<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
APPLIED POWER INC.
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction
applies:
---------------------
2) Aggregate number of securities to which transaction
applies:
---------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
-------------------------
4) Proposed maximum aggregate value of
transaction:
------------------------------
5) Total fee paid:
-----------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------
2) Form, Schedule or Registration Statement No.:
--------------
3) Filing Party:
---------------
4) Date Filed:
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<PAGE> 2
[API LOGO]
P.O. BOX 325
MILWAUKEE, WISCONSIN 53201
(414) 781-6600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
APPLIED POWER INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
APPLIED POWER INC., a Wisconsin corporation, will be held at the University
Club, 924 East Wells Street, Milwaukee, Wisconsin on Wednesday, January 8,
1997, at 3:30 p.m., Central Time, for the following purposes:
1. To elect a Board of six directors;
2. To consider and vote upon the Applied Power Inc. 1996 Stock
Plan; and
3. To transact such other business as may properly come before
the Meeting or any adjournment thereof;
all as set forth in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on November 13,
1996 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED AT THE MEETING, WHETHER YOUR HOLDINGS ARE LARGE OR SMALL.
IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY
TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
Anthony W. Asmuth III
Secretary
Milwaukee, Wisconsin
November 19, 1996
<PAGE> 3
[API LOGO]
P.O. BOX 325
MILWAUKEE, WISCONSIN 53201
(414) 781-6600
PROXY STATEMENT
_______________
THIS PROXY STATEMENT WAS FIRST MAILED TO
SHAREHOLDERS ON OR ABOUT NOVEMBER 19, 1996
______________________
Accompanying this Proxy Statement is a Notice of Annual Meeting of
Shareholders and a form of proxy for such Meeting solicited by the Board of
Directors of Applied Power Inc. (the "Company"). The Company's Annual Report
on Form 10-K for the year ended August 31, 1996, which constitutes the 1996
Annual Report to Shareholders and accompanies this Proxy Statement, contains
financial statements and certain other information concerning the Company. The
Annual Report and such financial statements are neither a part of this Proxy
Statement nor incorporated herein by reference.
The shares represented by all properly executed proxies received in
time for the Meeting will be voted as specified on such proxies. A proxy may
be revoked at any time before it is exercised. The cost of soliciting proxies,
including forwarding expense to beneficial owners of stock held in the name of
another, will be borne by the Company. No solicitation other than by mail is
contemplated, except that officers and employees of the Company may solicit the
return of proxies from certain shareholders by telephone. Shares held for the
accounts of participants in the Company's Employee Stock Purchase Plan ("ESPP")
and Employee Stock Ownership Plan ("ESOP") will be voted in accordance with the
instructions of the participants or otherwise in accordance with the terms of
such plans.
A majority of the votes entitled to be cast by shares entitled to
vote, represented in person or by proxy, constitutes a quorum for action on a
matter at the Meeting. Directors are elected by a plurality of the votes cast
by the holders of shares entitled to vote in the election at a meeting at which
a quorum is present. A "plurality" means that the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be elected at the meeting. Shares for which authority is withheld
to vote for director nominees and broker non-votes (i.e., proxies from brokers
or nominees indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares as to a matter
with respect to which the brokers or nominees do not have discretionary power
to vote) are considered present for purposes of establishing a quorum but will
have no effect on the election of directors except to the extent that the
failure to vote for a director nominee results in another nominee receiving a
larger number of votes. Votes attempted to be cast against a candidate are not
given legal effect and are not counted as votes cast in an election of
directors.
<PAGE> 4
If a quorum exists, the affirmative vote of the holders of a majority
of the shares cast at the Meeting, in person or by proxy, will be required for
approval of the Applied Power Inc. 1996 Stock Plan (the "Stock Plan"), provided
that the total vote cast on the Stock Plan represents over 50% of the shares
entitled to vote thereon. Because abstentions and broker non-votes are not
considered to be votes cast, neither will have an effect on the vote so long as
enough votes are cast to satisfy the 50% requirement set forth above.
On November 13, 1996, the record date for determining shareholders
entitled to receive notice of and to vote at the Annual Meeting of
Shareholders, the Company's outstanding capital stock consisted of 13,741,126
shares of Class A Common Stock ("Common Stock"). Each share of Common Stock
outstanding on the record date is entitled to one vote on all matters submitted
at the Meeting.
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of November 13, 1996 unless
otherwise indicated, certain information with respect to the beneficial
ownership of Common Stock by each person known to management to be the
beneficial owner of more than 5% of the Common Stock, by each director who is
not nominated for reelection at the Meeting, by each executive officer of the
Company named in the Summary Compensation Table below and by the Company's
executive officers and directors as a group. Briefly stated, shares are deemed
to be beneficially owned by any person or group having the power to vote or
direct the vote or the power to dispose or direct the disposition of such
shares, or who has the right to acquire beneficial ownership thereof within 60
days.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- - ---------------- ------------ --------
<S> <C> <C>
Brinson Partners, Inc 858,500(2) 6.3%
209 South LaSalle Street
Chicago, IL 60604-1295
Barbara B. Buzard 753,330(3) 5.5%
6144 North Brumder Road
Hartland, WI 53029
Firstar Trust Company 1,183,449(3)(4) 8.6%
777 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- - ---------------- ------------ --------
<S> <C> <C>
J.P. Morgan & Co. Incorporated 1,282,370(5) 9.3%
60 Wall Street
New York, NY 10260
The Prudential Insurance Company 827,900(6) 6.0%
of America
Prudential Plaza
Newark, NJ 07102-3777
Richard G. Sim 773,597(7) 5.5%
13000 West Silver Spring Drive
Butler, WI 53007
Richard M. Jones 10,000(8) *
Raymond S. Troubh 68,250(9) *
William J. Albrecht 52,513(10) *
Robert C. Arzbaecher 20,837(11) *
Gustav H.P. Boel 5,503(12) *
Philip T. Burkart 8,377(13) *
All Executive Officers and Directors
as a Group (17 persons) 1,259,452(14) 8.8%
</TABLE>
*Less than 1%.
(1) Unless otherwise noted, the specified persons have sole voting power
and/or dispositive power over the shares shown as beneficially owned.
(2) As set forth on an Amendment No. 1 to Schedule 13G dated February 9,
1996, reporting (for itself and its affiliates, Brinson Trust Company,
Brinson Holdings, Inc., SBC Holding (USA), Inc. and Swiss Bank
Corporation) shared voting and dispositive power as to 858,500 shares.
(3) Includes 463,350 shares held by a trust with respect to which Barbara
B. Buzard, Donald S. Buzard and Firstar Trust Company share voting and
dispositive power.
(4) Includes 690,511 shares held by Firstar Trust Company as trustee of
the Company's ESOP wherein the voting of such shares and their
disposition in a tender offer is directed by the participants but the
trustee has the power of disposition in all other circumstances, and
29,588 additional shares of
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<PAGE> 6
Common Stock of which Firstar Trust Company shares voting power and/or
the power of disposition. Excludes 38,126 shares held by Firstar
Trust Company as administrator of the ESPP; under such plan the
administrator does not have discretion as to disposition, and voting
of the shares is directed by the participants.
(5) As set forth on an Amendment No. 7 to Schedule 13G filed on February
15, 1996, reporting (for itself and its affiliates, J.P. Morgan
Investment Management Inc., Morgan Guaranty Trust Co. of New York and
J.P. Morgan Florida Federal Savings Bank) sole voting power as to
913,050 shares and sole dispositive power as to 1,282,370 shares.
(6) As set forth on a Schedule 13G dated February 14, 1996, reporting
shared voting and dispositive power with respect to 68,900 shares and
sole voting and dispositive power with respect to the remaining
759,000 shares.
(7) Includes options to purchase 450,171 shares exercisable currently or
within 60 days of the record date and 2,220 shares allocated to his
ESOP account.
(8) Includes options to purchase 7,000 shares exercisable currently or
within 60 days of the record date.
(9) Includes options to purchase 7,000 shares exercisable currently or
within 60 days of the record date.
(10) Includes options to purchase 50,988 shares exercisable currently or
within 60 days of the record date and 1,525 shares allocated to his
ESOP account.
(11) Includes options to purchase 14,500 shares exercisable currently or
within 60 days of the record date, 837 shares allocated to his ESOP
account and 1,500 shares owned by his spouse.
(12) Includes options to purchase 4,000 shares exercisable currently or
within 60 days of the record date and 113 shares allocated to his ESOP
account.
(13) Includes options to purchase 6,575 shares exercisable currently or
within 60 days of the record date and 1,014 shares allocated to his
ESOP account.
(14) Includes options to purchase 632,524 shares exercisable currently or
within 60 days of the record date, 11,339 shares allocated to
executive officers' ESOP accounts, 175,576 shares held by certain
trusts with respect to which certain officers have voting power and
the power of disposition and 1,500 shares owned by the spouse of an
executive officer.
