<PAGE>
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:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-12
APPLIED POWER INC. (d/b/a Actuant Corporation)
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE>
APPLIED POWER INC. d/b/a ACTUANT CORPORATION
6100 North Baker Road
GLENDALE, WISCONSIN 53209
(414) 352-4160
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
APPLIED POWER INC. d/b/a Actuant Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of APPLIED
POWER INC. d/b/a Actuant Corporation, a Wisconsin corporation, will be held at
the offices of the Company, 6100 North Baker Road, Glendale, Wisconsin, on
Tuesday, January 9, 2001, at 3:00 p.m., Central Time, for the following
purposes:
1. To elect a Board of seven directors;
2. To consider and vote upon the Actuant Corporation 2001 Stock Plan;
3. To consider and vote upon the Actuant Corporation 2001 Outside
Directors' Stock Option Plan;
4. To approve a change in the name of the Company from Applied Power Inc.
to "Actuant Corporation";
5. To approve proposed Articles of Amendment to effect a five-for-one
reverse stock split of the issued and outstanding shares of Actuant
Corporation and authorize management to restate the Articles after the
reverse stock split;
6. To vote on a shareholder proposal described in the accompanying proxy
statement; and
7. 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 22, 2000
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
December 1, 2000
<PAGE>
APPLIED POWER INC. d/b/a ACTUANT CORPORATION
6100 North Baker Road
GLENDALE, WISCONSIN 53209
(414) 352-4160
PROXY STATEMENT
----------------
This Proxy Statement and accompanying proxy were first mailed to
shareholders on or about December 1, 2000
----------------
This Proxy Statement and accompanying proxy are furnished to the
shareholders of Applied Power Inc. d/b/a Actuant Corporation (the "Company")
in connection with the solicitation of proxies by the board of directors of
the Company for use at the Annual Meeting of Shareholders on Tuesday, January
9, 2001, and at any adjournment thereof. Accompanying this Proxy Statement is
a Notice of Annual Meeting of Shareholders and a form of proxy for such
Meeting. The Company's Annual Report on Form 10-K for the year ended
August 31, 2000, which constitutes the 2000 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 by indicating such in writing or voting at the Meeting at any time
before it is exercised. In the absence of contrary direction from a
shareholder, proxies will be voted FOR Proposals 1-5 and AGAINST Proposal No.
6. 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. The
Company has retained Georgeson Shareholder Communications Inc. to aid in the
solicitation of proxies, including the solicitation of proxies from brokerage
firms, banks, nominees, custodians and fiduciaries, for an approximate $8,000
fee plus disbursements. In addition, officers and employees of the Company may
solicit the return of proxies from certain shareholders by telephone. Such
officers and employees will receive no compensation therefor in addition to
their regular compensation. Shares held for the accounts of participants in
the Company's 401(k) Savings Plan ("Savings Plan") 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 and will not constitute a vote for or against the other
proposals. 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. For
proposals 2, 3, and 6 (adoption of Actuant Corporation 2001 Stock Plan,
Actuant Corporation 2001 Outside Directors' Stock Option Plan, and
<PAGE>
a Shareholder Proposal) in this Proxy Statement, the affirmative vote of
holders of a majority of the shares cast at the Annual Meeting, in person or
by proxy, will be required for the approval of the proposal, provided the
total vote cast for the proposal represents a majority of the shares entitled
to vote. For Proposals 4 and 5 (Name Change and Authorizing Reverse Stock
Split) the affirmative vote of two-thirds of all outstanding shares is
required.
On November 22, 2000, 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 solely of 39,642,501 shares of
Class A 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 October 31, 2000 unless otherwise
indicated, certain information with respect to the beneficial ownership of
common stock 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 who has 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. The option numbers
reported below have been adjusted as a result of the spin-off of APW Ltd. on
July 31, 2000. To the knowledge of the Company, no one is the beneficial owner
of more than 5% of the common stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class
---------------- ----------------------- --------
<S> <C> <C>
Robert C. Arzbaecher, President and
Chief Executive Officer and Director... 1,399,063(2) 3.4%
Gustav H.P. Boel, Director.............. 8,280 *
Bruce S. Chelberg, Director............. 30,000 *
H. Richard Crowther, Director........... 185,000(3) *
Joseph Kampschroer, Vice President of
GB..................................... 229,989(4) *
Richard A. Kashnow, Director............ 234,000(5) *
Arthur Kerk, Vice President of
Engineered Solutions--Europe & Asia.... 110,163(6) *
Andrew G. Lampereur, Vice President--
Chief Financial Officer................ 375,450(7) *
Jerry Peiffer, Vice President of
Engineered Solutions--America.......... 121,773(8) *
Richard G. Sim, Chairman of the Board
and Director........................... 684,624(9) 1.7%
William P. Sovey, Director.............. -0- *
All Directors and Executive Officers (18
persons)............................... 4,143,310(10) 10.0%
</TABLE>
--------
*Less than 1%
(1) Unless otherwise noted, the specified person has sole voting power and/or
dispositive power over the shares shown as beneficially owned.
(2) Includes 3,000 shares held by spouse, 2,750 shares held by a daughter
through a custodian, 4,369 shares held in the Savings Plan and 4,000
shares held in an individual IRA account. Also includes 952,900 shares
issuable pursuant to options exercisable currently or within 60 days of
October 31, 2000.
(3) Includes 3,000 shares held by a family trust. Excludes phantom stock units
held in Applied Power Inc.'s Outside Directors' Deferred Compensation
Plan. The phantom stock units are settled in cash generally following the
director's termination of service. Also includes 182,000 shares issuable
pursuant to options exercisable currently or within 60 days of October 31,
2000.
2
<PAGE>
(4) Includes 2,932 shares held in the Savings Plan and 176,150 shares issuable
pursuant to options exercisable currently or within 60 days of October 31,
2000.
(5) Includes 234,000 shares issuable pursuant to options exercisable currently
or within 60 days of October 31, 2000. Excludes phantom stock units held
in Applied Power Inc.'s Outside Directors' Deferred Compensation Plan. The
phantom stock units are settled in cash generally following the director's
termination of service.
(6) Includes 58,500 shares issuable pursuant to options exercisable currently
or within 60 days of October 31, 2000.
(7) Includes 4,193 shares held in the Savings Plan and 220,350 shares issuable
pursuant to options exercisable currently or within 60 days of October 31,
2000.
(8) Includes 216 shares held in the Savings Plan and 45,500 shares issuable
pursuant to options exercisable currently or within 60 days of October 31,
2000.
(9) Includes 18,710 shares held by custodian for minor children. Excludes
deferred shares received upon exercise of options pursuant to the Stock
Option Plan deferral program which has been assumed by APW Ltd. in
connection with the spin-off and options which have been assumed by APW
Ltd.
(10) Includes 3,000 shares held by a family trust, 4,000 shares held in an
individual IRA account, 3,000 shares held by a spouse, 21,460 shares held
by custodians for minor children, 16,045 shares held in the Savings Plan,
218,552 shares held by certain trusts with respect to which officers have
voting and dispositive power and 1,935,450 shares issuable pursuant to
options exercisable currently or within 60 days of October 31, 2000.
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.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to serve until the next
annual meeting of shareholders and until their successors shall be elected and
qualified. 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
October 31, 2000
---------------------
Director Number of Percent
Name and Principal Position Age Since Shares of Class
--------------------------- --- -------- --------- --------
<S> <C> <C> <C> <C>
H. Richard Crowther (1)(3).................. 68 1995 185,000(4) *
Retired Vice Chairman, Illinois Tool Works
Inc. (manufacturer of engineered components
and systems).
Richard A. Kashnow (3)...................... 58 1993 234,000(5) *
Executive Officer, Tyco International Ltd.,
Retired Chairman of the Board, President
and Chief Executive Officer, Raychem
Corporation (manufacturer of disposable and
specialty products, fire and safety
services, flow control, and electrical and
electronic components).
Richard G. Sim (2).......................... 56 1985 684,624(6) 1.7%
Chairman of the Board, President and Chief
Executive Officer, APW Ltd. (global
producer of custom integrated enclosures).
Gustav H.P. Boel (2)........................ 55 2000 8,280 *
Senior Vice President of APW Ltd. (global
producer of custom integrated enclosures).
Bruce S. Chelberg (1)(3).................... 66 2000 30,000 *
Chairman and Chief Executive Officer of
Whitman Corporation until November 30, 2000
(a conglomerate whose principal operating
company is an independent Pepsi-Cola
bottler) since 1992.
William P. Sovey (1)(2)..................... 67 2000 -0- *
Chairman and Chief Executive Officer of
Newell Rubbermaid, Inc. (a multi-national
manufacturer and marketer of branded
consumer products).
Robert C. Arzbaecher........................ 40 2000 1,399,063(7) 3.4%
President and Chief Executive Officer of
Applied Power Inc. (as of August 8, 2000).
</TABLE>
--------
*Less than 1%.
(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 182,000 shares issuable pursuant to options exercisable currently
or within 60 days of October 31, 2000. Includes 3,000 shares held by a
family trust and excludes phantom stock units held in Applied Power Inc.'s
Outside Directors' Deferred Compensation Plan. The phantom stock units are
settled in cash generally following the director's termination of service.
4
<PAGE>
(5) Includes 234,000 shares issuable pursuant to options exercisable currently
or within 60 days of October 31, 2000. Excludes phantom stock units held
in Applied Power Inc.'s Outside Directors' Deferred Compensation Plan. The
phantom stock units are settled in cash generally following the director's
termination of service.
(6) Includes 18,710 shares held by custodian for a minor, of which Mr. Sim
disclaims beneficial ownership.
