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 Sections 240.14a-11(c) or Section
240.14a-12
NATIONAL-STANDARD COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
[Logo]
NATIONAL-STANDARD
Corporate Headquarters
MICHAEL B. SAVITSKE
President and
Chief Executive
Officer
December 15, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders which will be held on Thursday, January 22, 1998,
9:30 AM (local time) at the Windsor Park Conference Center,
located at 4020 Edison Lakes Parkway, Mishawaka, 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 1998 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.
Sincerely,
/s/ M. B. Savitske
NATIONAL-STANDARD COMPANY
1618 TERMINAL ROAD
NILES, MICHIGAN 49120
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 22, 1998
_______________
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
NATIONAL-STANDARD COMPANY will be held at the Windsor Park Conference Center,
located at 4020 Edison Lakes Parkway, Mishawaka, Indiana, on Thursday, the
22nd day of January, 1998 at 9:30 AM (EST) for the following purposes:
(1) To elect three directors to serve three years;
(2) To allocate an additional 450,000 shares of the Company's Common
Stock for future grants under the 1993 National-Standard Stock
Option Plan;
(3) To grant to all employees employed on December 31, 1997 an option
to purchase five hundred (500) shares of National-Standard Common
Stock at the closing price the day this proposal is approved.
(4) 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, 1997, all to be mailed on or about December 15, 1997.
The stock transfer books of the Company will not be closed, but only
shareholders of record as of the close of business on December 1, 1997 will
be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ Timothy C. Wright
T. C. Wright
Secretary
Niles, Michigan
December 15, 1997
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 22, 1998
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 22, 1998 and at any
adjournment thereof. Mailing of the proxy material will begin on or about
December 15, 1997. Shareholders of record as of December 1, 1997 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 1, 1997, there were outstanding 5,223,968 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
1, 1997 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>
BENEFICIAL OWNER OR NUMBER OF SHARES OF
MANAGEMENT COMMON STOCK OWNED BENEFICIALLY % OF CLASS (6)
<S> <C> <C>
National-Standard Company
Master Investment Trust 1,475,079 (1) 28.2
c/o First Trust Illinois
410 North Michigan Avenue
Chicago, Illinois 60611
National-Standard Company 660,215 (2) 12.6
Employees' Stock Savings Trust
c/o Key Trust Company of Indiana, N.A.
101 South Main Street
Elkhart, Indiana 46516
Dimensional Fund Advisors, Inc. 273,500 (3) 5.2
1299 Ocean Avenue, Suite 650
Santa Monica, California 90401
The Killen Group, Inc. 581,477 (4) 11.1
1189 Lancaster Avenue
Berwyn, Pennsylvania 19312
Michael B. Savitske 150,769 (5) 2.9
David M. Baldwin 18,694 (5) -
William D. Grafer 80,192 (5) 1.5
David L. Lawrence 36,233 (5) -
Timothy C. Wright 7,858 (5) -
Executive Officers and
Directors as a Group 338,646 (5) 6.5
____________
(1) First Trust Illinois has informed the Company that it held, as of
December 1, 1997, 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) Key Trust has advised the Company that it held, as of December 1, 1997,
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 273,500 shares of the
Company's Common Stock as of September 30, 1997, 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 273,500 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
96,500 additional shares which are owned by the Fund and 14,600 shares
which are owned by the Trust.
(4) The Killen Group, Inc. ("Killen"), has accumulated 581,477 shares of the
Company's Common Stock as of December 1, 1997. 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 1, 1997 through the exercise of stock options
under the National-Standard Stock Option Plan and the National-Standard
Company Stock Option Plan for Nonemployee Directors.
(6) Less than 1% unless otherwise indicated.
