MESTEK, INC.
260 North Elm Street
Westfield, MA 01085
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 24, 1995
To The Shareholders of Mestek, Inc:
Please take notice that the Annual Meeting of the Shareholders of
Mestek, Inc. (the "Company") will be held at the Reed Institute, located at 152
Notre Dame Street, Westfield, Massachusetts ( adjacent to the Company's
corporate headquarters at 260 North Elm Street), on Wednesday, May 24, 1995 at
11:00 a.m. local time, for the following purposes:
1. To elect a Board of nine (9) Directors for one-year terms,
each to hold office until his or her successor is elected and
qualified or he or she shall resign or be removed.
2. To amend the Articles of Incorporation of the Company to
authorize the issuance of up to 10,000,000 shares of no par
value Preferred Stock in such amounts, in one or more classes
or series, and with such designations, preferences,
limitations and special or relative rights for each class or
series as the Board of Directors shall determine.
3. To approve the appointment by the Board of Directors of
GrantThornton, as independent accountants to audit the books
of the Company for the year ending December 31, 1995.
4. To transact such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
Pursuant to the By-Laws of the Company, the Board of Directors has, by
resolution, fixed the close of business on April 12, 1995 as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any postponement or adjournment thereof. Enclosed is your
copy of the Proxy Statement and the Annual Report of the Company, including the
financial statements for the year ended December 31, 1994 which has been mailed
to all shareholders. Please refer to it for information concerning the affairs
of the Company. The Annual Report does not constitute proxy soliciting material.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE SIGN THE
ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
THIS WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON AT THE ANNUAL MEETING.
By Order of the Board of Directors
Mestek, Inc.
R. BRUCE DEWEY, Secretary
Westfield, Massachusetts
April 20, 1995
MESTEK, INC.
GENERAL OFFICES
260 North Elm Street
Westfield, Massachusetts 01085
April 20, 1995
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
May 24, 1995
Wednesday
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Mestek, Inc., hereinafter referred to as "Mestek" or the "Company".
The cost of the solicitation of proxies will be borne entirely by the Company.
Regular employees of the Company may solicit proxies by personal interview, mail
or telephone and may request brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting material to the beneficial owners of the stock
held of record by such persons.
If a proxy in the accompanying form is duly executed and returned, the
shares represented will be voted at the Annual Meeting and where a choice is
specified, will be voted in accordance with the specification made. Proxies may
be revoked at any time prior to voting by (1) executing and delivering a new
proxy to the Secretary of the Company at or before the Annual Meeting, (2)
voting in person at the Annual Meeting or (3) giving written notice of
revocation to the Secretary of the Company at or before the Annual Meeting.
VOTING RIGHTS
The shareholders entitled to vote at the Annual Meeting will be those
whose names appeared on the records of the Company as holders of its common
stock at the close of business on April 12, 1995, the record date. As of such
date, there were issued and outstanding 9,610,135 shares of Common Stock of the
Company, 9,021,368 of which are entitled to vote. The Company is not entitled to
vote the 588,767 shares of Common Stock held in the treasury.
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Shareholders are entitled to one vote for each share held on all
matters to be considered and acted upon at the Annual Meeting, except that, with
respect to the election of directors, cumulative voting is permitted. Cumulative
voting means that each shareholder is entitled to as many votes as are equal to
the number of shares which the shareholder owns multiplied by the number of
directors to be elected in the same election and that the shareholder may cast
all of such votes for a single nominee for director or may distribute them among
two or more nominees, as the shareholder may see fit. There are nine (9)
directors to be elected at the Annual Meeting to be held May 24, 1995.
Discretionary authority to cumulate votes is solicited by the Board of Directors
with respect to the election of directors in those cases in which no direction
is made on the proxy card. Therefore, in such elections, unless otherwise
indicated on the proxy cards, the votes represented by such proxies will be
voted in favor of the nominees listed thereon (unless otherwise indicated) and
in favor of Proposal 2 and Proposal 3.
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements and notes
thereto, including selected financial data and management's discussion and
analysis of financial condition and results of operations for the year ended
December 31, 1994, are included in the Company's 1994 Annual Report to
Shareholders, which was mailed concurrently with this proxy statement to all
shareholders of record. The Annual Report does not constitute proxy soliciting
material.
SHAREHOLDER PROPOSALS
Proposals which shareholders wish to present for consideration at the
Annual Meeting to be held in 1996 must be received at the Company's General
Offices no later than December 31, 1995 in order to be included in the Company's
proxy statement relating to such meeting.
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EXECUTIVE OFFICERS
The executive officers of the Company in addition to Messrs. J.E. Reed and
S.B. Reed, whose biographies appear in the section entitled "ELECTION OF
DIRECTORS" below, are the following:
James A. Burk Age 49 Vice President since 1986
Prior to the merger of Mestek, Inc. and Reed National Corp., Mr. Burk had
been a Vice President of Reed since 1975. Mr. Burk had been employed in a number
of manufacturing management positions by Reed since 1965. Mr. Burk is the son of
E. Herbert Burk, Director of the Company.
R. Bruce Dewey Age 43 Senior Vice President and
General Counsel since 1994
and Secretary since 1992.
Mr. Dewey was Vice President-Administration prior to 1994. Prior to joining
Mestek in 1990, Mr. Dewey was an attorney in private practice in Seattle,
Washington most recently with Cairncross, Ragen & Hempelmann from 1987 to 1990.
Prior to the merger of Mestek, Inc. and Reed National Corp., Mr. Dewey had been
Assistant to the President of Reed from 1979 to 1983 and had been affiliated
with the Cooper-Weymouth, Peterson division of Reed from 1975 to 1979.
William S. Rafferty Age 43 Senior Vice President of Sales
and Marketing since 1991.
Mr. Rafferty was Vice President of Marketing prior to 1991. Prior to
joining Mestek in 1990, Mr. Rafferty was Senior Vice President of Sales and
Marketing of Taco, Inc., from 1984 to 1990, and held a number of sales and
marketing management positions with The Trane Company from 1974 to 1984.
Stephen M. Shea Age 38 Senior Vice President-Finance
since 1994 and Chief Financial
Officer since 1990.
