<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
LAWSON PRODUCTS, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
LAWSON PRODUCTS, INC.
1666 East Touhy Avenue
Des Plaines, Illinois 60018
- --------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
May 16, 2000
- ------------------------
TO THE STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders of Lawson
Products, Inc. the "Company" or "Lawson"), which will be held at the offices of
the Company, 1666 East Touhy Avenue, Des Plaines, Illinois, on Tuesday, May 16,
2000, at 10:00 A.M. (Local Time) for the following purposes:
(1) To elect three directors to serve three years;
(2) To consider and vote upon a stockholder proposal if presented by its
proponent; and
(3) 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 31, 2000, 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 1999 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. YOU MAY ALSO VOTE YOUR SHARES BY TELEPHONE OR VIA THE INTERNET AS SET
FORTH IN THE ENCLOSED PROXY. IF YOU EXECUTE A PROXY, YOU STILL MAY ATTEND THE
MEETING AND VOTE IN PERSON.
By Order of the Board of Directors
Joseph L. Pawlick
SECRETARY
Des Plaines, Illinois
April 12, 2000
<PAGE>
[LOGO]
LAWSON PRODUCTS, INC.
1666 East Touhy Avenue
Des Plaines, Illinois 60018
- --------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 16, 2000
- ------------------------
This Proxy Statement is being sent to stockholders on or about April 12, 2000,
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 31, 2000, 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 $4,000 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
or you vote your shares by telephone or via the Internet as set forth in the
enclosed proxy pursuant to Section 212(c) of the Delaware General Corporation
Law, 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 31, 2000, the Company had outstanding 10,016,922 shares of the
Company's Common Stock (the "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.
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 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
stockholders, proxies will be voted for the election of all named director
nominees and against the stockholder proposal concerning the elimination of a
classified Board of Directors. Proxies relating to "street name" shares that are
voted by brokers on some but not all of the matters will be treated as shares
present for purposes of determining the presence of a quorum on all matters, but
will have no effect on any proposal at this annual meeting for which a vote is
not indicated on the proxies.
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
<PAGE>
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.
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 nine
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 2003.
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 2003
James T. Brophy........................ 72 Private Investor 1971
Mitchell H. Saranow.................... 54 Chairman of the Saranow Group, a family 1998
investment firm, since August 1996, and
Chairman of the Board and co-chief
executive officer of Navigant Consulting,
Inc. since 2000. Prior thereto, Mr.
Saranow was Chairman of Fluid Management,
L.P., a machinery manufacturer, for more
than five years.
Jerome Shaffer......................... 72 Vice President and Treasurer of the Company 1989
DIRECTORS WHOSE TERMS EXPIRE IN 2002
Ronald B. Port, M.D.................... 59 Physician 1984
Robert G. Rettig....................... 70 Consultant 1989
Peter G. Smith......................... 61 Retired President and Chief Operating 1985
Officer of the Company
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Bernard Kalish......................... 62 Retired Chairman of the Board and Chief 1983
Executive Officer of the Company
Sidney L. Port......................... 89 Chairman of the Executive Committee of the 1953
Company
Robert J. Washlow...................... 55 Chairman of the Board and Chief Executive 1997
Officer. In 1998 and 1999, Mr. Washlow was
Executive Vice President--Corporate
Affairs and participated in the Office of
the President from January 1, 1999 until
he became the Chairman in August of 1999.
Mr. Washlow was also Corporate Secretary
from 1985 until May of 1999.
</TABLE>
- ------------------------
- - The Executive Committee, the members of which are Sidney L. Port and Robert
J. Washlow, 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.
2
<PAGE>
- - The Audit Committee, the members of which are James T. Brophy, Robert G.
Rettig, and Mitchell H. Saranow, 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, Ronald B. Port, M.D. and Mitchell H. Saranow 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, Sidney L.
Port, Robert G. Rettig and Ronald B. Port, M.D., reviews and recommends
potential directors to the Board of Directors. The Nominating Committee will
consider director nominees recommended by stockholders if such
recommendations are submitted in writing to the Secretary of the Company.
- - The Incentive Stock Committee, the members of which are Sidney L. Port, James
T. Brophy and Ronald B. Port, M.D., administers the Company's Incentive Stock
Plan.
- - 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.
- - Robert J. Washlow is the son-in-law of Sidney L. Port. Mr. Washlow was a
partner at the law firm of Vedder, Price, Kaufman & Kammholz until
December 31, 1998, which firm provides legal services to the Company.
