<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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LAWSON PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per Unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
[LOGO]
LAWSON PRODUCTS, INC.
1666 EAST TOUHY AVENUE
DES PLAINES, ILLINOIS 60018
- --------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
May 7, 1996
- ------------------------
TO THE STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders of Lawson
Products, Inc., which will be held at the offices of the Company, 1666 East
Touhy Avenue, Des Plaines, Illinois, on Tuesday, May 7, 1996, at 10:00 A.M.
(Local Time) for the following purposes:
(1) To elect three directors to serve three years; and
(2) To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 29, 1996, as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting. Accompanying this notice is a form of proxy, a Proxy
Statement and a copy of the Company's 1995 Annual Report.
EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE VOTED AT THE
MEETING. IF YOU EXECUTE A PROXY, YOU STILL MAY ATTEND THE MEETING AND VOTE IN
PERSON.
By Order of the Board of Directors
Robert J. Washlow
SECRETARY
Des Plaines, Illinois
April 8, 1996
<PAGE>
[LOGO]
LAWSON PRODUCTS, INC.
1666 EAST TOUHY AVENUE
DES PLAINES, ILLINOIS 60018
- --------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 7, 1996
- ------------------------
This Proxy Statement is being sent to stockholders on or about April 8, 1996, in
connection with
the solicitation of the accompanying proxy by the Board of Directors of the
Company. Only stockholders of record at the close of business on March 29, 1996,
are entitled to notice of and to vote at the meeting. The Company has retained
Morrow & Co., Inc., a firm specializing in the solicitation of proxies, to
assist in the solicitation at a fee estimated to be $3,500 plus expenses.
Officers of the Company may make additional solicitations in person or by
telephone. Expenses incurred in the solicitation of proxies will be borne by the
Company. If the accompanying form of proxy is executed and returned in time, the
shares represented thereby will be voted, but the proxy may be revoked at any
time prior to its exercise by execution of a later dated proxy or by voting in
person at the annual meeting.
As of March 29, 1996, the Company had outstanding 11,600,614 shares of Common
Stock and such shares are the only shares entitled to vote at the annual
meeting. Each holder of Common Stock is entitled to one vote per share on all
matters to come before the meeting. For purposes of the meeting, a quorum means
a majority of the outstanding shares. In determining whether a quorum exists,
all shares represented in person or by proxy will be counted.
ELECTION OF DIRECTORS
Stockholders are entitled to cumulative voting in the election of directors.
Under cumulative voting, each stockholder is entitled to that number of votes
equal to the number of directors to be elected, multiplied by the number of
shares he owns, and he may cast his votes for one nominee or distribute them in
any manner he chooses among any number of nominees. Unless otherwise indicated
on the proxy card, votes may, in the discretion of the proxies, be equally or
unequally allocated among the nominees named below. Directors will be elected by
a plurality of the votes cast at the meeting by the holders of shares
represented in person or by proxy. Thus, assuming a quorum is present, the three
persons receiving the greatest number of votes will be elected as directors and
votes that are withheld will have no effect.
It is intended that the named proxies will vote in favor of the election as
directors of the nominees listed below, except as otherwise indicated on the
proxy form. If any nominee should become
<PAGE>
unavailable for election as a director (which is not contemplated), the proxies
will have discretionary authority to vote for a substitute. In the absence of a
specific direction from the shareholders, proxies will be voted for the election
of all named director nominees.
The By-Laws of the Company provide that the Board of Directors shall consist of
such number of members, between five and nine, as the Board of Directors
determines from time to time. The size of the Board is currently set at eight
members. The Board is divided into three classes, with one class being elected
each year for a three-year term. At the meeting, three directors are to be
elected to serve until 1999.
The following information has been furnished by the respective nominees and
continuing directors:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME AGE PRINCIPAL OCCUPATION DIRECTOR
- --------------------------------------- --- ------------------------------------------------------- ----------
<S> <C> <C> <C>
NOMINEES TO BE ELECTED TO SERVE UNTIL 1999
Ronald B. Port, M.D.................... 55 Physician 1984
Robert G. Rettig....................... 66 Consultant 1989
Peter G. Smith......................... 57 President and Chief Operating Officer 1985
of the Company
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Bernard Kalish......................... 58 Chairman of the Board and Chief Executive Officer of 1983
the Company
Sidney L. Port......................... 85 Chairman of the Executive Committee 1953
of the Company
DIRECTORS WHOSE TERMS EXPIRE IN 1997
James T. Brophy........................ 68 Private Investor 1971
Hugh Allen............................. 60 Executive Vice President -- Sales - Marketing 1995
Jerome Shaffer......................... 68 Vice President and Treasurer of the Company 1989
</TABLE>
- ---------
- - The Executive Committee, the members of which are Sidney L. Port, Bernard
Kalish and Peter G. Smith, has all of the authority of the Board of Directors
between Board meetings, except to declare a dividend, authorize the issuance
of stock, amend the By-Laws or take action relating to certain corporate
changes.