Mr. Shea was Vice President-Finance prior to 1994. Mr. Shea was Controller
of the Company from 1987 until 1990 and was Manager of Corporate Planning from
1986 to 1987, holding the same position at Reed National Corp. from 1985 to
1986. Prior to joining Reed in 1985, Mr. Shea was a Certified Public Accountant
with the Hartford, Connecticut accounting firm of Spitz, Sullivan, Wachtel &
Falcetta from 1979 to 1985.
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EXECUTIVE COMPENSATION
Consistent with the revised proxy rules on executive compensation
adopted by the Securities and Exchange Commission, there is shown below,
information concerning the annual compensation (salary, bonus and other) for
services in all capacities to the Company and its subsidiaries for the fiscal
years ended December 31, 1994, 1993 and 1992, of those persons who were at
December 31, 1994 (a) the Chief Executive Officer of the Company and (b) the
other four most highly compensated executive officers of the Company who were
serving as executive officers at December 31, 1994. No executive officers left
the employ of the Company during 1994.
SUMMARY COMPENSATION TABLE
Under the revised proxy rules on executive compensation adopted by the
Securities and Exchange Commission, all suggested columns and headings relating
to forms of compensation not offered by the Company have been omitted for
presentation in the Summary Compensation Table below.
NAME AND PRINCIPAL ANNUAL
POSITION COMPENSATION
Other An- All
nual Compen- Other
Fiscal Yr. Salary($) Bonus($)(1) sation(2) Comp.(3)
John E. Reed 1994 262,250 350,000 - 7,182
Chairman of the 1993 250,388 215,500 - 12,422
Board, President 1992 259,014 203,000 - 12,066
and Chief Executive
Officer (4)
Stewart B. Reed 1994 184,990 150,000 - 9,491
Executive Vice 1993 176,930 64,650 - 11,032
President (5) 1992 176,385 60,900 - 12,939
William S. 1994 110,500 107,775 - 9,491
Rafferty, Senior 1993 103,400 77,055 - 10,392
Vice President- 1992 103,755 58,920 - 9,913
Marketing
James A. Burk 1994 92,130 121,680 - 9,197
Vice President 1993 86,705 88,485 - 9,234
1992 83,613 68,880 - 9,026
Stephen M. Shea 1994 95,050 50,325 - 6,547
Senior Vice 1993 89,460 33,550 - 6,193
President-Finance 1992 88,098 32,300 - 7,135
NOTES TO SUMMARY COMPENSATION TABLE
(1) Certain executive officers whose corporate responsibilities are applicable
to all segments of the Company's business historically have been paid, and in
some cases are contractually entitled to be paid, bonuses based on the
company-wide profits during each fiscal year (the "Executive Officer Bonus
Policy"). Except for certain officers whose bonuses are specified by contract,
the eligible executive officers and the exact formula for determining the bonus
of each such executive officer is specified by the Board of Directors of the
Company based upon the recommendations of its Compensation Committee each
December for the following fiscal year. In general, the bonus for an eligible
executive officer for fiscal year 1994 is equal to the sum of percentages (which
may be different for each participant) of the Company's operating profits in
excess of a specified return on tangible net worth plus borrowed capital as of
January 1 of the fiscal year, after deduction for all other bonuses and with
goodwill eliminated from net worth for this purpose, on the first $5,000,000 of
operating profits for the first tier and in excess of $5,000,000 of operating
profits for the second tier. Except for certain officers whose participation is
contractually specified, the Board of Directors of the Company historically has
determined the officers eligible to participate under the Executive Officer
Bonus Policy, the target for the specified return on tangible net worth and the
percentages applicable to each participant each year which percentages are based
on the level of responsibility, seniority and performance of the officers.
Messrs. J.E. Reed, S.B. Reed, S.M. Shea and R.B. Dewey were the only
participants in the Executive Officer Bonus Policy for 1994 and Messrs. J.E.
Reed, S.B. Reed, S.M. Shea and R.B. Dewey are the only executive officers of
Mestek eligible to participate for 1995. Messrs. J.E. Reed and S.B. Reed are
contractually entitled to participate i
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n the Executive Officer Bonus Policy. Messrs. J.E. Reed and S.B. Reed were
entitled to receive, for 1994, respectively, ten percent (10%) and three percent
(3%) under the first tier bonus and five percent (5%) and two percent (2%) under
the second tier bonus. All officers of Mestek, other than those participating
under the Executive Officer Bonus Policy in a given year, and certain other key
employees involved in the Company's operations, historically have been paid
annual bonuses based on the profitability of the individual business units
(termed "profit centers" by the Company) to which such persons are assigned and
for which they have specific responsibility (the "Key Employee Bonus Policy").
Except for certain officers whose bonuses are specified by contract or
determined by the Compensation Committee of the Board of Directors, such bonuses
have generally been determined by the Chief Executive Officer before the
beginning of each fiscal year, in an amount equal to a percentage (which may be
different for each participant) of the amount by which the operating profits of
such employee's profit centers for such fiscal year exceed a specified return on
the average tangible net assets employed by such profit centers. The level of
responsibility and seniority of participants are taken into account in
determining the persons eligible to participate and the applicable percentages
of each participant each year. Of the executive officers of Mestek, only Messrs.
Rafferty and J.A. Burk were awarded bonuses under the Key Employee Bonus Policy
for 1994 and they are the only executive officers anticipated to be awarded
bonuses under the Key Employee Bonus Policy for 1995. Except to the extent
embodied in employment contracts with certain officers and employees, the
Executive Officer Bonus Policy and the Key Employee Bonus Policy represent only
historical practices and are not embodied in any written plan. Except to the
extent required by particular employment contracts, the Company may cease paying
bonuses under either policy, or alter the amounts payable, at any time, based
upon the recommendation of the Compensation Committee and actions of the Board
of Directors.
(2) In accordance with the revised proxy rules on executive officer compensation
adopted by the Securities and Exchange Commission, amounts of Other Annual
Compensation for 1992, 1993 and 1994, which would include the incremental costs
to the Company of perquisites and personal benefits paid to any executive
officer, are excluded because they are less than $50,000 or less than 10% of the
total annual salary and bonus compensation for all such individuals in the
Summary Compensation Table. Such perquisites would include, among others, the
cost of life insurance premiums in excess of $50,000 to which individuals other
than the Company are beneficiaries, the compensation attributable to the
personal use of a Company automobile, and compensation attributable to personal
use of club memberships.
