SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 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 Rule 14a-11(c) or Rule 14a-12
NIAGARA CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NIAGARA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Niagara Corporation, a Delaware corporation (the "Company"), will be held
at the offices of M&T Bank, 350 Park Avenue, 6th Floor, New York, New York
10022, on Tuesday, June 13, 2000, at 10:00 a.m. local time for the
following purposes:
1. To elect a Board of six Directors, each to serve until
the next Annual Meeting or until a successor shall have
been duly elected and qualified;
2. To ratify and approve the appointment of BDO Seidman LLP
as independent accountants for 2000; and
3. To transact such other business as may properly come
before the Annual Meeting.
The Board of Directors has fixed the close of business on May 5, 2000
as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting.
Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you plan to attend, please complete, date and sign the
enclosed proxy and return it promptly in the self-addressed stamped
envelope provided. If you attend the Annual Meeting, you may withdraw your
proxy and vote in person if you so desire.
By Order of the Board of Directors,
GILBERT D. SCHARF
Secretary
New York, New York
May 15, 2000
NIAGARA CORPORATION
667 MADISON AVENUE
11TH FLOOR
NEW YORK, NEW YORK 10021
(212) 317-1000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the stockholders of Niagara
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board of
Directors" or the "Board") for use at the Annual Meeting of Stockholders
scheduled to be held on Tuesday, June 13, 2000, at 10:00 a.m. local time at
the offices of M&T Bank, 350 Park Avenue, 6th Floor, New York, New York
10022 (with any adjournment or postponement thereof, the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting and the accompanying
form of proxy are first being mailed to stockholders on or about May 16,
2000.
All stockholders of the Company are invited to attend the Annual
Meeting. Due to limited seating capacity, persons who are not stockholders
of the Company may attend the Annual Meeting only if invited by the Board.
If you are a stockholder of the Company but not a holder of record, you
must bring proof of beneficial ownership (e.g., a current broker's
statement) in order to be admitted to the Annual Meeting.
Shares of the Company's Common Stock, par value $.001 per share
("Common Stock"), represented by properly executed proxies received prior
to or at the Annual Meeting and not revoked will be voted at the Annual
Meeting in accordance with the instructions indicated on such proxies. If
no instructions are indicated, shares represented by such proxies will be
voted (i) "FOR" the election of the six nominees to the Board of Directors
and (ii) "FOR" ratification and approval of BDO Seidman LLP as independent
accountants for 2000. The Board of Directors is not aware of any other
matter which is to come before the Annual Meeting; if any other matter is
properly presented for consideration, the persons named in the enclosed
proxy will have discretion to vote on such matters in accordance with their
best judgment.
Any proxy given pursuant to this solicitation can be revoked by the
person giving such proxy at any time before it is voted. Proxies can be
revoked by (i) filing with the Secretary of the Company, at or before the
taking of the vote at the Annual Meeting, a written notice of revocation
bearing a later date than the proxy, (ii) duly executing a subsequent proxy
relating to the same shares and delivering it to the Secretary of the
Company before the Annual Meeting or (iii) attending the Annual Meeting and
voting in person (although presence at the Annual Meeting without further
action will not revoke a proxy). Any written notice revoking a proxy should
be sent to: Niagara Corporation, Attention: Secretary, 667 Madison Avenue,
New York, New York 10021, or hand delivered to the Secretary at or prior to
the vote at the Annual Meeting.
The Board of Directors has fixed the close of business on May 5, 2000
as the record date for the Annual Meeting. Accordingly, only holders of
record of shares of Common Stock at the close of business on such date are
entitled to notice of and to vote at the Annual Meeting. At the close of
business on the record date, 8,738,246 shares of Common Stock were issued
and outstanding. On all matters voted upon at the Annual Meeting, holders
of shares of Common Stock vote as a single class, with each record holder
entitled to one vote per share.
The presence, in person or by properly executed proxy, of holders of
a majority of outstanding shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum. A stockholder who abstains from a
vote on a particular matter by registering an abstention will be deemed
present at the Annual Meeting for quorum purposes, but will not be deemed
to have voted on such matter. Proxies relating to "street name" shares
voted by brokers on a discretionary basis on certain proposals will be
treated as present for quorum purposes on all proposals, but will not be
entitled to vote on any proposal as to which the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner ("broker non-votes").
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors has nominated six candidates for election at
the Annual Meeting. Each nominee currently serves as a director of the
Company. The directors elected at the Annual Meeting will hold office until
the next annual meeting of stockholders or until their respective
successors have been duly elected and qualified.
If a quorum is present, those nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected as directors. A
"plurality" means that the nominees who receive the greatest number of
votes present or represented by proxy are elected as directors, up to six
directors. Any shares not voted "FOR" a particular director (whether as a
result of a direction to withhold authority or a broker non-vote) will not
be counted to determine a plurality.
Unless otherwise specified, shares represented by properly executed
and returned proxies will be voted "FOR" the nominees listed below. Each
nominee has consented to being named in the proxy statement and to serve if
elected. If, prior to the Annual Meeting, any nominee becomes unavailable
for election, which is not anticipated, the persons named in the enclosed
proxy will have full discretion to vote or refrain from voting for any
other person in accordance with their best judgment.
NOMINEES FOR ELECTION
Certain information with respect to the nominees for election as
directors is set forth below.
