<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:
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<PAGE> 2
MATTHEWS INTERNATIONAL CORPORATION
2001
NOTICE
OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
<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 15, 2001
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 6:00 PM on Thursday, February 15, 2001 at Sheraton Station
Square, Seven Station Square Drive, 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 PricewaterhouseCoopers LLP as independent
certified public accountants to audit the records of the Company for the
fiscal year ending September 30, 2001.
3. To transact such other business as may properly come before the meeting.
Shareholders of record as of December 31, 2000 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 card (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 15, 2001
<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 15, 2001.
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, 2000 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 13,453,509 shares
of Class A Common Stock, and 1,967,412 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> 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 fifteen. Until further action, the Board of Directors has fixed the
number of directors constituting the full Board at seven, divided into three
classes. The terms of office of the three classes of Directors end in
successive years.
During fiscal year 2000, there were five 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.
The principal functions of the three standing committees are summarized as
follows:
<PAGE> 6
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 2000, the Executive Committee met a total of six times. The
Chairman of the Executive Committee is David M. Kelly. The membership of
the Committee from October 1, 1999 until April 20, 2000 consisted of Mr. Kelly
and David J. DeCarlo. The membership of the Committee since April 20, 2000
consisted of Messrs. Kelly, DeCarlo and Thomas N. Kennedy.
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 John P. O'Leary, Jr. (Chairman), William J.
Stallkamp and Robert J. Kavanaugh. During fiscal year 2000, the Audit
Committee met twice.
Compensation Committee
The principal function of the Compensation Committee, the members of which are
William J. Stallkamp (Chairman), Robert J. Kavanaugh and John D. Turner, is to
review periodically the suitability of the remuneration arrangements
(including benefits), other than stock remuneration, for the principal
executives of the Company. A subcommittee of the Compensation Committee, the
Stock Compensation Committee, the members of which are Messrs. Stallkamp
(Chairman), Kavanaugh and Turner, consider and grant stock remuneration and
administer the Company's 1992 Stock Incentive Plan. The Compensation
Committee met five times during fiscal year 2000.
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
2000, 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. In addition, each such
director is paid $1,000 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. Directors may also elect to receive the common
stock equivalent of meeting fees. 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. 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. David J. DeCarlo, Robert J.
Kavanaugh and John P. O'Leary, Jr., whose terms of office are expiring, have
been nominated by the Board to serve for three-year terms that will end in
2004. Nominations made by the shareholders shall be made in writing in
accordance with Section 6.1 of the Restated Articles of Incorporation. 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 55, is President, Bronze Division and has been a
Director of the Company since 1987. 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> 8
Robert J. Kavanaugh, age 63, has been a Director of the Company since 1998.
Mr. Kavanaugh is a retired partner of the Pittsburgh office of Arthur Andersen
LLP, an accounting firm. Mr. Kavanaugh has more than 38 years of experience
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 retired from Arthur Andersen LLP in
August 1996.
John P. O'Leary, Jr., age 54, has been a Director of the Company since 1992.
Mr. O'Leary 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 and Beaver County Educational Trust. Mr. O'Leary is a Trustee of
Gettysburg College.
Continuing Directors
David M. Kelly, age 58, 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 on 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
and the United Way of Allegheny County.
Thomas N. Kennedy, age 65, has been a Director of the Company since 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.
<PAGE> 9
William J. Stallkamp, age 61, has been a Director of the Company since 1981.
Mr. Stallkamp was a Vice Chairman of Mellon Financial Corporation in
Pittsburgh, PA and Chairman of Mellon PSFS in Philadelphia, PA until his
retirement on January 1, 2000. Currently, he is a fund advisor at Safeguard
Scientifics, Inc. He received a Bachelor of Science Degree in Business
Administration from Miami University of Oxford, Ohio. He serves as a Director
of Destiny WebSolutions, Inc., United Concordia Companies, Inc., Akcelerant
Holdings, Inc. and Highmark Blue Cross/Blue Shield. He also serves on the
Board of Directors for YMCA of Philadelphia and Vicinity, the Southeastern
Pennsylvania Chapter of the American Red Cross, the Pennsylvania Academy of
Fine Arts, the Franklin Institute and Gwynedd - Mercy College.