The beneficial ownership information set forth above, and below under
"Election of Directors," is based on information furnished by the specified
persons or known to the Company and is determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as required for purposes of this
Proxy Statement. It is not necessarily to be construed as an admission of
beneficial ownership for other purposes.
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<PAGE> 7
ELECTION OF DIRECTORS
At the Meeting, six directors are to be elected to serve until the
next annual meeting of shareholders and until their successors shall be
elected. In August 1996, the Company's Bylaws were amended to increase the
number of directors by one in connection with the election of John J. McDonough
as a director. The Bylaws were also amended, effective at the Meeting, to
reduce the number of directors by two as a result of the retirement at the end
of their current terms of Richard M. Jones and Raymond S. Troubh, each of whom
has reached the mandatory retirement age for directors pursuant to the
Company's Bylaws. The many contributions to the Company made by Messrs. Jones
and Troubh are gratefully acknowledged.
It is the intention of the persons named in the accompanying form of
proxy to nominate as directors and, unless otherwise specified in a proxy by a
shareholder, to vote such proxy for the election of the persons named below.
In the event any of the nominees should become unable to serve as a director,
an eventuality which management has no reason to believe will occur, proxies
may be voted for another nominee. Each person named below is presently serving
as a director of the Company.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED AT
NOVEMBER 13, 1996
-----------------
DIRECTOR NUMBER PERCENT
NAME AND PRINCIPAL POSITION AGE SINCE OF SHARES OF CLASS
--------------------------- --- ----- --------- --------
<S> <C> <C> <C> <C>
H. Richard Crowther (1)(2) 64 1995 2,500(4) *
Retired Vice Chairman, Illinois
Tool Works Inc. (manufacturer of
engineered components and systems)
Jack L. Heckel (1)(3) 65 1993 5,000(5) *
Retired President and Chief
Operating Officer, GenCorp.
Inc. (manufacturer of
aerospace and defense,
polymer and automotive
products)
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED AT
NOVEMBER 13, 1996
-----------------
DIRECTOR NUMBER PERCENT
NAME AND PRINCIPAL POSITION AGE SINCE OF SHARES OF CLASS
--------------------------- --- ----- --------- --------
<S> <C> <C> <C> <C>
Richard A. Kashnow (2)(3) 54 1993 4,500(5) *
Chairman of the Board, President
and Chief Executive Officer,
Raychem Corporation (global
manufacturer of materials
science-based products for
electronics, telecommunications
and industrial applications)
L. Dennis Kozlowski (1)(2) 50 1994 3,000(6) *
Chairman of the Board, President
and Chief Executive Officer,
Tyco International Ltd.
(manufacturer of disposable
and specialty products, fire
and safety services, flow control,
and electrical and electronic
components)
John J. McDonough 60 1996 4,500 *
President and Chief Executive
Officer of McDonough Capital
Company LLC (venture capital
investment firm); Chairman and
Chief Executive Officer of SoftNet
Systems, Inc. (electronic information
and document management)
Richard G. Sim 52 1985 773,597(7) 5.5%
Chairman of the Board, President
and Chief Executive Officer,
Applied Power Inc.
</TABLE>
*Less than 1%.
-6-
<PAGE> 9
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Nominating Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
(4) Includes options to purchase 1,000 shares exercisable currently or
within 60 days of the record date.
(5) Includes options to purchase 3,000 shares exercisable currently or
within 60 days of the record date.
(6) Includes options to purchase 2,000 shares exercisable currently or
within 60 days of the record date.
(7) Includes options to purchase 450,171 shares exercisable currently or
within 60 days of the record date and 2,220 shares allocated to
his ESOP account.
All of the directors have held positions with the Company or other
organizations shown in the above table during the past five years, except that
(i) H. Richard Crowther was Vice Chairman of Illinois Tool Works Inc. from
January 1990 through March 1995; (ii) Jack L. Heckel was President and Chief
Operating Officer of GenCorp. Inc. from January 1987 through December 1993;
(iii) Richard A. Kashnow was President of Schuller International Group, Inc.
from May 1991 through September 1995; (iv) L. Dennis Kozlowski was named
President of Tyco International Ltd. in December 1989, its Chief Executive
Officer in July 1992 and its Chairman of the Board in January 1993; and (v)
John J. McDonough was named Chief Executive Officer of SoftNet Systems, Inc. in
September 1996, has been Chairman of SoftNet Systems, Inc. since 1995, was Vice
Chairman of DENTSPLY International Inc. from February 1995 through October
1995, Vice Chairman and Chief Executive Officer of DENTSPLY International Inc.
from June 1993 through February 1995, and Chairman and Chief Executive Officer
of GENDEX Corporation from April 1983 through June 1993.
H. Richard Crowther is a director of Illinois Tool Works Inc. Jack L.
Heckel is a director of WD-40 Co., Inc. and Advanced Tissue Sciences, Inc.
Richard A. Kashnow is a director of Raychem Corporation. L. Dennis Kozlowski
is a director of Tyco International Ltd., Thiokol Corporation, Raytheon Company
and RJR Nabisco Holdings Corp. John J. McDonough is a director of AMRESCO,
Inc., Lunar Corporation, Newell Corporation, Plexus Corporation and SoftNet
Systems, Inc. Richard G. Sim is a director of Falcon Building Products Inc.
and IPSCO Inc.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
There were four meetings of the Board of Directors, two meetings of
the Audit Committee, three meetings of the Compensation Committee and two
meetings of the Nominating Committee during the year ended August 31, 1996.
During the period in the last fiscal year in which they served, all members of
the Board of Directors attended at least 75% of the total number of meetings of
the Board of Directors and all the committees on which they served.
The Audit Committee of the Board of Directors (of which Richard M.
Jones was a member for fiscal 1996 in addition to the directors indicated
above): (i) reviews the scope and timing of the audit of the Company's
financial statements by the Company's independent accountants; (ii) reviews
with the independent accountants, and with the Company's management, policies
and procedures with respect to internal auditing and financial and accounting
controls; and (iii) reviews with the independent accountants their reports on
the
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<PAGE> 10
Company's financial statements and recommendations they make for improvements
in the Company's internal controls and the implementation of such
recommendations.
For fiscal 1996, Richard M. Jones and Raymond S. Troubh served on the
Compensation Committee of the Board of Directors in addition to the directors
indicated above. The Compensation Committee determines the compensation of the
Company's executive officers, awards bonuses to such key management personnel
as the Committee selects and administers the Company's stock incentive plans.
The Nominating Committee of the Board of Directors, which for fiscal
1996 was composed of the directors indicated above and Raymond S. Troubh,
seeks qualified persons for the position of director to recommend to the entire
Board of Directors. In carrying out its responsibilities, the Nominating
Committee will consider candidates suggested by other directors, employees and
shareholders. Suggestions for candidates, accompanied by biographical
material, may be sent to the Secretary of the Company at its corporate offices.
For the 1996 fiscal year, directors who were not employees of the
Company were paid an annual retainer of $19,000 for serving on the Board of
Directors and an attendance fee of $1,000 for each Board of Directors meeting
and committee meeting attended. Directors who are employees of the Company do
not receive separate remuneration in connection with their service on the Board
or Board committees.
In May 1995, the Board of Directors adopted the Outside Directors'
Deferred Compensation Plan (the "Deferred Compensation Plan"). Under the
Deferred Compensation Plan, each non-employee director may elect to defer all
or a specified portion of his annual retainer and attendance fees for future
payment on a date specified by the participant or upon termination of the
participant's service as a director. A participating non-employee director's
deferred compensation is credited to an account, the value of which is based
upon phantom investments in Common Stock. Distributions from the Deferred
Compensation Plan are only made in cash.
Each non-employee director also receives an option each year to
purchase shares of Common Stock under the 1989 Outside Directors' Stock Option
Plan (the "1989 Plan"). Through fiscal 1996, each director received an option
for 1,000 shares. Effective beginning in fiscal 1997, the 1989 Plan was
amended to provide for annual grants of 1,500 shares. The 1989 Plan is
intended to promote the growth and development of the Company by providing
incentives for non-employee directors of the Company through the grant to such
directors of nonqualified stock options to acquire shares of Common Stock.
