<PAGE>
<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission only
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11c or Rule 14a-12
MATTHEWS INTERNATIONAL CORPORATION
----------------------------------------------
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------
2) Aggregate number of securities to which transaction applies:
---------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
----------------------------------
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>
<PAGE> 2
1998
NOTICE
OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
<PAGE>
<PAGE> 3
Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, Pennsylvania 15212-5851
412.442.8200 Fax 412.442.8290
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 21, 1998
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 10:30 AM on Saturday, February 21, 1998 at the Health and
Science Theater, Carnegie Science Center, Pittsburgh, Pennsylvania, for the
purpose of considering and acting upon the following:
1. To elect three Directors of the Company for a term of three years.
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
certified public accountants to audit the records of the Company for the
fiscal year ending September 30, 1998.
3. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on December 31, 1997 will be
entitled to vote at the Annual Meeting or any adjournments thereof.
Please indicate on the enclosed proxy card whether you will or will not be able
to attend this meeting. Return the card in the enclosed envelope as soon as
possible. If you receive more than one proxy (for example, because you own
Class A and Class B Common Stock, or you own common stock in more than one
account), please be sure to complete and return all of them.
We hope you can be with us for this important occasion.
Sincerely,
Edward J. Boyle
Edward J. Boyle
Corporate Secretary
January 21, 1998
<PAGE>
<PAGE> 4
Matthews International Corporation
Two NorthShore Center
Pittsburgh, PA 15212 - 5851
412 / 442-8200
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of the Company
whose principal executive offices are located at Two NorthShore Center,
Pittsburgh, Pennsylvania 15212. This Proxy Statement and the accompanying proxy
were first released to shareholders on January 21, 1998.
Execution of the proxy will not affect a shareholder's right to attend the
meeting and vote in person. Any shareholder giving a proxy has the right to
revoke it at any time before it is voted by giving notice to the Corporate
Secretary or by attending the meeting and voting in person.
Matters to be considered at the Annual Meeting are those set forth in the
accompanying notice. Shares represented by proxy will be voted in accordance
with instructions. In the absence of instructions to the contrary, the proxy
solicited will be voted for the proposals set forth.
Management does not intend to bring before the meeting any business other than
that set forth in the Notice of Annual Meeting of Shareholders. If any other
business should properly come before the meeting, it is the intention of
Management that the persons named in the proxy will vote in accordance with
their best judgment.
OUTSTANDING STOCK AND VOTING RIGHTS
The Company has two classes of stock outstanding: Class A Common Stock, par
value $1.00 per share, and Class B Common Stock, par value $1.00 per share.
Together, these two classes are referred to as the "Common Stock."
Each outstanding share of Class A Common Stock of the Company entitles the
holder to one vote, and each outstanding share of Class B Common Stock entitles
the holder to ten votes, upon any business properly presented at the
shareholders' meeting. Cumulative voting is not applicable to the election of
directors.
The Board of Directors of the Company has established December 31, 1997 as the
record date for shareholders entitled to vote at the Annual Meeting. The
transfer books of the Company will not be closed. A total of 6,455,811 shares
of Class A Common Stock, and 1,806,502 shares of Class B Common Stock are
outstanding and entitled to vote at the meeting.
Abstentions and broker non-votes have no effect on any proposal to be voted
upon. Broker non-votes as to any matter are shares held by brokers and other
nominees which are voted at the meeting on matters as to which the nominee has
discretionary authority, but which are not voted on the matter in question
because the nominee does not have discretionary voting authority as to such
matter.
<PAGE>
<PAGE> 5
GENERAL INFORMATION REGARDING CORPORATE GOVERNANCE
Board of Directors
The Board of Directors is the ultimate governing body of the Company. As such,
it functions within a framework of duties and requirements established by
statute, government regulations and court decisions. In carrying out their
responsibilities, directors are expected to perform their duties in good faith
and with the diligence, care and skill which ordinarily prudent people would
exercise under similar circumstances.
Generally, the Board of Directors reviews and confirms the basic objectives and
broad policies of the Company, approves various important transactions,
appoints the officers of the Company and monitors Company performance in key
results areas. Management is accountable to the Board of Directors for the
satisfactory conduct of the day-to-day business of the Company.
Management is responsible for providing the Board of Directors with adequate
support, services and resources, together with thorough information, reports
and analyses concerning the Company's principal activities and plans. In
addition, the Board of Directors has the power, in its discretion, to employ
the services of outside consultants and is free to have discussions and
interviews with personnel of the Company and others as it deems appropriate and
helpful to its work.
Board Composition
The Restated Articles of Incorporation of the Company provide that the Board
of Directors has the power to set the number of Directors constituting the full
Board, provided that such number shall not be less than five nor more than 15.
Until further action, the Board of Directors has fixed the number of directors
constituting the full Board at eight, divided into three classes. The terms
of office of the three classes of Directors end in successive years.
During fiscal year 1997, there were 4 regularly scheduled meetings of the Board
of Directors.