(7) Includes 3,000 shares held by spouse, 2,750 shares held by a daughter
through a custodian, 4,369 shares held in the Savings Plan and 4,000
shares held in an individual IRA account. Also includes 952,900 shares
issuable pursuant to options exercisable currently or within 60 days of
October 31, 2000.
All of the directors have held the positions with the Company or other
organizations shown in the above table during the past five or more years,
except that (i) Richard A. Kashnow was President of Schuller International
Group, Inc. from May 1991 through September 1995 and Chairman of the Board,
President and Chief Executive Officer of Raychem Corporation until August
2000; and (ii) William P. Sovey is currently Chairman (since November 1998)
and Chief Executive Officer (since November 2000) of Newell Rubbermaid Inc.
and he was previously Vice Chairman and Chief Executive Officer of Newell
Rubbermaid, Inc. from May 1992 until December 1997.
H. Richard Crowther is currently a director of Illinois Tool Works Inc.
Richard G. Sim is a director of APW Ltd., IPSCO Inc. and Oshkosh Truck
Corporation. William P. Sovey is a director of Newell Rubbermaid, Inc. and a
nominee for director of Teco Energy, Inc. and Acme Metal. Bruce S. Chelberg is
a director at Whitman Corporation, First Midwest Bancorp, Inc, Northfield
Laboratories, Inc. and Snap-On Tools.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
There were [six] meetings of the board of directors, [two] meetings of the
Audit Committee, [two] meetings of the Compensation Committee and one meeting
of the Nominating Committee during the year ended August 31, 2000. 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 aggregate number of meetings of the
board of directors and all the committees on which they served, except Mr.
Sovey missed the one board meeting held after his appointment as a director.
Committees
The Compensation Committee of the board of directors 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 plan.
The Nominating Committee of the board of directors 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 of candidates to be considered by the Nominating Committee,
accompanied by biographical material, may be sent to the Secretary of the
Company at its corporate office.
The Audit Committee of the board of directors: (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 Company's financial
statements and recommendations they make for improvements in the Company's
internal controls and the implementation of such recommendations.
Director Compensation
For fiscal year 2000, 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 and received a grant of 39,000 options for shares (the number
of options has
5
<PAGE>
been adjusted under the terms of the Stock Option Plan for the spin-off of APW
Ltd.). Directors who are employees of the Company do not receive separate
remuneration in connection with their service on the board or board
committees.
The board of directors previously 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 made only in cash.
If approved at the Meeting, each non-employee director will receive an
option grant each year to purchase shares of common stock under the 2001
Outside Directors' Stock Option Plan (the "2001 Plan"). The 2001 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. The
amount and timing of options to be granted are set forth under the terms of
the 2001 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 11 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 2001 Plan is ten years and
one day after the date of grant. Each non-employee director serving in January
2000 was granted options for 39,000 shares of common stock under the 1989
Outside Directors' Stock Option Plan at an exercise price of $2.60 per share,
as adjusted for the spin-off of APW Ltd.
Report of the Audit Committee
The Audit Committee of the board of directors oversees and monitors the
participation of the Company's management and independent accountants
throughout the financial reporting process. No member of the Committee is
employed or has any other material relationship with the Company.
In connection with its function to oversee and monitor the financial
reporting process of the Company, the Committee has done, among other things,
the following:
. reviewed and discussed the audited financial statements for the fiscal
year ended August 31, 2000 with the Company's management;
. discussed with PricewaterhouseCoopers LLP, the Company's independent
accountants, those matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU 380); and
. received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No.1 and has discussed with PricewaterhouseCoopers LLP its
independence.
Based upon the foregoing, the Committee recommended to the board of
directors that the audited financial statements be included in the Company's
annual report on Form 10-K for the fiscal year ended August 31, 2000.
The Audit Committee has adopted a written charter to govern its operations.
The Audit Committee Charter is attached hereto as Exhibit A. The Audit
Committee is comprised of independent directors as defined and required by
Sections 303.01(B) and 303.02(D) of the New York Stock Exchange listing
standards.
H. Richard Crowther (Chairman)
Bruce S. Chelberg
William P. Sovey
6
<PAGE>
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
has been to develop a total compensation program that is competitive in the
marketplace and provides significant incentive to increase shareholder value.
Each year the Committee has reviewed its executive compensation policies
relative to market competitiveness, and then determined 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 components--salary, bonus and stock options.
As in past years, for fiscal 2000 the Committee retained an independent
outside consultant who provided data regarding the compensation practices of
U.S. manufacturing companies. Competitive pay standards were derived from 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
regarding an executive's experience, expertise and demonstrated performance,
were reviewed by the Committee in connection with setting fiscal 2000
salaries. The total value of each executive's pay package was intended to
equal the competitive median for like positions in companies of similar size
and type, but consistent with the Committee's prior practices, the mix of
compensation was somewhat atypical. For instance, cash compensation was set at
a lower level than the median; in general, salary standards were targeted at
approximately 95% of the market median and target bonuses were set at
approximately 70% of the market median. Stock incentives, on the other hand,
were generally set above the median for other companies in order to bring the
total compensation opportunity to a level competitive with others in the
marketplace. This general approach to compensation mix, though varied in
certain circumstances when the Committee in its discretion concluded it was
appropriate to do so, was designed to encourage the executive's continued
focus on building shareholder value.
As an added benefit to the Company's key management personnel, during
fiscal 1997 the Compensation Committee implemented an Executive Deferred
Compensation Plan (the "Deferred Plan"). The Deferred Plan allows certain
highly compensated employees (including executive officers) to defer payment
of a portion of their salary and bonus each year, generally until a date
specified by the participant or termination of employment. Amounts deferred
pursuant to the Deferred Plan are deemed to accrue interest at an annual rate
equal to (a) the simple average of the annual rate paid by ten-year U.S.
Treasury notes during September preceding each plan year with respect to which
compensation has been deferred, plus (b) 1.50%. Three named executive officers
made salary and bonus deferrals under the Deferred Plan in fiscal 2000. During
fiscal year 2000, two executives of the Company, Mr. Arzbaecher and Mr.
Lampereur, made deferrals under the Deferred Plan and then elected to receive
the entire amount previously deferred. In connection with the spin-off of APW
Ltd., APW Ltd. assumed the outstanding obligations under the Deferred Plan
because the only participants were employees of APW Ltd. As such, the Deferred
Plan no longer has any participants who remained employed by the Company.
Stock Incentive Component. To emphasize the Committee's belief that stock
ownership by the Company's executive officers directly focuses those
executives on increasing shareholder value, officer stock ownership guidelines
have been adopted. In general, it is the Company's policy that executive
officers should hold stock or options equal to three times their base salary
(recognizing that newer officers may need two or more years to build their
ownership up to that level). In general, at least one-third of such ownership
should be otherwise than through unvested employee stock options. To assist
executives in acquiring Company stock, the guidelines include a guarantee
program, whereby the Company guarantees loans and provides favorable interest
financing to such executives. To date, guarantees by the Company have been
made to all executive officers, totaling approximately $3.9 million in the
aggregate, all of which was used to purchase 997,000 shares of Company common
stock.
7
<PAGE>
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.
In valuing grants, 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 Committee has favored 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.
The Company's stock option plans permit optionees who earn more than
$100,000 per year to elect to defer receipt of option shares upon exercise of
an option and payment of the applicable exercise price, thereby allowing such
optionees an opportunity to defer the taxable income attributable to the
option exercise if they so choose. Throughout the deferral period, the
deferred shares are credited with "deemed dividends" at the same rate as
dividends paid on common stock. At the end of the deferral period, such
accumulated cash dividend equivalent amounts are converted into shares of
common stock and distributed to the optionee with the shares of common stock
issued to settle the optionee's deferred share account. During 2000, two
executive officers who are now employed by APW Ltd. deferred receipt of option
shares under this program and the obligation was assumed by APW Ltd. in the
spin-off.
In August 2000, the Company also adopted the Actuant Corporation Executive
Stock Purchase Plan. The purpose of this was to facilitate the purchase of
Company common stock by executive officers in order to more closely align the
executive's financial rewards with the financial rewards realized by Company
shareholders, increase the executive's motivation to manage the Company as
owners and to increase the ownership of common stock among executives. The
Compensation Committee designates the amount that can be borrowed and selects
employees eligible to participate in the program. In connection with this
plan, the Company will guarantee an individual's loan and agrees that the
Company will be responsible for interest expense incurred by the executive in
excess of four percent (4%) per year. The Company also agreed to be
responsible for 50% of any loss incurred on shares purchased under this
program so long as the participant remains employed by the Company until
July 31, 2004. If the participant terminates employment before July 31, 2004
or sells the shares purchased under this program prior to July 31, 2004, the
officer shall be responsible for any loss on the sale.
Key Measurement Criteria for Bonuses. Bonus payments are made to each
executive officer based upon the degree of achievement of the year's financial
objectives. An executive may receive more, or less, than the target bonus
based on actual business results.
Each executive responsible for a business unit (or multiple business units)
is measured principally by the performance of that unit (or those units). The
measuring index utilized is "Combined Management Measure" ("CMM"), which is
unit operating profit before amortization less a charge based upon the net
assets employed by the unit. For all business unit executives, bonuses for the
fiscal year ended August 31, 2000 ranged from 18% to 140% of their target
bonuses.
Company executives not in charge of business units receive bonus payments
based upon the performance of the Company as a whole. For fiscal 2000, 100%
was based on the Company's year over year performance in CMM. For the fiscal
year ended August 31, 2000, bonuses for this group equaled 70% of the
executives' targeted bonuses.
