<PAGE>1
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:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
FIGGIE INTERNATIONAL INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>2
FIGGIE INTERNATIONAL INC.
4420 Sherwin Road
Willoughby, Ohio 44094
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
holders of Class A Common Stock, par value $.10 per share, and
the holders of Class B Common Stock, par value $.10 per share, of
Figgie International Inc. (the "Corporation") will be held at
Franklin Hall at the Corporation's Headquarters, 4420 Sherwin
Road, Willoughby, Ohio 44094 on Tuesday, November 26, 1996 at
1:00 p.m. Eastern Daylight Savings Time, to consider and take
action with respect to the following:
1. To approve amendments to Sections 2(a) and (b) of
Article II of the Corporation's Bylaws to provide that
the Board of Directors shall consist of not less than
five nor more than eleven Directors;
2. To elect a class of two Directors each for a term of
three years and until their successors shall be elected
and qualified;
3. To conduct such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Holders of Class A Common Stock and holders of Class B
Common Stock of record at the close of business on October 16,
1996 are entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof.
By Order of the Board of Directors
/s/ Robert D. Vilsack
Secretary
Dated: October 22, 1996
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY/VOTING
INSTRUCTION CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
<PAGE>3
FIGGIE INTERNATIONAL INC.
4420 Sherwin Road
Willoughby, Ohio 44094
PROXY STATEMENT
Mailed on October 22, 1996
Annual Meeting of Stockholders to be held on November 26, 1996
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Figgie
International Inc. (the "Corporation") to be used at the Annual
Meeting of the holders of Class A Common Stock, par value $.10
per share (the "Class A Common Stock"), and the holders of
Class B Common Stock, par value $.10 per share (the "Class B
Common Stock"), of the Corporation to be held on November 26,
1996 and at any adjournments thereof. The time and place of the
Annual Meeting are stated in the Notice of Annual Meeting of
Stockholders which accompanies this Proxy Statement.
The expense of soliciting proxies, including the costs of
preparing, assembling and mailing the Notice, Proxy Statement and
Proxy, will be borne by the Corporation. In addition to the use
of the mails, proxies may be solicited personally or by telephone
or telegraph, and the Corporation may pay persons holding shares
for others their expenses in sending proxy material to their
principals. Solicitation of proxies may also be made on behalf
of the Board of Directors by Morrow & Company at a total cost,
including fees and expenses, of approximately $_________.
Proxies may be solicited by Morrow & Company by personal
interview, mail, telephone and telegraph.
VOTING RIGHTS
Only stockholders of record at the close of business on
October 16, 1996 are entitled to notice of and to vote at the
Annual Meeting. The proxy will also serve to instruct the
trustees of the Figgie International Inc. Stock Ownership Trust
and Plan (the "ESOP"), the Figgie International Inc. Stock
Ownership Trust and Plan for Salaried Employees (the "ESOP for
Salaried Employees"), the Figgie International Inc. Stock Bonus
Trust and Plan (the "Stock Bonus Plan"), the Figgie International
Inc. Supplementary Retirement Savings Plan (the "SRSP") and the
Figgie International Inc. Savings Plan for Hourly Paid Employees
on how to vote any shares of the Corporation's common
stock held by the plans. The number of shares printed on the
proxy/voting instruction card accompanying this proxy statement
includes, when applicable, shares allocated to the participants
in any such plan. The instructions given by the participants in
such plans will also serve to instruct the trustees of such plans
on how to vote any unallocated shares held by such plans.
At the close of business on October 16, 1996, the
Corporation had outstanding ______________ shares of Class A
Common Stock and _______________ shares of Class B Common Stock.
The holders of issued and outstanding shares of Class A Common
Stock are generally entitled to 1/20 of one vote for each share
held by them on each matter to be presented with certain
exceptions set forth below. The holders of issued and
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<PAGE>4
outstanding shares of Class B Common Stock are generally entitled
to one vote for each share held by them on each matter to be
presented with certain exceptions set forth below.
Article Sixth of the Corporation's Restated Certificate of
Incorporation (the "Substantial Stockholder Provision") places
limitations on the ability of certain persons coming within the
definition of a "Substantial Stockholder" to vote shares of the
Corporation's voting stock beneficially owned by them. A
Substantial Stockholder is defined as any beneficial owner of
more than a "threshold percentage" generally 20.00% of the
outstanding shares of any class of voting stock of the
Corporation. If a stockholder's percentage of shares of a class
of voting stock of the Corporation increases above the threshold
applicable to him as a result of purchases, redemptions or other
acquisitions of shares of the class by the Corporation or
decreases below the threshold applicable to him as a result of an
issuance of shares of a class by the Corporation or a reduction
in beneficial ownership by the stockholder, then the
stockholder's threshold percentage is adjusted to equal the
percentage of outstanding shares of the class held immediately
after such event, but never below 20.00%. The record holders of
any shares beneficially owned by a Substantial Stockholder are
entitled to 1/20 of one vote for each share of Class A Common
Stock held and one vote for each share of Class B Common Stock
held up to the Substantial Stockholder's threshold percentage of
each class or series, and 1/100 of such vote for each share held
in excess of such threshold percentage for each class or series.
Thus, a Substantial Stockholder holding shares in excess of the
applicable threshold percentage would be entitled to 1/2000 of a
vote for each such share of Class A Common Stock and 1/100 of a
vote for each such share of Class B Common Stock. Also, a
Substantial Stockholder may exercise a maximum percentage of the
voting power of each class or series equal to his threshold
percentage for that class plus 5%. The excess shares owned above
the threshold percentage plus 5% cannot be voted by the
Substantial Stockholder. The aggregate voting power of a
Substantial Stockholder, so limited, is allocated proportionately
among the record holders of the shares beneficially owned by the
Substantial Stockholder.
As of October 22, 1996, the Corporation believes that Harry
E. Figgie, Jr., his wife and their three adult sons, the Figgie
Family Foundation and The Clark-Reliance Corporation (the "Figgie
Family Group") were the only stockholders of the Corporation who
should be regarded as "Substantial Stockholders" as that term is
defined in the Substantial Stockholder Provision. The Figgie
Family Group filed Amendment No. 3 to Mr. Figgie's Schedule 13D
on September 11, 1995 to report their formation of a group for
the purpose of disposing of their investment in the Corporation.
In Amendment No. 4 to Mr. Figgie's Schedule 13D filed with the
Securities and Exchange Commission on December 5, 1995, the
Figgie Family Group reported beneficial ownership of an aggregate
of 968,888 shares of Class B Stock, or % of the Class B Stock,
and 386,957 shares of Class A Stock, or % of the Class A Stock.
As a result of the application of the Substantial
Stockholder Provision, the members of the Figgie Family Group are
entitled to vote at the Annual Meeting an aggregate of
shares of Class B Stock, or % of the Class B Stock, rather than
the 964,092 shares of Class B Stock, or % of the
Class B Stock, that the members of the Figgie Family Group
beneficially own as a group. Each record holder of shares
beneficially owned by the Figgie Family Group will be entitled to
a proportionate number of votes equal to the number of shares
held of record by such person multiplied by a fraction the
numerator of which is and the denominator of which is
.
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<PAGE>5
The reduced voting power of the Figgie Family Group reduces
the aggregate number of votes that the holders of shares of Class
B Stock are entitled to cast at the Annual Meeting from
votes, if there were no Substantial Stockholder, to
votes. As a result, the total number of votes of both classes of
the Corporation's stock entitled to be cast at the Annual Meeting
is .
The holders of record of shares entitled to cast a majority
of the votes entitled to be cast must be present in person or
represented by proxy in order to constitute a quorum for the
holding of the Annual Meeting.
Candidates for election as Directors receiving a plurality
of the votes of holders of Class A Common Stock and holders of
Class B Common Stock present in person or represented by proxy,
voting together and not as separate classes, will be elected to
the seats on the Board of Directors of the class whose term
expires in 1999.
Shares entitled to vote represented by proxies which are
properly executed and returned before the Annual Meeting will be
voted at the Annual Meeting as directed therein. If no vote is
specified therein, the shares will be voted "FOR" the proposal to
approve amendments to the Bylaws of the Corporation and "FOR" the
election of the Directors named as nominees in the Proxy
Statement.
Shares represented by proxies which are marked "WITHHELD"
with regard to the election of Directors will be excluded
entirely from the vote and will have no effect. Shares
represented by proxies which are marked "ABSTAIN" with respect to
the proposal to amend the Bylaws will be considered present in
person or represented by proxy at the meeting and, accordingly,
will have the effect of a negative vote because that matter
requires the affirmative vote of a majority of the votes of
holders of shares present in person or represented by proxy. In
addition, where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not
provided voting instructions with respect to a particular matter
("broker non-votes"), those shares will have no effect on the
outcome of such matter.
The Board of Directors does not know of any other business
to be presented for consideration at the Annual Meeting. If any
other business properly comes before the Annual Meeting or any
adjournment thereof, the proxies will be voted on such matters in
the discretion of the proxy holders insofar as the proxies are
not limited to the contrary. The Delaware General Corporation
Law provides that, unless otherwise provided in the proxy and
unless the proxy is coupled with an interest, a stockholder may
revoke a proxy previously given at any time prior to its exercise
at the Annual Meeting. A stockholder who has given a proxy may
revoke it at any time before it is exercised by delivering to any
of the persons named as proxies, or to the Corporation addressed
to the Secretary, an instrument revoking the proxy, by appearing
at the Annual Meeting and voting in person or by executing a
later dated proxy which is exercised at the Annual Meeting.
<PAGE>
<PAGE>6
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are those
which are known to the Corporation to be the beneficial owners of
5% or more of the Corporation's Class A Common Stock or Class B
Common Stock. Unless otherwise indicated, the information is as
of September 21, 1996. For purposes of this table, and as used
elsewhere in this Proxy Statement, the term "beneficial owner"
means any person who, directly or indirectly, has or shares the
power to vote, or to direct the voting of, a security or the
power to dispose, or to direct the disposition of, a security.
Except as otherwise indicated, the Corporation believes that each
individual owner listed below exercises sole voting and
dispositive power over his or its shares.
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
Class A Common Stock NewSouth Capital Management, Inc.
1000 Ridgeway Loop Road,
Suite 233
Memphis, TN 38120 1,827,991(1) 13.4%
Class A Common Stock The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071 1,210,500(2) 8.9%
Class A Common Stock The Prudential Insurance
Company of America
Prudential Plaza
Newark, NJ 07102-3777 1,037,400(3) 7.6%
Class A Common Stock Wilmington Trust Corporation
1100 North Market Street
Wilmington, DE 19890 1,029,769(4) 7.5%
Class A Common Stock Wellington Management Company
75 State Street
Boston, MA 02109 803,000(5) 5.9%
Class B Common Stock Wilmington Trust Corporation
1100 North Market Street
Wilmington, DE 19890 1,493,931(6) 31.7%
Class B Common Stock The Figgie Family Group
37001 Shaker Boulevard
Hunting Valley, OH 44022 964,092(7) 20.4%
Class B Common Stock Mentor Partners LP
500 Park Avenue
New York, NY 10022 433,300(8) 9.2%
(1) This amount, as reflected in a report on Schedule 13G dated
February 13, 1996 and as of December 31, 1995, consists of
1,737,991 shares as to which the reporting person claims
sole voting power, 90,000 shares as to which the reporting
person claims shared voting power and 1,827,991 shares as to
which the reporting person claims sole dispositive power.