Board Committees
There are three standing committees appointed by the Board of Directors -- the
Executive, Audit and Compensation Committees.
Management has the same responsibility to each committee as it does to the
Board of Directors with respect to providing adequate staff services and
information. Furthermore, each committee has the same power as the Board of
Directors to employ the services of outside consultants and to have discussions
and interviews with personnel of the Company and others.
<PAGE>
<PAGE> 6
The principal functions of the three standing committees are summarized as
follows:
Executive Committee
The Executive Committee is appointed by the Board of Directors to have and
exercise during periods between Board meetings all of the powers of the Board
of Directors, except that the Executive Committee may not elect directors,
change the membership of or fill vacancies in the Executive Committee, change
the By-Laws of the Company or exercise any authority specifically reserved by
the Board of Directors. Among the functions customarily performed by the
Executive Committee during periods between Board meetings are the approval,
within limitations previously established by the Board of Directors, of the
principal terms involved in sales of securities of the Company, and such
reviews as may be necessary of significant developments in major events and
litigation involving the Company. In addition, the Executive Committee is
called upon periodically to provide advice and counsel in the formulation of
corporate policy changes and, where it deems advisable, make recommendations
to the Board of Directors.
The Executive Committee holds meetings at such times as are required. During
fiscal year 1997, the Executive Committee met a total of eight times. The
Chairman of the Executive Committee is David M. Kelly. The other Committee
members are David J. DeCarlo and Geoffrey D. Barefoot.
Audit Committee
The principal function of the Audit Committee is to endeavor to assure the
integrity and adequacy of financial statements issued by the Company. It is
intended that the Audit Committee will review internal auditing systems and
procedures as well as the activities of the public accounting firm performing
the external audit.
The Committee members are William J. Stallkamp (Chairman), William A. Coates,
and John P. O'Leary, Jr. During fiscal year 1997, the Audit Committee met
twice.
Compensation Committee
The principal function of the Compensation Committee, the members of which are
Messrs. Coates (Chairman), Kennedy and Stallkamp, is to review periodically the
suitability of the remuneration arrangements (including benefits) for the
principal officers of the Company other than stock remuneration. A
subcommittee of the Compensation Committee, the Stock Compensation Committee,
the members of which are Messrs. Coates (Chairman) and Stallkamp, consider and
grant stock remuneration and administer the Company's 1992 Stock Incentive
Plan. The Compensation Committee met four times in fiscal year 1997.
Meeting Attendance
Under the applicable rules of the Securities and Exchange Commission, the
Company's Proxy Statement is required to name those directors who during the
preceding year attended fewer than 75% of the total number of meetings held by
the Board and by the Committees of which they are members. During fiscal year
1997, all directors attended more than 75% of such meetings for which they were
eligible.
<PAGE> 7
Compensation of Directors
Pursuant to the Director Fee Plan, directors who are not also officers of the
Company each receive as an annual retainer fee shares of the Company's Class
A Common Stock equivalent to approximately $16,000. Each director may elect
to be paid these shares on a current basis or have such shares credited to a
deferred stock account as phantom stock, with such shares to be paid to the
director subsequent to leaving the Board. In addition, each such director is
paid $800 for every meeting of the Board of Directors attended and (other than
a Chairman) $500 for every committee meeting attended. The Chairman of a
committee of the Board of Directors is paid $700 for every committee meeting
attended. No other remuneration is otherwise paid by the Company to any
director for services as a director.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominations for election to the Board of Directors may be made by the Board of
Directors or by the shareholders. Messrs. DeCarlo and O'Leary, whose terms of
office are expiring, have been nominated by the Board to serve for three-year
terms that will end in 2001. In addition, the Board of Directors has nominated
Mr. Robert J. Kavanaugh as a new member to serve for a three-year term that
will end in 2001. Mr. William A. Coates, who has served on the Board since
1992, will retire from the Board upon the expiration of his term in February
1998. Nominations made by the shareholders shall be made in writing in
accordance with Section 6.1 of the Articles. No such nominations have been
received.
The Board of Directors has no reason to believe that any of the nominees will
become unavailable for election. If a nominee should become unavailable prior
to the meeting, the accompanying proxy will be voted for the election in his
place of such other person as the Board of Directors may recommend.
The Board of Directors recommends that you vote FOR the election of Directors.
The following information is furnished with respect to the three persons
nominated by the Board of Directors for election as a director and with respect
to the continuing directors.
The Nominees
David J. DeCarlo, age 52, is President, Bronze Division and has been a Director
of the Company since 1987. He was hired by the Company in 1985 as Director of
Financial Planning and Analysis. He was named Division Manager of the Bronze
Division and was appointed Vice President in 1986. He was elected President,
Bronze Division in November 1993. Mr. DeCarlo received a Bachelor of Science
Degree in Industrial Management from West Virginia University in 1967, a Master
of Arts Degree in Economics and Statistics from the University of Pennsylvania
in 1970, and an M.B.A. in Finance from the University of Pennsylvania Wharton
School of Finance in 1971 where he also completed all the required courses for
a Ph.D. in Applied Economics and Finance. Prior to joining Matthews, Mr.