Chief Executive Officer Compensation. In fiscal 2000, the Committee
continued the same pay level for Mr. Sim, the Chief Executive Officer until
July 31, 2000 when he became employed by APW Ltd. As part of the spin-off of
APW Ltd. by the Company, Mr. Sim became Chairman and Chief Executive Officer
of APW Ltd. and his options, deferred compensation and other compensation
arrangements were assumed by APW Ltd. In
8
<PAGE>
August 2000, the Compensation Committee also established a new salary for Mr.
Arzbaecher as the Chief Executive Officer at $360,000 and established targeted
six month bonus amounts of $110,000 for Mr. Arzbaecher in fiscal 2000. In
August 2000, the Compensation Committee granted the Chief Executive Officer an
option for 125,000 shares. The board also granted an award of 295,000 shares
to Mr. Arzbaecher conditioned upon receipt of shareholder approval for the new
Actuant Corporation 2001 Stock Plan.
Tax Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") limits the Company's federal
income tax deduction to $1,000,000 per year for compensation paid to its chief
executive officer or any of the other executive officers named in the summary
compensation table of this Proxy Statement. Performance-based compensation is
not, however, subject to the deduction limit, provided certain requirements of
Section 162(m) are satisfied. The Company believes that its stock plans comply
with the final Section 162(m) regulations adopted by the Internal Revenue
Service. In order to preserve the deductibility of performance-based
compensation, the Company will generally seek to comply with Section 162(m) of
the Code to the extent such compliance is practicable and in the best
interests of the Company and its shareholders.
Richard A. Kashnow (Chairman)
H. Richard Crowther
Bruce S. Chelberg
Summary Compensation Table
The following table sets forth compensation awarded to, earned by or paid
to the Company's former and present Chief Executive Officer, each of the
Company's other four most highly compensated executive officers who were
serving as executive officers at the end of fiscal 2000 for services rendered
to the Company and its subsidiaries ("named executive officers") and two
former highly compensated executive officers. Also included in the table is
comparable compensation information for those individuals for fiscal years
1999 and 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation ($) Awards
------------------------------------------ ------------
Securities
Underlying
Name and Principal Other Annual Options/ All Other
Position Year Salary Bonus Compensation(1) SARs (#)(2) Compensation($)(3)
------------------ ---- ------- ------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Sim
Former Chairman,
President and
Chief Executive
Officer until
August 8, 2000(4) 2000 662,689(4) 750,000(4) -0- 1,950,002 64,957
Chairman, President and
Chief
Executive Officer 1999 662,977 120,000 -0- 1,300,000 18,640
Chairman, President and
Chief
Executive Officer 1998 491,724 611,250 -0- 650,000 17,840
Robert C. Arzbaecher
President and Chief
Executive Officer
after August 8,
2000(5) 2000 279,994 242,940 12,181 420,000 16,944
Vice President and
Chief
Financial Officer(6) 1999 263,073(7) 30,000(7) 7,498 390,000 11,761
Vice President and
Chief
Financial Officer 1998 189,231(7) 163,000(7) 3,787 13,200 10,961
Andrew G. Lampereur
Vice President and
Chief Financial
Officer after August
8, 2000 2000 148,077 84,715(9) 7,664 132,000 19,708
1999 146,346 55,031(9) 2,912 52,000 13,711
1998 122,692(9) 50,148 443 32,500 10,085
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation ($) Awards
-------------------------------------------- ------------
Securities
Underlying
Name and Principal Other Annual Options/ All Other
Position Year Salary Bonus Compensation(1) SARs (#)(2) Compensation($)(3)
------------------ ---- ------- ------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph Kampschroer
Vice President, GB
after August 8,
2000(10) 2000 152,121 33,424 -0- 75,000 13,020
1999 125,923 45,056 -0- 39,000 12,062
1998 122,615 27,573 -0- 26,000 10,157
Jerry Peiffer
Vice President,
Engineered Solutions--
Americas(11)
after August 8, 2000 2000 149,848 96,362 -0- 75,000 23,523
1999 130,000 69,387 -0- 65,000 17,773
1998 100,650 43,576 -0- 26,000 9,150
William J. Albrecht
Senior Vice President,
Electronics
until August 8,
2000(12) 2000 313,848(12) 190,800(12) 9,303 650,001 22,210
Senior Vice President,
Electronics 1999 290,964 75,600 5,796 1,170,000 17,720
Senior Vice President,
Engineered Solutions 1998 227,692 229,200(12) -0- 192,400 16,920
Gustav H.P. Boel
Senior Vice President,
APW Ltd.
until August 8,
2000(13) 2000 287,580(13) 173,700(13) 4,297 650,001 25,943
Senior Vice President,
Industrial 1999 243,078 155,000 -0- 832,000 20,581
Vice President,
President of Enerpac 1998 191,442 180,000 -0- 171,600 19,781
Arthur Kerk
Vice President,
Engineered Solutions--
Europe and Asia after
August 8, 2000(14) 2000 111,741 57,094 -0- 75,000 70,716
1999 120,300 42,100 -0- 78,000 20,740
1998 114,000 34,200 -0- 39,000 16,055
</TABLE>
--------
(1) Consists entirely of interest paid pursuant to the Deferred Plan.
(2) Consists entirely of stock options, adjusted in an amount as required
under the stock option plan for the spin-off of APW Ltd.
(3) The 2000 amounts represent (a) the Company's Savings Plan matching
contributions as follows: Mr. Sim-- $2,625, Mr. Arzbaecher--$2,625, Mr.
Lampereur--$2,625, Mr. Kampschroer--$2,625, Mr. Peiffer-- $2,625, Mr.
Albrecht--$2,625, Mr. Boel--$2,625 and Mr. Kerk--$0; (b) the Company's
Saving Plan core contributions as follows: Mr. Sim--$4,800, Mr.
Arzbaecher--$4,800, Mr. Lampereur--$4,800, Mr. Kampschroer--$4,800, Mr.
Peiffer--$4,800, Mr. Albrecht--$4,800, Mr. Boel--$4,800 and Mr. Kerk--$0;
(c) premiums paid by the Company for split-dollar life insurance as
follows: Mr. Sim--$11,215, Mr. Arzbaecher--$4,337; Mr. Albrecht--$10,295,
Mr. Boel--$13,156 and Mr. Kerk--$16; (d) auto payments as follows: Mr.
Sim--$13,243, Mr. Arzbaecher--$4,896, Mr. Lampereur--$12,229,
Mr.Kampschroer--$5,505, Mr. Peiffer--$15,960, Mr. Albrecht--$4,490, Mr.
Boel--$5,176 and Mr. Kerk--$70,700 (approximate value of purchased car);
(e) loan assistance to Mr. Sim in the principal amount of approximately
$2.5 million in connection with a residence which generated imputed
interest of $33,074; and (f) imputed income in connection with loan to
purchase company stock: Mr. Arzbaecher--$286, Mr. Lampereur--$54, Mr.
Kampschroer--$90, Mr. Peiffer--$138 and Mr. Boel--$186.
(4) Effective August 9, 2000, Mr. Sim who was appointed Chairman, President
and Chief Executive Officer of APW Ltd., terminated his positions as
President and Chief Executive Officer of Applied Power Inc. Mr. Sim
continues to serve as a Director and Chairman of the Board for Applied
Power Inc. The salary and bonus amount only includes amounts received
while employed at the Company.
10
<PAGE>
(5) Effective August 9, 2000, Mr. Arzbaecher was promoted to President and
Chief Executive Officer. Mr. Arzbaecher was Senior Vice President of
Applied Power Inc. from 1998 to August 8, 2000. Prior to that, Mr.
Arzbaecher served as Vice President and Chief Financial Officer of Applied
Power Inc. since 1994.
(6) Effective November 3, 1998, Mr. Arzbaecher was promoted to Senior Vice
President and Chief Financial Officer.
(7) Fiscal 1999 amount includes $26,307 of salary and $7,500 of bonus, payment
of which has been deferred pursuant to the Deferred Plan and paid in
fiscal 2000. Fiscal 1998 includes $18,923 of salary and $40,750 of bonus,
payment of which has been deferred pursuant to the Deferred Plan and paid
in fiscal 2000.
(8) Effective August 9, 2000, Mr. Lampereur was promoted to the office of Vice
President and Chief Financial Officer. Prior to that date, he served as
the business development and special projects leader for Applied Power
Inc. In 1998, he served as Vice President--General Manager of GB. Mr.
Lampereur joined Applied Power Inc. in 1993 as Corporate Controller, a
position he held until 1995, when he was appointed Vice President of
Finance for GB.
(9) Fiscal 2000 amount includes $62,625 in bonus amounts originally deferred
pursuant to the Deferred Plan which was paid in fiscal 2000. Amounts for
fiscal 1999 include $55,031 of bonus payments which have been deferred
pursuant to the Deferred Plan and which was paid in fiscal 2000. Amounts
for fiscal 1998 include $45,000 of salary, payment of which was deferred
pursuant to the Deferred Plan and was paid in fiscal 2000.
(10) Effective August 9, 2000, Mr. Kampschroer was promoted to the office of
Vice President, GB. Mr. Kampschroer joined GB in 1982 prior to its
acquisition by Applied Power Inc., and he has been involved in the
development and growth of its retail channel. Mr. Kampschroer resigned in
November 2000.
(11) Effective August 9, 2000, Mr. Peiffer was promoted to the office of Vice
President, Engineered Solutions--Americas. Mr. Peiffer joined Applied
Power Inc.'s Industrial Business in 1997 when Applied Power Inc. acquired
Versa Technologies, Inc.