- - 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,
unless otherwise indicated above. Mr. Washlow was a partner with the law firm
of Vedder, Price, Kaufman & Kammholz for more than five years prior to 1998,
the date Mr. Washlow became Executive Vice President--Corporate Affairs.
Mr. Washlow was Secretary of the Company for more than five years prior to
1999. On January 1, 1999, Mr. Washlow became a member of the Office of the
President. In August of 1999, Mr. Washlow was appointed Chairman of the Board
and Chief Executive Officer, and resigned from the Office of the President.
- - Mr. Saranow is a director and member of the Compensation Committee of
Navigant Consulting, Inc.
- - Mr. Rettig is a director of The Tech Group Inc. and Bermo Inc.
In 1999, the Board of Directors held four meetings, the Compensation Committee
held two meetings, the Audit Committee held one meeting and the Nominating
Committee held one meeting. During 1999, each director attended at least 75% of
the meetings of the Board and of 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 or retired officers of the Company receive directors' fees of $12,000
annually. In 1999, each outside director was paid an additional $10,000, except
for Mr. Saranow.
3
<PAGE>
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
Set forth below, as of March 1, 2000 (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 OF
VOTING OR VOTING OR CLASS AT
DISPOSITIVE DISPOSITIVE MARCH 1,
NAME POWER(1)(2) POWER 2000
- ---- ----------- ----------- ----------
<S> <C> <C> <C>
Sidney L. Port (3) ......................................... 3,549,782 -0- 35.2%
1666 East Touhy Avenue
Des Plaines, Illinois 60018
Bettie B. Port Trust (4) ................................... 1,173,802 -0- 11.6%
1666 East Touhy Avenue
Des Plaines, Illinois 60018
Dimensional Fund Advisors .................................. 690,950 -0- 6.9%
1299 Ocean Floor
11th Floor
Santa Monica, CA 90401
Jeffrey B. Belford.......................................... 5,350
James T. Brophy............................................. 1,150 -0- *
Roger F. Cannon............................................. 6,459 *
Bernard Kalish.............................................. 21,250 -0- *
Ronald B. Port, M.D......................................... 16,615 -0- *
Robert G. Rettig............................................ 500 -0- *
Mitchell H. Saranow (5)..................................... 8,000 -0- *
Jerome Shaffer.............................................. 24,533 2,530 *
Peter G. Smith.............................................. 1,700 6,399 *
Robert J. Washlow........................................... 28,577 0 *
All executive officers and directors as a group (13
persons).................................................. 4,851,261 8,929 48.2%
</TABLE>
- ------------------------
* Less than 1%.
(1) Does not include certain shares held by wives and minor children in the case
of Mr. Brophy (725 shares), Mr. Kalish (10,523 shares), Dr. Port (16,615
shares), Mr. Shaffer (2,450 shares), Mr. Smith (1,700 shares) and
Mr. Washlow (24,283) and all executive officers and directors as a group
(56,296 shares).
(2) Stockholdings shown include shares issuable upon the exercise of stock
options exercisable within 60 days by Mr. Belford (5,250 shares),
Mr. Cannon (4,375 shares), Mr. Kalish (21,250 shares), Mr. Shaffer (9,500
shares) and all executive officers and directors as a group (47,875 shares).
(3) Includes 1,200,000 shares held by a family limited partnership.
(4) Sidney L. Port has the sole power to vote the stock of the Bettie B. Port
Trust.
(5) All 8,000 shares are owned by Saranow Investments, L.L.C., which is owned by
Mr. Saranow and his family.
4
<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, 1999, 1998 and 1997, of those persons who were,
at December 31, 1999 (i) the chief executive officer, (ii) the retired chief
executive officer and (iii) the other four most highly compensated executive
officers of the Company (the "Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) ($)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Robert Washlow 1999 360,715 35,000 5,000 15,600
CHAIRMAN OF THE BOARD AND CHIEF 1998 88,462 -- -- --
EXECUTIVE OFFICER 1997 -- -- -- --
- -------------------------------------------------------------------------------------------------------
Bernard Kalish (4) 1999 432,386 0 0 0
RETIRED CHAIRMAN OF THE BOARD AND 1998 377,266 0 0 15,200
CHIEF EXECUTIVE OFFICER 1997 362,068 48,180 0 15,200
- -------------------------------------------------------------------------------------------------------
Sidney L. Port 1999 343,080 0 0 15,600
CHAIRMAN OF THE EXECUTIVE COMMITTEE 1998 329,156 0 0 15,200
1997 316,101 0 0 15,200
- -------------------------------------------------------------------------------------------------------
Jeffrey B. Belford 1999 246,253 15,000 0 15,600
OFFICE OF THE PRESIDENT AND CHIEF 1998 189,236 0 0 15,200
OPERATING OFFICER 1997 181,400 39,044 0 15,152
- -------------------------------------------------------------------------------------------------------
Roger F. Cannon 1999 241,311 15,000 0 15,600
OFFICE OF THE PRESIDENT AND CHIEF 1998 214,525 0 0 15,200
SALES OFFICER 1997 203,373 17,317 0 15,200
- -------------------------------------------------------------------------------------------------------
Jerome Shaffer 1999 234,293 0 0 15,600
VICE PRESIDENT AND TREASURER 1998 219,362 0 0 15,200
1997 210,278 5,938 0 15,200
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes a portion of the bonus earned in 1999 which was not determinable as
of the date hereof.