There is no discretion as to the amount or timing of options to be granted,
which are fixed by the terms of the 1989 Plan. The exercise price at which
shares may be purchased under each option is equal to the fair market value of
the shares on the date of grant. Options are not exercisable until eleven
months after the date of grant and then become fully exercisable, in whole or
in part, at any time prior to their expiration or termination. Unless earlier
exercised or terminated, the expiration date of each option granted under the
1989 Plan is ten years and one day after the date of grant. All of the
non-employee directors (except Mr. McDonough, who was not a director of the
Company at the date of grant) were granted options in fiscal 1996 for 1,000
shares of Common Stock at an exercise price of $28.375 per share. At November
13, 1996, options for 6,000 shares had been
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<PAGE> 11
exercised, options for 25,000 shares were outstanding and 29,000 shares were
reserved for future grants under the 1989 Plan.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Development of Compensation Approach and Objectives. The Compensation
Committee of the Board of Directors is responsible for establishing all of the
policies under which compensation is paid or awarded to the Company's executive
officers, and also determines the amount of such compensation. No member of
the Committee is employed by the Company. The Committee's objective is to
develop a total compensation program that is competitive in the marketplace and
provides significant incentive to increase shareholder value. Each year the
Committee reviews its executive compensation policies relative to market
competitiveness, and then determines what changes in the compensation program,
if any, are appropriate for the following year. Compensation of the Company's
executive officers currently consists of three key elements -- salary, bonus
and stock options.
The Committee retains an independent outside consultant who provides
data regarding the compensation practices of U.S. manufacturing companies.
Competitive pay standards are based upon the results of several compensation
surveys, including comparisons with several hundred manufacturing companies.
This data, along with management's recommendations for particular executive
officer compensation and information on an executive's experience, expertise
and demonstrated performance, is reviewed by the Committee. The total value of
each executive's pay package is intended to equal the competitive median for
like positions in companies of similar size and type, but the mix of
compensation is somewhat atypical. In particular, cash compensation is lower
than the median: salary standards are targeted at 95% of the market median and
target bonuses are set at 70% of the market median. Stock incentives, on the
other hand, are above the median for other companies in order to bring the
total compensation opportunity to a level competitive in the marketplace. This
compensation mix, which is consistent with the Committee's approach in prior
years, is designed to encourage the executive's continued focus on building
shareholder value. However, in appropriate circumstances, the Committee may
exercise its discretion to vary compensation from these guidelines.
Stock Incentive Component. Stock options are granted annually to
executive officers. Options may also be granted to other key employees whose
present and future contributions are especially important to the Company. All
option grants are priced at 100% of market value as of the date of grant.
Unless earlier terminated, options expire ten years from the date of grant and
generally become exercisable as to half of the shares granted two years after
the date of grant and fully exercisable five years after the date of grant.
The Committee values stock option grants at 50% of the exercise price.
This valuation method is recommended by the Committee's independent consultant
because it reflects the average discounted value of the actual gains produced
by options granted by U.S. industrial firms over the past several decades. The
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<PAGE> 12
Committee favors the simplicity of this 50% estimate and believes it to be as
good a predictor of the actual gains and costs of an option grant as other
methods.
In 1996, the Board of Directors adopted the Applied Power Inc. 1996
Stock Plan (the "Stock Plan"), subject to approval by the Company's
shareholders at the 1997 Annual Meeting of Shareholders. If the Stock Plan is
approved, the Stock Plan will replace the Company's existing plans and the
Committee, which is charged with the responsibility of administering the Stock
Plan, will have available to it an aggregate of 1,500,000 shares of Common
Stock for grants of incentives to key Company employees, including executive
officers; provided, however, that no participant in the Stock Plan may be
granted an award or awards covering more than 125,000 shares of Common Stock in
any calendar year.
Key Measurement Criteria for Bonuses. Bonus payments are made to each
executive officer based upon the degree of achievement of each year's financial
and personal objectives. An executive may receive more, or less, than the
target bonus based on actual business results and satisfaction of
executive-specific goals.
Each executive responsible for a business unit (or multiple business
units) is measured principally by the performance of that unit (or units). For
multi-business unit executives, the measuring index utilized is "Combined
Management Measure" ("CMM"), which is unit operating profit less a charge based
upon the net assets employed by the unit. In fiscal 1996, CMM constituted 60%
of the bonus measurement for such executives. Twenty percent of such
executive's respective bonuses paid for fiscal 1996 was based on the Company's
return on net assets ("RONA") and earnings per share ("EPS") for the period,
weighted equally. The remaining 20% of their respective bonuses was based on
other goals specific to the individual, such as targeted sales growth,
development of certain supplier relationships, implementation of designated
pricing strategies and organizational changes, product development and targeted
market expansion, each weighted as appropriate for the individual executive.
The measuring index for bonuses for executive officers responsible for a single
business unit is based on operating profit for the applicable unit measured
against targeted objectives. The bonuses of such executive officers were based
entirely on the operating profits of their respective business units. For the
fiscal year ended August 31, 1996, bonuses for business unit executives ranged
from 0% to 85% of their target bonuses.
Bonus payments for Company executives not in charge of business units
are primarily determined by the performance of the Company as a whole. For
fiscal 1996, 40% of each such executive's bonus was based on the Company's RONA
and 40% on the Company's EPS for the period. The remaining 20% of each such
bonus was based on the degree of accomplishment of certain pre-determined
projects and programs related to each executive's area of responsibility. For
the fiscal year ended August 31, 1996, bonuses for this group ranged from 88%
to 92% of their target bonuses.
Chief Executive Officer Compensation. Competitive data provided by
the Committee's independent consultant established a total compensation value
of $1,279,000 for the chief executive officer position. Following the
compensation philosophy described above for executive officers, the
compensation opportunity for Richard G. Sim, the Company's Chief Executive
Officer, consisted of a salary of $398,000
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<PAGE> 13
(approximately 95% of the market median), a target bonus of $300,000 (70% of
the market median) and a stock option grant valued at $581,850 (43,100 shares
valued at 50% of the exercise price). In addition, the Committee granted an
option to Mr. Sim for an additional 10,000 shares (valued at $135,000) in
recognition of Mr. Sim's recent performance as Chief Executive Officer.
Mr. Sim's fiscal 1996 bonus was based solely on Company performance,
50% of which was measured by RONA and 50% by EPS. Mr. Sim's fiscal 1996 bonus
of $268,200, which represents 89% of his target bonus, reflects attainment of
90% of the Company's RONA target and 89% of the Company's EPS target.
Tax Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code limits the Company's federal income tax deduction to
$1,000,000 per year for compensation paid to its chief executive officer or any
of the other executive officers named in the summary compensation table of this
Proxy Statement. Performance-based compensation is not, however, subject to
the deduction limit, provided certain requirements of Section 162(m) are
satisfied. Under regulations adopted by the Internal Revenue Service, grants
of stock options under the Company's current stock option plan qualified under
a transition rule as performance-based compensation. The Stock Plan proposed
for shareholder approval at the 1997 Annual Meeting has been drafted to comply
with the final Section 162(m) regulations adopted by the Internal Revenue
Service. In order to preserve the deductibility of performance-based
compensation, the Company will generally seek to comply with Section 162(m) of
the Internal Revenue Code to the extent such compliance is practicable and in
the best interests of the Company and its shareholders.
Richard A. Kashnow (Chairman)
Jack L. Heckel
Richard M. Jones
Raymond S. Troubh
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each of the Company's other
four most highly compensated executive officers who were serving as executive
officers at the end of fiscal 1996 for services rendered to the Company and its
subsidiaries during fiscal 1996 ("named executive officers"). Also included in
the table is compensation information for those individuals for fiscal years
1994 and 1995.
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<PAGE> 14
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
AWARDS
------
SECURITIES ALL OTHER
UNDERLYING COMPEN-
OPTIONS/ SATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#)(1) ($)(2)
--------------------------- ---- --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Richard G. Sim
Chairman, President and
Chief Executive Officer 1996 398,000 268,200 53,100 17,065
Chairman, President and
Chief Executive Officer 1995 362,000 411,730 49,900 16,015
Chairman, President and
Chief Executive Officer 1994 362,000 176,620 52,000 11,515
William J. Albrecht
Senior Vice President,
Engineered Solutions 1996 210,000 37,880 14,800 16,146
Senior Vice President,
Engineered Solutions 1995 190,000 90,350 17,800 11,538
Senior Vice President;
Engineered Solutions 1994 162,672 51,374 15,875 12,310
Robert C. Arzbaecher
Vice President and Chief
Financial Officer 1996 155,000 70,000 9,300 10,186
Vice President and Chief
Financial Officer 1995 138,171 120,502 12,000(3) 4,800
Vice President, Finance,
Distributed Products 1994 116,000 30,216 5,000 4,340
Gustav H.P. Boel
Vice President; President
of Enerpac 1996 175,667 39,092 10,500(4) 3,128(5)
Managing Director of Power-
Packer Europe 1995 122,214 12,625 2,000 36,677(5)
Managing Director of Power-
Packer Europe 1994 107,447 38,196 2,000 38,153(5)
</TABLE>
-12-
<PAGE> 15
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
AWARDS
------
SECURITIES ALL OTHER
UNDERLYING COMPEN-
OPTIONS/ SATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#)(1) ($)(2)
--------------------------- ---- --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Philip T. Burkart
Vice President; President of
Wright Line, Inc. (6) 1996 140,000 122,877 5,000 12,449
</TABLE>
(1) Consists entirely of stock options. Historically, the Compensation
Committee awarded options in July or August of each year applicable to
the executive's compensation for the following fiscal year.
