<PAGE>
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
FEDDERS CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FEDDERS CORPORATION
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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:
Notes:
<PAGE>
FEDDERS CORPORATION
WESTGATE CORPORATE CENTER
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938
(908) 604-8686
November 18, 1994
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of the
Company to be held at 10:30 a.m. on December 20, 1994.
Stockholders will be asked to consider and act on a proposal to approve the
action of the Board of Directors to (i) elect three (3) directors and (ii)
ratify the appointment of independent auditors.
It is important that your shares be represented at the meeting, whether or
not you are personally able to be present. The Board strongly recommends that
you vote, or instruct your broker or nominee to vote, FOR approval of all
proposals. Please sign, date and return your proxy as soon as possible. If you
do attend and wish to vote in person, your proxy can be revoked at your
request. Your prompt response in immediately returning the enclosed proxy card
will be appreciated.
Enclosed are the Notice of Meeting, Proxy Statement and proxy card.
Sincerely,
/s/ Salvatore Giordano /s/ Sal Giordano, Jr.
---------------------- -----------------------------
Salvatore Giordano Sal Giordano, Jr.
Chairman of the Board Vice Chairman, President, and
Chief Executive Officer
<PAGE>
FEDDERS CORPORATION
LIBERTY CORNER, NEW JERSEY 07938
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 20, 1994
----------------
Notice Is Hereby Given that the Annual Meeting of Stockholders of Fedders
Corporation (the "Company") will be held at the Somerset Hills Hotel, 200
Liberty Corner Road, Warren, New Jersey, on Tuesday, December 20, 1994 at 10:30
a.m. for the following purposes:
1. To elect three (3) directors to serve for a term of three (3) years
and until their successors shall be elected and shall have qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the ensuing fiscal year; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on November 14, 1994 has been fixed as the record date
for the determination of the holders of shares of the Company's Common Stock
and Class B stock entitled to notice of, and to vote at, the Annual Meeting. A
list of the Stockholders entitled to vote at the Annual Meeting will be
available during the period ten (10) days prior to the date of the Annual
Meeting for examination by any Stockholder, for any purpose germane to the
Annual Meeting, during ordinary business hours at the offices of the Company,
Westgate Corporate Center, 505 Martinsville Road, Liberty Corner, New Jersey.
By order of the Board of Directors
S. A. Muscarnera
Secretary
Dated: November 18, 1994
Liberty Corner, New Jersey
IMPORTANT: THE BOARD OF DIRECTORS INVITES YOU TO ATTEND THE MEETING IN
PERSON, BUT IF YOU ARE UNABLE TO BE PERSONALLY PRESENT, PLEASE DATE, SIGN AND
RETURN THE ENCLOSED PROXY IMMEDIATELY. NO POSTAGE IS REQUIRED IF THE PROXY IS
RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proxy Statement........................................................... 1
Election of Directors..................................................... 2
Meetings of the Board of Directors and Certain Committees............... 3
Security Ownership of Directors and Executive Officers.................... 4
Principal Stockholders.................................................... 6
Executive Compensation.................................................... 7
Summary Compensation Table.............................................. 7
Options/SAR Grant Table................................................. 8
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Ta-
ble.................................................................... 9
Compensation Committee Interlocks and Insider Participation............. 9
Board Compensation Committee Report..................................... 9
Employment Contract..................................................... 10
Indebtedness of Management.............................................. 12
Performance Graph....................................................... 13
Independent Auditors...................................................... 14
Stockholder Proposals--Next Annual Meeting................................ 14
Cost of Solicitation...................................................... 14
</TABLE>
<PAGE>
FEDDERS CORPORATION
WESTGATE CORPORATE CENTER
505 MARTINSVILLE ROAD
LIBERTY CORNER, NEW JERSEY 07938
(908) 604-8686
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Fedders Corporation (the "Company") of proxies in the
accompanying form to be used at the Annual Meeting of Stockholders of the
Company to be held on Tuesday, December 20, 1994, and at all adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. It is intended that this Proxy Statement and the proxies solicited
hereby be mailed to Stockholders on November 21, 1994. A Stockholder who shall
sign and return a proxy in the form enclosed with this Proxy Statement has the
power to revoke it at any time before it is exercised by giving written notice
to the Secretary of the Company to such effect or by delivering to the Company
an executed proxy bearing a later date. Any Stockholder who has given a proxy
may still attend the Annual Meeting, revoke his or her proxy, and vote in
person.
The Company's Annual Report to Stockholders for the period from September 1,
1993 to August 31, 1994 (the "Fiscal Year"), including financial statements,
was previously mailed to Stockholders.
The close of business on November 14, 1994 has been fixed as the record date
for the determination of the Stockholders entitled to notice of, and to vote
at, the Annual Meeting. As of such date, 18,988,099 shares of Common Stock and
2,267,906 shares of Class B Stock of the Company were outstanding and entitled
to be voted at the Annual Meeting. The holders of Class B Stock are entitled to
ten votes per share in any election of directors if more than 15% of the shares
of Common Stock outstanding on the record date are owned beneficially by a
person or a group of persons acting in concert, or if a nomination for the
Board of Directors is made by a person or a group of persons acting in concert
(other than the Board) provided such nomination is not made by one or more of
the holders of Class B Stock, acting in concert with each other, who
beneficially own more than 15% of the shares of Class B Stock outstanding on
such record date. The Board of Directors is not presently aware of any
circumstance that would give holders of Class B Stock the right to ten votes
per share in the election of directors at the Annual Meeting.
