<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
FEDDERS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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> 2
FEDDERS CORPORATION
WESTGATE CORPORATE CENTER
505 MARTINSVILLE ROAD
P.O. BOX 813
LIBERTY CORNER, NEW JERSEY 07938
(908) 604-8686
November 14, 1997
Dear Fellow 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 16, 1997.
At the Meeting you will be asked to elect directors and 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. If your shares are held in the name
of your broker or a nominee, they can vote your preferences for you. The Board
strongly recommends that you vote, or instruct your broker or nominee to vote,
FOR approval of both 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, proxy card and the
Company's Annual Report for the fiscal year ended August 31, 1997.
Sincerely,
<TABLE>
<S> <C>
SALVATORE GIORDANO SAL GIORDANO, JR.
Chairman of the Board Vice Chairman, President, and
Chief Executive Officer
</TABLE>
<PAGE> 3
FEDDERS CORPORATION
LIBERTY CORNER, NEW JERSEY 07938
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 16, 1997
------------------------
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, NJ on Tuesday, December 16, 1997 at 10:30 a.m. for
the following purposes:
1. To elect nine (9) directors to hold office until the next annual
meeting of stockholders and until each such director's successor shall have
been elected and shall have qualified; and
2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent auditors.
By order of the Board of Directors
KENT E. HANSEN
Secretary
Dated: November 14, 1997
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> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proxy Statement....................................................................... 1
Proposal 1 -- Election of Directors................................................... 2
Meetings of the Board of Directors and Certain Committees........................... 3
Security Ownership of Directors and Executive Officers of Fedders..................... 3
Section 16(a) Beneficial Ownership Reporting Compliance............................... 5
Principal Stockholders of Fedders..................................................... 5
Executive Compensation................................................................ 6
Summary Compensation Table.......................................................... 6
Options/SAR Grant's Table........................................................... 7
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.......... 7
Compensation Committee Interlocks and Insider Participation......................... 8
Report of the Compensation Committee on Executive Compensation...................... 8
Employment Contracts................................................................ 8
Salvatore Giordano............................................................... 8
Sal Giordano, Jr................................................................. 9
Performance Graph................................................................... 9
Proposal 2 -- Ratification of Selection of Independent Auditors....................... 9
Stockholder Proposals -- Next Annual Meeting.......................................... 10
Cost of Solicitation.................................................................. 10
</TABLE>
<PAGE> 5
FEDDERS CORPORATION
WESTGATE CORPORATE CENTER
505 MARTINSVILLE ROAD
P.O. BOX 813
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 ("Fedders" or 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 16, 1997, 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 14, 1997. 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, 1996 to August 31, 1997 (the "Fiscal Year"), including financial statements,
has been enclosed with this Proxy Statement.
At the Annual Meeting, holders of shares of the Company's Common Stock and
Class B Stock will be asked to consider and act on proposals to (i) elect each
current director to hold office until the next Annual Meeting of Stockholders
and until each such director's successor shall have been elected and qualified;
and (ii) ratify the appointment of BDO Seidman, LLP as the Company's independent
auditors for the fiscal year ending August 31, 1998.
The close of business on October 17, 1997 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, 18,989,898 shares of Common Stock and
2,266,606 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.
Under the terms of the Company's Certificate of Incorporation, approval of
Proposal 1 for the election of directors, requires a plurality of the votes of
the shares of Common Stock and Class B Stock present in person or represented by
proxy at the Annual Meeting, provided that such shares constitute a quorum. The
ratification of the appointment of independent auditors in Proposal 2 requires
the affirmative vote of a majority of the shares of Common Stock and Class B
Stock voted on such proposal.