Accordingly, option awards listed for a given fiscal year in this
table reflect the option grants which were made at the end of the
prior fiscal year unless otherwise noted. Beginning with fiscal 1997,
option grants will be made following the commencement of the fiscal
year.
(2) The 1996 amounts represent: (a) the Company's 401(k) matching
contributions as follows: Mr. Sim - $1,350, Mr. Albrecht - $1,350, Mr.
Arzbaecher - $1,350, Mr. Boel - $0 and Mr. Burkart - $1,350; (b)
Company allocations under the ESOP as follows: Mr. Sim - $4,500, Mr.
Albrecht - $4,500, Mr. Arzbaecher - $4,500, Mr. Boel - $0 and Mr.
Burkart - $4,500; and (c) premiums paid by the Company for
split-dollar life insurance as follows: Mr. Sim - $11,215, Mr.
Albrecht - $10,296, Mr. Arzbaecher - $4,336, Mr. Boel - $0 and Mr.
Burkart - $6,599.
(3) Includes stock option for 10,000 shares granted in October 1994 upon
Mr. Arzbaecher's election as Vice President and Chief Financial
Officer.
(4) Includes stock option for 7,500 shares granted in December 1995 upon
Mr. Boel's election as Vice President and President of Enerpac.
(5) Consists entirely of amounts contributed by the Company on Mr. Boel's
behalf to a private defined contribution pension plan.
(6) Mr. Burkart became an executive officer of the Company during fiscal
1996. As a result, pursuant to applicable Securities and Exchange
Commission rules, compensation information for Mr. Burkart for fiscal
years 1995 and 1994 has been omitted.
-13-
<PAGE> 16
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option
grants during the last fiscal year to the named executive officers. As
described above, the Compensation Committee historically made annual grants in
July or August which were applicable to the executive's compensation for the
following fiscal year. Beginning with fiscal 1997, annual option grants will
be made during the relevant fiscal year. As a result of this change, no annual
grants were actually made during fiscal 1996. (The grants made during fiscal
1995 which were applicable to fiscal 1996 compensation are reflected in the
summary compensation table above.) No stock appreciation rights ("SARs") were
granted in fiscal 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
PERCENT
OF TOTAL POTENTIAL REALIZABLE
OPTIONS/ VALUE AT ASSUMED
NUMBER OF SARS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE
UNDERLYING EMPLOYEES EXERCISE APPRECIATION FOR
OPTIONS/ IN OR BASE OPTION TERM(3)
SARS FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(#) YEAR(1) ($/SH) DATE(2) 5%($) 10%($)
---- ---------- ------- ------ ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Sim 0 0 - - - -
William J. Albrecht 0 0 - - - -
Robert C. Arzbaecher 0 0 - - - -
Gustav H.P. Boel 7,500 9.3% $32.125 12/1/15 151,524 383,992
Philip T. Burkart 0 0 - - - -
</TABLE>
(1) Based on stock option grants for an aggregate of 80,854 shares made to
all employees during the fiscal year ended August 31, 1996.
(2) Unless earlier terminated, options expire ten years from the date of
grant and generally become exercisable as to half of the shares
granted two years after the date of grant and fully exercisable five
years after the date of grant.
(3) The dollar amounts under these columns are the result of calculations
at 5% and 10% appreciation rates set by the Securities and Exchange
Commission and are not intended to forecast possible future
appreciation, if any, of the Common Stock price.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information for each of the named
executive officers concerning the exercise of stock options during fiscal 1996
and the number and value of stock options outstanding at the end of the fiscal
year. No SARs are outstanding.
-14-
<PAGE> 17
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
ACQUIRED ------------------ ---------------------
ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE(#) REALIZED($) CISABLE CISABLE(1) CISABLE CISABLE(1)
- - ---- ----------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Sim 0 0 450,171 130,050 5,572,748 997,644
William J. Albrecht 0 0 50,988 39,387 619,537 311,910
Robert C. Arzbaecher 0 0 7,750 27,050 102,125 167,850
Gustav H.P. Boel 5,000 88,387 4,000 13,500 54,000 23,500
Philip T. Burkart 0 0 1,575 15,000 18,517 62,500
</TABLE>
(1) Represents unvested options at the end of fiscal 1996.
(2) Based on the $30 closing price of the Common Stock on the New York
Stock Exchange at the end of the fiscal year.
PERFORMANCE GRAPHS
The following graph shows the cumulative total shareholder return on
the Common Stock during the preceding five fiscal years as compared to the
returns on the Standard & Poor's 500 Stock Index and the Standard & Poor's
Diversified Manufacturing Index. The graph assumes that $100 was invested on
August 31, 1991 in the Common Stock and each index and that all dividends were
reinvested.
[ 1991-1996 GRAPH ]
-15-
<PAGE> 18
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
APPLIED POWER $100.00 $ 97.63 $107.05 $142.07 $212.51 $193.22
S&P 500 INDEX 100.00 107.92 124.34 131.14 159.27 189.10
S&P DIV. MFG. INDEX 100.00 98.37 123.66 138.41 180.78 224.14
</TABLE>
The following graph shows the cumulative total shareholder return on
the Common Stock since it became publicly traded on August 6, 1987 through
August 31, 1996 as compared to the returns on the Standard & Poor's 500 Stock
Index and the Standard & Poor's Diversified Manufacturing Index. The graph
assumes that $100 was invested on August 6, 1987 in the Common Stock and each
index and that all dividends were reinvested.
[ 8/6/87-1996 GRAPH ]
-16-
<PAGE> 19
<TABLE>
<CAPTION>
8/6/87 1987 1988 1989 1990 1991
------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
APPLIED POWER $100.00 $111.43 $220.27 $278.09 $230.89 $209.72
S&P 500 INDEX 100.00 102.39 84.18 117.21 111.36 141.33
S&P DIV. MFG. INDEX 100.00 102.88 84.40 104.87 95.00 121.08
<CAPTION>
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
APPLIED POWER INC. $204.74 $224.51 $297.95 $445.68 $405.22
S&P 500 INDEX 152.53 175.73 185.34 225.09 $267.25
S&P DIV. MFG. INDEX 119.10 149.73 167.58 218.88 $271.38
</TABLE>
EMPLOYMENT AGREEMENT
The Company entered into an agreement with Richard G. Sim in May 1994
which superseded his employment agreement originally entered into in July 1985.
The agreement provides that if Mr. Sim's employment with the Company is
terminated as a result of his death or permanent disability, he or his
beneficiary will receive his then current salary for a period of one year
following such termination and a pro rata portion of any bonus award earned for
the fiscal year in which such termination occurs. During the term of the
agreement, the Company must maintain Mr. Sim's coverage under its present
long-term disability benefit plan or a substantially similar plan providing at
least comparable benefits. In the event that Mr. Sim qualifies for a long-term
disability benefit under such plan, the Company will supplement any plan
benefit payable to Mr. Sim to the extent necessary to provide a total long-term
disability benefit payment that is equal to 30% of his then base pay. Such
supplemental benefit will be provided at no cost to Mr. Sim.
PROPOSAL TO APPROVE THE APPLIED POWER INC.
1996 STOCK PLAN
On August 8, 1996, the Company's Board of Directors adopted the
Applied Power Inc. 1996 Stock Plan (the "Stock Plan"), subject to approval by
the Company's shareholders at their 1997 Annual Meeting. A copy of the Stock
Plan in the form adopted by the Board of Directors is attached as Annex A to
this Proxy Statement. If the Stock Plan is approved by the shareholders of the
Company, no further awards or grants will be made under the Applied Power Inc.
1990 Stock Option Plan, although options granted under that plan (and prior
plans) will remain in effect until they have been exercised or have expired and
such options shall
-17-
<PAGE> 20
be administered in accordance with their terms and in accordance with the plan
under which they were granted.
The affirmative vote of holders of a majority of the shares cast at
the Meeting, in person or by proxy, will be required for approval of the Stock
Plan, provided that the total vote cast on the Stock Plan represents over 50%
of the shares entitled to vote thereon. THE BOARD OF DIRECTORS RECOMMENDS THAT
COMPANY SHAREHOLDERS VOTE FOR APPROVAL OF THE STOCK PLAN.
