<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)
Robert N. Edwards
- --------------------------------------------------------------------------------
(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
LIBERTY CORNER, NEW JERSEY 07938
(908) 604-8686
November 25, 1998
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 22, 1998.
At the Meeting you will be asked to elect directors, approve the
reservation of shares of Class A Stock to be used to pay a portion of the annual
fee to non-employee 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 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,
<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 22, 1998
------------------------
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 07060 on Tuesday, December 22, 1998 at 10:30
a.m. for the following purposes:
1. To 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 shall have qualified;
2. To consider and act upon a proposal to approve a plan pursuant to
which 150,000 shares of Class A Stock would be reserved for issuance to pay
a portion of the fee paid to non-employee Directors of the Company; and
3. 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 25, 1998
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 No. 1 -- Election of Directors..................... 2
Meetings and Compensation of the Board of Directors....... 3
Membership and Meetings of the Committees of the Board of
Directors.............................................. 3
Security Ownership of Directors and Executive Officers...... 4
Section 16(a) Beneficial Ownership Reporting Compliance..... 5
Principal Stockholders of Fedders........................... 5
Executive Compensation...................................... 6
Summary Compensation Table................................ 6
Options/SAR Grant Table................................... 7
Aggregated Option/SAR Exercises and Fiscal Year-End
Option/SAR Value Table................................. 7
Report of the Compensation Committee on Executive
Compensation........................................... 7
Employment Contracts...................................... 8
Salvatore Giordano..................................... 8
Sal Giordano, Jr. ..................................... 8
Performance Graph......................................... 9
Proposal No. 2 -- To Consider and Act upon a Proposal to
Approve a Plan Pursuant to which 150,000 Shares of Class A
Stock would be Reserved for Issuance to Pay a Portion of
the Fee Paid to Non-Employee Directors of the Company..... 9
Proposal No. 3 -- Ratification of Selection of Independent
Auditors.................................................. 10
Stockholder Proposals -- Next Annual Meeting................ 10
Cost of Solicitation........................................ 10
</TABLE>
<PAGE> 5
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 ("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 22, 1998, 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 of the Company (the "Stockholders")
on November 25, 1998. A Stockholder who signs and returns 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, 1997 to August 31, 1998 (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 approve the proposals set forth in this Proxy
Statement.
The close of business on November 6, 1998 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, 16,838,559 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 under certain circumstances.
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.
Approval of Proposal No. 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. Approval of Proposal No. 2 for the reservation of
shares of the Company's Class A Stock to be used to pay a portion of the annual
fee paid to non-employee Directors of the Company, requires the affirmative vote
of a majority of the shares of Common Stock and Class B Stock voting together as
a single class, as does Proposal No. 3 for the ratification of the appointment
of the Company's independent auditors.
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; (ii) the reservation of shares of the Company's Class A Stock to be
used to pay a portion of the annual fee paid to non-employee Directors of the
Company; and (iii) 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. 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.
<PAGE> 6
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
On August 25, 1998, the Board of Directors approved a resolution increasing
the number of directors of the Company to ten (10) and elected Dr. David C.
Chang a director of the Company, to serve until the next annual meeting of
Stockholders.
The nominees for election as directors are Messrs. Salvatore Giordano, Sal
Giordano, Jr., William J. Brennan, David C. Chang, Joseph Giordano, C. A. Keen,
Howard S. Modlin, Clarence Russel Moll, S. A. Muscarnera and Anthony E. Puleo.
Set forth opposite the name of each director/nominee or in the notes below, 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
- ---- ---------------------------- --------
<S> <C> <C>
Nominees
Salvatore Giordano....... Chairman of the Board of the Company(1)(2); 88 1945
Sal Giordano, Jr......... Vice Chairman, President and Chief Executive Officer of
the Company(1)(2); 60 1965
William J. Brennan....... Financial Consultant(3); 70 1980
David C. Chang........... President, Polytechnic University(4); 57 1998
Joseph Giordano.......... Retired(1)(5); 64 1961
C. A. Keen............... Retired(6); 73 1996
Howard S. Modlin......... Partner, Weisman Celler Spett & Modlin(7); 67 1977
Clarence R. Moll......... President Emeritus, Widener University(8); 84 1967
S. A. Muscarnera......... Retired(1)(9); 58 1982
Anthony E. Puleo......... President, Puleo Tree Co.(10); 63 1994
</TABLE>
- ---------------
(1) Messrs. Sal Giordano, Jr. and Joseph Giordano are sons, and Mr. S. A.