The proxies in the accompanying form will be voted as specified, but if no
specification is made they will be voted in favor of (i) the election of
directors and (ii) ratifying the appointment of BDO Seidman, LLP 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> 6
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.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The nominees for election as directors are Messrs. Salvatore Giordano, Sal
Giordano, Jr., Joseph Giordano, Howard S. Modlin, Clarence Russel Moll, William
J. Brennan, Anthony E. Puleo, S. A. Muscarnera and C. A. Keen. Each nominee, if
elected, will hold office until the next annual meeting of stockholders and
until each such director's successor shall have been elected and shall have
qualified. Set forth opposite the name of each director/nominee 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/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
- ------------------------- ------------------------------------------------------ --------
<S> <C> <C>
Nominees
Salvatore Giordano....... Chairman of the Board of the Company(1)(2); 87 1945
Sal Giordano, Jr......... Vice Chairman, President and Chief Executive Officer
of the Company(1)(2); 59 1965
Joseph Giordano.......... Retired(1)(3); 64 1961
Howard S. Modlin......... Partner, Weisman Celler Spett & Modlin, P.A.(4); 66 1977
Clarence Russel Moll..... President Emeritus, Widener University(5); 83 1967
William J. Brennan....... Financial Consultant(6); 68 1980
Anthony E. Puleo......... President, Puleo Tree Co.(7); 62 1994
S. A. Muscarnera......... Retired(1)(8); 57 1982
C. A. Keen............... Retired(9); 72 1996
</TABLE>
- ---------------
(1) Messrs. Sal Giordano, Jr. and Joseph Giordano are sons, and Mr. Muscarnera
is the nephew, of Mr. Salvatore Giordano.
(2) Messrs. Salvatore Giordano and Sal Giordano, Jr. have been associated in
executive capacities with the Company for more than five years.
(3) Mr. Joseph Giordano was a Senior Vice President of the Company until his
retirement in 1992 and President of NYCOR, Inc. ("NYCOR") from August 1992
until its merger into the Company on August 13, 1996.
(4) Principal occupation during the past five years. The law firm of Weisman
Celler Spett & Modlin, P.A. renders legal services to the Company. Mr.
Modlin is also a director of General DataComm Industries, Inc. and Trans-Lux
Corporation.
(5) Principal occupation during the past five years. Dr. Moll is also a director
of Ironworkers' Savings Bank.
(6) Principal occupation during the past five years. Mr. Brennan served as an
executive of the Company for more than 30 years, and a director of the
Company from 1980 to 1987, and was again elected a director in 1989. He is
also a director of CSM Environmental Systems, Inc. He has been a financial
consultant since 1988.
(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.
(8) Mr. Muscarnera was Senior Vice President and Secretary of the Company prior
to his retirement in 1996. Mr. Muscarnera served in various capacities with
the Company for more than 39 years, including human resources and legal.
2
<PAGE> 7
(9) Mr. Keen was a Vice President of the Company for more than 20 years until
his retirement in 1992, with responsibilities in a number of areas during
that time, including marketing, treasury and international sales and
sourcing. He was also a director of NYCOR until its merger into the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During the Fiscal Year, the Board of Directors of the Company held ten (10)
meetings. All of the present directors attended 75% or more of such meetings and
of meetings of committees of which they were members held during the periods
they served as directors. Directors who are not employees receive an annual
stipend of $24,000.
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 six (6) 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 stipend of $1,000 and $500,
respectively, for each meeting they attend.
The Board of Directors has a Compensation Committee consisting of Messrs.
Howard S. Modlin, William J. Brennan and Anthony E. Puleo. During the Fiscal
Year, this committee held one (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.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF FEDDERS
As of October 27, 1997, each director of the Company and each executive
officer of the Company named in the Summary Compensation Table under "Executive
Compensation" and all directors and executive officers of the Company as a
group, 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. The
Company's Class A Stock has no voting rights except as provided under Delaware
Law.