(12) Effective July 31, 2000, Mr. Albrecht resigned and is now employed by APW
Ltd. The fiscal 2000 salary and bonus amount only includes amounts
received while employed at the Company. Fiscal 1998 includes $114,708 of
bonus, payment of which has been deferred pursuant to the Deferred Plan.
(13) Effective July 31, 2000, Mr. Boel resigned his Senior Vice President
position and is now employed by APW Ltd. The fiscal 2000 salary and bonus
amount only includes amounts received while employed at the Company.
(14) Effective August 9, 2000, Mr. Kerk was promoted to the office of Vice
President, Engineered Solutions-Europe and Asia. Mr. Kerk joined Applied
Power Inc.'s Industrial Business in 1995 as Commercial Director of Power-
Packer Europe. A resident of the Netherlands, he was promoted to Managing
Director of Power-Packer Europe in 1996, and subsequently was appointed
as Leader of Engineered Solutions--Europe in 1997.
11
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning stock option grants
during the last fiscal year to the named executive officers, as adjusted by
the spin-off of APW Ltd. No stock appreciation rights ("SARs") were granted in
fiscal 2000.
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (3)
------------------------------------------------------ -------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year(1) ($/Sh) Date(2) 5% ($) 10% ($)
---- ------------ ---------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Sim.......... 1,950,002(4) 20.0% 2.2620 10/26/09 2,773,994 7,029,846
Robert C. Arzbaecher.... 125,000 1.3% 3.7188 08/09/10 292,342 740,851
295,000(5) 3.0% 3.7188 08/09/10 689,926 1,748,409
Joseph Kampschroer...... 75,000 * 3.7188 08/09/10 175,405 444,511
Arthur Kerk............. 75,000 * 3.7188 08/09/10 175,405 444,511
Andrew G. Lampereur..... 52,000 * 2.2620 10/26/09 73,973 187,462
80,000 * 3.7188 08/09/10 187,099 474,145
Jerry Peiffer........... 75,000 * 3.7188 08/09/10 175,405 444,511
William J. Albrecht..... 650,001(4) 6.7% 2.2620 10/26/09 924,665 2,343,283
Gustav H.P. Boel........ 650,001(4) 6.7% 2.2620 10/26/09 924,665 2,343,283
</TABLE>
--------
* Less than 1%
(1) Based on stock option grants for an aggregate of 9,740,738 shares made
(after the adjustment of thirteen to one required as a result of the spin-
off of APW Ltd.) to all employees during the fiscal year ended August 31,
2000. This amount reflects the adjustment for the spin-off of APW Ltd. and
does not consider the amount assumed by APW Ltd. in the spin-off.
(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. In the event of a change in control of the Company, the
Compensation Committee may either provide for equivalent substitute
options to be granted to the optionees or a cash-out of the options based
on the highest fair market value per share of Company common stock during
the 60-day period immediately preceding the change in control. Optionees
who earn more than $100,000 per year may elect to defer receipt of option
shares upon exercise of an option. Throughout the deferral period, the
deferred shares are credited with "deemed dividends" at the same rate as
dividends paid on Company common stock. At the end of the deferral period,
such accumulated cash dividend equivalent amounts are converted into
shares of common stock and distributed with the shares of common stock
issued to settle the optionee's deferred share account.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation,
if any, of the common stock price.
(4) All options assumed by APW Ltd. in the spin-off and these options are not
currently outstanding Company options.
(5) Conditioned upon shareholder approval of the new Actuant Corporation 2001
Stock Plan.
12
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information for each of the named executive
officers concerning options exercised during fiscal 2000 and the number and
value of stock options outstanding at the end of the fiscal year. No SARs are
outstanding.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End($)(2)
----------------------------- ------------------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable(1) Exercisable Unexercisable(1)
---- ------------- ---------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Sim.......... 424,062 12,921,265 -0-(3) -0-(3) -0-(3) -0-(3)
Robert C. Arzbaecher.... 221,000 641,472 757,900 1,014,100 2,815,851 2,243,412
Joseph Kampschroer...... 52,000 124,129 156,650 151,050 601,421 319,281
Arthur Kerk............. 39,000 65,887 19,500 202,400 48,844 465,865
Andrew G. Lampereur..... -0- -0- 194,350 230,150 732,210 530,006
Jerry Peiffer........... -0- -0- 13,000 153,000 32,562 306,309
William J. Albrecht..... -0- -0- -0-(3) -0-(3) -0-(3) -0-(3)
Gustav H.P. Boel........ -0- -0- -0-(3) -0-(3) -0-(3) -0-(3)
</TABLE>
--------
(1) Represents unvested options at the end of fiscal 2000.
(2) Based upon the closing price of $4.9375 of the common stock on the New
York Stock Exchange, Composite Tape on August 31, 2000, as reported in the
Wall Street Journal.
(3) Messrs. Sim, Albrecht and Boel are currently employed by APW Ltd. and
Company options were assumed by APW Ltd. in the spin-off and accordingly
no amount is shown.
Employment Agreement and Change In Control Arrangements
Certain of the Company's stock option plans contain provisions that would
be triggered by a change in control of the Company. The 1996 Stock Option Plan
permits the Compensation Committee to either provide for equivalent substitute
options to be granted to the optionees upon a change in control or the cash-
out of options previously granted under such plan based on the highest fair
market value per share of Company common stock during the 60-day period
immediately preceding the change in control. The 1990 Stock Option Plan
provides for acceleration of vesting in the event of a change in control.
Finally, the stock option deferral programs which are part of each stock
option plan maintained by the Company require distribution of all deferred
shares as soon as administratively practicable after the date of a change in
control.
In September 1999, the Company entered into change in control agreements
with Messrs. Kobylinski, Kampschroer, Hicks, Keller, Peiffer, O'Connor and
Kerk whereby upon a triggering event within 18 months of a change in control
the Company shall continue to provide welfare benefits customarily received by
the executive for a 12 month period after termination at no cost and shall pay
a lump sum equal to 12 months of compensation based upon compensation then in
existence and the bonus that would have been earned if the officer met 100% of
the performance targets. A triggering event means:
. (a) reducing the total base compensation amount paid by the Company to
the executive or (b) modifying the bonus plan applicable to the Executive
which results in the executive earning less than the then existing bonus
plan or (c) reducing the total aggregate value of the fringe benefits
received by the executive from the Company from the levels received by
the executive at the time of a change in control or during the 120-day
period immediately preceding the change in control; or
13
<PAGE>
. a material change in the executive's position or duties, executive's
reporting responsibilities, or persons reporting to the executive from
the levels existing at the time of a change in control or during the 180-
day period immediately preceding the change in control; or
. a change in the location or headquarters where the executive is expected
to provide services of 40 or more miles from the previous location
existing at the time of the change in control or during the 180- day
period immediately preceding the change in control.
A change in control is defined to be:
. a sale of over 50% of the stock of the Company measured in terms of
voting power, other than in a public offering or in connection with an
acquisition by the Company of a business filing reports under Section 13
or 15(d) of the Securities Exchange Act of 1934; or
. the sale by the Company (but not the spin-off to shareholders) of over
50% of its business or assets in one or more transactions over a
consecutive 12-month period; or
. a merger or consolidation of the Company with or into any other
corporation or corporations such that the shareholders of the Company
prior to the merger or consolidation do not own at least 50% of the
surviving entity measured in terms of voting power; or
. the acquisition by any means of more than 25% of the voting power or
common stock of the Company by any person or group of persons (with group
defined by the definitions under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); or
. the election of directors constituting a majority of the Company's board
of directors pursuant to a proxy solicitation not recommended by the
Company's board of directors.
Certain Relationships and Related Transactions
Effective July 31, 2000, the Company completed the spin-off of APW Ltd. The
Company and APW Ltd. are parties to various agreements providing for the
separation of their respective business operations. These agreements govern
various interim and ongoing relationships between the companies and include
the following:
. Contribution Agreement, Plan and Agreement of Reorganization and
Distribution
. General Assignment, Assumption and Agreement regarding Litigation,
Claims, and other Liabilities
. Transitional Trademark Use and License Agreement
. Insurance Matters Agreement
. Bill of Sale and Assumption of Liabilities
. Employee Benefits and Compensation Agreement
. Tax Sharing and Indemnification Agreement
. Interim Administrative Services Agreement
. Confidentiality and Non Disclosure Agreement
Because these agreements were negotiated while APW Ltd. was a wholly-owned
subsidiary, they are not the result of negotiations between independent
parties, although the Company and APW Ltd. have set pricing terms for interim
services believed to be comparable to what could be achieved through arms-
length negotiations.