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. Mr.
Salvatore Giordano is Chairman of the Executive Committee. Mr. Sal
Giordano, Jr. is Chairman of the Nominating Committee, and a member of the
Executive Committee.
(3) 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 a director of CSM Environmental Systems, Inc. He has
been a financial consultant since 1988. Mr. Brennan is Chairman of the
Finance Committee and a member of the Audit and Compensation Committees.
(4) Principal occupation during last four years. Prior to that, Dr. Chang was
Dean of the College of Engineering and Applied Sciences at Arizona State
University. Dr. Chang is a member of the Finance and Nominating Committees.
(5) Mr. Giordano was a Senior Vice President of the Company until his
retirement on August 31, 1992, and President of NYCOR, Inc. until its
merger into the Company on August 13, 1996. Mr. Giordano is a member of the
Executive and Finance Committees.
(6) Mr. Keen was a Vice President of the Company for more than 20 years until
his retirement in August 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, Inc. until its merger into the
Company on August 13, 1996. Mr. Keen is a member of the Compensation and
Nominating Committees.
2
<PAGE> 7
(7) Principal occupation during the past five years. The law firm of Weisman
Celler Spett & Modlin, P.A. renders legal services to the Company from time
to time. Mr. Modlin is also a director of General DataComm Industries, Inc.
and Trans-Lux Corporation. Mr. Modlin is Chairman of the Compensation
Committee and a member of the Executive and Audit Committees.
(8) Principal occupation during the past five years. Dr. Moll is also a
director of Ironworkers' Savings Bank. Dr. Moll is Chairman of the Audit
Committee.
(9) Mr. Muscarnera was Senior Vice President and Secretary of the Company prior
to his retirement on August 31, 1996. Mr. Muscarnera served in various
capacities with the Company for over 39 years, including human resources
and legal. Mr. Muscarnera is a member of the Audit and Finance Committees.
(10) 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. Mr. Puleo is a member of
the Compensation and Nominating Committees.
MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
During the Fiscal Year, the Board of Directors of the Company held seven
(7) 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 fee
of $48,000, payable one-half in cash and one-half in shares of the Company's
Class A Stock.
MEMBERSHIP AND MEETINGS OF THE COMMITTEES OF THE BOARD OF DIRECTORS
The Board has five standing committees. These committee memberships are
indicated in the preceding biographical information.
The Audit Committee consists of four directors, none of whom is an employee
of the Company. The Audit Committee reviews significant matters relating to the
audit and internal controls of the Company, reviews the results of audits by the
Company's independent auditors, reviews the activities of the internal audit
staff, and recommends selection of the Company's independent auditors for
approval by the Board, subject to ratification by the Stockholders. The
Committee reviews the unaudited financial statements of the Company monthly and
the audited financial statements of the Company after the close of each fiscal
year. 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 Audit Committee held seven (7) meetings.
The Compensation Committee consists of four non-employee directors. The
Committee develops compensation plans for the executive officers of the Company,
subject to the approval of the full Board. During the Fiscal Year, the
Compensation Committee held one (1) meeting.
The Executive Committee consists of four directors and has the authority to
act on most matters concerning the Company during intervals between Board
meetings. During the Fiscal Year, the Executive Committee held one (1) meeting.
The Finance Committee consists of four directors. This Committee reviews
the Company's financial policies, keeps informed of its operations and financial
condition, including requirements for funds, and reviews the Company's
continuing financial arrangements and methods of external financing. The Finance
Committee did not meet during the Fiscal Year.
The Nominating Committee consists of four directors, three of whom are
non-employee directors. The Committee reviews possible director candidates and
makes recommendations to the Board concerning nominees to serve on the Board.
The Nominating Committee was recently formed and did not meet during the Fiscal
Year.