<TABLE>
<CAPTION>
SHARES
AMOUNT AND SUBJECT TO
NATURE OF ACQUISITION PERCENT
NAME OF INDIVIDUAL BENEFICIAL WITHIN 60 OF CLASS
TITLE OF CLASS OR PERSONS IN GROUP OWNERSHIP DAYS(12) OWNED(13)
- ------------------- --------------------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Common Stock Salvatore Giordano......... 1,100 (1) 0 Less than 1%
Sal Giordano, Jr. ......... 1,100 (1) 0 Less than 1%
Joseph Giordano............ 13,910 (1) 0 Less than 1%
Howard S. Modlin........... 256,800 (2) 0 1.35%
Clarence Russel Moll....... 61,400 (3) 0 Less than 1%
William J. Brennan......... 5,000 0 Less than 1%
Anthony E. Puleo........... 2,000 0 Less than 1%
S.A. Muscarnera............ 55,000 0 Less than 1%
C.A. Keen.................. 10,700
Robert L. Laurent, Jr. .... 115,000 0 Less than 1%
All directors and executive
officers as a group........ 525,310 0 2.77%
</TABLE>
3
<PAGE> 8
<TABLE>
<CAPTION>
SHARES
AMOUNT AND SUBJECT TO
NATURE OF ACQUISITION PERCENT
NAME OF INDIVIDUAL BENEFICIAL WITHIN 60 OF CLASS
TITLE OF CLASS OR PERSONS IN GROUP OWNERSHIP DAYS(12) OWNED(13)
- ------------------- --------------------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Class A Stock Salvatore Giordano......... 1,567,855 (4)(5) 167,314 7.68%
Sal Giordano, Jr. ......... 1,550,547 (4)(6)(7) 829,066 10.23%
Joseph Giordano............ 1,200,897 (4)(7)(8) 161,875 6.03%
Howard S. Modlin........... 310,581 (9) 171,564 2.14%
Clarence Russel Moll....... 69,867 (10) 60,000 Less than 1%
William J. Brennan......... 136,623 159,376 1.31%
Anthony E. Puleo........... 0 24,375 Less than 1%
S.A. Muscarnera............ 105,868 343,750 1.97%
C.A. Keen.................. 29,016 142,500 Less than 1%
Robert L. Laurent, Jr. .... 101,851 440,590 2.37%
Kent E. Hansen............. 23,940 50,000 Less than 1%
Gary J. Nahai.............. 0 55,262 Less than 1%
All directors and executive
officers as a group........ 4,112,590 2,695,581 27.11%
Class B Stock(13) Salvatore Giordano......... 2,262,566 (11) 0 99.82%
Sal Giordano, Jr. ......... 2,262,566 (11) 0 99.82%
Joseph Giordano............ 2,262,566 (11) 0 99.82%
All directors and executive
officers as a group........ 2,262,566 0 99.82%
Ownership of Common Stock,
Class A Stock, and Class B
Stock combined, by all
directors and executive
officers as a group........ 6,900,466 2,695,581 20.69%
</TABLE>
- ---------------
(1) The amount shown includes 1,100 shares which are held by a corporation in
which Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano are
officers, directors and stockholders, and share voting and investment power
over such shares.
(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.
(4) Includes 327,681 shares which are held by corporations in which Messrs.
Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano are officers
directors and stockholders, and share voting and investment power over such
shares.
(5) Includes 204,292 shares held of record by Mr. Giordano's wife, and 157,722
shares held of record by Mr. Giordano's wife in trust for their
grandchildren, as to which Mr. Giordano disclaims beneficial ownership.
(6) Includes 18,119 shares held of record by Mr. Giordano's wife, 89,254 shares
held of record by Mr. Giordano's wife in trust for their grandchildren, as
to which Mr. Giordano disclaims beneficial ownership, and 71,630 shares
held by Mr. Giordano in trust as trustee for himself.
(7) Includes 345,625 shares held in trust, as to which Messrs. Sal Giordano,
Jr. and Joseph Giordano share voting and investment power.
(8) Includes 71,630 shares held by Mr. Giordano in trust as trustee for himself
and 58,865 shares held by Mr. Giordano in trust for his children.
4
<PAGE> 9
(9) Includes 2,713 shares owned by members of Mr. Modlin's family as to which
Mr. Modlin disclaims beneficial ownership.
(10) Includes 13,125 shares owned by Dr. Moll's wife as to which Dr. Moll
disclaims beneficial ownership.
(11) Shares are owned by Giordano Holding Corporation as to which Messrs.
Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano share voting and
investment power.
(12) The amounts shown are the number of shares held under options exercisable
within 60 days.