MICHAEL J. SCHARF, 57, has been the Chairman of the Board, President
and Chief Executive Officer of the Company since its inception in 1993. He
has also served as the Chairman of the Board and Chief Executive Officer of
Niagara Cold Drawn Corp, which subsequently changed its name to Niagara
LaSalle Corporation ("Niagara LaSalle"), and LaSalle Steel Company
("LaSalle"), since the dates of their acquisition by the Company and
Niagara LaSalle, respectively, and currently holds various other positions
with such subsidiaries. Since March 1999, Mr. Scharf has also been the
Chairman of the Board and a director of Niagara LaSalle (UK) Limited
("Niagara UK"), a subsidiary of the Company which acquired eight steel bar
businesses in the United Kingdom during May 1999. Since August 1994, Mr.
Scharf has been a director of Maxcor (see below), and until August 1997,
was also a Vice President of Maxcor and its Secretary and Treasurer. Since
December 1997, Mr. Scharf has been a director of Worlds Inc., a development
stage company which designs, develops and markets three-dimensional
music-oriented Internet sites, and until April 1999, was also its Chairman
of the Board. Since August 1989, Mr. Scharf also has been a private
investor. From October 1983 to August 1989, he was the Chairman and Chief
Executive Officer of Edgcomb Steel of New England, Inc. and its successor
corporation, Edgcomb Corporation, which was, from 1984 to 1989, one of the
largest independent metals service center and distribution companies in the
United States. Mr. Scharf received an A.B. degree from Princeton University
and an M.B.A. from the Harvard Business School.
GILBERT D. SCHARF, 52, has been the Secretary and a director of the
Company since its inception, and until March 1998, was also a Vice
President of the Company and its Treasurer. He has also served as a
director of Niagara LaSalle and LaSalle since the dates of their
acquisition by the Company and Niagara LaSalle, respectively. Since August
1994, Mr. Scharf has been the Chairman of the Board, President and Chief
Executive Officer of Maxcor Financial Group Inc., a holding company with
operating subsidiaries in the financial services industry ("Maxcor"), and
currently holds the same positions with Euro Brokers Investment
Corporation, a financial services company and subsidiary of Maxcor, as well
as of a number of its subsidiaries. Since 1989, Mr. Scharf also has been a
private investor and the Chairman of Scharf Advisors, Inc. Mr. Scharf
received a B.A. degree from Duke University.
FRANK ARCHER, 63, has been a director of the Company since May 1998.
Mr. Archer has been the President and a director of Niagara LaSalle since
its formation in 1986 and the President and a director of LaSalle since
April 1997 when it was acquired by Niagara LaSalle. Mr. Archer received a
Certificate in Tool and Die Design from the Cleveland Engineering Institute
and an Associates degree from John Carroll University. He also attended the
Advanced Management Program at the Harvard Business School.
GERALD L. COHN, 71, has been a director of the Company since its
inception. Mr. Cohn is a private investor who, since 1968, has been
involved in the financing and acquisition of companies, including AgMet,
Inc., a refiner of precious metals and a recycler of ferrous and
non-ferrous metals, Cadillac Cable Corp., a multi-plant manufacturer of
copper and aluminum building wire, Pepco, Inc., a ferrous and non-ferrous
metal recycler and ferrous stevedoring and shipping company, and DVI, Inc.,
a health service finance company for which Mr. Cohn currently serves as a
financial advisory consultant and a director. He is also a director of
Diametrics Medical, Inc. and Frazier Healthcare Investments, L.P. Mr. Cohn
attended Penn State University.
ANDREW R. HEYER, 42, has been a director of the Company since its
inception. Between February 1990 and August 1995, Mr. Heyer was a Managing
Director and co-head of the Argosy Group L.P., a financial advisory firm.
Since August 1995, Mr. Heyer has been a Managing Director of CIBC World
Markets Corp. (formerly CIBC Oppenheimer Corp.), an investment banking
firm. He is also the Chairman of Hain Food Group, Inc. and a director of
Hayes Lemmerz International, Inc., Fairfield Corporation and Spectrasite
Holdings, Inc. Mr. Heyer received a B.S. degree and an M.B.A. from the
Wharton School of the University of Pennsylvania.
DOUGLAS T. TANSILL, 61, has been a director of the Company since
March 1998. From December 1994 through August 1998, Mr. Tansill was a
Managing Director, and since August 1998 he has been an Advisory Director,
in the Investment Banking Division at Paine Webber Incorporated, an
independent national securities firm. Prior to December 1994, Mr. Tansill
was a Managing Director of Kidder, Peabody and Co. Incorporated and from
May 1987 to December 1994 was a member of the board of directors of such
firm. Mr. Tansill received a B.A. degree from Trinity College and an M.B.A.
from the Harvard Business School.
COMMITTEES, MEETINGS, AND COMPENSATION OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors met seven times. All incumbent
directors attended at least 75% of the meetings of the Board and Committees
on which they serve.
The Board of Directors has Audit and Compensation Committees. The
Audit Committee is currently comprised of Messrs. Heyer (Chairman), Cohn
and Tansill. Until April 2000, the Audit Committee was comprised of Messrs.
Michael Scharf (Chairman), Heyer and Cohn. The Audit Committee recommends
to the Board of Directors the accounting firm to be appointed as
independent accountants for the Company; reviews with the Company's
management and independent accountants the Company's operating results; and
reviews with the Company's independent accountants the scope and results of
the audit and the adequacy of the Company's internal accounting procedures
and systems. The Audit Committee met once during 1999.