(3) In accordance with the revised proxy rules on executive officer compensation
adopted by the Securities and Exchange Commission, amounts of All Other
Compensation for 1992, 1993 and 1994 include the costs to the Company of the
contributions by the Company to each executive officer under the Company's
401(k) Plan whereby the Company matches each $1.00 of employee contribution with
$.25 up to the first 6% of salary and bonus, and the Company's contributions on
behalf of each executive officer to its Deferred Profit Sharing Plan whereby for
the fiscal year ended December 31, 1994, the Board of Directors voted a Company
contribution of three percent (3%) of annual base salary for all eligible
employees up to the OASDI maximum of $60,600 and a Company contribution of six
percent (6%) of annual base salary for all eligible employees for amounts of
compensation in excess of the OASDI maximum of $60,600 (as limited in accordance
with the Employee Retirement Income Security Act).
(4) Mr. J.E. Reed is employed under an agreement with the Company which is
automatically extended for one-year periods unless either party gives the other
sixty (60) days' notice of termination. The contract specifies a certain base
salary to be reviewed annually by the Board of Directors of the Company. The
base salary under this contract for 1994 was $262,000, an increase of 4.8% over
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1993. The contract provides for continuation of salary for six (6) months in the
case of death and for twelve (12) months, with the contractual bonus, described
above, in the case of incapacitation. The contract provides for Mr. J.E. Reed to
be furnished with the use of a Company automobile and to be reimbursed for
legitimate business expenses.
(5) Mr. S.B. Reed is employed under an agreement with the Company which is
automatically extended for one-year periods unless either party gives the other
sixty (60) days' notice of termination. The contract specifies a certain base
salary to be reviewed annually by the Board of Directors of the Company. The
base salary under this contract for 1994 was $185,000, an increase of 4.6% over
1993. The contract provides for continuation of salary for six (6) months in the
case of death and for twelve (12) months, with the contractual bonus, described
above, in the case of incapacitation. The contract provides for Mr. S.B. Reed to
be furnished with the use of a Company automobile and to be reimbursed for
legitimate business expenses.
DIRECTORS COMPENSATION
Except for David R. Macdonald, who is discussed below, directors of
Mestek who are not employees were paid in 1994 an annual retainer of $2,000, a
fee of $1,500 for each Board Meeting attended, and a fee of $500 for each
meeting of each Committee of the Board of Directors and each Special Assignment
attended, or $1,500 if such Committee meeting or Special Assignment attended is
not held in conjunction with a Board Meeting. Certain members of Mestek's Board
of Directors are also members of one or more of the subsidiary Boards. Mr.
Macdonald, a director of Mestek and a partner in the law firm of Baker &
McKenzie, bills to Mestek at his usual and customary rates a portion of the time
he spends at meetings of the Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the Compensation Committee of the Board of Directors of the
Company shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, and shall
not otherwise be deemed filed under such Acts. No members of the Compensation
Committee are officers or employees of the Company or any of its subsidiaries
nor are any of the members of the committee former officers of the Company or
any of its subsidiaries. The Compensation Committee furnished the following
report on Executive Compensation as required under the revised proxy rules on
executive compensation adopted by the Securities and Exchange Commission.
<PAGE>
REPORT
Under the supervision of the Compensation Committee of the Board of Directors of
the Company (the "Compensation Committee"), the Company has developed and
implemented compensation policies, plans and programs which seek to enhance the
profitability of the Company and thus shareholder value, by closely aligning the
financial interest of the Company's Chief Executive Officer and senior executive
management with the profitability of the Company. In furtherance of this goal,
annual base salaries are generally set somewhat below competitive levels so that
the Company relies to a large degree on annual bonuses to attract and retain
corporate officers and other key employees of outstanding abilities and to
motivate them to perform to the full extent of their abilities. Bonuses are
variable and closely tied to the overall corporate or individual business unit
performance in a manner that encourages a sharp and continuing focus on building
profitability and return on tangible net assets employed.
In general, the Compensation Committee believes that the various
compensation programs of the Company should (a) support the long and short-term
strategic goals and objectives of the Company, (b) reflect the Company's values,
and (c) reward individuals for outstanding contributions to the Company's
profitability. The Compensation Committee further believes that compensation
programs, especially performance-based bonuses, play a critical role in
attracting and retaining well-qualified executives. While compensation
opportunities should be based on individual contributions, the actual amounts
earned by executives in variable compensation programs will be dictated by how
the Company or individual business units perform.
BASE COMPENSATION. As noted above, the Compensation Committee's approach to base
compensation is to offer executive salaries somewhat below the competitive
levels represented by the salaries of those executives currently employed in
similar positions in public companies with sales and market capitalization
similar to the Company. The Compensation Committee annually considers and
determines the annual base salary of the Chief Executive Officer and, based upon
the recommendation of the Chief Executive Officer, the annual base salary of
each of the executive officers of the Company. The base salaries of executive
officers are set pursuant to a written annual review conducted by the Chief
Executive Officer of the work performance, accomplishments, experience and
decision-making responsibilities of each executive officer and the individual's
contributions to the achievement of the sales, profitability and other goals of
the Company or its individual business units set forth in the business plan.
Individual work performance in achieving business plan goals is the majority
factor in considering increases in compensation. Responsibility and experience
are the majority factors in setting an initial salary for an individual in a
particular executive position. The salary of the Chief Executive Officer in 1994
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was set by reference to the profitability of the Company as measured by
unaudited results of operations, the degree of accomplishment of the business
plan of the Company, and other individual contributions. The majority factor is
the degree of accomplishment of the sales, profitability and other goals set
forth in the business plan of the Company. In addition, the Compensation
Committee also takes into account the accomplishments of the Chief Executive
Officer that may not have contributed to the profitability of the Company in the
current year, but may contribute to the Company's long-term strategic goals. The
salary of the Chief Executive Officer for 1994 increased approximately 4.8% over
1993. Base salaries for executive officers for 1994 rose from 1993 levels
approximately five percent (5%).
ANNUAL BONUS PLAN. The Compensation Committee determines the executive officers
eligible to participate under the Executive Officer Bonus Policy and, based upon
the recommendation of the Chief Executive Officer, the Key Employee Bonus
Policy, the specified return on tangible net worth targets under the Executive
Officer Bonus Policy and, based upon the recommendation of the Chief Executive
Officer, the targets for the specified return on tangible net assets employed
under the Key Employee Bonus Policy and the percentages applicable to the
participation of the Chief Executive Officer and each of the eligible executive
officers of the Company under the applicable bonus policy based on their level
of responsibility, experience and performance. The specified return target for
the Executive Officer Bonus Policy for 1994 was a sixteen percent (16%) return.