The affirmative vote of a majority of the shares of Common Stock and Class B
Stock, voting in person or by proxy together as a single class, is required to
elect directors and ratify the appointment of the independent auditors. No
matters currently contemplated to be presented at the meeting will entitle a
dissenting Stockholder to appraisal rights.
The proxies in the accompanying form will be voted as specified, but if no
specification is made they will be voted in favor of the election of the
nominees set forth herein and the ratification of the appointment of Ernst &
Young as the Company's independent auditors for the ensuing fiscal year. In the
discretion of the proxyholders, the proxies will also be voted for or against
such other matters as may properly come before the meeting. The Board of
Directors is not aware that any other matters are to be presented for action at
the meeting.
<PAGE>
The shares represented by a proxy which is timely returned and marked
"Abstain" as to any matter as well as broker non-votes will be considered
present at the Annual Meeting and will be included in the calculation of those
shares needed to constitute a quorum. The shares represented by such proxies,
although considered present for quorum purposes, will not be considered a part
of the voting power present with respect to any proposal which is abstained
from or to which the broker non-vote relates.
ELECTION OF DIRECTORS
Stockholders may vote for a maximum of three directors at the Annual Meeting
of Stockholders. The nominees for election as directors are Messrs. Joseph
Giordano, Clarence Russel Moll and Anthony E. Puleo. Messrs. Giordano and Moll
were elected directors at the 1992 Annual Meeting and are now serving as such.
Mr. Puleo has not previously been elected a director of the Company. Set forth
opposite the name of each nominee and each director is his age, principal
occupation for the past five years, the name and principal business of any
corporation or other organization in which such employment is carried on and
other business directorships held by the nominee or director. The Company is
not presently aware of any circumstance which would prevent any nominee from
fulfilling his duties as a director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND AGE SINCE
---- ---------------------------- --------
Nominees -- Three Year Term
<S> <C>
Joseph Giordano......... President, NYCOR, Inc.(1)(5); 61 1961
Clarence Russel Moll.... President Emeritus, Widener University(6); 81 1967
Anthony E. Puleo........ President, Puleo Tree Co.(7); 59
Directors -- Two Years Remaining Term
Sal Giordano, Jr........ Vice Chairman, President and Chief Executive Officer 1965
of the Company(1)(2); 56
S. A. Muscarnera........ Senior Vice President and Secretary of the 1982
Company(1)(2); 54
Directors -- One Year Remaining Term
Salvatore Giordano...... Chairman of the Board of the Company(1)(2); 84 1945
Howard S. Modlin........ Partner, Weisman, Celler, Spett & Modlin(3); 63 1977
William J. Brennan...... Financial Consultant(1)(4); 66 1980
</TABLE>
- --------
(1) Messrs. Sal Giordano, Jr. and Joseph Giordano are sons, and Mr.
Muscarnera is the nephew, of Mr. Salvatore Giordano. Messrs. Salvatore
Giordano, and Sal Giordano, Jr., are also executive officers and (along with
Joseph Giordano, William J. Brennan and S. A. Muscarnera) directors of NYCOR,
Inc.
(2) Messrs. Salvatore Giordano, Sal Giordano, Jr. and S.A. Muscarnera, have
been associated in executive capacities with the Company for more than five
years.
(3) Principal occupation during the past five years. The law firm of Weisman,
Celler Spett & Modlin renders legal services to the Company. Mr. Modlin is also
a director of General DataComm Industries, Inc. and Trans-Lux Corporation.
2
<PAGE>
(4) Principal occupation during the past five years. Mr. Brennan served as a
director of the Company from 1980 to 1987, and was again elected a director in
1989. He is also Chairman of the Board of CSM Environmental Systems, Inc.
(5) Principal occupation during the past two years. NYCOR, Inc. is a holding
company currently comprising two operating companies, one manufacturing rotary
compressors and the other thermoelectric heating and cooling modules. Mr.
Giordano was a Senior Vice President of the Company for more than five years
prior to his retirement August 31, 1992.
(6) Principal occupation during the past five years. Dr. Moll is also a
director of Ironworkers' Savings Bank.
(7) Principal occupation during the past two and one half years. Puleo Tree
Co. is an importer of Christmas items and garden furniture. Prior to that Mr.
Puleo was President of Boulderwood Corporation.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During the Fiscal Year, the Board of Directors of the Company held 7
meetings. All of the present directors attended 75% or more of such meetings
and of meetings of committees of which they were members. Directors who are not
employees receive an annual fee of $20,000.
The Board of Directors has an Audit Committee consisting of Messrs. Clarence
Russel Moll, William J. Brennan and Howard S. Modlin. During the Fiscal Year,
this committee held 3 meetings. The Audit Committee reviews the audit function
with the Company's independent auditors. The Chairman and other members of the
Audit Committee receive a fee of $1,000 and $500, respectively, for each
meeting they attend.
During the Fiscal Year, the Board of Directors formed a Compensation
Committee consisting of Messrs. Howard S. Modlin and William J. Brennan. During
the Fiscal Year, this committee held 1 meeting. The Compensation Committee
develops compensation plans for the executive officers of the Company, subject
to approval by the Board of Directors.
The Company does not have a nominating committee.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
As of November 1, 1994, each director of the Company and all directors and
executive officers of the Company owned beneficially the number of shares of
the Company's equity securities set forth in the following table. Shares
subject to acquisition within 60 days pursuant to stock options are shown
separately. Unless otherwise indicated, the owners listed have sole voting and
investment power. Class A Stock has no voting rights except as provided under
Delaware Law.