- - The Audit Committee, the members of which are James T. Brophy, Robert G.
Rettig, and Ronald B. Port, M.D., reviews the scope and results of the audit
by the Company's independent auditors and reviews the Company's procedures
for monitoring internal accounting controls.
- - The Compensation Committee, the members of which are James T. Brophy, Robert
G. Rettig and Ronald B. Port, M.D., makes all determinations with respect to
the compensation of the Chairman of the Board and establishes general
compensation policies with respect to all other executive officers of the
Company.
- - The Nominating Committee, the members of which are James T. Brophy, Robert G.
Rettig and Ronald B. Port, M.D., reviews and recommends potential directors
to the Board of Directors.
- - Because of his substantial stockholdings, Sidney L. Port may be deemed to be
a control person of the Company. See "Securities Beneficially Owned by
Principal Stockholders and Management."
- - Ronald B. Port, M.D. is the son of Sidney L. Port.
- - Each nominee and continuing director has held the indicated position, or an
executive position with the same employer, for at least the past five years.
2
<PAGE>
In 1995, the Board of Directors held four meetings, the Compensation Committee
held two meetings, the Audit Committee held one meeting and the Nominating
Committee did not meet. During 1995, each director attended at least 75% of the
aggregate of the number of meetings of the Board and the respective committees
on which he served. The Executive Committee did not meet, as matters typically
dealt with by this Committee were considered by the full Board of Directors.
Directors who are not employees of the Company receive directors' fees of
$12,000 annually.
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
Set forth below, as of March 1, 1996 (unless otherwise indicated), are the
beneficial holdings of: each person known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock of the Company, each
director, the executive officers listed on the Summary Compensation Table below,
and all executive officers and directors as a group.
<TABLE>
<CAPTION>
SOLE SHARED PERCENT
VOTING OR VOTING OR OF CLASS AT
DISPOSITIVE DISPOSITIVE MARCH 1,
NAME POWER(1)(2) POWER 1995
- -------------------------------------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Sidney L. Port...................................................... 3,510,432 -0- 30.2%
1040 Lake Shore Drive
Chicago, Illinois
Bettie (Mrs. Sidney L.) Port........................................ 1,421,802 -0- 12.2%
1040 Lake Shore Drive
Chicago, Illinois
Hugh Allen.......................................................... 4,750 -0- *
James T. Brophy..................................................... 1,150 -0- *
Bernard Kalish...................................................... 11,600 -0- *
Ronald B. Port, M.D................................................. 15,915 -0- *
Robert G. Rettig.................................................... 500 -0- *
Jerome Shaffer...................................................... 18,333 2,530 *
Peter G. Smith...................................................... 8,300 10,511 *
All executive officers and directors as a group
(12 persons)...................................................... 3,583,793 13,041 30.9%
</TABLE>
- ---------
* Less than 1%.
(1) Does not include certain shares held by wives in the case of Mr. Brophy (725
shares), Mr. Kalish (11,030 shares), Dr. Port (15,915 shares), Mr. Shaffer
(750 shares), Mr. Smith (800 shares) and all executive officers and
directors as a group (29,220 shares).
(2) Stockholdings shown include shares issuable upon the exercise of stock
options exercisable within 60 days by Mr. Allen (2,500 shares), Mr. Kalish
(10,000 shares), Mr. Shaffer (5,000 shares), Mr. Peter Smith (7,500 shares)
and all executive officers and directors as a group (30,750 shares).