</TABLE>
ELECTION OF DIRECTORS (PROPOSAL 1)
The Board of Directors is composed of eight members divided into two
classes of three members each and one class of two 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. David F. Craigmile, Mr. Ranko Cucuz, and
Mr. Donald F. Walter 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. 1, 1997 (1)
NOMINEES TO SERVE UNTIL THE ANNUAL MEETING IN 2001:
<S> <C> <C> <C> <C>
David F. Craigmile 69 Executive Committee member, The Lincoln Foundation for 1989 3,150
Business Excellence; Director, Elkay Manufacturing Company;
formerly President, Elkay Manufacturing Company
(plumbing and drinking water products), 1985 to 1994.
Ranko Cucuz 53 Chairman and Chief Executive Officer of Hayes Wheels 1997 0
International (automobile industry supplier).
Donald F. Walter 65 Financial Consultant, Walter & Keenan Financial Consulting 1983 2,800(2)
Co.; Director, MetroBanCorp., CerProbe Corp.
DIRECTORS CONTINUING TO SERVE UNTIL THE ANNUAL MEETING IN 2000:
Michael B. Savitske 56 President and Chief Executive Officer of the Company; 1989 10,769(3)
Director, Protection Mutual Insurance Co.
Charles E. Schroeder 62 President, Miami Corporation (a private investment 1973 10,050 (4)
company).
COMMON STOCK
YEAR FIRST OWNED BENE-
PRINCIPAL OCCUPATION AND BECAME FICIALLY AS OF
NAME AGE OTHER INFORMATION A DIRECTOR DEC. 1, 1997 (1)
DIRECTORS CONTINUING TO SERVE UNTIL THE ANNUAL MEETING IN 1999:
Harold G. Bernthal 69 Chairman, CroBern, Inc. (health care management and 1986 12,200
investment company); Director, Butler Manufacturing
Company, Nalco Chemical Company.
John E. Guth, Jr. 69 Chairman of the Board of the Company since July 1989; 1972 8,700
previously President and Chief Executive Officer of S.R.A.,
Inc. (education publications).
Ernest J. Nagy 67 Chairman, Tri Star Distributing, Inc. (distributor of electronic 1986 8,000(5)
components for the recreational vehicle industry); previously
Chairman, Sudler, Nagy, Inc. (real estate management and
investments), 1992 to 1995.
(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 (4) below and except for shares held in the
Employees' Stock Savings Plan, as to which they have sole voting
but no investment power. Also, shares shown as beneficially
owned include 2,000 shares for each nonemployee director that may
be acquired within 60 days of December 1, 1997, through the
exercise of stock options under the National-Standard Company
Stock Option Plan for Nonemployee Directors.
(2) 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.
(3) Shares shown as beneficially owned include 10,369 shares held in
trust under the Employees' Stock Savings Plan but do not include
140,000 shares which may be acquired within 60 days of December
1, 1997 through the exercise of stock options under the National-
Standard Stock Option Plan.
(4) Includes 5,831 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.
(5) Includes 1,000 shares owned through JNS Realty partnership.
</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 THREE
NOMINEES TO SERVE UNTIL THE ANNUAL MEETING IN 2001 (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 1997 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. 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 1997 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 1997 fiscal year. The members of the Committee are Mr. Craigmile,
Chairman, Mr. Guth, and Mr. Savitske.
The Company's Board of Directors held seven meetings during the 1997
fiscal year. All directors were present for 75% or more of the total number
of meetings of the Board and its Committees.
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 $16,000 (the Chairman's
retainer is $40,000), 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.
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. Effective
November 20, 1996, this plan will no longer be offered to new directors.
Current and new nonemployee directors participate in the Stock Option Plan
for Nonemployee Directors ("Directors' Plan"), which was approved at last
year's Annual Meeting of Shareholders. Under this Directors' Plan, an
initial grant of 12,000 option shares at an option price of $8.50 was made
January 24, 1997, and each person who becomes or remains a nonemployee
director after 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 each next succeeding Annual Meeting of
Shareholders.
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. 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.
