<PAGE> 1
[SECURITIES AND EXCHANGE COMMISSION LETTERHEAD]
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [ ]
Filed by a party other than the registrant [X]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MCCLAIN INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
Blair B. Hysni
Jaffe, Raitt, Heuer & Weiss
Professional Corporation
One Woodward Ave., Ste. 2400
Detroit, Michigan 48226
(Name of Person(s) Filing Proxy Statement
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(2), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:____________________________________________
(4) Proposed maximum aggregate value of transaction:_______________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:________________________________________________
(2) Form, schedule or registration statement no.:__________________________
(3) Filing party:__________________________________________________________
(4) Date filed:____________________________________________________________
===============================================================================
<PAGE> 2
[MCCLAIN INDUSTRIES, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 1996
PROXY STATEMENT
AND
FORM OF REVOCABLE PROXY
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 1996
To the Shareholders:
Notice is hereby given that the annual meeting (the "Meeting") of
shareholders of McClain Industries, Inc., a Michigan corporation (the
"Company"), will be held at the Sterling Inn, St. Clair Room, 34911 Van Dyke
Road, Sterling Heights, Michigan, on Friday, May 10, 1996, at 10:00 a.m., local
time, for the following purposes:
(1) To elect a Board of four Directors to serve until the next
annual meeting of shareholders or until their successors shall
have been duly elected and qualified; and
(2) To transact such other business as may properly come before
the Meeting.
A Proxy Statement containing information relevant to the Meeting
appears on the following pages. Only holders of record of the Company's common
stock at the close of business on March 27, 1996, are entitled to notice of,
and to vote at, the Meeting or any adjournment.
All shareholders are cordially invited to attend the Meeting in
person. Whether or not you expect to attend the Meeting, please sign, date,
and mark the enclosed Proxy which is being solicited by the Board of Directors
and return it as soon as possible in the postage-paid envelope provided. If
you wish to vote in accordance with the Board of Director's recommendations,
you need only sign, date and return the Proxy. If you attend the Meeting, you
may withdraw your Proxy and vote your own shares.
By Order of the Board of Directors
CARL JAWORSKI
Secretary
Dated: April 10, 1996
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
ENCOURAGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
IN THE POSTAGE-PAID ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 1996
PROXIES AND SOLICITATIONS
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors (the "Board") of McClain
Industries, Inc., a Michigan corporation (the "Company"), to be used at the
annual meeting of shareholders (the "Meeting") or at any adjournment. If
received in time for the Meeting, the shares represented by a valid proxy will
be voted in accordance with the instructions, if any, contained in such
executed proxy. If no instructions are given, proxies will be voted for all
nominees for the Board. A proxy executed in the enclosed form may be revoked
by the person signing it at any time before it is exercised. Proxies may be
revoked by filing with the Company's Secretary, any time prior to the time set
for commencement of the Meeting, a written notice of revocation bearing a later
date than the proxy, or by attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy).
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of the
Company. Arrangements may also be made with brokerage houses or other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of shares of the Company's common stock, no par value (the
"Common Stock"), held of record by such persons, and the Company may reimburse
such persons for reasonable out-of-pocket expenses incurred in forwarding such
material, which the Company anticipates will not exceed $1,000. The Company
will bear the cost of all proxy solicitation.
The executive offices of the Company are located at 6200 Elmridge
Road, Sterling Heights, Michigan 48310. The approximate date of mailing of
this Proxy Statement and the enclosed Proxy materials to the Company's
shareholders is April 10, 1996.
TIME AND PLACE OF MEETING
The Meeting will be held at the Sterling Inn, St. Clair Room, 34911
Van Dyke Road, Sterling Heights, Michigan, on Friday, May 10, 1996, at 10:00
a.m., local time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only holders of record of shares of Common Stock at the close of
business on March 27, 1996 are entitled to notice of, and to vote at, the
Meeting or at any adjournment. As of that date, the Company had 4,722,729
shares of Common Stock
<PAGE> 5
issued, outstanding and entitled to vote held by 241 holders of record. Each
outstanding share of Common Stock entitles the record holder to one vote.
Shares cannot be voted at the Meeting unless the holder is present in person or
represented by proxy. The presence, in person or by proxy, of shareholders
entitled to vote a majority of the voting shares that are outstanding and
entitled to vote will constitute a quorum.