The reporting person does not claim any shared dispositive
power.
(2) This amount, as reflected in a report on Schedule 13G dated
February 9, 1996 and as of December 31, 1995, filed jointly
by The Capital Group Companies, Inc. ("CGC") and Capital
Guardian Trust Company ("CGTC"), consists of 1,152,500
shares as to which CGC and CGTC claim sole voting power and
1,210,500 shares as to which CGC and CGTC claim sole
dispositive power. The reporting persons do not claim any
shared voting power or shared dispositive power.
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<PAGE>7
(3) This amount, as reflected in a report on Schedule 13G dated
February 13, 1996 and as of December 31, 1995, consists of
791,000 shares as to which the reporting person claims sole
voting power, 243,400 shares as to which the reporting
person claims shared voting power, 791,000 shares as to
which the reporting person claims sole dispositive power and
246,400 shares as to which the reporting person claims
shared dispositive power.
(4) This amount, as reflected in a report on Schedule 13G dated
February 29, 1996 and as of December 31, 1995, filed by
Wilmington Trust Corporation ("WT Corporation") and
Wilmington Trust Company ("WT Company"), consists of no
shares as to which WT Corporation and WT Company claim any
dispositive power or sole voting power and 1,029,769 shares as
to which they claim shared voting power.
(5) This amount, as reflected in a report on Schedule 13G dated
February 3, 1996 and as of December 31, 1995, consists of
565,300 shares as to which the reporting person claims
shared voting power and 803,000 shared as to which the
reporting person claims shared dispositive power. The
reporting person does not claim any sole voting power or
sole dispositive power.
(6) This amount, as reflected in a report on Schedule 13G dated
February 29, 1996 and as of December 31, 1995, filed by
WT Corporation and WT Company, consists of 51,750 shares as
to which WT Corporation and WT Company claim sole voting and
dispositive power, 1,442,181 shares as to which they claim
shared voting power and no shares as to which they claim
shared dispositive power.
(7) This amount, as reflected in a report on Schedule 13D/A
dated December 5, 1995, filed by Harry E. Figgie, Jr., Nancy
F. Figgie, Harry E. Figgie, III, Mark P. Figgie, Matthew P.
Figgie, The Figgie Family Foundation and The Clark-Reliance
Corporation, as a group, consists of 604,738 shares (adjusted
for the disposition of 4,796 shares as reported on a Form 4
filed by Harry E. Figgie, Jr. for January 1996) as to
which Harry E. Figgie, Jr. claims sole voting and
dispositive power, 57,881 shares, as to which Nancy F.
Figgie claims sole voting and dispositive power, 105,995
shares as to which Harry E. Figgie, III claims sole voting
and dispositive power, 58,189 shares as to which Mark P.
Figgie claims sole voting and dispositive power, 613 shares
as to which Matthew P. Figgie claims sole voting and
dispositive power, 2,112 shares as to which The Figgie
Family Foundation claims sole voting and dispositive power
and as to which Harry E. Figgie, Jr. claims shared voting
and dispositive power and 134,564 shares as to which The
Clark-Reliance Corporation claims sole voting and
dispositive power. Except as indicated, the reporting
persons do not claim any shared voting power or shared
dispositive power. The members of the Figgie Family Group
filed a report on Schedule 13D/A with the SEC on September
11, 1995 to report their formation of a "group" for the
purpose of disposing of their investment in the Corporation.
(8) This amount, as reflected in a report on Schedule 13D/A
dated December 27, 1995 and as of December 31, 1995,
consists of 433,300 shares as to which the reporting person
claims sole voting and dispositive power. The reporting
person does not claim any shared voting power or shared
dispositive power.
<PAGE>
<PAGE>8
STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN FORMER EXECUTIVE OFFICERS
The following table and notes thereto set forth information,
as of September 21, 1996, with respect to the beneficial
ownership of shares of Class A and Class B Common Stock by each
Director, each nominee for Director and each Executive Officer
named in the Summary Compensation Table and, as a group, by the
current Directors and Executive Officers of the Corporation,
based upon information furnished to the Corporation by such
persons.
<TABLE>
<CAPTION>
Amount of Beneficial Ownership
as of September 21, 1996(1)
Class A Percentage Class B Percentage
Name of Beneficial Owner Common Stock of Class Common Stock of Class
<S> <C> <C> <C> <C>
Fred J. Brinkman 500 * 3,600 *
Alfred V. Gangnes 22,371(2) * 12,504(2) *
John S. Lanahan 358 * 6,536 *
F. Rush McKnight 1,315(3) * 6,503(3) *
Harrison Nesbit, II 1,005(4) * 6,562(4) *
John P. Reilly 230,601(5)(6) 1.7% 257(5) *
Steven L. Siemborski 75,713(5) * 496(5) *
A. A. Sommer, Jr. 2,250 * 7,750 *
Walter M. Vannoy 50,981(5) * 15,065(5) *
L. A. Harthun 6,374(5)(7) * 604(5) *
Keith V. Mabee 16,831(5)(8) * 701(5) *
Glen W. Lindemann 12,547(5)(9) * 1,383(5) *
All Directors, Nominees for
Director and Executive
Officers as a Group
(13 persons) 417,002(5) 3.1% 61,357(5) 1.3%
* Less than one percent (1%).
</TABLE>
(1) Except as otherwise indicated in footnotes (2), (5), and (6)
and as limited by the terms of applicable restricted stock
plans, each Director, nominee for Director or Executive
Officer owning shares listed or included in this table
exercises sole voting and dispositive power over such
shares. The shares shown include 210,667 shares of Class A
Common Stock with respect to which certain Executive
Officers have a right to acquire beneficial ownership within
sixty (60) days.
(2) Mr. Gangnes shares voting and dispositive
power with respect to 22,371 shares of Class A Common Stock
and 12,504 shares of Class B Common Stock with his wife.
(3) These amounts do not include 575 shares
of Class A Common Stock and 575 shares of Class B Common
Stock owned by Mr. McKnight's wife.
(4) These amounts do not include 2,405 shares
of Class A Common Stock and 47 shares of Class B Common
Stock owned by Mr. Nesbit's wife.
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<PAGE>9
(5) These amounts include shares of Class A and Class B
Common Stock held by the Figgie International Inc. Stock
Ownership Trust and Plan (the "ESOP") and the ESOP for
Salaried Employees which are subject to certain pass-through
voting and tendering rights. Participants in those plans are
entitled to instruct the trustee of the plans (the "Trustee"), on
a confidential basis, on how to vote and how to respond
to a tender or exchange offer for shares allocated to
their accounts and on how to vote and how to respond to a
tender or exchange offer for certain of the unallocated shares.
Under the trust agreement, as amended in November 1994,
allocated and unallocated shares for which no
instructions are received can be voted or tendered by the Trustee.
Each active participant is entitled to instruct the
Trustee as to the voting or tendering of a portion of the
unallocated shares in the proportion that his prior year's
compensation (subject to a maximum amount of
compensation) bears to the prior year's compensation of all active
participants. The numbers of shares of Class A and Class B
Common Stock held by the ESOP for Salaried Employees, the ESOP
and the Stock Bonus Plan which have been allocated to the Named
Executive Officers, Mr. Vannoy, the nominee for Director
and all Executive Officers, Directors and nominee for Director
as a group, including estimates of the numbers of
shares to be allocated as of June 30, 1996, are as
follows: (1) allocated shares in the ESOP for Salaried
Employees: Mr. Reilly - 601 shares of Class A Common Stock and
236 shares of Class B Common Stock; Mr. Siemborski - 713
shares of Class A Common Stock and 273 shares of Class
B Common Stock; Mr. Harthun - 707 shares of Class A Common
Stock and 277 shares of Class B Common Stock; Mr. Mabee -
824 shares of Class A Common Stock and 315 shares of
Class B Common Stock; Mr. Vannoy - 459 shares of Class
A Common Stock and 171 shares of Class B Common Stock;
Mr. Lindemann - 1,447 shares of Class A Common Stock and
642 shares of Class B Common Stock; all Executive Officers,
Directors, and nominee for Director as a group -
4,750 shares of Class A Common Stock and 1,914 shares
of Class B Common Stock; (2) allocated shares in the ESOP:
Mr. Reilly - 21 shares of Class B Common Stock;
Mr. Siemborski - 223 shares of Class B Common Stock;
Mr. Harthun - 327 shares of Class B Common Stock;
Mr. Mabee - 386 shares of Class B Common Stock; Mr. Vannoy -
368 shares of Class B Common Stock; Mr. Lindemann - 734 shares
of Class B Common Stock; and all Executive Officers,
Directors, and nominee for Director as a group - 2,059
shares of Class B Common Stock; and (3) allocated shares in
the Stock Bonus Plan: Mr. Lindemann - 7 shares of Class B
Common Stock; all Executive Officers, Directors and nominee
for Director as a group - 7 shares of Class B Common Stock.
(6) This amount includes 200,000 shares that
may be acquired within sixty (60) days by exercising a
stock option.
(7) This amount includes 5,667 shares that may be acquired
within sixty (60) days by exercising a stock option.
(8) This amount includes 5,000 shares that may be acquired
within sixty (60) days by exercising a stock option.
(9) This amount includes 6,000 shares that may be acquired
within sixty (60) days by exercising a stock option.
<PAGE>
<PAGE>10
APPROVAL OF THE PROPOSAL TO
AMEND THE BYLAWS
The text of Sections 2(a) and (b) of Article II of the
Bylaws of the Corporation (the "Bylaws"), relating to the number,
classification and election of Directors, as proposed to be
amended, is included as Exhibit A to this Proxy Statement. The
discussion which follows is qualified in its entirety by
reference to the text of these provisions of the Bylaws as
proposed to be amended.
At its meeting on September 18, 1996, the full Board of
Directors adopted resolutions recommending that the stockholders
consider and approve at the Annual Meeting a proposal to amend
Sections 2(a) and (b) of Article II of the Bylaws (i) to decrease
the maximum number of persons who may serve as Directors on the
Board by five, bringing the maximum number of Directors to
eleven, (ii) to decrease the minimum number of persons who may
serve as Directors of the Board by four, bringing the minimum
number of Directors to five, (iii) to eliminate the minimum
number of members of any class, and (iv) to delete certain
unnecessary language.