1993 NATIONAL-STANDARD STOCK OPTION PLAN
ALLOCATION OF ADDITIONAL SHARES (PROPOSAL 2)
BACKGROUND
In 1993, the Company's shareholders approved the National-Standard Stock
Option Plan (the "1993 Plan"). The purpose of the 1993 Plan was to encourage
stock ownership by certain management employees of the Company so that they
could acquire a proprietary interest in the success of the Company.
Additionally, the 1993 Plan was intended to provide an incentive for maximum
effort by such employees in the successful operation of the Company, to
encourage such employees to remain in the Company's employ and to tie
compensation of key management employees more closely with the performance of
the Company's Common Stock. The 1993 Plan had an initial allocation of
450,000 shares of the Company's Common Stock. Since the inception of the
1993 Plan, 28 employees have participated through the award of options for
450,000 shares of Company Common Stock, leaving no shares available for
future grants. The Board of Directors proposes that an additional 450,000
shares of the Company's Common Stock, either newly issued or treasury shares,
be allocated to the 1993 Plan.
The affirmative vote of holders of a majority of the shares of Common
Stock represented at the Annual Meeting is required for approval of this
Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADDITIONAL
ALLOCATION OF 450,000 SHARES TO THE 1993 PLAN (PROPOSAL 2).
SHAREHOLDER PROPOSAL (PROPOSAL 3)
BACKGROUND
The following proposal has been submitted by a shareholder for
consideration and action at the Annual Meeting:
"National-Standard Company shareholders recommend that all employees who were
employed on December 31, 1997, be granted an option to purchase five hundred
(500) shares at the closing price the day this is approved. The option shall
be for one to five years after date of grant. These options shall have the
same other conditions that currently apply to employee options."
COMMENT OF PROPONENT
"Should stock options be available only to executives or all employees?
You decide."
The affirmative vote of holders of a majority of the shares of Common
Stock represented at the Annual Meeting is required for approval of this
Proposal 3. The Proponent of this Proposal 3 holds 200 shares of Common
Stock of the Company. The Company will, upon written request made to the
Secretary of the Company at the address shown on the cover of this Proxy
Statement, furnish the name and address of the Proponent of this Proposal.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
FOR THE FOLLOWING REASONS THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE AGAINST THIS PROPOSAL. Most National-Standard employees already have
the opportunity to acquire Company stock through the Company's existing
Employee Stock Savings Plan ("ESSP"). Under the ESSP, participating
employees can elect to invest their own before-tax or after-tax contributions
in Company Common Stock. Additionally, the Company makes a regular matching
contribution equal to fifty percent of the first six percent of the
contributions made by each participant. This matching contribution is made
in the form of Company Common Stock. During 1997, ESSP matching
contributions given to participating National-Standard employees totaled
approximately 64,000 shares of the Company's Common Stock. The Board of
Directors believes that this Proposal is unwarranted as the ESSP is more
favorable to employees, because no payment for the shares received as a
matching contribution is required (as would be the case upon exercise of
options) and employees have the option of investing their own money in shares
using before-tax dollars, and the shares are credited directly to the
employees' ESSP accounts without the administrative burden and delay
associated with the execution of options.
Additionally, the Company's total compensation program for its executives
includes the granting of stock options. Stock options have not heretofore
been considered as part of the compensation program for all other employees.
Further, the granting of executive stock options is discretionary with the
Compensation/Nominating Committee, and the options are only approved, if at
all, as part of the executives' annual performance review. The Board of
Directors believes that it is more practical and efficient for such matters
to be decided by the Company's management with the review and approval of the
Board, rather than by the shareholders. In this instance, Proposal 3 would
result in the immediate grant of options covering some 550,000 shares, or
approximately 10%, of the Company's outstanding Common Stock, a significantly
larger number than has been granted over the last four years under the
Company's 1993 Stock Option Plan.