DeCarlo held various management positions with Reynolds Aluminum Company,
Westinghouse Electric Corporation, and Joy Manufacturing Company where his last
position was Vice President of Field Operations.
<PAGE>
<PAGE> 8
Robert J. Kavanaugh, age 60, is a retired partner of the Pittsburgh office of
Arthur Andersen L.L.P. Mr. Kavanaugh has more than 38 years of experience in
assisting clients in numerous industries and has extensive experience in public
reporting, SEC related matters, and mergers and acquisitions. Mr. Kavanaugh
served as the advisory partner to a number of major clients, both public and
private. Mr. Kavanaugh is on the Board of Directors of the Pittsburgh Symphony
Society and is Senior Vice President. He is on the Board of Trustees of Carlow
College and is Chairman of the Finance Committee. He is also on the Board of
Directors of the Greater Pittsburgh Chamber of Commerce where he serves as
Treasurer, and the Board of Trustees of Shady Side Academy. Mr. Kavanaugh
retired from Arthur Andersen L.L.P. in August 1996.
John P. O'Leary, Jr., age 51, is President and Chief Executive Officer of
Tuscarora Incorporated, the nation's largest producer of custom-molded foam
plastic products. He also serves as a member of Tuscarora's Board of
Directors. Immediately prior to taking over as President and Chief Executive
Officer, Mr. O'Leary served as President of Western Division operations and was
responsible for overseeing the operation of 12 profit centers located
throughout the Midwest and South. Mr. O'Leary holds a Masters in Business
Administration from the University of Pennsylvania Wharton School of Business
and received a Bachelor's Degree in Economics from Gettysburg College. He
currently serves on the Board of Directors of the Beaver County Corporation of
Economic Development, Southwestern Pennsylvania Industrial Resource Center, and
Gateway Rehabilitation Center. Mr. O'Leary is a Trustee of Gettysburg College.
Continuing Directors
Geoffrey D. Barefoot, age 51, is President, Graphic Systems Division and has
been a Director since 1990. Mr. Barefoot has been employed by the Company since
1975 and has held various management positions, both in Corporate Personnel and
the Graphic Systems Division. He was appointed Pittsburgh Branch Manager in
November 1979, Eastern Regional Manager for the Graphic Systems Division in
July 1984 and Division Manager in March 1986. He was subsequently elected Vice
President in March 1988 and elected President, Graphic Systems Division in
November 1993. Mr. Barefoot received a B.S. Degree in Business Administration
from West Virginia Wesleyan College in 1968 and holds an M.A. Degree in
Industrial Relations from St. Francis College. Prior to joining Matthews, Mr.
Barefoot served as an aviator in the United States Navy from 1968 to 1974. Mr.
Barefoot is Treasurer and a Director of the Flexographic Prepress Platemakers
Association.
David M. Kelly, age 55, was elected Chairman of the Board on March 15, 1996.
He joined Matthews on April 3, 1995 as President and Chief Operating Officer
and was appointed Chief Executive Officer October 1, 1995. Prior to his
employment with Matthews, Mr. Kelly was employed by Carrier Corporation for 22
years. During that time his positions included Marketing Vice President for
Asia Pacific; President of Japanese Operations; Vice President, Manufacturing;
President of North American Operations; and Senior Vice President for Carrier's
residential and light commercial businesses. Mr. Kelly received a Bachelor of
Science in Physics from Boston College in 1964, a Master of Science degree in
Molecular Biophysics from Yale University in 1966, and a Master of Business
Administration from Harvard Business School in 1968. He is chairman of the
Executive Committee and the Jas. H. Matthews & Co. Educational and Charitable
Trust, a member of the Pension Board, and serves on the boards of various
subsidiaries of Matthews International Corporation. Mr. Kelly is a member of
the Board of Directors of Mestek, Inc., Elliott Company, the United Way of
Allegheny County, and the Pittsburgh Symphony Orchestra.
<PAGE> 9
Thomas N. Kennedy, age 62, was elected a Director in 1987. He was Senior Vice
President, Chief Financial Officer and Treasurer of the Company until his
retirement from Matthews effective December 1, 1995. Mr. Kennedy had been
employed by the Company since 1972. He was elected Treasurer in 1974 and Vice
President--Treasurer in 1986. Mr. Kennedy received a Bachelor of Business
Administration from the University of Pittsburgh in 1958.
James L. Parker, age 59, retired from the Company November 1, 1996 after nearly
thirty years of service. He was formerly Senior Vice President, General
Counsel and Secretary of the Company. He has been a Director of the Company
since 1981. Mr. Parker received a Bachelor of Business Administration Degree
from the University of Pittsburgh and a Juris Doctor Degree from Case-Western
Reserve University.
William J. Stallkamp, age 58, has been a Director of the Company since 1981.