Section 2(a) of Article II of the Bylaws now provides that
the Board of Directors shall consist of not less than nine nor
more than sixteen members. At present, the Board of Directors of
the Corporation is set at nine Directors divided into three
classes of three Directors each. The term of office of one class
of Directors expires each year, and at each annual meeting the
successors to the Directors of the class whose term is expiring
in that year are elected to hold office for a term of three years
and until their successors shall be elected and qualified.
Section 2(a) of Article II of the Bylaws also now provides
that the stockholders are empowered to increase or decrease the
number of Directors by action at any annual meeting, up to the
upper limit of sixteen Directors and down to the minimum number
of nine Directors, and to increase or decrease the number of
Directors of the class whose term shall expire in that year,
provided that such class shall continue to consist of, as nearly
as may be, one-third of the whole number of the Board of
Directors and in any case of not less than three members.
Section 2(b) of Article II of the Bylaws similarly now provides
that the directors shall be classified into three classes, each
class consisting as nearly as may be of one-third of the whole
number of the Board of Directors, but each class in any case to
consist of not less than three members. In addition, the Board
of Directors has the power to increase or decrease the total
number of Directors and the number of Directors in any given
class within the range of nine to sixteen. To decrease the
maximum number of Directors to eleven, to decrease the minimum
number of Directors to five and to eliminate the minimum number
of Directors of a Class, however, Sections 2(a) and (b) of
Article II of the Bylaws must be amended.
The Board has determined to set the number of Directors at
eight if the stockholders approve the proposed amendment to
Sections 2(a) and (b) to provide that the Board of Directors
shall consist of not less than five nor more than eleven
Directors classified into three classes with no less than two
directors in a class. The Board of Directors has determined that
it would be in the best interests of the Corporation and its
stockholders to decrease the number of Directors on the Board to
eight in view of the recent restructuring of the Corporation and
the decision of two directors, Alfred V. Gangnes and John S.
Lanahan, not to stand for re-election. Adoption of the amendment
to the Bylaws will enable the Board to expand or decrease the
size of the Board in the future, if appropriate, since the
amendments to the Bylaws will provide that the Board of Directors
shall consist of not less than five nor more than eleven members
classified into three classes, consisting as nearly as may be of
one-third of the whole number of the Board of Directors.
Approval of these amendments to the Bylaws will require the
affirmative vote of holders of shares representing a majority of
the number of votes present in person or represented by proxy at
the Annual Meeting, provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE PROPOSED AMENDMENTS TO THE BYLAWS
<PAGE>
<PAGE>11
NOMINATION AND ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of
Directors shall consist of not less than nine nor more than
sixteen members and that, within such limits, the Board of
Directors is empowered to increase or decrease the total number
of Directors as well as the number of Directors in each class
provided that each class shall continue to consist of, as nearly
as may be, one-third of the whole number of the Board of
Directors. At the time of the Corporation's 1995 Annual Meeting,
the Board passed a resolution setting the number of Directors at
nine effective at the 1995 Annual Meeting.
If amended pursuant to the proposal described above, the
Bylaws of the Corporation will provide that the Board of
Directors shall consist of not less than five nor more than
eleven members. Harrison Nesbit, II has stated that he will
stand for re-election as a Director but Alfred V. Gangnes and
John S. Lanahan have stated that they will not stand for
re-election. The Board accordingly, took the following actions:
(i) nominated Glen W. Lindemann, President of the Corporation's
Scott Aviation division, as a nominee for the class of director
to be elected at this Annual Meeting, (ii) passed a resolution
reducing the total number of Directors to eight effective and
contingent upon amendment of the Bylaws at the 1996 Annual
Meeting, and (iii) reduced the number of Directors to be elected
at this Annual Meeting and whose term will expire at the Annual
Meeting in 1999 to two.
The reduction in the size of the Board from thirteen to
nine Directors effective at the Corporation's 1995 Annual Meeting
implemented a portion of the settlement agreement in September
1995 of derivative actions filed on behalf of the Corporation for
alleged self-dealing, waste of corporate assets, financial
statement overstatements, gross mismanagement and participation
or acquiescence in such practices by the directors of the
Corporation in office at the time of such practices, all of whom
were named as defendants. The Board of Directors also agreed
that initially two of the Directors of the nine member
Board would be members of management and seven would not be
members of management. The election of Glen W. Lindemann as a
Director would result in three Directors from management. The
Board has determined that Mr. Lindemann's election would be
in the best interests of the Corporation because of
its strategy to focus on operations and growth. The
Board has determined that the Board of Directors
should include no more than three Directors who are
members of management but in no event shall the Directors
who are members of management constitute a majority of
the Board of Directors.
The two nominees for election at this Annual Meeting,
Harrison Nesbit, II and Glen W. Lindemann, have informed the
Corporation that they are willing to serve for the term to which
they are nominated if they are elected. If a nominee for
Director should become unavailable for election or is unable to
serve as a Director, the shares represented by proxies voted in
favor of that nominee will be voted for any substitute nominee as
may be named by the Board of Directors.
<PAGE>
<PAGE>12
The information appearing in the following table and the
notes thereto has been furnished to the Corporation, where
appropriate, by the nominees for Director and the Directors
continuing in office with respect to: (i) the present principal
occupation or employment of each respective nominee and
continuing Director and, if such principal occupation or
employment has not been carried on during the past five years,
the occupation or employment during such period, (ii) the names
and principal businesses of the corporations or other
organizations in which such occupation or employment is carried
on and/or has been carried on during the past five years, and
(iii) the directorships held by each respective nominee or
continuing Director on the boards of publicly held and certain
other corporations and entities:
NOMINEES FOR ELECTION AS DIRECTORS TO BE
ELECTED FOR A TERM OF THREE YEARS
If Elected,
Term Expires
Served as at Annual
Name and Director Meeting of
Principal Occupation Since Stockholders in
HARRISON NESBIT, II, age 69
Retired; Chairman and Director, Godine,
Nesbit, McCabe & Co., an insurance brokerage
firm, from 1987 to 1993; former General
Agent, State of Virginia, Massachusetts
Mutual Life Insurance Co.; Director, St.
George Metals, Inc. 1969 1999
GLEN W. LINDEMANN, age 57
President of Figgie International Inc.'s
Scott Aviation division since 1989;
President, Paxall Circle Machinery from 1986
to 1989; President, Telesis Controls Corp.
from 1983 to 1986; General Manager, Norton
Company, Safety Equipment Group from 1979 to
1983. - 1999
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES FOR DIRECTOR.
<PAGE>
<PAGE>13
DIRECTORS CONTINUING IN OFFICE
If Elected,
Term Expires
Served as at Annual
Name and Director Meeting of
Principal Occupation Since Stockholders in
STEVEN L. SIEMBORSKI, age 42
Senior Vice President and Chief Financial
Officer, Figgie International Inc., since
July 1, 1994; former Partner, Ernst & 1994 1997
Young LLP.
A. A. SOMMER, JR., age 72
Counsel, Morgan, Lewis & Bockius LLP,
Washington, D.C., law firm, since October 1,
1994; former Partner, Morgan, Lewis &
Bockius; Chairman, Public Oversight Board of
the American Institute of Certified Public
Accountants; Director, Board of Governors,
NASD Regulation, Inc. 1986 1997
WALTER M. VANNOY, age 68 (1)
Retired; Chairman of the Board, Figgie Inter-
national Inc., from May 18, 1994 to May 16,
1995; Chief Executive Officer, Figgie Inter-
national Inc., from May 18, 1994 to January
3, 1995; Vice Chairman of the Board, Figgie
International Inc., from February 1994 to May
1994; former President, Vannoy Enterprises;
former Vice Chairman, McDermott International
Inc.; former President and Chief Operating
Officer, Babcock & Wilcox; Director, Illinova
Corp. 1981 1997
FRED J. BRINKMAN, age 67
Consultant; Partner, Arthur Andersen LLP,
public accountants, until 1989, Senior Part-
ner, Asia Pacific area from 1978 to 1989,
and Managing Partner of the firm's
Washington, D.C. office from 1981 to 1987;
Director, Washington Gas Light Co. and
Charles E. Smith Residential Realty Inc. 1992 1998
F. RUSH McKNIGHT, age 66(1)
Partner, Calfee, Halter & Griswold,
Cleveland, Ohio, law firm, and Managing
Partner from 1985 to 1991. 1985 1998
JOHN P. REILLY, age 53
Chief Executive Officer, Figgie International
Inc., since January 3, 1995; President,
Figgie International Inc., since February 1,
1995 and Chairman of the Board of Figgie
International Inc. since May 16, 1995;
President and Chief Operating Officer, Bruns-
wick Corporation, from 1993 to 1994;
President and Chief Executive Officer,
Tenneco Automotive, from 1987 to 1993;
Director, Trinova Corporation; Director
Emeritus, Barat College. 1995 1998
(1) See discussion under the caption "CERTAIN TRANSACTIONS."
<PAGE>
<PAGE>14
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 6 non-telephonic meetings and 3
telephonic meetings during the year ended December 31, 1995.
During the year, no incumbent Director attended fewer than 75%
of the aggregate of (i) the total number of meetings of the Board of
Directors held during the period he served as a Director and (ii) the
total number of meetings held by any Committee of the Board on
which he served.
Effective upon the date of the Annual Meeting, the committees
of the Board of Directors, their principal functions and their
respective memberships are expected to be as follows:
EXECUTIVE AND FINANCE COMMITTEE
W. Vannoy, Chairman
F. Brinkman
J. Reilly
F.R. McKnight
H. Nesbit, II
S. Siemborski (ex-officio and non-voting)
The Executive and Finance Committee will continue to be
empowered to act on behalf of the Board of Directors during
the periods of the year in which the Board does not meet and
will focus particularly on the review and oversight of
budgets, issuance of securities, proposed financings and
acquisitions and dispositions.
AUDIT COMMITTEE
A.A. Sommer, Jr., Chairman
F. Brinkman
F.R. McKnight
H. Nesbit, II
The Audit Committee will continue to have as its principal
assignment the oversight and review of the internal and
external audit functions of the Corporation.
MANAGEMENT DEVELOPMENT-COMPENSATION AND NOMINATING
COMMITTEE
H. Nesbit, II, Chairman
F. Brinkman
F.R. McKnight
A.A. Sommer, Jr.
W. Vannoy
J. Reilly (ex-officio and non-voting)
The Management Development-Compensation and Nominating
Committee will continue to evaluate candidates for Board
membership, make recommendations with respect to the number
of Directors and candidates to be included in the annual
proxy materials, recommend candidates to fill Board vacancies
and exercise overall authority with respect to the
compensation, development and succession of executive
personnel.
STOCK OPTION COMMITTEE
A.A. Sommer, Jr., Chairman
F. Brinkman
H. Nesbit, II
The Stock Option Committee administers the 1993 Restricted
Stock Purchase Plan for Employees (the "Restricted Stock
Plan") and the Figgie International Inc. Key Employees' Stock
Option Plan (the "Stock Option Plan").