<TABLE>
<CAPTION>
AMOUNT AND SHARES SUBJECT
NATURE TO ACQUISITION PERCENT
TITLE OF NAME OF INDIVIDUAL OF BENEFICIAL WITHIN 60 OF CLASS
CLASS OR PERSONS IN GROUP OWNERSHIP DAYS (14) OWNED (15)
-------- ------------------------ ------------- -------------- ------------
<C> <S> <C> <C> <C>
Common Stock Salvatore Giordano...... 201,100(1) 0 1.1%
Sal Giordano, Jr........ 181,100(1) 0 Less than 1%
Joseph Giordano......... 146,410(1) 0 Less than 1%
Howard S. Modlin........ 256,800(2) 0 1.4%
Clarence Russel Moll.... 61,400(3) 0 Less than 1%
William J. Brennan...... 5,000 0 Less than 1%
Robert L. Laurent, Jr. . 115,000 0 Less than 1%
S. A. Muscarnera........ 55,000 0 Less than 1%
Norman W. Swartz........ 13,000(4) 0 Less than 1%
All directors and
executive officers as a
group.................. 1,032,610 0 5.4%
Class A Stock Salvatore Giordano...... 1,034,643(5)(6) 180,000 11.2%
Sal Giordano, Jr........ 957,086(5)(7)(8) 135,000 10.2%
Joseph Giordano......... 936,216(5)(8) 67,500 9.4%
Howard S. Modlin........ 128,400(9) 123,750 2.4%
Clarence Russel Moll.... 30,700 69,750 Less than 1%
William J. Brennan...... 2,500 56,250 Less than 1%
Robert L. Laurent, Jr. . 57,500 127,500 1.7%
S. A. Muscarnera........ 27,500 112,500 1.3%
Norman W. Swartz........ 6,500 15,000 Less than 1%
All directors and
executive officers as a
group.................. 1,738,255 897,750 22.9%
Class B Stock (15) Salvatore Giordano...... 1,798,185(10)(11) 0 79.3%
Sal Giordano, Jr........ 1,663,071(10)(12)(13) 0 73.3%
Joseph Giordano......... 1,656,021(10)(13) 0 73.0%
All directors and
executive officers as a
group.................. 2,198,897 0 96.7%
Ownership of Common
Stock, Class A Stock
and Class B Stock
combined, by all
directors and executive
officers as a group.... 4,969,762 897,750 17.9%
</TABLE>
4
<PAGE>
- --------
(1) The amount shown includes 1,100 shares as to which Messrs. Salvatore
Giordano, Sal Giordano, Jr. and Joseph Giordano share voting and investment
power.
(2) Includes 3,100 shares owned by members of Mr. Modlin's family as to which
Mr. Modlin disclaims beneficial ownership.
(3) Includes 15,000 shares owned by Dr. Moll's wife, as to which Dr. Moll
disclaims beneficial ownership. Through inadvertance, Dr. Moll reported, in an
untimely manner, one transaction on Form 4 covering one sale of shares of the
Common Stock of the Company during the Fiscal Year. The Company is not aware of
any failure of Dr. Moll to file any required Form.
(4) Through inadvertance, Mr. Swartz was late in filing a required report on
Form 4, covering one sale of shares of the Common Stock of the Company during
the Fiscal Year. The Company is not aware of any failure on Mr. Swartz's part
to file any required Form.
(5) Includes 550 shares as to which Messrs. Salvatore Giordano, Sal Giordano,
Jr. and Joseph Giordano share voting and investment power; 692,700 shares as to
which the same individuals also share voting and investment power; 26,250 are
shares held by the Salvatore Giordano Foundation; and 1,895 are shares held by
the Giordano Foundation, for both of which foundations these individuals are
officers, directors and stockholders.
(6) Includes 25,835 shares held of record by Mr. Giordano's wife, and 37,400
shares held of record by Mr. Giordano's wife in trust for their grandchildren,
as to which Mr. Giordano disclaims beneficial ownership.
(7) Includes 2,375 shares held of record by Mr. Giordano's wife, as to which
Mr. Giordano disclaims beneficial ownership.
(8) Includes 87,500 shares held in trust, as to which Messrs. Sal Giordano,
Jr. and Joseph Giordano share voting and investment power.
(9) Includes 1,550 shares owned by members of Mr. Modlin's family as to which
Mr. Modlin disclaims beneficial ownership.
(10) The amount shown includes 1,315,400 shares as to which Messrs. Salvatore
Giordano, Sal Giordano, Jr. and Joseph Giordano share voting and investment
power; 52,500 are shares held by the Salvatore Giordano Foundation, and 3,790
are shares held by the Giordano Foundation, for both of which they are
officers, directors and stockholders.
(11) The amount shown includes 51,669 shares held of record by Mr. Giordano's
wife, and 74,800 shares held of record by Mr. Giordano's wife in trust for
their grandchildren, as to which Mr. Giordano disclaims beneficial ownership.
(12) The amount shown includes 4,750 shares held of record by Mr. Giordano's
wife, as to which Mr. Giordano disclaims beneficial ownership.
(13) The amount shown includes 175,000 shares held in trust, as to which
Messrs. Sal Giordano, Jr. and Joseph Giordano share voting and investment
power.
(14) The amounts shown are the number of shares held under options
exercisable within 60 days.