The Stock Plan replaces the Company's existing stock option plans as
described above. The principal objectives of the Stock Plan are the same as
the objectives of the existing plans: to provide incentive for the key
employees of the Company and its subsidiaries to improve corporate performance
on a long-term basis, and to attract and retain key employees. As indicated in
the Report of the Compensation Committee of the Board of Directors on Executive
Compensation contained elsewhere in this Proxy Statement, stock option grants
made under the Company's existing stock option plans qualified as
performance-based compensation (and therefore were not subject to the deduction
limitation imposed by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code")) as a result of a transitional rule which will expire at
the Meeting. Accordingly, certain changes in the Company's stock incentive
program are required in order to continue the availability of that tax
deduction. The Compensation Committee determined it advisable to adopt a new
plan rather than amend the Company's existing plans to bring them into
compliance with the Section 162(m) regulations. This approach also offered the
advantage of permitting the Compensation Committee to incorporate certain new
features into the Stock Plan, as described in more detail below.
PRINCIPAL TERMS OF THE STOCK PLAN
Under the Stock Plan, incentive stock options, nonqualified stock
options and restricted stock (each, an "Award") may be granted to any regular
salaried employee of the Company or a subsidiary of the Company who, in the
sole opinion of the Compensation Committee, contributes significantly to the
growth and success of the Company or a subsidiary. This includes employees who
are members of the Board of Directors but excludes directors who are not
employees of the Company or any of its subsidiaries. Such eligible
participants in the Stock Plan shall be referred to as "Eligible Employees."
The total number of shares of Common Stock available for issuance
under the Stock Plan may not exceed one million five hundred thousand
(1,500,000) shares, although no Eligible Employee may be granted an Award or
Awards covering more than 125,000 shares of Common Stock in any calendar year.
These stock thresholds are subject to adjustment in the event of a stock split,
stock distribution or other capital event, as described in the Stock Plan.
Shares available for an Award under the Stock Plan may be either
authorized but unissued or reacquired shares of Common Stock. Shares subject
to, but not issued under, an option which expires, terminates, is cancelled or
forfeited for any reason under the Stock Plan and shares of restricted stock
which
-18-
<PAGE> 21
have been forfeited before the grantee has received any benefit of ownership
(such as dividends) shall again become available for the granting of Awards
under the Stock Plan.
The Stock Plan is administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee shall be
constituted so as to permit the Stock Plan to comply with the provisions of
Section 162(m) of the Code and to afford Stock Plan participants an exemption
for Stock Plan transactions pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it deems necessary or
proper for administration of the Stock Plan, including any modification,
extension or renewal of any option granted thereunder. The Committee has the
authority to interpret the provisions of the Stock Plan, which interpretations
shall be final and conclusive. Specifically, the Committee is empowered,
subject to any contrary provisions of the Stock Plan, to designate the persons
to whom Awards shall be granted, to grant Awards in such form and amount as the
Committee shall determine, to impose such limitations, restrictions and
conditions upon any such Award as the Committee shall deem appropriate, and to
waive in whole or in part any limitations, restrictions or conditions imposed
upon any such Award as the Committee shall deem appropriate. The Board of
Directors may also amend, modify, suspend or terminate the Stock Plan from time
to time; provided, however, that no such action can be taken without
shareholder approval if required by applicable law. Furthermore, subject to
the terms and conditions of the Stock Plan, the Committee may modify, extend or
renew outstanding Awards granted under the Stock Plan, accept the surrender of
outstanding options (to the extent not theretofore exercised), reduce the
exercise price of outstanding options and authorize the granting of new options
in substitution therefor (to the extent not theretofore exercised); provided,
however, that no such modification of an Award (either directly or through
modification of the Stock Plan) shall, without the consent of the grantee,
alter or impair any rights of the grantee under the Award.
STOCK OPTIONS
Stock Options ("Options") may be granted to Eligible Employees at any
time as determined by the Committee (subject to the volume limitations set
forth above). Options granted under the Stock Plan may be either "Incentive
Stock Options" under Section 422 of the Code or options that are not intended
to qualify as Incentive Stock Options ("Nonqualified Stock Options"). Each
Option must be evidenced by an agreement between the Company and the grantee
which must contain the terms and conditions required by the Stock Plan and such
other terms and conditions not inconsistent therewith as the Committee may deem
appropriate.
The exercise price of an Option granted under the Stock Plan is
determined by the Committee; provided, however, that in the case of an
Incentive Stock Option, the exercise price may not be less than 100% of the
Fair Market Value of the Common Stock (as defined in the Stock Plan) when the
Option is granted; and provided further that the Committee may only grant a
Nonqualified Stock Option with an exercise price of less than 100% of the Fair
Market Value of the Common Stock on the condition that the grantee makes a cash
payment to the Company on the date of grant of at least the difference between
the Fair Market Value and the option price (i.e., the sum of the cash payment
and the exercise price must be equal to or in excess of the Fair Market Value
of the Common Stock on the date of grant).
-19-
<PAGE> 22
For purposes of the Stock Plan, an Option is considered as having been
granted on the date on which the Committee authorized its grant (unless the
Committee has designated a later grant date). Options granted under the Stock
Plan may be exercisable at such times and subject to such restrictions and
conditions as the Committee in each instance approves, but no Option may be
exercisable until at least six months have elapsed from the date of grant
(except in the case of death or disability) or prior to shareholder approval of
the Stock Plan. Furthermore, the period of exercisability of an Incentive
Stock Option may not exceed 10 years from the date the Option is granted and no
Option may be treated as an Incentive Stock Option unless the grantee exercises
the Option while employed by the Company (or a subsidiary) or within three
months after termination of employment, unless such termination is caused by
death or disability, in which case the optionee has one year after such
termination within which to exercise.
An Option may be exercised in whole or in part from time to time as
specified in the Option agreement by the grantee giving a written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. The exercise price may
be paid either (i) in cash, (ii) by check, or (iii) with the approval of the
Committee, through delivery of shares of Common Stock which have been
beneficially owned by the grantee, the grantee's spouse or both of them for a
period of at least six months prior to the exercise ("Delivered Stock"), or
(iv) through a combination of cash and Delivered Stock. Delivered Stock is
valued at its Fair Market Value as of the date of the exercise. The holder of
an Option shall not have any rights as a shareholder with respect to the shares
subject to the Option until certificates evidencing such shares are delivered
to him or her.
Special provisions are contained in the Stock Plan covering a merger,
consolidation or reorganization of the Company with another corporation in
which the Company is not the surviving corporation. In that circumstance, the
Committee may, subject to the approval of the Board of Directors of the Company
or the Board of Directors of any corporation assuming the obligations of the
Company under the Stock Plan, take action regarding each outstanding
unexercised option to either (i) substitute on an equitable and economically
equivalent basis an appropriate number of shares of the surviving corporation
for the shares of Common Stock covered by the Option, or (ii) cancel the Option
and provide for a payment to the optionee of an amount equal to the cash value
of the Option (determined in accordance with the provisions of the Stock Plan).
In addition, the Stock Plan permits Options to be granted to new Eligible
Employees who become such as a result of the Company's acquisition of property
or stock from an unrelated corporation in substitution for options granted to
such Eligible Employees by their former employer.
RESTRICTED STOCK
The Committee, at any time, may grant Awards of restricted stock under
the Stock Plan; provided, however, that no more than 75,000 shares of
restricted stock may be granted in the aggregate during any calendar year. The
Committee may condition the grant of restricted stock upon the attainment of
specified levels of revenue, earnings per share, net income, return on assets,
return on sales, customer satisfaction, stock price, costs, individual
performance measures or such other factors or criteria as the Committee shall
determine. The provisions of various restricted stock Awards need not be
identical; provided, however, that such restricted stock Awards shall be
subject to the following terms and conditions: (i) until all applicable
restrictions lapse, the grantee shall not be permitted to sell, assign,
transfer, pledge, or otherwise encumber
-20-
<PAGE> 23
the shares of restricted stock; (ii) the grantee shall have all of the rights
of a shareholder of the Company with respect to the shares of restricted stock
(including the right to vote the shares and the right to receive any cash
dividends); (iii) unless otherwise provided in the applicable restricted stock
agreement or pursuant to (iv) below, all shares of restricted stock shall be
forfeited by the grantee upon termination of employment; (iv) in the event of a
hardship or other special circumstances under which a grantee's employment is
involuntarily terminated (other than for cause), the Committee may waive in
whole or in part any or all remaining restrictions attendant to shares of
restricted stock held by such grantee; (v) upon the lapse of all applicable
restrictions, unlegended certificates for such shares shall be delivered to the
grantee; and (vi) each Award shall be subject to the terms of a restricted
stock agreement. All grantees of restricted stock shall be issued a
certificate in respect of such shares, registered in such grantee's name and
bearing an appropriate legend. In its discretion, the Committee may require
that the certificates evidencing such shares of restricted stock be held in
custody by the Company until the restrictions thereon have lapsed.
TERM OF STOCK PLAN
The Stock Plan will terminate 10 years after its effective date (i.e.,
August 8, 2006), except as to Awards then outstanding, which Awards shall
remain in effect until they have been exercised, the restrictions have lapsed
or the Awards have expired or been forfeited.
