<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
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 Rule 14a-11(c) or Rule 14a-12
LESCO, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LESCO, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
LESCO, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1996
APRIL 11, 1996
TO THE SHAREHOLDERS OF
LESCO, INC.:
The annual meeting of the shareholders of LESCO, Inc., an Ohio corporation
(the "Company") will be held at the offices of the Company, 20005 Lake Road,
Rocky River, Ohio 44116 on Wednesday, May 15, 1996 at 9:30 a.m., local time,
for the following purposes:
1. To elect Directors, each to hold office for a one-year term and until his
successor is elected and qualified.
2. To consider and act upon a proposal to amend the 1992 Stock Incentive Plan
(the "1992 Plan") to: (a) increase by 400,000 to 1,000,000 the aggregate
number of Common Shares available for awards under the 1992 Plan and (b)
permit the Committee (as defined in the 1992 Plan) to fix, in its
discretion, the exercise period for options held by an employee subject to
Section 16 of the Securities Exchange Act of 1934 following that
employee's termination of employment with the Company.
3. To consider and act upon a proposal to amend the 1987 Stock Option Plan
(the "1987 Plan") to permit the Committee (as defined in the 1987 Plan) to
fix, in its discretion, the exercise period for options held by an
employee subject to Section 16 of the Securities Exchange Act of 1934
following that employee's termination of employment with the Company.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record at the close of business on April 5, 1996 will be
entitled to notice of and to vote at the meeting. Shareholders are urged to
complete, date and sign the enclosed proxy and return it in the enclosed
envelope.
By Order of the Board of Directors,
PATRICIA W. PRIBISKO, Secretary
<PAGE> 3
LESCO,INC.
20005 LAKE ROAD
ROCKY RIVER, OHIO 44116
PROXY STATEMENT
April 11, 1996
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the annual meeting of shareholders (the "Annual Meeting")
of LESCO, Inc., an Ohio corporation (the "Company"), to be held at the offices
of the Company, 20005 Lake Road, Rocky River, Ohio, on Wednesday, May 15, 1996,
at 9:30 a.m., local time, and at any adjournment thereof. This proxy statement
and the accompanying notice and proxy, together with the Company's Annual
Report to Shareholders for the year ended December 31, 1995, are first being
sent to shareholders on or about April 11, 1996.
The solicitation of proxies is made by and on behalf of the Board of
Directors. The cost of the solicitation of proxies will be borne by the
Company. The Company may also reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for expenses incurred by them in sending
proxy materials to the beneficial owners of the Company's Common Shares,
without par value (the "Common Shares").
If the enclosed proxy is properly executed and returned, the Common Shares
represented thereby will be voted in accordance with any directions properly
specified therein. If no directions are indicated, the Common Shares will be
voted to elect the directors set forth under "Election of Directors" below and
FOR proposals One and Two. A shareholder's presence alone at the Annual
Meeting will not operate to revoke that shareholder's proxy. The proxy is
revocable by a shareholder at any time insofar as it has not been exercised by
giving notice to the Company in writing or in open meeting.
The close of business on April 5, 1996, has been fixed as the record date
for the determination (the "Record Date") of shareholders entitled to notice of
and to vote at the Annual Meeting. At that time, the Company's voting
securities outstanding consisted of 7,986,088 Common Shares, each of which is
entitled to one vote at the Annual Meeting. The presence, in person or by
proxy, of persons entitled to vote a majority of the Common Shares outstanding
will constitute a quorum for the conduct of all business to be considered at
the annual meeting.
<PAGE> 4
ELECTION OF DIRECTORS
The Code of Regulations of the Company (the "Code") fixes the number of
Directors at nine but authorizes the Board of Directors to increase or decrease
the number of Directors by not more than two. The Code also authorizes the
Board of Directors to fill any vacancy by the affirmative vote of a majority of
the Directors then in office. The Board increased the number of directors from
nine to eleven. Each Director elected serves until the next annual meeting and
until his successor is elected and qualified.
