MLX CORP.
1000 Center Place
Norcross, Georgia 30093
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of MLX Corp. (the "Company") at Kilpatrick
Stockton LLP, 27th Floor, 1100 Peachtree Street, Atlanta, Georgia, on
April 30, 1997, at 11:00 a.m., Atlanta time.
The Annual Meeting will be held for the following purposes:
1. To elect six directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected and
qualified.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March
11, 1997, as the record date for determination of shareholders
entitled to notice of and to vote at the meeting.
A copy of the Annual Report to Shareholders for the fiscal year
ended December 31, 1996 is enclosed.
By Order of the Board of Directors,
Theodore R. Kallgren, Secretary
Norcross, Georgia
April 1, 1997
The vote of every shareholder is important, and your cooperation
in returning your executed proxy promptly will be appreciated. The
proxy is revocable and will not affect your right to vote in person if
you attend the meeting. It will, however, help to avoid added proxy
solicitation costs.
<PAGE>
MLX Corp.
1000 Center Place
Norcross, Georgia 30093
PROXY STATEMENT
for Annual Meeting of Shareholders
to be held on April 30, 1997.
INTRODUCTION
April 1, 1997
This Proxy Statement and the enclosed proxy, which is first being
mailed to the shareholders of MLX Corp. (the "Shareholders") on
approximately April 1, 1997, is furnished to you in connection with
the solicitation of proxies on behalf of the Board of Directors of MLX
Corp. ("MLX" or the "Company") to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the offices of
Kilpatrick Stockton LLP, 27th Floor, 1100 Peachtree Street, Atlanta,
Georgia on April 30, 1997 at 11:00 Atlanta time, and at any
subsequent time which may be necessary by an adjournment or
adjournments thereof.
Proxies in proper form received by the time of the meeting will
be voted as specified. A shareholder giving a proxy may revoke it at
any time before it is exercised by filing with the Secretary of the
Company a revoking instrument or a duly executed proxy bearing a later
date, or by attending the meeting and voting in person. Shares cannot
be voted at the meeting unless the holder is present or represented by
proxy.
The cost of soliciting proxies, including the preparation,
assembling and mailing of the Notice of Meeting, Proxy Statement,
form of proxy and other soliciting material, as well as the cost of
forwarding such material to the beneficial owners of the Company's
common stock (the "Common Stock"), is to be borne by the Company.
Directors, officers and employees of the Company may also solicit
proxies, but without compensation, by further mailings, personal
conversations or by telephone. The Company may reimburse brokers and
others holding stock in their names or in the names of nominees for
their reasonable out-of-pocket expenses incurred in sending the proxy
materials to principals and beneficial owners.
Each shareholder is entitled to one vote per share of Common
Stock held as of the Record Date. In determining whether a quorum
exists at the Annual Meeting for purposes of all matters to be voted
on, all votes "for" or "against," as well as all abstentions
(including votes to withhold authority to vote in certain cases), with
respect to the proposal receiving the most such votes, will be
counted. The vote required for the election of directors is a
plurality of the votes cast at an election, provided a quorum is
present. Thus, with respect to election of directors, an abstention
or broker non-vote will have no effect.
The Board of Directors of the Company (the "Board"), in
accordance with the Bylaws, has fixed the close of business on March
11, 1997, as the record date for determining the Shareholders entitled
to notice of and to vote at the Annual Meeting or any adjournments
thereof. At the close of business on such date, the outstanding
number of voting securities of the Company was 2,617,584 shares of
Common Stock, $.01 par value, each of which is entitled to one vote.
<PAGE>
ELECTION OF DIRECTORS
BOARD OF DIRECTORS:
The Bylaws of the Company provide for a Board of Directors
consisting of from six to ten directors. The Bylaws also provide that
the directors, by a vote of a majority, have the power, within such
limits, to fix the number of directors that shall constitute the whole
Board and to fill vacancies for the unexpired term by an affirmative
majority vote. The current number of directors is set at seven, and
effective at the annual meeting, it will be reduced to six.
The Board of Directors is responsible for the overall affairs of
the Company. To assist it in carrying out its duties, the Board has
delegated certain authority to standing Audit, Compensation and Funds
Management Committees. Members of each standing committee are normally
elected by the Board at its organizational meeting following the
Annual Meeting of Shareholders. The Board of Directors has no
nominating committee or other committee which performs a similar
function.