Information concerning principal holders of the Common Stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
MATTERS TO COME BEFORE THE MEETING
ELECTION OF DIRECTORS
The Company's Bylaws provide for seven positions on the Board. It is
proposed that only four of these positions be filled by persons nominated to
the Board at the Meeting. Management has determined that the functions of the
Board can be served adequately by four directors. It is anticipated that the
remaining three positions will remain vacant; however, shareholders attending
the Meeting may nominate and elect persons to fill the three vacancies. In no
event may proxies be voted for more than four persons. Each director shall be
elected by a plurality of the votes cast at the Meeting. Therefore,
abstentions and broker non-votes will have no effect on the election of
directors. Proxies will be tabulated by the Company's transfer agent. The
Inspector of Elections appointed at the Meeting will then combine the proxy
votes with the votes cast at the Meeting. Each director elected at the Meeting
will serve for a term commencing on the date of the Meeting and continuing
until the next annual meeting of shareholders or until his successor is duly
elected and qualified. In the absence of instructions to the contrary, proxies
will be voted in favor of the election of the four nominees listed below.
If any of the persons nominated are unavailable to serve for any
reason, then a valid proxy may be voted for the election of such other persons
as the person or persons voting the proxy may deem advisable in accordance with
their best judgment. Management has no present knowledge that any of the
persons nominated will be unavailable to serve. In any event, the enclosed
proxy can be voted for only the four persons named in this Proxy Statement or
their substitutes.
The following list identifies each person nominated for election to
the Board at the Meeting and describes each person's principal occupation for
the past five years. Each such person is presently a director of the Company
and has served continuously from the date of his election to the present time.
KENNETH D. MCCLAIN, age 54, is Chairman of the Board and President of
the Company. He has been a director and officer of the Company since its
inception in
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<PAGE> 6
March 1968. He also serves as Vice President and a director of Shelby Steel
Processing Co., a Michigan corporation ("Shelby Steel"), and President and a
director of McClain of Georgia, Inc., a Georgia corporation
("McClain-Georgia"), both of which companies are wholly-owned operating
subsidiaries of the Company. Mr. McClain is also a director and the Chairman
of the Board of Galion Holding Company ("Galion Holding"), McClain E-Z Pack,
Inc. ("E-Z Pack"), formerly known as Galion Solid Waste Equipment, Inc., Galion
Dump Bodies, Inc. ("Galion Dump Bodies") and McClain Group Sales, Inc.
("Sales"), formerly known as M.E.G. Equipment Sales, Inc., all of which are
Michigan corporations. Galion Holding is a wholly-owned holding company
subsidiary of the Company and the sole shareholder of E-Z Pack and Galion Dump
Bodies. The Company, E-Z Pack and Galion Dump Bodies collectively own all of
issued and outstanding stock of Sales, which is the exclusive sales
representative of its parent companies, McClain-Georgia and McClain of Ohio,
Inc. ("McClain-Ohio"). McClain-Ohio, formerly known as McClain Industries of
Ohio, Inc, is a wholly-owned operating subsidiary of the Company.
ROBERT W. MCCLAIN, age 59, is Senior Vice President and Assistant
Secretary of the Company. He has been a director and officer of the Company
since its inception in March 1968. He also serves as President of Shelby Steel
and Vice President of McClain-Georgia. Mr. Robert McClain and Mr. Kenneth
McClain are brothers.
RAYMOND ELLIOTT, age 61, has been a director of the Company since
August 1990. He has been President and a director of Elliott & Sons Insurance
Agency, Inc. and Michigan Benefit Plans Insurance Agency, Inc. since 1967. Mr.
Elliott also serves as a director of the Boys and Girls Club of Troy, a
charitable organization located in Troy, Michigan.
WALTER J. KIRCHBERGER, age 61, was elected to fill a vacancy in the
Board resulting from the return of Peter Sugar to his former law firm, which
serves as general counsel to the Company. Mr. Kirchberger is First Vice
President - Research of PaineWebber Incorporated, and has served in such
capacity for more than 25 years. He also serves as a director of Simpson
Industries, Inc.
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest,
adverse to the Company. To the best of the Company's knowledge, there have
been no events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions that are material to the evaluation of the ability or
integrity of any nominee during the past five years.
-3-
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
The Board met three times during the Company's fiscal year ended
September 30, 1995 ("Fiscal 1995"). All of the directors on the Board attended
each meeting during Fiscal 1995.