Finally, the Proposal would impose significant additional costs and
administrative burdens on the Company. The Company estimates that it could
cost as much as $25,000 to establish the Proposal's option program and could
require significant amounts of personnel time to administer it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL (PROPOSAL
3).
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 1997 PERFORMANCE
In fiscal 1997, 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. During the
year, the Company restructured operations in the United Kingdom. This action
to eliminate that operation's ongoing losses resulted in a nonrecurring
charge to earnings of $9.9 million, as discussed in the Company's annual
report. Net income without this charge would have been $860,000, and
operating profit would have been $5.2 million. The third consecutive year of
operating profit compared to prior year losses is indicative of management's
commitment to continuous improvement and of the level of success achieved in
developing, implementing, and adhering to a sound, long-term strategic plan.
The Committee believes that the Company is positioned for continued
improved profitability in 1998 and beyond.
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 were no
incentive awards resulting from the 1996 or 1997 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, 1996, and to all executives in
1997.
1997 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, and annually thereafter. 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.
While the Company generated positive operating profit, 1997 profit plan
objectives were not fully met, and thus there was no incentive award granted.
The performance graph on page 12, 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 all officers during the year.
The 1997 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 1997, Mr. Savitske's base salary was increased 10.5% to $315,000.
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 related to 1997
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)
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (#) COMPENSATION (2)
<S> <C> <C> <C> <C> <C> <C>
Michael B. Savitske 1997 $307,500 $ 0 $2,794 10,000 $4,750
President and 1996 276,250 0 803 - 4,500
Chief Executive Officer 1995 243,750 102,375 550 20,000 4,620
William D. Grafer 1997 174,750 0 829 10,000 5,243
Vice President, Finance 1996 161,250 0 571 - 4,838
1995 146,625 51,319 500 15,000 4,399
David M. Baldwin 1997 169,875 0 3,660 5,000 5,096
Vice President, 1996 138,750 0 0 5,000 1,650
Wire Division 1995 0 0 0 - 0
David L. Lawrence 1997 108,000 0 0 5,000 3,240
Treasurer, Assistant 1996 100,425 0 0 - 3,012
Secretary 1995 97,150 32,953 0 7,500 2,825
Timothy C. Wright 1997 113,375 0 0 5,000 4,750
Secretary, General Counsel 1996 36,667 0 0 - 0
1995 0 0 0 - 0
(1) Amounts reimbursed during the fiscal year for payment of taxes.
(2) Amounts are Company-matching contributions to the Employees' Stock
Savings Plan.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Michael B. Savitske 10,000 23% $7.00 November 19, 2006 $44,020 $111,560
William D. Grafer 10,000 23% 7.00 November 19, 2006 44,020 111,560
David M. Baldwin 5,000 12% 7.00 November 19, 2006 22,010 55,780
David L. Lawrence 5,000 12% 7.00 November 19, 2006 22,010 55,780
Timothy C. Wright 5,000 12% 7.00 November 19, 2006 22,010 55,780
</TABLE>
<TABLE>
<CAPTION>
YEAR-END OPTION VALUE TABLE (1)
(a) (d) (e)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
NAME OPTIONS AT SEPT. 30, 1997 OPTIONS AT SEPT. 30, 1997 (2)
(ALL EXERCISABLE) (ALL EXERCISABLE)
<S> <C> <C>
Michael B. Savitske 130,000 $4,375
William D. Grafer 52,000 4,375
David L. Lawrence 27,500 2,188
David M. Baldwin 10,000 2,188
Timothy C. Wright 5,000 2,188
(1) No options were exercised during the fiscal year.
(2) The exercise price on unexercised options at September 30,1997 was in
excess of the fair market value of the underlying securities on that
date only for last fiscal year's grant.
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
1997 annual rate of cash compensation until attainment of normal retirement
age, the annual lifetime pension at normal retirement age under the Plan
would be $47,915 for Mr. Savitske; $25,994 for Mr. Baldwin; $51,583 for
Mr. Grafer; $38,348 for Mr. Lawrence; and $18,053 for Mr. Wright.