(2) 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. The Company issued
options at fair market value to the named officers as shown.
(3) These amounts represent the Company's contribution as accrued to the
Company's Profit Sharing Plan.
(4) Mr. Kalish retired as Chairman of the Board and Chief Executive Officer in
August 1999.
5
<PAGE>
The following table presents the number of stock options granted to the Named
Executive Officers during fiscal 1999.
OPTIONS GRANTED DURING 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- ----------------------------------------------------------------------------------------- ---------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED
GRANTED TO EMPLOYEES EXERCISE OR BASE
NAME (#) IN FISCAL YEAR PRICE ($/SH) EXPIRATION DATE 5% 10%
- ---- ---------- ---------------- ---------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Washlow.... 5,000 100% 22 7/16 8/10/09 $223,484 $355,861
</TABLE>
The following table summarizes option exercises during the fiscal year by the
Named Officers and the value of the options held by such persons at the end of
such fiscal year.
AGGREGATE OF OPTIONS EXERCISED IN 1999
AND OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999(1)
--------------------- -----------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Robert J. Washlow......... -- -- 0/5,000 $ 0/$3,425
Bernard Kalish............ -- -- 21,250/3,750 7,031/2,344
Sidney L. Port............ -- -- -- --
Jeffrey B. Belford........ -- -- 5,250/1,250 2,344/781
Roger Cannon.............. -- -- 4,375/625 1,172/391
Jerome Shaffer............ -- -- 9,500/1,500 2,812/938
</TABLE>
- ------------------------
(1) Based on the closing price of the Company's Common Stock as reported on the
NASDAQ National Market System on December 31, 1999.
EMPLOYMENT CONTRACTS
Prior to his retirement in August 1999, Mr. Kalish was employed under a contract
pursuant to which he received $222,117 during 1999. In 1999, the Company entered
into a salary continuation agreement with Mr. Kalish for consulting services
pursuant to which Mr. Kalish received $210,269 in 1999 and will receive $497,000
in 2000, and will continue to participate in certain of the Company's employee
benefits plans.
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. Belford is employed under a contract pursuant to which he will receive a
minimum salary of $265,000 for 2000. 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. Cannon is employed under a contract pursuant to which he will receive a
minimum salary of $260,000 for 2000. 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 expiring in 2000 pursuant to which he
will receive a minimum salary of $230,225 for 2000. The contract is
automatically renewable for one year terms
6
<PAGE>
unless a one year notice is given. 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 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 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.
Federal tax law imposes a $1 million limit on the tax deduction for certain
executive compensation payments. Because the compensation paid to any executive
officer is significantly below the $1 million threshold, the Compensation
Committee has not yet had to address the issues relative thereto.
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 other than the chief
executive officer, was set pursuant to employment agreements described elsewhere
in this proxy statement. The chief executive officer's base salary and bonus, if
any, are established annually by the Compensation Committee. In setting these
compensation levels, the Compensation Committee 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 by the Chairman of the Board with the consent of the Compensation
Committee based on performance and general market factors.
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 establishes annual corporate,
company and individual target performance levels for each of the participating
employees (which will include each of the Named Officers except Robert J.
Washlow). Each participant will then be granted an annual incentive award based
upon the base salary at the beginning of the year for that participant and the
degree to which the participant's predetermined targets were achieved during the
year.
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 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
7
<PAGE>
stock ownership position in the Company. Under the Company's plan, the Incentive
Stock 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.
Mitchell H. Saranow
8
<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 S&P Small Capitalization Index and a peer group
(the "Peer Group") of the Company for the five prior fiscal years. The Peer
Group consists of Barnes Group Inc., Strategic Distribution, Inc.,
SunSource Inc., Premier Farnell PLC, Vallen Corporation and NCH Corporation.
EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LAWSON PRODUCTS, INC. S&P SMALL CAP PEERS
---------------------- --------------- --------
<S> <C> <C> <C>
12/31/94.................................................... $100.00 $100.00 $100.00
12/31/95.................................................... $ 96.07 $129.96 $107.36
12/31/96.................................................... $ 87.81 $157.67 $122.88
12/31/97.................................................... $121.85 $198.01 $ 96.16
12/31/98.................................................... $ 96.43 $195.42 $ 63.19
12/31/99.................................................... $ 98.79 $219.66 $ 91.30
</TABLE>
Assumes that the value of the investment in Lawson's Common Stock and each index
was $100 on December 31, 1994 and that all dividends were reinvested.
9
<PAGE>
STOCKHOLDER PROPOSAL REGARDING THE ELIMINATION OF A CLASSIFIED BOARD OF
DIRECTORS
The Company has been advised that William Steiner, 4 Radcliffe Drive, Great
Neck, New York 11024, who held 1,950 shares of Lawson Common Stock as of
September 30, 1999, intends to submit the following proposal at the Annual
Meeting:
"ELIMINATE CLASSIFIED BOARD OF DIRECTORS RESOLUTION
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to declassify
the Board of Directors so that all directors are elected annually, such
declassification to be effected in a manner that does not affect the unexpired
terms of directors previously elected."
SUPPORTING STATEMENT
The election of directors is the primary avenue for stockholders to influence
corporate governance policies and to hold management accountable for it's (sic)
implementation of those policies. I believe that the classification of the Board
of Directors, which results in only a portion of the Board being elected
annually, is not in the best interests of the Company and it's (sic)
stockholders.
I believe that the Company's classified Board of Directors maintains the
incumbency of the current Board and therefore of current management, which in
turn limits management's accountability to stockholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity to
register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders.
I believe that concerns expressed by companies with classified boards that the
annual election of all directors could leave companies without experienced
directors in the event that all incumbents are voted out by stockholders, are
unfounded. In my view, in the unlikely event that stockholders vote to replace
all directors, this decision would express stockholder dissatisfaction with the
incumbent directors and reflect the need for change.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION"
THE BOARD OF DIRECTORS OF THE COMPANY OPPOSES AND UNANIMOUSLY RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL FOR THE FOLLOWING REASONS:
In 1982, the Board of Directors recommended that the Company elect directors to
serve staggered terms so that no more than one-third of the directors are
elected each year. The stockholders adopted that recommendation at the 1983
annual meeting of stockholders by an overwhelming majority vote and Article
Ninth of the Certificate of Incorporation and Section 3.2 of the By-Laws of the
Company were adopted.
Under Delaware law, the action recommended in the proposal can be taken only if
the Board recommends an amendment to the Company's Certificate of Incorporation
and directs that the amendment be submitted to a vote of stockholders. In
accordance with the Company's By-Laws, an affirmative vote of 75% of the
outstanding shares of Common Stock entitled to vote would be required at a
future meeting of the Company's stockholders in order to amend the provision for
the staggered election of directors. The Board of Directors has not recommended
and does not recommend such an amendment and deems the proposal to be
detrimental to the interests of the Company's stockholders.
10
<PAGE>
The classification of directors has the effect of making it more difficult to
change the composition of the Board at other than a moderate pace and requires
that at least two-thirds of the directors serving will have had prior experience
on the Board. Preventing precipitous changes in control strengthens the Board's
ability, in the exercise of its fiduciary duties, to maximize the value of the
stockholders' investment in the Company and serves to provide informed oversight
of corporate policies, orderly development of business strategies and
operations, and long-term strategic planning. It also serves as an obstacle to
sudden and disruptive attempts to obtain control of the Company.
A person seeking to acquire immediate control of the Company will be required to
initiate such action through arm's-length negotiations with members of the Board
who are in the best position to negotiate a transaction to maximize stockholder
value and yield the highest price for the Company's stockholders. By virtue of
staggered terms, at least two meetings of stockholders would be required to
change control of the Board unless the existing Board consented to such change
of control. The consent of the Board to a change of control, in turn, could be a
condition to obtaining a higher price for the stockholders. Thus, having a
staggered Board enhances the ability to negotiate favorable terms for all
stockholders and does not necessarily discourage takeover offers.
The staggered Board notwithstanding, the stockholders retain their ability to
replace incumbent directors or to propose alternative nominees for the class of
directors to be elected at an annual meeting and thereby stockholders can
properly and effectively express their views and influence Company policies.
