilities and obligations
of the businesses transferred to it in the Company's 1984 restructuring,
including claims and litigation resulting from events or circumstances that
occurred or existed prior to the transfer, but excluding specified liabilities,
including those related to certain of the Company's stock option, restricted
stock and pension plans.
TRIMAS CORPORATION
Effective October 1, 1988, MascoTech transferred to TriMas various
businesses and cash in exchange for common stock and other securities of TriMas.
In a related transaction, the Company, which prior to such transfer had an
equity ownership interest in TriMas, purchased additional TriMas common stock
for cash. As part of these transactions, TriMas agreed to indemnify MascoTech
against substantially all of the liabilities and obligations of the businesses
transferred to it, and the three companies entered into certain other agreements
described below. As of March 1, 1996 the Company and MascoTech owned 5.3 percent
and 41.4 percent, respectively, of the outstanding TriMas common stock.
TriMas Corporate Services Agreement
Under a Corporate Services Agreement, the Company provides TriMas and its
subsidiaries with use of the Company's data processing equipment and services,
certain research and development services, corporate administrative staff and
other support services, in return for TriMas' payment of an annual base service
fee of .8 percent of TriMas' consolidated annual net sales, subject to
adjustments. This agreement also provides for various license rights and
confidential treatment of certain information
17
<PAGE> 20
which may arise from the Company's performance of research and development
services on behalf of TriMas. TriMas paid the Company approximately $3 million
for 1995 under this agreement, which is terminable by TriMas at any time upon at
least 90 days notice and by the Company at the end of any calendar year upon at
least 180 days notice.
TriMas Corporate Opportunities Agreement
The Company, MascoTech and TriMas are parties to a Corporate Opportunities
Agreement which addresses potential conflicts of interest with respect to future
business opportunities. It materially restricts TriMas' ability to enter into
businesses in which the Company or MascoTech are engaged without the consent of
the Company or MascoTech. This agreement will continue in effect until at least
two years after the termination of the TriMas Corporate Services Agreement and
thereafter will be renewed automatically for one-year periods, subject to
termination by any party at least 90 days prior to any such scheduled renewal
date.
TriMas Stock Repurchase Agreement
Under a Stock Repurchase Agreement, the Company and MascoTech have the
right to sell to TriMas, at a price based on fair market value, shares of TriMas
common stock upon certain events that would result in an increase in their
respective ownership of the then outstanding shares of TriMas common stock. The
Company and MascoTech have advised TriMas that they intend to exercise such
rights whenever necessary to prevent their ownership of TriMas common stock from
equaling or exceeding 20 percent and 50 percent, respectively, of the TriMas
common stock then outstanding, or if the Company or MascoTech then determines
such action to be in its respective best interest.
OTHER RELATED TRANSACTIONS
In 1993, the Company and MascoTech partially restructured their affiliate
relationships through transactions that reduced the Company's common equity
ownership of MascoTech and resulted in MascoTech's acquisition of the Company's
investments in Emco Limited, a Canadian-based manufacturer and distributor of
building and home improvement and other industrial products. As a result of such
transaction, MascoTech holds CDN $17,680,000 of 8% subordinated debentures and
CDN $33,040,000 of 7 1/4% convertible subordinated debentures issued by Emco
Limited, for which Frank M. Hennessey, an executive officer of the Company, also
serves as Chairman of the Board and Chief Executive Officer. As part of the
consideration for the restructuring, the Company received from MascoTech
seven-year warrants to purchase 10 million shares of MascoTech common stock at
$13 per share. The Company may not exercise the warrants if, after giving effect
to such exercise, the Company would own more than 35 percent of the outstanding
shares of MascoTech common stock. The Company also entered into an agreement to
purchase from MascoTech at MascoTech's option through March 1997 up to $200
million of subordinated debentures, and in connection therewith, MascoTech pays
an annual commitment fee to the Company of $250,000. In addition, MascoTech
agreed to file registration statements under the federal securities laws to
enable the Company from time to time to publicly dispose of securities of
MascoTech held by the Company.
18
<PAGE> 21
MascoTech GmbH, a German subsidiary of MascoTech, and Masco GmbH, a German
subsidiary of the Company, have from time to time advanced excess funds held in
such foreign country to one another to be used for working capital. The parties
negotiated a fluctuating rate of interest for these loans. The largest amount
outstanding payable by MascoTech GmbH during 1995 was approximately $107,000.
TriMas acquired several businesses from the Company in early 1990, and as
part of the transaction, the Company agreed to indemnify TriMas against certain
liabilities of the acquired businesses.