The specified return targets for the Key Employee Bonus Policy for 1994 vary by
business unit, but were generally a twenty percent (20%) return. The
participation in the Executive Bonus Policy is equal to the sum of percentages
(which may be different for each participant) of the Company's operating profits
in excess of a specified return on tangible net worth plus borrowed capital as
of January 1 of the fiscal year, after deduction for all other bonuses and with
goodwill eliminated from net worth for this purpose, on the first $5,000,000 of
operating profits for the first tier and in excess of $5,000,000 of operating
profits for the second tier. The percentages applicable to Messrs J.E. Reed and
S.B. Reed are determined by employment contracts that are reviewed annually for
renewal. The Chief Executive Officer was entitled to receive, for 1994, ten
percent (10%) under the first tier bonus and five percent (5%) under the second
tier bonus. The participation in the Key Employee Bonus Policy is equal to the
sum of percentages (which may be different for each participant) of the
operating profits of individual business units of the Company in excess of a
specified return on tangible net assets employed in the individual business
units. Certain executive officers participate in the Executive Officer Bonus
Policy and certain executive officers participate in the Key Employee Bonus
Policy. Based upon the above considerations, the annual bonus compensation of
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the Chief Executive Officer and the eligible executive officers of the Company
is directly and objectively tied to the Company's performance and profitability.
After considering all of the factors and making recommendations upon the annual
base compensation and bonus formulae and percentage participations for the Chief
Executive Officer and each of the other executive officers of the Company, the
Compensation Committee presents its written report to the full membership of the
Board of Directors at the December Board Meeting of the Company each year. The
recommendations of the Compensation Committee for each of 1992, 1993 and 1994
were discussed and voted upon, and approved in an Executive Session of the Board
of Directors of the Company, Messrs. J.E. Reed and S.B. Reed abstaining.
In addition, each year the entire Board of Directors, based upon the
recommendation of the Compensation Committee considers the percentage
participation of all employees (including the Chief Executive Officer and the
other executive officers of the Company) in the Company's Deferred Profit
Sharing Plan. For the fiscal year ended December 31, 1994, the Board of
Directors voted a Company contribution of three percent (3%) of annual base
salary for all eligible employees up to the OASDI maximum of $60,600 and a
Company contribution of six percent (6%) of annual base salary for all eligible
employees for amounts in excess of the OASDI maximum of $60,600 (as limited in
accordance with the Employee Retirement Income Security Act).
DAVID W. HUNTER, Chairman
A. WARNE BOYCE, WILLIAM J. COAD, Members
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
This Shareholder Return Performance Presentation shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, and shall not otherwise be deemed filed
under such Acts. Set forth below is a line graph comparing the yearly percentage
change in the cumulative total shareholder return on the common stock of Mestek
(referred to by its New York Stock Exchange symbol "MCC" in the line graph and
notes thereto) against the cumulative total return of the S&P Composite 500
Stock Index and the S&P Building Materials Index (referred to as the "Peer
Group" in the line graph and notes thereto) for the period of five (5) fiscal
years commencing December 31, 1989 and ended December 31, 1994. It assumes $100
invested at the close of trading on the last
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trading day preceding the first day of the fifth preceding fiscal year in MCC
Common Stock, S&P 500, and Peer Group. Cumulative total return assumes
reinvestment of dividends.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
Mestek, Inc., S&P 500, Peer Group (Performance results through 12/31/94)
1989 1990 1991 1992 1993 1994
MCC $100.00 $ 91.18 $116.18 $104.41 $110.29 $114.71
S&P 500 $100.00 $ 96.90 $126.42 $136.05 $149.76 $151.74
PEER GROUP $100.00 $ 74.77 $107.02 $136.90 $169.63 $125.04
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
WESTFIELD, MASSACHUSETTS. Mestek leases its Westfield, Massachusetts
commercial products manufacturing facilities from Sterling Realty Trust under
two leases corresponding to the two major buildings on the north side of Notre
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Dame Street, one at a net annual rental of $192,000, which expires on December
31, 1999, and the other at a net annual rental of $42,000, which expires on June
30, 1998. Both leases are payable monthly. Mestek leases its South Complex,
including its advertising facility, the Reed Institute training facility and the
baseboard manufacturing facility pursuant to a lease which expires December 31,
2008 from Sterling Realty Trust at a net annual rental of $256,800, payable
monthly. Sterling Realty Trust is a Massachusetts business trust of which John
E. Reed is the sole trustee and of which Mr. Reed and a Reed family trust are
the sole beneficiaries. Mestek leases certain equipment used in the Westfield
facilities pursuant to a lease from Sterling Realty Trust that expires December
31, 1997, for an annual rental of $24,360. Mestek also leases certain equipment
used in the Westfield facilities pursuant to a lease from the Elizabeth C. Reed
Trust that expires December 31, 1997, for an annual rental of $3,600 and
pursuant to a lease from Machinery Rental Company that expires December 31, 1997
for an annual rental of $24,888. John E. Reed is the sole proprietor of
Machinery Rental Company. Mr. Reed is the trustee of the Elizabeth C. Reed Trust
and his daughter is sole beneficiary.
FARMVILLE, NORTH CAROLINA. Mestek leases its Farmville, North Carolina
production facility from Rudbeek Realty Corp. ("Rudbeek") for an annual minimum
net base rental of $324,000, payable monthly. The lease expires on December 31,
1998. Rudbeek is wholly owned by family trusts for which John E. Reed and E.
Herbert Burk, directors of the Company, respectively, serve as trustees and of
which Stewart B. Reed (Mr. Reed's son and a director and Executive Vice
President of the Company), James A. Burk (Mr. Burk's son and Vice President of
the Company) and certain other members of the Burk family are beneficiaries.
Mestek leases certain equipment for use at the Farmville facility pursuant to a
lease which expires December 31, 1997, from Sterling Realty Trust for an annual
rental of $5,700. Mestek also leases certain equipment used at the Farmville
facility pursuant to a lease from the Elizabeth C. Reed Trust that expires
December 31, 1997, for an annual rental of $3,000 and pursuant to a lease from
Machinery Rental Company that expires December 31, 1997, for an annual rental of
$132,360.
