[logo] National-Standard
Corporate Headquarters
MICHAEL B. SAVITSKE
President and
Chief Executive
Officer
December 16, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders which will be held on Thursday, January 23, 1997, 9:30
AM (local time) at the Holiday Inn - Downtown, located at 213 West
Washington Street, South Bend, Indiana.
The matters expected to be acted upon at the meeting are described
in the attached Proxy Statement. In addition, we will report on the
1997 outlook for the Company, and shareholders will have the
opportunity to ask questions and meet our officers, directors and
auditors present at the meeting.
We are pleased by our shareholders' continued interest in National-
Standard and appreciate that in the past, so many of you have voted
your shares in person or by proxy; we hope that you will continue to
do so and urge you to return your proxy card promptly. In this way,
you can be sure your shares will be voted at the meeting, and you
will help us avoid the expense of a follow-up mailing.
SINCERELY,
/s/ M.B. Savitske
NATIONAL-STANDARD COMPANY
1618 TERMINAL ROAD
NILES, MICHIGAN 49120
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 23, 1997
_______________
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
NATIONAL-STANDARD COMPANY will be held at the Holiday Inn - Downtown, located at
213 West Washington Street, South Bend, Indiana, on Thursday, the 23rd day of
January, 1997 at 9:30 AM (EST) for the following purposes:
(1) To elect two directors to serve three years;
(2) To consider and act upon the proposed Stock Option Plan for
Nonemployee Directors;
(3) To consider any other matters which may properly come before the
meeting or any adjournment thereof.
Accompanying this notice of annual meeting is a form of proxy, a proxy
statement, and a copy of the Company's Annual Report for the fiscal year ending
September 30, 1996, all to be mailed on or about December 16, 1996.
The stock transfer books of the Company will not be closed, but only
shareholders of record as of the close of business on December 2, 1996 will be
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
T. C. Wright
Secretary
Niles, Michigan
December 16, 1996
IMPORTANT
WHETHER YOU OWN FEW OR MANY SHARES, IT IS IMPORTANT THAT YOUR STOCK BE
REPRESENTED AT THE MEETING. THEREFORE, PLEASE FILL IN, DATE, SIGN THE ENCLOSED
PROXY, AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO STAMP NECESSARY IF
MAILED IN THE UNITED STATES.
NATIONAL-STANDARD COMPANY
NILES, MICHIGAN
________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, JANUARY 23, 1997
This Proxy Statement is furnished by the Board of Directors (the "Board") of
National-Standard Company (the "Company"), in connection with its solicitation
of proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held on Thursday, January 23, 1997 and at any adjournment thereof. Mailing
of the proxy material will begin on or about December 16, 1996. Shareholders of
record as of December 2, 1996 of the Company's Common Stock will be entitled to
one vote for each share held on all matters to come before the meeting.
On December 2, 1996, there were outstanding 5,308,635 shares of Common
Stock; no other securities are entitled to vote at the meeting.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings on December 2,
1996 of each person known by the Company to own beneficially more than 5% of its
common stock, executive officers named in the Summary Compensation Table and all
executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
BENEFICIAL OWNER COMMON STOCK
OR MANAGEMENT OWNED BENEFICIALLY % OF CLASS (6)
<S> <C> <C>
National-Standard Company
Master Investment Trust 1,475,079 (1) 27.8
c/o First Trust Illinois
410 North Michigan Avenue
Chicago, Illinois 60611
National-Standard Company 641,010 (2) 12.1
Employees' Stock Savings Trust
c/o Comerica Bank
Renaissance Center
Detroit, Michigan 48243
Dimensional Fund
Advisors Inc. 291,000 (3) 5.5
1299 Ocean Avenue, Suite 650
Santa Monica, California 90401
The Killen Group, Inc. 591,910 (4) 11.1
1189 Lancaster Avenue
Berwyn, Pennsylvania 19312
Michael B. Savitske 140,329 (5) 2.6
David M. Baldwin 10,291 (5) -
William D. Grafer 60,962 (5) 1.1
David L. Lawrence 33,462 (5) -
Executive Officers and
Directors as a Group 285,163 (5) 5.4
(1) First Trust Illinois has informed the Company that it held, as of
December 2, 1996, such shares of the Company's Common Stock as Trustee
under the Company's Master Investment Trust. Under the terms of the Trust,
the Company's Investment Committee directs the Trustee with respect to
disposition and voting of such shares.
(2) Comerica Bank has advised the Company that it held, as of December 2, 1996,
such shares as Trustee under the Company's Employees' Stock Savings Plan.
Under terms of the Trust, the shares held therein are voted by the Trustee
in the same proportion as the voting instructions received from the Plan's
participants.
