SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MORGAN PRODUCTS LTD.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
[LOGO]
469 MCLAWS CIRCLE
WILLIAMSBURG, VIRGINIA 23185
(757) 564-1700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Meeting") of Morgan Products Ltd., a Delaware corporation (the "Company"), will
be held at 10:00 A.M. Eastern Standard Time at the Marriott Hotel, 50 Kingsmill
Road, Williamsburg, Virginia 23185 on Wednesday, May 13, 1998, for the following
purposes:
1. To elect seven (7) directors to serve until the next annual meeting of
stockholders and until their successors are elected and qualified;
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending December 31, 1998;
and
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The close of business on March 20, 1998 has been fixed as the record date
for determining stockholders entitled to notice of and to vote at the Meeting.
All holders of common stock of the Company at that date are entitled to vote at
the Meeting or any adjournment or postponement thereof. A list of those
stockholders will be available for inspection at the Meeting upon request of any
stockholder.
You are cordially invited to attend the Meeting. Your vote is important. If
you do not expect to attend the Meeting, or if you do plan to attend but wish to
vote by proxy, please date, sign and mail promptly the enclosed proxy, for which
a return envelope is provided. If you do attend, you may revoke your proxy and
vote your shares in person if you wish to do so.
By Order of the Board of Directors,
/s/ Mitchell J. Lahr
Williamsburg, Virginia Mitchell J. Lahr
April 3, 1998 Secretary
<PAGE>
MORGAN PRODUCTS LTD.
469 McLaws Circle
Williamsburg, VA 23185
(757) 564-1700
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Morgan Products Ltd. (the "Company") for
use at the Annual Meeting of Stockholders (the "Meeting") to be held at the
Marriott Hotel, 50 Kingsmill Road, Williamsburg, Virginia, on Wednesday, May 13,
1998, at 10:00 A.M. Eastern Standard Time, and at any adjournments or
postponements thereof. This Proxy Statement and the enclosed proxy will first be
mailed to stockholders on or about April 3, 1998.
Only holders of record of the Company's common stock, par value $.10 per
share (the "Common Stock"), as of the close of business on March 20, 1998 (the
"Record Date"), will be entitled to notice of, and to vote at, the Meeting. As
of the Record Date, there were 10,358,512 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. As of the Record Date, 2,386
shares of Common Stock were outstanding and held by the Company as treasury
shares. There is no other class of voting securities issued and outstanding. The
presence in person or by proxy of holders of a majority of the outstanding
Common Stock will be necessary to constitute a quorum for the transaction of
business at the Meeting.
Assuming a quorum is present, a plurality of the votes of the shares of
Common Stock present or represented by proxy at the Meeting is required for the
election of any nominee or other person as a director and the affirmative vote
of a majority of the shares of Common Stock present or represented by proxy at
the Meeting and entitled to vote is required for the ratification of the
selection of Price Waterhouse LLP as the Company's independent accountants for
the fiscal year ending December 31, 1998.
All shares represented by properly executed proxies will be voted in
accordance with the instructions indicated thereon unless such proxies
previously have been revoked. If any such proxies do not contain voting
instructions, the shares represented by such proxies will be voted (1) FOR the
election of the nominees listed thereon and (2) FOR the ratification of the
selection of Price Waterhouse LLP as the Company's independent accountants for
the fiscal year ending December 31, 1998. An automated system administered by
the Company's transfer agent tabulates the votes. Where the approval of a
majority of the shares represented at the meeting is required for the approval
of a proposal, abstentions are the equivalent of votes against such proposal and
broker non-votes have no effect. The Board of Directors does not know of any
business to be brought before the Meeting other than as indicated in the Notice
of Annual Meeting. If any other matters properly come before the Meeting, shares
represented by all properly executed proxies will be voted in accordance with
the judgment of the persons acting thereunder.
Any stockholder who executes and delivers a proxy may revoke it at any time
prior to its exercise at the Meeting by (a) filing a written notice of
revocation with the Secretary of the Meeting; (b) delivering to the Secretary of
the Company a duly executed proxy bearing a later date; or (c) appearing at the
Meeting and voting in person.
<PAGE>
1. ELECTION OF DIRECTORS
Nominees
The Board of Directors has nominated seven (7) persons for election as
directors of the Company to serve until the next Annual Meeting of Stockholders
and until their successors have been duly elected and qualified. William R.
Holland, a current director, had decided not to stand for re-election. The Board
of Directors has nominated J. Michael Marks for election to fill the vacancy
occurring in the Board of Directors. All the nominees except J. Michael Marks
are currently serving as directors of the Company.
Each nominee has consented to be named in this Proxy Statement and to serve
if elected. If, prior to the Meeting, any nominee becomes unable to serve, the
shares represented by all properly executed proxies will be voted for such
additional person as may be recommended by the Board of Directors, unless the
Board of Directors shall determine to reduce the number of directors pursuant to
the by-laws of the Company.
Frank J. Hawley, Jr. age 70, has been Chairman of the Board of the Company
since December 1983. Since September 1986, he has been the managing partner of
Bedford Partners, the general partner of Saugatuck Capital Company Limited
Partnership II ("Saugatuck II"), a venture capital partnership. Since October
1992, he has been the managing partner of Greyrock Partners Limited Partnership,
the general partner of Saugatuck Capital Company Limited Partnership III
("Saugatuck III"), a venture capital partnership. Since September 1986, he has
been the President and principal stockholder of Saugatuck Associates, Inc. and
Saugatuck Associates II, Inc., each a risk capital management firm which
provides investment advice and assistance to Saugatuck II and Saugatuck III.
During the period from 1982 to 1996, Mr. Hawley was the managing partner of the
general partner of Saugatuck Capital Company Limited Partnership, a venture
capital partnership which was terminated in 1996.
John S. Crowley, age 74, has served as a member of the Company's Board of
Directors since November 1986. Mr. Crowley has been a private investor since
1994. Previously he was a managing director of Saugatuck Associates from 1985 to
1994. From 1983 to 1987 he was the organizer and general partner of Round Hill
Associates, a private investment fund engaged in management buyouts, and the
President of Round Hill Associates Management Company. Mr. Crowley is also a
director of General Housewares Corp., a consumer goods company.
Howard G. Haas, age 73, has served as a member of the Company's Board of
Directors since September 1987. Mr. Haas has been the Chairman of Howard G. Haas
& Associates, a consulting firm, since 1986. From 1967 to 1986 Mr. Haas was the
President and Chief Executive Officer of Sealy Incorporated; Mr. Haas is also a
member of the faculty of the Graduate School of Business at the University of
Chicago.
J. Michael Marks, age 49, is not currently a member of the board of
Directors of the Company. In April 1987, Mr. Marks founded Indian River
Consulting Group, a wholesale distribution business consulting company based in
Melbourne, Florida. From November 1981 to December 1986, Mr. Marks was the
Executive Vice President of Lex Electronics, a Stamford, Connecticut based
electronics distributor. Prior to November 1981, Mr. Marks served as Director of
Corporate Training and Development for Ducommon Inc., a Los Angeles, California
based industrial distribution company.
Larry R. Robinette, age 54, has served as a member of the Company's Board
of Directors since November 1994 and as the President and Chief Executive
Officer of the Company since September 1994. He is the former President and CEO
of Anchor Hocking Packaging of Cincinnati, Ohio, a subsidiary of
CarnaudMetalbox. From 1980 to 1993, he held a series of executive assignments at
Newell Company, including operations vice presidencies in the EZ Painter
Division, Newell Window Furnishings and the Mirro Foley Division and the
presidency of Anchor Industrial Glass. Prior to that, he was employed at General
Motors.
Edward T. Tokar, age 50, has served as a member of the Board of Directors
of the Company since November 1994. Since 1985, Mr. Tokar has served as Vice
President-Investments, AlliedSignal Inc., responsible for the overall investment
management of employee benefit asset funds worldwide. He is also the Chief
Executive Officer of Allied Capital Management, LLC. Mr. Tokar has been employed
at AlliedSignal since 1977 in various management positions. Mr. Tokar is a
trustee of the Morgan Grenfell Investment Funds, an advisor to various
investment partnerships and a trustee of the College of William and Mary.
2
<PAGE>
Patrick J. McDonough, Jr., age 66, has served as a member of the Board of
Directors of the Company since November 1994. Since February 1997, Mr. McDonough
has served as the President of McDonough & Associates, a management consulting
firm that specializes in corporate strategic planning and re-engineering. From
June 1994 to February 1997, Mr. McDonough was the Chairman and CEO of Olympic
Manufacturing Group, Inc., a commercial roofing and fastener company located in
Massachusetts. Mr. McDonough spent 22 years with the Black & Decker
Manufacturing Company, most recently as President of the U.S. division of Black
& Decker Manufacturing Company and Chief Administrative Officer in the Office of
the CEO.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE ``FOR'' THE
ELECTION OF ALL NOMINEES FOR DIRECTOR.
The Board of Directors held six meetings (exclusive of consents executed in
lieu of meetings) during the period from January 1, 1997 to December 31, 1997
("Fiscal 1997"). Mr. Tokar and Mr. McDonough attended four of the six meetings
of the Board of Directors. All other incumbent directors attended more than 75%
of the meetings of the Board of Directors and the committees of which they were
members. The standing committees of the Board of Directors are the Audit
Committee and the Compensation Committee. The Board of Directors, as a whole,
functions as a nominating committee.
The Audit Committee currently consists of Messrs. Crowley, Haas, Holland,
and Tokar. The Audit Committee's functions include the recommendation of a firm
to be employed by the Company as its independent accountants, consultation with
the accountants with respect to the plan of audit, review with such accountants
of their report of audit, consultation with such accountants regarding the
adequacy of internal controls, the direct monitoring of the Company's accounting
practices and system of internal controls, and other related functions. The
Audit Committee held two meetings during 1997.
The Compensation Committee currently consists of Messrs. Hawley and
Holland. The Compensation Committee functions include overseeing the general
compensation policies of the Company, establishing compensation plans and
specific compensation levels for executive officers and administering the
Executive Performance Incentive Plan, the Morgan Products Ltd. Incentive Stock
Option Plan and the Morgan Products Ltd. Incentive Compensation Plan. The
Compensation Committee held two meetings during 1997.
Compensation of Directors
All directors receive reimbursement for all expenses incurred in connection
with attendance at board meetings and all directors, other than Messrs. Hawley
and Robinette, receive a fee of $1,500 per meeting of the board, $1,500 per
committee meeting and a retainer of $3,000 per quarter.
In addition, each individual serving on the Board of Directors who is not
an employee of the Company or a beneficial owner (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of more than 20% of the issued and outstanding Common Stock (a
"Non-employee Director") is automatically granted an option to purchase 1,000
shares of Common Stock upon such person's election and each re-election to the
Board of Directors. During 1997, five incumbent Non-employee Directors (Messrs.
Crowley, Haas, Holland, Tokar, and McDonough) each received a grant of options
for the purchase of 1,000 shares of Common Stock pursuant to the Morgan Products
Ltd. 1992 Non-employee Director Stock Option Plan (the "Director Plan").
Each grant under the Director Plan permits the holder to purchase from the
Company 1,000 shares of Common Stock at the fair market value of such shares on
the date the option was granted. Such options vest beginning one year from the
date of grant in equal amounts over the next three years. In the event that a
person granted options under the Director Plan ceases to be a director for any
reason other than death or disability or in connection with a Change of Control
(as defined in the Director Plan), each option not vested as of the effective
date of termination as a director shall, to the extent not so vested, be
forfeited and revert back to the Company.
3
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Hawley and
Holland. Mr. Hawley is an officer of the Company and may be considered an
employee of the Company. In 1997, the Company paid Mr. Hawley a chairman's fee
of $100,000 which he is entitled to receive annually. No other executive officer
of the Company served as: (i) a member of the compensation committee (or other
board committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served on the compensation committee of the Board of
Directors of the Company; (ii) a director of another entity, one of whose
executive officers served on the Board of Directors of the Company; or (iii) a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served as a
director of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 20, 1998 the number of shares
of Common Stock owned beneficially, to the knowledge of the Company, by each
beneficial owner of more than 5% of the Common Stock, by each director, by each
named executive officer, and by all executive officers and directors of the
Company as a group. Unless otherwise indicated in a footnote, each person listed
in the table possesses sole voting and investment power with respect to the
shares indicated.
<TABLE>
<CAPTION>
Number Percentage of
Name and Address of Beneficial Owner of Shares Common Stock
- -------------------------------------- -------------------- --------------
<S><C>
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202 2,064,900 (1) 19.9
The Parnassus Fund
One Market
Steuart Tower - Suite #1600
San Francisco, CA 94105 1,000,000 9.7
Franklin Resources, Inc.
Franklin Advisory Services, Inc.
901 Mariners Island Blvd, 6th Floor
San Mateo, CA 94404 749,800 (2) 7.2
Dimensional Fund Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401 555,900 (3) 5.4
Citicorp
Citibank, N.A.
399 Park Avenue
New York, NY 10043 529,800 (4) 5.1
Larry R. Robinette
469 McLaws Circle
Williamsburg, VA 23185 271,666 (5) 2.6
Frank J. Hawley, Jr.
One Canterbury Green
Stamford, CT 06901 125,122 1.2
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Number Percentage of
Name and Address of Beneficial Owner of Shares Common Stock
- -------------------------------------- -------------------- ---------------
<S><C>
Howard G. Haas
Suite 1275
208 S. LaSalle Street
Chicago, IL 60604 9,500 (6) *
William R. Holland
301 S. College Street
2300 One First Union Center
Charlotte, NC 28202 5,500 (7) *
John S. Crowley
275 Guinea Road
Stamford, CT 06903 5,000 (8) *
Edward T. Tokar
P.O. Box 1219R
101 Columbia Road
Morristown, NJ 07962-1219 4,000 (9) *
Patrick J. McDonough, Jr.
P.O. Box 508
153 Bowles Road
Agawam, MA 01001 2,000 (10) *
Mitchell J. Lahr
469 McLaws Circle
Williamsburg, VA 23185 50,000 (11) *
Peter Balint
469 McLaws Circle
Williamsburg, VA 23185 50,000 (12) *
David A. Braun
Morgan Distribution
303 Mulberry Drive
Mechanicsburg, PA 17055 35,000 (13) *
Darrell J. Olson
469 McLaws Circle
Williamsburg, VA 23185 25,000 (14) *
Duane R. Greenly
Morgan Manufacturing
P.O. Box 2446
500 Park Plaza
Oshkosh, WI 54903-2442 0 (15) *
All Directors and Executive Officers
as a group (13 persons) 589,857 (16) 5.5
</TABLE>
- ----------
* Number equals less than one percent (1%) of outstanding shares of Common
Stock.
(1) Based on information filed with the Securities and Exchange Commission,
Heartland Advisors, Inc. has sole voting power with respect to 1,932,300
shares and dispositive power with respect to 2,064,900 shares.
5
<PAGE>
(2) Based on information filed with the Securities and Exchange Commission,
Franklin Advisory Services, Inc. has sole voting power with respect to
220,000 shares and sole dispositive power with respect to 749,800 shares.
(3) Based on information filed with the Securities and Exchange Commission,
Dimensional Fund Advisors Inc. ("Dimensional") has sole voting power with
respect to 366,700 shares. Persons who are officers of Dimensional also
serve as officers of DFA Investment Dimensions Group Inc. (the "Fund") and
the DFA Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these persons vote
66,000 additional shares which are owned by the Fund and 123,200 shares
which are owned by the Trust. Dimensional has sole dispositive power with
respect to 555,900 shares.
(4) Citicorp, the Parent Holding Company (as defined in Rule 13d-1(b)(ii)(G)
under the Exchange Act) shares voting and dispositive power with Citibank,
N.A., a Bank (as defined in Section 3(a)(6) of the Exchange Act) with
respect to 529,800 shares.
(5) This amount consists of 271,666 shares of Common Stock as to which Mr.
Robinette has options to purchase which were granted pursuant to the
Morgan Products Ltd. Incentive Stock Option Plan (the "Stock Option Plan")
and which are currently exercisable or exercisable within 60 days.
(6) This amount includes 5,000 shares of Common Stock as to which Mr. Haas has
options to purchase which were granted pursuant to the Director Plan and
which are currently exercisable or exercisable within 60 days, as well as
4,500 shares owned individually.
(7) This amount includes 5,000 shares of Common Stock as to which Mr. Holland
has options to purchase which were granted pursuant to the Director Plan
and which are currently exercisable or exercisable within 60 days, as well
as 500 shares owned individually.
(8) This amount consists of 5,000 shares of Common Stock as to which Mr.
Crowley has options to purchase which were granted pursuant to the
Director Plan and which are currently exercisable or exercisable within 60
days.
(9) This amount represents 2,000 shares of Common Stock as to which Mr. Tokar
has options to purchase which were granted pursuant to the Director Plan
and which are currently exercisable or exercisable within 60 days, as well
as 2,000 shares owned individually.
(10) This amount represents 2,000 shares of Common Stock as to which Mr.
McDonough has options to purchase which were granted pursuant to the
Director Plan and which are currently exercisable or exercisable within 60
days.
(11) This amount includes 50,000 shares of Common Stock as to which Mr. Lahr
has options to purchase which were granted pursuant to the Stock Option
Plan and which are currently exercisable or exercisable within 60 days.
(12) This amount includes 50,000 shares of Common Stock as to which Mr. Balint
has options to purchase which were granted pursuant to the Stock Option
Plan and which are currently exercisable or exercisable within 60 days.
(13) This amount includes 35,000 shares of Common Stock as to which Mr. Braun
has options to purchase which were granted pursuant to the Stock Option
Plan and which are currently exercisable or exercisable within 60 days.
(14) This amount includes 25,000 shares of Common Stock as to which Mr. Olson
has options to purchase which were granted pursuant to the Stock Option
Plan and which are currently exercisable or exercisable within 60 days.
(15) Pursuant to an amendment to his option agreement, Mr. Greenly's 90,000
options, a portion of which had vested and were exercisable as of the
closing date of the sale of the Company's manufacturing business, did not
terminate upon the termination of his employment, but such options are no
longer exercisable until August 2, 1998, at which time all 90,000 options
shall be vested and become immediately exercisable.
(16) This amount represents the aggregate amount of 589,857 shares of Common
Stock as to which all executive officers and directors as a group have
options to purchase and which are currently exercisable or exercisable
within 60 days, as well as shares owned or beneficially owned
individually.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table (Summary Compensation Table) sets forth information
with respect to all cash and non-cash compensation for services rendered to the
Company in all capacities for fiscal years 1997, 1996 and 1995, of those persons
who were, at December 31, 1997 (i) the Chief Executive Officer and (ii) the
other most highly compensated executive officers of the Company (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation (1) Long-Term Compensation
------------------------------------------------ ----------------------
Awards
Other Annual of Stock Long-Term All Other
Name & Principal Position Year Salary Bonus Compensation(2) Options Payouts Compensation(3)
- ------------------------------- ------ ---------- ---------------- -------------------- -------- --------------- ---------------
<S><C>
Larry R. Robinette 1997 $400,010 -- $ 21,980 (9) -- $1,098,942 (22) $19,192
President, Chief Executive 1996 $365,580 $ 239,724 $ 15,192 (10) 25,000 -- $16,451
Officer, and Director 1995 $350,000 -- $ 432,423 (11) 20,000 -- $11,593
Mitchell J. Lahr 1997 $164,423 $ 112,500 (4) $ 199,277 (12) 100,000 -- $ 4,932
Vice President -- Finance and
Administration, Chief
Financial Officer, and
Secretary
Darrell J. Olson 1997 $ 99,615 $ 50,000 (5) $ 175,444 (13) 75,000 -- $ 2,988
Vice President -- Human
Resources
David A. Braun 1997 $200,000 $ 22,027 $ 5,853 (14) 35,000 -- $13,989
Vice President and 1996 $170,382 $ 330,677 $ 2,914 (15) 25,000 -- $ 9,073
President -- Morgan 1995 $ 60,585 $ 30,000 $ 90,517 (16) 40,000 --
Distribution $ 1,558
Duane A. Greenly 1997 $200,000 $ 100,000 (6) $ 15,328 (17) -- -- $ 5,820
Vice President and 1996 $ 7,780 $ 77,411 (7) $ 44 (18) 90,000 -- --
President -- Morgan
Manufacturing
Peter Balint 1997 $200,018 $ 0 $ 6,583 (19) 0 0 $ 0
Former Executive Vice 1996 $200,018 $ 50,000 $ 10,871 (20) 0 0 $ 4,292
President -- Market 1995 $126,935 $ 40,000 (8) $ 82,947 (21) 50,000 0 $ 3,231
Development & National
Accounts
</TABLE>
- ----------
(1) This includes amounts earned in the respective fiscal year, whether or not
deferred.
(2) This represents payments by the Company for moving expenses, excess group
life insurance, leased automobiles, tax gross-up on amounts included in
taxable compensation (other than salary and bonuses) and certain other
reimbursable fees and expenses to the extent required to be reported.
(3) This amount represents contributions by the Company under Section 401(k) of
the Code pursuant to the Profit Sharing Savings and Retirement Plan, as
well as excess 401(k) amounts the Company contributed to the Deferred
Compensation Plan.
(4) This represents a deferred signing bonus paid to Mr. Lahr pursuant to his
employment agreement entered into on March 11, 1997.
(5) This represents a deferred signing bonus paid to Mr. Olson pursuant to his
employment agreement entered into on March 21, 1997.
(6) This represents a bonus paid to Mr. Greenly to partially compensate him for
the loss of bonuses which he was eligible to earn under his previous
employment arrangement with a former employer.
(7) This includes a $20,000 bonus paid to Mr. Greenly pursuant to his
employment agreement and a performance bonus which was earned in 1996 but
paid in 1997.
7
<PAGE>
(8) This represents a deferred signing bonus paid to Mr. Balint pursuant to his
employment agreement entered into on May 1, 1995.
(9) Other Annual Compensation includes $21,980 of tax gross-up.
(10) Other Annual Compensation includes $15,180 of tax gross-up.
(11) Other Annual Compensation includes $338,719 of moving expenses paid on Mr.
Robinette's behalf and $74,748 of tax gross-up.
(12) Other Annual Compensation includes $119,712 of moving expenses paid on Mr.
Lahr's behalf and $58,328 of tax gross-up.
(13) Other Annual Compensation includes $128,629 of moving expenses paid on Mr.
Olson's behalf and $23,815 of tax gross-up.
(14) Other Annual Compensation includes $5,853 of tax gross-up.
(15) Other Annual Compensation includes $2,913 of tax gross-up.
(16) Other Annual Compensation includes $78,428 of moving expenses paid on Mr.
Braun's behalf and $12,089 of tax gross-up.
(17) Other Annual Compensation includes $15,328 of tax gross-up.
(18) Other Annual Compensation includes $44 of tax gross-up.
(19) Other annual compensation includes $6,583 of tax gross-up.
(20) Other annual compensation includes $10,868 of tax gross-up.
(21) Other annual compensation includes $50,178 of moving expenses paid on Mr.
Balint's behalf and $29,000 of tax gross-up.
(22) Pursuant to Mr. Robinette's employment agreement entered into in 1994, the
Company granted 140,000 restricted shares of Common Stock with a 1994 fair
market value of $5.00 per share to a trust for the benefit of Mr.
Robinette. Such trust was created to partially compensate Mr. Robinette
for the loss of certain future retirement benefits that occurred when Mr.
Robinette joined the Company. The trust sold all such shares during the
time period February 14, 1997 to July 29, 1997 for an average price per
share of approximately $7.85, for an aggregate cash value of $1,098,942.
Option Grants in Fiscal 1997
The following table sets forth certain information concerning individual
grants of options to purchase Common Stock made by the Company during Fiscal
1997 to each of the Named Executive Officers.
OPTION / SAR GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
Number of % of Total Alternative to 5%
Shares Options / SARs and 10%
Underlying Granted to Exercise Appreciation:
Options / SARs Employees in Price Expiration Grant Date Present
Name Granted Fiscal Year (1) $ / Share (2) Date Value (3)
- -------------------------- -------------------- ----------------- --------------- -------------------- --------------------
<S><C>
Mitchell J. Lahr ......... 100,000 (4)(6) 40.5% $ 6.625 April 16, 2007 $445,000
Darrell J. Olson ......... 50,000 (4)(6) 20.4% 6.625 April 16, 2007 222,500
25,000 (5)(7) 10.2% 6.875 September 15, 2007 119,500
David A. Braun ........... 35,000 (5)(7) 14.3% 6.875 September 15, 2007 167,300
</TABLE>
- ----------
(1) The total number of options granted to employees in 1997 was 245,000.
Options to purchase 10,000 shares were granted on February 4, 1997; options
to purchase 155,000 shares were granted on April 16, 1997; options to
purchase 65,000 shares were granted on September 15, 1997; and options to
purchase 15,000 shares were granted on September 16, 1997.
(2) All exercise prices are equal to fair market value on the date of grant.
(3) The estimated grant date present values reflected in the above table are
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating
8
<PAGE>
the values of the options reflected in the above table include:
o Exercise prices on the options are equal to the fair market value of the
underlying stock on the dates of the grant.
o The option term of ten years.
o Interest rates that represent the interest rate on a U.S. Treasury
security on the dates of grant with maturity dates corresponding to those
of the option terms.
o Volatilities calculated using daily stock prices for the one-year period
prior to the grant dates.
o Dividends at the rate of $0.00 per share representing the annualized
dividends paid with respect to a share of Common Stock at the dates of
grant. The Company does not pay a dividend with respect to Common Stock.
o Reductions to reflect the probability of forfeiture due to termination
prior to vesting and the probability of a shortened option term due to
termination of employment prior to the option expiration date.
(4) Granted outside the Company's Stock Option Plan.
(5) Granted pursuant to the Company's Stock Option Plan.
(6) Granted on April 16, 1997.
(7) Granted on September 15, 1997.
The following table summarizes the aggregated option exercises by the
Named Executive Officers in Fiscal 1997 and the year-end values of unexercised
options.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION
VALUE
<TABLE>
<CAPTION>
Total Number of
Shares Underlying Value of Unexercised
Number of Unexercised Options in the Money Options
Shares Held At Fiscal Year-End Held at Fiscal Year-End (1)
Acquired on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ------------- --------- ------------- --------------- ------------- --------------
<S><C>
Larry R. Robinette ......... 0 $ 0 271,666 23,334 $ 78,125 $ 0
Mitchell J. Lahr ........... 0 $ 0 50,000 50,000 $ 0 $ 0
Darrell J. Olson ........... 0 $ 0 25,000 50,000 $ 0 $ 0
David A. Braun ............. 0 $ 0 35,000 30,000 $ 0 $ 0
Duane Greenly .............. 0 $ 0 67,500 22,500 $ 0 $ 0
Peter Balint ............... 0 $ 0 50,000 0 $ 0 $ 0
</TABLE>
- ----------
(1) Total value of vested options based on the Common Stock's closing price on
the New York Stock Exchange of $5.3125 as of December 31, 1997.
Employment Agreements
On September 6, 1994, the Company and Mr. Robinette entered into an
employment agreement. Pursuant to such agreement, Mr. Robinette was employed as
President and Chief Executive Officer of the Company through December 31, 1997.
Mr. Robinette received an annual base salary of $400,000 in 1997. Mr. Robinette
is furnished with the use of a Company automobile, participation in group
health, term life insurance and other employee benefit plans available to other
executive personnel. He is eligible for four weeks paid vacation in each
calendar year. He is also eligible to participate in the bonus plan. In
addition, Mr. Robinette received a signing bonus of $150,000, of which $50,000
was paid in 1994 and $100,000 was paid on January 13, 1995. As part of this
agreement, Mr. Robinette was awarded stock options representing the right to
purchase 250,000 shares of Common Stock at an exercise price of $5 per share.
These options vested over a three-year period; 25% vested immediately upon his
employment with the Company and 25%, 35% and 15% vested on each of August 19,
1995, 1996, and 1997 respectively. In addition, a trust for the benefit of Mr.
Robinette was granted 140,000 restricted shares of stock at the then fair market
value of $5 per share. These shares vested 33-1/3% per year for three years
beginning on August 19, 1995. Between February 14, 1997 and July 29, 1997, the
trust sold all 140,000 shares of restricted stock pursuant to an exemption to
registration under the Securities Act of 1933, as
9
<PAGE>
amended, for an average price per share of approximately $7.85 for an aggregate
cash value of $1,098,942. The cash value of the trust was distributed to Mr.
Robinette on August 29, 1997. Effective as of January 1, 1998, the Company and
Mr. Robinette entered into a new employment agreement. The new agreement
supersedes the agreement dated September 6, 1994. Pursuant to the new agreement,
Mr. Robinette will continue to be employed as President and Chief Executive
Officer and receive an annual salary of $400,000 in 1998. Under the new
agreement, Mr. Robinette will be entitled to receive a bonus at the end of each
calendar year of 70% of his annual base salary if the Company meets its annual
budget for such year under the Company's bonus plan. If the Company exceeds its
annual budget and meets certain other targets under the bonus plan, Mr.
Robinette will be entitled to receive a bonus of up to 105% of his base salary.
In addition to the benefits to which Mr. Robinette was entitled under the 1994
employment agreement, under the new employment agreement Mr. Robinette will also
be able to participate in the Company's Profit Sharing and Savings Retirement
Plan, Long Term Incentive Plan and the Deferred Compensation Plan.
On May 1, 1995, the Company and Mr. Balint entered into an employment
agreement. Pursuant to the agreement, Mr. Balint receives an annual base salary
of $200,000. Mr. Balint is furnished with the use of a Company automobile and
participation in group health, term life insurance and other employee benefit
plans available to other executive personnel. He is eligible for four weeks paid
vacation in each calendar year. He is also eligible to participate in the bonus
plan. In addition, Mr. Balint received a signing bonus of $40,000 in 1995.
Pursuant to the agreement, Mr. Balint was awarded stock options representing the
right to purchase 50,000 shares of Common Stock under the Stock Option Plan at
an exercise price of $5.75 which was equal to the fair market value on the date
of grant. These options vest 33 1/3% per year for three years beginning on May
17, 1995. As of December 31, 1997, Mr. Balint was no longer an executive officer
of the Company. Mr. Balint's employment with the company was terminated
effective March 20, 1998.
On November 23, 1996, the Company and Mr. Greenly entered into an
employment agreement. Pursuant to the agreement, Mr. Greenly received an annual
base salary of $200,000. Mr. Greenly was furnished with the use of a Company
automobile and permitted to participate in group health, term life insurance and
other employee benefit plans available to other executive personnel. He was
eligible for four weeks paid vacation in each calendar year. He was also
eligible to participate in the Company's bonus plan. In addition, Mr. Greenly
received a signing bonus of $20,000 in 1996. Pursuant to his employment
agreement, Mr. Greenly was awarded stock options representing the right to
purchase 90,000 shares of Common Stock at an exercise price of $7.00 that was
equal to the fair market value on the date of grant. In connection with the sale
of substantially all of the assets of the manufacturing business of the Company,
Mr. Greenly's employment with the Company terminated effective March 13, 1998.
Mr. Greenly is entitled to receive severance benefits for a change in control as
described under "Severance Plans" below. Mr. Greenly is also entitled to receive
moving and other expenses associated with his relocation. Pursuant to an
amendment of his option agreement, Mr. Greenly's options, a portion of which had
vested and were exercisable as of the closing date of the sale of the Company's
manufacturing business, did not terminate upon the termination of his
employment, but such options shall not be exercisable until August 2, 1998, at
which time all 90,000 options shall be vested and become immediately
exercisable.
On March 11, 1997, the Company and Mr. Lahr entered into an employment
agreement. Pursuant to the agreement, Mr. Lahr receives an annual base salary of
$225,000 and a deferred signing bonus of $112,500 for 1997. Mr. Lahr is
furnished with the use of a Company automobile and is eligible to participate in
group health, term life insurance and other employee benefit plans available to
other executive personnel. He is eligible for four weeks paid vacation in each
calendar year. He is also eligible to participate in the Company's bonus plan.
Pursuant to his employment agreement, Mr. Lahr was awarded an option to purchase
100,000 shares of Common Stock at an exercise price of $6.625 that was equal to
the fair market value on the date of grant. These options vest over a two-year
period, with 50% and 100% vesting on each of April 16, 1998 and 1999,
respectively.
On March 21, 1997, the Company and Mr. Olson entered into an employment
agreement. Pursuant to the agreement, Mr. Olson receives an annual base salary
of $140,000 and a deferred signing bonus of $50,000 for 1997. Mr. Olson is
furnished with the use of a Company automobile and is eligible to participate in
group health, term life insurance and other employee benefit plans available to
other executive personnel. He is eligible for four weeks paid vacation in each
calendar year. He is also eligible to participate in the Company's bonus plan.
Pursuant to his employment agreement, Mr. Olson was awarded stock options
representing the right to purchase 50,000 shares of Common Stock at an exercise
price of $6.625 that was equal to the fair market value on the
10
<PAGE>
date of grant. These options vest over a two-year period, with 50% and 100%
vesting on each of April 16, 1998 and 1999, respectively.
Severance Plans
The Company has adopted a Chief Executive Officer Severance Plan (the "CEO
Plan") for Mr. Robinette and an Executive Severance Plan (the "Executive Plan")
for Messrs. Lahr, Greenly, Braun and Olson. The CEO Plan provides for severance
benefits in the event a participant's employment is involuntarily terminated for
any reason other than cause, or where a participant voluntarily terminates for
certain prescribed reasons outlined in the CEO Plan. If the participant's
employment is terminated, the participant will receive severance pay equal to
two times (a) the sum of the participant's base salary and (b) the greater of
(i) the average annual bonus earned in the three fiscal years prior to the date
of the termination and (ii) the target annual bonus established for the year in
which the effective date of termination occurs. Upon termination of employment,
the participant will also receive a pro rata targeted annual bonus for the year
of termination. A participant whose employment is terminated is also eligible to
receive those fringe benefits he had received prior to his termination until the
participant and his spouse reach the age of 70 or become eligible for Medicare,
whichever is earlier. If, during the six months prior to or within a year
following a Change in Control (as defined in the CEO Plan), the participant's
employment is terminated, he will be paid a severance benefit equal to three
times the sum of (a) his annual base salary and (b) the greater of (i) the
average annual bonus earned in the three fiscal years prior to the date of the
termination and (ii) the target annual bonus established for the year in which
the participant's effective date of termination occurs. Also, upon a termination
of employment in connection with a Change in Control, the participant will
receive a pro rata targeted annual bonus for the year of termination. Further,
the participant would be entitled to receive any unused or accrued vacation pay,
and would be eligible to receive those fringe benefits he had received prior to
his termination until the participant and his spouse attain age 70 or become
entitled to Medicare, whichever is earlier. In the event that the severance
benefits under the CEO Plan exceed the "golden parachute" excise tax limit set
forth in Section 280G of the Internal Revenue Code, the participant is entitled
to receive an additional cash gross-up payment so that the net amount retained
by the participant after the imposition of such excise tax is equal to the
amount of severance benefits due him under the CEO Plan.
The Executive Plan provides for severance benefits in the event a
participant's employment is involuntarily terminated for any reason other than
cause, or where a participant voluntarily terminates for certain prescribed
reasons outlined in the Executive Plan. If the participant's employment is
terminated, the participant will receive severance pay equal to one times the
sum of (a) the participant's base salary and (b) the greater of (i) the average
annual bonus earned in the three fiscal years prior to the date of the
termination and (ii) the target annual bonus established for the year in which
the participant's effective date of termination occurs. Upon termination of
employment the participant will also receive a pro rata targeted annual bonus
for the annual year of termination. A participant whose employment is terminated
is also eligible to receive those fringe benefits he had received prior to his
termination for one full year. If, during the six months prior to or within a
year following a Change in Control (as defined in the Executive Plan), the
participant's employment is terminated, the participant would be paid a
severance benefit equal to two times the sum of (a) his annual base salary and
(b) the greater of (i) the average annual bonus earned in the three fiscal years
prior to the date of the termination and (ii) the target annual bonus
established for the year in which the effective date of termination occurs.
Also, upon a termination of employment in connection with a Change in Control,
the participant will receive a pro rata targeted annual bonus for the year of
termination. Further, the participant would receive any unused or accrued
vacation pay, and would be eligible to receive those fringe benefits he had
received prior to his termination for a period of twenty-four months. In order
to avoid the imposition of excise taxes, participants' benefits are capped at
the "golden parachute" excise tax limit set forth in Section 280G of the
Internal Revenue Code (unless removing the cap results in a greater after-tax
benefit to the participant).
In exchange for the severance benefit provided under the CEO Plan and the
Executive Plan, as the case may be, the covered executive, for a period of
twenty-four calendar months after termination shall not, directly or indirectly:
(i) use, attempt to use, disclose or otherwise make known to any person or
entity knowledge or information of which the executive became aware during his
employment including lists of customers or suppliers, trade secrets or similar
information and information of a confidential nature including, without
limitation, information relating to the business, properties, accounting or
similar functions of the Company, (ii) engage or become interested in any
business conducted by the Company, and (iii) employ, retain or arrange to
participate
11
<PAGE>
in the employment of any person who is an employee or consultant of the Company
or its affiliates. The CEO Plan and the Executive Plan supersede any previous
severance agreements between the Company and its executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Function and Overall Policy
The Compensation Committee of the Board of Directors (the "Committee")
oversees the general compensation policies of the Company, establishes
compensation plans and specific compensation levels for executive officers, and
administers the Executive Performance Incentive Plan (the "Bonus Plan"). The
Committee is also responsible for administering the Morgan Products Ltd.
Incentive Stock Option Plan (the "Stock Option Plan"), the Morgan Products Ltd.
1997 Incentive Compensation Plan (the "Incentive Compensation Plan") and other
compensation programs of the Company.
The Committee is comprised entirely of board members. No member of the
Committee is eligible to receive awards under any plan administered by the
Committee.
The Committee's primary objective in establishing compensation
opportunities for the Company's key executive officers is to support the
Company's goal of maximizing the value of stockholder interests in the Company.
To achieve this objective, the Committee believes it is critical to:
o Hire, develop, reward, and retain the most competent executives possible,
and to provide compensation opportunities for executives which are
competitive in the marketplace;
o Encourage decision-making that enhances stockholder value by providing
short-term and long-term incentives that are tied directly to the
Company's stock price;
o Pay executives based on competitive levels of incentive compensation but
only after stockholders have been rewarded; and
o Promote a close identity of interest between management and stockholders
by tying executive pay to increases in stockholder value.
The Committee targets total pay opportunities at median pay levels of a
group of comparable companies. These companies (the "Comparator Companies") are
selected based upon their size, industry, and their inclusion in publicly and
privately available survey sources. This group is comprised of companies beyond
those comprising the peer group in the Performance Graph. The Committee does not
believe that the companies which are used for purposes of evaluating financial
performance are necessarily the same companies against which the Company
competes for executive talent.
The Committee makes all decisions pertaining to the Company's executive
compensation programs which promote the objectives detailed above. The Committee
believes that the Company's current compensation programs and those that the
shareholders are being asked to approve through this proxy statement support the
Company's business mission, and that such programs are linked to the enhancement
of stockholder value.
Components of Compensation
Base Salary
The Committee annually reviews each executive officer's base salary. Base
salaries are determined according to the following factors: requirements under
existing employment contracts, comparable levels of pay among executives in
similar positions at the Comparator Companies, levels of responsibilities, prior
experience and breadth of knowledge, and internal pay equity. The Committee does
not ascribe any specific weightings to any of the factors described above.
However, base salaries are targeted at the median levels for the Comparator
Companies, taking into consideration individual job performance.
12
<PAGE>
Mr. Robinette received a base salary of $400,000 in 1997 which the
Committee believes is approximately equal to median market levels. The Committee
believes that the Chief Executive Officer's compensation should be heavily
influenced by the Company's performance. In determining Mr. Robinette's base
salary, the Committee considered Mr. Robinette's previous experience, his
long-term role in the future success of the Company, and the base salaries of
CEOs at the Comparator Companies.
Annual Incentives
The Committee believes that the annual incentives of executive officers
should be directly tied to improving stockholder value. Consistent with this
philosophy, the Bonus Plan focuses on increasing stockholder value by
establishing targets that are tied directly to the Company's or business unit's
attainment of a pre-specified earnings goal.
Under the Bonus Plan, which is targeted to median market levels, executive
officers, other than the Chief Executive Officer, can earn a bonus equal to 50%
of their base salary upon attainment of the targeted goal. The maximum incentive
to any executive, other than the Chief Executive Officer, under the Bonus Plan
is equal to 75% of base salary in any one calendar year, and no payment is made
if an achievement level of 80% of the targeted goal is not met. Effective as of
January 1, 1998, Mr. Robinette will be entitled to receive a bonus equal to 70%
of his annual base salary upon attainment of the targeted goal. Mr. Robinette
will be entitled to receive up to 105% of his base salary if the Company exceeds
its budget and meets certain targeted goals under the Bonus Plan.
Since Company performance in 1997 was below the minimum threshold of 80% of
the targeted goal, no bonuses were paid to any executive officer under the Bonus
Plan. However, as noted below under the caption "Employment Agreements,"
pursuant to the terms of Mr. Lahr's employment agreement, he received a deferred
signing bonus of $112,500. Pursuant to the terms of Mr. Olson's employment
agreement, he received a deferred signing bonus of $50,000. Based upon the
achievement of a targeted goal by the distribution division of the Company, Mr.
Braun was paid a bonus of $22,027 for 1997.
Long-Term Incentives
The Committee believes that long-term incentive awards should be payable
only after financial rewards have been delivered to stockholders. Long-term
incentives are awarded under the Stock Option Plan and the Incentive
Compensation Plan. Since there is no defined benefit retirement plan for
officers, stock options, stock appreciation rights, restricted stock and other
long-term incentives are also designed to serve as a vehicle for providing
executives with post-retirement income. Stock options focus executives on the
creation of stockholder value over the long-term and encourage equity ownership
in the Company. Stock options are used as the primary long-term incentive
vehicle.
The sizes of stock option grants are based on competitive practice, and are
targeted to be at the median of option values granted by the Comparator
Companies. The sizes of the awards can be adjusted based on individual factors
and historical award data. In addition, the Committee considers the size of
option grants made in prior years. The Committee's objective is to deliver
competitive award opportunities based on the estimated value of the award
granted.
13
<PAGE>
Policy With Respect to $1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits the annual corporate deduction for compensation paid to "covered
employees" to $1 million, unless certain requirements are met. In 1994, pursuant
to Mr. Robinette's employment agreement, a trust for his benefit was granted
140,000 restricted shares of stock at the then fair market value of $5 per
share. Between February 14, 1997 and July 29, 1997, the trust sold all 140,000
shares of restricted stock pursuant to an exemption to registration under the
Securities Act of 1933, as amended, for an average price per share of
approximately $7.85, for an aggregate cash value of $1,098,942. The cash value
of the trust was distributed to Mr. Robinette on August 29, 1997. As a result,
the total compensation paid to Mr. Robinette will exceed $1 million, and the
Company will be unable to deduct a portion of the payments made to Mr. Robinette
in Fiscal 1997.
The Committee continues to review Company compensation policies with
respect to 1998 and subsequent years to consider ways to maximize tax
deductibility of executive compensation, but intends to retain the discretion
the Committee deems necessary to compensate executive officers in a manner
commensurate with performance and the competitive environment for executive
talent.
Summary
The Committee believes that the compensation policies summarized above
provide motivation for executives to enhance the value of the Company for the
stockholders' benefit. The Committee will continue to monitor the effectiveness
of the Company's compensation programs to meet the Company's needs.
Mr. Frank J. Hawley, Jr., Chairman
Mr. William R. Holland
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below compares the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the S & P Composite -- 500 Stock Index and a Peer Group Index. The
Peer Group consists of Masco Corporation; Ply-Gem Industries, Inc.; T.J.
International, Inc.; and Nortek, Inc. Management believes that the Peer Group
sells to similar customers and that their financial performance is similarly
influenced by the residential construction and repair and remodeling markets.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN1
MORGAN PRODUCTS LTD., S&P 500, AND PEER GROUP
[GRAPHIC]
12/92 12/93 12/94 12/95 12/96 12/97
----- ----- ----- ----- ----- -----
Morgan Products $100 $122 $ 78 $ 81 $102 $ 73
S&P 500 $100 $110 $112 $153 $188 $251
Peer Group $100 $133 $ 85 $117 $140 $197
Peer Group Companies(2)
Masco Corporation; Nortek, Inc.; and T.J. International, Inc.
- ----------
(1) Total return assumes reinvestment of dividends on a quarterly basis.
(2) Ply-Gem Industries removed from peer group as a result of merger/acquisition
in September 1997.
15
<PAGE>
CERTAIN TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" for a
discussion of Certain Transactions.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors as of
March 20, 1998 appointed Price Waterhouse LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998. The Board of Directors
is requesting ratification of such appointment by the Company's shareholders. A
representative of Price Waterhouse LLP will attend the Meeting and will be
available to respond to appropriate questions from those attending the Meeting;
however, no statement shall be made by such representative on behalf of the
Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR"
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons holding more than 10% of a registered class of
the Company's equity securities to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership, reports
of changes in ownership and annual reports of ownership of Common Stock and
other equity securities of the Company. Such directors, officers, and 10%
stockholders are also required to furnish the Company with copies of all such
filed reports.
Based solely upon a review of the copies of such reports furnished to the
Company, or representations that no reports were required, the Company believes
that all of its directors, executive officers and 10% shareholders complied with
all filing requirements under Section 16(a) in 1997. A delinquent Annual
Statement of Beneficial Ownership on Form 5 ("Form 5") was filed by Mr. Howard
Haas with respect to securities held in his individual retirement account since
1990. Mr. Haas failed to report his beneficial ownership of such shares until
February 2, 1998 when he filed his most recent Form 5.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Stockholders and Annual Report on
Form 10-K for the year ended December 31, 1997, as filed with the Securities and
Exchange Commission (except for exhibits), will be furnished without charge by
first class mail within one business day of the receipt of the request to
stockholders upon written request sent to Investor Relations, Morgan Products
Ltd., 469 McLaws Circle, Williamsburg, Virginia 23185, (757) 564-1700.
OTHER MATTERS
The Company will bear the cost of solicitation of proxies. In addition,
officers, directors, and other employees of the Company may, without additional
remuneration, solicit proxies from stockholders in person and by mail, telegram,
telephone or facsimile. Brokerage houses, nominees, fiduciaries, and other
custodians will be requested to forward soliciting material to the beneficial
owners of shares of Common Stock and will be reimbursed for their expenses by
the Company.
16
<PAGE>
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any stockholder who intends to present a proposal at the Company's 1999
Annual Meeting of Stockholders is advised that in order for such proposal to be
included in the Board of Directors' proxy material for such meeting, the
proposal must be directed to the Secretary of the Company at its principal
executive offices such that it is received not later than November 28, 1998, and
the proposal must meet certain eligibility requirements of the Securities and
Exchange Commission.
By Order of the Board of Directors
/s/ Mitchell J. Lahr
Williamsburg, Virginia MITCHELL J. LAHR
April 3, 1998 Secretary
17
<PAGE>
COMMON STOCK COMMON STOCK
PROXY PROXY
MORGAN PRODUCTS LTD.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting to be Held May 13, 1998
The undersigned hereby appoints Larry R. Robinette and Mitchell J. Lahr,
individually, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of common stock of Morgan Products Ltd., held of record by the
undersigned on March 20, 1998, at the annual meeting of stockholders to be held
on May 13, 1998, or any adjournment or postponement thereof. The proxies are
authorized to vote in their discretion upon such other business as may properly
come before the meeting or any adjournment or postponement thereof.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
3489--Morgan Products Ltd.
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY: [ ]
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors - For Withhold For All
Nominees: F.J. Hawley, Jr., All All Except those whose name(s) appear below.
L.R. Robinette, J.S. Crowley, [ ] [ ] [ ] _______________________________________________________
H.G. Haas, J.M. Marks, E.T.
Tokar and P.J. McDonough, Jr.
2. Ratification of appointment of Price For Against Abstain
Waterhouse, LLP as Independent Public [ ] [ ] [ ]
Accountants.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, the proxy will be voted "FOR all nominees" in Proposal
1, "FOR" Proposal 2. The Board of Directors recommends a vote
"FOR all nominees" in Proposal 1, "FOR" Proposal 2.
Dated: __________________________________________, 1998
Signature(s) __________________________________________________
_______________________________________________________________
Please sign exactly as name appears herein. Joint owners should
each sign. Where applicable, indicated official position or
representative capacity.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
3849--Morgan Products Ltd.