GENERAL TERMS
The Company may require, as a condition to the exercise of an Option
or the issuance of an unrestricted stock certificate, that the grantee
concurrently pay to the Company any taxes which the Company is required to
withhold by reason of such exercise or lapse of restrictions. Such payment may
be made either in cash or, at the discretion of the Committee, and subject to
all applicable rules and regulations, through shares of Delivered Stock or
shares of stock withheld from the Award having a Fair Market Value equal to the
amount of the tax obligation. No Award granted under the Stock Plan shall be
transferable by a grantee other than by will or the laws of descent and
distribution; provided, however, that the Committee, in its discretion but in
accordance with Internal Revenue Service guidance, may grant Nonqualified Stock
Options that are transferable, without payment of consideration, to family
members of the grantee or to trusts or partnerships for such family members.
As of the date hereof, there are no outstanding Options or shares of
restricted stock under the Stock Plan and no shares of Common Stock have been
issued upon the exercise of Options granted under the Stock Plan. Furthermore,
the number of grants to be made in the future to current executive officers and
key employees is subject to the discretion of the Committee and cannot be
determined at this time. On November 13, 1996, the closing price of the Common
Stock on the New York Stock Exchange was $37. As of such date, there were
approximately 125 employees participating in the Company's 1990 Stock Option
Plan, the basis for eligibility in which is the same as in the Stock Plan.
-21-
<PAGE> 24
FEDERAL TAX CONSEQUENCES
An Eligible Employee realizes no taxable income at the time an Option
is granted under the Stock Plan. An Eligible Employee generally realizes no
taxable income at the time of an Award of restricted stock, so long as the
restricted stock is not vested. Stock is vested for this purpose if it is
either transferable or is not subject to a substantial risk of forfeiture.
With regard to Incentive Stock Options, no income is recognized by an
Eligible Employee upon transfer to him of shares pursuant to his exercise of an
Incentive Stock Option. In order to avail himself of this tax benefit, the
Eligible Employee must make no disposition of the shares so received before he
has held such shares for at least one year and at least two years have passed
since he was granted the Option. Assuming compliance with this and other
applicable tax provisions, an Eligible Employee will realize long-term capital
gain or loss when he disposes of his shares, measured by the difference between
the exercise price and the amount received for the shares at the time of
disposition. If an Eligible Employee disposes of shares acquired by exercise
of an Incentive Stock Option before the expiration of the above- noted periods,
any amount realized from such disqualifying disposition will be taxable as
ordinary income in the year of disposition to the extent the lessor of (a) the
Fair Market Value of the shares on the date the Option was exercised, or (b)
the amount realized upon such disposition, exceeds the exercise price. Any
amount realized in excess of the Fair Market Value on the date of exercise is
treated as long- term or short-term capital gain, depending upon the holding
period of the shares. If the amount realized upon such disposition is less
than the exercise price the loss will be treated as long-term or short-term
capital loss, depending upon the holding period of the shares. For purposes of
the alternative minimum tax, the Eligible Employee shall recognize income upon
the transfer of shares to him pursuant to the exercise of an Incentive Stock
Option in an amount equal to the difference between the Fair Market Value of
the shares at the time of exercise and the exercise price.
With regard to Nonqualified Stock Options, ordinary income generally
is realized by the Eligible Employee at the time of his exercise of an Option.
The amount of income is generally equal to the difference between the exercise
price and the Fair Market Value of the shares on the date of exercise. Tax
withholding is currently required on such income. When an Eligible Employee
disposes of shares acquired upon the exercise of a Nonqualified Stock Option,
any amount received in excess of the Fair Market Value of the shares on the
date of exercise will be treated as long-term or short-term capital gain,
depending upon the holding period of the shares, and if the amount received is
less than the Fair Market Value of the shares on the date of exercise, the loss
will be treated as long-term or short-term capital loss, depending upon on the
holding period of the shares.
With regard to restricted stock, ordinary income is realized by an
Eligible Employee at the time that such restricted stock vests. The amount of
income is generally equal to the excess of the Fair Market Value of the shares
at the time of vesting over the purchase price for such shares, if any. Tax
withholding is required on such income. When an Eligible Employee disposes of
restricted stock, any amount received in excess of the Fair Market Value of the
shares on the date of vesting will be treated as long-term or short-term
capital gain, depending upon the holding period of the shares, and if the
amount received is less than the Fair Market Value on the date of vesting, the
loss will be treated as long-term or short-term capital loss,
-22-
<PAGE> 25
depending on the holding period of the shares. Dividends paid on restricted
stock which has not vested and which has not been the subject of an election
under Section 83(b) of the Code are treated as compensation income. Section
83(b) of the Code permits the Eligible Employee to elect, not more than 30 days
after the date of grant of the restricted stock, to include as ordinary income
the difference between the Fair Market Value of the restricted stock on the
date of grant and the purchase price of the restricted stock, if any. If no
Section 83(b) election is made, then the ordinary income inclusion occurs on
the date the restricted stock becomes vested and the amount of such inclusion
will be the spread between the Fair Market Value of the restricted stock and
the purchase price for the restricted stock at the time of vesting, if any.
If an Eligible Employee pays the exercise price of an Option by
tendering other vested shares then owned by the Eligible Employee, the
difference between the Fair Market Value and adjusted basis of the tendered
shares will not produce a taxable gain or loss to the Eligible Employee;
however, the Eligible Employee's tax basis for an equal number of acquired
shares will be the same as the Eligible Employee's tax basis for the tendered
shares. The remaining acquired shares will have an original tax basis equal to
the sum of the amount paid in cash, if any, plus any amount that the optionee
is required to recognize as income as a result of the exercise of the Option.
No deduction will be allowed to the Company for federal income tax
purposes at the time of the grant or exercise of any Incentive Stock Option.
At the time of a disqualifying disposition by an Eligible Employee, the Company
will be entitled to a deduction for the amount taxable to the Eligible Employee
as ordinary income. The Company will be entitled to a deduction for federal
income tax purposes at the same time and in the same amount as the Eligible
Employee is considered to have realized ordinary income in connection with the
exercise of a Nonqualified Stock Option and the grant of restricted stock,
assuming compliance with Section 162(m) of the Code.
The foregoing discussion is based upon presently applicable provisions
of the federal income tax laws, and thus is subject to change if and when such
laws change.
OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on information available to it, the Company is not aware that
any director, officer or beneficial owner of 10% or more of the Common Stock
failed to file on a timely basis reports required by Section 16(a) of the
Securities Exchange Act of 1934 during the last fiscal year.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP as the
independent certified public accountants to audit the financial statements of
the Company for the fiscal year ending August 31, 1997. The Company expects
that representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and available to respond to appropriate questions and have the
opportunity to make a statement if they desire.
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<PAGE> 26
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than
July 22, 1997 in order to be considered for inclusion in next year's annual
meeting proxy statement.
ADDITIONAL MATTERS
Management is not aware of any matters which will be presented for
action at the Meeting other than the election of directors and the proposal set
forth in the Notice of Annual Meeting and described herein. If other matters
do come before the Meeting, it is intended that proxies will be voted in
accordance with the judgment of the person or persons exercising the authority
conferred thereby.
By Order of the Board of Directors
Anthony W. Asmuth III
Secretary
Milwaukee, Wisconsin
November 19, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, SHAREHOLDERS ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THEIR PROXY AS SOON AS POSSIBLE.
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED AUGUST 31, 1996 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION HAS BEEN PROVIDED WITH THIS PROXY STATEMENT. ADDITIONAL
COPIES OF THE FORM 10-K ARE AVAILABLE, FREE OF CHARGE, UPON REQUEST DIRECTED TO
ROBERT C. ARZBAECHER, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, APPLIED POWER
INC., P.O. BOX 325, MILWAUKEE, WISCONSIN 53201.
-24-
<PAGE> 27
ANNEX A
APPLIED POWER INC.
1996 STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Applied Power Inc. 1996
Stock Option Plan (the "1996 Plan" or the "Plan"). The purpose of the Plan is
to provide incentive for key employees of Applied Power Inc. and its
Subsidiaries to improve corporate performance on a long- term basis, and to
attract and retain key employees.
1.02 Effective Date. The effective date of the 1996 Plan shall be
August 8, 1996, subject to approval of the 1996 Plan by the shareholders of
Applied Power Inc. at the 1997 annual meeting. Any Award granted prior to such
shareholder approval shall be expressly conditioned upon such shareholder
approval of the Plan.
1.03 Effect on Prior Plans. If the 1996 Plan is approved, no further
awards or grants will be made under the Applied Power Inc. 1985 Stock Option
Plan, the Applied Power Inc. 1987 Nonqualified Stock Option Plan, or the
Applied Power Inc. 1990 Stock Option Plan. Options granted under those plans
will remain in effect until they have been exercised or have expired. The
options shall be administered in accordance with their terms and in accordance
with the plan under which they were granted.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Award" shall mean the grant of any form of stock option or
restricted stock.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Committee" shall mean the Compensation Committee of the Board,
as described in Section 4.01.