(3) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 291,000 shares of the
Company's Common Stock as of September 30, 1996, all of which shares are
held in portfolios of DFA Investment Dimensions Group, Inc. (the "Fund"), a
registered open-end investment company, or in series of the DFA Investment
Trust Company (the "Trust"), a Delaware business trust, or the DFA Group
Trust and the DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares. Dimensional has sole dispositive power for all 291,000 shares and
sole voting power for 162,400 of those shares. Persons who are officers of
Dimensional also serve as officers of the Fund and the Trust, each an open-
end management investment company registered under the Investment Company
Act of 1940. In their capacity as officers of the Fund and the Trust,
these persons vote 109,500 additional shares which are owned by the Fund
and 19,100 shares which are owned by the Trust.
(4) The Killen Group, Inc. ("Killen"), has accumulated 591,910 shares of the
Company's Common Stock as of December 2, 1996. Killen has accumulated
these shares for investment purposes and does not exert voting control over
the majority of these shares. Killen does have the power to increase or
decrease this investment position.
(5) Shares shown as beneficially owned include shares held in trust under the
Employees' Stock Savings Plan and shares which may be acquired within 60
days of December 2, 1996 through the exercise of stock options under the
National-Standard Stock Option Plan.
(6) Less than 1% unless otherwise indicated.
</TABLE>
ELECTION OF DIRECTORS (PROPOSAL 1)
The Board of Directors is composed of seven members divided into two classes
of two members each and one class of three members, with one class being elected
in each year to serve a three-year term, all as provided in the Certificate of
Incorporation and the Bylaws. Unless otherwise specified, proxies will be voted
to elect Mr. Michael B. Savitske and Mr. Charles E. Schroeder for three-year
terms.
If any nominee should not be able to serve (which management has no reason
to anticipate), the proxies will be voted for such person as shall be designated
as a replacement by the Board of Directors. Information relative to the
nominees for election and directors continuing in office is set forth in the
following table. No nominee or director owns more than one percent of the
Company's Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
YEAR FIRST OWNED BENE-
PRINCIPAL OCCUPATION AND BECAME FICIALLY AS OF
NAME AGE OTHER INFORMATION A DIRECTOR DEC. 2, 1996 (1)
NOMINEES TO SERVE UNTIL THE ANNUAL MEETING IN 2000:
<S> <C> <C> <C> <C>
Michael B. Savitske 55 President and Chief Executive Officer of the Company; 1989 10,329 (2)
Director, Protection Mutual Insurance Co.
Charles E. Schroeder61 President, Miami Corporation (a private investment 1973 10,269 (3)
company).
DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING IN 1999:
Harold G. Bernthal 68 Chairman, CroBern, Inc. (health care management and 1986 10,200
investment company); Director, Butler Manufacturing
Company, Nalco Chemical Company.
John E. Guth, Jr. 68 Chairman of the Board of the Company since July 1989; 1972 6,700
previously President and Chief Executive Officer, SRA
Division of MacMillan/McGraw Hill School Publishing Co.
(educational publications), 1989 to 1992.
Ernest J. Nagy 66 Chairman, Tri Star Distributing, Inc. (distributor of 1986 6,000 (4)
electronic components for the recreational vehicle
industry); previously Chairman, Sudler, Nagy, Inc.
(real estate management and investments) 1992 to
1995; previously President and Chairman, Riblet
Products Corporation (recreational vehicle
and manufactured housing components), 1975 to 1990.
DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING IN 1998:
David F. Craigmile 68 Executive Committee member, The Lincoln Foundation for
Business Excellence; Director, Elkay Manufacturing 1989 1,150
Company; formerly President, Elkay Manufacturing
Company (plumbing and drinking water products),
1985 to 1994.
Donald F. Walter 64 Financial Consultant, Walter & Keenan Financial 1983 800 (5)
Consulting Co.; Director, MetroBanCorp.,
CerProbe Corp.
(1) Includes in some cases shares held in fiduciary capacity or by wives,
children or relatives. The inclusion of these shares is not an admission
of beneficial ownership for any other purpose. Each nominee or director
has sole voting and investment power over the shares shown as beneficially
owned except as noted in footnotes (2) and (5) below and except for shares
held in the Employees' Stock Savings Plan, as to which they have sole
voting but no investment power.
(2) Shares shown as beneficially owned include 9,929 shares held in trust under
the Employees' Stock Savings Plan but do not include 130,000 shares which
may be acquired within 60 days of December 2, 1996 through the exercise of
stock options under the National-Standard Stock Option Plan.
(3) Includes 8,050 shares voted by Mr. Schroeder as trustee of certain family
trusts. The inclusion of these shares is not an admission of beneficial
ownership for any other purpose.
(4) Includes 1,000 shares owned through JNS Realty partnership.
(5) Not included are 5,000 shares owned by the Edward and Irma Hunter
Foundation, on which board Mr. Walter serves as trustee and shares voting
and investment power with other trustees. Mr. Walter disclaims beneficial
ownership of such shares.
</TABLE>
The affirmative vote of the holders of a plurality of the shares of Common Stock
represented at the Annual Meeting is required for the election of directors.