MEETINGS OF THE BOARD OF DIRECTORS:
There were four meetings of the Board of Directors in 1996. In
addition to the meetings of the Board of Directors and its committees
at which all formal actions are taken, additional time on the part of
the Company's directors is required to be expended in the frequent
review of Company matters and documents and in numerous communications
with the chairman and other executives during periods between
meetings. Mr. Glancy missed one audit committee meeting and one
regular board meeting due to international travel commitments.
COMMITTEES OF THE BOARD OF DIRECTORS:
The Audit Committee of the Board of Directors, which met one time
during 1996, has as its primary responsibilities the selection and
recommendation of an independent certified public accounting firm to
be appointed by the Board as the Company's independent auditors, to
review the scope and results of the audit, and to evaluate the
adequacy of and compliance with the Company's internal accounting
procedures and controls. The members of the Audit Committee are:
W. John Roberts-Chairman * S. Sterling McMilllan, III * Alfred R.
Glancy III * J. William Uhrig
The Compensation Committee of the Board of Directors, which did
not meet in 1996, has as its primary responsibilities the review of
the Company's salary administration program, the review of the
salaries of the officers of the Company, and recommendations with
respect to such salaries to the full Board, and the review and
approval of any recommendations made by management for awards under
the MLX Corp. Stock Option and Incentive Award Plan. The members of
the Compensation Committee are:
Alfred R. Glancy III-Chairman * Willem F.P. de Vogel * W. John Roberts
The Funds Management Committee of the Board of Directors, which
met four times during 1996, has as its primary responsibilities the
review of the Company's investment policies and practices and
consulting with management on investments, investment strategies and
approval of certain funds transfers. The members of the Funds
Management Committee are:
W. John Roberts-Chairman * H. Whitney Wagner * J. William Uhrig
NOMINEES FOR THE BOARD OF DIRECTORS:
Six directors are to be elected at the Annual Meeting of
Shareholders to hold office until the next Annual Meeting of
Shareholders or until their successors are elected and qualified. The
nominees for election as directors who are named below are willing to
be elected and to serve. However, in the event that a nominee at the
time of election is unable to serve, or is otherwise unavailable for
election, the Board of Directors may select a substitute nominee.
Information concerning the business experience of the nominees appears
in the following section. The nominees for directors are:
Alfred R. Glancy III * S. Sterling McMillan, III * J. William Uhrig
W. John Roberts * H. Whitney Wagner * Willem F.P. de Vogel
IT IS INTENDED THAT PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE VOTED FOR (UNLESS OTHERWISE DIRECTED) THE ELECTION OF THE SIX
NOMINEES NAMED ABOVE.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
Principal Shareholders. The following table lists the
shareholders known to the Company to be the beneficial owners of more
than five percent of the Common Stock of the Company as of March 11,
1997. The information concerning beneficial ownership was obtained
from the Company's records or from filings with the Securities and
Exchange Commission on Forms 13D or 13G.
<TABLE>
Amount and Nature of Percent of
Names and Addresses of Beneficial Owners Beneficial Ownership Class
- ---------------------------------------- -------------------- ----------
<S> <C> <C>
Three Cities Holdings Limited
c/o Craigmuir Chambers
P.O. Box 71: Road Town
Tortola
British Virgin Islands 851,456(1) 32.53%
The Equitable Life Assurance Society of
the United States
1285 Avenue of the Americas
New York, New York 10019 178,914(2) 6.84%
Teribe Limited
c/o Craigmuir Chambers
P.O. Box 71; Road Town
Tortola
British Virgin Islands 136,722(3) 5.22%
</TABLE>
(1) Three Cities Holdings Limited has sole and irrevocable power
to vote and dispose of 851,456 shares of Common Stock that
are owned of record by the following group of investors (the
"Investor Group"): Terbem Limited (374,244 shares --
14.30%), Mitvest Limited (47,107 shares -- 1.80%), Tinvest
Limited (201,286 shares -- 7.69%), Bobst Investment Corp.
(59,961 shares -- 2.29%), and TCR International Partners, LP
(168,858 shares -- 6.45%). Each member of the Investor Group
is an investment vehicle established for the purpose of
investing in securities of other enterprises in various
parts of the world, and the Investor Group acquired the
shares of Common Stock as participants in an equity
portfolio fund managed by Three Cities Holding Limited.