The Board committees which existed during 1995 held the
following numbers of meetings during that year: Executive and
Finance Committee - 7, Audit Committee - 4, Management
Development & Compensation Committee - 4, Nominating
Committee - 4, Management Development-Compensation and
Nominating Committee (which was established in October 1995 to
assume the obligations of the Management Development &
Compensation and the Nominating Committees) - 1, and
Stock Option Committee - 2. Not included in these totals
are those instances in which the committees took action by
written unanimous consent.
<PAGE>
<PAGE>15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development-Compensation and Nominating
Committee of the Board of Directors consists of Harrison
Nesbit, II (Chairman), Fred J. Brinkman, Alfred V. Gangnes,
F. Rush McKnight, A.A. Sommer, Jr. and Walter M. Vannoy, with
John P. Reilly (participating on an ex-officio and non-voting
basis). During 1995, the same individuals and Dale S. Coenen
served on that Committee. Until January 3, 1995, Mr. Vannoy was
CEO of the Corporation, and until May 16, 1995, he was Chairman
of the Board of Directors. Mr. Reilly became CEO of the
Corporation on January 3, 1995, President of the Corporation on
February 1, 1995 and Chairman of the Board of Directors of the
Corporation on May 16, 1995.
The Stock Option Committee of the Board of Directors
currently consists of A. A. Sommer, Jr. (Chairman), Fred J.
Brinkman and Harrison Nesbit, II. During 1995, the same
individuals and Dale S. Coenen served on that Committee.
Mr. McKnight, a member of the Board of Directors, is a
partner in the law firm of Calfee, Halter & Griswold which
performs legal services for the Corporation. For services
rendered during 1995, the Corporation paid Calfee, Halter &
Griswold $2,646,891.
The Corporation entered into an employment agreement dated
October 28, 1994 (the "Agreement") with Walter M. Vannoy. The
Agreement provided for Mr. Vannoy's employment as Vice-Chairman
of the Board of Directors between February 16, 1994 and May 18,
1994, as CEO from May 18, 1994 until such time as a new CEO was
duly elected and took office, and as Chairman of the Board from
May 18, 1994 until a new Chairman was named. Mr. Vannoy's annual
base salary under the Agreement was $400,000. In addition to his
base salary, Mr. Vannoy was entitled to receive a discretionary
bonus under the regular bonus programs of the Corporation, to
participate in other benefit plans provided by the Corporation,
and to be reimbursed for all reasonable expenses incurred while
performing his duties under the Agreement. In accordance with
the Agreement, 50% of the 115,497 shares of restricted
stock granted to Mr. Vannoy under the Restricted Stock Plan were
repurchased by the Corporation upon termination of Mr. Vannoy's
employment with the Corporation pursuant to the provisions of the
Restricted Stock Plan relating to repurchases from retirees.
Further, the Agreement provided for certain benefits under
specified circumstances upon his termination of employment prior
to the expiration of a period of time specified in the Agreement,
which period ended on May 16, 1996. During 1995, Mr. Vannoy
received $400,000 pursuant to the provisions of the Agreement as
well as the use of an apartment and a car and reimbursement of
moving expenses and, during 1996, he received $150,000 until
the termination of his employment under the Agreement.
On October 30, 1995, Trans-Industries, Inc., whose President
and Chairman of the Board at the time was Dale S. Coenen, a
director of the Corporation until the Corporation's annual
meeting on October 17, 1995 and a shareholder of Trans-Industries,
repurchased $1,000,000 of 10% Convertible
Subordinated Debentures, due October 30, 2001, sold by
Trans-Industries, Inc. to the Corporation on October 30, 1991 for
the face amount plus accrued interest. The debentures provided
for prepayment without premium of $142,857 per year commencing in
1995 and additional optional prepayments at declining premiums
over the same period. The debentures were convertible at any
time at the option of the Corporation into common stock of
Trans-Industries at $2.00 per share. The common stock of
Trans-Industries is publicly traded in the over-the-counter
market.
<PAGE>
<PAGE>16
Notwithstanding anything to the contrary, the following
reports of the Compensation Committee and the Stock Option
Committee, and the Performance Graph shall not be deemed
incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended,
except to the extent that the Corporation specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Development-Compensation and Nominating
Committee (the "Compensation Committee") of the Board of
Directors has overall authority with respect to, among other
things, the cash compensation paid by the Corporation to
executive personnel and other key employees. The Stock Option
Committee of the Board of Directors oversees the Corporation's
long-term incentive program under which stock options and
restricted stock are awarded to key employees, including
executives.
Between January 1995 and the date of the Corporation's
Annual Meeting on October 17, 1995, the members of the
Compensation Committee were Dale S. Coenen (Chairman), Fred J.
Brinkman, Alfred V. Gangnes, Harrison Nesbit, II and Walter W.
Vannoy and the members of the Stock Option Committee were
A.A. Sommer, Jr. (Chairman), Fred J. Brinkman and Dale S. Coenen.
Effective upon the date of the 1995 Annual Meeting, the members
of the Compensation Committee and the Stock Option Committee have
not included Dale S. Coenen, who did not stand for re-election at
the 1995 Annual Meeting, but have included F. Rush McKnight and
A.A. Sommer, Jr., with John P. Reilly participating on an
ex-officio and non-voting basis, on the Compensation Committee
and Harrison Nesbit, II on the Stock Option Committee, in each
case in addition to the other members identified above.
Set forth below are the reports of each committee with
respect to executive compensation.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE CASH COMPENSATION
The Compensation Committee's cash compensation policies are
designed: (a) to align closely the financial interests of the
Corporation's executive officers, including the chief executive
officer (the "CEO"), with the financial interests of the
Corporation's stockholders and thereby to enhance the
Corporation's profitability and stockholder value; (b) to provide
compensation packages that are competitive and will attract and
retain qualified personnel; and (c) to reward individual
performance. The Corporation's cash compensation policies are
designed to provide an incentive for executive officers to
achieve the Corporation's goals by relating a substantial portion
of executive compensation directly to the Corporation's
performance.
<PAGE>
<PAGE>17
Executive Officer Compensation Policies
The Compensation Committee, assisted by both an independent
compensation consultant and data generated by independent
executive compensation analysts, annually establishes ranges of
total cash compensation to be paid to executives in each pay
grade based upon its review of national surveys of executive
compensation which include peer data for diversified corporations
of a similar size. The peer data that the Compensation Committee
considered for 1995 compensation reflected corporations of a
smaller size than the peers evaluated for 1994 compensation
because of the Corporation's smaller size.
Base Salary. The Compensation Committee establishes base
salary amount ranges for pay grades for executive officers at
amounts that, in general, are substantially similar to the
average base salary amounts expected by the Corporation to be
paid by companies of comparable size to executives having
comparable positions. The performance of such companies is not
taken into account by the Compensation Committee because it
believes that the Corporation must pay competitive base salaries
in order to attract and retain qualified executives. In
determining base salaries for specific executive officers, the
Compensation Committee takes into account the performance of the
executive officers. The base salaries for 1995 for executive
officers other than the CEO and the chief financial officer, who
have employment agreements, were established during the month of
January 1995.
Annual Cash Incentive Amounts. The Corporation has an
incentive program under which the officers have the opportunity
to receive a bonus which is directly related to the performance
of the Corporation. An incentive pool for officers and other key
executives is established based upon actual performance against
the Corporation's business plan. The bonus amount for each
participant is then calculated in two components: a formula-based
component and a discretionary component.
Fifty percent of the bonus pool is used for the formula-based
component, which is based upon the Corporation achieving a
specified amount of net income. All participants receive the
same percent of target bonus based on actual net income. The
percent of base salary in the formula varies by salary grade, but
is the same for all participants within a salary grade. For
1995, there were no formula-based bonuses awarded because the
Corporation did not achieve its performance target.
Fifty percent of the bonus pool is reserved for the
discretionary component. The CEO recommends the amount of the
discretionary component for each executive officer, other than
himself, after assessing the performance of each of those
executives. The Compensation Committee then determines the
amount of the discretionary award for each executive, including
the CEO, up to the maximum percentage of base salary for such
award. The discretionary component is based upon the executive's
performance, including such person's contributions to the success
of those operations for which such person is responsible and to
the Corporation in general.
<PAGE>
<PAGE>18
For 1995, Messrs. Siemborski, Harthun and Mabee received
total bonuses of $108,000, $80,000 and $52,000, respectively.
Messrs. Siemborski and Harthun were entitled to bonuses of at
least $50,000 and $80,000, respectively, for 1995 pursuant to the
terms of agreements with the Corporation.
Management Agreements. During 1995, the Corporation entered
into agreements with Messrs. Harthun and Mabee, its two executive
officers who did not have employment agreements, in order to
induce such officers to remain with the Corporation for the
periods provided in such agreements. The Compensation Committee
determined that the Corporation's best interests required
continuity of the Corporation's management team during the
Corporation's efforts to accomplish a comprehensive plan for
restructuring the Corporation's diverse businesses in order to
improve its financial condition and operating results.
CEO Compensation
In determining a CEO's base salary and the maximum
percentages of such base salary amount payable as formula-based
and discretionary bonus awards, the Compensation Committee
historically has evaluated the compensation paid to chief
executive officers of comparable companies. In addition, the
amounts of a CEO's base salary and any discretionary bonus award
have generally reflected a CEO's performance with respect to
operations for which he is specifically responsible as well as
the overall success of the Corporation in achieving the strategic
goals defined by him and the Corporation's Board of Directors,
taking into account the general economic environment and
conditions in the industries in which the Corporation operates.
Mr. Reilly, the Corporation's CEO, entered into an
employment agreement with the Corporation dated January 1, 1995
when he became the CEO of the Corporation. The compensation
provided for in the employment agreement was determined based
upon the amounts of base salaries paid and the terms of other
awards provided to chief executive officers of companies of a
comparable size to that of the Corporation at that time and as a
result of the negotiations with Mr. Reilly. Pursuant to his
employment contract, the CEO received a base salary of $500,000
and a bonus of $250,000 for 1995. The CEO's employment agreement
is described elsewhere in this Proxy Statement.
Harrison Nesbit, II Fred J. Brinkman Alfred J. Gangnes
F. Rush McKnight A.A. Sommer, Jr. Walter M. Vannoy
<PAGE>
<PAGE>19
STOCK OPTION COMMITTEE REPORT
ON LONG-TERM EXECUTIVE COMPENSATION
The Stock Option Committee has administered the
Corporation's long-term incentive program under which executive
officers and other senior executives of the Corporation are
provided the opportunity to buy shares of the Common Stock of the
Corporation. Starting in 1978, four five-year restricted stock
purchase plans have been approved by the Corporation's
stockholders. In 1993, the Corporation's stockholders approved
the 1993 Restricted Stock Purchase Plan for Employees (the
"Restricted Stock Plan"), which is substantially similar to prior
plans. On October 19, 1994, the Corporation's stockholders
approved the Figgie International Inc. Key Employees' Stock
Option Plan (the "Stock Option Plan"). Stock options have become
the primary equity incentive compensation program of the
Corporation and grants of restricted stock under the Restricted
Stock Plan generally are being used only to supplement the Stock
Option Plan.