MascoTech and TriMas participate with the Company in a number of national
purchasing programs, which enable each of them to obtain favorable terms from
certain of their service and product suppliers. Sales of products and services
and other transactions occur from time to time among the Company, MascoTech and
TriMas. As a result of such transactions in 1995, the Company paid approximately
$11.2 million to MascoTech and approximately $1.8 million to TriMas, and
received approximately $641,000 from MascoTech. In addition, MascoTech paid
approximately $3.3 million to TriMas and TriMas paid approximately $572,000 to
MascoTech for 1995 as a result of such transactions in 1995.
In 1988 the Company and MascoTech jointly established Masco Capital
Corporation to seek business and other investment opportunities of mutual
interest that for various reasons were viewed as more appropriately undertaken
on a joint basis rather than individually. In 1988 Masco Capital made an
investment in Payless Cashways, Inc., a building materials specialty retailer.
In connection with this investment, Payless entered into a multi-year supply
agreement with the Company covering the purchase of certain competitively priced
products of the Company and any affiliate designated by the Company, including
MascoTech. This Agreement expired on December 31, 1995. In December 1991, the
Company purchased MascoTech's 50 percent ownership interest in Masco Capital for
approximately $49.5 million and may make additional payments based upon any
aggregate net increase in the value of Masco Capital's remaining investments
through late 1996.
In 1989 the Company made long-term restricted stock awards to a large
number of Company employees that were combined with tandem rights to phantom
TriMas shares. The value of a phantom TriMas share is deemed to be equal to the
value of a share of TriMas common stock. At the time of the grant, the aggregate
value of the shares of Company Common Stock awarded to each participant was
equal to the aggregate value of the alternative phantom TriMas shares that were
awarded. The phantom TriMas shares vest on the same schedule as the shares of
Company Common Stock. On each vesting date the participant receives the benefit
of the then current value of the vesting shares of Company Common Stock or the
then current value of the vesting phantom TriMas shares, whichever is greater.
If the value of the vesting phantom TriMas shares is greater, the participant
receives the vesting shares of the Company Common Stock and the excess is paid
in cash. If the value of the vesting phantom TriMas shares is less, the
participant receives only the vesting shares of Company Common Stock.
In 1993, as part of its plan to dispose of its energy-related businesses,
MascoTech sold Lamons Metal Gasket Co. to TriMas for a purchase price of $60
million plus additional future payments contingent upon the level of
profitability of Lamons. As part of the transaction, MascoTech agreed to
indemnify TriMas against certain liabilities of the acquired business.
19
<PAGE> 22
Subject to certain conditions, and upon the request of MascoTech or the
Company, TriMas has agreed to file registration statements under the federal
securities laws to permit the sale in public offerings of TriMas common stock
held by the Company and MascoTech. In addition, the Company and MascoTech
entered into arrangements with TriMas pursuant to which TriMas has registered
shares of TriMas common stock held by certain executives of the Company and
MascoTech, including Richard A. Manoogian, under incentive programs established
by such companies. TriMas provides indemnification against certain liabilities
arising from such transactions.
Ownership of securities and various other relationships and incentive
arrangements may result in conflicts of interest in the Company's dealings with
MascoTech, TriMas and others. The MascoTech and TriMas Corporate Opportunities
Agreements and other aspects of the relationships among the three companies may
affect their ability to make acquisitions and develop new businesses under
certain circumstances. Four persons affiliated with the Company are currently
members of MascoTech's Board of Directors (although the term of one of the four,
Mr. Mosteller, Senior Vice President -- Finance, expires in May 1996, and he is
not seeking re-election) and three persons affiliated with the Company are
members of TriMas' Board of Directors. Mr. Manoogian, the Company's Chairman of
the Board and Chief Executive Officer, is also the Chairman of the Board and
Chief Executive Officer of MascoTech, the Chairman of the Board of TriMas and a
significant stockholder of all three companies. Mr. Morgan, who is a Director of
the Company, is also a Director of MascoTech and TriMas. Mr. Gargaro, an
executive officer of the Company, is also a director and the Secretary of both
MascoTech and TriMas. Certain officers and other key employees of the Company
receive benefits based upon the value of the common stock of the Company,
MascoTech and TriMas under certain Company and MascoTech incentive compensation
programs. See "Compensation of Executive Officers."
As previously reported to stockholders, on April 1, 1996, the Company
entered into an agreement for the sale of the Home Furnishings Group to
Furnishings International Inc., an investor group. During the discussions
leading to the signing of the sale agreement, the investor group expressed its
strong desire that Wayne Lyon, the Company's President and Chief Operating
Officer, join Furnishings International as its full-time Chairman, President and
Chief Executive Officer to manage the Home Furnishings Group operations
following the sale. The Company has reluctantly acceded to this request and Mr.