Three Cities Holdings Limited is the parent company of Three
Cities Research, Inc. and an affiliate of Teribe Limited.
Shares owned by Teribe Limited are not included in Three
Cities Holdings Limited's beneficial ownership. Mr. Willem
F.P. de Vogel, a director of the Company, is President of
Three Cities Research, Inc., and Messrs. Uhrig and Wagner,
directors of the Company, are Managing Directors of Three
Cities Research, Inc. See Notes 5 and 6 under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS -- Directors and
Officers."
(2) Included in the Equitable Life Assurance Society of the
United States' ("Equitable") beneficial ownership are
107,348 shares owned directly by Equitable and 71,566 shares
owned by its wholly-owned subsidiary Equitable Variable Life
Insurance Company.
(3) Teribe Limited is an indirectly owned investment subsidiary
of Enterprises Quilmes S.A., a Luxembourg holding company
whose shares are listed and traded on the Paris and
Luxembourg Stock Exchanges. One of the members of the
Investor Group described in Note 1 above, Tinvest Limited,
is a subsidiary of Teribe Limited and is also an affiliate
of Three Cities Research, Inc. Teribe Limited disclaims
beneficial ownership of the shares owned by Tinvest Limited.
<PAGE>
Directors and Officers. The following information concerning
beneficial ownership of the Common Stock of the Company at March 11,
1997, by directors, executive officers and by directors and executive
officers as a group was furnished by the respective directors or
officers or obtained from the records of the Company.
<TABLE>
Exercisable Percent of
Stock Common
Name or Group Options (1) Other Total Stock
- --------------------------- ------------- ----- ------ ----------
<S> <C> <C> <C> <C>
Alfred R. Glancy III -- 4,300(2) 4,300 (7)
S. Sterling McMillan, III -- 14,726(3) 14,726 (7)
W. John Roberts -- 1,600(4) 1,600 (7)
Willem F.P. de Vogel -- 1,950(5) 1,950 (7)
J. William Uhrig -- (6) -- (7)
H. Whitney Wagner -- (6) -- (7)
Brian R. Esher -- -- -- (7)
Thomas C. Waggoner 40,000 5,000 45,000 1.7%
Theodore R. Kallgren -- 2,124 2,124 (7)
All directors and executive officers,
including those named above (9 persons) 40,000 29,700 69,700 2.6%
</TABLE>
(1) Includes shares subject to options which are exercisable
within sixty days of March 11, 1997.
(2) Included in the other amount shown for Mr. Glancy are 3,900
shares in which he has sole voting and investment power, 100
shares owned by his wife and 300 shares owned by his
children in which he has no voting or investment power.
(3) Included in the other amount shown for Mr. McMillan are
7,526 shares in which he has sole voting and investment
power, 600 shares which are owned by his wife in which he
has no voting or investment power, 1,445 shares which are
owned by his children in which he has no voting or
investment power, 1,603 shares held by trusts in which Mr.
McMillan as trustee has sole or shared voting and investment
power, and 3,552 shares held by a trust in which Mr.
McMillan is a possible beneficiary over which he has only
advisory voting and investment power. Excluded from the
table are 40,010 shares for which Mr. McMillan is an
investment advisor and/or trustee with discretionary
investing and/or voting power in which Mr. McMillan
disclaims any beneficial interest.
(4) The shares indicated for Mr. Roberts are owned jointly with
his wife.
(5) Mr. de Vogel is President of Three Cities Research, Inc., a
wholly owned subsidiary of Three Cities Holdings Limited and
an affiliate of Enterprises Quilmes S.A., which indirectly
owns Teribe Limited (see Note 3 under "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS - Principal Shareholders"). None
of the shares beneficially owned by Three Cities Holdings
Limited and Teribe Limited is included in Mr. de Vogel's
beneficial ownership.
(6) Messrs. Uhrig and Wagner are both Managing Directors of
Three Cities Research, Inc. None of the shares owned by
Three Cities Holdings Limited and Teribe Limited is included
in the beneficial ownership of Messrs. Uhrig and Wagner.
(7) Less than 1%.
<PAGE>
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS:
The following information with respect to business experience has
been furnished by the respective officer, director or nominee for
director.