CLINTON, MAINE. Mestek leases certain equipment used in its Clinton,
Maine facility pursuant to a lease from Machinery Rental Company that expires
December 31, 1997, for an annual rental of $24,000.
WRENS, GEORGIA. Mestek leases certain equipment used in its Wrens,
Georgia facility pursuant to a lease which expires December 31, 1997, from
Sterling Realty Trust, for an annual rental of $12,600. Mestek also leases
certain equipment used in the Wrens facility pursuant to a lease from the
Elizabeth C. Reed Trust that expires December 31, 1997, for an annual rental of
$7,500 and
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pursuant to a lease from Machinery Rental Company that expires December 31,
1997, for an annual rental of $18,732.
SOUTH WINDSOR, CONNECTICUT. Mestek leases its South Windsor,
Connecticut facility from MacKeeber Associates Limited Partnership
("MacKeeber"), a Connecticut limited partnership, for a net annual base rental
of $616,041, payable monthly. Such lease expires on December 31, 2004, and the
annual base rental increases over time to $677,652, payable monthly, by the year
of expiration. The annual rental will increase to $677,652 in the year 2000.
MacKeeber is owned by John E. Reed, Stewart B. Reed, E. Herbert Burk and David
R. Macdonald, all directors of the Company, as limited partners and John E. Reed
as the sole general partner. In 1984, the Connecticut Development Authority
issued an Industrial Development Bond in the principal amount of $3,500,000,
bearing interest at 72% of the prime rate, with final maturity in 2004. Of the
proceeds of issuance of such Bond, $2,650,000 were lent by the Authority to
MacKeeber (the proceeds of which loan were used to acquire the South Windsor
facility) and $850,000 were lent by the Authority to a former subsidiary of the
Company (the proceeds of which loan were used to acquire certain machinery and
equipment for use at the South Windsor facility). The Company and MacKeeber have
agreed to an unconditional guaranty of the payment of each other's note under
the loan agreement. The obligations of the Company under its note have been paid
in full. Mestek leases certain equipment for use at the South Windsor facility
pursuant to a lease from Machinery Rental Company that expires December 31,
1997, for an annual rental of $24,000.
LOS ANGELES, CALIFORNIA. Pacific/Air Balance, Inc., a wholly-owned
subsidiary of the Company, rents a facility at 13516 Desmond Street, Los
Angeles, California, from Production Realty, Inc., for an amount equivalent to
an annual rental of $26,400, payable monthly. The Company occupies the facility
as a tenant-at-will. Pacific/Air Balance, Inc. also rents on a month-to-month
basis certain equipment used at this facility from Production Realty, Inc. for
an amount equivalent to an annual rental of $41,400, payable monthly. Stewart B.
Reed, a director of the Company, is the sole shareholder of Production Realty,
Inc.
OTHER CONSIDERATIONS AND RELATIONSHIPS. Mestek retained the law firm
of Baker & McKenzie during 1994 and proposes to retain that firm during 1995.
David R. Macdonald is a partner in the Washington, D.C. office of Baker &
McKenzie.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Under the proxy rules of the Securities and Exchange Commission, a
person who directly or indirectly has or shares voting power and/or investment
power with respect to a security is considered a beneficial owner of the
security. Shares as to which voting power and/or investment power may be
acquired within 60 days are also considered as beneficially owned under these
<PAGE>
proxy rules. The information set forth in this proxy statement concerning
beneficial ownership of shares of the common stock of the Company has been
received from or on behalf of the persons named. The only persons known by the
Company to be the beneficial owners of more than five percent (5%) of the common
stock of the Company as of April 12, 1995 are John E. Reed and Stewart B. Reed,
both of whom are directors of the Company. The address of each of Messrs. J.E.
Reed and S.B. Reed is 260 North Elm Street, Westfield, Massachusetts 01085. The
amount and nature of their beneficial ownership is included in the table below.
The directors of the Company and the executive officers and directors
as a group beneficially owned shares of the Company's outstanding stock as
follows on April 12, 1995:
Amount and nature of Percent
Name and beneficial beneficial ownership of Class
Directors:
A. Warne Boyce 1,500 (less than 1%)
E. Herbert Burk 447,102 (1) 4.96%
William J. Coad 2,200 (less than 1%)
Peter Glynn-Jones 375 (less than 1%)
Winston R. Hindle, Jr. 300 (less than 1%)
David W. Hunter 13,330 (2) (less than 1%)
David R. Macdonald 3,000 (less than 1%)
John E. Reed 3,298,393 (3) 36.56%
Stewart B. Reed 2,177,437 (4) 24.14%
Executive Officers:
James A. Burk 32,294 (5) (less than 1%)
R. Bruce Dewey 307 (less than 1%)
William S. Rafferty 1,000 (less than 1%)
Stephen M. Shea 0 (less than 1%)
All executive officers and
directors as a group
(13 persons) 5,977,238 66.26%
(1) Excludes 137,500 shares of common stock held by a spousal trust, to
which he disclaims ownership. Also excludes 4,128 shares of common
stock held by his wife, to which he disclaims ownership.
(2) Excludes 9,500 shares of common stock held by his spouse to which he
disclaims ownership.
(3) Excludes 13,307 shares of common stock held by his wife, to which he
disclaims ownership. Excludes 1,712,691 shares of common stock held by
John E. Reed as sole trustee for various family trusts, but for which
<PAGE>
he disclaims beneficial ownership. 1,325,833 of such common shares are,
however, included in the shares listed as beneficially owned by Stewart
B. Reed per note (4) below. Includes 524,994 shares of common stock
owned by Sterling Realty Trust, a Massachusetts business trust of which
John E. Reed is the sole trustee and of which he and a family trust are
the beneficiaries.
(4) Includes 1,325,833 shares of common stock owned by the Stewart B.
Reed Trust, of which Stewart B. Reed is the beneficiary and John E.
Reed is the sole trustee.
(5) Excludes 100 shares held by his daughter.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
certain officers of the Company, as well as persons who own more than ten
percent (10%) of a registered class of the company's equity securities, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. To the Company's knowledge, based solely on
its review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the year ended
December 31, 1994, all applicable Section 16(a) filing requirements were
satisfied, except that one report on Form 4 due October, 1994, reflecting one
transaction was filed late by Mr. Glynn-Jones.