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
1997 annual rate of cash compensation until attainment of normal retirement
age, the annual lifetime benefit at normal retirement age under the SRP would
be $29,437 for Mr. Savitske; $4,973 for Mr. Baldwin; and $7,698 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
1997 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 $46,660 for Mr. Savitske and $4,069 for Mr. Grafer.
NATIONAL-STANDARD COMPANY
RELATIVE MARKET PERFORMANCE
TOTAL RETURN FOR FISCAL YEARS ENDING SEPTEMBER 30
[graph]
</TABLE>
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
N-S Co. $278 $400 $470 $265 $259
S&P 400 124 126 158 181 251
Peer Group 124 143 142 140 209
Assumes $100 invested October 1, 1992 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 (the
"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 for a lump sum compensation payment to the executive in
the event of his termination of employment by the Company, or by such
executive following a substantial change in his job responsibilities. The
lump sum compensation payments for Messrs. Savitske and Grafer are equal to
2.99 times their respective "base amounts" [as defined under Section
280G(b)(3) of the Internal Revenue Code]. The lump sum payment for the
remaining covered executives, including the officers, is equal to two times
the particular executive's "base amount" [as defined under Section 280G(b)(3)
of the Internal Revenue Code].
A "change in control" is defined in such Agreements as: (i) the
acquisition by any person or entity (other than any Company employee benefit
plan) of 30% or more of combined voting power of the Company's outstanding
securities; or (ii) shareholder approval of any consolidation or merger
where, following such consolidation or merger, the Company's original
shareholders do not hold at least 60% of the voting securities of the
surviving corporation; or (iii) during any 24-month period, the individuals
(including "qualified replacements") who, at the beginning of the period,
make up the Board of Directors, cease, for any reason, to constitute a
majority of the Board; or (iv) shareholder approval of any sale, lease,
exchange or other transfer of all, or substantially all, of the Company's
assets to any entity in which the Company, or its shareholders, own less than
60% of that entity's outstanding voting securities. The Agreements extend
through September 30, 2000.
AUDITORS
During 1997, 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, 1998. 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, 1997 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
$3,000 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 1999 Annual Meeting, such proposals must be
received by the Secretary of the Company no later than August 17, 1998.
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, FOR the approval of Proposal 2 and AGAINST the
approval of Proposal 3. 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 enclosed proxy form 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,
/s/ Timothy C. Wright
T. C. Wright
Secretary
PROXY NATIONAL-STANDARD COMPANY PROXY
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 Shareholders to be held on Thursday, January 22, 1998, 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 THREE DIRECTORS; FOR APPROVAL TO ALLOCATE 450,000 ADDITIONAL
SHARES TO THE 1993 NATIONAL-STANDARD STOCK OPTION PLAN; AND AGAINST
APPROVAL OF A SHAREHOLDER PROPOSAL TO GRANT AN OPTION TO EACH EMPLOYEE ON
THE ROLLS AS OF 12/31/97 TO PURCHASE FIVE HUNDRED (500) SHARES OF COMPANY
COMMON STOCK AT THE CLOSING PRICE ON THE DATE THE PROPOSAL IS APPROVED.
Proposal 1 - WITH / / WITHOUT / / Authority to vote for all
nominees listed below:
David F. Craigmile, Ranko Cucuz,
Donald F. Walter
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided here:
Proposal 2 - FOR / / AGAINST / /
Proposal 3 - FOR / / AGAINST / /
(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 THREE
DIRECTORS PROPOSED, FOR PROPOSAL 2, AND AGAINST PROPOSAL 3.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement.
Dated: _______________________________, 19 _____
______________________________________________
(Signature of Shareholder)
______________________________________________
(Signature of Shareholder)
Please sign exactly as name appears
hereon. If 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.