Alfred R. Glancy III, age 59. Chairman, President and Chief
Executive Officer of MCN Energy Group Inc., a diversified energy
holding company with natural gas markets and investments throughout
North America. Director of the Company since 1985 and Non-executive
Chairman of the Board since May 1996. Mr. Glancy joined Michigan
Consolidated Gas Company, a subsidiary of MCN, in 1962 and has held
the position of Chairman since 1984 and Chief Executive Officer from
1984 until September 1992. In 1988, through a corporate
reorganization, Michigan Consolidated Gas Company became a subsidiary
of MCN Corporation. Mr. Glancy has been Chairman, President and Chief
Executive Officer since the reorganization.
S. Sterling McMillan, III, age 58. Vice Chairman of Greenleaf
Capital Management, an investment company. Director of the Company
since 1985. Mr. McMillan has held his current position since 1986.
Prior to joining Greenleaf, Mr. McMillan was employed by
Cleveland-Cliffs Inc. as Vice President-Finance (1983-1986).
W. John Roberts, age 65. Retired Senior Vice President-Finance
and Treasurer of the Amerisure Companies, a group of affiliated
companies providing property, casualty and life insurance. Director of
the Company since 1985. Mr. Roberts joined Michigan Mutual Insurance
Company, the parent organization for Amerisure Companies, as Vice
President-Finance in 1982 and was Senior Vice President-Finance and
Treasurer from 1985 until his retirement in March 1991.
J. William Uhrig, age 35. Managing Director of Three Cities
Research, Inc., a firm engaged in the investment and management of
private capital. Director of the Company since 1993. Mr. Uhrig joined
Three Cities in 1984. Prior to December 1991, Mr. Uhrig was the
Managing Director of TCR Europe Ltd. Mr. Uhrig has been nominated at
the behest of the Investor Group pursuant to the terms of a Nomination
Agreement between the Investor Group and the Company. See
"COMPENSATION COMMITTEE INTERLOCKS AND RELATED TRANSACTIONS." Mr.
Uhrig received his Master of Business Administration from the
University of Chicago in 1984, and graduated from Purdue University in
1982. Mr. Uhrig is also a director of Family Bargain Corporation.
Willem F.P. de Vogel, age 46. President of Three Cities
Research, Inc., a firm engaged in the investment and management of
private capital. Director of the Company since 1986. Mr. de Vogel
joined Three Cities in 1977 and has been the President of Three Cities
since 1982. Mr. de Vogel also serves as a director of Computer
Associates International.
H. Whitney Wagner, age 41. Managing Director of Three Cities
Research, Inc., a firm engaged in the investment and management of
private capital. Director of the Company since 1993. Mr. Wagner
joined Three Cities in 1983. Mr. Wagner has been nominated at the
behest of the Investor Group pursuant to the terms of a Nomination
Agreement between the Investor Group and the Company. See
"COMPENSATION COMMITTEE INTERLOCKS AND RELATED TRANSACTIONS." Mr.
Wagner was employed as a Corporate Banking Officer with Chemical Bank
prior to joining Three Cities (1978-1983). Mr. Wagner is also
a director of Garden Ridge Corporation and Family Bargain Corporation.
Thomas C. Waggoner, age 52. Chief Executive Officer and President
of the Company. Mr. Waggoner joined the Company in March 1991 as its
Vice President and Chief Financial Officer. He was promoted to
President in June 1995 and Chief Executive Officer in May 1996. He
continues to serve as the primary financial officer for the Company.
He was previously employed by Forstmann & Company from 1986 to 1990 as
its Vice President and Chief Financial Officer. Prior to that
position, he was employed during 1984 and 1985 by Breneman Company as
its Vice President of Finance and Administration. From 1971 to 1983 he
was employed by Deloitte, Haskins & Sells.
Theodore R. Kallgren, age 35. Vice President of Finance,
Treasurer and Secretary of the Company. Mr. Kallgren joined the
Company in May 1988 and has served as its Vice President of Finance
and Treasurer since June 1991. He has served as its Secretary since
June 1995. He was previously employed by Ernst & Whinney from 1984 to
1988. He is also currently employed as Chief Financial Officer for
Pameco Holdings, Inc. See "COMPENSATION COMMITTEE INTERLOCKS AND
RELATED TRANSACTIONS."