(13) 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
Charter, 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 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, 3,998,835 shares constituting 9.12%;
Mr. Sal Giordano, Jr., 4,643,279 shares constituting 10.43%; Mr. Joseph
Giordano, 3,639,248 shares constituting 8.30% and all directors and
executive officers as a group 9,596,047 shares constituting 20.69%. The
share totals for Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph
Giordano include 2,591,347 shares which are held by corporations in which
they are officers, directors and stockholders and share voting and
investment power over such shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to indentify any officer, director or owner of more
than 10% of the Company's Common Stock, Class A Stock, Convertible Preferred
Stock or the 8 1/2% Convertible Subordinated Debentures Due 2012 who failed to
file on a timely basis with the Securities and Exchange Commission and the New
York Stock Exchange a required report relating to beneficial ownership of such
equity securities of the Company under Section 16 of the Securities Exchange Act
of 1934. Based solely on a review of information provided to the Company, all
persons subject to these reporting requirements filed the required reports on a
timely basis for the Fiscal Year.
PRINCIPAL STOCKHOLDERS OF FEDDERS
The following table sets forth information at October 27, 1997 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>
AMOUNT
NAME AND ADDRESS BENEFICIALLY PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER(1) OWNED OF CLASS
- ---------------------------------------------- ------------------------- ------------ --------
<S> <C> <C> <C>
Class B Stock................................. Salvatore Giordano 2,262,566 99.82%
Joseph Giordano and Sal
Giordano, Jr.
c/o Fedders Corporation
Liberty Corner, NJ 07938
</TABLE>
- ---------------
(1) See footnotes (11) and (13) to the previous table for more detailed
information with respect to the security ownership of the named individuals.
5
<PAGE> 10
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 $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- ------------
(I)
(B) (C) (D) (G) ALL OTHER
(A) FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
- ----------------------------------------- ------ ------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Salvatore Giordano....................... 1997 523,000(3) 412,320 120,000 28,060
Chairman of the Board of Directors 1996 268,258 492,660 120,000 22,827
1995 245,354 520,365 77,314 3,097,691(2)
Sal Giordano, Jr......................... 1997 579,800(3) 412,320 120,000 42,550
Vice Chairman, President and 1996 352,007 492,660 120,000 35,634
Chief Executive Officer 1995 341,530 520,365 139,066 32,424
Robert L. Laurent, Jr.................... 1997 250,000 206,160 60,000 14,564
Executive Vice President Finance and 1996 250,000 246,330 30,000 16,003
Administration, and Chief Financial
Officer 1995 226,489 260,183 50,590 15,281
Kent E. Hansen........................... 1997 186,000 51,540 20,000 8,306
Senior Vice President and 1996 -- -- -- --
Secretary 1995 -- -- -- --
Gary J. Nahai............................ 1997 150,000 16,875 15,000 5,006
Vice President and 1996 111,440 14,414 16,824 3,776
President, Fedders International, Inc. 1995 93,333 5,000 9,375 2,950
</TABLE>
- ---------------
(1) Includes the Company's matching contribution to savings and investment
retirement plans of up to the 3% offered to all employees of the Company in
1997, 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.
$12,787; Mr. Robert L. Laurent, Jr. $879; and Mr. Kent E. Hansen $1,180).
(2) Includes a special award granted to Mr. Giordano in recognition of more than
fifty years of extraordinary and exemplary service to the Company as its
President or Chairman, overseeing the growth of the Company from a
$7,000,000 automobile radiator manufacturer to the leading manufacturer of
room air conditioners in North America.
(3) Reflects the terms of the merger agreement between the Company and NYCOR,
requiring that all employees and directors be placed in the same economic
position following the merger, as they were immediately prior thereto.
6
<PAGE> 11
OPTIONS/SAR GRANTS TABLE
The following table sets forth information concerning the grant of stock
options and/or stock appreciation rights (SAR's) during the Fiscal Year to the
individual executive officers named in the Summary Compensation Table.
The table shows the number of options granted to each named executive
officer, (no SAR's were granted during the Fiscal Year and no SAR's are
outstanding) the number of options granted as a percentage of options granted to
all employees during the Fiscal Year, the exercise price of each option, the
expiration date for each option, and a presentation of the potential realizable
value for each option assuming annual rates of stock appreciation of 5% and 10%
over each option term.