(15) The Class B Stock is convertible into Common Stock at any time on a
share-for-share basis. In the event that the individuals named as owning Class
B Stock converted their shares into Common Stock, less than 5% of the class
would remain outstanding, and pursuant to the terms of the Company's
Certificate of Incorporation as amended, all remaining Class B Stock and all
outstanding Class A Stock would
5
<PAGE>
automatically be converted into Common Stock. If such conversion took place,
and the named individuals exercised all of the options indicated, such
individuals and the group would beneficially own the following number of shares
constituting the indicated percentage of Common Stock outstanding: Mr.
Salvatore Giordano, 3,213,928 shares (of which 2,009,750 are shares as to which
Mr. Giordano shares voting and investment power with Messrs. Joseph Giordano
and Sal Giordano, Jr.; 78,750 are shares held by the Salvatore Giordano
Foundation, and 5,685 are shares held by the Giordano Foundation, for both of
which he is an officer, director and shareholder) constituting 10.02%; Mr. Sal
Giordano, Jr., 2,936,257 shares (of which 2,009,750 are shares as to which Mr.
Giordano shares voting and investment power with Messrs. Salvatore Giordano and
Joseph Giordano; 78,750 are shares held by the Salvatore Giordano Foundation,
and 5,685 are shares held by the Giordano Foundation, for both of which he is
an officer, director and shareholder) constituting 9.17%; Mr. Joseph Giordano,
2,806,147 shares (of which 2,009,750 are shares as to which Mr. Giordano shares
voting and investment power with Messrs. Salvatore Giordano and Sal Giordano,
Jr.; 78,750 are shares held by the Salvatore Giordano Foundation, and 5,685 are
shares held by the Giordano Foundation, for both of which he is an officer,
director and shareholder) constituting 8.78%; and all directors and executive
officers as a group 5,849,017 shares constituting 17.85%.
PRINCIPAL STOCKHOLDERS
The following table sets forth information at November 1, 1994 with respect
to the beneficial ownership of the Company's voting securities by all persons
known by the Company to own more than 5% of the Company's outstanding voting
securities. Unless otherwise indicated, the owners listed have sole voting and
investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT BENEFICIALLY PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER(1) OWNED OF CLASS
-------------- ---------------------- ------------------- --------
<C> <S> <C> <C>
Class B Stock Salvatore Giordano
Joseph Giordano and
Sal Giordano, Jr. .............. 2,198,897 96.7%
c/o Fedders Corporation
Liberty Corner, NJ 07938
</TABLE>
- --------
(1) In the event that the named individuals converted their shares of Class B
Stock into Common Stock, less than 5% of the class would remain outstanding,
and pursuant to the terms of the Company's Certificate of Incorporation as
amended, all remaining Class B Stock and all outstanding Class A Stock would
automatically be converted into Common Stock. If such conversion took place,
and the named individuals exercised all of their currently exercisable stock
options, they would own 4,592,962 shares of Common Stock constituting 14.24% of
Common Stock outstanding.
See the previous table and the notes thereto for more detailed information
with respect to the security ownership of the named individuals.
6
<PAGE>
EXECUTIVE COMPENSATION
The following information is furnished as to all cash compensation paid by
the Company and its subsidiaries during the Fiscal Year to each of the five
highest paid executive officers of the Company whose aggregate direct
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------- ------------
(a) (b) (c) (d) (g) (i)
ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION (1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- ---------------------------- ------ ------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Salvatore Giordano.......... 1992 222,800 0 150,000 6,671
Chairman of the Board of 1993 237,133 0 120,000 7,114
Directors 1994 252,150 282,045 150,000 15,753
Sal Giordano, Jr............ 1992 269,850 0 150,000 8,073
Vice Chairman, President and 1993 307,800 0 590,000 9,234
Chief Executive Officer 1994 335,375 282,045 180,000 17,548
Robert L. Laurent, Jr....... 1992 138,600 0 105,000 4,136
Executive Vice President -- 1993 186,101 0 85,000 5,583
Finance and Administration, 1994 209,725 141,023 95,000 8,425
and Chief Financial Officer
S. A. Muscarnera............ 1992 159,850 0 75,000 4,773
Senior Vice President and 1993 173,633 0 120,000 5,209
Secretary 1994 181,875 141,023 15,000 7,641
Norman W. Swartz............ 1992 116,251 26,940 18,500 3,488
Senior Vice President and 1993 134,780 17,690 12,000 4,025
President, Fedders North 1994 142,800 99,000 28,500 7,254
America, Inc.
</TABLE>
- --------
(1) Includes the Company contribution to savings and investment retirement
plans up to the 3% offered to all employees of the Company and in 1994, the
dollar value of the benefit of premiums paid for split-dollar life insurance
policies projected on an actuarial basis which cost is recovered by the Company
from the proceeds of such policies (Mr. Sal Giordano, Jr. $4,656; Mr. Robert L.
Laurent, Jr. $481; Mr. S. A. Muscarnera $2,440; and Mr. Norman W. Swartz $470).
7
<PAGE>
OPTIONS/SAR GRANTS TABLE
The following table sets forth information concerning the grant of stock
options and/or stock appreciation rights (SAR's) during the Fiscal Year to the
individual executive officers named in the Summary Compensation Table.
The table shows the number of options granted to each named executive
officer, the number of options granted as a percentage of options granted to
all employees during the Fiscal Year, the exercise price of each option, the
expiration date for each option, and a presentation of the potential realizable
value for each option assuming annual rates of stock appreciation of 5% and 10%
over each option term.