John D. Turner, age 54, was elected to the Board of Directors of the Company
in April 1999. Mr. Turner has been Executive Vice President of The LTV
Corporation and President of LTV Copperweld, a manufacturer of tubular and
bimetallic wire products, since November 1999. Mr. Turner was formerly
President and Chief Executive Officer of Copperweld Corporation. He joined
Copperweld in 1984 as Group Vice President - Marketing & Sales and later held
the positions of Group Vice President - Specialty Bar & Tubing and Executive
Vice President. Mr. Turner received a Bachelor's Degree in Biology from
Colgate University. He currently serves on the Advisory Board of Shenango,
Inc., Coalition of Christian Outreach, and Greater Pittsburgh Council, Boy
Scouts of America. Mr. Turner is also a member of the Carnegie Mellon Board
of Trustees and the Board of Directors of the Fellowship of
Christian Athletes. He also serves on the national Board of Directors of the
Council of Leadership Foundations.
The term for each nominee and each Director is listed below:
Term to expire at Annual
Nominees Meeting of Shareholders in:
David J. DeCarlo 2004
Robert J. Kavanaugh 2004
John P. O'Leary, Jr. 2004
Continuing Directors
David M. Kelly 2002
John D. Turner 2002
Thomas N. Kennedy 2003
William J. Stallkamp 2003
<PAGE> 10
PROPOSAL 2
SELECTION OF AUDITORS
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has appointed PricewaterhouseCoopers LLP as independent certified
public accountants to audit the records of the Company for the year ending
September 30, 2001.
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 PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP, the selection of alternative independent certified
public accountants will be considered by the Board of Directors.
It is not expected that any representative of PricewaterhouseCoopers LLP 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 directors, officers and executive management. Those
individuals with more than five percent of such shares could be deemed to be
"control persons" of the Company.
<PAGE> 11
This information is as of November 30, 2000.
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, Officers and Executive Management:
--------------------------------------------
D.M. Kelly 224,437 (3) 1.6% 36,000 1.8%
E.J. Boyle 57,083 (3) 0.4 18,750 1.0
D.J. DeCarlo 166,667 (3) 1.2 289,910 14.7
R.J. Kavanaugh 1,000 * None -
L.W. Keeley, Jr. 246 (3) * None -
T.N. Kennedy 30,000 0.2 None -
J.P. O'Leary, Jr. 13,450 0.1 None -
R.J. Schwartz 48,059 (3) 0.4 None -
W.J. Stallkamp 7,200 * None -
J.D. Turner 2,000 * None -
All directors, officers
and executive management
as a group (12 persons) 571,398 (3) 4.1 361,860 18.4
Others:
------
D. Majestic None - 252,000 12.8
T. Rowe Price
Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202 1,452,700 10.8 None -
Ariel Capital
Management, Inc.
307 North Michigan Ave.
Chicago, IL 60601 1,072,755 8.0 None -
Lord, Abbett & Co.
767 Fifth Avenue
New York, NY 10153 885,390 6.6 None -
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158 819,431 6.1 None -
* Less than 0.1%
(1) Unless otherwise noted, 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 as follows:
Mr. Stallkamp has sole voting power except for 200 Class A shares held
by Mr. Stallkamp as custodian under UTMA for a son. Mr. Schwartz has
sole voting power except for 40 Class A shares held by Mr. Schwartz
as custodian for a daughter.
Shares held by T. Rowe Price Associates, Inc. ("Price Associates") are
owned by various individual and institutional investors, including
T. Rowe Price Small-Cap Stock Fund, Inc. which owns 896,000 shares,
which Price Associates serves as investment advisor with power to
direct investments and/or sole power to vote the shares. For
purposes of the reporting requirements of the Securities Exchange
Act of 1934, Price Associates is deemed to be a beneficial owner of
such shares; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such shares. Price Associates
has sole dispositive power for 1,452,700 shares and sole voting power
for 387,700 shares.
<PAGE> 12
Ariel Capital Management, Inc. has no beneficial interest in any of the
1,072,755 shares owned. Ariel Capital Management, Inc. holds the
shares solely for its clients of whom none of them individually owns
5% or more of Matthews International Corporation common stock. Ariel
Capital Management, Inc., in its capacity as investment advisor, has
sole voting power for 1,013,155 shares and sole investment discretion
for 1,072,755 shares.