3
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The table below sets forth certain information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1995, 1994 and 1993, of those persons who were,
at December 31, 1995 (i) the chief executive officer, and (ii) the other four
most highly compensated executive officers of the Company (the "Named
Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION SECURITIES
--------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Bernard Kalish 1995 $325,950 $-0- -0- $ 15,000
CHAIRMAN OF THE BOARD AND 1994 309,141 -0- -0- 14,250
CHIEF EXECUTIVE OFFICER 1993 290,399 -0- -0- 20,636
- -----------------------------------------------------------------------------------------------------
Sidney L. Port 1995 288,187 -0- -0- 15,000
CHAIRMAN OF THE EXECUTIVE 1994 273,215 -0- -0- 14,250
COMMITTEE 1993 252,825 -0- -0- 20,636
- -----------------------------------------------------------------------------------------------------
Peter G. Smith 1995 274,119 -0- -0- 15,000
PRESIDENT AND CHIEF 1994 259,864 -0- -0- 14,250
OPERATING OFFICER 1993 238,838 -0- -0- 20,422
- -----------------------------------------------------------------------------------------------------
Hugh Allen 1995 202,891 -0- -0- 15,000
EXECUTIVE VICE-PRESIDENT -- 1994 192,321 -0- -0- 14,250
SALES -- MARKETING 1993 186,543 -0- -0- 12,992
- -----------------------------------------------------------------------------------------------------
Jerome Shaffer 1995 197,232 -0- -0- 15,000
VICE PRESIDENT AND 1994 186,956 -0- -0- 14,250
TREASURER 1993 177,312 -0- -0- 14,372
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has not issued stock appreciation rights or restricted stock
awards to the Named Officers and does not have any "long-term incentive
plans" as that term is defined in the applicable rules.
(2) These amounts represent the Company's contribution as accrued to the
Company's Profit Sharing Plan.
No options were granted by the Company to the Named Officers in the fiscal year
ended December 31, 1995. The following table summarizes option exercises during
such fiscal year by the Named Officers and the value of the options held by such
persons at the end of such fiscal year.
4
<PAGE>
AGGREGATE OF OPTIONS EXERCISED IN 1995
AND OPTIONS VALUES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER OPTIONS AT
31, 1995 DECEMBER 31, 1995(1)
--------------------- --------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- --------------------------------- --------------- -------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Bernard Kalish................... -- -- 10,000/0 $ 0/0
Peter G. Smith................... -- -- 7,500/0 0/0
Hugh Allen....................... -- -- 2,500/0 0/0
Jerome Shaffer................... -- -- 5,000/0 0/0
</TABLE>
- ---------
(1) Based on the closing price of the Company's Common Stock as reported on the
NASDAQ National Market System on December 31, 1995.
EMPLOYMENT CONTRACTS
Mr. Kalish is employed under a contract, expiring in 1996 pursuant to which he
will receive a minimum salary of $331,651 for 1996. The contract provides for
annual increases of not less than 5% and for salary continuation during
incapacity and for two years after death.
Under the terms of a salary continuation agreement, in the event of Mr. Port's
death while employed by the Company, the Company will continue his salary for
two years thereafter.
Mr. Peter Smith is employed under a contract pursuant to which he will receive a
minimum salary of $281,235 for 1996. Upon the expiration of two years prior
written notice, the contract is cancelable by either party. The contract
provides for salary increases from time to time and salary continuation during
incapacity and for one year after death.
Mr. Allen is employed under a contract pursuant to which he will receive a
minimum salary of $200,655 for 1996. Upon the expiration of two years prior
written notice, the contract is cancelable by either party. The contract
provides for salary increases from time to time and salary continuation during
incapacity and for one year after death.
Mr. Shaffer is employed under a contract pursuant to which he will receive a
minimum salary of $202,585 for 1996. Upon the expiration of two years prior
written notice, the contract is cancelable by either party. The contract
provides for salary increases from time to time and salary continuation during
incapacity and for one year after death.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Report of the Compensation Committee of the Board of Directors and the
following Stock Price Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
REPORT OF THE COMPENSATION COMMITTEE
AS TO COMPENSATION MATTERS
OVERVIEW
The objectives of the Compensation Committee in establishing executive
compensation are to provide compensation that will both attract and retain
superior talent and align the interests of the
5
<PAGE>
Company's executive officers with the financial success of the Company. The
criteria used to determine the compensation of the Chief Executive Officer are
also used in determining compensation for the other executive officers.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, short-term incentive compensation, long-term incentive compensation (in
the form of stock options) and various benefits, including medical and profit
sharing plans, generally available to employees of the Company.
BASE SALARY. Base salary for the executive officers was set pursuant to
employment agreements described elsewhere in this proxy statement. In setting
these compensation levels, the Board of Directors considered a variety of
factors, including competitive market levels, levels of responsibility as well
as the unique abilities and individual experience and performance of each
officer. In addition, certain of the employment agreements provide for
discretionary increases in base salary. Generally, these salary increases are
determined annually and correspond to increases in the consumer price index.
INCENTIVE COMPENSATION PROGRAM. In 1995 the Board of Directors adopted the
Lawson Products, Inc. Annual Incentive Compensation Program (the "Program").
Under the Program the Compensation Committee will establish annual corporate,
team and individual target performance levels for each of the participating
employees (which will include each of the Named Executive Officers). Each
participant will then be granted an annual incentive award based upon the market
median base salary for that participant's position and the degree to which the
participant's predetermined targets were accomplished during the year. The
Program became effective as of January 1, 1995. However, no amounts were awarded
under the Program to the executive officers in 1995.