14
<PAGE>
Performance Graph
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,
1995 in the common stock and each index and that all dividends were
reinvested. On July 31, 2000 the Company spun off its Electronics Business as
a company named APW Ltd. and this resulted in the Company's stock price
decreasing from approximately $39.8125 (combined price as of spin-off) to
$3.062 for Applied Power Inc. after the spin-off.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG APPLIED POWER INC., THE S & P 500 INDEX
AND THE S & P MANUFACTURING (DIVERSIFIED) INDEX
[LOGO OF CHART]
<TABLE>
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1998 1999 2000
------------------------------------------------------------------------------------------------
APPLIED POWER $100 $ 91 $193 $151 $187 $ 30
------------------------------------------------------------------------------------------------
S&P 500 INDEX 100 119 167 181 252 294
------------------------------------------------------------------------------------------------
S&P DIV. MFG. INDEX 100 124 176 155 258 262
------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Performance since the spin-off of APW Ltd. is shown below:
COMPARISON OF 1 MONTH CUMULATIVE TOTAL RETURN*
AMONG ACTUANT CORPORATION, THE S&P 500 INDEX
AND THE S&P MANUFACTURING (DIVERSIFIED) INDEX
[GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------
August 1, 2000 August 31, 2000
-------------- ---------------
<S> <C> <C>
The Company................................ 100.00 136.22
S&P 500.................................... 100.00 106.21
S&P Manufacturing (Diversified)............ 100.00 106.09
</TABLE>
PROPOSAL 2
APPROVAL OF THE ACTUANT CORPORATION 2001 STOCK PLAN
Shareholders of the Company are also being asked to approve the Actuant
Corporation 2001 Stock Plan. On August 9, 2000, subject to shareholder
approval, the board of directors adopted the plan. The plan is intended to
provide certain key employees of the Company an increased identification with
the shareholders of the Company by offering increased stock ownership. Except
for the August 2000 grant of 295,000 options to Mr. Arzbaecher conditioned
upon shareholder approval, no options have yet been granted under the plan,
nor is it anticipated that any such options or other rights will be granted
prior to shareholder approval. A copy of the plan is attached hereto as
Exhibit B. The following summary of the material features of the plan is
qualified in its entirety by reference to the complete text of the plan.
The affirmative vote of holders of a majority of the shares cast at the
Annual Meeting, in person or by proxy, will be required for the approval of
the plan, provided the total vote cast on the plan represents over 50% of the
shares entitled to vote.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
Actuant Corporation 2001 Stock Plan
Under the 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. 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, who may be all employees in the plan, shall be referred to as
"Eligible Employees."
The total number of shares of common stock available for issuance under the
plan may not exceed two million (2,000,000) shares, although no Eligible
Employee may be granted an Award or Awards covering more than five hundred
thousand (500,000) 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 plan and are prior to
the reverse stock split. If the reverse stock split is approved, 400,000
shares will be available for issuance under the plan.
The plan will be administered by the Compensation Committee of the board of
directors (the "Committee"). The Committee shall be constituted so as to
permit the plan to comply with the provisions of Section 162(m) of the Code
and to afford plan participants an exemption for plan transactions pursuant to
Rule 16b-3 under the Securities Exchange Act of 1934. The Committee will be
empowered to adopt such rules, regulations and procedures and take such other
action as it deems necessary or proper for administration of the plan,
including any modification, extension or renewal of any option granted
thereunder. The Committee will have the authority to interpret the provisions
of the plan, which interpretations shall be final and conclusive.
Specifically, the Committee will be empowered, subject to any contrary
provisions of the 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.
16
<PAGE>
Stock Options
Stock Options ("Options") may be granted to Eligible Employees at any time
as determined by the Committee (subject to the volume limitation set forth
above). Options granted under the 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 will be
evidenced by an agreement between the Company and the grantee which will
contain the terms and conditions required by the 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 plan will be 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
(as defined in the plan) of the common stock 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).
For purposes of the plan, an Option will be considered as having been
granted on the date on which the Committee authorizes its grant (unless the
Committee has designated a later grant date). Options granted under the 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 prior to shareholder approval of the 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, (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 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 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
plan). In addition, the 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
plan; provided, however, that no more than 150,000 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,
17
<PAGE>
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 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 Plan
The plan will terminate 10 years after its effective date, 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. The board of directors may also amend, modify, suspend or
terminate the plan from time to time; provided, however, that no such action
can be taken without shareholder approval if required by applicable law.
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, by check, 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 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.
Certain Federal Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of Awards under the plan based on applicable provisions of the
Code now in effect.
An Eligible Employee realizes no taxable income at the time an Option is
granted under the 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 the shares, measured by the difference
between the exercise price and the amount received for the
18
<PAGE>
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 lesser 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 the 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. 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 generally recognized 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.
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, 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.
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.
19
<PAGE>
PROPOSAL 3
APPROVAL OF THE ACTUANT CORPORATION 2001 OUTSIDE DIRECTORS' STOCK OPTION PLAN
Shareholders of the Company are being asked to approve the Actuant
Corporation 2001 Outside Directors' Stock Option Plan. On August 8, 2000,
subject to shareholder approval, the board of directors adopted the plan. The
plan is intended to provide outside directors with incentive to promote the
growth and development of the Company. No options have yet been granted under
the plan, nor is it anticipated that any such options or other rights will be
granted prior to shareholder approval. A copy of the plan is attached hereto
as Exhibit C. Descriptions of certain provisions of the plan are qualified in
their entirety by reference to the complete text of the plan.
The affirmative vote of holders of a majority of the shares cast at the
Annual Meeting, in person or by proxy, will be required for the approval of
the plan, provided the total vote cast on the plan represents over 50% of the
shares entitled to vote.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
The purpose of the plan is to promote the growth and development of the
Company by providing increased incentives to the outside directors of the
Company. The Company currently has six outside directors eligible to
participate in the plan. The plan will be administered by the Compensation
Committee of the board of directors (the "Committee"). The Committee will be
constituted so as to permit the plan to comply with the provisions of Rule
16b-3 under the Securities Exchange Act of 1934.
The plan provides for the granting of nonqualified stock options to outside
directors of the Company. In addition, the plan provides that Company
directors who were previously directors of the Company and who were granted
options to purchase Company common stock will be granted substitute options to
purchase common stock of the Company under this plan on terms which are
economically consistent with the prior Company stock options. The aggregate
number of shares of common stock which may be issued pursuant to options
granted under the plan, including shares that may be issued upon exercise of
substitute stock options, is 350,000. This number is subject to adjustment in
the event of a stock split, stock distribution or other capital event, as
described in the plan and is before the reverse stock split. If the reverse
stock split is approved, 70,000 shares will be available for issuance under
the plan.
The plan provides that an option to purchase 15,000 shares of the Company's
common stock will be automatically granted to each person then serving as an
outside director at the first meeting of the board of directors following each
Annual Meeting of shareholders. Each option granted under the plan is
evidenced by a stock option agreement between the Company and the outside
director. The agreement will contain the terms and conditions required by the
plan, along with any other terms or conditions that the Committee may deem
appropriate.
The exercise price at which shares may be purchased pursuant to an option
is 100% of the Fair Market Value (as defined in the plan) of the Company's
common stock on the date the option is granted. The option exercise price must
be paid in full at the time of exercise. Such payment may be made either in
cash, check or by the delivery of shares of common stock which the outside
director, or his spouse, has owned for at least six months prior to the time
of exercise ("Delivered Stock"), or a combination of cash and Delivered Stock.
An option granted pursuant to the plan may be exercised, in whole or in
part, any time during the period beginning 11 months after the date of grant
and ending upon the earlier of ten (10) years from the date of grant, or two
(2) years from the date the director ceases to be a director.
Options granted under the plan may not be transferred or assigned except by
will or the laws of descent and distribution and, during the grantee's
lifetime may be exercised only by the grantee; however, the Committee, in its
discretion, may grant options that are transferrable to family members.
20
<PAGE>
The plan is effective August 8, 2000, subject to shareholder approval. It
provides that options may be granted any time prior to August 8, 2010. On that
date, the plan will expire, except as to options then outstanding, which will
remain in effect until they have been exercised, expired or otherwise
terminated. The plan may be terminated at any time by the board of directors.
The board of directors may also amend the plan from time to time, but
shareholder approval is required in the event of certain material changes. The
above amounts are prior to the reverse stock split.
Certain Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of the nonqualified stock options under the plan, based on
applicable provisions of the Code now in effect.
An optionee will not recognize taxable income at the time the option is
granted. Upon exercise of the option, an optionee will recognize compensation
income in an amount equal to the difference between the exercise price and the
Fair Market Value of the shares on the date of exercise. The amount of such
difference will usually be a deductible expense to the Company for tax
purposes. On a subsequent sale or exchange of shares acquired pursuant to the
exercise of an option, the optionee will recognize a capital gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis will, in general, be the amount
paid for the shares plus the amount treated as compensation income at the time
the shares were acquired pursuant to the exercise of the option.
PROPOSAL 4
APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S
NAME
The board of directors has approved and is hereby soliciting shareholder
approval of an amendment (the "Name Change Amendment") to Article 1 of the
Company's Articles of Incorporation to change the name of the Company to
Actuant Corporation. The Name Change Amendment is attached as Exhibit D to
this Proxy Statement. The board of directors believes that it is in the best
interests of the Company to change the name from Applied Power Inc. to Actuant
Corporation to avoid misunderstandings as to its business.
The proposed change in the name of the Company is desirable, among other
things, to disassociate the Company with the recently spun off segment of the
Company, APW Ltd. The Company applied to the New York Stock Exchange to change
its trading symbol to "ATU." Effective as of July 24, 2000, the New York Stock
Exchange approved the trading symbol change and Applied Power Inc. stock has
since been trading under the symbol "ATU."
Adoption of the Name Change Amendment requires the affirmative vote of the
holders of two-thirds of the outstanding shares of common stock. If it is
adopted, the Name Change Amendment will become effective as soon after the
meeting as practicable upon the filing of Articles of Amendment to the
Articles of Incorporation with the Wisconsin Department of Financial
Institutions.
The board of directors unanimously recommends that shareholders vote FOR
this proposal to adopt the Articles of Amendment to change the Company's name
to Actuant Corporation.