(e) "Company" shall mean Applied Power Inc., a Wisconsin
corporation.
(f) "Company Stock" shall mean Class A Common Stock of the Company
and such other stock and securities as may be substituted
therefor pursuant to Section 3.02.
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(g) "Eligible Employee" shall mean any regular salaried employee
of the Company or a Subsidiary who satisfies all of the
requirements of Section 5.01.
(h) "Fair Market Value" on any date shall mean, with respect to
Company Stock, if the stock is then listed and traded on a
registered national securities exchange, or is quoted in the
NASDAQ National Market System, the mean of the high and low sale
prices recorded in composite transactions as reported in the
Wall Street Journal (Midwest Edition). In the absence of
reported sales on such date, or if the stock is not so listed or
quoted, but is traded in the over-the-counter market, "Fair
Market Value" shall be the mean of the closing bid and asked
prices for such shares on such date as reported in the Wall
Street Journal (Midwest Edition), or, if not so reported as
obtained from a bona fide market maker in such shares.
(i) "Grantee" shall mean any person who has been granted an Award,
under the Plan.
(j) "Option Period" shall mean the period of time provided pursuant
to Section 6.04 within which a stock option may be exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly, a
voting stock interest of more than fifty percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock
that may be issued under the Plan, shall in the aggregate not exceed one
million five hundred thousand (1,500,000) shares. Shares subject to and not
issued under an option which expires, terminates, is canceled or forfeited for
any reason under the Plan and shares of restricted Company Stock which have
been forfeited before the Grantee has received any benefits of ownership, such
as dividends from the forfeited shares, shall again become available for the
granting of Awards.
3.02 Changes in the Number of Available Shares. If any stock
dividend is declared upon the Company Stock, or if there is any stock split,
stock distribution, or other recapitalization of the Company with respect to the
Company Stock, resulting in a split or combination or exchange of shares, the
aggregate number and kind of shares which may thereafter be offered under the
Plan shall be proportionately and appropriately adjusted and the number and
kind of shares then subject to options granted to employees under the Plan and
the per share option price therefor shall be proportionately and appropriately
adjusted, without any change in the aggregate purchase prices to be paid
therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be
administered by the Compensation Committee of the Board, or such other
committee of the Board as the Board may from time to time
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<PAGE> 29
determine. The Committee shall be constituted so as to permit the Plan to
comply with the provisions of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule) and Section 162(m) of the Code.
4.02 Committee Powers. The Committee is empowered to adopt such
rules, regulations and procedures and take such other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend or renew any option theretofore granted. The Committee
shall also have authority to interpret the Plan, and the decision of the
Committee on any questions concerning the interpretation of the Plan shall be
final and conclusive. The Committee may consult with counsel, who may be
counsel for the Company, and shall not incur any liability for any action taken
in good faith in reliance upon the advice of counsel. The Committee may adopt
such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Eligible Employees who are foreign nationals or
employed outside of the United States.
Subject to the provisions of the Plan, the Committee shall have full
and final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any
such Award as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Committee shall
deem appropriate.
V. PARTICIPATION
5.01 Eligibility. Key employees of the Company and its Subsidiaries
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, contribute significantly to the growth and
success of the Company or a Subsidiary shall be eligible for Awards under the
Plan. From among all such Eligible Employees, the Committee shall determine
from time to time those Eligible Employees to whom Awards shall be granted. No
Eligible Employee may be granted an Award or Awards covering more than 125,000
shares of Company Stock in any calendar year. No Eligible Employee shall have
any right whatsoever to receive an Award unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of employment, nor
shall it interfere with the rights of the Company or any Subsidiary to
terminate the employment of any person or to take any other action affecting
such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in the
form of incentive stock options (within the meaning of the Code) or nonqualified
stock options. Each option granted under the Plan shall
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<PAGE> 30
be evidenced by a stock option agreement between the Company and the Grantee
which shall contain the terms and conditions required by this Article VI, and
such other terms and conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case.
6.02 Option Price. The price at which each share of Company Stock
covered by an option may be purchased shall be determined in each case by the
Committee and set forth in each stock option agreement. In no event shall such
price be less than one hundred percent (100%) of the Fair Market Value of the
Company Stock when the option is granted. Notwithstanding the foregoing, the
Committee may grant nonqualified stock options with an option price of less
than 100% of the Fair Market Value of the Company Stock on the condition that
the Grantee make a cash payment to the Company on the date of grant of at least
the difference between the Fair Market Value of the Company Stock and the
option price (i.e., the sum of the cash payment and the option price must be
equal to or in excess of the Fair Market Value of the Company Stock on the date
of grant). Employees who own, directly or indirectly, within the meaning of
Code Section 425(d), more than 10% of the voting power of all classes of stock
of the Company or any parent or subsidiary corporation shall not be eligible to
receive an incentive stock option hereunder unless the purchase price per share
under such option is at least 110% of the Fair Market Value of the stock
subject to the option and such option by its terms is not exercisable after the
expiration of 5 years from the date such option is granted.
6.03 Date Option Granted. For purposes of the Plan, a stock option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the option, except where the Committee has designated a
later date, in which event the later date shall constitute the date of grant of
the option; provided, however, that in either case notice of the grant of the
option shall be given to the employee within a reasonable time.
6.04 Period for Exercise. Each stock option agreement shall state
the period or periods of time within which the option may be exercised by the
Grantee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that:
(a) No option granted under this Plan may be exercised until at
least six months have elapsed from the date of grant (except
in the case of death or disability) or prior to shareholder
approval of the Plan,
(b) No Option Period for an incentive stock option may exceed ten
(10) years from the date the option is granted, and
(c) No option may be treated as an incentive stock option unless
the Grantee exercises the option while employed by the Company
or a Subsidiary or within three months after termination of
employment, or if termination is caused by death or
disability, within one year after such termination.
6.05 Special Rule for Incentive Stock Options. For so long as
Section 422 (or any successor provision) of the Code so provides, the
aggregate Fair Market Value (determined as of the date the incentive
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<PAGE> 31
stock option is granted) of the number of shares with respect to which
incentive stock options are exercisable for the first time by a Grantee during
any calendar year shall not exceed One Hundred Thousand Dollars ($100,000) or
such other limit as may be required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written notice
of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor. The
purchase price may be paid in cash, by check, or, with the approval of the
Committee, by delivering shares of Company Stock which have been beneficially
owned by the Grantee, the Grantee's spouse, or both of them for a period of at
least six months prior to the time of exercise ("Delivered Stock") or a
combination of cash and Delivered Stock. Delivered Stock shall be valued at
its Fair Market Value determined as of the date of exercise of the option. No
Grantee shall be under any obligation to exercise any option hereunder. The
holder of an option shall not have any rights of a stockholder with respect to
the shares subject to the option until such shares shall have been delivered to
him or her.
6.07 Merger, Consolidation or Reorganization. In the event of a
merger, consolidation or reorganization with another corporation in which the
Company is not the surviving corporation, the Committee may, subject to the
approval of the Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the Company hereunder, take action
regarding each outstanding and unexercised option pursuant to either clause (a)
or (b) below:
(a) Appropriate provision may be made for the protection of such
option by the substitution on an equitable basis of
appropriate shares of the surviving corporation, provided that
the excess of the aggregate Fair Market Value of the shares
subject to such option immediately before such substitution
over the exercise price thereof is not more than the excess of
the aggregate fair market value of the substituted shares made
subject to option immediately after such substitution over the
exercise price thereof; or
(b) The Committee may cancel such option. In such event, the
Company, or the corporation assuming the obligations of the
Company hereunder, shall pay the employee an amount of cash
(less normal withholding taxes) equal to the excess of the
highest Fair Market Value per share of the Company Stock
during the 60-day period immediately preceding the merger,
consolidation or reorganization over the option exercise
price, multiplied by the number of shares subject to such
option.
6.08 Substitute Options. Notwithstanding the provisions of
Sections 6.02 and 6.03 above, in the event that the Company or a Subsidiary
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Eligible Employees on account of such transaction may be granted options
in substitution for options granted by their former employer. If such
substitute options are granted, the Committee, in its sole discretion and
consistent with Section 424(a) of the Code, may determine that such substitute
options shall have an exercise price less than one hundred (100%) of the Fair
Market Value of the shares on the grant date.