<PAGE>
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS:
Executive Compensation Summary
The following table provides certain summary information
concerning compensation paid or accrued by the Company and
its subsidiaries for the last three fiscal years of the Company to or
on behalf of the Company's President and Chief Executive Officer and
the former Chairman and Chief Executive Officer.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
---------------------- ----------------------------
Awards Payouts All other
---------------------------- compen-
sation
Other Restricted Options LTIP ($)
Name and Principal Position Year Salary ($) Bonus($) annual stock (#) payouts
compen- award(s) ($)
sation ($)
- --------------------------- ---- ---------- -------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas C. Waggoner 1996 $145,000 $ 52,500 0 0 0 0 0
President and 1995 131,508 150,000 0 0 30,000 0 0
Chief Executive 1994 135,000 70,000 0 0 12,500 0 0
Officer
Brian R. Esher 1996 $ 12,000 $ 0 0 0 0 0 0
Former Chairman 1995 70,187 37,500 0 0 0 0 0
and Chief Exe- 1994 125,000 75,000 0 0 0 0 0
tive Officer
</TABLE>
Compensation Committee Report on Executive Compensation
President & CEO Compensation
Decisions on compensation and bonus for the President and Chief
Executive officer are made by the three member Compensation Committee
of the Board of Directors, each of whom is a non-employee Director.
Mr. Waggoner and the Company have not entered into an employment
agreement.
Mr. Esher's compensation during 1996 was governed by his
Employment Agreement with the Company, which was first entered into in
1991. The initial Employment Agreement was amended on February 11,
1992 in light of the decreased size of the Company following the sale
of the Company's Refrigeration and Air Conditioning Group and to
reflect the responsibilities Mr. Esher acquired as Chief Executive
Officer of Pameco Holdings, Inc. The Employment Agreement was
again amended, effective January 1, 1994 and January 1, 1995 and
January 1, 1996 and extended on terms reflective of MLX's current
financial condition and size. Effective with the sale of S.K. Wellman
in June 1995, Mr. Esher's salary was decreased from $125,000 per year
to $12,000 per year and all incentive compensation for the remainder
of 1995 was eliminated. In January 1996 Mr. Esher's Employment
Agreement was extended through December 31, 1996 based on a $12,000
annual salary and no incentive compensation.
General
The Company's compensation programs have been designed to enable
the Company to attract, motivate and retain senior managers and key
employees by providing a total compensation opportunity based upon
individual and unit performance. The Company's compensation program
provides for competitive base salaries, annual incentive bonus
opportunities, competitive benefits (health, life, disability,
vacation, and defined contribution retirement) with employee
contributions and long term stock options. This compensation program
aligns the interest of the Company's management and its shareholders
to build long term value and improve the return to the Company's
shareholders. It is the Company's policy to structure its
compensation programs so that all compensation is deductible by the
Company pursuant to Section 162(m) of the Internal Revenue Code.
<PAGE>
Salaries
All officers are employed as employees at will. The salary of
the remaining executive officer is determined by the Chairman and
Compensation Committee and is based upon salary grades assigned to
positions and the relative experience and performance of the
individual. Salary grades are reviewed annually and adjusted in
accordance with the individual's performance and assigned
responsibilities within the Company and the general complexity of the
Company's operations. The Company generally attempts to set its
salaries near the midpoint of the salary ranges of comparably
sized employers.
Typically, individual executives are reviewed annually and their
performance evaluated against their objectives for the period of
evaluation. Such objectives include measurements of revenue
generation, operating profit, asset management, cash flows, cost
improvements, quality in customer service, in each case depending upon
the responsibilities of the executive. Evaluation of these factors is
subjective, and no fixed, relative weights are assigned to the
criteria considered. For 1996, these objectives were determined to
have been met or exceeded for Mr. Waggoner, resulting in the salary
increase reflected in the Summary Compensation Table above.
Bonus Compensation
All executive officers are granted bonus opportunities under the
Company's Senior Management Discretionary Bonus Plan, which defines
the administration and goal measurements of each key position. This
plan is updated annually and target bonus opportunities assigned to
qualifying managers. Payments are granted annually based upon
achievement of goals which are also established annually. For Mr.
Waggoner, these goals include profitability, lender matters, common
stock and NASDAQ matters, financial reporting and income tax
compliance, and mergers and acquisitions. Each goal is assigned a
relative weight of 10% to 25%. In each case, these targets were
substantially met in 1996, resulting in the bonus for Mr. Waggoner
reflected in the Summary Compensation Table above.