The Board of Directors recommends a vote FOR election of the two nominees to
serve until the Annual Meeting in 2000 (Proposal 1).
ORGANIZATION AND REMUNERATION OF THE BOARD
The Board of Directors has a standing Audit Committee, a
Compensation/Nominating Committee, and an Executive Committee.
The Audit Committee, composed of nonemployee directors, oversees the audit
of the corporate accounts through independent public accountants whom it
recommends for selection by the Board of Directors. The Committee reviews the
scope of the audit with such accountants and their related fees. The Committee
held three meetings during the 1996 fiscal year. The members of the Committee
are Mr. Bernthal, Chairman, Mr. Nagy, and Mr. Schroeder.
The Compensation/Nominating Committee, composed of nonemployee directors,
reviews and recommends executive and director compensation, including bonus
payments to elected corporate officers. It also has as its stated purpose to -
develop, establish and recommend to the Board criteria for the nomination and
tenure of the directors and to submit for approval of the Board nominees for
election as directors at each annual meeting of shareholders and for any vacancy
that may occur on the Board from time to time. The Committee may consider
nominees recommended by shareholders or anyone else, or, in its discretion, may
limit its consideration to nominees selected by the Committee. Any shareholder
wishing to recommend a nominee may forward such recommendation to the
Compensation/Nominating Committee, c/o the Secretary of the Company. The
Committee members communicate with each other from time to time in person and by
telephone and act on matters by either a formal meeting or by unanimous written
consent. The Committee held four meetings during the 1996 fiscal year. The
members of the Committee are Mr. Walter, Chairman, Mr. Craigmile, Mr. Guth, and
Mr. Schroeder.
The Executive Committee has, during the interval between regular meetings of
the Board of Directors, the authority to exercise all the powers of the Board
which may be legally delegated to it in the management and direction of the
business and affairs of the Company. The Committee held five meetings during
the 1996 fiscal year. The members of the Committee are Mr. Craigmile, Chairman,
Mr. Guth, and Mr. Savitske.
The Company's Board of Directors held six meetings during the 1996 fiscal
year. All directors were present for 75% or more of the total number of
meetings of the Board and its Committees.
Under the Company's Directors' Retirement Income Plan, a nonemployee
director is entitled to receive an annual retirement benefit, paid quarterly,
equal to the annual retainer payable to such director during his last full year
on the Board. Such director's normal retirement date is the later of age 70 or
the end of any term of service on the Board in which he attains age 70. No
director whose appointed or elected service on the Board is less than five years
will be entitled to a retirement benefit. Such amount is payable over a period
as measured by the shortest of:
(a) life, or
(b) years of service on the Board as computed in full quarters, or
(c) 10 years.
The above benefits are payable only to the retired director. In the event of
death while on the Board, a death benefit equal to a full year's retainer fee
will be paid to such director's designated beneficiary.
Directors who are employees of the Company receive no additional
compensation for service on the Board. Directors who are not employees of the
Company each receive an annual retainer of $12,000 (the Chairman's retainer is
$36,000), plus a fee of $800 for each Board or Committee meeting attended and
$250 for each subsequent meeting attended in the same day. All directors are
reimbursed out-of-pocket expenses in attending Board or Committee meetings;
directors, as such, do not participate in any Executive Compensation Plans.
At the November 20, 1996 meeting, the Board of Directors voted to
restructure directors' compensation to more closely align it with the
performance of the Company while continuing to provide the opportunity to
attract and retain qualified directors. The restructuring included:
o increasing the annual retainer for nonemployee directors to $16,000
effective January 1, 1997;
o terminating the Directors' Retirement Income Plan effective November 20,
1996, with directors retaining any vested benefit accrued through that
date;
o proposing to replace the Directors' Retirement Income Plan with a stock
option plan as discussed in the following Proposal 2.
APPROVAL OF STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS (PROPOSAL 2)
BACKGROUND
On November 20, 1996, the Board of Directors adopted the Stock Option Plan
for Nonemployee Directors (the "Directors' Plan") which shareholders are asked
to approve at the Annual Meeting of Shareholders. The purpose of the Directors'
Plan is to attract and retain outstanding individuals to serve as members of the
Board of Directors of the Company by providing such persons opportunities to
acquire shares of the common stock of the Company on advantageous terms, thereby
giving them a stake in the growth and profitability of the Company in order to
enable them to represent the viewpoint of other shareholders of the Company more
effectively. Reference is made to Exhibit A to this Proxy Statement for the
complete text of the provisions of the Directors' Plan, which are summarized
below.
The affirmative vote of holders of a majority of the shares of Common Stock
represented at the Annual Meeting is required for approval of the Directors'
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE NATIONAL-
STANDARD STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS (PROPOSAL 2).
DESCRIPTION OF THE DIRECTORS' PLAN
The following summary of the Directors' Plan does not purport to be complete
and is qualified in its entirety by reference to the complete provision thereof
attached hereto as Exhibit A.