MATTERS TO BE ACTED UPON
1. Election of Directors
In accordance with the By-Laws of the Company, the Board of Directors
consists of not less than seven (7) nor more than fourteen (14) members, as set
from time to time by the Board of Directors, elected by the shareholders
annually. The Board of Directors has set the number of members at nine (9). The
Board of Directors recommends the election of the nine (9) nominees identified
below. Eight (8) of the current directors elected at the last Annual Meeting and
one (1) current director appointed to fill a vacancy will stand for election at
the Annual Meeting on May 24, 1995. The proxies named in the accompanying proxy
card intend, subject to the discretionary authority to cumulate votes described
above, to vote for the nine (9) persons named below, unless otherwise directed
by the shareholder on the proxy card. The Board of Directors knows of no reason
why any nominee will be unavailable or unable to serve. If any nominee is unable
to serve or for good cause will not serve, the persons named as proxies will
vote for such other persons as they shall deem to be in the best interest of the
Company.
<PAGE>
Nominees to be Elected
A. Warne Boyce Age 65 Director of Mestek from
1983 to 1986 and since 1990
Mr. Boyce has been Chairman and Chief Executive Officer of Microbac
Laboratories, Inc., Pittsburgh, Pennsylvania, since 1989 and President since
1969. He holds the same positions with three affiliated companies: BTC Analysts,
Inc., also of Pittsburgh, Orbeco Analytical Systems, Inc., Long Island, New York
and CPA Microbac, Ltd., U.K. Mr. Boyce was a Director of Chester Environmental,
Inc., a former subsidiary of the Company, from 1985 until 1990.
E. Herbert Burk Age 76 Director of Mestek since 1986
Mr. Burk retired on July 31, 1987 as Senior Vice President of the Company,
an office he had held since 1986. Prior to the merger of Mestek, Inc. and Reed
National Corp. on July 31, 1986, Mr. Burk had been a Director and Vice President
of Reed since 1969 and a Senior Vice President of Reed since 1975. He had been
employed by Reed since 1948. Mr. Burk is the father of James A. Burk, who is a
Vice President of the Company.
William J. Coad Age 63 Director of Mestek since 1986
Mr. Coad has been President and Director of The McClure Corporation, St.
Louis, Missouri, mechanical and electrical engineering consultants, since 1984,
and from 1968 until 1984 he served as its Vice President and Director. He was
Professor of Mechanical Engineering at Washington University in St. Louis,
Missouri until his retirement from that position in January 1987 and is now an
Affiliate Professor at that institution. Mr. Coad is also a Director of
Mechanical Engineering Data Service, Inc., St. Louis, Missouri, and Exergen
Corporation, Natick, Massachusetts. Prior to the 1986 merger of Mestek, Inc. and
Reed National Corp., Mr. Coad had been a Director of Reed since 1985.
Peter Glynn-Jones Age 48 Director of Mestek since 1993
Mr. Glynn-Jones is currently Managing Director with worldwide
responsibility for Strategic Management and Planning of SmithKline Beecham
Consumer Brands in London, England. Between January, 1987 and September 1988 he
was President of Beecham Products, USA, based in Pittsburgh. He is also a member
of the Board and Executive Committee of the Non-Prescription Drug Manufacturers
of America and Chairman of the World Federation of Proprietary Medicines
Manufacturers.
Winston R. Hindle, Jr. Age 64 Director of Mestek Since 1994
Mr. Hindle was Senior Vice President of Digital Equipment Corporation,
Maynard, Massachusetts, prior to his retirement in July, 1994. In his 32 years
<PAGE>
with Digital, he managed both corporate functions and business units and was a
member of the Company's Executive Committee. Mr. Hindle is also a director of
Keane, Inc., Boston, Massachusetts.
David W. Hunter Age 66 Director of Mestek since 1985
Mr. Hunter has been Chairman of Hunter Associates, Inc., an investment
banking firm in Pittsburgh, Pennsylvania since 1992. From 1990 to 1992 he was
Chairman Emeritus of Parker/Hunter, Inc., an investment banking firm in
Pittsburgh, Pennsylvania, where he was Chairman from 1978 until 1990. Mr. Hunter
is also a Director of Lockhart Companies, Kiene Diesel Accessories, Inc.,
Justifacts, Quanterra, Inc. and U.S. Tool & Die Corporation. He served as
Chairman of the Board of Governors of the National Association of Securities
Dealers, Inc. from 1986 to 1987.
David R. Macdonald Age 65 Director of Mestek since 1986
Mr. Macdonald is a partner in the Washington, D.C. office of the law firm
of Baker & McKenzie. Mr. Macdonald is a member of Mestek's Executive Committee.
Between 1981 and 1983, Mr. Macdonald served as Deputy United States Trade
Representative, with the rank of Ambassador. Between 1977 and 1981, Mr.
Macdonald was engaged in private law practice with the firm of Baker & McKenzie
in Chicago, Illinois. Before 1977, Mr. Macdonald served as Under Secretary of
the Navy and as Assistant Secretary of the Treasury for Enforcement, Operations
and Tariff Affairs. Prior to the merger of Mestek, Inc. and Reed National Corp.,
Mr. Macdonald had been a Director of Reed since 1983. Mr. Macdonald is also a
director of Chicago City Bank and Trust Company, Chicago City Bancorporation,
Inc. and Vycor Corporation.
John E. Reed Age 79 Director of Mestek since 1986
Mr. J.E. Reed has been Chairman of the Board, President and Chief Executive
Officer of the Company since 1989, and is a member of the Executive Committee.
From 1986 until 1989 he was President and Chief Executive Officer and prior to
the 1986 merger of Mestek, Inc. and Reed National Corp., had been President and
Chief Executive Officer of Reed since he founded it in 1946. Mr. Reed is also a
Director of Wainwright Bank & Trust Co., Boston, Massachusetts. Mr. Reed is the
father of Stewart B. Reed, Executive Vice President of the Company.
Stewart B. Reed Age 47 Director of Mestek since 1986
Mr. S.B. Reed is Executive Vice President of the Company and is a member of
the Executive Committee. Prior to the 1986 merger of Mestek, Inc. and Reed
National Corp., Mr. Reed had been Executive Vice President of Reed in charge of
corporate development. Mr. Reed had been employed by Reed since 1970. Mr. Reed
<PAGE>
is the son of John E. Reed, Chairman of the Board, President and Chief Executive
Officer of the Company.