Lord, Abbett & Co. is an investment advisor for various accounts and,
as such, disclaims beneficial ownership of shares.
Neuberger Berman, LLC ("Neuberger"), as a registered investment
advisor, may have discretionary authority to dispose of or vote
shares that are under its management. As a result, Neuberger may be
deemed to have beneficial ownership of such shares. Neuberger does
not, however, have any economic interest in the shares. Its clients
are the actual owners of the shares and have the sole right to
receive and the power to direct the receipt of dividends from or
proceeds from the sale of such shares. Neuberger Berman Inc. is the
parent holding company and owns 100% of Neuberger Berman, LLC and
Neuberger Berman Management, Inc. Of the shares set forth in the
table, Neuberger had shared dispositive power with respect to 819,431
shares, sole voting power with respect to 423,431 shares and shared
voting power on 396,000 shares. With regard to the shared voting
power, Neuberger Berman Management, Inc. and Neuberger Berman Funds
are deemed to be beneficial owners for purpose of Rule 13(d) since
they have shared power to make decisions whether to retain or dispose
of the shares. Neuberger is the sub-advisor to the above referenced
Funds. It should be further noted that the aforementioned shares are
also included with the shared power to dispose calculation.
(3) Includes options exercisable within 60 days of November 30, 2000 as
follows: Mr. Kelly, 181,000 shares; Mr. Boyle, 39,333 shares;
Mr. DeCarlo, 166,667 shares; Mr. Schwartz, 36,667 shares; Mr. Keeley, no
shares; and all directors, officers and executive management as a group,
438,334 shares.
Changes in Control:
The Company knows of no arrangement which may, at a subsequent date, result in
a change in control of the Company.
Executive Management
The Executive Management of the Company as of December 31, 2000 was as
follows:
Year First
Elected as
Name Age an Officer Positions with Registrant
---- --- ---------- -------------------------
David M. Kelly 58 1995 President and Chief Executive
Officer
Edward J. Boyle 54 1991 Vice President, Accounting &
Finance, Treasurer and Secretary
David J. DeCarlo 55 1986 President, Bronze Division
Brian J. Dunn 43 2000 President, Marking Products, North
America
Lawrence W. Keeley, Jr. 39 2000 President, Graphic Systems Division
Steven F. Nicola 40 1995 Controller
Robert J. Schwartz 53 1998 Group President, Graphic Systems &
Marking Products Divisions
<PAGE> 13
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 as follows: Mr. Dunn joined the Company in November 1998.
Prior thereto, he was a regional sales manager for the Automation Division of
Rockwell International Corporation. Mr. Keeley joined the Company in
September 1999. Prior thereto, he was a Vice President for Container Graphics
Corporation. Mr. Schwartz joined the Company in January 1997. Prior thereto,
he was Vice President - Sales for Northeast Distributors, Inc., a distributor
of air conditioning products.
Compensation of Executive Management and Retirement Benefits
The following table sets forth the individual compensation information for the
fiscal years ended September 30, 2000, 1999 and 1998 for the Company's Chief
Executive Officer and the four most highly compensated executives.
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) (3)
<S> <C> <C> <C> <C> <C> <C>
David M. Kelly 2000 $367,117 $360,585 None $736,928 $ 117
Chairman of the Board and 1999 329,618 339,298 275,000 734,737 None
Chief Executive Officer 1998 312,409 324,082 40,000 239,850 None
David J. DeCarlo 2000 236,095 163,498 None 761,709 1,492
Director and President, 1999 217,411 171,334 149,000 711,607 1,419
Bronze Division 1998 207,921 169,552 None 269,660 2,520
Edward J. Boyle 2000 160,232 94,876 None 190,292 2,142
Vice President, 1999 143,041 89,962 78,000 187,183 3,294
Accounting & Finance 1998 129,689 87,394 36,000 60,211 4,250
Robert J. Schwartz 2000 139,913 85,646 5,000 118,929 3,189
President, Marking 1999 126,577 80,952 10,000 55,464 747
Products Division 1998 118,323 75,177 32,000 None 1,038
Lawrence W. Keeley, Jr. 2000 156,169 55,402 20,000 None 35,795
President, Graphic
Systems Division
<PAGE> 14
<FN>
(1) Includes the current portion of management incentive plan and supplemental management
incentive payments and for Mr. Kelly in 1999 and 1998, an amount equal to his life insurance
premium cost. Until 2000, at his request, the Company did not provide life insurance for
Mr. Kelly, but in lieu thereof paid to him annually the amount which the Company would have
paid in premiums to provide coverage, considering his position and age. Such amounts were
not included in calculating other Company benefits for Mr. Kelly. The amount paid to
Mr. Kelly in lieu of life insurance for 1999 and 1998 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. 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.