OPTIONS/SAR GRANTS LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------------- -------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Salvatore Giordano................... 120,000 6.8% $ 4.75 12/17/01 $157,480 $347,991
Sal Giordano, Jr. ................... 120,000 6.8% 4.75 12/17/01 157,480 347,991
Robert L. Laurent, Jr. .............. 60,000 3.4% 4.75 12/17/01 78,740 173,995
Kent E. Hansen....................... 20,000 1.1% 4.75 12/17/01 26,247 57,998
Gary J. Nahai........................ 15,000 0.9% 4.75 12/17/01 19,685 43,499
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth the number of shares exercised during the
Fiscal Year, the value realized upon exercise, the number of unexercised options
at the end of the Fiscal Year, and the value of unexercised in-the-money options
at the end of the Fiscal Year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE ------------- ---------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- -------- ------------- ---------------
<S> <C> <C> <C> <C>
Salvatore Giordano....................... -- -- 647,314 E 1,692,049 E
120,000 U 157,500 U
Sal Giordano, Jr. ....................... -- -- 709,066 E 1,796,041 E
1,057,500 U 3,341,156 U
Robert L. Laurent, Jr. .................. -- -- 380,592 E 871,548 E
60,000 U 78,750 U
Kent E. Hansen........................... 175,000 441,656 30,000 E 84,375 E
20,000 U 26,250 U
Gary J. Nahai............................ -- 40,262 E 104,315 E
15,000 U 19,688 U
</TABLE>
7
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of three directors who are not
officers or employees of the Company (Howard S. Modlin, William J. Brennan, and
Anthony E. Puleo). The Committee submitted a plan to the Company's Board of
Directors (the "Board") for the Fiscal Year which was approved by the Board on
December 17, 1996.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In determining the total compensation package for the chief executive
officer and all other executive officers for the Fiscal Year, the Committee
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 Committee recommended and the Board adopted the
same plan it used to compensate its executives in fiscal year 1996 by applying
certain percentages against earnings of the Company before income taxes, plus
net interest expense and depreciation and amortization minus $1,000,000
("EBITDA"). The awards under the plan (the "Executive Plan") are based heavily
upon the performance of the Company. 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 awards for
the Fiscal Year range from 0.13% to 1.0% of EBITDA. With respect to the
individuals named in the Summary Compensation Table, the following percentages
of EBITDA have been designated: Mr. Salvatore Giordano 1.0%; Mr. Sal Giordano,
Jr. 1.0%; Mr. Robert L. Laurent, Jr. 0.5%, and Mr. Kent E. Hansen 0.13%. Under
the Executive Plan, the following awards were made for Fiscal Year performance:
Mr. Salvatore Giordano $412,320; Mr. Sal Giordano, Jr. $412,320; Mr. Robert L.
Laurent, Jr. $206,160; and Mr. Kent E. Hansen $51,540. Mr. Gary J. Nahai,
President, Fedders International, Inc. qualifies for incentive remuneration
under a separate plan. Applying the terms of his plan, Mr. Nahai earned an
incentive award of $16,875.
Respectfully submitted,
COMPENSATION COMMITTEE
Howard S. Modlin -- Chairman
William J. Brennan
Anthony E. Puleo
EMPLOYMENT CONTRACTS
SALVATORE GIORDANO. Mr. Salvatore Giordano has an Employment Agreement
with the Company, which became effective on March 23, 1993, and was amended in
August 1996 to take into account the merger of NYCOR, Inc. into the Company. The
material provisions of the Agreement include: (1) an annual base salary of at
least $482,000, 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 in the
Agreement, such as permanent disability or death. During the Fiscal Year, the
Company amortized the estimated present
8
<PAGE> 13
value of future non-salary benefits payable under the Agreement based upon
certain assumptions, in the amount of $480,000.
SAL GIORDANO, JR. In order to assure the services of Mr. Sal Giordano, Jr.
through age 65, the Board of Directors offered Mr. Giordano a comprehensive
employment agreement for a term of six (6) years. Mr. Giordano accepted the
Company's offer and effective October 1, 1997 entered into an Employment
Agreement with the Company which expires on September 30, 2003. The material
provisions of the Agreement include: (1) an annual base salary of at least
$579,750 payable in accordance with the Company's usual payroll practices for
officers of the Company, which is reviewable annually and subject to increase;
(2) eligibility to receive an annual bonus of not less than 1% of the Company's
EBITDA, (1) and (2) above being the same level of compensation as Mr. Giordano
received during the Fiscal Year; (3) an award of 300,000 restricted shares of
the Company's Class A Stock which shall be held by the Company until January 1,
2004, with the provision that, under certain circumstances, this stock award may
be forfeited by Mr. Giordano; (4) a one-time signing bonus of $2,000,000 to be
contributed to Mr. Giordano's account under the Company's supplementary
retirement plan, which will vest at the rate of one-sixth per year; and (5) real
estate financing in an amount not to exceed $4 million or alternatively, the
provision of housing, furnishing and maintenance in the State of New Jersey,
comparable to Mr. Giordano's current residence.
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, and stocks included in the "Home Appliance"
category by The Value Line Investment Survey.
comparision graph
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Company engaged BDO Seidman, LLP ("BDO") as its independent auditors as
of May 23, 1995. Prior to this engagement, BDO performed audits on the Company's
pension plans for the plan years ended October 31 and December 31, 1993. BDO has
served as the Company's independent auditors for each of the last three (3)
fiscal years.
9
<PAGE> 14
On recommendation of the Audit Committee, the Board of Directors appointed
the firm of BDO, independent auditors, to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending August
31, 1998, subject to ratification by the Company's Stockholders at the Annual
Meeting. BDO does not have any direct financial interest in the Company.
Representatives of BDO 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 15, 1998.
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
KENT E. HANSEN
Secretary
Dated: November 14, 1997
Liberty Corner, New Jersey
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<PAGE> 15
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, and minutes away from Interstate 287 by automobile. 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> 16
PROXY
FEDDERS CORPORATION
PROXY - Annual Meeting of Stockholders - December 16, 1997
Solicited on behalf of the Board of Directors
The undersigned stockholder of FEDDERS CORPORATION (the "Company") hereby
constitutes and appoints SALAVATORE GIORDANO, SAL GIORDANO, JR. and KENT E.
HANSEN, 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 the Company, to be held
at the Somerset Hills Hotel, 200 Liberty Corner Road, Warren, New Jersey, on
Tuesday, December 16, 1997 at 10:30 a.m., and at any adjournments thereof, the
number of votes the undersigned would be entitled to cast if present, on the
items 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 - Slavatore Giordano, Sal Giordano, Jr., Joseph Giordano, Howard S.
Modlin, Clarence Russel Moll, William J. Brennan, Anthony E. Puleo, S.A.
Muscarnera and C.A. Keen.
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 14, 1997.
IMPORTANT - This proxy is continued and is to be signed on the reverse side.
SEE REVERSE SIDE
<PAGE> 17
Directions to
Somerset Hills Hotel
200 Liberty Corner Road
Warren, NJ 07059
(908) 647-6700
The Somerset Hills Hotel is located directly north of Interstate 78 at
Exit 33, and minutes away from Interstate 287 by automobile.
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 miles from the Hotel.
DETACH HERE
[X] Please mark votes as in this example
Unless you specify, the Proxy will be voted FOR items 1 and 2
______________________________________________
Directors recommend a vote FOR items 1 and 2
______________________________________________
FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratification of the [ ] [ ] [ ]
for a term of one year. appointment of BDO
Nominees: Salvatore Giordano, Seidman, LLP as the
Sal Giordano, Jr., Joseph Company's independent
Giordano, Howard S. Modlin, Auditors.
Clarence Russel Moll, William
J. Brennan, Anthony E. Puleo
S.A. Muscarnera, C.A. Keen
[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE [ ]
AND NOTE AT LEFT
NOTE: The Proxy, Properly filled
in, dated and signed, should be
returned immediately in the
enclosed post-paid envelope to
Proxy Department, Boston
EquiServe, P.O. Box 9381, Boston,
Massachusetts 02105. If a signer
is a corporation, sign in full
the corporate name by a duly
authorized officer. Attorneys,
executors, administrators,
trustees or guardians should sign
full name and mark as such.
Signature:___________ Date ___, 1997 Signature: ____________ Date:_____, 1997