GRANT OF OPTIONS
Each person who remains or becomes a nonemployee director of the Company on
the date of the 1997 Annual Meeting of Shareholders will be granted an option to
purchase 2,000 shares of Common Stock on the first business day after the date
of the 1997 Annual Meeting of Shareholders. Each person who becomes or remains
a nonemployee director after the date of the 1997 Annual Meeting of Shareholders
shall be granted an option to purchase 2,000 shares of Common Stock on the first
business day after the date of the next succeeding Annual Meeting of
Shareholders.
Each nonemployee director who is granted an initial option to purchase 2,000
shares of Common Stock under this Directors' Plan shall be granted additional
options to purchase 2,000 shares of Common Stock on the first business day after
the date of each succeeding Annual Meeting of Shareholders at which the
nonemployee director remains a member of the Board.
OPTION PRICE
The option price for each option granted to nonemployee directors shall be
100% of the fair market value of the shares subject to option on the date of
option grant.
TERMS OF OPTIONS
The option term shall be ten years. The period of exercise following death
shall be one year. In the event of any other termination of service on the
Board, each option shall be exercisable for the lesser of three years or the
balance of its ten-year term.
SHAREHOLDER APPROVAL
This Directors' Plan was adopted by the Board of Directors of the Company on
November 20, 1996. The Directors' Plan shall be null and void if shareholder
approval is not obtained at the 1997 Annual Meeting of Shareholders.
SHARES RESERVED
250,000 shares of Common Stock which may be newly issued or treasury shares.
The number of shares reserved and subject to option shall be adjusted if the
Company changes the number of issued shares without consideration (such as by
stock dividend or stock split).
FEDERAL INCOME TAX CONSEQUENCES
Under current U.S. federal tax law, a nonemployee director who is granted an
option will not realize any taxable income at the time of grant. The director
will have taxable income at the time of exercise equal to the difference between
the option price and the fair market value of the shares on the date of exercise
and the Company will be entitled to a corresponding deduction.
ESTIMATE OF BENEFITS
There are six nonemployee directors in the proposed Directors' Plan. If this
Directors' Plan is approved, then on January 24, 1997, the day after the Annual
Shareholders Meeting, the six nonemployee directors, as a group, will be granted
a total of 12,000 option shares at an option price equal to the fair market
value of the shares on that date.
COMPENSATION/NOMINATING COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report by the Compensation/Nominating Committee shall not be deemed to
be incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934 and shall not otherwise be deemed filed under
such Acts.
FISCAL 1996 PERFORMANCE
In fiscal 1996, the Company's management continued to pursue the long-term
goals of meeting customers' delivery and quality expectations 100% of the time
and improving operating margins by five points. Progress was made in all of
these areas, although not to the extent we had expected. The 1996 net income of
$8.9 million included approximately $3.5 million from the sale of shares of
Allmerica Financial Corporation, which is discussed in the Company's annual
report. The second consecutive year of operating profit compared to prior year
losses is indicative of the level of success achieved in developing,
implementing, and adhering to a sound strategic plan.
The Committee believes that the Company is positioned for continued improved
profitability in 1997 and beyond.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's compensation program for officers is based on two objectives:
(1) Attract and retain qualified, talented and effective executives.
(2) Motivate those executives to maximize profits and returns to
shareholders.
To that end, the Company's executive compensation program has the following
components:
BASE SALARIES are currently targeted at approximately the 50th percentile
(median) for similar-size manufacturing companies. Base salaries for most
officers are at median competitive levels, based on surveys of similar-size
manufacturing companies.
ANNUAL INCENTIVE COMPENSATION opportunities are currently targeted to be
below median competitive levels for similar-size manufacturing companies.
Incentive awards can vary significantly, depending primarily on Company net
income. No incentive awards are made if the Company does not generate a profit.
Consequently, no incentive awards had been paid to officers for several years
prior to 1995, when an award was earned. There are no incentive awards
resulting from the 1996 performance, as noted elsewhere in this statement.
LONG-TERM INCENTIVE opportunities are now targeted at or below median
competitive levels for similar-size manufacturing companies and are based solely
on the Company's long-term stock performance. After several years with no
long-term incentives, the Board voted and the shareholders approved the adoption
of a stock option plan in 1993. Stock option grants were made to certain but
not all executives in 1993, 1995, and 1996.
1996 ACTIONS
Subsequent to the 1992 fiscal year end, the Board conducted a thorough
review of the entire executive compensation program. This review was updated
during 1995. It included a careful analysis of the executive pay levels and
incentive opportunities relative to the market. This analysis resulted in the
aforementioned stock option plan and an annual incentive plan that is based on
achieving net income and reaching certain levels of performance toward goals
established annually by the Board of Directors.
The Company has continued its return to profitability; however, 1996 profit
plan objectives were not fully met, and thus there was no incentive award
granted. The performance graph on page 11, although not an absolute
determinant, is another indicator of the improvements and progress made by the
Company over the course of the last few years. Taking all of this into account,
the Board granted salary increases to certain officers during the fiscal year.