BOARD MEETINGS AND COMMITTEES
During the past twelve months the Board of Directors held four
meetings. All directors were present at the meetings except Messrs. Coad,
Glynn-Jones and Hunter were excused from attendance at one meeting each due to
prior commitments.
The Board of Directors has four (4) standing committees: Audit,
Compensation, Executive and Nominating.
Audit Committee
The Audit Committee's responsibilities include (a) reviewing and
evaluating the work and performance of the Company's independent accountants and
making recommendations to the Board of Directors regarding the selection of such
independent accountants, (b) conferring with the Company's independent
accountants and its financial officers to evaluate the Company's internal
accounting methods and procedures and to recommend changes in such methods and
procedures, (c) reviewing and making recommendations on all related party
transactions and the Company's conflict of interest policy, (d) directing the
tasks of the internal auditor of the Company, and (e) reviewing and overseeing
the organization and operation of the financial operations of the Company. The
Audit Committee held three (3) meetings during the past twelve months. The
current members of the Audit Committee are Messrs. Burk (Chairman), Hunter and
Glynn-Jones.
Compensation Committee
The Compensation Committee is responsible for reviewing the salary of
the Chief Executive Officer and the executive officers of the Company and
recommending to the Board of Directors the amount of salary to be paid, the
bonus formulae and other compensation for the Chief Executive Officer and the
executive officers of the Company. Please see the report of the Compensation
Committee above. The Compensation Committee held two meetings in the last twelve
months and generally meets annually in December to consider and recommend
compensation matters to the Board of Directors. The current members of the
Compensation Committee are Messrs. Hunter (Chairman), Coad and Boyce.
Executive Committee
To the extent permitted by the laws of the Commonwealth of
Pennsylvania, the Executive Committee has and may exercise all the powers and
authorities of the Board of Directors as follows: (a) to take action on behalf
of the Board of Directors during intervals between regularly scheduled meetings
of the Board of Directors if it is impracticable to delay action on a matter
until the next regularly scheduled meeting of the Board of Directors, and (b) to
take action on all matters of the Company that have been delegated for action by
<PAGE>
the Board of Directors. The Executive Committee meets from time to time,
irregularly, as necessary to discharge its duties. The current members of the
Executive Committee are Messrs. J.E. Reed (Chairman), S.B. Reed and Macdonald.
Nominating Committee
The Nominating Committee's responsibilities include (a) evaluating and
recommending nominees for election as directors to the Board of Directors, (b)
recommending to the Board of Directors criteria for membership on the Board, and
(c) proposing nominees to fill vacancies on the Board of Directors as they
occur. The Nominating Committee held one meeting during the last twelve months.
The current members of the Nominating Committee are Messrs. Boyce (Chairman),
Coad and Glynn-Jones.
In selecting candidates for election to the Board of Directors at
future annual meetings of shareholders, the Nominating Committee will consider
prospective candidates whose names have been submitted by shareholders. Such
submissions should be in writing and directed to the Secretary of the Company at
260 North Elm Street, Westfield, Massachusetts 01085.
2. Proposal to Amend the Articles of Incorporation of the
Company to Authorize Preferred Stock
The Company's Board of Directors has approved and proposes to the
shareholders an amendment to the Company's Articles of Incorporation which would
authorize the Company to issue up to 10,000,000 shares with no ascribed par
value preferred stock (the "Preferred Stock").
If the proposed amendment is approved, the Board of Directors would be
empowered, without the necessity of further action or authorization by the
shareholders of the Company (unless such action or authorization is required in
a specific case by applicable laws or regulations or stock exchange rules), to
authorize the issuance of the Preferred Stock from time to time in one or more
series or classes, and to fix by resolution or resolutions, the designations,
preferences, limitations and special or relative rights of each such series or
class. Each series or class of the Preferred Stock could, as determined by the
Board of Directors at the time of issuance, rank, with respect to dividends,
redemption, liquidation and voting rights, senior to the Company's Common Stock.
<PAGE>
By resolutions of the Company's Board of Directors, the Company has
redeemed all previously outstanding shares of the Company's $100 par value
redeemable preferred stock (the "$6.00 Preferred Stock"), and it has redeemed
all previously outstanding shares of the Company's $100 par value non-voting
convertible preferred stock (the "$5.00 Non-Voting Preferred Stock") that were
not converted into shares of the Company's Common Stock. Thus there are no
shares of $6.00 Preferred Stock or $5.00 Non-Voting Preferred Stock currently
issued and outstanding. One result of such resolutions and this proposed
amendment is to eliminate all references to the $6.00 Preferred Stock and $5.00
Non-Voting Preferred Stock from the Company's Articles of Incorporation.
If the Amendment is authorized, the current text of Article 5 of the
Company's Articles of Incorporation shall be deleted in its entirety and be
amended to read in full as follows:
"The authorized Capital Stock of the Corporation is 20,000,000 shares
of common stock without par value (the "Common Stock") and 10,000,000
shares of preferred stock without par value (the "Preferred Stock").
A description of each class of Capital Stock which the Corporation
shall have the authority to issue and a statement of the designations,
powers, preferences, qualifications, limitations, restrictions and
special or relative rights in respect of each class or series of any
class are as follows:
I. THE PREFERRED STOCK
The shares of Preferred Stock may be issued from time to time in one or
more series or classes. The Board of Directors of the Corporation is
hereby authorized to fix the designations and powers, preferences and
relative, participating, optional, special or other rights, if any, and
qualifications, limitations or other restrictions thereof, including,
without limitation, dividend rights and preferences over dividends on
Common Stock or any series or classes of Preferred Stock, the dividend
rate (and whether dividends are cumulative), conversion rights, if any,
voting rights, rights and terms of redemption, if any, (including
sinking fund provisions, if any) redemption price and liquidation
preferences of any wholly unissued series or class of Preferred Stock
and the number of shares constituting any such series or class and the
designation thereof, or any of them; and to increase or decrease the
number of shares of any series or class subsequent to the issue of
shares of that series or class, but not below the number of shares of
such series or class then outstanding.
II. THE COMMON STOCK
Except for and subject to those rights expressly granted to the holders
of any series or class of the Preferred Stock pursuant to Section I of
this Article 5th and except as may be provided by applicable law, the
holders of Common Stock shall have exclusively all other rights of
shareholders."