(2) Represents payments of deferred amounts under the management incentive plan.
(3) Includes premiums for term life insurance and educational assistance for dependent
children. Each officer of the Company is provided term life insurance coverage in
an amount approximately equivalent to three times his respective salary. 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. Amounts reported in this column include only life insurance benefit
costs except for Messrs. Boyle, Schwartz and Keeley. Educational assistance amounts for
Mr. Boyle in fiscal 2000, 1999 and 1998, respectively, were $1,200, $2,400 and $2,200.
In 2000, Mr. Schwartz received $2,400 under the educational assistance program. The amount
reported in this column in 2000 for Mr. Keeley includes $35,592 for the reimbursement of
relocation expenses.
</TABLE>
The Summary Compensation Table does not include expenses to the Company of
incidental benefits of a limited nature to executives 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% of the annual compensation reported in such
table.
Long-Term Incentive Plans - Awards in Last Fiscal Year
<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 Maximum
------------- ---------- ----------- ----------------
<S> <C> <C> <C>
D.M. Kelly - 2 Years $ 370,982
D.J. DeCarlo - 2 Years 195,084
E.J. Boyle - 2 Years 97,239
R.J. Schwartz - 2 Years 38,004
L.W. Keeley, Jr. - 2 Years None
<PAGE> 15
<FN>
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>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants (1) for Option Term
------------------------------------------------------------------- ----------------------
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted Fiscal Year per Share Date 5% 10%
------------- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
D.M. Kelly None - - - - -
D.J. DeCarlo None - - - - -
E.J. Boyle None - - - - -
R.J. Schwartz 5,000 4.5% $25.688 10/26/09 $ 80,774 $204,696
L.W. Keeley, Jr. 20,000 17.9 25.688 10/26/09 323,095 818,785
<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 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 164,000 $3,238,188 104,334 441,666 $1,641,177 $2,652,071
D.J. DeCarlo 126,000 2,495,500 83,334 315,666 1,276,052 2,768,073
E.J. Boyle None None 13,667 141,333 209,276 819,316
R.J. Schwartz None None 16,000 79,000 225,125 740,561
L.W. Keeley, Jr. None None None 20,000 None 73,750
</TABLE>
<PAGE> 16
Report of the Compensation Committee
The Company's executive compensation policies are administered by the
Compensation Committee of the Board of Directors. The Committee consists of
three independent, non-employee directors: Messrs. Stallkamp (Chairman),
Kavanaugh and Turner. Executive compensation for the Company's chief
executive officer and the four other most highly compensated executives is
presented in the Summary Compensation Table.
Objectives and Policies
The Compensation Committee seeks to:
. Ensure that there is a strong linkage between executive compensation and
the creation of shareowner value;
. Align the interests of the Company's executives 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 executives.
Components of Compensation
The Company's executive 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. The Company endeavors to determine that
executives' base salary levels and opportunities for incentive compensation
are competitive in the marketplace.
Base Salary
The objective of the base salary policy is to provide income at a median level
in comparison to a peer group and to reflect individual performance. An
outside consulting firm specializing in such services is retained periodically
to compare executives' responsibilities with a peer group of other
corporations whose annual revenues range between $100 million and $250
million. Accordingly, base salaries of executives for calendar 2000 were
increased over calendar 1999 to reflect competitive market pay practices.
Annual Incentive Compensation (Bonuses)
Annual incentive payments paid to executives in 2000 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 the
associated capital cost 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.
Earned incentive awards that exceed target levels are deferred and paid in the
subsequent two fiscal years. In 2000, certain executives received a payout of
fifty percent of incentive award amounts earned and deferred from fiscal years
1999 and 1998. The remaining fifty percent earned in fiscal 1999 is payable
in 2001 contingent upon economic value added performance and continued
employment during fiscal 2001.