The 1996 actions are in keeping with the compensation philosophy stated
above.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation package of Mr. M. B. Savitske consists of the same elements
as for the other officers named in the Summary Compensation Table, specifically
an annual base salary, participation in the annual incentive plan, and
participation in the National-Standard Stock Option Plan.
During 1996, Mr. Savitske's base salary was increased 14% to $285,000.
Based upon the executive compensation review work of this committee, Mr.
Savitske's base salary remains below the position's median for similar-sized
manufacturing companies.
Mr. Savitske received no annual incentive award or stock option grants
related to 1996 performance.
Compensation/Nominating Committee:
Donald F. Walter, Chairman
David F. Craigmile
John E. Guth, Jr.
Charles E. Schroeder
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
(A) (B) (C) (D) (E) (G) (I)
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (#) COMPENSATION (2)
<S> <C> <C> <C> <C> <C> <C>
Michael B. Savitske 1996 $276,250 $ 0 $803 - $4,500
President and 1995 243,750 102,375 550 20,000 4,620
Chief Executive Officer 1994 218,750 0 900 - 4,620
William D. Grafer 1996 161,250 0 571 - 4,838
Vice President, Finance 1995 146,625 51,319 500 15,000 4,399
1994 134,000 0 625 - 4,020
David M. Baldwin 1996 138,750 0 0 5,000 1,650
Vice President, 1995 0 0 0 - 0
Wire Division 1994 0 0 0 - 0
David L. Lawrence 1996 100,425 0 0 - 3,012
Treasurer, Assistant 1995 97,150 32,953 0 7,500 2,825
Secretary 1994 88,000 0 0 - 2,014
(1) Amounts reimbursed during the fiscal year for payment of taxes.
(2) Amounts are Company-matching contributions to the Employees' Stock Savings
Plan.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
David M. Baldwin 5,000 100% $10.375 January 26, 2006 $32,625 $82,675
</TABLE>
YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
(A) (D) (E)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
NAME OPTIONS AT SEPT. 30, 1996 OPTIONS AT SEPT. 30, 1996 (1)
(ALL EXERCISABLE) (ALL EXERCISABLE)
<S> <C> <C>
Michael B. Savitske 120,000 $ -
William D. Grafer 42,000 -
David L. Lawrence 22,500 -
David M. Baldwin 5,000 -
(1) The exercise price on all unexercised options at September 30,1996 was in
excess of the fair market value of the underlying securities on that date.
</TABLE>
SALARIED EMPLOYEES' RETIREMENT PLAN
The Salaried Employees' Retirement Plan (the "Plan") is a defined benefit
plan and provides for an annual lifetime pension at normal retirement age (the
later of age 65 or five years of participation in the Plan) equal to 1.5% of the
participant's total cash compensation from the Company (including any
contributions made to the Employees' Stock Savings Plan from their pre-tax
remuneration) for the period of covered employment occurring after October 1,
1987. The compensation elements upon which the Plan benefits are based are
salary and payments of cash awards under the various incentive plans.
The Company funds the entire cost of the Plan by periodic contributions to
the Plan trust on an actuarial basis. Company contributions to the trust are not
allocated to the account of any particular employee; officers participate in the
Plan on the same basis as all other employees of the Company who are covered by
the Plan.
Should they continue their covered employment with the Company at their 1996
annual rate of cash compensation until attainment of normal retirement age, the
annual lifetime pension at normal retirement age under the Plan would be $46,415
for Mr. Savitske; $24,750 for Mr. Baldwin; $49,611 for Mr. Grafer; and $36,414
for Mr. Lawrence.
SUPPLEMENTAL RETIREMENT PLANS
The Supplemental Retirement Plan (the "SRP") provides an annual supplemental
pension benefit to any participant in the Salaried Employees' Retirement Plan
whose benefit under that plan is reduced or limited as a result of rules set
forth in the Internal Revenue Code. The funding of the cost of this benefit
will come from the general assets of the Company.
Should they continue their covered employment with the Company at their 1996
annual rate of cash compensation until attainment of normal retirement age, the
annual lifetime benefit at normal retirement age under the SRP would be $21,187
for Mr. Savitske; $2,694 for Mr. Baldwin; and $4,248 for Mr. Grafer.
The Targeted Retirement Benefit Plan (the "Plan) provisions provide that
participants' retirement benefit will not be less than 55% of final average
earnings. To the extent that Company funded benefits from the Salaried
Employees' Retirement Plan and all other sources do not achieve this target, the
Plan will make up the difference. The funding of the cost of this Plan will
come from the general assets of the Company. Current participants are Mr.
Savitske and Mr. Grafer.
Should they continue their covered employment with the Company at their 1996
annual rate of cash compensation until attainment of normal retirement age, the
estimated annual lifetime benefit at normal retirement age under this Plan would
be $29,310 for Mr. Savitske. There would be no estimated annual lifetime
benefit at normal retirement age under this Plan for Mr. Grafer.