The Compensation Committee is comprised of Messrs. Cohn (Chairman)
and Tansill and considers and makes recommendations to the Board of
Directors on matters relating to the cash and non-cash compensation of
executive officers of the Company and also administers the Company's 1995
Stock Option Plan (the "Option Plan") and Employee Stock Purchase Plan,
which plans were approved by the Company's stockholders in May 1996 and
July 1998, respectively. The Compensation Committee met three times during
1999.
The members of the Board of Directors are compensated in a manner and
at a rate determined from time to time by the full Board. Since 1996, the
Company has granted non-qualified stock options to its outside directors as
compensation for their service as a director. On January 28, 1999, each
member of the Board of Directors, other than Michael Scharf and Frank
Archer, received as compensation for his service as a director, a
non-qualified stock option (collectively, the "Director Options") to
purchase 10,000 shares of Common Stock exercisable at $5.875 per share.
Each Director Option became exercisable as to 2,000 of the underlying
shares on the date of grant and becomes exercisable as to an additional
2,000 of the underlying shares on each of the first through fourth
anniversaries of the date of grant, provided the holder is then serving as
a director of the Company. Upon a "change in control" of the Company (as
defined in the Option Plan), each Director Option will become exercisable
in full.
The Company maintains directors and officers liability insurance
which insures directors and officers of the Company and its subsidiaries
against certain liabilities incurred by them while serving in such
capacities, and reimburses the Company and its subsidiaries for certain
indemnification payments made by them to their directors and officers. This
policy extends through March 12, 2001 at a total premium of $215,000. No
claims have been made under this policy.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew Heyer, a current director and nominee for election as a
director of the Company, is a Managing Director of CIBC World Markets Corp.
which has provided investment banking and financial advisory services to
the Company and Niagara LaSalle prior to 1999. CIBC World Markets Corp. is
a subsidiary of CIBC Inc., which is one of five banks who are parties to a
$90 million revolving credit and term loan agreement with Niagara LaSalle
and LaSalle, the obligations of which are guaranteed by the Company. CIBC
Inc.'s commitments under this credit agreement total $20 million. In
addition, CIBC Inc. issued a (pound)9.8 million (approximately $15.7
million) standby letter of credit on May 21, 1999 which indirectly secured
Niagara UK's obligations under a (pound)19.8 million (approximately $31.7
million) bank facilities agreement guaranteed by the Company and entered
into in connection with Niagara UK's acquisition of eight U.K. steel bar
businesses. This letter of credit expired on December 31, 1999.
On December 5, 1997, the Company loaned Gilbert Scharf $600,000, the
proceeds of which were used by him to exercise Redeemable Common Stock
Purchase Warrants of the Company, which, having been called for redemption,
were not exercisable after December 11, 1997. The loan was evidenced by a
Promissory Note (the "Original Note") executed by Mr. Scharf in favor of
the Company and due on December 4, 1998. Interest on the unpaid principal
amount of the Original Note accrued at 5.68% per annum. The Original Note
required installment payments of principal following the sale of shares of
Common Stock by Mr. Scharf in amounts equal to the proceeds from such
sales. In addition, the Original Note permitted prepayments of principal
without premium or penalty. During December 1998, the Company extended the
maturity date of the Original Note by one year and Mr. Scharf paid $100,000
of principal and all accrued interest due thereunder. All other terms of
the Original Note remained the same. The foregoing were reflected in an
Amended and Restated Promissory Note dated December 15, 1998 and due on
December 4, 1999 (the "Amended Note") issued by Mr. Scharf to the Company
in exchange for the Original Note. During December 1999, Mr. Scharf paid
the Company all amounts due on the Amended Note. Mr. Scharf is the
Secretary, a current director and a nominee for election as a director of
the Company, and until March 1998, was a Vice President of the Company and
its Treasurer.
Michael Scharf and Gilbert Scharf are brothers. There are no other
family relationships among the Company's directors, executive officers or
persons nominated or chosen by the Company to become a director or
executive officer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, officers and persons who
beneficially own more than 10% of a registered class of the Company's
equity securities ("10% stockholders") to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and changes in
ownership in the Company's equity securities and to furnish the Company
with copies of all such forms. Based solely on its review of copies of such
forms received by it, and written representations that no other reports
were required, the Company believes that all such Section 16(a) filing
requirements applicable to its directors, officers and 10% stockholders
with respect to the Company's fiscal year ended December 31, 1999 and its
prior fiscal years were complied with on a timely basis.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE SIX
NOMINEES LISTED ABOVE AS DIRECTORS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information concerning beneficial
ownership of Common Stock as of May 5, 2000 by (i) each director of the
Company, (ii) each Named Executive Officer (as defined below), (iii) all
directors and executive officers of the Company as a group and (iv) based
on filings with the SEC made through May 5, 2000, persons known by the
Company to be the beneficial owners of 5% or more of the outstanding shares
of Common Stock.