Mr. Stallkamp is Chairman and Chief Executive Officer of Mellon PSFS in
Philadelphia, PA. He received a Bachelor of Science Degree in Business
Administration from Miami University of Oxford, Ohio. He serves as a Director
of Yoder Brothers, Inc., Highmark Blue Cross/Blue Shield, Greater Philadelphia
Chamber of Commerce and Greater Philadelphia First. He also serves on the
Board of Directors for YMCA of Philadelphia and Vicinity, the Southeastern
Pennsylvania Chapter of the American Red Cross, and the Pennsylvania Academy
of Fine Arts.
The term for each nominee and each Director is listed below:
Term to expire at Annual
Nominees Meeting of Shareholders in:
David J. DeCarlo 2001
Robert J. Kavanaugh 2001
John P. O'Leary, Jr. 2001
Continuing Directors
David M. Kelly 1999
James L. Parker 1999
Geoffrey D. Barefoot 2000
Thomas N. Kennedy 2000
William J. Stallkamp 2000
<PAGE>
<PAGE> 10
PROPOSAL 2
SELECTION OF AUDITORS
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has appointed Coopers & Lybrand L.L.P. as independent certified
public accountants to audit the records of the Company for the year ending
September 30, 1998.
The Board of Directors has determined that it would be desirable to request an
expression of opinion from the shareholders on the appointment. Ratification
of the appointment of Coopers & Lybrand L.L.P. requires the affirmative vote
of a majority of all the votes cast by shareholders of Common Stock entitled
to vote at the meeting. If the shareholders do not ratify the selection of
Coopers & Lybrand L.L.P., the selection of alternative independent certified
public accountants will be considered by the Board of Directors.
It is not expected that any representative of Coopers & Lybrand L.L.P. will be
present at the Annual Meeting of Shareholders.
The Board of Directors recommends that you vote FOR Proposal 2.
OTHER INFORMATION
Certain Reportable Transactions
The Securities and Exchange Commission requires disclosure of certain business
transactions or relationships between the Company, or its subsidiaries, and
other organizations with which any of the Company's directors are affiliated
as an owner, partner, director, officer or employee. Briefly, disclosure is
required where such a business transaction or relationship meets the standards
of significance established by the Securities and Exchange Commission with
respect to the types and amounts of business transacted. The Company is aware
of no transaction requiring disclosure pursuant to this item during the past
fiscal year.
Stock Ownership
The Company's Articles of Incorporation divide its voting stock into three
classes: Preferred Stock and Class A and Class B Common Stock. At the present
time, none of the Preferred Stock is issued or outstanding. The following
information is furnished with respect to persons who the Company believes,
based on its records, beneficially own more than five percent of the
outstanding shares of Class A and Class B Common Stock of the Company, and with
respect to nominees for election to and current members of the Board of
Directors. Those individuals with more than five percent of such shares could
be deemed to be "control persons" of the Company.
<PAGE>
<PAGE> 11
This information is as of November 30, 1997.
Number of Number of
Class A Shares Class B Shares
Name of Beneficially Percent Beneficially Percent
Beneficial Owner (1) Owned (2) of Class Owned (2) of Class
- ---------------- -------------- -------- -------------- --------
Directors and Officers:
- ----------------------
D.M. Kelly 27,000 0.4% 28,000 1.5%
G.D. Barefoot None - 104,500 5.6
W.A. Coates 17,572 0.3 None -
D.J. DeCarlo None - 144,995 7.8
R.J. Kavanaugh None - None -
T.N. Kennedy 45,490 0.7 None -
J.P. O'Leary, Jr. 5,750 0.1 None -
J.L. Parker 199,760 3.1 None -
W.J. Stallkamp 3,100 * None -
All directors and
executive officers as
a group (11 persons) 298,672 4.6 354,845 19.1
Others:
- ------
W. Hauber 423,300 6.6 None -
D. Majestic None - 156,000 8.4
R. Buzza None - 103,250 5.6
* Less than 0.1%
(1) The mailing address of each beneficial owner is the same as that of the
Registrant.
(2) The nature of the beneficial ownership for all shares is sole voting
and investment power, except for 100 Class A shares held by Mr.
Stallkamp as custodian under UTMA for son.
Changes in Control
The Company knows of no arrangement which may, at a subsequent date, result
in a change in control of the Company.
<PAGE>
<PAGE> 12
Executive Officers
The Executive Officers of the Company as of January 3, 1998 are the following:
Year First
Elected as
Name Age An Officer Positions with Registrant
- ---- --- ---------- -------------------------
David M. Kelly 55 1995 President and Chief Executive
Officer
Geoffrey D. Barefoot 51 1988 President, Graphic Systems
Division
Edward J. Boyle 51 1991 Vice President, Accounting &
Finance, Treasurer and Secretary
David J. DeCarlo 52 1986 President, Bronze Division
Steven F. Nicola 37 1995 Controller
During the past five years, the business experience of each executive officer
named has been as reflected above or in a management capacity with the Company,
except for Mr. Kelly, who was an officer of Carrier Corporation prior to April
1995.