Directors who are employees of the Company do not receive compensation
for serving on the Board or on the Board's committees. Directors who are not
employees of the Company are entitled to a quarterly retainer fee of $3,250
($2,500 for quarters ending prior to October 1, 1995), a $1,000 fee for each
regular or special meeting of the Board and a $1,000 fee for each committee
meeting attended on a day other than a regular or special Board meeting date
(collectively, the "Fees"). A director may elect to receive payment of the
Fees in shares of Common Stock pursuant to the Company's 1989 Retainer Stock
Plan for Non-Employee Directors (the "Retainer Plan"). To participate in the
Retainer Plan, an eligible director must elect prior to December 31 of each
year the percentage, if any, of Fees he desires to receive in the form of
shares of Common Stock. The Common Stock is issued quarterly during the
following calendar year. The number of shares of Common Stock to be issued to
an eligible director is determined by dividing the dollar amount of the
percentage of Fees such director elects to receive in Common Stock by the "fair
market value" of Common Stock on the day prior to the date of issuance of the
Common Stock to such director. The term "fair market value" means the average
of the highest and lowest selling price for the Common Stock as quoted on
Nasdaq National Market for the day prior to the date of issuance or for the
first date prior to the date of issuance for which shares of Common Stock are
quoted, if not quoted on the day prior to the date of issuance. Any fractional
share of Common Stock derived from such calculation is paid in cash.
The aggregate fair market value of the shares of Common Stock issued
to any eligible director in a given year cannot exceed 100% of such eligible
director's Fees. Fees may not be increased more often than annually. During
Fiscal 1995, 1,561 shares of Common Stock were issued under the Retainer Plan.
Several important functions of the Board may be performed by
committees that are comprised of members of the Board. The Company's Bylaws
authorize the formation of these committees and grant the Board the authority
to prescribe the functions of each committee and the standards for membership
of each committee. In addition, the Board appoints the members of each
committee. The Board has three standing committees: the Audit Committee, the
Compensation Committee, and the Executive Committee.
The Audit Committee was established to: (i) annually recommend a firm
of independent public accountants to the Board to act as auditors of the
Company; (ii) review the scope of the annual audit with the auditors in advance
of the audit;
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<PAGE> 8
(iii) generally review the results of the audit and the adequacy of the
Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board. The current
members of the Audit Committee are Messrs. Raymond Elliott, Kenneth D. McClain
and Walter J. Kirchberger. Walter J. Kirchberger was appointed after the end
of Fiscal 1995 to replace Peter Sugar. The Audit Committee reviewed and
discussed reports from the Company's auditors but the Audit Committee did not
hold any formal meetings during Fiscal 1995.
The Compensation Committee was established to: (i) review the
compensation (including salaries, bonuses and stock options) of the Company's
officers; and (ii) perform such other duties as may be delegated to it by the
Board. The current members of the Compensation Committee are Messrs. Raymond
Elliott and Walter J. Kirchberger. Walter J. Kirchberger was appointed after
the end of Fiscal 1995 to replace Peter Sugar. See "Report of the Compensation
Committee on Executive Compensation".
The Executive Committee was established to manage generally the
day-to-day business and affairs of the Company between regular Board meetings.
In no event may the Executive Committee, without the prior approval of the
Board acting as a whole: (i) amend the Company's Articles of Incorporation;
(ii) amend the Company's Bylaws; (iii) adopt an agreement of merger or
consolidation; (iv) recommend to the shareholders the sale, lease or exchange
of all or substantially all of the Company's property and assets; (v) recommend
to the shareholders a dissolution of the Company or a revocation of a
dissolution; (vi) fill vacancies on the Board; (vii) fix compensation of the
directors for serving on the Board or on a committee of the Board; (viii)
declare dividends or authorize the issuance of the Company's stock; or (ix)
approve or take any action with respect to any related party transaction
involving the Company. All actions taken by the Executive Committee must be
promptly reported to the Board as a whole and are subject to ratification,
revision and alteration by the Board, except that no rights of third persons
created in reliance on authorized acts of the Executive Committee can be
affected by any such revision or alteration. The current members of the
Executive Committee are Messrs. Kenneth D. McClain and Robert W. McClain. The
Executive Committee did not hold any formal meetings during Fiscal 1995.
The Board has adopted a policy requiring review of related party
transactions by disinterested directors on a transaction by transaction basis.