PERCENTAGE
NAME (1) NUMBER OF SHARES (2) BENEFICIALLY OWNED (3)
---- ---------------- -----------------
Michael J. Scharf................. 1,519,200(4) 16.8%
Gilbert D. Scharf................. 576,700(5) 6.6%
Raymond Rozanski.................. 266,250(6) 3.0%
Frank Archer...................... 260,000 2.9%
Andrew R. Heyer................... 58,500 *
Gerald L. Cohn.................... 45,000 *
Douglas T. Tansill................ 32,000 *
Marc J. Segalman ................. 30,000 *
All directors and executive
officers as a group
(eight persons)................. 2,787,650 28.7%
Dimensional Fund Advisors
Inc. (7)........................ 493,900 5.7%
- -------------
* Less than 1%
(1) The address of each stockholder, other than Dimensional Fund Advisors
Inc. ("Dimensional"), is c/o Niagara Corporation, 667 Madison Avenue,
11th Floor, New York, New York 10021. The address of Dimensional is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(2) Includes shares of Common Stock issuable upon the exercise of stock
options held by the stockholder that are currently exercisable or
exercisable within 60 days ("Exercisable Options"). Beneficial
Ownership of Exercisable Options is as follows: Michael J. Scharf --
300,000; Gilbert D. Scharf -- 35,000; Raymond Rozanski -- 260,000;
Frank Archer -- 260,000; Andrew R. Heyer -- 35,000; Gerald L. Cohn --
35,000; Douglas T. Tansill -- 12,000; Marc J. Segalman -- 30,000; and
all directors and executive officers as a group -- 967,000.
(3) Based upon 8,738,246 shares of Common Stock outstanding as of May 5,
2000, plus any shares of Common Stock issuable upon the exercise of
Exercisable Options held by the stockholder (but not by any other
stockholder).
(4) Includes 205,000 shares of Common Stock held by the Michael J. Scharf
1987 Grantor Income Trust and 194,500 shares of Common Stock held by
the Scharf Family 1989 Trust. Michael Scharf is trustee of both of
these trusts.
(5) Includes 238,700 shares of Common Stock held by the Gilbert D. Scharf
Living Trust, of which Gilbert Scharf is the sole trustee.
(6) Includes 6,250 shares of Common Stock held by a trust for the benefit
of Mr. Rozanski's children, of which Mr. Rozanski's wife is trustee.
Mr. Rozanski disclaims beneficial ownership of such shares.
(7) Information with respect to Dimensional and its holdings of Common
Stock is based on Dimensional's Schedule 13G filed with the SEC on
February 3, 2000.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information with respect to each of the
executive officers of the Company who is not also a director or director
nominee of the Company.
RAYMOND ROZANSKI, 54, has been a Vice President and the Treasurer of
the Company since March 1998, Executive Vice President, Secretary,
Treasurer and a director of Niagara LaSalle since its formation and
Executive Vice President, Treasurer and a director of LaSalle since it was
acquired by Niagara LaSalle. Mr. Rozanski has also been the Secretary and a
director of Niagara UK since March 1999. Mr. Rozanski received a B.S.
degree in Business Administration from the State University of New York at
Buffalo.
MARC J. SEGALMAN, 41, has been a Vice President and the General
Counsel of the Company since September 1997, and since March 2000, has been
an Executive Vice President and the General Counsel of Niagara LaSalle and
LaSalle. From October 1987 to August 1997, Mr. Segalman was an attorney in
the mergers and acquisitions group of the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP. Mr. Segalman received an A.B. degree from Dartmouth
College and a J.D. degree from the Boston University School of Law.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation paid by the Company and
its subsidiaries during each of the last three fiscal years to its Chief
Executive Officer and its other executive officers as of December 31, 1999
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Executive Officer Year Annual Compensation Long-Term Compensation
----------------- ---- ------------------- Securities Underlying All Other
Base Salary Bonus(1) Options (No. of Shares) Compensation(2)
----------- ----- ----------------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael J. Scharf 1999 $ 480,000 -- 600,000 $ 11,857
Chairman, Chief 1998 $ 480,000 $ 200,000 -- $ 12,074
Executive Officer 1997 $ 400,000(3) $ 200,000 100,000 $ 2,270
and President
Frank Archer(4) 1999 $ 225,000 -- 100,000 $ 12,000
President of Niagara 1998 $ 225,000 $ 150,000 -- $ 13,940
LaSalle and LaSalle
Raymond Rozanski(5) 1999 $ 225,000 -- 100,000 $ 12,000
Vice President and 1998 $ 225,000 $ 150,000 -- $ 13,904
Treasurer
Marc J. Segalman (6) 1999 $ 225,000 -- -- $ 12,000
Vice President and 1998 $ 225,000 $ 50,000 25,000(7) $ 6,882
General Counsel 1997 $ 75,000 -- 50,000 $ 406
</TABLE>
- ------------------
(1) Paid in subsequent year.
(2) Amounts include (i) employer matching and additional contributions
under the Niagara/LaSalle 401(k) Retirement Savings Plan equal to a
100% match for the first 3% of employee contributions, a 50% match for
the next 2% of employee contributions and an additional employer
contribution equal to 2% of earnings, subject, in each case, to
certain limitations, (ii) annual premiums ranging from $406 to $1,624
on life insurance policies providing coverage for such officers of two
times annual salary, up to a maximum of $250,000 and (iii) annual
premiums ranging from $329 to $1,283 on long-term disability policies
providing for, in the event of disability, two-thirds of monthly
earnings, up to a maximum of $4,500 per month. Certain perquisites and
other personal benefits that aggregate in each case to less than the
lesser of either $50,000 or 10% of the Named Executive Officer's
annual salary and bonus have been omitted pursuant to Item
402(b)(2)(iii)(C)(1) of Regulation S-K.
(3) Based on an annual salary of $480,000 set by the Compensation
Committee in April 1997, effective May 1, 1997.
(4) Mr. Archer became an executive officer of the Company (for purposes of
the SEC's applicable rules) in March 1998.