<PAGE>
<PAGE> 13
Compensation of Executive Officers and Retirement Benefits
The following table sets forth the individual compensation information for the
fiscal years ended September 30, 1997, 1996, and 1995 for the Company's Chief
Executive Officer and the four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------- -----------------------
Awards Payouts
------ ------- All
Securities Other
Name of Individual Underlying LTIP Compen-
and Principal Position Year Salary Bonus Options Payouts sation
- ---------------------- ---- ------- ------- ---------- --------- -------
(1) (Shares) (2)
<S> <C> <C> <C> <C> <C> <C>
David M. Kelly (3) 1997 $290,174 $290,687 95,000 None None
Chairman of the Board and 1996 268,764 261,193 35,000 None None
Chief Executive Officer 1995 125,004 94,233 100,000 None None
David J. DeCarlo 1997 199,473 174,477 125,000 None $3,046
Director and President, 1996 188,100 159,409 20,000 None 4,904
Bronze Division 1995 177,636 162,132 43,000 None 3,851
Geoffrey D. Barefoot 1997 146,080 13,487 None None 2,622
Director and President, 1996 142,497 59,827 15,000 None 2,028
Graphic Systems Division 1995 135,696 68,213 32,000 None 1,391
Edward J. Boyle 1997 113,379 75,043 20,500 None 3,804
Vice President, 1996 104,709 68,308 14,000 None 2,205
Accounting & Finance 1995 92,745 47,484 17,500 None 1,092
Richard C. Johnson 1997 109,570 75,814 12,500 None 4,685
Vice President, 1996 104,562 55,004 13,000 None 5,216
Corporate Development 1995 98,508 54,515 17,500 None 4,082
<FN>
(1) Includes the current portion of management incentive plan and supplemental management
incentive payments and, for Mr. Kelly, an amount equal to his life insurance premium
cost. At his request, the Company does not provide life insurance for Mr. Kelly, but
in lieu thereof pays to him annually the amount which the Company would have paid in
premiums to provide coverage, considering his position and age. Such amounts are not
included in calculating other Company benefits for Mr. Kelly. The amount paid to
Mr. Kelly in lieu of life insurance for 1997, 1996 and 1995 was $4,100 each year. The
Company has adopted a management incentive plan for officers and key management
personnel. Participants in such plan are not eligible for the Company's profit
distribution plan. The incentive plan is based on improvement in divisional and Company
economic value added and the attainment of established personal goals. A portion of
amounts earned are deferred by the Company and are payable with interest at a market
rate over a two-year period contingent upon economic value added performance and
continued employment during such period. See "Long-Term Incentive Plans - Awards in Last
Fiscal Year" table. The deferred portion of management incentive compensation will be
included under LTIP Payouts for the fiscal years paid. In addition, payments include a
supplement in amounts which are sufficient to pay annual interest expense on the
outstanding notes of management under the Company's Designated Employee Stock Purchase
Plan and to pay medical costs which are not otherwise covered by a Company plan.<PAGE>
<PAGE> 14
(2) Includes educational assistance for dependent children and premiums for term life
insurance. Educational assistance for dependent children is provided to any officer or
employee of the Company whose child meets the scholastic eligibility criteria and is
attending an eligible college or university. Educational assistance amounts reported in
this column for the named officers in fiscal 1997, 1996 and 1995, respectively, were:
Mr. DeCarlo, none, $2,000 and $2,000; Mr. Boyle, $2,000, $1,000 and none; and
Mr. Johnson, $3,000, $4,000 and $3,000. Each officer of the Company is provided term
life insurance coverage in an amount approximately equivalent to three times his
respective salary. Amounts reported in this column for the named officers in fiscal
1997, 1996 and 1995 include the following respective life insurance benefit costs:
Mr. DeCarlo, $3,046, $2,904 and $1,851; Mr. Barefoot, $2,622, $2,028 and $1,391;
Mr. Boyle, $1,804, $1,205 and $1,092 and Mr. Johnson, $1,685, $1,216 and $1,082.
See also note (1).
(3) Mr. Kelly joined the Company on April 3, 1995 and was elected Chief Executive Officer
effective October 1, 1995. Mr. Kelly has an employment arrangement with the Company
which provides that, in the event of his discharge without cause prior to April 3, 1998,
he will receive additional compensation of double his annual base salary rate as of the
discharge date. Such arrangement further provides for the life insurance payments
described in note (1) above and the waiver of minimum service for vesting purposes
described under "Retirement Plans."
</TABLE>
The Summary Compensation Table does not include expenses to the Company of
incidental benefits of a limited nature to executive officers including use of
Company vehicles, club memberships, dues, or tax planning services. The Company
believes such incidental benefits are in the conduct of the Company's business,
but, to the extent such benefits and use would be considered personal benefits,
the value thereof is not reasonably ascertainable and does not exceed, with
respect to any individual named in the compensation table, the lesser of
$50,000 or 10% the annual compensation reported in such table.