The Board of Directors of the Company, through the Nominating Committee, has
nominated the eleven persons listed below for election as Directors. If any
nominee declines or is unable to serve (which the Board of Directors has no
reason to expect), the persons named in the accompanying Proxy intend to vote
for the balance of those nominees named, and, if they deem it advisable, for a
substitute nominee.
The following table sets forth information with respect to each nominee:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
DIRECTOR
CONTINUOUSLY
NAME AGE POSITION SINCE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
William A. Foley 48 Chairman of the Board of 1993
Directors, President and
Chief Executive Officer
Robert F. Burkhardt 59 Consultant and Director 1963
Paul H. Carleton 48 Director 1984
David H. Clark 67 Director 1985
Karl E. Ware 69 Director 1987
F. Leon Herron, Jr. 74 Director 1991
Stanley M. Fisher 68 Director 1994
Drexel Bunch 51 Director 1995
J. Martin Erbaugh 47 Director 1995
Michael J. FitzGibbon 30 Director 1996
Lee C. Howley 48 Director 1996
</TABLE>
William B. Nicol served on the Board of Directors from 1984
until his resignation on September 30, 1995. Following his resignation from
the Board, Mr. Nicol became a Director Emeritus and attends Board meetings but
does not vote.
-2-
<PAGE> 5
During 1995, the Board of Directors of the Company met on
seven occasions. No director attended less than 75% of the meetings of the
Board of Directors and committees of which he was a member held during 1995.
The Company has a Finance Committee that reviews, with the
Company's independent auditors, the audit plans, the results of the audit
engagement and the adequacy of the Company's internal accounting controls. The
Finance Committee, which prior to March 3, 1995 consisted of William B. Nicol,
Chairman, Paul H. Carleton, and David H. Clark and since March 3, 1995 has
consisted of Paul H. Carleton, Chairman, William B. Nicol (until his
resignation from the Board on September 30, 1995), Daniel G. Dunstan (until his
resignation from the Board on November 30, 1995), and Stanley M. Fisher, met
two times during 1995.
The Company has a Compensation and Governance Committee which
is responsible for determining executive compensation and administering the
Company's compensation plans. The Compensation and Governance Committee, which
prior to March 3, 1995 consisted of David H. Clark, Chairman, Paul H.
Carleton, F. Leon Herron, Jr., and Karl E. Ware, and since March 3, 1995 has
consisted of J. Martin Erbaugh, Chairman, David H. Clark, Drexel Bunch and
Stanley M. Fisher, met two times during 1995.
The Nominating Committee prior to March 3, 1995 consisted of
Karl E. Ware, Paul H. Carleton and William A. Foley, and since March 3, 1995
has consisted of William A. Foley, Chairman, Daniel G. Dunstan (until his
resignation from the Board on November 30, 1995), Robert F. Burkhardt and David
H. Clark. The Nominating Committee nominates candidates for election to the
Board of Directors and will consider suggestions forwarded by shareholders to
the Secretary of the Company concerning qualified candidates for election as
Directors. The Nominating Committee met one time during 1995.
Ohio law provides that if notice in writing is given by any
shareholder to the President or a Vice-President or the Secretary of the
Company not less than forty-eight hours before the time fixed for holding the
Annual Meeting, which states that the shareholder desires that the voting for
the election of Directors be cumulative, and an announcement of the giving of
such notice is made upon the convening of the meeting by the Chairman or
Secretary or by or on behalf of the shareholder giving such notice, then each
shareholder will have cumulative voting rights in the election of directors.
If cumulative voting is invoked: (i) each shareholder will be entitled to cast
an aggregate number of votes in the election of Directors determined by
multiplying the number of persons to be elected by the number of shares the
shareholder holds as of the Record Date and to distribute such votes among
nominees in any fashion the shareholder sees fit; and (ii) unless express
contrary instructions are given therein, a proxy in the enclosed form will
include discretionary authority to cumulate votes and distribute them among
persons nominated by the Board of Directors in such fashion as the proxies
believe will maximize the number of such nominees elected. If cumulative
voting is not invoked, each shareholder will be entitled to cast for each of
eleven nominees up to that number of votes that equals the number of shares
held by him as of the Record Date. The eleven nominees receiving the greatest
number of votes will be elected. Submission of a Proxy withholding authority
from a nominee or a broker non-vote has the effect of failing to vote for such
nominee but does not otherwise act as a vote "against" such nominee.