NATIONAL-STANDARD COMPANY
RELATIVE MARKET PERFORMANCE
TOTAL RETURN FOR FISCAL YEARS ENDING SEPTEMBER 30
[Graphics Omitted]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
N-S Co. $209 $582 $836 $982 $555
S&P 400 112 139 142 178 203
Peer Group 105 130 150 149 147
Assumes $100 invested October 1, 1991 in National-Standard Co. Common Stock, S&P
400 Midcap index and industry peer group (dividends reinvested).
</TABLE>
PEER GROUP USED IN PERFORMANCE CHART
The peer group shown in the performance chart is a subset of the "Specialty
and Other Products" subgroup of the Standard and Poor's Steel and Heavy
Machinery group and consists of the following companies: Birmingham Steel
Corp., Carpenter Technology, Chaparral Steel Company, Commercial Metals,
Keystone Construction Industries, Inc., Lukens, Inc., Quanex Corp., and Timken
Company.
INFORMATION REGARDING OTHER TRANSACTIONS
The Company has existing Supplemental Compensation Agreements with certain
executives, including all officers of the Company (six persons including Mr.
Savitske) which, following a change in control of the Company, provide, among
other things, for a termination compensation payment equal to two years'
compensation to the executive in the event of his termination of employment by
the Company or by such executive in the event of a substantial change in his job
responsibilities.
A "change in control" is defined in such Agreements as the acquisition by
any person or entity (other than any employee benefit plan) of 40% or more of
combined voting power of the Company's outstanding securities, or a change in
the membership of a majority of the Board of Directors following the acquisition
by any person or entity (other than an employee benefit plan) of 20% or more of
the combined voting power of the Company's outstanding securities. These
Agreements extend through September 30, 1999.
AUDITORS
During 1996, the Company engaged the firm of KPMG Peat Marwick LLP as
independent public accountants to render audit services, including such matters
as the annual audit of financial statements for the Company and its
subsidiaries. Upon the recommendation of the Audit Committee, the Board of
Directors has appointed KPMG Peat Marwick LLP as independent auditors for the
fiscal year ending September 30, 1997. A representative of KPMG Peat Marwick
LLP will be present at the meeting with the opportunity to make a statement if
appropriate and will be available to respond to questions.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K
The Company is required to file an annual report, called Form 10-K, with the
Securities and Exchange Commission. A copy of Form 10-K for the fiscal year
ended September 30, 1996 will be made available without charge to any person
entitled to vote at the Annual Meeting. Written request should be directed to
T. C. Wright, Office of the Corporate Secretary, National-Standard Company, 1618
Terminal Road, Niles, Michigan 49120.
MISCELLANEOUS
COST OF SOLICITATION
The cost of soliciting proxies from the shareholders of the Company will be
borne by the Company. Proxies may be solicited by mail, personal interviews,
telephone and facsimile transmission (FAX). It is anticipated that banks,
brokerage houses and other custodians, nominees or fiduciaries will be requested
to forward soliciting material to their principals and to obtain authorization
for the execution of proxies and will be reimbursed for their charges and
expenses incurred in connection therewith.
The Company has retained Corporate Investor Communications, Inc., 111
Commerce Road, Carlstadt, New Jersey to assist in the solicitation of proxies.
Corporate Investor Communications, Inc. will receive a fee of $2,500 plus
out-of-pocket expenses and disbursements for its services. Certain directors,
officers and regular employees of the Company may also solicit proxies without
additional remuneration therefor.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at the Company's annual meetings, consistent with rules and regulations
of the Securities and Exchange Commission. To have such proposals considered
for inclusion in the Proxy Statement and Proxy of the Board of Directors for the
1998 Annual Meeting, such proposals must be received by the Secretary of the
Company no later than August 17, 1997.
In addition, the Bylaws provide that in order for business to be brought
before the Annual Meeting, a shareholder must deliver written notice to the
Secretary of the Company not less than sixty (60) nor more than ninety (90) days
prior to the date of the meeting. The notice must state the shareholder's name,
address, number of shares of Common Stock held, and briefly describe the
business to be brought before the meeting and any material interest of the
shareholder in the proposal.
DIVIDEND REINVESTMENT SERVICE SHARES
For shareholders in the Company's Dividend Reinvestment Service offered by
the State Street Bank and Trust Company, Boston, Massachusetts, the Bank will
vote any shares that it holds for the participant's account in accordance with
the proxy returned by the participant to the Bank in respect of the shares of
the Company Stock held by the Bank in such participant's account. Shares in
respect of which a proxy or other written instructions are not received by the
Company or the Bank will not be voted.