Option Grants
The Company uses grants of stock options under its 1985 Stock
Option Plan and its 1995 Stock Option and Incentive Award Plan (the
"Stock Option Plans") to its key employees and executive officers to
closely align the interests of such employees and officers with the
interests of its shareholders. The Company's Stock Option Plans are
administered by the Compensation Committee, which determines the
persons eligible, the number of shares subject to each grant, the
exercise price thereof and the other terms and conditions of the
option. Options granted under the Stock Option Plans have an exercise
price equal to at least 100% of the market price of the Common Stock
on the date that the option is granted, and the term of any option
granted is from five (5) to ten (10) years. Option grants typically
vest over a three year period, subject to continued employment.
The Compensation Committee
Alfred R. Glancy III, Chairman
Willem F.P. de Vogel
W. John Roberts
<PAGE>
Five-Year Shareholder Return Comparison
Set forth below is a line graph comparing for the five-year
period ended December 31, 1996, the cumulative total shareholder
return (stock price increase plus dividends, divided by beginning
stock price) on the Company's Common Stock with that of (i) all U.S.
companies quoted on NASDAQ and (ii) non-financial companies quoted on
NASDAQ. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
Comparison of Five Year Cumulative Total Return
Among the Company, The NASDAQ Stock Market and NASDAQ Non-Financial
Stocks
[GRAPH HERE]
<TABLE>
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
MLX Corporation 100 177.9 186.8 160.1 355.9 471.5
Nasdaq Stock Market (US Companies) 100 116.4 133.6 130.6 184.7 227.2
Nasdaq Non-Financial Stocks 100 109.4 126.3 121.4 169.2 205.6
SIC 0100-5999, 7000-9999 US & Foreign
</TABLE>
<PAGE>
Option Grants
There were no grants of stock options under the Company's Stock
Option Plans during the last fiscal year. See "REMUNERATION OF
DIRECTORS AND EXECUTIVE OFFICERS - Employment Agreements with
Executive Officers." No stock appreciation rights were granted during
the last fiscal year.
Option Exercises and Fiscal Year-End Values
The following table shows for the Company's Chief Executive Officer
and former Chief Executive Officer named in the Summary Compensation
Table above the number of shares covered by both exercisable and
non-exercisable stock options as of December 31, 1996, and the values
for "in-the-money" options, based on the positive spread between the
exercise price of any such existing stock options and the year-end
price of the Company's common stock.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
Number of unexercised Value of unexercised
Shares Value options at December 31, in-the-money options at
Name Acquired on Realized 1996 (No. of shares) December 31, 1996(1)
Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Waggoner 5,000 55,937 40,000 10,000 $ 263,125 $40,000
Brian R. Esher 0 0 190,400(2) 0 1,570,800(2) 0
</TABLE>
(1) Based on closing price of $13.25 on December 31, 1996.
(2) These options were converted to SAR's in February 1997 as
described under "Employment Agreements with Executive
Officers."
Directors Fees
Directors who are not employees of the Company receive a
quarterly retainer of $2,500 and a meeting fee of $400 per
meeting attended.
Employment Agreements with Executive Officers
Effective as of February 11, 1991, the Company and Brian R. Esher
former Chairman and Chief Executive Officer entered into an employment
agreement wherein Mr. Esher agreed to be employed as the Chairman,
President & Chief Executive Officer of MLX for a period of three
years, subject to earlier termination for cause as provided in the
agreement. Mr. Esher's employment agreement was amended as of
February 11, 1992, as a result of the substantial change in the
Company resulting from the sale of its Refrigeration & Air
Conditioning Group (the "RAC group"). The Amendment acknowledged the
other duties that Mr. Esher then had as the Chief Executive Officer of
the new Refrigeration & Air Conditioning group company, Pameco
Holdings, Inc. See "COMPENSATION COMMITTEE INTERLOCKS AND RELATED
TRANSACTIONS."
Based on a review of Mr. Esher's employment agreement, the
Company and Mr. Esher amended his employment agreement effective as of
January 1, 1994 , 1995 and 1996, in each case to extend the term until
the end of the calendar year. Under the terms of the amended
agreement, Mr. Esher received a base salary of $12,000 in 1996.
Under the terms of his original 1991 employment agreement, Mr.
Esher received an option to purchase 190,400 shares of Common Stock,
at a price of $5.00 per share, exercisable (subject to vesting
schedules which have been satisfied) at any time or from time to time
prior to February 10, 1998. As described below, these options were
converted to SAR's and subsequently exercised by Mr. Esher in February
1997.