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<PAGE> 32
VII. RESTRICTED STOCK
7.01 Administration. Shares of restricted stock may be issued
either alone or in addition to other Awards granted under the Plan; provided
that a maximum of 75,000 shares of restricted stock may be granted in any
calendar year. The Committee shall determine the Eligible Employees to whom
and the time or times at which grants of restricted stock will be made, the
number of shares to be awarded, the time or times within which such Awards may
be subject to forfeiture and any other terms and conditions of the Awards. The
Committee may condition the grant of restricted stock upon the attainment of
specified levels of revenue, earnings per share, net income, return on assets,
return on sales, customer satisfaction, stock price, costs, individual
performance measures or such other factors or criteria as the Committee shall
determine. The provisions of restricted stock Awards need not be the same with
respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a
restricted stock Award shall be issued a certificate in respect of such shares
of restricted stock. Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Applied Power Inc. 1996 Stock Plan and a Restricted
Stock Agreement. Copies of such Plan and Agreement are on file at the
offices of Applied Power Inc."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any restricted stock Award, the Grantee shall have
delivered a stock power, endorsed in blank, relating to the Company Stock
covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall be
subject to the following terms and conditions:
(a) Until the applicable restrictions lapse, the Grantee shall not
be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of restricted stock.
(b) The Grantee shall have, with respect to the shares of
restricted stock, all of the rights of a stockholder of the
Company, including the right to vote the shares and the right
to receive any cash dividends. Unless otherwise determined by
the Committee, cash dividends shall be automatically paid in
cash and dividends payable in Company Stock shall be paid in
the form of additional restricted stock.
(c) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (d) below, all shares still
subject to restriction shall be forfeited by the Grantee upon
termination of a Grantee's employment for any reason.
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<PAGE> 33
(d) In the event of hardship or other special circumstances of a
Grantee whose employment is involuntarily terminated (other than
for cause), the Committee may waive in whole or in part any or
all remaining restrictions with respect to such Grantee's shares
of restricted stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Grantee.
(f) Each Award shall be confirmed by, and be subject to the terms
of, a Restricted Stock Agreement.
VIII. WITHHOLDING TAXES.
8.01 General Rule. Pursuant to applicable federal and state laws,
the Company is or may be required to collect withholding taxes upon the
exercise of an option or the lapse of stock restrictions. The Company may
require, as a condition to the exercise of an option or the issuance of a stock
certificate, that the Grantee concurrently pay to the Company (either in cash
or, at the request of Grantee but in the discretion of the Committee and
subject to such rules and regulations as the Committee may adopt from time to
time, in shares of Delivered Stock) the entire amount or a portion of any taxes
which the Company is required to withhold by reason of such exercise or lapse
of restrictions, in such amount as the Committee or the Company in its
discretion may determine.
8.02 Withholding from Shares to be Issued. In lieu of part or all
of any such payment, the Grantee may elect, subject to such rules and
regulations as the Committee may adopt from time to time, or the Company may
require that the Company withhold from the shares to be issued that number of
shares having a Fair Market Value equal to the amount which the Company is
required to withhold.
8.03 Special Rule for Insiders. Any such request or election (to
satisfy a withholding obligation using shares) by an individual who is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934 shall be
made in accordance with the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
IX. GENERAL
9.01 Nontransferability. No Award shall be transferable by a Grantee
otherwise than by will or the laws of descent and distribution, provided that
in accordance with Internal Revenue Service guidance, the Committee, in its
discretion, may grant nonqualified stock options that are transferable, without
payment of consideration, to family members of the Grantee or to trusts or
partnerships for such family members. The Committee may also amend outstanding
stock options to provide for such transferability.
9.02 General Restriction. Each Award shall be subject to the
requirement that if at any time the Board or the Committee shall determine, in
its discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any
A-7
<PAGE> 34
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Award or the issue or purchase of
securities thereunder, such Award may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board or the Committee.
9.03 Expiration and Termination of the Plan. The Plan will terminate
ten (10) years after the effective date of the Plan, except as to Awards then
outstanding under the Plan, which Awards shall remain in effect until they have
been exercised, the restrictions have lapsed or the Awards have expired or been
forfeited. The Plan may be abandoned or terminated at any time by the Board of
Directors of the Company, except with respect to any Awards then outstanding
under the Plan.
9.04 Amendments. The Board may from time to time amend, modify,
suspend or terminate the Plan; provided, however, that no such action shall be
made without shareholder approval where such change would be required in order
to comply with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) or the Code. Subject to the terms and conditions and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding Awards granted under the Plan, accept the surrender of outstanding
options (to the extent not theretofore exercised), reduce the exercise price of
outstanding options, or authorize the granting of new options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, no modification of an Award (either directly or through modification
of the Plan) shall, without the consent of the Grantee, alter or impair any
rights of the Grantee under the Award.
9.05 Construction. Except as otherwise required by applicable
federal laws, the Plan shall be governed by, and construed in accordance with,
the laws of the State of Wisconsin.
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<PAGE> 35
APPLIED POWER INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 8, 1997
P R O X Y
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RICHARD G. SIM AND ROBERT C. ARZBAECHER, and each of them, are hereby
authorized as Proxies, with full power of substitution, to represent and vote
the Class A Common Stock of the undersigned at the Annual Meeting of
Shareholders of Applied Power Inc., a Wisconsin corporation, to be held on
Wednesday, January 8, 1997, or any adjournment thereof, with like effect as if
the undersigned were personally present and voting, upon the following matters:
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) nominees listed below
</TABLE>
H. RICHARD CROWTHER, JACK L. HECKEL, RICHARD A. KASHNOW,
L. DENNIS KOZLOWSKI, JOHN J. MCDONOUGH and RICHARD G. SIM
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- - --------------------------------------------------------------------------------
2. To approve the Applied Power Inc. 1996 Stock Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
(Continued on reverse side)
- - --------------------------------------------------------------------------------
(Continued from reverse side)
ESOP
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1. AND 2.
Dated: , 19
-------------------- ---
------------------------------------
------------------------------------
Signature(s) of Shareholder(s)
PLEASE SIGN PERSONALLY AS NAME APPEARS
AT LEFT. When signing as attorney,
executor, administrator, personal
representative, trustee or guardian,
give full title as such. If signer is a
corporation, sign full corporate name
by duly authorized officer. If stock
is held in the name of two or more
persons, all should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE -
PLEASE DO NOT FOLD
<PAGE> 36
APPLIED POWER INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 8, 1997
P R O X Y
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RICHARD G. SIM AND ROBERT C. ARZBAECHER, and each of them, are hereby
authorized as Proxies, with full power of substitution, to represent and vote
the Class A Common Stock of the undersigned at the Annual Meeting of
Shareholders of Applied Power Inc., a Wisconsin corporation, to be held on
Wednesday, January 8, 1997, or any adjournment thereof, with like effect as if
the undersigned were personally present and voting, upon the following matters:
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below) nominees listed below
</TABLE>
H. RICHARD CROWTHER, JACK L. HECKEL, RICHARD A. KASHNOW,
L. DENNIS KOZLOWSKI, JOHN J. MCDONOUGH and RICHARD G. SIM
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- - --------------------------------------------------------------------------------
2. To approve the Applied Power Inc. 1996 Stock Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
(Continued on reverse side)
- - --------------------------------------------------------------------------------
(Continued from reverse side)
ESPP
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1. AND 2.
Dated: ____________________, 19___
____________________________________
____________________________________
Signature(s) of
Shareholder(s)
PLEASE SIGN PERSONALLY AS NAME APPEARS
AT LEFT. When signing as attorney,
executor, administrator, personal
representative, trustee or
guardian, give full title as
such. If signer is a corporation,
sign full corporate name by duly
authorized officer. If stock is held
in the name of two or more persons, all
should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE -
PLEASE DO NOT FOLD
<PAGE> 37
APPLIED POWER INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 8, 1997
P R O X Y
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RICHARD G. SIM AND ROBERT C. ARZBAECHER, and each of them, are hereby
authorized as Proxies, with full power of substitution, to represent and vote
the Class A Common Stock of the undersigned at the Annual Meeting of
Shareholders of Applied Power Inc., a Wisconsin corporation, to be held on
Wednesday, January 8, 1997, or any adjournment thereof, with like effect as if
the undersigned were personally present and voting, upon the following matters:
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below) nominees listed below
</TABLE>
H. RICHARD CROWTHER, JACK L. HECKEL, RICHARD A. KASHNOW,
L. DENNIS KOZLOWSKI, JOHN J. MCDONOUGH, and RICHARD G. SIM
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- - --------------------------------------------------------------------------------
2. To approve the Applied Power Inc. 1996 Stock Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
(Continued on reverse side)
- - --------------------------------------------------------------------------------
(Continued from reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1. AND 2.
Dated: , 19
-------------------- ---
------------------------------------
------------------------------------
Signature(s) of Shareholder(s)
PLEASE SIGN PERSONALLY AS NAME APPEARS
AT LEFT. When signing as attorney,
executor, administrator, personal
representative, trustee or guardian,
give full title as such. If signer is a
corporation, sign full corporate name
by duly authorized officer. If stock
is held in the name of two or more
persons, all should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE -
PLEASE DO NOT FOLD