MANNER IN WHICH THE PROXIES WILL BE VOTED
In the absence of contrary direction, the persons named in the enclosed
proxy propose to vote the proxies FOR the election of each of the above nominees
to the Board. Management knows of no other matter which may come up 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. Abstentions and broker non-votes will be counted to
determine if a quorum is present. Broker non-votes are not counted in
determining the number of shares voted for or against any proposal. However, an
abstention by any shareholder is counted as if it were a vote against any
proposal.
Shareholders who do not expect to attend in person are urged to execute and
return the enclosed form of proxy. Moreover, it is important that the proxies
be returned promptly. A proxy may be revoked at any time before it is actually
voted at the Annual Meeting by delivering written notice of revocation to the
Secretary of the Company, by submitting a subsequently dated proxy or by
attending the meeting and withdrawing the proxy. A shareholder may also be
represented by another person present at the meeting through executing a form of
proxy designating such person to act on such shareholder's behalf.
By Order of the Board of Directors,
T. C. Wright
Secretary
Exhibit A
NATIONAL-STANDARD COMPANY
STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
1. PURPOSE. The purpose of the National-Standard Company Stock Option Plan
for Nonemployee Directors (the "Plan") is to encourage directors who are not
officers or full-time employees of National-Standard Company (the "Company") or
any of its subsidiaries ("Nonemployee Directors") to become shareholders in the
Company, thereby giving them a stake in the growth and profitability of the
Company, to enable them to represent the viewpoint of the shareholders of the
Company more effectively and to encourage them to continue serving as directors.
2. SHARES RESERVED. There is hereby reserved for issuance under the Plan an
aggregate of 250,000 shares of Common Stock which may be newly issued or
treasury shares. If there is a lapse, expiration, termination, or cancellation
of any option granted under this Plan, all unissued shares subject to the option
may again be used for new options granted under this Plan.
3. GRANT OF OPTIONS. Each person who remains or becomes a Nonemployee
Director of the Company on the date of the 1997 Annual Meeting of Shareholders
shall be granted an option to purchase 2,000 shares of Common Stock on the first
business day after the date of the 1997 Annual Meeting of Shareholders. Each
person who remains or becomes a Nonemployee Director after the date of the 1997
Annual Meeting of Shareholders shall be granted an option to purchase 2,000
shares of Common Stock on the first business day after the date of the next
succeeding Annual Meeting of Shareholders.
Each Nonemployee Director who is granted an initial option to purchase
2,000 shares of Common Stock hereunder shall be granted an option to purchase
2,000 shares of Common Stock on the first business day after the date of each
succeeding Annual Meeting of Shareholders on which the Nonemployee Director is a
member of the Board.
4. OPTION PRICE. The option price for each option granted to Nonemployee
Directors shall be equal to the closing price of the shares subject to option as
reported on the New York Stock Exchange Composite Transactions list on the date
of option grant.
5. EXERCISE OF OPTIONS. Shares shall be issued to the participant pursuant
to the exercise of an option only upon receipt by the Company from the
participant of written notice of exercise, specifying the number of shares with
respect to which the option is being exercised. Payment for the shares shall be
(a) in cash, (b) by delivery of shares (or certification of ownership) of Common
Stock previously owned by the optionee or by a combination of (a) and (b), in an
amount or having a combined market value equal to the aggregate purchase price
for the shares subject to the option being exercised. Previously owned shares
acquired in a prior exercise of a stock option granted under this Plan shall not
be accepted in full or partial payment for shares purchased upon the exercise of
an option unless the previously owned shares have been held by the participant
for at least six months.
6. TERM OF THE OPTIONS. Each option granted hereunder shall be exercisable
for not more than ten years from the date it is granted.
7. NONTRANSFERABILITY. Any option granted under this Plan shall not be
transferable other than by will or the laws of descent and distribution and
shall be exercisable during the Nonemployee Director's lifetime only by the
director or the director's guardian or legal representative. If a director dies
during the option period, any option granted to the director may be exercised by
his or her estate or the person to whom the option passes by will or the laws of
descent and distribution. Notwithstanding the foregoing, a Nonemployee Director
may transfer any option granted hereunder to members of the director's immediate
family or trusts or family partnerships for the benefit of such persons, subject
to such terms and conditions as may be established by the Board of Directors.
8. RETIREMENT OR TERMINATION OF SERVICE OF PARTICIPANT. Upon the retirement
or termination of service of a participant, all options previously granted to
the participant must be exercised within a three-year period following the date
of retirement or termination of service, but in no event later than ten years
from the date of grant of the options.
9. TOTAL DISABILITY OF PARTICIPANT. Upon the total disability of a
participant, all options previously granted to the participant must be exercised
within a three-year period following the date the participant becomes totally
disabled, but in no event later than ten years from the date of grant of the
options.
10. DEATH OF PARTICIPANT. Upon the death of a participant, all options
previously granted to the participant must be exercised by the legal
representative of the deceased participant's estate within a one-year period
following the date of the participant's death, but in no event later than ten
years from the date of grant of the options.