OPTIONS/SAR GRANTS LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------ --------------------
% OF
TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) (1) YEAR ($/Sh) DATE 5% ($) 10% ($)
- ---- ------- ---------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Salvatore Giordano...... 30,000 $5.125 Dec. 31, 1998 $ 42,478 $ 93,866
120,000 6.75 Apr. 30, 1998 223,788 494,513
-------
150,000 19.9%
Sal Giordano, Jr........ 30,000 5.125 Dec. 31, 1998 42,478 93,866
150,000 6.75 Apr. 30, 1998 279,735 618,141
-------
180,000 23.9%
Robert L. Laurent, Jr... 20,000 5.125 Dec. 31, 1998 28,319 62,577
75,000 6.75 Apr. 30, 1998 139,868 309,071
-------
95,000 12.6%
S. A. Muscarnera........ 15,000 1.9% 5.125 Dec. 31, 1998 21,239 46,933
Norman W. Swartz........ 5,000 5.00 Apr. 30, 1998 6,907 15,263
3,500 7.00 Apr. 30, 1998 6,769 14,957
10,000 7.25 Apr. 30, 1998 20,030 44,262
10,000 5.25 Dec. 31, 1998 14,159 31,289
-------
28,500 3.8%
</TABLE>
- --------
(1) In conjunction with a stock dividend to holders of record on August 31,
1994, substantially all Common Stock options were converted to Class A Stock
options and increased by 50% with a corresponding reduction in exercise price
to 2/3 of the original price in order to maintain the equivalent economic
position of optionees. (See Notes 9 and 10 to the "Notes of Consolidated
Financial Statements" in the Company's Annual Report for the Fiscal Year). The
table shows the status of the Common Stock options prior to such conversion and
adjustment, as the Class A Stock did not commence trading "regular way"on the
New York Stock Exchange until September 12, 1994.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth the number of shares exercised during the
Fiscal Year, the value realized upon exercise, the number of unexercised
options at the end of the Fiscal Year, and the value of unexercised in-the-
money options at the end of the Fiscal Year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END (#) (1) FY-END ($) (1)
ACQUIRED ON VALUE -------------- --------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Salvatore Giordano.......... 150,000 $333,750 120,000E $ 86,250E
120,000U 105,000U
Sal Giordano, Jr............ 180,000 405,000 90,000E 67,500E
650,000U 1,443,750U
Robert L. Laurent, Jr. ..... 95,000 210,625 65,000E 53,750E
95,000U 93,125U
S. A. Muscarnera............ 15,000 30,000 75,000E 63,750E
45,000U 45,000U
Norman W. Swartz............ 33,500 43,781 10,000E 7,500E
13,500U 5,938U
</TABLE>
- --------
(1) In conjunction with a stock dividend to holders of record on August 31,
1994, substantially all Common Stock options were converted to Class A Stock
options and increased by 50% with a corresponding reduction in exercise price
to 2/3 of the original price in order to maintain the equivalent economic
position of optionees. (See Notes 9 and 10 to the "Notes of Consolidated
Financial Statements" in the Company's Annual Report for the Fiscal Year). The
table reflects the status of the Common Stock options prior to such conversion
and adjustment, as the Class A Stock did not commence trading "regular way"on
the New York Stock Exchange until September 12, 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
A separate Compensation Committee was created during the Fiscal Year. The
Committee is comprised of two directors who are not officers or employees of
the Company (Howard S. Modlin and William J. Brennan). The Committee did not
propose the compensation plan for the Fiscal Year due to the timing of its
creation, but has submitted a plan to the Company's Board of Directors (the
"Board") for fiscal year 1995.
BOARD COMPENSATION COMMITTEE REPORT
For the Fiscal Year, all matters concerning executive compensation for the
chief executive officer and other executive officers were determined by the
Company's entire Board of Directors (the "Board"). In determining the total
compensation package for the chief executive officer and all other executive
officers for
9
<PAGE>
the Fiscal Year, the Board considered several factors including: the
performance of the Company; the individual contribution of each executive
officer; the need to attract and retain highly qualified executives in the air
conditioning industry necessary to build long-term stockholder value; and the
need to link a portion of each executive officer's long-term capital
accumulation to the growth in the market value of the Company's Common Stock.
Executive compensation was broken down into three major components (i) cash
compensation, (ii) incentive bonuses, and (iii) stock options.
Cash compensation for the Fiscal Year is shown on the Summary Compensation
Table. For the Fiscal Year, the Board adopted the same incentive plan used for
its executive officers in fiscal years 1992 and 1993. The awards under the plan
are based heavily upon the performance of the Company (the "Executive Plan").
In accordance with the terms of the Executive Plan, the executive officers
designated by the Board may receive incentive awards based upon a prescribed
formula. The amount of the award ranges from 0.5% to 1.5% of an amount equal to
consolidated pre-tax income of the Company minus $1,000,000 ("Adjusted Pre-Tax
Income"). With respect to the individuals named in the Summary Compensation
Table, the following percentages of Adjusted Pre-Tax Income have been
designated by the Board: Mr. Salvatore Giordano 1.5%; Mr. Sal Giordano, Jr.
1.5%; Mr. Robert L. Laurent, Jr. 0.75%; and Mr. S. A. Muscarnera 0.75%. Under
the Executive Plan, the following awards were made for Fiscal Year performance:
Mr. Salvatore Giordano $282,045, Mr. Sal Giordano, Jr. $282,045, Mr. Robert L.
Laurent, Jr. $141,023, and Mr. S.A. Muscarnera $141,023. Mr. Norman W. Swartz,
as president of Fedders North America, Inc. qualifies for incentive
remuneration under a separate plan. Under that plan, approved by the Board, Mr.
Swartz is entitled to receive an incentive award based upon a formula that
takes into consideration the financial results of his operating unit. Applying
this formula, Mr. Swartz earned an incentive award of $99,000.
Salvatore Giordano -- Chairman
Sal Giordano, Jr.
William J. Brennan
Joseph Giordano
Howard S. Modlin
Clarence Russel Moll
S. A. Muscarnera
EMPLOYMENT CONTRACT
Mr. Salvatore Giordano has an Employment Agreement with the Company, which
became effective on March 23, 1993. The material provisions of the Agreement
include: (1) an annual base salary of at least $238,000, payable in equal semi-
monthly installments; (2) annual participation in all compensatory plans and
arrangements of the Company no less favorable than the fiscal year 1993 plans
including, but not limited to, a bonus not less than the amount of the fiscal
year 1993 bonus (none was paid), and continuing eligibility to be awarded stock
options; (3) reimbursement for all expenses incurred while on Company related
business; and (4) annual consideration for base salary and plan participation
increases, if deemed justified by the Company. The Agreement has a stated
expiration date of March 23, 2003, but the term of the Agreement automatically
extends and has a remaining term of ten years from any point in time, until the
term is finally fixed at a period of ten years from an intervening event, as
provided for in the Agreement, such as permanent disability or death.
10
<PAGE>
The Agreement provides that Mr. Giordano will remain Chairman of the Board
throughout the term but, if for any reason this provision is not binding upon
the Company, or he is not elected a director or Chairman, he may serve as a
senior executive for the term with the same duties and responsibilities he
performed at March 23, 1993. If, for any reason during the term, Mr. Giordano
is no longer Chairman of the Board, he has the right to discontinue services
under the Agreement and receive: (1) an annual amount in equal monthly
installments for the remainder of the Employment Period (10 years), equal to
his aggregate compensation from the Company during the fiscal year immediately
preceding the fiscal year in which he elects to discontinue his services. If
Mr. Giordano dies during this period, his estate will be entitled to an annual
sum equal to 100% of his aggregate compensation from the Company during the
fiscal year immediately preceding the fiscal year in which he dies, payable in
semi-monthly installments for a period of ten years from the date of his death
(the "Death Benefit"). For the remainder of the Employment Period, Mr. Giordano
will also be covered by all medical and other insurance programs available to
senior executives, and will continue to be indemnified and insured by the
Company, for all his activities as agent, employee, officer or director of the
Company, for the remainder of his life (collectively, the "Miscellaneous
Benefits"). If Mr. Giordano is living at the end of the Employment Period, he
will also be entitled to receive, for the rest of his life, an annual sum equal
to 50% of his aggregate compensation from the Company during the last fiscal
year of the Employment Period, payable in equal monthly installments, and
adjusted each January for increases in the cost of living ("Post Employment
Compensation").
Should Mr. Giordano become disabled during the term of the Agreement, the
Company may terminate regular compensation and, for the remainder of the
Employment Period (10 years from the date of disability), pay an annual amount
in equal monthly installments equal to his aggregate compensation from the
Company during the fiscal year immediately preceding the fiscal year in which
he became disabled. Mr. Giordano shall also receive the Miscellaneous Benefits.
At the end of the Employment Period, Mr. Giordano will be entitled to receive
the Post Employment Compensation. If Mr. Giordano should become able to resume
work after being disabled (and is still within the Employment Period), he may
do so and resume the normal terms of the Agreement. The Employment Period would
then return to a rolling ten year term. If Mr. Giordano dies after becoming
disabled (and is still within the Employment Period), then in lieu of
disability payments shown above, the Company shall (for the remainder of the
Employment Period following his death) pay his estate the Death Benefit.
In the event there is a "change of control" of the Company (as defined in the
Agreement), Mr. Giordano may: (1) within one year thereafter, elect to treat
such event as a termination without cause and a breach of this Agreement, and
terminate his employment; or, (2) if there is a change in control and the
Company materially breaches this Agreement and fails to cure such breach within
the time provided in the Agreement, Mr. Giordano has one year (if such date is
within five years from the date of the change of control), to elect to treat
such breach as a termination by the Company without cause and to terminate his
employment. Upon a "termination" under either such circumstance, Mr. Giordano
will receive, for the remainder of the Employment Period (as of the day prior
to the date of such termination): (1) base salary at the rate in effect as of
the date of termination, adjusted annually for cost of living; (2) a minimum
bonus using the bonus formula established by the Company for its other senior
officers, but in no event less thant the bonus paid for the prior fiscal year
during the Employment Period; (3) all employee benefits under applicable plans,
and the provision of comparable supplemental benefits where continuation of
such benefits is impermissible under applicable plans; (4) accrual of all
pension benefits; (5) existing perquisites; and (6) vesting of any restricted
stock, stock options and any other then provided long-term incentive benefits.
The Company will hold Mr. Giordano harmless from the effects of certain excise
or other taxes payable by him by reason of these
11
<PAGE>
entitlements following a change in control. In the event of any such
termination without cause, Mr. Giordano has no duty to mitigate his damages by
seeking other employment or becoming self-employed, and the Company has no
right of set-off if he does so.
The Company may only terminate this Agreement for "cause" (as defined in the
Agreement for "cause" (as defined in the Agreement), and thereafter, Mr.
Giordano (or if deceased, his designated beneficiary) will be entitled to
continue to receive the employee benefits he was entitled to receive
immediately prior to his termination. This will continue for the period that
he, or his designated beneficiary, is entitled to receive such benefits (as
provided in the Agreement). A payment shall also be made to reimburse Mr.
Giordano, or his beneficiary, for any additional tax liabilities incurred by
reason of the receipt of such benefits after the termination of, rather than
during the term of, this Agreement.
During the Fiscal Year, the Company amortized the estimated present value of
future non-salary benefits payable under the Agreement based upon certain
assumptions, in the amount of $531,000.
INDEBTEDNESS OF MANAGEMENT
As of November 1, 1994, Mr. Sal Giordano, Jr., a director and executive
officer, is indebted to the Company in the principal amount of $429,094,
pursuant to the terms of a Promissory Note given by Mr. Giordano to the Company
and dated July 31, 1992. The terms of the loan from the Company to Mr. Giordano
require it to be repaid, with interest (based on the then current prime rate of
interest at a named New York bank) on the earlier of (i) the fifth anniversary
of the Note, or (ii) when he sells capital stock of the Company acquired
through the exercise of currently exercisable stock options. Interest on the
Note is payable monthly and has been paid to date.
As of November 1, 1994, Messers. Sal Giordano, Jr., a director and executive
officer, Joseph Giordano, a director, and Robert Laurent and Norman Swartz,
executive officers, were indebted to the Company in the principal amounts of
$269,730, $187,000, $143,397 and $45,053, respectively, pursuant to the terms
of Promissory Notes dated August 4, 1994. The Notes were given as required by a
program offered to all optionees of the Company's stock option plans for a six-
week period in early 1994, whereby optionees were given the opportunity to pay
two-thirds of the exercise price upon exercise and to defer the remaining
balance until the earlier of July 31, 1995 or upon the sale of capital stock of
the Company acquired through such exercises. The Notes are non-recourse, and
bear interest at the prime rate as determined at the beginning of each month,
and published in The Wall Street Journal.
As of November 1, 1994, Mr. Swartz, an executive officer, is indebted to the
Company in the principal amount of $120,000, pursuant to a Promissory Note
given to the Company and dated September 30, 1994. The non-interest bearing
Note was given as part of a relocation assistance loan, and is secured by a
second mortgage on his residence. The loan is forgiven at the rate of $30,000
per annum and will expire by its terms on August 30, 1998.
12
<PAGE>
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total stockholder
return on the Company's Common Stock with returns on the New York Stock
Exchange Composite Index, the Standard & Poor's 500 Stock Index, and stocks
included in the "Home Appliance" category by The Value Line Investment Survey.
Fedders Corporation Common Stock was removed from the S&P 500 Index on April 5,
1994, having been one of the smallest capitalization stocks in that Index for
many years.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS AMONG FEDDERS CORPORATION, THE
NYSE COMPOSITE INDEX, THE S&P 500 INDEX AND HOME APPLIANCE STOCKS
ASSUMES $100 INVESTED ON JANUARY 1, 1990 WITH DIVIDENDS REINVESTED. FISCAL
YEARS ENDED DECEMBER 31 IN 1990 AND AUGUST 31 THEREAFTER.
[Graph]
<TABLE>
<CAPTION> HOME APPLIANCE
Measurement period FEDDERS NYSE COMP. STOCKS PER S&P 500
(Fiscal year Covered) CORP. INDEX VALUE LINE INDEX
- --------------------- ------- --------- ---------- -------
<S> <C> <C> <C> <C>
Measurement PT -
01/01/1990 $100 $100 $100 $100
1990 $ 53.41 $ 95.92 $ 65.00 $ 67
1991 $ 58.65 $116.41 $100.04 $119
1992 $ 31.35 $125.40 $ 98.05 $128
1993 $ 43.48 $146.07 $150.63 $147
1994 $ 61.68 $155.79 $144.26 $156
</TABLE>
13
<PAGE>
INDEPENDENT AUDITORS
Pursuant to the recommendations of its Audit Committee, the Board of
Directors selected the firm of Ernst & Young LLP, independent auditors, to
audit the consolidated financial statements of the Company for the year ended
August 31, 1994. The Company's Stockholders ratified that selection at their
Annual Meeting on December 21, 1993.
On recommendation of the Audit Committee, the Board of Directors appointed
the firm of Ernst & Young LLP, independent auditors, to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending August 31, 1995, subject to ratification by the Company's Stockholders
at the Annual Meeting. Ernst & Young LLP does not have any direct financial
interest in the Company.
Representatives of Ernst & Young LLP are expected to be at the Annual Meeting
and will be available to respond to any appropriate questions by Stockholders
and may make a statement, if they so choose.
STOCKHOLDER PROPOSALS -- NEXT ANNUAL MEETING
If any Stockholder desires to submit a proposal for action at the next
regular annual meeting, it must be received by the Company, P.O. Box 813,
Liberty Corner, NJ 07938 on or before July 21, 1995.
COST OF SOLICITATION
The cost of preparing and mailing material in connection with the
solicitation of proxies is to be borne by the Company. To the extent necessary
in order to assure sufficient representation at the meeting, such solicitation
will be made by the Company's regular employees in the total approximate number
of five. Solicitations will be made by mail and may also be made by telegram,
telephone and in person and by W. F. Doring & Co., for estimated professional
fees of $1,500.
By order of the Board of Directors
S. A. Muscarnera
Secretary
Dated: November 18, 1994 Liberty Corner, New Jersey
14
<PAGE>
DIRECTIONS TO
SOMERSET HILLS HOTEL
200 LIBERTY CORNER ROAD
WARREN, NJ 07060
(908) 647-6700
The Somerset Hills Hotel is located
directly north of Interstate 78 at Exit
33. Newark International Airport is less
than 35 minutes away, and New York City
is within an hour's commute. The
Bernardsville and Lyons railroad stations
are conveniently located approximately
seven minutes from the Hotel.