3
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF FEDDERS
As of October 31, 1998, 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(11) OWNED(12)
- -------------- ------------------- ---------- ----------- ---------
<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%
William J. Brennan......... 5,000 0 Less than 1%
Joseph Giordano............ 13,910(1) 0 Less than 1%
C. A. Keen................. 5,700 0 Less than 1%
Howard S. Modlin........... 256,800(2) 0 1.5%
Clarence Russel Moll....... 61,400(3) 0 Less than 1%
S. A. Muscarnera........... 55,000 0 Less than 1%
Anthony E. Puleo........... 2,000 0 Less than 1%
Robert L. Laurent, Jr...... 20,000 0 Less than 1%
All directors and executive
officers as a group...... 425,410 0 2.5%
Class A Stock Salvatore Giordano......... 1,391,944(4)(5) 0 7.5%
Sal Giordano, Jr........... 1,629,965(4)(6) 319,066 10.4%
William J. Brennan......... 37,000 31,875 Less than 1%
Joseph Giordano............ 1,048,637(4)(7) 161,875 6.5%
C. A. Keen................. 125,016 22,500 Less than 1%
Howard S. Modlin........... 361,967(8) 45,938 2.2%
Clarence Russel Moll....... 69,867(9) 15,000 Less than 1%
S. A. Muscarnera........... 105,868 103,750 1.1%
Anthony E. Puleo........... 0 24,375 Less than 1%
Robert L. Laurent, Jr...... 287,997 140,590 2.3%
Kent Hansen................ 25,593 20,000 Less than 1%
Gerald C. Senion........... 0 50,000 Less than 1%
All directors and executive
officers as a group...... 4,090,024 953,607 25.9%
Class B Stock(12) Salvatore Giordano......... 2,262,566(10) 0 99.82%
Sal Giordano, Jr........... 2,262,566(10) 0 99.82%
Joseph Giordano............ 2,262,566(10) 0 99.82%
All directors and executive
officers as a group...... 2,262,566 0 99.82%
Ownership of Common, Class
A, and Class B Stock
combined, by all
directors and executive
officers as a group...... 6,778,000 953,607 20.05%
</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.
4
<PAGE> 9
(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 502,346 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, 122,914
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 71,630 shares held by Mr. Giordano in trust as trustee for himself
and 77,565 shares held by Mr. Giordano in trust for his children.
(8) Includes 2,713 shares owned by members of Mr. Modlin's family as to which
Mr. Modlin disclaims beneficial ownership.
(9) Includes 13,125 shares owned by Dr. Moll's wife as to which Dr. Moll
disclaims beneficial ownership.
(10) Shares are owned by Giordano Holding Corporation as to which Messrs.
Salvatore Giordano, Sal Giordano, Jr. and Joseph Giordano share voting and
investment power.
(11) The amounts shown are the number of shares held under options exercisable
within 60 days.
(12) 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 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, 3,655,610 shares constituting 9.72%;
Mr. Sal Giordano, Jr., 4,212,697 shares constituting 11.11%; Mr. Joseph
Giordano, 3,486,988 shares constituting 9.23%; and all directors and
executive officers as a group 7,731,607 shares constituting 20.05%. The
share totals for Messrs. Salvatore Giordano, Sal Giordano, Jr. and Joseph
Giordano include 2,764,912 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 identify any officer, director or owner of more
than 10% of the Company's Common or Class A Stock 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 31, 1998 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 (10) and (12) 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 $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- -------------------------
(A) (B) (C) (D) (F) (G)
RESTRICTED (I)
STOCK ALL OTHER
FISCAL SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(1)
--------------------------- ------ ------- ------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Salvatore Giordano............... 1998 522,701 378,660 -- -- 28,324
Chairman of the Board of 1997 522,701 412,320 -- 120,000 28,060
Directors 1996 268,258 492,660 -- 120,000 22,827
Sal Giordano, Jr................. 1998 579,750 378,660 1,764,000 -- 543,165
Vice Chairman, President and 1997 579,750 412,300 -- 120,000 42,550
Chief Executive Officer 1996 352,007 492,660 -- 120,000 35,634
Robert L. Laurent, Jr. .......... 1998 250,000 189,330 -- -- 14,001
Executive Vice 1997 250,000 206,160 -- 60,000 14,564
President-Finance
and Administration and Chief 1996 250,000 246,330 -- 30,000 16,003
Financial Officer
Kent E. Hansen................... 1998 185,503 47,333 -- -- 8,372
Senior Vice President and 1997 185,503 51,540 -- 20,000 8,306
Secretary 1996 -- -- -- -- --
Gerald C. Senion................. 1998 180,000 68,583 -- -- 4,580
Group Vice President and 1997 19,846 -- -- 50,000 100,000(2)
President, Fedders North 1996 -- -- -- -- --
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, 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. $13,368; Mr. Robert L.
Laurent, Jr. $941; and Mr. Kent E. Hansen $1,261). The 1998 amount for Mr.
Sal Giordano, Jr. includes $491,484 related to his employment contract.
(2) Represents a one-time signing bonus.