<PAGE> 17
In fiscal 2000, certain executives earned incentive awards in excess of target
levels. Amounts in excess of target have been deferred and are payable
contingent upon economic value added performance and continued employment
during fiscal years 2001 and 2002.
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 executive management and
shareholders. The Stock Compensation Committee (Messrs. Stallkamp, Kavanaugh
and Turner) makes periodic grants of stock options to executives and other key
employees of the Company to foster a commitment to increasing long-term
shareholder value. During fiscal 2000, certain executives and other
management personnel were granted nonstatutory stock options to purchase a
combined total of 111,550 shares of the Company's stock at fair market value
at the time of the grants.
Report on 2000 CEO Compensation
The chief executive officer's compensation is established based on the
philosophy and policies enunciated above for all executive management. This
includes cash compensation (base salary and annual cash incentive payouts) and
long-term incentives (stock option awards). In calendar 2000, Mr. Kelly's
base salary was increased 7.5 percent. Mr. Kelly's annual incentive paid in
2000 was based upon the annual incentive plan described above. No options
were granted to Mr. Kelly in fiscal 2000 under the 1992 Stock Incentive Plan.
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 executives 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.J. Stallkamp, Chairman
R.J. Kavanaugh
J.D. Turner
December 8, 2000
<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
---- -------- ------- -------------
1995 $100 $100 $100
1996 142 120 129
1997 201 168 180
1998 255 183 162
1999 309 234 255
2000 303 265 252
* Total return assumes dividend reinvestment
** Fiscal year ended September 30
Note:
Performance graph assumes $100 invested on October 1, 1995 in Matthews
International Corporation common stock, Standard & Poor's (S&P) 500 Index and
S&P Manufacturing (Diversified) Index. The results are not necessarily
indicative of future performance.
Compensation Committee Interlocks and Insider Participation
Thomas N. Kennedy, a former officer of the Company, was a member of the
Company's Compensation Committee until April 2000.
<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. 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
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
800,000 222,000 296,000 370,000 444,000 518,000
<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, 2000 and rounded to the next
higher year, are: Mr. Kelly, 6 years; Mr. DeCarlo, 16 years; Mr. Boyle, 14
years; Mr. Schwartz, 4 years; and Mr. Keeley, 1 year.
<PAGE> 21
Report of the Audit Committee
The Audit Committee of Matthews International Corporation is composed of three
independent directors. The Committee operates under a written charter adopted
by the Company's Board of Directors, which is included as an Appendix to this
Proxy Statement.
Management of the Company has the primary responsibility for the financial
statements and the reporting process, including the system of internal
controls. The Audit Committee is responsible for reviewing the Company's
financial reporting process on behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the
Committee that the Company's consolidated financial statements were prepared
in accordance with generally accepted accounting principles, and the Committee
has discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing
Standards ("SAS") No. 61, "Communication With Audit Committees" and SAS No.
90, "Audit Committee Communications."
The Company's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions With Audit Committees," and the Committee discussed
with the independent accountants that firm's independence.
Based on the Committee's discussions with management and the independent
accountants and the Committee's review of the report of the independent
accountants on the consolidated financial statements of the Company for the
year ended September 30, 2000, the Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in
the Company's Annual Report on Form 10-K for the year ended September 30, 2000
filed with the Securities and Exchange Commission.
Audit Committee:
J.P. O'Leary, Jr., Chairman
R.J. Kavanaugh
W.J. Stallkamp
December 8, 2000
<PAGE> 22
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Shareholders may make proposals for inclusion in the proxy statement and proxy
form for the 2002 Annual Meeting of Shareholders. To be considered for
inclusion, any such proposal should be written and mailed to the Secretary of
the Company at the corporate office for receipt by September 17, 2001.
Section 2.09 of the By-laws of the Company requires that any shareholder
intending to present a proposal for action at an Annual Meeting must give
written notice of the proposal, containing the information specified in such
Section 2.09, so that it is received by the Company not later than the notice
deadline determined under such Section 2.09. This notice deadline will
generally be 75 days prior to the anniversary of the Company's Annual Meeting
for the previous year, or December 3, 2001 for the Company's Annual Meeting
in 2002. Any shareholder proposal received by the Secretary of the Company
after December 3, 2001 will be considered untimely under Rule 14a-4(c)(1)
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
OTHER MATTERS
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, a Division of
EquiServe.