Long-Term Incentive Plans - Awards in Last Fiscal Year (1)
<TABLE>
<CAPTION>
Performance Estimated Future
or Other Payouts Under
Number Period Non-Stock Price-
of Shares Until Based Plans
or Other Maturation ----------------
Name Rights or Payout Target
- ------------- ---------- ----------- ----------------
<S> <C> <C> <C>
D.M. Kelly - 2 Years $452,547
D.J. DeCarlo - 2 Years 508,791
G.D. Barefoot - 2 Years None
E.J. Boyle - 2 Years 113,306
R.C. Johnson - 2 Years 91,040
<FN>
(1) The Company has a management incentive plan based on improvement in divisional and Company
economic value added and the attainment of established personal goals. A portion of
amounts earned are deferred by the Company and are payable with interest at a market rate
over a two-year period contingent upon economic value added performance and continued
employment during such period.
/TABLE
<PAGE>
<PAGE> 15
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants (1) Option Term
- ----------------------------------------------------------------- ----------------------
Percent
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted Year per Share Date 5% 10%
- -------------- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
D.M. Kelly 95,000 28.3% $28.125 12/13/06 $1,680,318 $4,258,274
D.J. DeCarlo 125,000 37.2% $28.125 12/13/06 2,210,944 5,602,992
G.D. Barefoot None - - - - -
E.J. Boyle 20,500 6.1% $28.125 12/13/06 362,594 918,890
R.C. Johnson 12,500 3.7% $28.125 12/13/06 221,094 560,299
<FN>
(1) All options were granted at market value as of the date of grant. Options are
exercisable in various share amounts based on the attainment of certain market value
levels of Class A Common Stock, but, in the absence of such events, are exercisable in
full for a one-week period beginning five years from the date of grant. In addition,
options granted after September 30, 1996 vest in one-third increments after three,
four and five years, respectively, from the grant date (but, in any event, not until the
attainment of the certain market value levels described above). The options are not
exercisable within six months from the date of grant and expire on the earlier of ten
years from the date of grant, upon employment termination, or within specified time
limits following voluntary employment termination (with consent of the Company),
retirement or death.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Securities Underlying In-the-Money Options
Acquired Unexercised Options at Fiscal Year End
On Value -------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D.M. Kelly None None 123,334 106,666 $2,673,759 $1,278,115
D.J. DeCarlo None None 56,334 131,666 1,286,884 1,561,240
G.D. Barefoot None None 42,000 5,000 958,750 69,375
E.J. Boyle None None 26,834 25,166 577,946 305,615
R.C. Johnson None None 26,167 16,833 568,691 206,995
</TABLE>
<PAGE>
<PAGE> 16
Report of the Compensation Committee
The Company's officer compensation policies are administered by the
Compensation Committee of the Board of Directors. The Committee consists of
three independent, non-employee directors: Messrs. Coates, Stallkamp and
Kennedy (a former officer). Executive compensation for the Company's chief
executive officer and the four other most highly compensated executive officers
is presented in the Summary Compensation Table.
Objectives and Policies
The Compensation Committee seeks to:
. Ensure that there is a strong linkage between officer compensation and the
creation of shareowner value;
. Align the interests of the Company's officers with those of its stockholders
through potential stock ownership;
. Ensure that compensation and incentives are at levels which enable the
Company to attract and retain high-quality officers.
Components of Compensation
The Company's officer compensation program presently is comprised of three
elements: base salary, annual incentives (bonuses) and stock options. An
executive compensation consulting firm is periodically engaged to provide
comparative market compensation data.
Base Salary
The objective of the base salary policy is to provide income reflecting
individual performance and a median level in comparison to a peer group. An
outside consulting firm specializing in such services is retained to compare
officers' responsibilities with a peer group of other corporations whose annual
revenues range between $100 and $250 million. Accordingly, base salaries of
executive officers for calendar 1997 were increased over calendar 1996 to
reflect competitive market pay practices. The Company endeavors via annual
base salary adjustments to determine that officers' base salary levels and
opportunities for incentive compensation are competitive in the marketplace.
Annual Incentive Compensation (Bonuses)
Annual incentive payments paid to officers in 1997 were based upon the
improvement in economic value added over the prior two years' base. Economic
value added is defined for this purpose as operating profit less associated
capital costs of operating assets.
The incentive pools are determined based upon a percentage of absolute economic
value added plus a percentage of the incremental economic value added over a
two year base. The incentive pools are distributed to individuals based upon
each participant's target incentive and performance relative to achievement of
personal goals.
<PAGE>
<PAGE> 17
Earned incentive awards that exceeded target are deferred and paid in the
subsequent two fiscal years. These subsequent payments are contingent upon
economic value added performance and continued employment during fiscal 1998
and fiscal 1999.
Stock Options
Stock options, which are an integral part of incentive compensation for the
officers of the Company, serve to encourage share ownership by Company
executives and thus align the interests of officers and shareholders. The
aggregate number of shares of the Company's common stock which may be issued
for stock options or restricted stock is 1,100,000 under the 1992 Stock
Incentive Plan. The Stock Compensation Committee (Messrs. Stallkamp and
Coates) plans to make periodic grants of stock options to executive officers
and other key employees of the Company to foster a commitment to increasing
long-term shareholder value. During fiscal 1997 certain officers and other
management personnel were granted nonstatutory stock options to purchase a
combined total of 336,050 shares of the Company's stock at fair market value
at the time of the grants.