PROPOSAL 5
APPROVAL OF AMENDMENT OF ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK
SPLIT
The board of directors has approved and hereby is soliciting shareholder
approval of an amendment to the Company's Articles of Incorporation in the
form set forth in Exhibit E to the Proxy Statement (the "Amendment") pursuant
to which each five (5) shares of the issued and outstanding shares of the
common stock of the Company ("Old Common Stock") shall be converted into one
(1) issued and outstanding share of common
21
<PAGE>
stock of the Company (the "New Common Stock"). If approved by the Company's
shareholders, this five-for-one reverse stock split (the "Reverse Split") will
become effective upon filing Articles of Amendment to the Company's Articles
of Incorporation with the Wisconsin Department of Financial Institutions (the
"Effective Date"). Adoption requires the affirmative vote of two-thirds of the
outstanding shares of common stock.
In order to effect the Reverse Split, the shareholders of the Company are
being asked to adopt the Amendment because the board of directors believes
that the Reverse Split is in the best interests of both the Company and its
shareholders. The board of directors is recommending that shareholders approve
the Reverse Split in hopes that it will broaden the market for the Company's
common stock. The board of directors, however, reserves the right,
notwithstanding shareholder approval and without further actions by the
shareholders, to decide not to proceed with the Reverse Split if at any time
prior to the Amendment's effectiveness, it determines in its sole discretion,
that the Reverse Split is no longer in the best interests of the Company or
its shareholders. The board of directors may make any and all changes to the
Amendment that it deems necessary in order to file the Amendment with the
Wisconsin Department of Financial Institutions and give effect to the Reverse
Split.
Effects of Reverse Stock Split
The Articles of Incorporation authorize 80,000,000 shares of common stock
with a par value of $.20 per share, of which 39,642,501 shares are issued and
outstanding as of November 22, 2000. If effected, the Reverse Split would
reduce the number of outstanding shares of Old Common Stock from 39,642,501 to
approximately 7,928,500 shares of New Common Stock as of the Effective Date
and the number authorized will be reduced to 16,000,000. (The foregoing
assumes no issuance or repurchases of common stock between the record date and
the Effective Date). Thus, the Reverse Split would decrease the number of
authorized shares available for issuance. While no transactions are currently
contemplated, the availability of authorized shares makes it possible to
consummate potential transactions, including public and private offerings and
acquisitions, without the cost and delays that could result if the board of
directors were required to obtain shareholder authorization for additional
shares in the context of a particular transaction.
The Reverse Split would not affect any shareholder's proportionate equity
interest or proportional voting power in the Company. Options to purchase
common stock will be affected by the Reverse Split by a five-for-one
reduction.
Under the Wisconsin Business Corporation Law, shareholders are not entitled
to dissenter's rights with respect to this proposed Amendment and the Company
will not independently provide the shareholders with such a right.
Mechanics of the Proposed Reverse Stock Split
If the Reverse Split is approved by the requisite vote of the Company's
shareholders and the board of directors does not thereafter elect to abandon
the Reverse Split as described above, the Amendment will be filed with the
Wisconsin Department of Financial Institutions. The Reverse Split will be
effective on the date of such filing. Upon filing the Amendment, every five
(5) issued and outstanding shares of the Old Common Stock will, immediately
following filing of the Amendment, be automatically and without any action on
the part of the shareholders, converted into and reconstituted as one (1)
share of New Common Stock.
As soon as practicable after the Effective Date, the Company will mail or
cause to be mailed, a letter of transmittal to each shareholder of record of
shares of Old Common Stock outstanding as of the Effective Date. The letter of
transmittal will set forth instructions for surrender to the Company's
transfer agent of the certificates representing the Old Common Stock in
exchange for the certificates representing the appropriate number of shares of
the New Common Stock. CERTIFICATES SHOULD NOT BE SENT TO THE COMPANY OR THE
TRANSFER AGENT PRIOR TO THE RECEIPT OF SUCH LETTER OF TRANSMITTAL FROM THE
COMPANY. Until this exchange is completed, the shareholder's Old Common Stock
shall be deemed equal to the number of whole shares of New Common Stock to
which each shareholder is entitled as a result of the Reverse Split.
22
<PAGE>
No scrip or fractional share certificates will be issued in connection with
the Reverse Split. In lieu of the issuance of fractional shares of common
stock, the Company will issue a check equal to the amount received by the
Company from the sale of fractional interests.
Federal Income Tax Consequences of the Proposed Reverse Stock Split
The following briefly summarizes our understanding of the principal federal
income tax consequences of the Reverse Split based upon the applicable
provisions of the Code in effect on the date of this Proxy Statement. This
summary is subject to change in the event of a change in either the Code or
its interpretations. Shareholders are advised to consult their own tax
advisors as to the personal effects of the Reverse Split, including the
effects under state income tax or other tax laws which may be applicable.
The Company believes that the Reverse Split will qualify as a
"recapitalization" under Section 368(a)(1)(E) of the Code. As a result, no
gain or loss will be recognized by the Company or its shareholders in
connection with the Reverse Split. Shareholders of the Company who exchange
their Old Common Stock for New Common Stock will recognize no gain or loss for
federal income tax purposes. A shareholder's aggregate tax basis in his, her
or its shares of New Common Stock received from the Company will the be the
same as his, her or its aggregate tax basis in the Old Common Stock. The
holding period of the New Common Stock received by the shareholders will
include the shareholder's holding period of shares of Old Common Stock,
provided that the shares of Old Common Stock were held as a capital asset on
the date of the exchange.
Accounting Effects of the Reverse Stock Split
Following the Effective Date, the par value of the Company's common stock
will remain at $.20 per share. As a result, the Company's stated capital will
be reduced and the Company's capital in excess of par value (paid-in-capital)
will increase accordingly. Shareholder's equity will remain unchanged.
The board of directors unanimously recommends that shareholders vote FOR
this proposal to authorize the reverse stock split.
PROPOSAL 6
VOTE ON SHAREHOLDER PROPOSAL
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California
90278, who as of April 4, 2000 owned 85 shares, has given notice that he
intends to present the following resolution at the meeting for the reasons
stated:
POISON PILLS
RECOMMEND SHAREHOLDERS HAVE THE RIGHT TO VOTE
Recommend the Company shall not adopt or maintain any poison pill,
euphemistically called a rights plan, share purchase rights plan or similar
agreement, designed to block, the acquisition of stock in excess of a
specified threshold:
Unless such plan or agreement has previously been approved by a majority of
the outstanding shares of stock at a general or special meeting of
shareholders.
Recommend the Company shall redeem or terminate any such plan or agreement.
Recommend this Resolution not be amended, modified or repealed, except by a
shareholder vote as a separate issue. If any part of this resolution is
determined by the Securities and Exchange Commission as not in conformity with
state law, that part is not part of the resolution.
23
<PAGE>
SUPPORTING STATEMENT:
Why submit Applied Power's poison pill to a confidential shareholder vote?
. The poison pill is an anti-takeover device, which injure shareholders by
reducing management accountability and adversely affect shareholder
value.
. Poison pills are a major shift of shareholders rights from shareholders
to management. They give directors absolute veto power over any proposed
business combination, no matter how beneficial it might be for the
shareholders.
Nell Minow and Robert Monks in their book
POWER AND ACCOUNTABILITY
. Given the substantial power that poison pills shift from shareholders to
management, and the potential this holds for reducing management
accountability, shareholders should have the opportunity to vote on this
significant corporate issue.
. Rights plans such as Applied Power's are increasingly unpopular.
Shareholders proposals seeking to redeem poison pills or subject plans to
shareholder vote achieved 56% approval from shareholders.
Investor Responsibility Research Center's Corporate Governance Bulletin,
April-June 1998
. The Council of Institutional Investors (http://www.cii.org/ and
http://www.cii.org/ciicentral/policies.htm)--an organization of large
pension plans--calls for shareholder approval of all poison pills in its
Shareholder Bill of Rights.
. Institutional investors own 76% of Applied Power stock.
. Harvard University Professor John Pound's study found a link between high
corporate performance and the absence of poison pills.
What issues highlight concern about Applied Power's performance:
. Applied Power takes $52 million charge due in part to its recent
acquisition of Zero Corp.
Business Journal Serving Greater Milwaukee, October 2, 1998
. Minus -55% earning drop in 1998.
. Price-to-Earnings ratio: 52 to one.
Source: Standard & Poors, May 8, 1999
. Applied Power stock price bearish since Feb. 1997.
Standard & Poors, May 8, 1999
. Applied Power financed its recent acquisitions largely through debt,
which may have added a degree of price volatility to its stock.
Value Line, May 7, 1999
. Management dismissed Deloitte and Touche as auditors. However, management
failed the typical corporate practice of asking shareholders to approve
the new auditors.
To increase shareholder value and rights:
POISON PILLS
RECOMMEND SHAREHOLDERS HAVE THE RIGHT TO VOTE
YES ON 6
24
<PAGE>
THE COMPANY'S RESPONSE AND STATEMENT IN OPPOSITION:
The board of directors believes that Proposal 6 is not in the best interest
of the Company or you, our shareholders, and unanimously recommends that you
vote against it, because the Company does not currently have and is not
currently recommending a shareholder rights plan.
However, the Company does not wish to impede its ability to adopt a plan in
the future if the board of directors believes it is prudent to do so, for
there is substantial empirical evidence that a shareholder rights plan may
better position a board of directors to achieve the best result for all
shareholders in the event there is a bid for the Company. In fact, a 1997
study of 319 merger and acquisition transactions completed between 1992 and
1996, by Georgeson & Company, Inc. found the following:
. premiums paid to acquire companies with shareholder rights plan averaged
8 percentage points higher than premiums for companies without such
plans;
. the presence of shareholder rights plans contributed an estimated
additional $13 billion in shareholder value in the merger and acquisition
transactions studied, and shareholders of acquired companies without
shareholder rights plans sacrificed an estimated $14.5 billion in
potential premiums;
. the presence of a shareholder rights plan did not increase the likelihood
of the withdrawal of a friendly bid nor the defeat of a hostile bid; and
. shareholder rights plans did not reduce the likelihood of a company
becoming a takeover target (in fact, companies with shareholder rights
plans had a slightly higher takeover rate than companies without plans).