11. ADMINISTRATION. This Plan is intended to be self-governing and requires
no discretionary action by any administrative body. All grants of options to
Nonemployee Directors under the Plan shall be automatic and nondiscretionary and
shall be made strictly in accordance with the terms of the Plan. To the extent,
if any, that questions of interpretation arise, they shall be resolved by the
entire Board of Directors.
12. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of issued shares
of Common Stock without new consideration to it (such as by stock dividends,
stock splits, or similar transactions), the total number of shares reserved for
issuance under this Plan and the number of shares covered by each outstanding
option shall be adjusted so that the aggregate consideration payable to the
Company and the value of each option shall not be changed.
(b) In the case of any merger, consolidation, or combination of the
Company with or into another corporation, other than a merger, consolidation or
combination in which the Company is the continuing corporation and which does
not result in the outstanding Common Stock being converted into or exchanged for
different securities, cash, or other property, or any combination thereof (an
"Acquisition"), any Nonemployee Director to whom an option has been granted
under the Plan shall have the right during the remaining term of such option, to
receive upon exercise thereof the Acquisition Consideration (as defined below)
receivable upon such Acquisition by a holder of the number of shares of Common
Stock which might have been obtained upon exercise of such option or portion
thereof, as the case may be, immediately prior to such Acquisition. The term
"Acquisition Consideration" shall mean the kind and amount of shares of the
surviving or new corporation, cash, securities, evidence of indebtedness, other
property, or any combination thereof receivable in respect of one share of
Common Stock of the Company upon consummation of an Acquisition.
13. REGISTRATION AND LEGAL COMPLIANCE. The grant of any option under the
Plan may also be subject to other provisions as counsel to the Company deems
appropriate, including, without limitation, provisions to comply with federal
and state securities laws and stock exchange requirements. The Company shall
not be required to issue or deliver any certificate for Common Stock purchased
upon the exercise of any option granted under this Plan prior to the admission
of such shares to listing on any stock exchange on which Common Stock of the
Company may at that time be listed. If the Company shall be advised by its
counsel that the shares deliverable upon exercise of an option are required to
be registered under the Securities Act of 1933, as amended (the "Act") or any
state securities law or that delivery of such shares must be accompanied or
preceded by a prospectus meeting the requirements of such Act, the Company will
use its best efforts to effect such registration or provide such prospectus not
later than a reasonable time following each exercise of such option, but
delivery of shares by the Company may be deferred until such registration is
effective or such prospectus is available.
14. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN. The Board of Directors
may suspend or terminate the Plan at any time and may amend it from time to time
in such respects as the Board of Directors may deem advisable in order that any
grants thereunder shall conform to or otherwise reflect any change in applicable
laws or regulations or to permit the Company or the Nonemployee Directors to
enjoy the benefits of any change in applicable laws or regulations; provided,
however, if any law, regulation, agreement or exchange on which the Company's
common stock is traded requires shareholder approval for an amendment to become
effective, no amendment shall become effective unless approved by vote of the
Company's shareholders. No such amendment, suspension, or termination shall
impair the rights of Nonemployee Directors under any outstanding options.
15. SHAREHOLDER APPROVAL. This Plan was adopted by the Board of Directors
of the Company on November 20, 1996. The Plan shall be null and void if
shareholder approval is not obtained at the 1997 Annual Meeting of Shareholders.
PROXY PROXY
NATIONAL-STANDARD COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, appoints
MICHAEL B. SAVITSKE and DONALD F. WALTER, or either of them,
proxies of the undersigned, with full power of substitution to
vote all stock the undersigned is entitled to vote at the
National-Standard Company Annual Meeting of Stockholders to be
held on Thursday, January 23, 1997, and any adjournments thereof,
(1) as specified on the matters set forth below and (2) in their
discretion on such other matters as may properly come before the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE WITH AUTHORITY
FOR THE ELECTION OF TWO DIRECTORS; FOR APPROVAL OF THE
NATIONAL-STANDARD COMPANY STOCK OPTION PLAN FOR
NONEMPLOYEE DIRECTORS.
Proposal 1 WITH [ ] WITHOUT [ ] Authority to vote for all nominees
listed below:
Michael B. Savitske
Charles E. Schroeder
INSTRUCTION:
To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided here: ____________
Proposal 2 FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of the
National-Standard
Company Stock Option
Plan for Nonemployee
Directors.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(Continued from other side)
ACCOUNT NUMBER NUMBER OF SHARES PROXY NUMBER
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS
OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED WITH AUTHORITY FOR
THE ELECTION OF THE TWO DIRECTORS PROPOSED AND FOR PROPOSAL 2.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement.
Dated: ____________________________, 19 ____
___________________________________________
(Signature of Shareholder)
___________________________________________
(Signature of Stockholder)
Please sign exactly as name appears hereon. In signing as
attorney, executor, administrator, trustee or guardian, please
give full title of such, and if signing for a corporation, give
your title. When shares are in the names of more than one
person, any one may sign.
PLEASE DATE, SIGN, AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