The Board does not have a standing committee responsible for
nominating individuals to become directors.
-5-
<PAGE> 9
MANAGEMENT AND COMPENSATION
EXECUTIVE OFFICERS
The persons listed below are the current executive officers of the
Company. Each is annually appointed by, and serves at the pleasure of, the
Board.
<TABLE>
<CAPTION>
APPROXIMATE
DATE
SERVICE
NAME AGE OFFICE BEGAN
---- --- ------ -----
<S> <C> <C> <C>
Kenneth D. McClain(1) 54 Chairman of the Board, Chief Executive 03/68
Officer and President
Robert W. McClain(1) 59 Senior Vice President and Assistant 03/68
Secretary
Carl Jaworski 52 Secretary 10/72
</TABLE>
Each of the executive officers has been continuously employed by the
Company for more than five (5) years serving in the capacities and since the
date reflected above. Some of the executive officers listed above were
partners in certain partnerships which sold to the Company property which the
Company had previously been leasing from such partnerships. See "Certain
Relationships and Related Transactions".
To the best of the Company's knowledge, there are no material
proceedings to which any officer is a party, or has a material interest,
adverse to the Company. To the best of the Company's knowledge, there have
been no events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions that are material to the evaluation of the ability or
integrity of any executive officer during the past five years.
EXECUTIVE COMPENSATION
The following tables set forth all cash compensation paid to the Chief
Executive Officer of the Company and the only other executive officer whose
total annual salary and bonus from the Company exceeded $100,000 during Fiscal
1995.
__________________________________
(1) Kenneth D. McClain and Robert W. McClain are brothers.
-6-
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------- ----------------------
Name and Fiscal Salary Options/
Principal Position Year Amount($) SARs(#)
------------------ ---- ------ ----
<S> <C> <C> <C>
Kenneth D. McClain, 1995 $219,675 13,333
President/ CEO
1994 194,250 26,667
1993 194,250 0
Robert W. McClain, 1995 216,582 6,667
Senior Vice President
1994 191,250 22,667
1993 191,250 0
</TABLE>
OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
Potential Realizable
Shares % of Total Value at Assumed
Underlying Options/SARs Annual Rates of Stock
Options/SARs Granted to Exercise Price Appreciation
Granted Employees Price Expiration for Option Term
Name in 1995 in 1995 ($/Sh.) Date ---------------------------
5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. 13,333 26.31% $7.31 1/16/00 $26,927 $53,854
McClain
Robert W. 6,667 13.16% $7.31 1/16/00 $13,465 $26,930
McClain
</TABLE>
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<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
No. of Unexercised
Options/SARs Value of Unexercised
at In-The-Money Options/SARs at
Shares Fiscal Year-End Fiscal Year-End
Acquired Value ----------------------------------------------------------------------
on Received Not Not
Exercise Exercisable Exercisable(1) Exercisable Exercisable(2)
in 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kenneth D. 0 8,889 17,778 $3,378 $6,756
McClain
Robert W. 0 7,556 15,111 $2,871 $574
McClain
</TABLE>
________________________
(1) Stock options granted April 18, 1994 pursuant to the Company's 1989
Incentive Stock Plan (the "Incentive Plan"). Options must be exercised by
April 17, 1999. Exercise price is $6.56 per share.
(2) Value based on the average of the September 29, 1995 closing bid high
and low price which was $6.94 per share.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The executive compensation program is administered by the Compensation
Committee of the Board (the "Committee") which is comprised of independent
directors, Messrs. Raymond Elliott and Walter J. Kirchberger. The program
supports the Company's commitment to providing superior shareholder value. It
is designed to attract and retain high-quality executives, to encourage them to
make career commitments to the Company, and to accomplish the Company's short
and long term objectives. The Committee attempts to structure a compensation
program for the Company that will reward its top executives with bonuses and
stock and option awards upon attainment of specified goals and objectives while
striving to maintain salaries at reasonably competitive levels. The Committee
reviews the compensation (including salaries, bonuses and stock options) of the
Company's key executive officers and performs such other duties as may be
delegated to it by the Board. The Committee held one formal meeting during
Fiscal 1995.
In reviewing the compensation to be paid to the Company's executive
officers during Fiscal 1995, the Committee sought to ensure that executive
officers were rewarded for long-term strategic management, for increasing the
Company's value for its shareholders, and for achieving internal goals
established by the Board.