(5) Mr. Rozanski became a Vice President of the Company and its Treasurer
in March 1998.
(6) Mr. Segalman became a Vice President of the Company and its General
Counsel in September 1997. His compensation for 1997 relates to a
partial year (reflecting an annual base salary of $225,000).
(7) Reflects the repricing on December 15, 1998 of an option granted on
September 8, 1997.
STOCK OPTION GRANTS
The following table sets forth certain information concerning stock
options granted during 1999 to the Named Executive Officers. All such
options were granted under the Company's 1995 Stock Option Plan.
STOCK OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total Options Exercise at Assumed Annual Rates of
Shares Underlying Granted to All Price Per Expiration Stock Price Appreciation
Executive Officer Options Granted Employees in 1999 Share Date for Option Term
- ----------------- ----------------- ------------------ --------- ---------- --------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Michael J. Scharf 600,000 (1) 70.6 $ 5.875 1/28/09 (2) $ 2,220,000 $ 5,622,000
Frank Archer 100,000 (1) 11.8 $ 5.875 1/28/09 (2) $ 370,000 $ 937,000
Raymond Rozanski 100,000 (1) 11.8 $ 5.875 1/28/09 (2) $ 370,000 $ 937,000
</TABLE>
(1) On January 28, 1999, Messrs. Michael Scharf, Archer and Rozanski were
granted non-qualified stock options to purchase the number of shares
of Common Stock set forth opposite their names. Each option is
currently exercisable as to 20% of the underlying shares and will
become exercisable as to an additional 20% of the underlying shares on
each of the second through fifth anniversaries of the date of grant,
provided that such Named Executive Officer is then employed by the
Company or one of its subsidiaries. Upon the occurrence of a "change
in control" of the Company (as defined in the Option Plan), such
options will become exercisable in full.
(2) Expires on the earlier of January 28, 2009 and 90 days after the
termination of the Named Executive Officer's employment with the
Company and its subsidiaries.
STOCK OPTION EXERCISES AND FISCAL YEAR END VALUES
No stock options were exercised by any of the Named Executive
Officers during 1999.
The following table sets forth, for each Named Executive Officer, the
number of shares of Common Stock underlying the total number of stock
options held by him at the Company's December 31, 1999 fiscal year end.
Based on the closing price for the Common Stock as of such date, none of
the stock options granted by the Company to its Named Executive Officers
were in-the-money.
EXERCISABLE/UNEXERCISABLE STOCK OPTIONS AT
FISCAL YEAR END
Number of Shares Underlying
Options at 1999 Fiscal Year End
-------------------------------
Name Exercisable Unexercisable
---- ----------- -------------
Michael J. Scharf 160,000 740,000
Frank Archer 230,000 120,000
Raymond Rozanski 230,000 120,000
Marc J. Segalman 30,000 20,000
PENSION PLAN TABLE
The following table sets forth estimated annual benefits payable to
Michael Scharf upon his retirement from the Company under his Employment
Agreement (see "Employment Contracts - Michael Scharf") based upon
estimates of his Final Average Pay (as described below) and years of
service with the Company.
PENSION PLAN TABLE
Years of Service
----------------
Final Average Pay 10 15 20
----------------- -- -- --
$ 500,000 $ 125,000 $ 187,500 $ 250,000
$ 550,000 $ 137,500 $ 206,250 $ 275,000
$ 600,000 $ 150,000 $ 225,000 $ 300,000
$ 650,000 $ 162,500 $ 243,750 $ 325,000
$ 700,000 $ 175,000 $ 262,500 $ 350,000
Mr. Scharf's Employment Agreement provides that he will be entitled,
commencing on the first day of the month following his termination of
employment with the Company, to receive an annual retirement benefit equal
in amount to his Final Average Pay, multiplied by the product of his years
of service with the Company and 2.5%, with 50% of such annual amount to be
paid to his surviving spouse during her lifetime. Final Average Pay is
defined in Mr. Scharf's Employment Agreement to mean the highest average of
his combined annual salary and bonus over a three-consecutive-year period
during the ten-year period immediately preceding the year in which he
incurs a termination of his employment with the Company. Accordingly, Mr.
Scharf's current Final Average Pay is $586,667. He had 6.67 years of
service with the Company as of December 31, 1999. The estimated annual
benefits set forth in the Pension Plan Table are computed on a
straight-life annuity basis, commencing at normal retirement age, and are
not subject to any deduction for social security or other offsetting
amounts.
EMPLOYMENT CONTRACTS
Michael Scharf
The Company and Niagara LaSalle entered into an employment agreement
with Michael Scharf dated as of January 1, 1999 (the "Employment
Agreement"), providing, among other things, that he will continue to serve
as the Chairman, Chief Executive Officer and President of the Company and
the Chairman and Chief Executive Officer of Niagara LaSalle for the term of
the Employment Agreement. Such term will be for five years, subject to
annual one-year extensions commencing on January 1, 2002 unless the Company
or Mr. Scharf provides the other with timely notice not to extend. The
Employment Agreement provides that Mr. Scharf will be entitled to (i) an
annual base salary ("Annual Base Salary") of not less than $480,000; (ii) a
performance-based annual incentive bonus subject to the approval of the
Company's stockholders (which was approved at the Company's 1999 Annual
Meeting of Stockholders); (iii) a supplemental annual retirement benefit
("SERP") equal in amount to Mr. Scharf's Final Average Pay (as defined in
the Employment Agreement), multiplied by the product of Mr. Scharf's years
of service with the Company and 2.5%, with 50% of such annual amount to be
paid to Mr. Scharf's surviving spouse during her lifetime; (iv) annual
grants of stock options as determined by the Compensation Committee of the
Board of Directors; and (v) medical coverage and specified fringe benefits.