Those directors who remain in office will be influenced by any such stockholder
action. The Board does not believe that directors elected for staggered terms
are any less accountable to stockholders than if they would be elected annually.
The same standards of performance apply regardless of the term of service.
The Board continues to believe as it did in 1982, that maintaining staggered
terms for directors is in the best interests of the Company and its
stockholders. Maintaining staggered terms represents a reasonable and
appropriate means of protecting against potentially abusive and coercive tactics
associated with unsolicited efforts to obtain control of the Company and to
provide informed oversight in the development of policies, business strategies
and operations.
The Board notes that according to information supplied to the Company by
Mr. Steiner, he held 1,950 shares of Common Stock as of September 30, 1999, with
a market value of $42,169. As of March 1, 2000, the Board, in the aggregate,
held approximately 47.75% of the outstanding Lawson Common Stock, worth
approximately $103.1 million.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of the holders of a majority of the shares represented and
entitled to vote at the annual meeting is required for approval of the
stockholder proposal. Abstentions will count as a vote against the proposal, but
broker non-votes will have no effect.
INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as independent auditors
to audit the financial statements of the Company for 2000. 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 annual meeting to be held in 2001
must be received at the Company's executive offices, 1666 East Touhy Avenue, Des
Plaines, Illinois 60018, by no
11
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later than December 13, 2000, for evaluation as to inclusion in the Proxy
Statement in connection with such meeting.
OTHER MATTERS
The Board of Directors knows of no other proposals which may be presented for
action at the meeting. However, in accordance with the By-laws of the Company,
if any other proposal properly comes before the meeting, the persons named in
the proxy form enclosed will vote in accordance with their judgment upon such
matter. In order for a proposal to properly come before a meeting, the proposal
must be received by the Company not less than 90 days nor more than 110 days
prior to the first anniversary of the prior year's meeting unless the date of
the annual meeting is advanced by more than 30 days or delayed by more than
60 days from such anniversary date, in which case notice of such proposal must
be received by the Company no later than 10 days following the date on which
public announcement of the date of such meeting is first made.
Stockholders are urged to execute and return promptly the enclosed form of proxy
in the envelope provided or to vote your shares by telephone or via the
Internet.
By Order of the Board of Directors
Joseph L. Pawlick
SECRETARY
12
<PAGE>
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PROXY PROXY
Lawson Products, Inc.
This Proxy Is Solicited on Behalf of the Board of Directors
for the Annual Meeting on May 16, 2000.
The undersigned hereby makes, constitutes and appoints Sidney L. Port and
Robert J. Washlow and each of them, proxies for the undersigned, with full
power of substitution, to vote on behalf of the undersigned 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 16, 2000,
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)
PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING YOUR PROXY
BY TELEPHONE OR INTERNET.
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FOLD AND DETACH HERE
<PAGE>
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- ---------
PLEASE MARK YOUR
X VOTES AS IN THIS
SAMPLE.
- ---------
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 AND "AGAINST" THE
STOCKHOLDER PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND AGAINST PROPOSAL 2.
FOR WITHHELD
1. Election of Directors:
Nominees:
James T. Brophy,
Mitchell H. Saranow,
and Jerome Shaffer.
FOR, except vote withheld from the following nominee(s):
- ----------------------------------------------------------
FOR AGAINST ABSTAIN
2. Stockholder proposal
concerning elimination
of a classified
Board of Directors.
3. In their discretion, the Proxy is authorized to vote 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.
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.
Signature(s) Date ,2000
----------------------------------------- ---------------
-----------------------------------------
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Dear Stockholder:
We encourage you to vote your shares electronically this year either by
telephone or via the Internet. This will eliminate the need to return your
proxy card. You will need your proxy card and Social Security number (where
applicable) when voting your shares electronically. The Voter Control Number
that appears in the box above, just below the perforation, must be used in
order to vote by telephone or via the Internet.
The EquiServe Vote by Telephone and Vote by Internet systems can be accessed
24-hours a day, seven days a week up until the day prior to the meeting.
To vote by telephone:
Using a touch-tone phone call Toll-free:
1-877-PRX-VOTE (1-877-779-8683)
To vote by internet:
Log on to the Internet and go to the website:
http://www.eproxyvote.com/laws
NOTE: IF YOU VOTE OVER THE INTERNET, YOU MAY INCUR COSTS SUCH AS
TELECOMMUNICATION AND INTERNET ACCESS CHARGES FOR WHICH YOU WILL BE
RESPONSIBLE
THANK YOU FOR VOTING YOUR SHARES
YOUR VOTE IS IMPORTANT!
DO NOT RETURN THIS PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET
