<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
FIGGIE INTERNATIONAL INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
================================================================================
<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
Robert D. Vilsack
Secretary
Dated: October 24, 1996
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY/VOTING
INSTRUCTION CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
FIGGIE INTERNATIONAL INC.
4420 SHERWIN ROAD
WILLOUGHBY, OHIO 44094
------------------------
PROXY STATEMENT
MAILED ON OCTOBER 24, 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 mail, proxies may be solicited
personally or by telephone, facsimile 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 $6,000. Proxies may be solicited by Morrow & Company
by personal interview, mail, telephone, facsimile 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 the ESOP, the ESOP for
Salaried Employees and the Stock Bonus Plan 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 13,641,613 shares of Class A Common Stock and 4,715,807 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 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.
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<PAGE> 4
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 and a report on Form 4, filed with the Securities and
Exchange Commission on December 5, 1995 and for January 1996 respectively, the
Figgie Family Group reported beneficial ownership of an aggregate of 964,092
shares of Class B Common Stock, or 20.4% of the Class B Common Stock, and
384,228 shares of Class A Common Stock, or 2.8% of the Class A Common 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 943,599 shares of Class B Common Stock, or 20.0% of the
Class B Common Stock, rather than the 964,092 shares of Class B Common Stock, or
20.4% of the Class B Common 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 such votes
based upon the number of shares held of record by such person.
The reduced voting power of the Figgie Family Group reduces the aggregate
number of votes that the holders of shares of Class B Common Stock are entitled
to cast at the Annual Meeting from 4,715,807 votes, if there were no Substantial
Stockholder, to 4,695,314 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
18,336,927.
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<PAGE> 5
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 amend the Bylaws of the Corporation and "FOR" the election
of the nominees for Director named in the Proxy Statement.
Shares represented by proxies which are marked "WITHHELD" with regard to
the election of the nominees for Director 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.
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 October 16, 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
3
<PAGE> 6
dispose, or to direct the disposition of, a security. Except as otherwise
indicated, the Corporation believes that each owner listed below exercises sole
voting and dispositive power over his or its shares.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------------- ----------------------------------- ------------ ---------
<S> <C> <C> <C>
Class A Common Stock NewSouth Capital Management, Inc. 1,827,991(1) 13.4%
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120
Class A Common Stock The Capital Group Companies, Inc. 1,210,500(2) 8.9%
333 South Hope Street
Los Angeles, CA 90071
Class A Common Stock The Prudential Insurance Company of 1,037,400(3) 7.6%
America
Prudential Plaza
Newark, NJ 07102-3777
Class A Common Stock Wellington Management Company 803,000(4) 5.9%
75 State Street
Boston, MA 02109
Class B Common Stock Wilmington Trust Corporation 1,052,087(5) 22.3%
1100 North Market Street
Wilmington, DE 19890
Class B Common Stock The Figgie Family Group 964,092(6) 20.4%
37001 Shaker Boulevard
Hunting Valley, OH 44022
Class B Common Stock Mentor Partners LP 433,300(7) 9.2%
500 Park Avenue
New York, NY 10022
<FN>
- ---------------
(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.
(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.
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<PAGE> 7
(4) 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 shares as to which
the reporting person claims shared dispositive power. The reporting person
does not claim any sole voting power or sole dispositive power.
(5) This amount, which includes 843,264 shares owned by the ESOP, the ESOP for
Salaried Employees, the Stock Bonus Plan and certain other of the
Corporation's employee benefit plans as of October 16, 1996 and shares owned
by the Figgie Family Group and is based upon information as of September 30,
1996 provided by the stockholder, consists of 236,868 shares as to which
Wilmington Trust Corporation and Wilmington Trust Company claim sole voting
and dispositive power and 815,219 shares as to which they claim shared
voting and dispositive power.
(6) This amount, based upon 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, and upon a report on Form 4 for
Harry E. Figgie, Jr., consists of 604,738 shares 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 Securities and Exchange
Commission (the "SEC") on September 11, 1995 to report their formation of a
"group" for the purpose of disposing of their investment in the Corporation.
(7) This amount, as reflected in a report on Schedule 13D/A dated December 27,
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.
</TABLE>
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<PAGE> 8
STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS
AND A FORMER EXECUTIVE OFFICER
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 Common Stock 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 230,521(5)(6) 1.7% 274(5) *
Steven L. Siemborski 75,635(5) * 515(5) *
A. A. Sommer, Jr. 2,250 * 7,750 *
Walter M. Vannoy 50,998(5) * 15,120(5) *
L. A. Harthun 6,282(5)(7) * 616(5) *
Keith V. Mabee 16,751(5)(8) * 719(5) *
Glen W. Lindemann 12,467(5)(9) * 1,400(5) *
All Directors, Nominees for
Director and Current Executive
Officers as a Group (12
persons) 417,250(5) 3.1% 61,945(5) 1.3%
<FN>
- ---------------
* Less than one percent (1%).
(1) Except as otherwise indicated in footnotes (2), (5), (6), (8) and (9) and as
limited by the terms of applicable restricted stock plans, each Director,
nominee for Director, Executive Officer or former Executive Officer owning
shares listed or included in this table exercises sole voting and
dispositive power over such shares. The shares shown include 211,000 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.
(5) These amounts include shares of Class A Common Stock and Class B Common
Stock held by the ESOP, the ESOP for Salaried Employees and the Stock Bonus
Plan 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 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
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<PAGE> 9
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 Common Stock 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 nominees for
Director and all current Executive Officers, Directors and nominees for
Director as a group, including the numbers of shares allocated as of June
30, 1996, are as follows: (1) allocated shares in the ESOP for Salaried
Employees: Mr. Reilly -- 504 shares of Class A Common Stock and 198 shares
of Class B Common Stock; Mr. Siemborski -- 618 shares of Class A Common
Stock and 237 shares of Class B Common Stock; Mr. Harthun -- 598 shares of
Class A Common Stock and 234 shares of Class B Common Stock; Mr.
Mabee -- 727 shares of Class A Common Stock and 278 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 -- 1,350 shares of Class A Common Stock
and 604 shares of Class B Common Stock; and all current Executive Officers,
Directors and nominees for Director as a group -- 4,181 shares of Class A
Common Stock and 1,699 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 current Executive Officers,
Directors and nominees for Director as a group -- 1,963 shares of Class B
Common Stock; and (3) allocated shares in the Stock Bonus Plan: Mr.
Lindemann -- 7 shares of Class B Common Stock; and all current Executive
Officers, Directors and nominees for Director as a group -- 7 shares of
Class B Common Stock. The numbers of shares of Class A Common Stock and
Class B Common Stock held by the ESOP for Salaried Employees and the ESOP
which have not been allocated and are reflected in the table above as
beneficially owned by the Named Executive Officers, Mr. Vannoy, the nominees
for Director and all current Executive Officers, Directors and nominees for
Director as a group are as follows: (1) unallocated shares in the ESOP for
Salaried Employees: Mr. Reilly -- 17 shares of Class A Common Stock and 20
shares of Class B Common Stock; Mr. Siemborski -- 17 shares of Class A
Common Stock and 20 shares of Class B Common Stock; Mr. Harthun -- 17 shares
of Class A Common Stock and 20 shares of Class B Common Stock; Mr.
Mabee -- 17 shares of Class A Common Stock and 20 shares of Class B Common
Stock; Mr. Vannoy -- 17 shares of Class A Common Stock and 20 shares of
Class B Common Stock; Mr. Lindemann -- 17 shares of Class A Common Stock and
20 shares of Class B Common Stock; and all current Executive Officers,
Directors and nominees for Director as a group -- 91 shares of Class A
Common Stock and 107 shares of Class B Common Stock; and (2) unallocated
shares in the ESOP: Mr. Reilly -- 35 shares of Class B Common Stock; Mr.
Siemborski -- 35 shares of class B Common Stock; Mr. Harthun -- 35 shares of
Class B Common Stock; Mr. Mabee -- 35 shares of Class B Common Stock; Mr.
Vannoy -- 35 shares of Class B Common Stock; Mr. Lindemann -- 35 shares of
Class B Common Stock; and all current Executive Officers, Directors and
nominees for Director as a group -- 188 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) Mr. Harthun retired from the Corporation on July 5, 1996.
(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.
</TABLE>
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<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 on 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 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 amendments 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. 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, each class consisting as nearly as may be of one-third of the whole
number of the Board of Directors.
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<PAGE> 11
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.
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. In connection with 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 Directors to be elected at this Annual Meeting, (ii) passed a
resolution setting the total number of Directors of the Board as eight effective
and contingent upon adoption of the amendments to the Bylaws at the 1996 Annual
Meeting, and (iii) determined that the number of Directors to be elected at this
Annual Meeting and whose term will expire at the Annual Meeting in 1999 is 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.
9
<PAGE> 12
The information appearing in the following tables 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
<TABLE>
<CAPTION>
TERM EXPIRES AT
SERVED AS ANNUAL MEETING
DIRECTOR OF STOCKHOLDERS
NAME AND PRINCIPAL OCCUPATION SINCE IN
- -------------------------------------------------------------- --------- ---------------
<S> <C> <C>
HARRISON NESBIT, II, age 69 1969 1999
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.
GLEN W. LINDEMANN, age 57(1) -- 1999
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.
<FN>
- ---------------
(1) See discussion under the caption "CERTAIN TRANSACTIONS."
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES FOR DIRECTOR.
10
<PAGE> 13
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
TERM EXPIRES AT
SERVED AS ANNUAL MEETING
NAME AND DIRECTOR OF STOCKHOLDERS
PRINCIPAL OCCUPATION SINCE IN
- -------------------------------------------------------------- --------- ---------------
<S> <C> <C>
STEVEN L. SIEMBORSKI, age 42(1) 1994 1997
Senior Vice President and Chief Financial Officer, Figgie
International Inc., since July 1, 1994; former Partner,
Ernst & Young LLP.
A.A. SOMMER, JR., age 72 1986 1997
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.
WALTER M. VANNOY, age 68(2) 1981 1997
Retired; Chairman of the Board, Figgie International Inc.,
from May 18, 1994 to May 16, 1995; Chief Executive
Officer, Figgie International 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.
FRED J. BRINKMAN, age 67 1992 1998
Consultant; Partner, Arthur Andersen LLP, public
accountants, until 1989, Senior Partner, 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.
F. RUSH McKNIGHT, age 66(2) 1985 1998
Partner, Calfee, Halter & Griswold, Cleveland, Ohio, law
firm, and Managing Partner from 1985 to 1991.
JOHN P. REILLY, age 53 1995 1998
Chief Executive Officer, Figgie International Inc., since
January 3, 1995; President, Figgie International Inc.,
since February 1, 1995; Chairman of the Board of Figgie
International Inc., since May 16, 1995; President and
Chief Operating Officer, Brunswick Corporation, from 1993
to 1994; President and Chief Executive Officer, Tenneco
Automotive, from 1987 to 1993; Director, Trinova
Corporation; Director Emeritus, Barat College.
<FN>
- ---------------
(1) See discussion under the caption "CERTAIN TRANSACTIONS."
(2) See discussion under the caption "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION."
</TABLE>
11
<PAGE> 14
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six non-telephonic meetings and three
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.
The committees of the Board of Directors, their principal functions and
their respective memberships are as follows:
EXECUTIVE AND FINANCE COMMITTEE
W. Vannoy, Chairman
F. Brinkman
H. Nesbit, II
J. Reilly
S. Siemborski (ex-officio and non-voting)
The Executive and Finance Committee acts on behalf of the Board of
Directors during the periods of the year in which the Board does not meet
and focuses 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's principal assignment is 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
A. Gangnes
F.R. McKnight
A.A. Sommer, Jr.
W. Vannoy
J. Reilly (ex-officio and non-voting)
The Management Development-Compensation and Nominating Committee evaluates
candidates for Board membership, makes recommendations with respect to the
number of Directors and candidates to be included in the annual proxy
materials, recommends candidates to fill Board vacancies and exercises
overall authority with respect to the compensation, development and
succession of executive personnel.
12
<PAGE> 15
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.
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 chief executive officer ("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 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, and provided him with a salary and various benefits for
a specified period thereafter. 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. Upon Mr. Vannoy's retirement from the Corporation,
the Corporation repurchased 50% of the 115,497 shares of restricted stock
acquired by Mr. Vannoy pursuant to the Agreement and under the Restricted Stock
Plan. 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
13
<PAGE> 16
expenses, and, during 1996, he received $150,000 until the termination of his
employment under the Agreement.
On October 30, 1995, Trans-Industries, Inc.("Trans-Industries"), whose
President and Chairman of the Board at the time was Dale S. Coenen, a member of
the Board of Directors 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 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.
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
nonvoting 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.
14
<PAGE> 17
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.
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 upon 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.
15
<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
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.
16
<PAGE> 19
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. The executives are
entitled to vote and receive dividends on the shares they acquire under the
Restricted Stock Plan, 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, other than terminations
resulting from death or total disability, the Corporation has the right to
repurchase 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. The transfer restrictions on the restricted shares lapse upon the
expiration of the Corporation's repurchase right or the termination of the
employment of a participant resulting from death or total disability prior to
the termination of the Restricted Stock Plan on July 1, 1998, unless earlier
terminated by the Board of Directors.
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. 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
17
<PAGE> 20
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 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 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 Internal
Revenue 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 of $1.00 per
share) 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
18
<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 CEO and each of the Corporation's other executive officers during
1995 whose total annual salary and bonus exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------------------
------------------------------------- RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL ANNUAL AWARD(S) OPTIONS/ COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION(1) ($)(2) SARS (#) (3)
- -------------------------- ---- -------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Reilly (4) 1995 $500,000 $250,000 $ 67,198 $165,000 500,000 $ 38,178
Chairman, CEO and
President
Steven L. Siemborski (5) 1995 350,000 108,000 448,124 -- -- 16,179
Senior Vice President
and 1994 175,000 25,000 258,126 -- -- 60,363
Chief Financial Officer
L. A. Harthun (6) 1995 239,166 80,000 -- -- 17,000 20,941
Senior Vice President -- 1994 229,166 -- -- -- -- 18,520
Legal and Secretary 1993 219,000 -- -- 277,405 -- 23,026
Keith V. Mabee (7) 1995 192,916 52,000 -- -- 15,000 13,141
Vice President --
Corporate 1994 152,666 -- -- 18,464 -- 12,919
Relations
<FN>
- ---------------
(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 (i) 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 ($412,500 in 1995 and
$248,438 in 1994), (ii) his use of a company car ($27,726 in 1995 and $8,402
in 1994), and (iii) club dues ($7,898 in 1995 and $1,286 in 1994).
(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.
(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
19
<PAGE> 22
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 -- $2,968.
(4) Mr. Reilly became CEO of the Corporation on January 3, 1995, President of
the Corporation on February 1, 1995 and Chairman of the Board of Directors
of the Corporation on May 16, 1995. He was not employed by the Corporation
prior to 1995.
(5) Mr. Siemborski became Senior Vice President and Chief Financial Officer of
the Corporation effective July 1, 1994. He was not employed by the
Corporation prior to 1994.
(6) Mr. Harthun retired from the Corporation on July 5, 1995.
(7) Mr. Mabee became an executive officer of the Corporation on February 23,
1994.
</TABLE>
STOCK OPTIONS
The following tables provide information on grants of stock options
pursuant to the Stock Option Plan during the year ended December 31, 1995. The
Stock Option Plan is administered by the Stock Option Committee of the Board of
Directors, which has the authority to determine the individuals to whom options
are granted and the terms of all grants thereunder. The Stock Option Plan
provides for the issuance of nonqualified stock options and "incentive stock
options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), for the Corporation's Class A
Common Stock and the granting of stock appreciation rights ("SARs"). The options
granted pursuant to the Stock Option Plan have terms of up to 10 years from the
date of grant and an exercise price equal to one hundred percent (100%) of the
fair market value on the date of grant and are non-transferable.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information related to options granted or
awarded to the Named Executive Officers during 1995.
20
<PAGE> 23
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SHARE) GRANT DATE DATE
- ---------------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
John P. Reilly (2).... 500,000 62.85% $ 6.500 1/04/95 1/04/02
Steven L.
Siemborski.......... 0 0.00 N/A N/A N/A
L. A. Harthun (3)..... 17,000 2.14 7.625 2/14/95 2/14/02
Keith V. Mabee (3).... 15,000 1.89 7.625 2/14/95 2/14/02
All Stockholders...... N/A N/A N/A N/A N/A
All Optionees......... 793,500 100.00 7.177 Various 7 Years
Options Gain as % of
all Stockholder
Gain................ N/A N/A N/A N/A N/A
<CAPTION>
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRCIATION
FOR OPTION TERM (1)
------------------------------------------
NAME 0% 5% 10%
- ---------------------- --------- ------------ ------------
<S> <C> <C> <C>
John P. Reilly (2).... N/A $ 1,323,076 $ 3,083,331
Steven L.
Siemborski.......... N/A N/A N/A
L. A. Harthun (3)..... N/A 52,770 122,977
Keith V. Mabee (3).... N/A 46,562 108,510
All Stockholders...... N/A 53,667,653 125,068,454
All Optionees......... N/A 2,318,259 5,402,529
Options Gain as % of
all Stockholder
Gain................ N/A 4.32 % 4.32 %
<FN>
- ---------------
(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.)
</TABLE>
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:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
SHARES ACQUIRED VALUE OPTIONS AT FY-END (#) AT FY-END ($)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ------------------------- --------------- -------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C>
John P. Reilly........... 0 0 100,000/400,000 $387,500/ $1,550,000
Steven L. Siemborski..... 0 0 0/ 0 0/ 0
L. A. Harthun............ 0 0 0/ 17,000 0/ 46,750
Keith V. Mabee........... 0 0 0/ 15,000 0/ 41,250
<FN>
- ---------------
(1) No options were exercised.
</TABLE>
21
<PAGE> 24
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
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. A Director who does not stand for re-election because he is 72 or
older or a Director who does not stand for re-election and who was a Director in
1976 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:
22
<PAGE> 25
<TABLE>
<CAPTION>
ANNUAL PENSIONABLE EARNINGS (1)
------------------------------------
0-100% OVER 100% OF
OF COVERED COVERED
COMPENSATION (2) COMPENSATION (2)
---------------- ----------------
<S> <C> <C>
Retirement Income Credit 0.7% 1.2%
<FN>
- ---------------
(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.
</TABLE>
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.
23
<PAGE> 26
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
<TABLE>
<CAPTION>
ANNUAL BENEFIT FOR YEARS OF CREDITED SERVICE SHOWN(1)
REMUNE- -------------------------------------------------------------------------
RATION(2) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$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
<FN>
- ---------------
(1) Annual benefits are computed on the basis of one hundred percent (100%)
joint and survivor benefits. 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.
</TABLE>
As of December 31, 1995, the credit years of service for the Named
Executive Officers are as follows: Mr. Reilly, 1 year; Mr. Siemborski, 1 year;
Mr. Harthun, 30 years; and Mr. Mabee, 2 years.
24
<PAGE> 27
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 (which was
paid) if he remained an employee of the Corporation until April 30, 1996; (ii)
the right (which was exercised) to acquire 30,000 shares of the Corporation's
Common Stock pursuant to the terms of the Restricted Stock Plan; 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 75,000 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), 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
25
<PAGE> 28
$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 in an
amount 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 until May 31, 1997. Unless
the Officer Retention Agreement is earlier terminated by Mr. Mabee without cause
or by the Corporation based upon 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 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: (i) 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, (ii) 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, (iii) a waiver of the Corporation's right to repurchase shares
previously purchased by Mr. Mabee pursuant to the Restricted Stock Plan, (iv)
any then unpaid installments of bonuses previously awarded to Mr. Mabee pursuant
to the Corporation's Compensation Plan for Executives, and (v) such additional
bonuses as the Management Development-Compensation and Nominating Committee of
the Board of
26
<PAGE> 29
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 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. As noted above, Mr.
Harthun retired on July 5, 1996. The Management Retention Agreement provided
similar benefits to those provided to Mr. Mabee in the Officer Retention
Agreement except that the periods for which such benefits were to be provided
were shorter.
27
<PAGE> 30
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 upon
market capitalization.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG FIGGIE INTERNATIONAL INC.-CLASS A AND B, THE NASDAQ STOCK MARKET-US INDEX,
AN OLD PEER GROUP AND A NEW PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) FIGGIE CLASS A FIGGIE CLASS B OLD PEER GROUP NASDAQ NEW PEER GROUP
<S> <C> <C> <C> <C> <C>
12/90 100 100 100 100 100
12/91 100 113 105 161 137
12/92 130 108 118 187 149
12/93 108 88 169 214 177
12/94 49 39 167 210 161
12/95 82 63 213 297 188
<FN>
- ---------------
* $100 invested on 12/31/90 in stock or index-including reinvestment of
dividends; fiscal year ending December 31.
</TABLE>
28
<PAGE> 31
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:
<TABLE>
<S> <C> <C>
AM International, Inc. Dresser Industries, Inc. Outboard Marine Corp.
Applied Materials Inc. Figgie International Inc. Parker Hannifin Corp.
Baker Hughes Incorporated Class A Pentair Inc.
Black and Decker Corp. Great American Management Stewart & Stevenson
Briggs & Stratton Corp. & Investment, Inc. Services, Inc.
Caterpillar Inc. Harnischfeger Industries, Tecumseh Products Co.
Cincinnati Milacron Inc. Inc. Tenneco Inc.
Clark Equipment Co. IMO Industries Inc. Terex Corp.
Cummins Engine Ingersoll-Rand Company The Toro Company
Company, Inc. Kennametal Inc. The Timken Company
Deere & Company NACCO Industries, Inc. Trinova Corporation
Dover Corporation Nortek Inc.
</TABLE>
The newly constructed peer group was constructed to more closely resemble
the Corporation's current market capitalization. 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:
<TABLE>
<S> <C>
Ago Corporation NAACO Industries Inc.
Detroit Diesel Corporation National Presto Industries Inc.
Fedders Corporation Pentair Inc.
Figgie International Inc. Class A Tecumseh Products Co.
Giddings & Lewis Inc. Terex Corp.
IMO Industries Inc. The Toro Company
Lincoln Electric Company
</TABLE>
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, but the Corporation has
agreed to pay to Mr. Siemborski a bonus in an amount equal to the accrued
interest, grossed-up for all applicable taxes, provided that Mr. Siemborski is
not in default on the loan. As of September 21, 1996, the entire $430,000 plus
accrued interest remains outstanding.
The Corporation entered into a management agreement dated December 9, 1994
(the "Director Agreement") with Glen W. Lindemann. The Director Agreement
provides for Mr. Lindemann's employment until December 9, 1997, and automatic
extensions for successive one year terms thereafter, as President of the
Corporation's Scott Aviation division. Either the Corporation or Mr. Lindemann
may terminate the Director Agreement on December 9, 1997 or at the end of any
successive one year term thereafter. If Mr. Lindemann'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.
Lindemann is a participant. In the event Mr. Lindemann becomes disabled, the
Corporation
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may terminate his employment, and Mr. Lindemann's benefits will be determined in
accordance with the Corporation's disability and other applicable plans then in
effect. If the Corporation terminates Mr. Lindemann's employment other than for
cause (as defined), the Corporation will continue to pay Mr. Lindemann 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. Lindemann will also be entitled to reimbursement for the
cost of outplacement services in an amount 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. Lindemann has a vested
right.
The Corporation entered into a retention agreement dated July 17, 1996 (the
"Director Retention Agreement") with Glen W. Lindemann. Until the Director
Retention Agreement is terminated upon the earliest to occur of May 31, 1997,
Mr. Lindemann's death or disability, the completion of payouts under the
Director Retention Agreement, or the termination of Mr. Lindemann's employment,
unless the Corporation terminates his employment without cause (as defined), the
Director Retention Agreement grants to Mr. Lindemann a transaction bonus as an
incentive for Mr. Lindemann to remain an employee of the Corporation, payable on
the earlier of the Sale of the Corporation (as defined) or the Sale of the
Corporation's Scott Aviation division (the Business Unit, as defined). The
transaction bonus consists of a cash lump sum equal to: (i) two tenths of one
percent (0.2%) of the Net Proceeds (as defined) from the Sale of the Business
Unit or two tenths of one percent (0.2%) of the Net Proceeds of the Sale of the
Corporation which is allocable to the Business Unit; (ii) any then unpaid
installments of bonuses previously awarded to Mr. Lindemann pursuant to the
Corporation's Compensation Plan for Executives; and (iii) a pro-rata bonus under
the Corporation's Compensation Plan for Executives with respect to the year in
which the transaction bonus is awarded based upon Mr. Lindemann's performance
through the date of sale under the Scott Aviation business plan for such year.
In addition, the Director Retention Agreement provides for the Corporation to
indemnify Mr. Lindemann for any Excise Tax (as defined) and related expenses in
the event that Mr. Lindemann receives any payment or benefit in connection with
a change in ownership or control (as defined) or termination of Mr. Lindemann's
employment.
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 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation's independent public accountants for the fiscal year ended
1995 were Arthur Andersen LLP. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting and will have an opportunity to
make a statement if they so desire and to respond to appropriate questions.
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The Corporation has not made a final decision as to the selection of its
independent public accountants for the current year and is considering as
potential candidates several public accounting firms including Arthur Andersen
LLP.
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
1994. 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 1997 Annual Meeting must do so no later than January 21, 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.
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:
Investor Relations Department
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
Robert D. Vilsack
Secretary
Dated: October 24, 1996
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<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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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 election of all listed nominees as Directors and
for the amendments to the Bylaws of the Corporation 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.
1. Amendments to Section 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 Nominees as Directors.
Nominees: Glen W. Lindemann and Harrison Nesbit, II
FOR WITHHELD
_____________________________________
For all nominees except as noted above
DIRECTORS RECOMMEND A VOTE "FOR" THE PROPOSALS.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND THE
NOTE AT LEFT MEETING
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> 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 B 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 election of all listed nominees as Directors and
for the amendments to the Bylaws of the Corporation 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.
1. Amendments to Section 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 Nominees as Directors.
Nominees: Glen W. Lindemann and Harrison Nesbit, II
FOR WITHHELD
_____________________________________
For all nominees except as noted above
DIRECTORS RECOMMEND A VOTE "FOR" THE PROPOSALS.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND THE
NOTE AT LEFT MEETING
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_________