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
William A. Foley joined the Company in July 1993 as President,
Chief Executive Officer and a director. He was elected Chairman of the Board
of Directors in October 1994, following the death of James I. FitzGibbon. Mr.
Foley was President and Chief Executive Officer of Imperial Wallcoverings,
Inc., a wallpaper producer and a subsidiary of Collins & Aikman, Inc., from
October 1990 until February 1993. From January 1988 to October 1990, Mr. Foley
was Vice President and General Manager of The Scotts Company Consumer Business
Group, a producer and marketer of turf care products. Mr. Foley was Vice
President and General Manager of Rubbermaid Specialty Products Division, a
producer of rubber and plastic products, from 1984 to 1988, and was Vice
President - Sales and Marketing for Anchor Hocking Corporation, a producer of
glass products from 1970 to 1984. Mr. Foley is also a director of Alltrista
Corporation, a consumer and industrial products manufacturing company,
Associated Estates Realty Corporation, a real estate investment trust, and
Libbey, Inc., a producer of glass products.
-3-
<PAGE> 6
Robert F. Burkhardt has served as a consultant to the Company
since July 1994 and as a director since 1963. He is a co- founder of the
Company and served as Vice Chairman from January 1987 to June 1994. Mr.
Burkhardt served as President of the Company from May 1984 to January 1987, and
as Vice President from 1963 to May 1984.
Paul H. Carleton has been a director of the Company since May
1984. Since January 1993, Mr. Carleton has been Managing Director of, and a
principal in, Carleton, McCreary, Holmes & Co., an investment banking firm
located in Cleveland, Ohio, specializing in mergers, acquisitions and public
and private financings. From July 1989 through December 1992, Mr. Carleton was
President, and a principal in, The Carleton Group, an investment banking firm
located in Cleveland, Ohio. Prior thereto, Mr. Carleton was a Managing
Director of McDonald & Company Securities, Inc., a Cleveland investment banking
firm. Mr. Carleton is a director of University Hospitals of Cleveland, a major
teaching hospital, and Bluecoats, Inc., an organization devoted to the welfare
of families of Cuyahoga County safety forces employees who lost their lives in
the line of duty.
David H. Clark has been a director of the Company since
December 1985. Mr. Clark was President of McLouth Steel Products Corp. from
1986 to 1988 and is now retired. From 1984 to 1985, Mr. Clark was a Vice
President of L.T.V. Steel Company, Inc., and President of its Bar Division. He
had also been Executive Vice-President--Steel Group for Republic Steel
Corporation prior to the merger of Republic and L.T.V. in 1984.
F. Leon Herron, Jr. has been a director of the Company since
June 1991. Mr. Herron was employed by O.M. Scott & Sons, Inc., a producer and
marketer of turf care products, prior to his retirement in 1983, and served as
President from 1966 to 1983 and Chairman from 1971 to 1983.
Karl E. Ware has been a director of the Company since March
1987. Mr. Ware is currently Chairman and Chief Executive Officer of Ware
Industries, Inc., a wire bending company. Prior to his retirement in 1986, Mr.
Ware was employed by White Consolidated Industries, Inc., where he served as
Vice Chairman and Chief Administrative Officer from 1984 to 1986 and Senior
Executive Vice President and Chief Operating Officer from 1976 to 1984. He is
a director of Lubrizol Corporation, a specialty chemical manufacturer; Oatey
Co., a plumbing and aftermarket automotive supplier; Pioneer Standard
Electronics, Inc., a national distributor of industrial electronics; and
Acme-Cleveland Corporation, a diversified manufacturer and supplier of
industrial and telecommunications products.
Stanley M. Fisher was the Company's outside counsel from 1975
to December 1994, and has been a director of the Company since December 1994.