Even if adopted, a shareholder rights plan is not intended to preclude any
potential takeover proposal that the board of directors determines, in the
exercise of its fiduciary duties, is in the best interest of the Company's
shareholders.
Your board of directors is an independent board elected by the
shareholders, with a majority of its members being outside directors who are
not employed by the Company. If presented with an unsolicited bid for the
Company, these outside directors must act in a manner that is independent of
management and sensitive to the fiduciary duties under Wisconsin law to
represent shareholders when evaluating the merits of an acquisition proposal.
A shareholder rights plan is a tool that over 2,000 other public companies
have adopted.
The board of directors unanimously recommends that you vote AGAINST the
proposal. Proxies solicited by the board of directors will be voted against
this proposal unless otherwise specified by you in your proxy.
OTHER INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, executive officers and persons who beneficially own 10%
or more of the common stock are required to report their initial ownership of
common stock and subsequent changes in that ownership to the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
those reports have been established and the Company is required to disclose in
this Proxy Statement any failure to file by those due dates during fiscal
2000. Based upon a review of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that all
of those filing requirements were satisfied with respect to fiscal 2000.
Independent Public Accountants
The Company has retained PricewaterhouseCoopers LLP as its accountants.
The Company expects that representatives of PricewaterhouseCoopers LLP will
be present at the Annual Meeting and available to respond to appropriate
questions and make a statement if desired.
25
<PAGE>
Shareholder Proposals
Shareholder proposals must be received by the Company no later than August
3, 2001 in order to be considered for inclusion in the Company's annual
meeting proxy statement next year. Shareholder proposals not intended to be
included in the Company's annual meeting proxy statement next year must be
received by the Company no later than October 18, 2001 to be considered
timely.
Additional Matters
A shareholder has requested that the agenda for the Annual Meeting include
the following proposals: (1) shareholders have the opportunity to vote on
auditors at the 2001 and subsequent annual meetings; (2) the board be required
to have at least 9 directors; (3) that the 2001 and subsequent proxy
statements list all the outside directorships, including non-profit
organizations, held by each director; (4) that confidential voting be allowed
at the 2001 and subsequent annual meetings; and (5) that the annual meeting
start between the hours of 10:00 am and 3:00 pm and not at 8:00 am. In the
event that the shareholder properly presents such proposals at the Annual
Meeting, it is intended that proxies will be voted with discretionary
authority against such proposals.
Other than the proposals and matters described herein, management is not
aware of any matters which will be presented for action at the Annual Meeting.
If other matters do come before the Annual Meeting, including any matter as to
which the Company did not receive notice by October 26, 2000 and any
shareholder proposal omitted from this Proxy Statement pursuant to applicable
rules of the Securities and Exchange Commission, 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
December 1, 2000
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 proxies 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, 2000, 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 Andrew Lampereur, Senior Vice President and Chief Financial Officer,
Applied Power Inc., P.O. Box 325, Milwaukee, Wisconsin 53201.
26
<PAGE>
EXHIBIT A
APPLIED POWER INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The main function of the Audit Committee is to assist the Company's Board
of Directors ("Board") in fulfilling its oversight responsibilities by: (i)
reviewing the financial reports and other financial information provided by
the Company to its constituencies, (ii) monitoring the Company's systems of
internal financial and accounting controls, and (iii) monitoring and providing
oversight to the Company's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should strive to foster adherence to,
the Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
. Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the Company's independent
auditors, providing for the independent auditors to account to the Board
through the Audit Committee.
. Create an open avenue of communication among the independent auditors,
financial and senior management, and the Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated below.
II. COMPOSITION AND GOVERNANCE ISSUES
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be outside directors, free from
any relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. A
director will not be deemed independent if he or she is: (1) employed by the
Company or any affiliate of the Company within the past five years; (2)
currently compensated by the Company or any affiliate of the Company, other
than compensation for board service or benefits under retirement plans; (3) a
member of the immediate family of any person who, within the past five years,
has been an executive officer of the Company or any affiliate of the Company;
(4) a partner in, or controlling shareholder or executive officer of, a
company which has made or received significant payments to or from the Company
within the past five years; and (5) an executive officer of another company,
where any of the Company's executives serves on the other company's
compensation committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices, and at least one
member of the Committee shall have accounting or related financial management
expertise.
The members of the Committee shall be annually elected by the Board at a
meeting of the Board and shall maintain such positions until their successors
shall be duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the Committee may designate a Chair by majority vote of
the full Committee membership.
III. MEETINGS
The Committee shall meet at least twice annually and more frequently as
circumstances dictate. As part of its commitment to open communication, the
Committee should meet as needed, and at least annually, with management and
the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed
privately.
A-1
<PAGE>
IV. ROLES AND RESPONSIBILITIES
A. Internal Control
. Evaluate whether management is properly and adequately emphasizing the
importance of internal control measures throughout the organization.
. Inquire of the independent auditors about fraud, illegal acts,
deficiencies in internal control, and other matters effecting internal
controls within the Company.
. Focus on the extent to which the Company and its external auditors or
other designees review the effectiveness and security of the Company's
computer systems and applications, and the need for and adequacy of
contingency plans for processing financial information in the event of a
systems failure; and
. Ascertain whether internal control recommendations made by the accounting
department and external auditors have been implemented by management.
B. Financial Reporting
1. General
. Review significant accounting and reporting issues, including issued
and pending professional and regulatory pronouncements, and
understand their impact, or potential impact, on the Company's
financial statements and operations; and
. Inquire of management and the external auditors as to the existence
of any significant financial, accounting or reporting risks or
exposures and the Company's plans to address such risks. Seek the
auditor's judgment about the quality of the Company's accounting and
reporting practices, including the clarity and accuracy of the
Company's financial disclosures and the degree of aggressiveness or
conservatism of the Company's accounting policies and underlying
estimates.
2. Annual Financial Reports
. Review the annual financial statements and determine whether they are
complete and consistent with information known to Committee members,
and assess through inquiry whether the financial statements reflect
appropriate accounting principles;
. Review all complex and/or unusual transactions such as restructuring
charges and derivative disclosures which are material to the
Company's financial statements;
. Understand the basis for the Company's accounting in material,
judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and
disclosure of obsolete or slow-moving inventory; warranty, product,
and environmental liabilities; litigation reserves; and other
commitments and contingencies;
. Meet with management and the external auditors to review the
financial statements and the results of the audit; and
. Consider management's handling of proposed audit adjustments
identified by the external auditors.
3. Interim Financial Statements
. Gain an understanding as to how management develops and summarizes
quarterly financial information, the extent to which the external
auditors review quarterly financial information, and whether that
review is performed on a pre- or post-issuance basis;
. Management and PricewaterhouseCoopers shall review the quarterly
financial results with the Chairman of the Audit Committee before
such results are released, and the Chairman may call a meeting,
either telephonically or in person, of the Audit Committee to review
the interim financial results if he believes such a meeting is
desirable for any reason.
A-2
<PAGE>
C. Review of Compliance
. If applicable, review the results of management's investigation and
follow-up (including disciplinary action) on any fraudulent acts or
accounting irregularities;
. Be satisfied that compliance matters have been considered in the
preparation of the financial statements; and
. Review the findings of any examinations or reviews by regulatory agencies
such as the Securities and Exchange Commission.
D. External Audit
. Review the external auditors' proposed audit scope and approach;
. Review and approve audit fees to the external auditors;
. Review and confirm the independence of the external auditors by reviewing
a statement to be provided by the external auditors on the nonaudit
services provided and the auditors' assertion of their independence in
accordance with professional standards; and
. Review the performance of the external auditors and recommend to the
Board the appointment or discharge of the external auditors.
E. Other Responsibilities
. Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis;
. Review, with the Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements;
. If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist;
. Perform other oversight functions as requested by the full Board; and
. Review and reassess the adequacy of the charter on an annual basis and
receive approval of changes from the Board.
F. Reporting Responsibilities
. Regularly update the Company's Board about Committee activities and make
appropriate recommendations.
A-3
<PAGE>
EXHIBIT B
ACTUANT CORPORATION
2001 STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Actuant Corporation 2001
Stock Option Plan (the "Plan"). The purpose of the Plan is to provide
incentive for key employees of Actuant Corporation 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 Plan shall be August 9,
2000, subject to approval of the Plan by the Company's shareholders. Any Award
granted prior to such shareholder approval shall be expressly conditioned upon
such shareholder approval of the Plan.
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., d/b/a Actuant Corporation,
or any entity that is a successor to the Company.
(f) "Company Stock" shall mean common stock of the Company and such
other stock and securities as may be substituted therefor pursuant to
Section 3.02.
(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 two million
(2,000,000) 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.
B-1
<PAGE>
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 approximately 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 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 five
hundred thousand (500,000) 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 be evidenced
B-2
<PAGE>
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 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 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 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.
B-3
<PAGE>
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.
6.09 Deferral of Stock Option Gain. The Committee may permit, in its
discretion, an optionee who exercises a stock option to defer the taxable
income attributable to such exercise. In the event the Committee elects to
permit such deferrals, the Committee shall identify the optionees to whom such
deferral elections shall be made available and establish procedures for
implementing such deferrals. An optionee who defers a stock option gain under
this Plan or any other Company stock option plan shall be credited with deemed
dividends under this Plan on such terms as the Committee shall prescribe. All
deferrals which are permitted under this section and all deemed dividends
shall be distributed in Actuant Corporation common stock.