In February 1997, the Board of Directors voted to convert all of
Mr. Esher's options to SAR's. All such SAR's were exercised and paid
to Mr. Esher in February 1997. The amount paid, as provided for under
the agreement, amounted to $2.2 million based on a closing market
price of $16.50 on February 12, 1997 and an exercise price of $5.00
per share.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND RELATED TRANSACTIONS:
Messrs. de Vogel, Glancy and Roberts served on the Compensation
Committee of the Board of Directors for the past fiscal year. None of
the members of the committee served as an officer of the Company.
On March 19, 1992, the Company consummated a sale of its RAC
Group and a restructuring of the Company's and its subsidiaries -- debt
obligations to it senior lenders (such sale and debt restructuring are
referred to collectively herein as the "1992 Restructuring").
Following its sale of the RAC Group, the Company entered into a
Management Services Agreement, dated March 19, 1992 (the Management
Services Agreement"), with Pameco Holdings, Inc., the purchaser of
the RAC Group, pursuant to which the Company provided management,
operational and administrative services to the RAC Group for a fee of
$30,000 per month. In 1993, this agreement was amended to provided
for the transfer of certain employees to Pameco Holdings and for the
Company to pay a monthly fee of $5,000 to Pameco Holdings for shared
expenses, including the lease of common office space and for the
services of the transferred employees. This amount was adjusted to
$4,500 per month for 1996 and 1997. Under the Management Services
Agreement, Pameco Holdings paid the Company $81,500 in fees (net of
amounts paid by the Company to Pameco Holdings under the
post-amendment version of the Management Services Agreement) during
1993. The Company paid $69,000 to Pameco Holdings under this
arrangement during 1994. As an integral part of the 1992
Restructuring, Brian R. Esher and Pameco Holdings entered into an
employment agreement providing that in addition to his duties as the
Chairman and Chief Executive Officer of the Company, Mr. Esher
would perform other duties as the Chairman, President and Chief
Executive Officer of Pameco Holdings. Mr. Esher's agreement with
Pameco Holdings also required him to acquire an 8.5% equity interest
in the common stock of Pameco Holdings and to make certain other
investments in Pameco Holdings. See "Employment Agreements with
Executive Officers" under the caption "REMUNERATION OF DIRECTORS AND
EXECUTIVE OFFICERS" above for additional details concerning Mr.
Esher's employment arrangements with the Company. Mr. Kallgren, an
executive officer of the Company, is also an employee of Pameco
Holdings.
The Investment Group that purchased the assets of the RAC Group
was led by Three Cities Research, Inc., a firm engaged in the
investment and management of private capital. Willem F.P. de Vogel, a
member of the Board since 1986 and a member of the Company's
Compensation Committee, is the President of Three Cities Research,
Inc. Messrs. Uhrig and Wagner, directors of the Company, are both
Managing Directors of Three Cities Research, Inc.
In connection with the Investor Group's acquisition of the
Company's outstanding zero coupon bonds (since repaid) and shares of
Common Stock from certain of the Company's lenders, the Company
entered into a Nomination Agreement with the Investor Group, dated
December 15, 1992, whereby the Investor Group may nominate up to three
directors to the Board. Messrs. Uhrig and Wagner have been nominated
by the Investor Group pursuant to the Nomination Agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is not aware of any officer, director or ten percent
shareholder who failed to file on a timely basis any report required
to be filed by Section 16(a) of the Securities Exchange Act of 1934.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Ernst & Young LLP has served as the Company's independent
accountants for many years, including the year ended December 31,
1996. The selection of independent accountants is subject to annual
review and recommendation by the Audit Committee and final decision by
the Board of Directors. The selection of independent accountants for
1997 has not yet been made. The Company's Bylaws do not require that
the shareholders approve the selection of independent accountants.
A representative of Ernst & Young LLP is expected to be at the Annual
Meeting and will have the opportunity to make a statement if he
desires to do so and will be available to respond to appropriate
questions.
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MISCELLANEOUS
SHAREHOLDER PROPOSALS:
Pursuant to the general rules under the Securities Exchange Act
of 1934, proposals of shareholders intended to be presented at the
1998 Annual Meeting of Shareholders must be received by management of
the Company at its executive offices on or before December 31, 1997.
OTHER MATTERS:
It is not expected that any other matters are likely to be
brought before the meeting.
By Order of the Board of Directors,
Theodore R. Kallgren
Secretary
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