He is Of Counsel with the Cleveland, Ohio law firm Arter & Hadden. Mr. Fisher
has been a member of the National Conference of Commissioners on Uniform State
Laws since 1983. He was appointed in 1994 by the President of the United
States to the Federal Service Impasses Panel. He is a past National President
of the Federal Bar Association and serves as an Adjunct Professor of Law at The
Cleveland-Marshall College of Law of Cleveland State University, Cleveland,
Ohio.
Drexel Bunch has been a director since March 1995. Mr. Bunch
has been employed by Nordson Corporation, a producer and marketer of industrial
equipment along with software and application technologies, since 1983, where
he has been Vice President, Manufacturing, since 1985. Prior to that, Mr.
Bunch held the positions of Vice President of Quality and Productivity and
Director of Quality Assurance. Prior to joining Nordson Corporation, Mr. Bunch
was employed for more than 16 years by the Ford Motor Company.
J. Martin Erbaugh has been a director since March 1995. Mr.
Erbaugh is an attorney who has had 17 years of management experience in the
lawn care industry as President of Lawnmark, a lawn care company. Currently,
he is President of J.M. Erbaugh Co., a private investment firm, and President
of Coer Inc., a real estate development firm. He is a director of Barefoot,
Inc., a national lawn care company; a director of Morgan Fun Shares, Inc., a
closed-end investment company; and a director of Morgan Bank, NA, a national
bank. He is Founder, a past President and Director of The Professional Lawn
Care Association of America. He is a trustee of the Burton D. Morgan
Foundation and the Ohio Police and Firemen's Pension and Disability Fund.
-4-
<PAGE> 7
Michael J. FitzGibbon has been a director since March 1, 1996.
Mr. FitzGibbon is currently a Ph.D. candidate in the Social Policy History
Program at Case Western Reserve University. He received an M.A. from the
University of Kentucky in 1991 and a B.A. from Miami University in 1988. Mr.
FitzGibbon is currently a limited partner in the FitzGibbon Family Partnership
which undertakes business and venture capital opportunities. Mr. FitzGibbon
has had extensive experience working in the nonprofit sector. From 1991-1993,
Mr. FitzGibbon served on the Executive Board of the Ohio Council for Social
Studies. Mr. FitzGibbon currently serves as a trustee of the Diabetes
Association of Greater Cleveland. Mr. FitzGibbon has been the recipient of
several major fellowships. In 1995, he was a John D. Rockefeller III Fellow at
the Yale University Program on Non-Profit Organizations. During the 1993-94
academic year, Mr. Fitzgibbon was a Doctoral Fellow at the Indiana University
Center on Philanthropy.
Lee C. Howley has been a director since March 1, 1996. Mr.
Howley has been a principal in the construction, financing and operation of
health care related real estate and in telecommunications systems. He has
served in leadership capacities for a number of civic organizations. From 1994
to 1995, Mr. Howley represented the United States at the United Nations as the
Country's Public Delegate, at the request of President Clinton. Since 1981,
Mr. Howley has served as President of Howley & Company, a real estate
development and management company; since 1987, he has served as Chairman of
Coast Management Company, a real estate cleaning company; and since 1995, he
has served as Principal of Howley & Leroux Health Services, a consulting
company for the merger, affiliation and acquisition of health care providers.
He was founder and a general partner of North Coast Cable, Ltd., a cable
television company servicing Cleveland, Ohio, from 1981 to 1994. Mr. Howley
is a director of Boykin Management, a hotel and restaurant management company,
and DMI, a provider of consulting services to the health care industry.