Lyon accepted the appointment, to become effective upon completion of the
transaction. Mr. Lyon and other members of the Home Furnishings Group management
will become investors in Furnishings International, in amounts and on terms to
be established.
20
<PAGE> 23
The following table sets forth the number of shares of MascoTech and TriMas
common stock beneficially owned as of March 1, 1996 by the nominees, the current
Directors and named executive officers and by the current Directors and
executive officers of the Company as a group. Except as indicated below, each
person exercises sole voting and investment power with respect to the shares
listed.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK OF COMMON STOCK OF
MASCOTECH TRIMAS CORPORATION
NAME(1) BENEFICIALLY OWNED BENEFICIALLY OWNED
- - ---------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Dr. Lillian Bauder........................................ 0 0
Frank M. Hennessey........................................ 0 40,000
Joseph L. Hudson, Jr...................................... 0 0
Raymond F. Kennedy(2)..................................... 4,030 55,500
Erwin L. Koning........................................... 3,000 500
Wayne B. Lyon(3)(8)....................................... 60,580 176,084
Richard A. Manoogian(4)(5)(8)............................. 5,111,142 1,801,852
John A. Morgan............................................ 24,000 8,000
Richard G. Mosteller...................................... 1,000 0
Arman Simone(6)(8)........................................ 20,000 2,880
Peter W. Stroh............................................ 0 0
All 19 current Directors and executive officers of the
Company as a group (excluding subsidiary, divisional and
group executives)(2)(3)(4)(5)(6)(7)(8).................. 5,359,266 2,363,494
</TABLE>
- - -------------------------
(1) The only nominee, current Director or executive officer of the Company who
beneficially owns one percent or more of MascoTech or TriMas common stock is
Mr. Manoogian, who beneficially owns 9.1 percent of MascoTech common stock
and 4.9 percent of TriMas common stock. Directors and executive officers of
the Company as a group beneficially own 9.6 percent of MascoTech common
stock and 6.5 percent of TriMas common stock.
(2) Mr. Kennedy owns 5,000 shares of MascoTech $1.20 Convertible Preferred (less
than one percent of the total issue outstanding). Shares of MascoTech common
stock owned by Mr. Kennedy and by all Directors and executive officers as a
group include in each case 4,030 shares into which the preferred stock is
convertible.
(3) Includes 2,000 shares of MascoTech common stock and 7,184 shares of TriMas
common stock owned by a foundation for which Mr. Lyon serves as director.
Shares owned beneficially by Mr. Lyon and all Directors and executive
officers of the Company as a group include 22,580 shares of MascoTech common
stock which could be acquired upon conversion of convertible debt securities
of MascoTech.
(4) Includes 202,560 shares of MascoTech common stock and 33,008 shares of
TriMas common stock owned by charitable foundations for which Mr. Manoogian
serves as a director, and 387,006 shares of MascoTech common stock which can
be acquired upon conversion of convertible securities owned by the
foundations. In addition, Mr. Manoogian may be deemed to be the beneficial
owner of 200,000 shares of MascoTech's $1.20 Convertible Preferred Stock
(1.9 percent of the total issue outstanding) owned by one of the
foundations.
(5) Includes shares of MascoTech common stock which may be acquired on or before
April 29, 1996 upon exercise of stock options (700,000 shares for both Mr.
Manoogian and all Directors and
21
<PAGE> 24
executive officers of the Company as a group), unvested restricted shares
issued under the Company's Restricted Stock (Industries) Plan (5,000
shares for Mr. Manoogian and 12,200 for all Directors and executive
officers of the Company as a group), and unvested restricted shares
issued under MascoTech's restricted stock incentive plans (21,840 shares
for Mr. Manoogian and 40,200 shares for all Directors and executive
officers of the Company as a group). Mr. Manoogian exercises neither
voting nor investment power over unexercised option shares and has sole
voting but no investment power over unvested, restricted shares.
(6) Includes 10,000 shares of MascoTech common stock owned by a charitable
organization for which Mr. Simone serves as a director.
(7) Includes 27,000 shares of MascoTech common stock and 11,684 shares of TriMas
common stock owned by trusts for which an executive officer serves as a
trustee and 4,354 shares of MascoTech common stock which could be acquired
upon conversion of convertible debt securities owned by such trusts.
(8) The directors of the foundations and the charitable organization and the
trustees share voting and investment power with respect to the MascoTech
common and preferred stock and the TriMas common stock owned by such
entities; however, Messrs. Manoogian, Simone and Lyon and the executive
officer who acts as trustee each disclaim beneficial ownership of such
securities.
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected the independent public accounting firm of Coopers & Lybrand L.L.P.
("Coopers & Lybrand") to audit the Company's financial statements for the year
1996, and believes it appropriate to submit its choice for ratification by
stockholders.