-8-
<PAGE> 12
The key components of executive officer compensation are salary,
bonuses and stock awards. Salary is generally based on factors such as an
individual officer's level of responsibility, prior years' compensation,
comparison to compensation of other officers in the Company, and compensation
provided at competitive companies and companies of similar size. Bonuses and
stock awards are intended to reward exceptional performances. Stock awards are
also intended to increase an officer's interest in the Company's long-term
success as measured by the market and book value of the Common Stock. Stock
awards may be granted to officers and directors of the Company and its
subsidiaries and to certain employees who have managerial or supervisory
responsibilities under the Incentive Plan. Stock awards may be stock options,
stock appreciation rights or restricted share rights. Two executive officers
and two key employees received stock options under the Incentive Plan during
Fiscal 1995.
The Committee generally reviews the Company's financial and operating
performance for the preceding fiscal year upon the availability of audited
financial statements, usually in the first or second quarter of the following
fiscal year. In line with this practice, the Committee reviewed the Company's
financial results for the fiscal year ended September 30, 1994 ("Fiscal 1994")
and the first quarter of Fiscal 1995. The Committee observed that the Company
experienced significant growth and profit improvement in Fiscal 1994. By
increasing its sales efforts and continuing its cost-cutting measures during
Fiscal 1994, the Company was able to increase its net sales by over 28% and its
net income by over 50%. In addition, its net income as a percentage of net
sales increased to 4.12% for Fiscal 1994 compared to 3.42% for the fiscal year
ended September 30, 1993. After reviewing the individual performance of the
Chief Executive Officer and recognizing the progress the Company has made
toward attaining its long-term goal of increasing its earnings per share and
shareholder value, the Committee decided to increase the Fiscal 1995 salary of
the Chief Executive Officer from $194,250, which was the annual salary paid to
the Chief Executive Officer during the years 1990-1994, to $219,675 and to
grant the Chief Executive Officer an option to purchase 13,333 shares of Common
Stock under the Incentive Plan. See "Executive Compensation" for the material
terms of such option.
Raymond Elliott
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Raymond Elliott and Walter J. Kirchberger are not currently,
and have never been, officers or employees of the Company or its subsidiaries.
Mr. Elliott is a principal officer of Elliott & Sons Insurance Agency, Inc. and
Michigan Benefit Plans Insurance Agency, Inc., entities which provided
insurance to the Company during Fiscal 1995. Sales from these entities to the
Company aggregated approximately $1.3 million during Fiscal 1995, for which
these entities received fees and commissions in the approximate amount of
$129,000. The
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<PAGE> 13
Board believes that Mr. Elliott's ability to make fair compensation decisions
have not and will not be compromised by the Company's relationship with these
entities. None of the Company's executive officers served as a director,
executive officer or compensation committee member of another entity which had
an executive officer who served as a Committee member or director of the
Company during the last fiscal year.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Common Stock against the
cumulative total return of the NASDAQ Market Index, a group of issuers used by
the Company for comparison purposes for Fiscal 1993 and 1994(2) ("Peer Group
One"), and a group of issuers with similar market capitalizations as the
Company as of February 21, 19963 ("Peer Group Two"), for the period of five (5)
fiscal years commencing October 1, 1990 and ending September 30, 1995. This
line graph assumes a $100 investment on October 1, 1990 with dividend
reinvestment.
The Company has elected to compare its yearly percentage change in
shareholder return against issuers with similar market capitalizations because
a published industry or line-of-business index does not exist and because
financial information on the Company's competitors is not publicly available.
The Company decided to use the group of issuers identified as Peer Group Two
for comparison purposes because two of the issuers in Peer Group One, Eldec
Corporation and Orthomet Inc., are no longer publicly traded, three of the
issuers have market capitalizations (as at March 26, 1996) substantially in
excess of McClain's: Drew Industries Incorporated - $72.0 million; Mueller
Paul Company - $35.0 million; Safetytek Corporation - $44.0 million; and the
last issuer, Rexon Incorporated, has a market capitalization (as at March 28,
1996) of $1.6 million, which is substantially less than McClain's.
__________________________________
(2) Issuers in this group include Drew Industries Incorporated, Mueller
Paul Company, Rexon Incorporated, and Safetytek Corporation. Eldec
Corporation was included in Peer Group One for Fiscal 1993, and Orthomet
Inc. for Fiscal 1993 and 1994, however, these corporations are no longer
publicly traded.