[MAP]
<PAGE>
COMMON FEDDERS CORPORATION COMMON
PROXY - Annual Meeting of Stockholders - December 20, 1994
Solicited on Behalf of the Board of Directors
PROXY
The undersigned stockholder of FEDDERS CORPORATION hereby constitutes and
appoints SALVATORE GIORDANO, SAL GIORDANO, JR. and S.A. MUSCARNERA, and each of
them, the attorneys and proxies of the undersigned, with full power of
substitution, to vote for and in the name, place and stead of the undersigned,
at the Annual Meeting of Stockholders of said Corporation, to be held at the
Somerset Hills Hotel, 200 Liberty Corner Road, Warren, New Jersey, on December
20, 1994 at 10:30 a.m., and at any adjournments thereof, the number of votes the
undersigned would be entitled to cast if present for the election of directors
and the other item as set forth on the reverse side of this proxy and in their
discretion, upon such other matters as may properly come before the meeting or
any adjournment thereof. The Board of Directors recommends the following for
Director - Joseph Giordano, Clarence Russel Moll, and Anthony E. Puleo.
A majority of said attorneys and proxies, or their substitutes at said
meeting, or any adjournments thereof (or if only one, that one) may exercise all
of the power hereby given. Any proxy to vote any of the shares with respect to
which the undersigned is or would be entitled to vote, heretofore given to any
persons other than the persons named above, is hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed this proxy and hereby
acknowledges receipt of a copy of the notice of said meeting and proxy statement
in reference thereto both dated November 18, 1994.
IMPORTANT: This proxy is continued and is to be signed on the reverse side.
<PAGE>
[X] Please mark votes as in this example.
Unless you specify, the Proxy will be voted FOR the election of the nominees as
Directors and Item 2.
Directors recommend a vote FOR Items 1 and 2.
1. Election of Directors, Nominees: Joseph Giordano, Clarence Russel Moll, and
Anthony E. Puleo as Directors for a term of three years.
FOR [ ] WITHHELD [ ]
- --------------------------------------
For all nominees except as noted above
2. Ratification of the appointment of Ernst & Young as the Company's independent
auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
NOTE: This Proxy, properly filled in, dated and signed, should be returned
immediately in the enclosed post-paid envelope to Proxy Department, Bank of
Boston, P.O, Box 1628, Boston, Massachusetts 02105. If the signer is a
corporation, sign in full the corporate name by a duly authorized officer.
Attorneys, executors, administrators, trustees or guardians should sign full
title as such.
Signature: _____________________________________ Date __________
Signature: _____________________________________ Date __________
<PAGE>
CLASS B FEDDERS CORPORATION CLASS B
PROXY - Annual Meeting of Stockholders - December 20, 1994
Solicited on Behalf of the Board of Directors
PROXY
The undersigned stockholder of FEDDERS CORPORATION hereby constitutes and
appoints SALVATORE GIORDANO, SAL GIORDANO, JR. and S.A. MUSCARNERA, and each of
them, the attorneys and proxies of the undersigned, with full power of
substitution, to vote for and in the name, place and stead of the undersigned,
at the Annual Meeting of Stockholders of said Corporation, to be held at the
Somerset Hills Hotel, 200 Liberty Corner Road, Warren, New Jersey, on December
20, 1994 at 10:30 a.m., and at any adjournments thereof, the number of votes the
undersigned would be entitled to cast if present for the election of directors
and the other item as set forth on the reverse side of this proxy and in their
discretion, upon such other matters as may properly come before the meeting or
any adjournment thereof. The Board of Directors recommends the following for
Director - Joseph Giordano, Clarence Russel Moll, and Anthony E. Puleo.
A majority of said attorneys and proxies, or their substitutes at said
meeting, or any adjournments thereof (or if only one, that one) may exercise all
of the power hereby given. Any proxy to vote any of the shares with respect to
which the undersigned is or would be entitled to vote, heretofore given to any
persons other than the persons named above, is hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed this proxy and hereby
acknowledges receipt of a copy of the notice of said meeting and proxy statement
in reference thereto both dated November 18, 1994.
IMPORTANT: This proxy is continued and is to be signed on the reverse side.
<PAGE>
[X] Please mark votes as in this example.
Unless you specify, the Proxy will be voted FOR the election of the nominees as
Directors and Item 2.
Directors recommend a vote FOR Items 1 and 2.
1. Election of Directors, Nominees: Joseph Giordano, Clarence Russel Moll, and
Anthony E. Puleo as Directors for a term of three years.
FOR [ ] WITHHELD [ ]
- --------------------------------------
For all nominees except as noted above
2. Ratification of the appointment of Ernst & Young as the Company's independent
auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
NOTE: This Proxy, properly filled in, dated and signed, should be returned
immediately in the enclosed post-paid envelope to Proxy Department, Bank of
Boston, P.O. Box 1628, Boston, Massachusetts 02105. If the signer is a
corporation, sign in full the corporate name by a duly authorized officer.
Attorneys, executors, administrators, trustees or guardians should sign full
title as such.
Signature: _____________________________________ Date __________
Signature: _____________________________________ Date __________
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS REFERENCE
- --------------------------------------------------------------------------------
BACK COVER MAP SHOWING DIRECTIONS TO SOMERSET HILLS HOTEL
- --------------------------------------------------------------------------------