Report on 1997 CEO Compensation
The chief executive officer's compensation is established based on the
philosophy and policies enunciated above for all executive officers. This
includes cash compensation (base salary and annual cash incentive payouts) and
long-term incentives (stock option awards.) In calendar 1997, Mr. Kelly's base
salary was increased 5.5 percent. Mr. Kelly's annual incentive paid in 1997
was based upon the annual incentive plan described above. In fiscal 1997,
Mr. Kelly was granted 95,000 non-statutory stock options under the 1992 Stock
Incentive Plan to further align his long-term interests with those of our
shareowners.
Tax Policy
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
disallows federal income tax deductions for compensation paid to the Chief
Executive Officer and any of the other four highest compensated executive
officers in excess of $1 million in any taxable year, subject to certain
exceptions. One exception involves compensation paid pursuant to
shareholder-approved compensation plans that are performance-based. Certain
of the provisions in the Company's 1992 Stock Incentive Plan, as amended, are
intended to cause grants of stock options under such plan to be eligible for
this performance-based exception (so that compensation upon exercise of such
options should be deductible under the Code). Payments of cash compensation
to executives (and certain other benefits which could be awarded under the
plan, such as restricted stock) are not at present eligible for this
performance-based exception. The Committee has taken and intends to continue
to take whatever actions are necessary to minimize, if not eliminate, the
Company's non-deductible compensation expense, while maintaining, to the extent
possible, the flexibility which the Committee believes to be an important
element of the Company's executive compensation program.
Compensation Committee:
W.A. Coates, Chairman
W.J. Stallkamp
T.N. Kennedy
December 2, 1997
<PAGE> 18
COMPARISON OF FIVE YEAR CUMULATIVE RETURN *
AMONG MATTHEWS INTERNATIONAL CORPORATION,
S&P 500 INDEX AND S&P MANUFACTURING INDEX **
S&P
S&P 500 Manufacturing
Year Matthews Index Index
- ---- -------- ------- -------------
1992 $100 $100 $100
1993 107 113 119
1994 205 117 134
1995 276 151 180
1996 392 182 233
1997 556 254 323
* Total return assumes reinvestment of dividends
** Fiscal year ended September 30
Note:
Performance graph assumes $100 invested on October 1, 1992 in Matthews
International Corporation common stock, Standard & Poor's (S&P) 500 Index and
S&P Manufacturing (Diversified) Index. Prior to the Company's initial public
offering (July 20, 1994), the performance of Matthews International Corporation
common stock was based on Consolidated Adjusted Book Value per share as defined
under the Employees' Stock Purchase Plan (assuming dividend reinvestment). The
results are not necessarily indicative of future performance.
Compensation Committee Interlocks and Insider Participation
Thomas N. Kennedy, a former officer of the Company, is a member of the
Company's Compensation Committee.
<PAGE>
<PAGE> 19
Retirement Plans
The Company's domestic retirement plan is noncontributory and provides benefits
based upon length of service and final average earnings. Generally, employees
age 21 with one year of continuous service are eligible to participate in the
retirement plan. The benefit formula is 3/4 of 1% of the first $550 of final
average monthly earnings plus 1-1/4% of the excess times years of credited
service (maximum 35). The plan is an insured, defined benefit plan and covered
compensation is limited generally to base salary or wages. Benefits are not
subject to any deduction or offset for Social Security.
In addition to benefits provided by the Company's retirement plan, the Company
has a Supplemental Retirement Plan, which provides for supplemental pension
benefits to executive officers of the Company designated by the Board of
Directors, including those named in the Summary Compensation Table. Upon normal
retirement under this plan, such individuals who meet stipulated age and
service requirements are entitled to receive monthly supplemental retirement
payments which, when added to their pension under the Company's retirement plan
and their maximum anticipated Social Security primary insurance amount, equal,
in total, 1.85% of final average monthly earnings (including incentive
compensation) times the individual's years of continuous service (subject to
a maximum of 35 years). Upon early retirement under this plan, reduced
benefits will be provided, depending upon age and years of service. Benefits
under this plan do not vest until age 55 and the attainment of 15 years of
continuous service. However, in order to recruit Mr. Kelly, the Company waived
such minimum service requirement with respect to Mr. Kelly. No benefits will
be payable under such supplemental plan following the voluntary employment
termination or death of any such individual. The Supplemental Retirement Plan
is unfunded; however, a provision has been made on the Company's books for the
actuarially computed obligation.