STOCK OPTION PROGRAM. The Company's long-term incentive based compensation
program is achieved principally through the Lawson Products, Inc. Incentive
Stock Plan under which stock options (both nonqualified and incentive), stock
appreciation rights, stock purchase agreements and stock awards may be issued to
officers and key employees. The objectives of the Plan are to align executive
and stockholder long-term interests by creating a link between executive
compensation and stockholder return and to enable executives and other key
employees to develop and maintain a long-term stock ownership position in the
Company. Under the Company's plan, the Compensation Committee determines the
identity of recipients and the amount of benefits to be received by each
recipient. Generally, options are granted at an exercise price equal to the fair
market value of the Company's common stock on the date of grant and have ten
year terms.
OTHER BENEFITS. The Company maintains an Executive Deferral Plan and also
provides a variety of other benefits including a Profit Sharing Plan, which are
generally available to Company employees.
James T. Brophy
Robert G. Rettig
Ronald B. Port, M.D.
6
<PAGE>
STOCK PRICE PERFORMANCE CHART
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the Dow Jones Equity Market Index and the Dow Jones
Industrial Diversified Index for the five prior fiscal years.
LAWSON PRODUCTS INC.
COMPARATIVE TOTAL RETURN
1990-1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LAWSON PRODUCTS DOW JONES INDUSTRIAL DIVERSIFIED DOW JONES EQUITY MARKET INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 91.76 123.82 132.44
1992 89.66 144.08 143.83
1993 104.63 176.06 158.14
1994 95.63 161.48 159.36
1995 91.87 211.46 220.51
</TABLE>
Assumes that the value of the investment in Lawson's Common Stock and each index
was $100 on December 31, 1990 and that all dividends were reinvested.
INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as independent auditors
to audit the financial statements of the Company for 1996. Representatives of
Ernst & Young LLP are expected to be present at the annual meeting and will be
given the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be presented at the 1997 annual meeting must be
received at the Company's executive offices, 1666 East Touhy Avenue, Des
Plaines, Illinois 60018, by no later than December 9, 1996, for evaluation as to
inclusion in the Proxy Statement in connection with such meeting.
7
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters which may be presented for
action at the meeting. However, if any other matter properly comes before the
meeting, the persons named in the proxy form enclosed will vote in accordance
with their judgment upon such matter.
Stockholders are urged to execute and return promptly the enclosed form of proxy
in the envelope provided.
By Order of the Board of Directors
Robert J. Washlow
SECRETARY
April 8, 1996
8
<PAGE>
LAWSON PRODUCTS, INC. PROXY
- --------------------------------------------------------------------------------
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
ON MAY 7, 1996.
The undersigned hereby makes, constitutes and appoints Sidney L. Port and
Bernard Kalish, and each of them, proxies for the undersigned, with full power
of substitution, to represent and to vote, on behalf of the undersigned, all
shares of Common Stock of Lawson Products, Inc. that the undersigned would be
entitled to vote at the Annual Meeting of Stockholders of Lawson Products,
Inc., to be held at the offices of the Company, 1666 East Touhy Avenue, Des
Plaines, Illinois, on May 7, 1996, at 10:00 A.M. (Local Time), or any
adjournment thereof.
The withholding of authority to vote for any nominee will allow the proxies to
distribute, in their discretion, the withheld votes equally or unequally to or
among the remaining nominees. The nomination of any additional person or persons
by any stockholder will allow the proxies to distribute, in their discretion,
votes in respect of all proxies they hold equally or unequally to or among the
Board of Directors' nominees.
- --------------------------------------------------------------------------------
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
/X/ Please mark your 5302
vote(s) as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
FOR WITHHELD as to ALL Nominees
1. ELECTION OF / / / /
DIRECTORS
Nominees:
Ronald B. Port, M.D., Robert G. Rettig and Peter G. Smith
(Instruction: To withhold authority to vote for any individual nominee, mark the
"FOR" box and write the name of each such nominee in the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion on any other matter that may properly come before the
meeting or any adjournment thereof.
The undersigned hereby revokes any proxy heretofore given and confirms all that
said proxies, or any of them, or any substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
(Owner's Signature-Sign exactly as name appears hereon.)________________(SEAL) ,
________________________(SEAL) DATED:______________, 1996
NOTE: Please date and sign as name appears hereon. If shares are held jointly
or by two or more persons, each stockholder named should sign. Attorneys,
executors, administrators, trustees, guardians and others signing in a
representative capacity should indicate the capacity in which they sign.
If the signer is a corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign in partnership name by
authorized person.