Restricted Stock Purchase Plan
Under the Restricted Stock Plan, shares of the
Corporation's common stock are sold to executives at a price of
$1.00 per share. When participants acquire the shares, they
become holders of the restricted shares and are eligible to vote
and receive dividends on the shares, but the certificates
representing the restricted shares are held by the Corporation in
escrow until the transfer restrictions lapse, generally at the
termination of the Plan. Because of the transfer restrictions,
the participants cannot sell the stock and thus disengage the
benefits under the Plan from the Corporation's performance.
Generally, unless otherwise directed by the Stock Option
Committee, upon the termination of the employment of any
participant prior to the termination of the Plan and the lapse of
the transfer restrictions, other than terminations resulting from
death or total disability, the Corporation has the right to
purchase all, or, in the case of the retirement of a participant,
a specific portion, of the restricted shares at a price equal to
the lesser of the price paid by the participant for such shares
or the then fair market value of the shares.
Awards were initially made under the Restricted Stock
Plan in 1993. A maximum award was established for each executive
pay grade. In determining this maximum award, the Stock Option
Committee, assisted by an independent compensation consultant,
took into account the relationship between cash and bonus amounts
paid to executive officers, including CEOs, in comparable
companies and the benefits that such companies provided their
executive officers, including CEOs, from their stock incentive
plans. Maximum award amounts were calculated based upon average
award sizes of the comparable companies and without regard to
restricted stock awards made under prior plans. In a manner
consistent with awards under the earlier similar restricted stock
plans, the sizes of the actual awards made to executive officers,
including the CEO, were based upon the executives' performance
over the prior five years. If an executive officer, including
the CEO, received during the five preceding fiscal years an
aggregate of either 70% or 80%, depending upon the executive's
pay grade, of the aggregate amount of the potential discretionary
bonus awards he could have received over that period, the Stock
Option Committee awarded the executive 100% of the maximum
award established for the executive under the Restricted Stock Plan.
<PAGE>
<PAGE>20
If the executive received less than the requisite percentage of
the potential discretionary bonus awards justifying the maximum
award, he received between 25% and 75% of the maximum award,
depending upon the percentage of the aggregate amount of the
potential discretionary bonus awards he had received over the
five-year period. Prior to the termination of the Plan in 1998,
the Stock Option Committee can award to an executive who did
not receive the maximum award additional restricted stock awards in
aggregate amounts up to the balance of the maximum restricted stock
award, depending upon the executive's performance. In addition,
under the Restricted Stock Plan, persons who are promoted can
receive additional restricted stock awards in amounts that take
into account their new pay grade and newly hired executives can
receive restricted stock awards in amounts based upon their pay
grade but reflecting the remaining restricted period.
Pursuant to his employment agreement, the chief
financial officer received the right to purchase 150,000 shares
of stock over a four-year period beginning in July 1994. In each
of July 1994 and July 1995, in accordance with his employment
agreement, the Stock Option Committee granted to the chief
financial officer the right to purchase 37,500 shares of Class A
Common Stock for $1.00 per share. The shares, which were issued
under the Restricted Stock Plan, contained no restrictions on
resale. The Stock Option Committee did not award to the chief
financial officer any other rights to acquire restricted shares
under the Restricted Stock Plan. (The Stock Option Committee's
award of restricted stock to the CEO is described below.)
Stock Option Plan
Under the Stock Option Plan, the Corporation may
issue non-qualified stock options, "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), and stock
appreciation rights (giving the right to elect a payment equal to
the appreciation of the stock value over the option price) to
executives and other key employees. The Stock Option Plan is
intended to provide additional incentives which will enhance the
Corporation's ability to attract and retain key employees and
align employees' economic interests with those of the
Corporation's stockholders.
The Stock Option Committee granted options to acquire
793,500 shares of the Corporation's Class A Common Stock during
1995, including options to acquire 17,000 and 15,000 shares to
Mr. Harthun and Mr. Mabee, respectively, which vest in one-third
(1/3) cumulative installments on each of February 14, 1996, 1997
and 1998 and terminate seven years after the date of grant, or, if
earlier (as was the case of Mr. Harthun), ninety days after the
optionee's termination of employment other than upon death or disability.
The Stock Option Committee has determined that stock option
grants will be made in amounts determined by reference to
equity awards made by the companies included in the Corporation's
peer group and under the same circumstances in which annual cash
incentive awards are made. Stock options are becoming the
primary equity incentive compensation program of the Corporation.
The Stock Option Committee believes that stock
options granted under the Stock Option Plan will not be subject
to the $1,000,000 limit contained in Section 162(m) of the
Internal Revenue Code (the "Code") as it is intended that the
option price will be at least the fair market value on the date
of grant and that the composition of the committee will meet
certain requirements as to independence contained in regulations
adopted pursuant to Section 162(m) of the Code.
CEO Compensation
In his employment agreement, Mr. Reilly, the
Corporation's CEO, was given the right to acquire 30,000 shares
of restricted stock in 1995 under the Restricted Stock Plan.
Mr. Reilly exercised the right at a time when the value of the
restricted shares he acquired (less the purchase price) was
$165,000. In addition, pursuant to the terms of his employment
agreement, Mr. Reilly was granted options under the Stock Option
Plan to acquire 500,000 shares of the Corporation's Class A
Common Stock. The options vest in 20% increments of 100,000
shares on each of January 4, 1995, 1996, 1997, 1998 and 1999.
A. A. Sommer, Jr. Fred J. Brinkman Harrison Nesbit, II
<PAGE>
<PAGE>21
EXECUTIVE COMPENSATION
Summary of Compensation
The following table shows information concerning the
annual and long-term compensation earned during the last three
fiscal years, if required, by the Corporation's Chief Executive
Officer ("CEO") and each of the Corporation's other executive
officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
----------------------------------- ------------------------
Restricted Securities
Other Stock Underlying All Other
Name and Principal Annual Award(s) Options/ Compensation
Position Year Salary Bonus Compensation(1) ($)(2) SARs (#) (3)
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Reilly(4)
Chairman, CEO
and President 1995 $500,000 $250,000 $67,198 $165,000 500,000 $38,178
Steven L. Siemborski (5)
Senior Vice President and
Chief Financial Officer 1995 350,000 108,000 412,500 - - 16,179
1994 175,000 25,000 248,438 - - 60,363
L. A. Harthun (6)
Senior Vice President -
Legal and Secretary 1995 239,166 80,000 - - 17,000 20,941
1994 229,166 - - - - 18,520
1993 219,000 - - 277,405 - 23,026
Keith V. Mabee (7)
Vice President -
Corporate Relations 1995 192,916 52,000 - - 15,000 13,141
1994 152,666 - - 18,464 - 12,919
</TABLE>
(1) (a) The amounts indicated with respect to Mr. Reilly
represent his use of a company car ($9,576), the payment of
his moving expenses ($17,765) and club dues ($39,857).
(b) The amounts indicated with respect to Mr. Siemborski
represent the difference between the fair market values of the
37,500 shares of Class A Common Stock acquired by
Mr. Siemborski in each of 1995 and 1994 and the prices paid by
Mr. Siemborski for those shares.
(2) The transfer and pledge restrictions on the restricted
shares reflected in the table are scheduled to lapse upon
the termination of the Restricted Stock Plan on July 1,
1998 under the terms of the plan. As of December 29, 1995,
the aggregate number of shares and the value of the shares
of restricted stock held by the executives (less the
purchase price paid by the executive) were as follows: Mr.
Reilly, 30,000 shares of Class A Common Stock having a
market value (less purchase price) of $281,250;
Mr. Harthun, 17,613 shares of Class A Common Stock having a
market value (less purchase price) of $165,122; and
Mr. Mabee, 7,338 shares of Class A Common Stock having a
market value (less purchase price) of $68,794.
<PAGE>
<PAGE>22
(3) Includes the following for 1995:
(a) The discounted value of the benefit to each of the Named
Executive Officers of the premium paid by the Corporation
during 1995 for one or more split-dollar insurance policies
under which the executive receives an interest in the cash
surrender value of the policy at the time when the ownership
of the policy is split between the executive and the
Corporation, which then becomes the beneficiary of a policy on
the executive's life with a cash surrender value equivalent to
the Corporation's premium payments. The Executive Officers
paid a portion of the premium based upon a rate for term life
insurance. The amounts reflected in the table for
split-dollar insurance are as follows: Mr. Reilly - $35,168;
Mr. Siemborski - $13,210; Mr. Harthun - $17,435; and Mr. Mabee
- $10,173.
(b) The allocations for 1995 of equivalent shares of Class A
Common Stock or Class B Common Stock under the ESOP for
Salaried Employees. The dollar values as of December 29, 1995
of the allocations for each of the Named Executive Officers of
the Corporation are as follows: Mr. Reilly - $3,010;
Mr. Siemborski - $2,969; Mr. Harthun - $3,506; Mr. Mabee - $2,968.
(4) Mr. Reilly became CEO of the Corporation on January 3,
1995, President of the Corporation on February 1, 1995 and
Chairman of the Board of Directors of the Corporation on
May 16, 1995. He was not employed by the Corporation prior
to 1995.
(5) Mr. Siemborski became Senior Vice President and Chief
Financial Officer of the Corporation effective July 1,
1994. He was not employed by the Corporation prior to
1994.
(6) Mr. Harthun retired from the Corporation on July 5, 1995.
(7) Mr. Mabee became an executive officer of the Corporation on
February 23, 1994.
Stock Options
The following tables provide information on grants of stock
options pursuant to the Stock Option Plan during the year ended
December 31, 1995. The Stock Option Plan is administered by the
Stock Option Committee of the Board of Directors, which has the
authority to determine the individuals to whom options are
granted and the terms of all grants thereunder. The Stock Option
Plan provides for the issuance of nonqualified stock options and
"incentive stock options," within the meaning of Section 422 of
the Internal Revenue Code, for the Corporation's Class A Common
Stock and the granting of stock appreciation rights ("SARs").
The options granted pursuant to the Stock Option Plan have terms
of up to 10 years from the date of grant and an exercise price
equal to one hundred percent (100%) of the fair market value on
the date of grant and are non-transferable.