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 150,000 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 Actuant Corporation Stock Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the offices of
Actuant Corporation."
B-4
<PAGE>
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.
(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.
B-5
<PAGE>
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 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.
B-6
<PAGE>
EXHIBIT C
ACTUANT CORPORATION 2001
OUTSIDE DIRECTORS' STOCK OPTION PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Actuant Corporation 2001
Outside Directors' Stock Option Plan (the "Plan"). The purpose of this Plan is
to promote the growth and development of the Company by providing increased
incentives for directors. This Plan provides for the granting of non-qualified
stock options.
1.02 Effective Date. The effective date of the Plan shall be August 8,
2000, subject to approval of the Plan by the Company's shareholders. Options
granted prior to such shareholder approval shall be expressly conditioned upon
such shareholder approval of the Plan.
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)"Board" shall mean the Board of Directors of the Company.
(b)"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(c)"Committee" shall mean the Compensation Committee of the Board, as
described in Section 4.01.
(d)"Company" shall mean Applied Power Inc., d/b/a Actuant Corporation,
or any entity that is a successor to the Company.
(e)"Company Stock" shall mean common stock of the Company and such other
stock and securities as may be substituted therefor pursuant to Section
3.02.
(f)"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.
(g)"Optionee" shall mean any person who has been granted an option under
the Plan.
(h)"Outside Director" shall mean a director of the Company who is not
also an employee of the Company.
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 three hundred fifty
thousand (350,000) shares. Shares subject to and not issued under an option
which expires, terminates, is canceled or forfeited for any reason under the
Plan shall again become available for the granting of options.
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 approximately 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.
C-1
<PAGE>
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 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).
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.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the persons to whom options shall be granted;
(b) grant options in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
option as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such option as the Committee shall deem
appropriate.
V. STOCK OPTIONS
5.01 General. Each year, upon the first meeting of the Company's Board of
Directors following the Company's annual meeting of shareholders, each person
then serving the Company as an Outside Director at that time shall
automatically be granted an option to purchase fifteen thousand (15,000)
shares, subject to adjustment under Section 3.02 hereof or as may be reduced
by the Board. Each option granted under the Plan shall be evidenced by a stock
option agreement between the Company and the Grantee which shall contain the
terms and conditions required by this Article V, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem appropriate
in each case.
5.02 Option Price. The price at which each share of Company Stock covered
by an option may be purchased shall be one hundred percent (100%) of the Fair
Market Value of the Company Stock on the date the option is granted.
5.03 Period for Exercise. Each stock option agreement shall state the
period or periods of time within which the option may be exercised by the
Optionee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that unless otherwise determined
by the Committee:
(a) Options will vest eleven (11) months after grant.
(b) If the option is not earlier exercised or terminated, all rights to
exercise an option shall expire ten (10) years from the date the option was
granted.
(c) Upon termination of service as a director of the Company for any
reason other than death, after the director shall have continuously so
served for eleven (11) months after the date of option grant, the director
may, at any time within two (2) years after the date of such termination,
but in no event later than the date of expiration of the option, exercise
the option to the extent he or she was entitled to do so on the date of
termination.
(d) If an Optionee dies while serving as a director of the Company, or
within two (2) years after termination of such service, the personal
representative of the Optionee's estate or the person or persons to whom
the option is transferred by will or the laws of descent and distribution
may, at any time within two (2) years after the date of death, but not
later than the date of expiration of the option, exercise the option to the
extent the Optionee was entitled to do so on the date of death.
C-2
<PAGE>
(e) All options shall become immediately exercisable in full upon a
change in control (as determined by the Committee).
5.04 Method of Exercise. Each option may be exercised in whole or in part
from time to time as specified in the stock option agreement. Each Optionee
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 Optionee,
the Optionee'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 Optionee shall be
under any obligation to exercise any option hereunder. An Optionee 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.
5.05 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 Optionee 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.
5.06 Withholding Taxes. 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 Optionee 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. In lieu of part or all of any such payment, the Optionee 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.
VI. GENERAL
6.01 Nontransferability. No option shall be transferable by an Optionee
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 options that are transferable, without payment of
consideration, to family members of the Optionee or to trusts or partnerships
for such family members. The Committee may also amend outstanding stock
options to provide for such transferability.
6.02 General Restriction. Each option 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 government
C-3
<PAGE>
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such option or the issue or purchase of securities
thereunder, such option 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.
6.03 No Promise of Continued Service as a Director. Nothing in the Plan or
in any option granted under the Plan shall confer on any director any right to
continue as a director of the Company or affect the right of the Company to
terminate his or her service to the Company at any time.
6.04 Expiration and Termination of the Plan. The Plan will terminate ten
(10) years after the effective date of the Plan, except as to options then
outstanding under the Plan, which options shall remain in effect until they
have been exercised, the restrictions have lapsed or the options 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 options then
outstanding under the Plan.
6.05 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 options 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 option (either directly
or through modification of the Plan) shall, without the consent of the
Optionee, alter or impair any rights of the Optionee under the option.
6.06 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.
C-4
<PAGE>
Actuant Corporation Proposed Name Change Amendment
EXHIBIT D
Article 1. Name. The name of the corporation is Actuant Corporation.
D-1
<PAGE>
Actuant Corporation Proposed Increase in Authorized Shares
EXHIBIT E
"3.1 Number of Shares and Classes. The aggregate number of shares which the
Corporation shall have authority to issue is as follows:
(a) Class A Common Stock. 80,000,000 shares of Class A Common Stock,
having a par value of $.20 per share.
(b) Class B Common Stock. 7,500,000 shares of Class B Common Stock,
having a par value of $.20 per share.
(c) Cumulative Preferred Stock. 800,000 shares of Cumulative Preferred
Stock, having a par value of $1.00 per share.
Upon the amendment of this Section 3.1, every five (5) issued and
outstanding shares of Class A Common Stock, $.20 par value per share (the "Old
Common Stock") shall automatically and without action on the part of the
shareholders, be converted into and reconstituted as one (1) share of Class A
Common Stock, $.20 par value per share (the "New Common Stock"), subject to
the treatment of the fractional share interests as described below. Each
holder of a certificate or certificates that, immediately prior to this
Amendment becoming effective pursuant to the Wisconsin Business Corporation
Law (the "Effective Date"), represented outstanding shares of the Old Common
Stock (the "Old Certificates") shall be entitled to receive a certificate or
certificates for the number of shares of New Common Stock they own by
presenting their Old Certificates to the Corporation's transfer agent for
cancellation and exchange. No scrip or fractional certificates will be issued.
The Corporation shall sell any fractional interests of a shareholder and remit
the proceeds from such sale to shareholders that would otherwise receive
fractional shares.
E-1
<PAGE>
APPLIED POWER INC. d/d/a ACTUANT CORPORATION
ANNUAL MEETING OF SHAREHOLDERS--JANUARY 9, 2001
P R O X Y
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ROBERT C. ARZBAECHER and ANDREW G. LAMPEREUR, 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. d/b/a Actuant Corporation, a Wisconsin
corporation, to be held on Tuesday, January 9, 2001, or any adjournment
thereof, with like effect as if the undersigned were personally present and
voting, upon the matters indicated on the reverse side of this card.
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 ALL NAMES LISTED IN PROPOSAL 1, FOR PROPOSALS 2 THROUGH 5 AND
AGAINST PROPOSAL 6.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
(Continued on Reverse Side)
<PAGE>
(Continued from Reverse Side)
APPLIED POWER INC. d/b/a ACTUANT CORPORATION 2001 ANNUAL MEETING
1. Election 1-H. RICHARD 5-BRUCE S. [_] FOR [_] WITHHOLD
of CROWTHER CHELBERG all AUTHORITY to
Directors: 2-RICHARD A. 6-WILLIAM P. nominees vote for all
KASHNOW SOVEY listed to nominees
3-RICHARD G. 7-ROBERT C. the left listed to
SIM ARZBAECHER (except the left.
4-GUSTAV H.P. as
BOEL specified
below).
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the number(s) of the nominee(s) in the box provided to the right). _____________
Board Recommends a Vote For 7. In their discretion, upon such
2. Approval of the Actuant other business as may properly
Corporation 2001 Stock Plan come before the Meeting or any
[_] FOR [_] AGAINST [_] ABSTAIN adjournment thereof; all as set
out in the Notice and Proxy
3. Approval of the Actuant Statement relating to the
Corporation 2001 Outside Meeting, receipt of which is
Directors' Stock Option Plan hereby acknowledged.
Check appropriate box
Date _ No. of Shares _
[_] FOR [_] AGAINST [_] ABSTAIN Indicate changes below:
4. Approval of the Articles of Address Change? [_] Name
Amendment to change the name of Change? [_] [ ]
the Company SIGNATURE(S) IN BOX
[_] FOR [_] AGAINST [_] ABSTAIN PLEASE SIGN PERSONALLY AS NAME
APPEARS AT LEFT. When signing as
5. Approval of the Articles of attorney, executor, administrator,
Amendment to effect a five-for- personal representative, trustee
one reverse stock split or guardian, give full title as
[_] FOR [_] AGAINST [_] ABSTAIN 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.
Board Recommends a Vote Against
6. Approval of John Chevedden's
shareholder proposal concerning
shareholder rights plan
[_] FOR [_] AGAINST [_] ABSTAIN