Coopers & Lybrand has acted as the Company's independent certified public
accounting firm for over 35 years. During such time, it has performed services
of an accounting and auditing nature for the Company as well as for MascoTech
and TriMas Corporation. Representatives of Coopers & Lybrand are expected to be
present at the meeting, will have the opportunity to make a statement and are
expected to be available to respond to appropriate questions.
If the selection is not ratified, the Board will consider selecting another
public accounting firm as the independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT AUDITORS FOR THE COMPANY
FOR THE YEAR 1996.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals intended to be presented at the 1997 Annual Meeting
of Stockholders of the Company must be received by the Company at its address
stated above by December 30, 1996, to be considered for inclusion in the
Company's Proxy Statement and Proxy relating to such meeting.
22
<PAGE> 25
OTHER MATTERS
The Board of Directors knows of no other matters to be voted upon at the
meeting. If any other matters properly come before the meeting, it is the
intention of the proxies named in the enclosed Proxy to vote the shares
represented thereby with respect to such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Eugene A. Gargaro, Jr.
EUGENE A. GARGARO, JR.
Secretary
Taylor, Michigan
April 29, 1996
23
<PAGE> 26
MASCO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
AT MASCO CORPORATE HEADQUARTERS
21001 VAN BORN ROAD
TAYLOR, MICHIGAN 48180
[MAP]
FROM DOWNTOWN DETROIT (EAST)
- - - Take I-94 west to the Pelham Road exit.
- - - Turn right onto Pelham Road and travel to Van Born Road.
- - - Turn left onto Van Born Road and proceed to the corporate office.
FROM METRO AIRPORT (WEST)
- - - Take I-94 east to Pelham/Southfield Road exit.
- - - Turn left onto Pelham and travel to Van Born Road.
- - - Turn left onto Van Born Road and proceed to the corporate office.
FROM SOUTHFIELD/BIRMINGHAM (NORTH)
- - - Take the Southfield Freeway to the Outer Drive/Van Born Road exit.
- - - Stay on the service drive and proceed to Van Born Road.
- - - Bear right onto Van Born Road and travel to the corporate office.
FROM TOLEDO (SOUTH)
- - - Take I-75 north to the Telegraph Road north exit.
- - - Proceed on Telegraph Road north to Van Born Road.
- - - Turn right on Van Born Road and proceed to the corporate office.
<PAGE> 27
<TABLE>
<S><C>
/ /
(1) Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote
listed below / / for all nominees listed below / / EXCEPTIONS / /
Class II Directors to hold office until the 1999 Annual Meeting of Stockholders or until their respective successors are elected
and qualified:
NOMINEES: DR. LILLIAN BAUDER, JOSEPH L. HUDSON, JR. and JOHN A. MORGAN
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT
NOMINEE'S NAME.)
(2) Ratification of the selection of Coopers & Lybrand L.L.P. as independent auditors for the Company for the year 1996.
FOR / / AGAINST / / ABSTAIN / /
(3) In their discretion upon such other business as may properly come before the meeting.
The shares represented by this proxy will be voted in accordance with the specifications above. IF SPECIFICATIONS ARE NOT MADE,
THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR THE RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND L.L.P.
Change of Address or Comments Mark Here / /
Please sign exactly as name appears at left. Executors, administrators, trustees, et al. should so indicate when signing. If the
signature is for a corporation, please sign the full corporate name by an authorized officer. If the signature is for a
partnership, please sign the full partnership name by an authorized person. If shares are registered in more than one name, all
holders must sign.
Dated: _________________________________, 1996
_________________________________________(L.S.)
Signature
_________________________________________(L.S.)
Signature
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. / /
Please sign, date and return the proxy card promptly using the enclosed envelope.
</TABLE>
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 22, 1996
MASCO CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby revoking any Proxy heretofore given, appoints
RICHARD A. MANOOGIAN and EUGENE A. GARGARO, JR. and each of them attorneys and
proxies for the undersigned, each with full power of substitution, to vote the
shares of Company Common Stock registered in the name of the undersigned to the
same extent the undersigned would be entitled to vote if then personally
present at the Annual Meeting of Stockholders of Masco Corporation to be held at
the offices of the Company at 21001 Van Born Road, Taylor, Michigan 48180, on
Wednesday, May 22, 1996, at 10:00 A.M. Eastern daylight time and at any
adjournment thereof.
The undersigned hereby acknowledges receipt of the accompanying Notice
of Annual Meeting of Stockholders and Proxy Statement.
(Continued and to be signed and dated on the reverse side.)
MASCO CORPORATION
P.O. BOX 11261
NEW YORK, N.Y. 10203-0261