6
<PAGE> 11
OPTIONS/SAR GRANTS TABLE
There were no grants of stock options and/or stock appreciation rights
(SARs) during the Fiscal Year to the individual executive officers named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth the number of shares exercised during the
Fiscal Year, the value realized upon exercise, the number of unexercised options
at the end of the Fiscal Year, and the value of unexercised in-the-money options
at the end of the Fiscal Year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE ------------- ---------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- --------- ------------- ---------------
<S> <C> <C> <C> <C>
Salvatore Giordano...................... 767,314 1,946,828 -0-E -0-E
-0-U -0-U
Sal Giordano, Jr........................ 1,447,500 4,861,136 319,066E 314,124E
-0-U -0-U
Robert L. Laurent, Jr................... 300,000 553,742 140,590E 146,803E
-0-U -0-U
Kent E. Hansen.......................... 30,000 91,875 20,000E 13,750E
-0-U -0-U
Gerald C. Senion........................ -- -- 50,000E -0-E
-0-U -0-U
</TABLE>
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; and the need to attract and
retain highly qualified executives in the air conditioning industry necessary to
build long-term stockholder value. Executive compensation was broken down into
two major components (i) cash compensation and (ii) incentive bonuses. Messrs.
Salvatore Giordano and Sal Giordano, Jr. have employment contracts with the
Company.
Cash compensation for the Fiscal Year is shown on the Summary Compensation
Table. For the Fiscal Year, the Committee recommended and the Board adopted a
plan (the "Executive Plan") pursuant to which executive officers may receive
incentive awards based upon designated percentages applied against the Company's
earnings before interest, taxes, depreciation and amortization minus $1,000,000,
exclusive of restructuring charges. The designated percentages for the Fiscal
Year range from 0.125% to 1%. With respect to the individuals named in the
Summary Compensation Table, the following percentages were designated: Mr.
Salvatore Giordano 1%; Mr. Sal Giordano, Jr. 1%; Mr. Robert L. Laurent, Jr.
0.5%, and Mr. Kent E. Hansen 0.125%. Mr. Gerald C. Senion is on a separate plan
based upon the performance of the Company's subsidiary, Fedders North America,
Inc. Under the Executive Plan and the plan for Mr. Senion, the following awards
were made for Fiscal Year performance: Mr. Salvatore Giordano
7
<PAGE> 12
$378,660; Mr. Sal Giordano, Jr. $378,660; Mr. Robert L. Laurent, Jr. $189,330;
Mr. Kent E. Hansen $47,333 and Mr. Gerald C. Senion $70,833.
Respectfully submitted,
COMPENSATION COMMITTEE
Howard S. Modlin -- Chairman
William J. Brennan
C. A. Keen
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 $232,000, 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 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
earnings before income taxes, plus net interest expense and depreciation and
amortization (EBITDA) in excess of $1 million, (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 is being
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 million contributed to Mr. Giordano's account under
the Company's supplementary retirement plan and 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.
8
<PAGE> 13
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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FEDDERS CORPORATION,
NYSE COMPOSITE INDEX, AND HOME APPLIANCE STOCKS
ASSUMES $100 INVESTED ON SEPTEMBER 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEARS END ON AUGUST 31.
<TABLE>
<CAPTION>
FEDDERS PEER GROUP NYSE MARKET
CORPORATION INDEX INDEX
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 141.86 97.05 106.65
1995 196.29 104.98 121.52
1996 195.03 114.94 143.11
1997 221.09 134.46 194.39
1998 183.93 152.77 202.00
</TABLE>
PROPOSAL NO. 2 -- TO CONSIDER AND ACT UPON A PROPOSAL TO APPROVE
A PLAN PURSUANT TO WHICH 150,000 SHARES OF CLASS A STOCK
WOULD BE RESERVED FOR ISSUANCE TO PAY A PORTION OF THE FEE
PAID TO NON-EMPLOYEE DIRECTORS OF THE COMPANY.
Subject to the approval of the Company's Stockholders, the Board of
Directors of the Company unanimously approved a plan pursuant to which 150,000
shares of Class A Stock are reserved for issuance in payment of a portion of the
compensation of the Company's non-employee Directors. The Company currently has
eight (8) non-employee Directors.
Non-employee Directors are currently paid an annual cash fee of $24,000 for
attendance at Board Meetings. The Board proposes to match the economic value of
this cash payment with a yearly payment of shares of the Company's Class A
(non-voting) Stock, which would be received by each non-employee Director free
of any restrictions, other than those imposed by Federal Securities Rules and
Regulations.