A copy of the Company's Annual Report for 2000 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> 23
APPENDIX A
Matthews International Corporation
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
A. Background
Matthews' Board of Directors first appointed an Audit Committee in 1980. The
Committee has been composed of three independent directors since 1988.
B. Purpose
The primary function of the Audit Committee of the Board of Directors is to
serve as an independent and objective party to monitor the Corporation's
financial reporting and internal control system; review and appraise the
Corporation's outside auditors and the Company's internal audit department;
and serve as a vehicle to provide an open avenue of communication between the
Company's Board of Directors and financial management, the internal audit
department, and independent accountants.
C. Structure
The Audit Committee members shall consist of a minimum of three independent
(financially oriented) directors appointed by the Board of Directors, with one
member appointed Chairman of the Committee.
D. Meetings
The Audit Committee shall meet at a minimum of two times per year. One
meeting should occur prior to the Company's filing of Form 10-K. Each meeting
which includes discussions of Company financial results should be attended by
representatives of the Company's independent accounts and the Company's senior
financial management. The meetings will follow a formal agenda and will allow
for open discussion among all parties. From time to time, the following items
will also be discussed by the Committee: the Corporation's Ethics Statement;
EPA/OSHA programs, policies, and issues; Employee Assistance Programs;
Employee Hot Line and Employment Practices.
E. Specific Duties of the Audit Committee
1. Review and update the Committee's written Charter from time to time.
2. Review and discuss with the Company's Board of Directors the adequacy of
the Company's outside auditors and make specific recommendations to nominate,
select, and/or replace the outside auditors as necessary.
3. Require the outside auditors to provide a written report to the Committee
annually delineating all relationships between the auditors and the Company to
ensure independence of the auditors.
4. Require the Company's outside auditors to report to the Chairman of the
Committee regarding the adequacy of the Company's interim financial statements
prior to the release of the Company's quarterly earnings for interim reporting
periods.
<PAGE> 24
5. Require the Company's outside auditors to report to the Committee and to
the Board of Directors regarding the adequacy of the Company's annual
financial statements prior to the release of the Company's annual earnings
release.
F. General Responsibilities of the Committee
1. Review the Company's Ethics Statement.
2. Require Company Management to report employee Hot Line activity to the
Committee.
3. Review all internal audit reports.
4. Periodically review with Management the Company's financial and
operational exposure list.
5. Discuss with the outside auditors annually the proposed audit fee schedule
for the ensuing fiscal year; composition of the audit team; scope of coverage
to be provided by the auditors with respect to wholly owned subsidiaries
and/or partially owned companies and the services to be provided by the
auditors.
6. Meet with the Company's OSHA and EPA coordinator from time to time to
discuss Company policy and practices with respect to employee health and
safety programs and to determine the adequacy of the Company's compliance with
governmental environment, safety, and health regulations.
7. Review the outside auditors' annual Management Letter to the Company as
well as Management's response and actions regarding such comments.
8. Review the Company's proposed internal audit schedule for the ensuing
fiscal year.
9. Require Management to report annually to the Board of Directors the scope
of the Company's property and casualty insurance program.
10. Require Management to report (as necessary) on the status of material
litigation issues within the Company.
11. Require Management to report all known instances of employee fraud,
theft, embezzlement, etc.
12. Require Management and/or the Company's auditors to discuss from time to
time the status of the Company's Defined Benefit Program and 401(K) Plan.
<PAGE> 25
APPENDIX B
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: Thursday, February 15, 2001
Time: 6:00 PM
Location: Sheraton Station Square, Pittsburgh, PA
<PAGE> 26
[ 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 [ ] [ ] Robert J. Kavanaugh
John P. O'Leary, Jr.
For, except vote withheld from the following nominee:
-------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of
PricewaterhouseCoopers LLP as independent
certified public accountants to audit
the records of the Company for the fiscal
year ending September 30, 2001. [ ] [ ] [ ]
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 15, 2001
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 6:00 PM, Thursday, February 15, 2001 at Sheraton Station
Square, 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, 2000 will be
entitled to vote at the Annual Meeting or any adjournments thereof.