(3) Issuers in this group include Barnwell Industries Inc., Enscor Inc.,
Hampton Industries, Inc., Paris Corporation and Smith Environmental
Technologies Corporation.
-10-
<PAGE> 14
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MCCLAIN INDUSTRIES, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDICES
[GRAPH]
FISCAL YEAR
<TABLE>
<CAPTION>
COMPANY 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
MCCLAIN IND. 100 160.00 190.00 360.00 440.00 366.67
PEER GROUP ONE 100 138.20 202.41 160.28 173.26 165.32
PEER GROUP TWO 100 89.17 79.80 69.15 78.31 84.07
BROAD MARKET 100 134.19 131.96 171.62 181.61 220.50
</TABLE>
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<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1996, certain information
regarding the beneficial ownership of Common Stock, of: (i) each person known
to the Company to be the beneficial owner of more than five percent (5%) of the
Common Stock; (ii) each director of the Company; (iii) each executive officer
listed in the Summary Compensation Table; and (iv) all executive officers and
directors of the Company as a group, based upon information available to the
Company.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Name and Address Beneficial Outstanding
of Beneficial Owner Ownership(1) Shares(2)
------------------- ------------ ---------
<S> <C> <C>
Kenneth D. McClain 1,369,521(3) 29.00%
6200 Elmridge Road
Sterling Heights, MI 48310
Robert W. McClain 1,135,246(4) 24.04%
6200 Elmridge Road
Sterling Heights, MI 48310
June McClain 337,178 7.14%
68333 DeQuindre
Oakland, MI 48368
Lisa McClain Pfeil(5) 310,474 6.57%
67667 Sisson
Romeo, MI 48065
Raymond Elliott 9,047 .19%
290 Town Center
P.O. Box 890
Troy, Michigan 48084
Walter J. Kirchberger 575 .01%
2301 West Big Beaver Road
Troy, Michigan 48084
All current executive officers and 2,663,964(6) 56.41%
directors as a group (5 persons)
</TABLE>
___________________________________
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares that such person has a right to acquire within 60
days.
(2) Based on 4,722,729 shares of Common Stock issued and outstanding as of
March 31, 1996. In addition, for purposes of computing the percentage of
outstanding shares held by each person or group of persons named above, any
security that such person or persons has or have the right to acquire within 60
days is also deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(3) Includes 2,430 shares of Common Stock owned by Kenneth D. McClain's
wife. Mr. McClain disclaims beneficial ownership of these shares.
-12-
<PAGE> 16
(4) Includes 337,178 shares of Common Stock owned by Robert W. McClain's
wife. Mr. McClain disclaims beneficial ownership of these shares.
(5) Of the shares beneficially owned by Mrs. Pfeil, 305,098 are held of
record by an irrevocable trust for her benefit. Mrs. Pfeil is the daughter of
Kenneth D. McClain.
(6) Includes 61,170 shares which executive officers and directors have the
right to acquire pursuant to stock options exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 2, 1993, the Company consummated the purchase of three
facilities which it had been leasing from three different entities controlled
by certain officers and directors of the Company, including its main Sterling
Heights, Michigan facility, its Kalamazoo, Michigan facility and its Macon,
Georgia facility. In each instance, the Company paid the purchase price by
issuing shares of Common Stock and assuming existing mortgages on the
facilities. The purchase prices were determined by the Board on the basis of
independent appraisals of the facilities. The Common Stock issued was valued
at $5.40 per share, based on the market price for shares of Common Stock as of
March 29, 1993, the date that definitive purchase agreements for the facilities
were executed. These shares of Common Stock are restricted within the meaning
of Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), meaning that they cannot be resold unless registered under
the Securities Act, or in a transaction which is exempt from such registration.
The seller of each facility owned the facility for more than two years before
the sale.
In November 1994, in connection with a contemplated public offering of
Common Stock, the Company agreed to value the shares of Common Stock issued in
exchange for these facilities at a price based on the market value of shares of
Common Stock as of August 2, 1993, the date these transactions were
consummated. This revision gave effect to the fact that the shares had
increased in value by $504,000 from March 29, 1993. Messrs. Kenneth and Robert
McClain have agreed to pay this amount to the Company, with interest at the
prime rate established by Standard Federal Bank, in five equal principal
installments with accrued interest, commencing September 30, 1995.