If Mr. Scharf's employment is terminated by the Company without Cause
(as defined in the Employment Agreement) or by Mr. Scharf due to a breach
of the Employment Agreement by the Company, the Company will (i) provide
Mr. Scharf with a lump sum amount equal to the product of (A) the greater
of three and the number of years remaining in the term of the Employment
Agreement ("Severance Multiple"), and (B) the sum of Mr. Scharf's then
current Annual Base Salary and the greater of Mr. Scharf's three-year
average annual bonus and the target bonus for the year of termination; (ii)
provide Mr. Scharf with a pro rata bonus for the year of termination; (iii)
for the number of years equal to the Severance Multiple, provide Mr. Scharf
with additional years of service credit under the SERP, continued life
insurance benefits and continued exercisability of stock options; and (iv)
cause all of Mr. Scharf's outstanding equity awards to vest. Mr. Scharf
would also receive a gross-up payment for any excise tax payable under
Section 4999 of the Internal Revenue Code of 1986, as amended.
Frank Archer and Raymond Rozanski
The Company and Niagara LaSalle entered into employment agreements with
each of Frank Archer and Raymond Rozanski (each, an "Executive") dated
August 16, 1995 (the "Archer/Rozanski Agreements"), providing, among other
things, that they will continue to serve as President and Executive Vice
President, respectively, of Niagara LaSalle for a period of five years. The
Archer/Rozanski Agreements provide that each Executive will be entitled to
(i) an annual base salary of not less than $175,000 adjusted for increases
in the consumer price index (which amount has subsequently been increased
to $225,000); (ii) cash bonuses determined by the Compensation Committee of
the Company's Board of Directors; (iii) options to purchase 200,000 shares
of Common Stock ("Options"); (iv) medical, dental and life insurance
coverage; and (v) certain specified fringe benefits.
If the Executive's employment is terminated by the Company other than
for incapacity or certain specified acts (i) the Executive would receive
his annual base salary through the end of the five-year term (the
"Employment Period"); (ii) subject to continued compliance with certain
confidentiality and non-competition obligations, the Executive would
receive one-half of his annual base salary (as then in effect) payable over
the one-year period following expiration of the Employment Period; (iii)
the Executive would continue to receive medical, dental and life insurance
coverage, subject to the terms of the applicable plans, through the end of
the Employment Period; and (iv) all Options would immediately vest and
become exercisable for a period of one year.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), formed in August 1995, is comprised of Messrs. Cohn (Chairman)
and Tansill, each of whom is an independent outside director and a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange
Act. There are no "interlocks" as defined by the SEC with respect to any
director who serves or for any part of 1999 served as a member of the
Compensation Committee.
General
The Compensation Committee is responsible for determining the
compensation of the Company's executive officers and for administering the
Option Plan and the Company's Employee Stock Purchase Plan. The
Compensation Committee reviews and develops compensation policies and
programs designed to enhance the Company's long-term profitability by
attracting, motivating and retaining high-quality executives and aligning
their individual interests with the long-term interests of the Company and
its stockholders.
Currently, the Compensation Committee's objectives are implemented
through three components -- base salary, annual bonus and periodic stock
option awards. In considering and determining these components, the
Compensation Committee, among other things, reviews the Company's current
and historical performance, evaluates the executive's contributions and
performance for the relevant compensation period and receives the
recommendations of the Chief Executive Officer. The Compensation Committee
also takes into account the salary and bonus provisions in existing
employment agreements with certain of the Company's executives. In making
compensation decisions, the Compensation Committee exercises its discretion
and judgment based on the foregoing and other criteria, without applying a
specific formula to determine the weight of each factor considered.
Compensation of the Chief Executive Officer
The Company and Niagara LaSalle entered into an Employment Agreement
with Michael Scharf dated as of January 1, 1999, providing, among other
things, that Mr. Scharf will continue to serve as the Chairman, Chief
Executive Officer and President of the Company and the Chairman and Chief
Executive Officer of Niagara LaSalle for a term of five years, subject to
extension (see "Employment Contracts -- Michael Scharf"). The Employment
Agreement provides that the Company will pay Mr. Scharf an Annual Base
Salary of not less than $480,000, subject to increase by the Board of
Directors if warranted by the Company's growth during the period. The
Compensation Committee, reflecting Mr. Scharf's own recommendation, did not
recommend to the full Board an increase in Mr. Scharf's Annual Base Salary,
notwithstanding the acquisition by a subsidiary of the Company of eight
U.K. steel bar businesses during May 1999.
The Employment Agreement also provides that Mr. Scharf is entitled to
an annual incentive bonus based upon the Company achieving a performance
goal (based on the Company's earnings before interest, taxes, depreciation
and amortization) preapproved by the Compensation Committee for such year.
The performance goal for 1999 was determined following discussions among
members of the Compensation Committee and other directors of the Company,
and in consultation with Mr. Scharf. Because the Company did not achieve
the preestablished performance goal for 1999, no incentive bonus was paid
to Mr. Scharf for the year. In addition, in view of the Company's
performance for 1999 (reflecting unsettled conditions in the cold finished
bar industry as a whole for the year), the Compensation Committee, on the
recommendations of Messrs. Michael Scharf and Archer, determined not to
award any performance bonuses to any other Named Executive Officer for
1999.