<PAGE>
<PAGE>23
Option Grants in Last Fiscal Year
The following table provides information related to options
granted or awarded to the Named Executive Officers during 1995.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of Stock
Number of % of Total Price Appreciation
Securities Options for Option Term (1)
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Grant Expiration
Name (#) Year ($/share) Date Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John P. Reilly (2) 500,000 62.85% $6.500 1/04/95 1/04/02 N/A $1,323,076 $ 3,083,331
L. A. Harthun (3) 17,000 2.14 7.625 2/14/95 2/14/02 N/A 52,770 122,977
Steven L.Siemborski 0 0.00 N/A N/A N/A N/A N/A N/A
Keith V. Mabee (3) 15,000 1.89 7.625 2/14/95 2/14/02 N/A 46,562 108,510
All Stockholders N/A N/A N/A N/A N/A N/A 53,667,653 125,068,454
All Optionees 793,500 100.00 7.177 Various 7 Years N/A 2,318,259 5,402,529
Options Gain
as % of all
Stockholder Gain N/A N/A N/A N/A N/A N/A 4.32% 4.32%
</TABLE>
(1) The dollar amounts under these columns are the results of
calculations at assumed annual rates of stock price
appreciation of zero percent (0%), five percent (5%) and
ten percent (10%). These assumed rates of growth were
selected by the SEC for illustration purposes only. They
are not intended to forecast possible future appreciation,
if any, of the Corporation's stock price. Since Optionees
received options with an exercise price equal to the market
value on the date of grant, no gain is possible without an
increase in stock prices, which will benefit all
stockholders. A zero percent (0%) gain in stock price will
result in a zero percent (0%) benefit to such Optionees.
(2) Mr. Reilly's option vests in twenty percent (20%)
increments of 100,000 shares on each of January 4, 1995,
1996, 1997, 1998 and 1999; however, vesting accelerates
upon a change in control (as defined in the Stock Option
Plan).
(3) Mr. Harthun's and Mr. Mabee's options vest in one-third
(1/3) cumulative installments on each of February 14, 1996,
1997 and 1998. (Mr. Harthun's option terminated ninety days
after termination of his employment.)
<PAGE>
<PAGE>24
Aggregated Option Exercises and Fiscal Year-end Option Values Table
The following table provides information related to any stock
options exercised by the Named Executive Officers during 1995 and
the value of unexercised in-the-money options held by the Named
Executive Officers at December 31, 1995:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Acquired Options at FY-End In-the-Money Options/SARs
on Exercise Value Exercisable/ at FY-End ($) Exercisable/
Name (#)(1) Realized($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
John P.Reilly 0 0 100,000/400,000 $387,500/$1,550,000
L. A. Harthun 0 0 0/ 17,000 0/ 46,750
Steven L. Siemborski 0 0 0/ 0 0/ 0
Keith V. Mabee 0 0 0/ 15,000 0/ 41,250
(1) No options were exercised.
</TABLE>
<PAGE>
<PAGE>25
COMPENSATION OF DIRECTORS
The Directors, except for those who are also employees of
the Corporation, receive an annual stipend of $15,000, an
attendance fee of $1,000 for each meeting of the Board of
Directors, and an attendance fee of $750 for each separately
called meeting of non-management directors. In addition, the
non-employee members of the Executive and Finance Committee
receive $3,000 per year, an attendance fee of $750 for each
meeting of the Executive and Finance Committee, and a
participation fee of $750 for each regularly scheduled telephonic
meeting and $250 for each special telephonic meeting of the
Executive and Finance Committee and members of the remaining
committees other than the Stock Option Committee receive $3,000
per year, an attendance fee of $250 for each meeting, and a
participation fee of $250 for each telephonic meeting. The
Directors also receive travel and lodging expenses in connection
with their attendance at Board and committee meetings.
In addition, the Corporation provides certain death and
other benefits to non-employee Directors. The Corporation has
agreed to pay a death benefit, in the amount of $200,000, to the
estate of each Director, other than a Director who is also an
employee, upon his death. This benefit is provided to a Director
while in office and after retirement if he has served five years.
The benefit is payable from the general assets of the Corporation
and the Corporation has insured this liability by purchasing life
insurance policies on the lives of the eligible Directors. Upon
the retirement or resignation of a Director from the Board, he is
designated a "Director Emeritus", is entitled to attend Board
meetings of the Corporation, which reimburses his travel expenses
incurred in attending such Board meetings, and is paid the annual
fee to which Directors are entitled for a period ending upon the
earlier of his death or the third anniversary of the date upon
which he ceased to be a Director.
RETIREMENT PLANS
Retirement Income Plan II
All of the Executive Officers of the Corporation are
currently accruing retirement income credits under, or will
accrue them upon their satisfaction of the eligibility
requirements set forth in, the Salaried Employee Retirement
Income Provisions of the Figgie International Inc. Retirement
Income Plan II (the "Salaried Provisions"), a defined benefit
pension plan. The Salaried Provisions cover the salaried
employees of the Corporation except employees of certain
non-participating divisions and subsidiaries. Directors who are
not employees are not entitled to receive retirement benefits
under the Figgie International Inc. Retirement Income Plan II.
In general, the Salaried Provisions, as amended effective
July 31, 1993, provide that salaried employees accrue dollar
units of retirement income credits for each calendar year of
participation in the Salaried Provisions on the basis of their
"Annual Pensionable Earnings." To receive full benefits under
the Salaried Provisions, employees must contribute two percent
(2%) of their "Annual Pensionable Earnings" over their "Covered
Compensation." The following sets forth the percentage Annual
Pensionable Earnings which is accrued as a Retirement Income
Credit under the Salaried Provisions:
Annual
Pensionable Earnings (1)
0-100% of Over 100% of
Covered Covered
Compensation Compensation
(2) (2)
Retirement Income Credit 0.7% 1.2%
<PAGE>
<PAGE>26
(1) "Annual Pensionable Earnings" includes cash salaries and
bonuses received by the participant but excludes any such
earnings in excess of $150,000 for calendar year 1996 and
thereafter (plus any increase for cost-of-living as shall be
prescribed by the Secretary of the Treasury pursuant to
Sections 401(a)(17) and 415(d) of the Internal Revenue Code).
(2) "Covered Compensation" means the average of the contributions
and benefit bases in effect under Section 230 of the Social
Security Act for each such calendar year in the 35 calendar years
ending immediately prior to each such calendar year. For
calendar year 1996, Covered Compensation will equal $25,920.
Generally, any salaried employee of the Corporation except
employees of certain non-participating divisions and subsidiaries
is eligible to participate in the Salaried Provisions after the
earlier of the completion of one year of service or attainment of
age 40. A participant becomes vested in the Salaried Provisions
five years after the participant's hire date. Upon reaching
normal retirement at age 65, each participant is generally
entitled to receive an annual retirement benefit for life equal
to the total of the retirement income credits accrued by him
during his period of participation. Such benefit is not subject
to any deduction for Social Security benefits. A reduced annual
retirement income benefit may be payable to a retired employee
under other actuarially equivalent forms of pay-out provided for
in the Salaried Provisions. The Salaried Provisions also contain
provisions for early retirement and preretirement death benefits
payable to spouses and dependent children of certain deceased
participants. During 1995, certain employees of the Corporation
and its subsidiaries accrued retirement benefits under separate
retirement plans of the Corporation which cover employees of its
divisions or subsidiaries which are not or were not at the time
participating under the Salaried Provisions or a prior plan which
was terminated on November 21, 1988 (the "Prior Plan").
As of December 31, 1995, the annual benefits payable upon
retirement under the Salaried Provisions, including accrued
benefits from the Prior Plan, to the Named Executive Officers are
stated below. In determining such benefits, the executives'
earnings were estimated through 1996 and were assumed not to
exceed $150,000 after 1996. Covered Compensation ($25,920 for
1996) was assumed not to increase after 1996, the maximum
allowable employer-funded benefit under the Internal Revenue Code
(which is the greater of $118,800 or the accrued benefit as of
December 31, 1982) was assumed to continue to retirement and
executives were assumed to continue working until at least age 65
and to be fully vested. Based upon the preceding assumptions,
the annual benefits payable to such persons including benefits
payable as a result of voluntary contributions and the accrued
benefits from the Prior Plan are as follows: Mr. Reilly -
$23,082; Mr. Siemborski - $42,626; Mr. Harthun - $99,819; and
Mr. Mabee - $32,596.
<PAGE>
<PAGE>27
Senior Executive Benefits Program
The following plan table shows the annual benefits upon
retirement at age 65 in 1995 for various combinations of
compensation and lengths of service which may be payable under
the Corporation's Senior Executive Benefits Program (the "SEBP")
to the Named Executive Officers. These amounts are paid in
addition to the amounts payable under the Corporation's Salaried
Provisions discussed above.
PENSION PLAN TABLE
Annual Benefit for Years
Remuner- of Credited Service Shown(1)
ation(2)
10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
$125,000 $20,841 $42,493 $37,062 $31,632 $26,201 $20,770
150,000 29,296 55,177 48,557 41,937 35,317 28,697
175,000 40,130 71,427 64,807 58,187 51,567 44,947
200,000 50,963 87,677 81,057 74,437 67,817 61,197
225,000 61,796 103,927 97,307 90,687 84,067 77,447
250,000 72,630 120,177 113,557 106,937 100,317 93,697
300,000 94,296 152,677 146,057 139,437 132,817 126,197
350,000 115,963 185,177 178,557 171,937 165,317 158,697
400,000 137,630 217,677 211,057 204,437 197,817 191,197
450,000 159,296 250,177 243,557 236,937 230,317 223,697
500,000 180,963 282,677 276,057 269,437 262,817 256,197
(1) Annual benefits are computed on the basis of one hundred
percent (100%) joint and survivor benefit. The annual benefits
reflected in the table constitute sixty-five percent (65%) of
final covered remuneration prorated for service less than fifteen
(15) years, less assumed social security benefits of $22,464 and
less assumed amounts of benefits payable under the Salaried
Provisions. The benefits under the Salaried Provisions have been
calculated based upon the assumptions that the amount of Covered
Compensation, as defined in the Salaried Provisions, remains
fixed for all years of participation and the amount of Annual
Pensionable Earnings, as defined in the Salaried Provisions, is
limited to amounts that do not exceed $150,000. (See the
description of the Salaried Provisions set forth above.) (Accrual
under the Salaried Provisions for years prior to 1996 may be less
than as assumed.) The gross annual benefits will be increased by
ten percent (10%) of the final covered remuneration for a
participant in the SEBP as of February 18, 1987 or a person hired
prior to February 18, 1987 who completes 20 years of service.
The annual benefits will be reduced by any retirement or deferred
compensation plans of other employers.
(2) Consists of base salary and the installment payments that
have been received by an executive under the discretionary bonus
component of the Corporation's incentive bonus arrangements.
As of December 31, 1995, the credit years of service for the
Named Executive Officers are as follows: Mr. Reilly, 1 year;
Mr. Harthun, 30 years; Mr. Siemborski, 1 year; and Mr. Mabee,
2 years.
<PAGE>
<PAGE>28
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation entered into an employment agreement dated
January 1, 1995 (the "Executive Agreement") with John P. Reilly.