<PAGE>
The proposed amendment to the Articles of Incorporation of the Company
would not change the number of shares of Common Stock currently authorized,
namely 20,000,000 shares.
The Board of Directors recommends the authorization of the Preferred
Stock to increase the Company's financial flexibility. The Board believes that
the complexity of modern business financing and acquisition transactions
requires greater flexibility in the Company's capital structure than now exists.
The Preferred Stock would be available for issuance from time to time as
determined by the Board of Directors for any proper corporate purpose. Such
purposes might include, without limitation, issuance as part or all of the
consideration required to be paid by the Company for acquisitions of other
businesses or properties, and issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Company's business and
operations. The Company does not have, at present, any agreements,
understandings or arrangements which would result in the issuance of any shares
of the Preferred Stock.
It is not possible to state the precise effect of the authorization of
the Preferred Stock upon the rights of the holders of the Company's Common Stock
until the Board of Directors determines the respective preferences, limitations
and relative rights of the holders of one or more series or classes of the
Preferred Stock. Each series or class of Preferred Stock could, as determined by
the Board of Directors at the time of issuance, rank, with respect to dividends,
redemption, liquidation and voting rights, senior to the Company's Common Stock.
Such effect might include, among other things, the following: (a) reduction of
the amount otherwise available for payment of dividends on Common Stock, to the
extent dividends are payable on any issued shares of any series or classes of
the Preferred Stock, and restrictions on dividends on Common Stock if dividends
on such Preferred Stock are in arrears; (b) dilution of the voting power of the
Common Stock to the extent that any series or classes of the Preferred Stock
authorized by the Board of Director has voting rights; (c) the holders of the
Common Stock not being entitled to share in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted to the
holders of any issued shares of any series or classes of the Preferred Stock;
and (d) reduction of the Company's cash assets to the extent that cash is
expended in satisfaction of any redemption rights granted to any series or
classes of the Preferred Stock.
The proposed amendment to the Articles of Incorporation also may be
viewed as having the effect of discouraging an unsolicitated attempt by another
person or entity to acquire control of the Company and may therefore have an
anti-takeover effect by making it more difficult, in certain instances, to
effect transactions such as mergers, tender offers, or proxy contests with
respect to the Company especially if additional shares of a series or class of
Preferred Stock were issued in response to a potential takeover. Issuances of
authorized preferred shares can be implemented and
<PAGE>
have been implemented by some companies in recent years, with voting or
conversion privileges intended to make acquisition of a company more difficult
or more costly. Such an issuance could deter, discourage or limit the
shareholder's participation in certain types of transactions that might be
proposed (such as a tender offer), whether or not such transactions were favored
by the majority of the shareholders, and could enhance the ability of officers
and directors to retain their positions. Shareholders of the Company should note
that the current members of the Board of Directors control a majority of the
shares of the Company (see Page 14 of this Proxy Statement).
In addition to authorizing 10,000,000 new shares of the Preferred
Stock, the amendment would eliminate all reference in the Company's Articles of
Incorporation to the $6.00 Preferred Stock and the $5.00 Non-Voting Preferred
Stock. Neither the $6.00 Preferred Stock nor the $5.00 Non-Voting Preferred
Stock currently have any shares outstanding. Furthermore, the rights of these
two classes include certain rights which may only be exercised by the holders
thereof prior to certain dates which have already passed. These obsolete
references make it impractical for the $6.00 Preferred Stock or the $5.00
Non-Voting Preferred Stock to be utilized by the Company to advance any
legitimate corporate purposes. The proposed amendment will also eliminate the
provision that prohibits the Company from issuing shares of non-voting capital
stock.
The affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock entitled to vote at the Annual Meeting, present in
person or represented by proxy, is required to authorize the proposed amendment
to the Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO AUTHORIZE THE PREFERRED STOCK.
3. Approval of Appointment of Independent Public Accountants
The Board of Directors of the Company has voted to appoint the
accounting firm of GrantThornton as independent public accountants to audit the
financial statements of the Company for the year ending December 31, 1995, and
recommends that the shareholders of the Company approve such appointment at the
Annual Meeting of the Company. Although approval by the shareholders of the
appointment of independent public accountants is not required, the Company has
followed the practice of submitting such appointment for approval by the
shareholders. The persons named in the accompanying proxy intend, subject to the
discretionary authority above, to vote FOR the Approval of the Appointment of
GrantThornton. If such approval is not obtained, the Board of Directors of the
Company will reconsider its appointment of GrantThornton. A representative of
GrantThornton has been invited and is expected to be present at the Annual
Meeting where he or she will have an opportunity to make a statement if he or
<PAGE>
she desires, and he or she will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
4. Other Matters
No business other than that set forth in the attached Notice of Annual
Meeting is expected to be acted upon, but should any other matters requiring a
vote of shareholders be properly brought before the Annual Meeting or any
postponement or adjournment thereof, the persons named in the accompanying proxy
will vote thereon according to their best judgment in the interest of the
Company.
VOTE REQUIRED
The Company's By-Laws provide that the presence of the holders of a
majority of the issued and outstanding stock of the Company entitled to vote at
the Annual Meeting, present in person or represented by a proxy, shall
constitute a quorum for the Annual Meeting and that the vote of the shareholders
who hold a majority of the voting power present in person or represented by
proxy at the Annual Meeting and entitled to vote will decide any question
brought before the Annual Meeting, unless otherwise provided by statute or the
Company's Restated Certificate of Incorporation or By-Laws.
The nominees for election as directors of the Company at the Annual
Meeting who receive the greatest number of votes cast will be elected as
directors for the nine (9) positions on the Board of Directors of the Company to
be filled. The amendment of the Articles of Incorporation of the Company to
approve the authorization of the Preferred Stock and the appointment of the
independent accountants each will be approved by the affirmative vote of a
majority of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon.
Where the quorum requirement set forth above is met, broker non-votes
will have no effect on the outcome of the election of directors or the
ratification of the appointment of the independent accountants because the
matters to be acted upon are routine matters for which brokers have the
discretion to vote on behalf of beneficial owners in the absence of instructions
from beneficial owners. Abstentions will have no effect on the outcome of such
election, but will have the same effect as a negative vote with respect to the
amendment of the Articles of Incorporation and the ratification of the
appointment of the independent accountants.
April 20, 1995 MESTEK, INC.