In conjunction with negotiating the Employment Agreement (which secured
Mr. Scharf's continued services for five years), and to further the goals
of retaining and incentivizing Mr. Scharf, the Compensation Committee
determined on January 28, 1999 to grant Mr. Scharf a non-qualified stock
option to purchase an aggregate of 600,000 shares of Common Stock at $5.875
per share. See "Stock Option Grants." In making the determination to grant
Mr. Scharf such option, the Compensation Committee also considered (i) Mr.
Scharf's long-term contributions to the Company and, in particular, his
successful shepherding of the Company through three acquisitions as of such
grant date, (ii) the results of operations for the Company and its
subsidiaries for 1998, (iii) Mr. Scharf's significant efforts to improve
operations and efficiency and reduce costs at the Company's operating
subsidiaries, (iv) Mr. Scharf's successful shepherding of the Company
through the 1998 strike at the Company's Hammond, Indiana facility and (v)
that the five-year vesting schedule would serve to further align Mr.
Scharf's interests with the long-term interests of the Company and its
stockholders.
Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") disallows tax deductions by a public company of compensation in
excess of $1 million paid to its chief executive officer and four remaining
most highly compensated executive officers in a taxable year. However,
compensation which qualifies as "performance-based" is excluded from the $1
million limit if, among other things, the compensation is payable only upon
attainment of preestablished, objective performance goals under a plan
approved by the Company's stockholders. Compensation attributable to the
Option Plan has been designed to be, and should qualify as, "performance-
based" under Section 162(m) of the Code. In addition, Mr. Scharf's
performance-based bonuses payable in future years under his Employment
Agreement with the Company are intended to so qualify as performance-based
compensation. The Compensation Committee will continue to monitor the
compensation levels potentially payable under the Company's compensation
programs, but intends to retain the flexibility necessary to provide total
compensation in line with the Company's compensation philosophy and the
Company's strategic goals and best interests.
COMPENSATION COMMITTEE
Gerald L. Cohn, Chairman
Douglas T. Tansill
STOCK PRICE PERFORMANCE COMPARISON
The following graph compares cumulative total return of shares of
Common Stock with the cumulative total return of (i) the Standard & Poor's
600 Smallcap index (the "S&P 600 Smallcap Index") and (ii) an industry peer
group index comprised of five other publicly-traded steel companies (the
"Steel Index"). The graph assumes $100 was invested on December 31, 1994 in
shares of Common Stock, stocks comprising the S&P 600 Smallcap Index and
the Steel Index, and the reinvestment of all dividends, and shows the
percentage change from such date.
The companies comprising the Steel Index are publicly-traded steel
companies that produce, process and/or distribute steel bars. The companies
comprising the Steel Index are: A.M. Castle & Co., Bayou Steel Corporation,
Birmingham Steel Corporation, Nucor Corporation and Quanex Corporation.
COMPARATIVE STOCK PRICE PERFORMANCE (1)
S&P 600
NIAGARA SMALLCAP
DATE CORPORATION INDEX STEEL INDEX
---- ----------- -------- -----------
Jan-95 0.000 0.000 0.000
Feb-95 (4.375) 4.010 7.527
Mar-95 (0.625) 6.016 4.872
Apr-95 0.000 8.301 (1.212)
May-95 0.781 9.864 (1.061)
Jun-95 5.000 15.804 8.083
Jul-95 5.000 24.580 10.183
Aug-95 20.000 27.145 7.123
Sep-95 25.000 30.293 (1.512)
Oct-95 5.000 23.782 (1.039)
Nov-95 1.250 28.547 0.094
Dec-95 (10.000) 30.552 8.776
Jan-96 (6.250) 30.757 10.681
Feb-96 13.750 34.897 7.311
Mar-96 (5.000) 37.667 14.066
Apr-96 2.500 45.483 15.751
May-96 17.500 50.507 16.975
Jun-96 12.500 44.491 9.238
Jul-96 12.500 34.455 (3.811)
Aug-96 (12.500) 42.615 1.559
Sep-96 2.500 48.749 8.314
Oct-96 (10.000) 47.607 4.734
Nov-96 (15.000) 55.142 10.797
Dec-96 (12.500) 56.835 10.162
Jan-97 15.000 59.336 12.702
Feb-97 13.750 55.918 7.910
Mar-97 5.000 47.790 (0.115)
Apr-97 12.500 49.504 0.924
May-97 22.500 66.915 17.552
Jun-97 17.500 74.159 18.533
Jul-97 42.500 85.015 27.656
Aug-97 62.500 89.532 31.640
Sep-97 97.500 101.930 25.520
Oct-97 80.000 93.122 14.492
Nov-97 85.000 91.580 12.760
Dec-97 97.500 95.300 9.411
Jan-98 80.000 91.397 11.201
Feb-98 91.250 108.689 22.460
Mar-98 76.250 116.516 20.843
Apr-98 98.750 117.691 26.270
May-98 93.750 106.026 15.935
Jun-98 77.500 106.490 8.256
Jul-98 80.000 90.589 (2.656)
Aug-98 20.000 53.719 (20.497)
Sep-98 35.000 62.969 (19.342)
Oct-98 39.375 70.418 (17.321)
Nov-98 36.250 79.862 (17.898)
Dec-98 16.250 91.203 (17.667)
Jan-99 17.500 88.724 (15.127)
Feb-99 50.000 71.561 (23.037)
Mar-99 25.000 73.642 (27.136)
Apr-99 45.000 85.015 0.808
May-99 43.750 89.360 (7.390)
Jun-99 13.750 100.000 (6.755)
Jul-99 10.625 98.146 (5.831)
Aug-99 0.000 89.273 (9.296)
Sep-99 (10.000) 89.953 (10.508)
Oct-99 (12.500) 89.381 (10.912)
Nov-99 (7.500) 97.251 (13.395)
Dec-99 (15.000) 113.228 (6.351)
(1) The comparisons in the performance graph are set forth in response to
disclosure requirements of the SEC and are not intended to forecast or
be indicative of future performance of the shares of the Common Stock
(or of any of the indices or companies comprising them).