The Executive Agreement provides for Mr. Reilly's employment as
CEO of the Corporation at an annual base salary of $500,000. In
addition, the Executive Agreement provides Mr. Reilly the
following: (i) a guaranteed lump sum payment for 1995 of
$250,000 if he remained an employee of the Corporation until
April 30, 1996 (which was paid); (ii) the right to acquire 30,000
shares of the Corporation's Common Stock pursuant to the terms of
the Restricted Stock Plan (which was exercised); and (iii) an
option to purchase 500,000 shares of the Corporation's Class A
Common Stock pursuant to the Stock Option Plan, at an option
price equal to the fair market value of such stock determined
under the plan, exercisable not later than the seventh
anniversary of the date of issuance (which was granted). In
addition, the Executive Agreement entitles Mr. Reilly to
participate in the Corporation's regular bonus and benefit plans
for senior executives. In the event of Mr. Reilly's death or
disability (as defined), Mr. Reilly's employment shall be deemed
to have terminated, except that the Corporation will pay a pro
rata portion of any guaranteed payment or bonus otherwise
payable. If the Corporation terminates Mr. Reilly's employment
without good cause (as defined), then the Corporation must pay
Mr. Reilly's base salary for the greater of (i) two years or
(ii) the remainder of the term of the Executive Agreement. The
Executive Agreement terminates on January 1, 1998, and will be
automatically extended for successive one-year periods unless the
Corporation or Mr. Reilly gives notice of termination.
The Corporation entered into an employment agreement dated
July 1, 1994 (the "Employment Contract") with Steven L.
Siemborski. The Employment Contract provides for
Mr. Siemborski's employment as Senior Vice President and Chief
Financial Officer of the Corporation, at an annual base salary of
$350,000. In addition, the Employment Agreement provides
Mr. Siemborski the following: (i) a special $50,000 transition
payment (which was paid in 1994), an incentive bonus of $25,000
for reducing financial consulting fees by fifty percent (50%)
during his first four months of employment (which was paid on
June 30, 1995) and an additional incentive bonus of $50,000 for
reducing such financial consulting fees to zero by June 30, 1995
(which was paid on June 30, 1995) during the first year of the
Employment Contract; (ii) the greater of a bonus of $50,000 or
the bonus payable to him with respect to the 1995 calendar year
under the regular bonus programs of the Corporation during the
second year of the Employment Contract (which was paid); and
(iii) a discretionary bonus under the regular bonus programs of
the Corporation during the third and fourth years of the
Employment Contract. Mr. Siemborski also received the right to
purchase 150,000 shares of the Corporation's Common Stock, the
class to be determined by the Stock Option Committee, for one
dollar ($1.00) per share in four annual increments of 37,500
shares exercisable between July 1 and the following November 1st
beginning in 1994 (Mr. Siemborski has acquired 750,000 shares of
Class A Common Stock pursuant to this right), to participate in
other benefit plans provided by the Corporation, and to be
reimbursed for all reasonable expenses incurred while performing
his duties under the Employment Contract. Further, the
Employment Contract provides that in the event Mr. Siemborski's
employment is terminated due to death or disability (as defined),
<PAGE>
<PAGE>29
Mr. Siemborski (or his successor in interest) would be entitled
to the pro rata portion of any bonus which would have been
payable during the second, third and fourth years of the
Employment Contract and to his stock purchase rights under the
Employment Contract. The Employment Contract also provides that
in the event Mr. Siemborski's employment is terminated by the
Corporation without good cause (as defined) or by Mr. Siemborski
for good reason (as defined), Mr. Siemborski would be entitled to
his stock purchase rights under the Employment Contract and to
severance pay based upon the date of termination of his
employment as follows: (i) if employment is terminated during
the first year of the Employment Contract, a proportional amount
of $400,000 with respect to the year of his termination and
$400,000, $350,000 and $350,000 for the succeeding three years;
(ii) if employment is terminated during the second year of the
Employment Contract, a proportional amount of $400,000 with
respect to that year and $350,000 for each of the next succeeding
two years; or (iii) if employment is terminated during the third
year of the Employment Contract, a proportional amount of
$350,000 with respect to that year and $350,000 for the
succeeding year.
The Corporation entered into a management agreement dated
February 23, 1995 (the "Officer Agreement") with Keith V. Mabee.
The Officer Agreement provides for Mr. Mabee's employment until
February 23, 1998, and automatic extensions for successive one
year terms thereafter, as Vice President Corporate Relations of
the Corporation. Either the Corporation or Mr. Mabee may
terminate the Officer Agreement on February 23, 1998 or at the
end of any successive one year term thereafter. If Mr. Mabee's
employment is terminated due to his retirement or death, his
benefits will be determined in accordance with the Corporation's
retirement and benefit plans then in effect in which Mr. Mabee is
a participant. In the event Mr. Mabee becomes disabled, the
Corporation may terminate his employment, and Mr. Mabee's
benefits will be determined in accordance with the Corporation's
disability and other applicable plans then in effect. If the
Corporation terminates Mr. Mabee's employment other than for
cause (as defined), the Corporation will continue to pay Mr.
Mabee his monthly base salary then in effect, as well as his life
insurance and health care benefits (unless comparable benefits
are provided by a subsequent employer), for 24 full calendar
months following the date of such termination. In such an event,
Mr. Mabee will also be entitled to reimbursement for the cost of
outplacement services up to fifteen percent (15%) of his annual
base salary. In the event of any termination, the Corporation
will be obligated to pay when due all other benefits to which Mr.
Mabee has a vested right.
The Corporation entered into a retention agreement dated
March 20, 1996 (the "Officer Retention Agreement") with Mr. Mabee
that supplements the Officer Agreement until May 31, 1997.
Unless the Officer Retention Agreement is earlier terminated by
Mr. Mabee without cause or by the Corporation based on
Mr. Mabee's death or disability or for cause (as defined), the
Officer Retention Agreement grants to Mr. Mabee a continued
service bonus, as an incentive for Mr. Mabee to remain an
employee of the Corporation, payable on the earlier of (i) the
execution of an agreement for a merger, consolidation, sale or
divestiture of substantially all of the assets of the
Corporation, (ii) the termination by Mr. Mabee of his employment
within three months of the Corporation making a significant
<PAGE>
<PAGE>30
negative change in the nature or scope of his authorities,
powers, functions or duties (the earlier of (i) or (ii) being
"Mr. Mabee's Release Date"), or (iii) the execution of an
agreement for a merger, consolidation, sale or divestiture of
substantially all of the assets of any one of the Interstate
Electronics, Snorkel, Scott or Taylor Divisions of the
Corporation and a corresponding declaration by the Board of
Directors of a dividend payable to stockholders. The continued
service bonus provides the right to purchase 3,668 shares of the
Corporation's common stock under the Restricted Stock Plan and
immediate vesting of all options previously granted to Mr. Mabee
pursuant to the Stock Option Plan. On Mr. Mabee's Release Date,
if any, Mr. Mabee will be entitled to an additional service bonus
consisting of: (a) a lump sum payment or monthly payments in an
amount equal to 24 full calendar months of Mr. Mabee's salary in
effect on Mr. Mabee's Release Date, (b) a lump sum payment or
monthly payments, in an amount equal to 12 months of the monthly
car allowance being received by Mr. Mabee on Mr. Mabee's Release
Date, (c) a waiver of the Corporation's right to repurchase
shares previously purchased by Mr. Mabee pursuant to the
Restricted Stock Plan, (d) any then unpaid installments of
bonuses previously awarded to Mr. Mabee pursuant to the
Corporation's Compensation Plan for Executives, and (e) such
additional bonuses as the Management Development and Compensation
Committee of the Board of Directors may award to Mr. Mabee with
respect to his 1996 performance and his contribution toward the
successful completion of a merger, consolidation or the sale of a
part or all of the Corporation.
The Corporation entered into a management agreement dated
April 28, 1995 (the "Management Agreement") with Luther A.
Harthun. The Management Agreement, as amended on January 31,
1996, provided for Mr. Harthun's continued employment until
July 3, 1996 (unless mutually extended or terminated) as Senior
Vice President Legal and Secretary of the Corporation, at his
current base salary on April 28, 1995, a guaranteed bonus for
1995 to be paid in 1996 of $80,000 and various benefits upon his
termination of employment prior to July 3, 1996 under specified
circumstances. Mr. Harthun retired on July 5, 1996.
The Corporation entered into a retention agreement dated
March 20, 1996 (the "Management Retention Agreement") with
Mr. Harthun that supplemented the Management Agreement. As noted
above, Mr. Harthun retired on July 5, 1996. The Management
Retention Agreement provided similar benefits as those provided
to Mr. Mabee in the Officer Retention Agreement except that the
periods for which such benefits were to be provided were shorter.
<PAGE>
<PAGE>31
STOCK PERFORMANCE GRAPH
The graph reflects a cumulative five year total return on an
investment of $100 on December 31, 1990 in Figgie International
Inc. Class A and Class B Common Stock, the NASDAQ Market Index,
the peer group used by the Corporation in its 1995 Proxy
Statement (the "1995 Peers") and a newly constructed peer group
and assumes dividend reinvestment through the fiscal year ending
December 31, 1995. The returns of each company in the peer
groups are weighted based on market capitalization.
<TABLE>
<CAPTION>
Cumulative Total Return
12/90 12/91 12/92 12/93 12/94 12/95
<S> <C> <C> <C> <C> <C> <C>
Figgie International Inc. - Class A 100 100 130 108 49 82
Figgie International Inc. - Class B 100 113 108 88 39 63
New Peer Group 100 137 149 177 161 188
Old Peer Group 100 105 118 169 167 213
NASDAQ Stock Market - US 100 161 187 214 210 297
</TABLE>
The 1995 Peers consist of the companies set forth below,
which are among the companies included on the Fortune 500
Industrial and Farm Equipment Companies list:
AM International, Inc.
Applied Materials Inc.
Baker Hughes Incorporated
Black and Decker Corp.
Briggs & Stratton Corp.
Caterpillar Inc.
Cincinnati Milacron Inc.
Clark Equipment Co.
Cummins Engine Company, Inc.
Deere & Company
Dover Corporation
Dresser Industries, Inc.
Figgie International Inc. Class A
Great American Management & Investment, Inc.
Harnischfeger Industries, Inc.
IMO Industries Inc.
Ingersoll-Rand Company
Kennametal Inc.
NACCO Industries, Inc.
Nortek Inc.
Outboard Marine Corp.
Parker Hannifin Corp.
Pentair Inc.
Stewart & Stevenson Services, Inc.
Tecumseh Products Co.
Tenneco Inc.
Terex Corp.
The Timken Company
The Toro Company
Trinova Corporation
The newly constructed peer group was constructed because the
Corporation's current market capitalization is significantly
smaller than the market capitalization of the 1995 Peers.
The companies in the Corporation's newly constructed peer group
are companies included on the Fortune 500 Industrial and Farm
Equipment Companies list and having a market capitalization of
between $50 million and $600 million. The newly constructed peer
group consists of the companies set forth below:
Agco Corporation
Detroit Diesel Corporation
Fedders Corporation
Figgie International Inc. Class A
Giddings & Lewis Inc.