The Company leases one of its facilities from the mother of Messrs.
Kenneth and Robert McClain. The Company believes that the terms and conditions
of this lease are comparable to those available from an unrelated party with
respect to similar facilities.
The Company had sales of approximately $239,000 in Fiscal 1995 to
McClain Leasing Corporation, an entity controlled by certain officers and
directors of the Company.
Elliott & Sons Insurance Agency, Inc. and Michigan Benefit Plans
Insurance Agency, Inc., entities controlled by Raymond Elliott, a director of
the Company, provided insurance to the Company during Fiscal 1995. Sales from
these entities to the Company aggregated approximately $1.3 million during
Fiscal 1995, for which these entities received fees and commissions in the
approximate amount of $129,000. See "Compensation Committee Interlocks and
Insider Participation".
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GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected Rehmann Robson P.C. as the Company's independent
public accountants for Fiscal 1995. Representatives of Rehmann Robson P.C. are
expected to be present at the Meeting, and will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions. It
is expected that Rehmann Robson P.C. will also serve the Company in the same
capacity during the fiscal year ending September 30, 1996.
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials
for the Company's next annual meeting of shareholders must comply with the
rules and regulations promulgated under the Securities Exchange Act of 1934, as
amended, and must be received by the Company at its offices at 6200 Elmridge
Road, Sterling Heights, Michigan 48310, not later than December 12, 1996. Such
proposals should be addressed to the Company's Secretary.
OTHER MATTERS
The Company's 1995 Annual Report has been mailed with this Proxy
Statement or delivered previously to the Company's shareholders.
Management knows of no matters which will be presented for
consideration at the Meeting other than those stated in the Notice of Annual
Meeting. However, if any other matters do properly come before the Meeting,
the person or persons named in the enclosed proxy will vote the proxy in
accordance with their best judgment regarding such matters, including the
election of a director or directors other than those named in this Proxy
Statement should an emergency or unexpected occurrence make the use of such
discretionary authority necessary, and also regarding matters incident to the
conduct of the Meeting.
Shareholders are requested to date, sign and return the enclosed proxy
in the enclosed postage-paid envelope. So that the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote at the
Meeting may be assured, prompt execution and return of the proxy is requested.
By Order of the Board of Directors
CARL JAWORSKI
Secretary
Dated: April 10, 1996
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<PAGE> 18
REVOCABLE PROXY
McCLAIN INDUSTRIES, INC.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS MAY 10, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder appoints KENNETH D. McCLAIN, ROBERT W. McCLAIN,
RAYMOND ELLIOTT and WALTER J. KIRCHBERGER, or any one of them, as attorneys and
proxies of the shareholder, with full power of substitution, to vote on behalf
of the shareholder and in his or her name and stead, all shares of the common
stock of McClain Industries, Inc. which the shareholder would be entitled to
vote if personally present at the Company's Annual Meeting of Shareholders to
be held at the Sterling Inn, St. Clair Room, 34911 Van Dyke Road, Sterling
Heights, Michigan, on Friday, May 10, 1996, and at any adjournments.
The undersigned shareholder acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated April 10, 1996.
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| Date |
Please sign exactly as your name appears on this card. | |
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| |
| |
| |
------Shareholder sign above-------Co-holder (if any) sign above-------------
With- For All
For held Except
1. ELECTION OF DIRECTORS / / / / / /
The nominees are:
KENNETH D. McCLAIN ROBERT W. McCLAIN
WALTER J. KIRCHBERGER RAYMOND ELLIOTT
Instructions: To vote for all of the nominees, put an X in the box marked
"For". To withhold your vote for all of the nominees, put an X in the box marked
"Withheld". To vote for some but not all of the nominees, put an X in the box
marked "For All Except" and list on the line below only those nominees for whom
your vote is withheld.
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2. OTHER BUSINESS
The appointed proxies are authorized to vote upon all matters incidental to the
conduct of the Annual Meeting and such other business as may properly come
before the Annual Meeting in accordance with their best judgment.
The giving of this Proxy does not affect the right of the undersigned
shareholder to vote in person should the undersigned shareholder attend the
Annual Meeting. This Proxy may be revoked at any time before it is voted.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED.
When shares are held be joint tenants, both should sign. When signing as
attorney, executor, personal representative, trustee or in some other
representative capacity, please sign name and give full title. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