The following table shows the total estimated annual retirement benefits
payable at normal retirement under the above plans for the individuals named
in the Summary Compensation Table at the specified executive remuneration and
years of continuous service:
Years of Continuous Service
Covered ----------------------------------------------------
Remuneration 15 20 25 30 35
- ------------------ -------- -------- -------- -------- --------
$125,000 $ 34,688 $ 46,250 $ 57,813 $ 69,375 $ 80,938
150,000 41,625 55,500 69,375 83,250 97,125
175,000 48,563 64,750 80,938 97,125 113,313
200,000 55,500 74,000 92,500 111,000 129,500
225,000 62,438 83,250 104,063 124,875 145,688
250,000 69,375 92,500 115,625 138,750 161,875
300,000 83,250 111,000 138,750 166,500 194,250
400,000 111,000 148,000 185,000 222,000 259,000
500,000 138,750 185,000 231,250 277,500 323,750
600,000 166,500 222,000 277,500 333,000 388,500
700,000 194,250 259,000 323,750 388,500 453,250
<PAGE>
<PAGE> 20
The table shows benefits at the normal retirement age of 65, before applicable
reductions for social security benefits. The Employee Retirement Income
Security Act of 1974 places limitations, which may vary from time to time, on
pensions which may be paid under federal income tax qualified plans, and some
of the amounts shown on the foregoing table may exceed the applicable
limitation. Such limitations are not currently applicable to the Company's
Supplemental Retirement Plan.
Estimated years of continuous service for each of the individuals named in the
Summary Compensation Table, as of October 1, 1997 and rounded to the next
higher year, are: Mr. Kelly, 3 years; Mr. DeCarlo, 13 years; Mr. Barefoot, 22
years; Mr. Boyle, 11 years; and Mr. Johnson, 10 years.
Indebtedness of Management
The following officers and directors were indebted to the Company on notes
carrying an annual interest rate of 6.5% which were issued under the Company's
Designated Employee Stock Purchase Plan, as referred to in Note 7 of the Notes
to Consolidated Financial Statements:
Highest Amount
Outstanding During Amount
the Year Ended Outstanding at
September 30, 1997 November 30, 1997
------------------ -----------------
Geoffrey D. Barefoot $ 143,436 $ 70,373
Edward J. Boyle 88,125 57,064
David J. DeCarlo 446,670 317,960
Richard C. Johnson 96,373 None
Steven F. Nicola 38,104 27,336
The Company has annually made supplemental management incentive payments to
officers and other employees indebted on such notes in amounts equal to the
interest paid by such persons on their respective notes.
<PAGE>
<PAGE> 21
OTHER MATTERS
Shareholders may make proposals for inclusion in the proxy statement and proxy
form for the 1999 Annual Meeting of Shareholders. Any such proposal should be
written and mailed to the Secretary of the Company at the corporate office for
receipt by October 30, 1998.
The cost of soliciting proxies in the accompanying form will be paid by the
Company. Shareholder votes at the Annual Meeting will be tabulated by the
Company's transfer agent, First Chicago Trust Company of New York.
A copy of the Company's Annual Report for 1997 has previously been mailed to
each shareholder of record, or will be mailed with this Proxy Statement.
By Order of The Board of Directors
Edward J. Boyle
Edward J. Boyle
Corporate Secretary
<PAGE>
<PAGE> 22
APPENDIX
PROXY
MATTHEWS INTERNATIONAL CORPORATION
I hereby appoint David M. Kelly and Edward J. Boyle and each of them, with full
power of substitution and revocation, proxies to vote all shares of Common
Stock of Matthews International Corporation which I am entitled to vote at the
Annual Meeting of Shareholders or any adjournment thereof, with the authority
to vote as designated on the reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE
- -----------------------------------------------------------------------------
NOTICE
Please note the location and time of the Shareholders' Meeting.
Date: Saturday, February 21, 1998
Time: 10:30 AM
Location: Carnegie Science Center, Pittsburgh, PA
(near Three Rivers Stadium)
PARKING ARRANGEMENTS
There is a parking lot directly in front of the Carnegie Science Center.
Please advise the parking lot attendant upon entry that you are attending the
Matthews Shareholders' Meeting and there will be no charge for parking.
<PAGE>
<PAGE> 23
[ X ] Please mark your votes as in this example.
- -----------------------------------------------------------------------------
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE LISTED PROPOSALS.
- -----------------------------------------------------------------------------
FOR WITHHELD NOMINEES:
1. Election of David J. DeCarlo,
Directors [ ] [ ] John P. O'Leary, Jr.
Robert J. Kavanaugh
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of Coopers &
Lybrand LLP, as independent certified
public accountants to audit the records
of the Company for the fiscal year ending
September 30, 1998. [ ] [ ] [ ]
3. To transact such other business as may
properly come before the meeting.
I plan to attend
the meeting. [ ]
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
----------------------------------------------------
----------------------------------------------------
SIGNATURE(S) DATE
- -------------------------------------------------------------------------------
MATTHEWS INTERNATIONAL CORPORATION
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 21, 1998
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 10:30 AM, Saturday, February 21, 1998 at Carnegie Science
Center, Pittsburgh, Pennsylvania, for the purpose of considering and acting
upon the proposals set forth above.
Shareholders of record at the close of business on December 31, 1997 will be
entitled to vote at the Annual Meeting or any adjournments thereof.