IMO Industries Inc.
Lincoln Electric Company
NACCO Industries Inc.
National Presto Industries Inc.
Pentair Inc.
Tecumseh Products Co.
Terex Corp.
The Toro Company
<PAGE>
<PAGE>32
CERTAIN TRANSACTIONS
In 1996, the Corporation loaned to Steven L. Siemborski,
the Corporation's Senior Vice President and Chief Financial
Officer and a Director, $430,000 with interest at the applicable
Federal rate of 5.32% in lieu of Mr. Siemborski selling stock
and using the proceeds to repay a loan he incurred in order to
pay federal income taxes resulting from his purchase of 75,000
shares of Class A Common Stock in 1994 and 1995 pursuant
to his Employment Contract. The principal and interest on the
loan are due on March 8, 1997. As of September 21, 1996, the
entire $430,000 remains outstanding.
Certain transactions or relationships relating to the Corporation
are described under the caption "Compensation Committee
Interlocks and Insider Participation."
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Forms 3 reporting the formation of a group were filed with
the Securities and Exchange Commission (the "SEC") more than ten
days after the formation on September 11, 1995 of the group by
Harry E. Figgie, III, Mark P. Figgie, Matthew P. Figgie, The
Harry E. Figgie, Jr. & Nancy F. Figgie Irrevocable Trust, Matthew
Figgie Trust, The Clark-Reliance Corporation, Nancy F. Figgie
and The Figgie Family Foundation. The Forms 3 filed by Nancy
Figgie and the Figgie Family Foundation were filed on October 17,
1995, and the Forms 3 filed by the other members of the group
were filed on October 13, 1995.
STOCKHOLDER PROPOSAL REQUIREMENTS
The Corporation intends to schedule its 1997 annual meeting
on a date consistent with the dates on which it held its
annual meetings in years prior to 1995. Accordingly, any
stockholder who wishes to submit a proposal for inclusion in the
proxy material to be disseminated by the Corporation in
connection with its 1995 Annual Meeting must do so no later than
March 5, 1997. To be eligible for inclusion in the 1997 proxy
material, such proposal must conform to the requirements
set forth in Regulation 14A under the Securities Exchange Act of
1934. In order to be considered at an Annual Meeting, a
stockholder proposal must be presented by the proponents or their
representatives in attendance at the meeting.
<PAGE>
<PAGE>33
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented at the Annual Meeting other than those listed in the
Notice of Annual Meeting of Stockholders. However, if other
matters properly come before the Meeting, it is the intention of
the persons named in the accompanying proxy to vote in accordance
with their best judgment on such matters insofar as the proxies
are not limited to the contrary.
To the extent that information contained in this Proxy
Statement is within the knowledge of persons other than the
management of the Corporation, the Corporation has relied on such
persons for the accuracy and completeness thereof.
Upon the receipt of a written request from any stockholder
entitled to vote at the forthcoming Annual Meeting, the
Corporation will mail, at no charge to the stockholder, a copy of
the Corporation's annual report on Form 10-K, including the
financial statements and schedules required to be filed with the
SEC pursuant to Rule 13a-1 under the Securities Exchange Act of
1934, for the Corporation's most recent fiscal year. Requests
from beneficial owners of the Corporation's voting securities
must set forth a good faith representation that, as of the record
date for the Annual Meeting, the person making the request was
the beneficial owner of securities entitled to vote at such
meeting. Written requests for such report should be directed to:
Manager Corporate Communications and Investor Relations
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
You are urged to sign and return your proxy promptly to make
certain your shares will be voted at the Annual Meeting. For
your convenience, a return envelope is enclosed requiring no
additional postage if mailed in the United States.
By Order of the Board of Directors
/s/ Robert D. Vilsack
Secretary
Dated: October 22, 1996
<PAGE>
<PAGE>34
Exhibit A
Text of Sections 2(a) and 2(b) of Article II of the
Bylaws As Proposed To Be Amended
The following are the provisions of Sections 2(a) and (b) of
Article II of the Bylaws of Figgie International Inc. as proposed
to be amended. Material to be added by the proposed amendments
is italicized and material to be deleted is set off by brackets.
SECTION 2. Number, Classification, and Election of
Directors.
(a) Number. The Board of Directors shall consist of not
less than [9] 5 nor more than [16] 11 members. [The initial
Board of Directors shall consist of 14 members.] At any annual
meeting, the stockholders by a vote of a majority of the votes
entitled to be cast by the holders of all issued and outstanding
shares, may increase or decrease the number of the members of the
Board of Directors within the above limitation of [9] 5 to [16]
11 members, and may increase or decrease the number of directors
of the class whose term shall expire in that year, provided that
such class shall continue to consist of, as nearly as may be,
one-third (1/3) of the whole number of the Board of Directors
[and in any case of not less than three members]. If the Board
of Directors determines prior to any annual meeting that an
increase in the number of directors of the class whose term shall
expire in that year would cause such class not to consist of, as
nearly as may be, one-third (1/3) of the whole number of the
Board of Directors, then the stockholders, by the vote specified
in this Section 2(a), may increase by one (1) the number of
directors of one (1) of the other classes, provided that such
class shall continue to consist of, as nearly as may be, one-third
(1/3) of the whole number of the Board of Directors. In
addition, the Board of Directors may increase or decrease the
number of the members of the Board of Directors within the above
limitation of [9] 5 to [16] 11 members, and may increase or
decrease the number of directors of any class, provided that such
class shall continue to consist of, as nearly as may be, one-third
(1/3) of the whole number of the Board of Directors. No
reduction in the number of directors shall itself have the effect
of shortening the term of any incumbent director.
(b) Classification. The directors shall be classified in
respect of the time for which they shall hold office by dividing
them into three classes, each class consisting, as nearly as may
be, of one-third (1/3) of the whole number of the Board of
Directors[, but each class in any case to consist of not less
than three members.]
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<PAGE>35
FIGGIE [LOGO] PROXY/VOTING INSTRUCTION CARD
FIGGIE INTERNATIONAL INC. CLASS A COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders on November 26, 1996.
Your vote is important! Please sign and date on the reverse side of
this card.
The undersigned hereby appoints Keith Mabee, William Sickman,
Robert Vilsack and each of them, proxies, with full power of
substitution to appear on behalf of the undersigned and to vote all
shares of Class A Common Stock of the undersigned at the Annual
Meeting of Stockholders to be held at Franklin Hall at the
Corporation's Headquarters, 4420 Sherwin Road, Willoughby, Ohio
44094 on November 26, 1996 at 1:00 p.m., E.D.S.T., and at any
adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy
statement furnished herewith, subject to any directions indicated
on the reverse side of this card, hereby revoking any and all
proxies heretofore given.
The proxies will vote for the amendments to the Bylaws of the
Corporation and for the election of all listed nominees if the
applicable boxes are not marked and at their discretion on any
other matter that may properly come before the meeting.
Nominees for election as Directors are: Glen W. Lindemann and
Harrison Nesbit, II.
Please return promptly in the enclosed postage-paid envelope or
otherwise to P.O. Box 1628, Boston, MA 02105-1628, so that your
shares can be represented at the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
_______________
Please mark
votes as in this
example.
DIRECTORS RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS
1. Amendments to Sections 2(a) and (b) of Article II of the Bylaws
of the Corporation to provide that the Board of Directors shall
consist of not less than 5 nor more than 11 members.
FOR AGAINST ABSTAIN
2. Election of all Directors.
Nominees: Glen W. Lindemann and Harrison Nesbit, II
FOR WITHHELD
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND THE
________________________ NOTE AT LEFT MEETING
For all nominees except as noted above
Please sign and return this Proxy Card so that your shares can be
represented at the meeting. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the capacity
in which you are signing. If you do attend the meeting and decide to
vote by ballot, such vote will supersede this proxy.
Signature_______________ Date________________
Signature_______________ Date________________
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<PAGE>36
FIGGIE [LOGO] PROXY/VOTING INSTRUCTION CARD
FIGGIE INTERNATIONAL INC. CLASS B COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders on November 26, 1996.
Your vote is important! Please sign and date on the reverse side of
this card.
The undersigned hereby appoints Keith Mabee, William Sickman,
Robert Vilsack and each of them, proxies, with full power of
substitution to appear on behalf of the undersigned and to vote all
shares of Class A Common Stock of the undersigned at the Annual
Meeting of Stockholders to be held at Franklin Hall at the
Corporation's Headquarters, 4420 Sherwin Road, Willoughby, Ohio
44094 on November 26, 1996 at 1:00 p.m., E.D.S.T., and at any
adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy
statement furnished herewith, subject to any directions indicated
on the reverse side of this card, hereby revoking any and all
proxies heretofore given.
The proxies will vote for the amendments to the Bylaws of the
Corporation and for the election of all listed nominees if the
applicable boxes are not marked and at their discretion on any
other matter that may properly come before the meeting.
Nominees for election as Directors are: Glen W. Lindemann and
Harrison Nesbit, II.
Please return promptly in the enclosed postage-paid envelope or
otherwise to P.O. Box 1628, Boston, MA 02105-1628, so that your
shares can be represented at the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
________________
Please mark
votes as in this
example.
DIRECTORS RECOMMEND A VOTE "FOR" THE FOLLOWING PROPOSALS
1. Amendments to Sections 2(a) and (b) of Article II of the Bylaws
of the Corporation to provide that the Board of Directors shall
consist of not less than 5 nor more than 11 members.
FOR AGAINST ABSTAIN
2. Election of all Directors.
Nominees: Glen W. Lindemann and Harrison Nesbit, II
FOR WITHHELD
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND THE
________________________ NOTE AT LEFT MEETING
For all nominees except as noted above
Please sign and return this Proxy Card so that your shares can be
represented at the meeting. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the capacity
in which you are signing. If you do attend the meeting and decide to
vote by ballot, such vote will supersede this proxy.
Signature_______________ Date________________
Signature_______________ Date________________
<PAGE>
<PAGE>37
CORRESPONDENCE
October 10, 1996
VIA MESSENGER
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Figgie International Inc.
(File No. 1-8591): Preliminary Proxy Statement
Dear Sir or Madam:
Figgie International Inc. (the "Company") is furnishing
electronically by Edgar to the Commission its Preliminary Proxy
Statement pursuant to Rule 14a-6(a) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). No filing fee is
required for this filing.
Definitive copies of the Proxy Statement and form of proxy are
expected to be released to security holders on or about October 22,
1996.
If you have any questions with respect to this matter, please do
not hesitate to telephone Linda L. Griggs at (202) 467-7245 or
Jonathan Shanberge at (202) 467-7281.
Very truly yours,
/s/ Linda L. Griggs
cc: The Nasdaq Stock Market
Market Listing Qualifications
Robert D. Vilsack