At the June meeting of the Company's Board of Directors each year (or the
next meeting thereafter if no meeting is held in June in any given year), the
Company would issue to each non-employee Director then serving, that number of
shares of the Company's Class A Stock determined by dividing $24,000 by the
closing price of the Company's Class A Stock on the date of the Board Meeting.
Fractional shares would be rounded up to the next full number of shares. If, at
any time, the cash fee paid to qualified Directors increases, the Class A Stock
portion of such Director's total fee would also increase and be
9
<PAGE> 14
based upon the higher cash fee. The first such grant was made, subject to the
approval of this Proposal No. 2, in June 1998 at the meeting at which this plan
was adopted.
The Board of Directors feels strongly that, in order to attract and retain
highly qualified members to serve on the Board, it must strive to be more
competitive in the compensation it offers its non-employee members. Reports to
the Board showed that the Company's current level of compensation to outside
directors is approximately one-half of the average rate for companies of similar
size. Current trends also suggest that at least some of the compensation to
outside directors should be in the form of company stock, or other forms of
deferred compensation.
For federal income tax purposes, the Company would treat the compensation
given in the form of Class A Stock in the same manner as it would had the
Company paid all cash compensation to the non-employee Directors. The total
compensation package (cash and stock) is fully deductible by the Company for tax
purposes. The value of the Class A Stock received by the non-employee Directors
would be recognized by each of them as ordinary income.
Approval of Proposal No. 2 requires the affirmative vote of a majority of
the shares of Common Stock and Class B Stock voting together as a single class.
The Board of Directors recommends a vote in favor of Proposal No. 2.
PROPOSAL NO. 3 -- 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 four fiscal
years.
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, 1999, 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 28, 1999.
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 $3,500.
By order of the Board of Directors
KENT E. HANSEN
Secretary
Dated: November 25, 1998
Liberty Corner, New Jersey
10
<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. 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
[0514-FEDDERS CORPORATION] [FILE NAME: FER98B.ELX] [VERSION-2] [11/17/98]
FDR98B DETACH HERE
_______________________________________________________________________________
PROXY
FEDDERS CORPORATION
Annual Meeting of Stockholders -- December 22, 1998
Solicited on behalf of the Board of Directors
The undersigned stockholder of FEDDERS CORPORATION (the "Company") hereby
constitutes and appoints SALVATORE 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 steed 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
December 22, 1998 at 10:30 a.m., and at any adjournments thereof, the number of
votes the undersigned would be entitled to cast if personally 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 a vote in favor of
Proposals 1, 2 and 3.
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 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 25, 1998.
_____________ _____________
| | | |
|SEE REVERSE| CONTINUED AND TO BE SIGNED ON REVERSE SIDE |SEE REVERSE|
| SIDE | | SIDE |
|___________| |___________|
<PAGE> 17
[0614-FEDDERS CORPORATION] [FILE NAME:FDR96A.ELX] [VERSION-3] [11/18/98]
Detach Here
- --------------------------------------------------------------------------------
_____
| | Plese mark
| X | votes as in
|_____| this example
Unless you specify, the Proxy will be voted FOR Proposals 1, 2 and 3,
Directors recommend a vote FOR Proposals 1, 2 and 3.
<TABLE>
<S> <C>
___ ___ ___
1. Election of Directors for a term of one year. 2. Approve reservation of 150,000 | | | | | |
Nominee: Salvatore Giordano, Sal Giordano, Jr., shares of Class A Stock in con- |___| |___| |___|
William J. Brennan, David C. Chang, Joseph nection with a yearly grant of
Giordano, C.A. Keen, Howard S. Modlin, shares of the Company's Class A
Clarence R. Moll, S.A. Muscarnera, Stock to be used to pay a portion
Anthony E. Puleo. of the annual fee paid to non-
employee Directors of the Company.
___ ___ ___
___ ___ 3. Ratification of the appointment of | | | | | |
FOR ALL | | | | WITHHELD FROM ALL BDO Seidman, LLP as the Company's |___| |___| |___|
NOMINEES |___| |___| NOMINEES Independent auditors.
___
| | _______________________________________
|___| 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 postage-paid envelope to Proxy Depart-
ment, BankBoston, P.O. Box 9381, Boston,
Massachusetts 02206. If a signer is a corporation,
sign in full corporate name by a duly authorized
officer. Attorneys, executors, administrators,
trustees or guardians should sign full name
and mark as such.
Signature: ______________________________ Date: ___________________ Signature: ______________________________ Date: _______________
</TABLE>