The shares of Common Stock are traded on the Nasdaq National Market.
Until October 15, 1995, such stock was quoted on the OTC Bulletin Board, a
National Association of Securities Dealers, Inc. sponsored and operated
inter-dealer automated quotation system for equity securities not included
in the Nasdaq system. Such over-the-counter market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily reflect actual transactions.
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of members of the Audit
Committee, has appointed BDO Seidman LLP ("BDO Seidman") as independent
accountants for 2000, subject to ratification and approval by the Company's
stockholders. BDO Seidman has served as the Company's independent
accountants since the Company's inception. The Board recommends that
stockholders ratify and approve their appointment. A representative of BDO
Seidman is expected to attend the Annual Meeting and will have an
opportunity to make a statement, if he desires to do so, and to respond to
questions from the Company's stockholders.
The affirmative vote of the holders of a majority of shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to ratify and approve the appointment of BDO
Seidman as independent accountants for 2000. Unless a contrary instruction
is indicated, a properly executed and returned proxy will be voted "FOR"
appointment of BDO Seidman as independent accountants for 2000. A failure
to vote shares, either by abstention or broker non-vote, will have the same
effect as a vote against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPOINTMENT OF BDO SEIDMAN AS INDEPENDENT ACCOUNTANTS FOR 2000.
SOLICITATION OF PROXIES
The costs of soliciting proxies for the Annual Meeting will be paid
by the Company. In addition to the mailing of proxy materials, such
solicitation may be made in person or by telephone, facsimile or telegram
by directors and executive officers of the Company, who will receive no
additional compensation. Arrangements will be made with brokerage houses
and other custodians, nominees and fiduciaries for forwarding solicitation
materials to beneficial owners of Common Stock held of record by such
persons, and the Company will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Proposals which stockholders of the Company intend to present at next
year's annual meeting of stockholders must be received, in order to be
included in the Company's proxy statement and form of proxy prepared in
connection with such meeting, by the Secretary of the Company, at the
Company's executive offices located at 667 Madison Avenue, New York, New
York 10021, not later than the close of business on January 16, 2001.
Pursuant to Rule 14a-4 under the Exchange Act, stockholders of the
Company are advised that, in connection with the Company's annual meeting
of stockholders to be held in 2001, proxies solicited on behalf of the
Board of Directors may confer on the persons named as proxies therein
discretionary authority to vote on any stockholder proposal presented at
such meeting that has not been submitted in writing to Niagara Corporation
(to the attention of the Secretary), 667 Madison Avenue, New York, New York
10021, on or prior to April 1, 2001.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K for the year ended December
31, 1999, as filed with the Commission, is enclosed with this proxy
statement (without exhibits or schedules), but is not to be regarded as
proxy soliciting materials. The Company will provide without charge to each
stockholder, upon written request, copies of the exhibits and schedules to
such Form 10-K. Stockholders should address such written requests to:
Niagara Corporation, Attention: Secretary, 667 Madison Avenue, New York,
New York 10021.
By Order of the Board of Directors,
GILBERT D. SCHARF
Secretary
New York, New York
May 15, 2000
NIAGARA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 13, 2000
The undersigned hereby appoints Michael J. Scharf and Gilbert D.
Scharf as Proxies, each with the power to appoint such stockholder's
substitute, and hereby authorizes them, or either one of them, to represent
and to vote, as designated below, all of the shares of Common Stock of
Niagara Corporation (the "Company"), held of record by the undersigned on
May 5, 2000, at the Annual Meeting of Stockholders to be held on Tuesday,
June 13, 2000 at 10:00 a.m. local time and any and all adjournments or
postponements thereof.
1. Proposal 1 - Election of Directors-Nominees are: Michael J. Scharf,
Gilbert D. Scharf, Frank Archer, Gerald L. Cohn, Andrew R. Heyer
and Douglas T. Tansill.
|_| FOR ALL NOMINEES |_| WITHHOLD AUTHORITY to vote for all
Nominees
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
below.)
2. Proposal 2 - Appointment of BDO Seidman LLP as independent
accountants for 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1 and 2.
Please sign exactly as your name appears
herein. If shares are held by joint
tenants, both must sign. When signing as
an attorney, executor, administrator,
trustee, or guardian, give your full
title as such. If shares are held by a
corporation, the corporation's president
or other authorized officer must sign
using the corporation's full name. If
shares are held by a partnership, an
authorized person must sign using the
partnership's full name.
Dated: _______________,2000
______________________________________
Signature
______________________________________
Signature if held jointly
PLEASE MARK, DATE, SIGN, AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED STAMPED ENVELOPE.