-5-
<PAGE> 8
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
--------------------------
The following table summarizes the compensation paid to the
Chief Executive Officer and each of the Company's other five most highly
compensated officers (the "Named Executive Officers") during or with respect to
the fiscal years ended December 1995, 1994 and 1993 for services in all
capacities to the Company.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation(1)
Awards
- ----------------------------------------------------------------------------------------------------------------------------
All Other
Fiscal Salary Bonus Options Compensation(1)
NAME AND PRINCIPAL POSITION Year ($) ($) (# of shares) ($)
--------------------------- ------ ------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
William A. Foley, 1995 275,000 - 4,000 7,924
Chairman of the Board, President 1994 275,000 - 4,000 6,358
And Chief Executive 1993(2) 139,615 - 300,000 615
Officer
Daniel G. Dunstan, 1995(3) 177,885 - 4,000 9,274
Executive Vice-President 1994 182,000 - 4,000 8,015
Chief Operating Officer, 1993 184,692 15,000(4) 9,000 11,422
Chief Accounting and
Financial Officer and Secretary
John M. Freise(5), 1995 67,315 - 10,000 973
Vice President, Service Centers
Philip R. Gardner, 1995 145,000 - 4,000 5,363
Vice President, Lawncare Sales and 1994 145,000 - 4,000 5,771
National Accounts 1993 147,500 - 9,000 5,027
C. Thomas Smith(6), 1995 127,200 - 4,000 5,453
Vice President, Operations
Michael A. Sotak(6), 1995 146,440 - 4,000 8,563
Vice President, Marketing
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Reflects (i) the Company's contributions to the LESCO, Inc. Stock
Investment and Salary Savings Plan and Trust and (ii) reimbursement
for medical expenses pursuant to an insurance program.
(2) Mr. Foley was first employed by the Company effective July 1, 1993,
and the salary reported for fiscal year 1993 reflects the period July
1 through December 31, 1993.
(3) Mr. Dunstan resigned from his position and from the Board of Directors
effective November 30, 1995. Mr. Dunstan currently provides
consulting services to the Company.
(4) Reflects payment of a bonus in connection with increased services
rendered during the Company's search for a new president and chief
executive officer.
(5) Mr. Freise was first employed by the Company effective September 11,
1995, and the salary for fiscal year 1995 reflects the period
September 11 through December 31.
(6) Mr. Smith and Mr. Sotak both joined the Company in 1994 and became
executive officers in 1995.
</TABLE>
-6-
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted
during the year ended December 31, 1995 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term(1)
- -------------------------------------------------------------------- ------------------------ -----
% of Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted(2) Fiscal Year ($/sh) Date 0%($) 5%($) 10%($)
- ---- ------- ------------ ------ ---- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Foley 4,000 2.8 15.625 4/17/05 0 39,300 99,600
Daniel G. Dunstan 4,000 2.8 15.625 4/17/05 0 39,300 99,600
John M. Freise 10,000 7.0 14.000 9/11/05 0 88,000 223,100
Philip R. Gardner 4,000 2.8 15.625 4/17/05 0 39,300 99,600
C. Thomas Smith 4,000 2.8 15.625 4/17/05 0 39,300 99,600
Michael A. Sotak 4,000 2.8 15.625 4/17/05 0 39,300 99,600
- ----------------------------------------
<FN>
(1) Amounts have been calculated using the exercise price per share at
assumed compound annual rates of stock appreciation from the date of
grant to the date of expiration of 0%, 5% and 10% respectively.
(2) The options were granted pursuant to the Company's 1992 Stock
Incentive Plan. The options became fully exercisable on December 31,
1995. None of the options include "reload" or tax reimbursement
features.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth information for each Named
Executive Officer with regard to the aggregate stock options exercised during
the year ended December 31, 1995, and the stock options held as of December 31,
1995.
<TABLE>
<CAPTION>
Value of Unexercised
in-the-Money
Number of Unexercised Options at
Options at FY-End FY-End($)(2)
----------------------------- ------------------ ---------
Shares Acquired Value
Name On Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Foley 1,840 10,892 101,960 180,000 492,553 900,000
Daniel G. Dunstan 3,900 30,050 41,000 0 207,070 0
John M. Freise 0 0 10,000 0 10,000 0
Philip R. Gardner 0 0 26,000 0 51,030 0
C. Thomas Smith 0 0 6,000 0 0 0
Michael A. Sotak 0 0 7,000 0 0 0
- -----------------------------------
<FN>
(1) Market value of underlying securities at exercise, minus the exercise price
of $9.333 for William A. Foley and $6.417 for Daniel G. Dunstan.
(2) Market value of underlying securities at December 31, 1995 of $15.00 minus
the exercise price.
</TABLE>
-7-
<PAGE> 10
COMPENSATION OF DIRECTORS
The Company pays all Directors who are not employees a
retainer of $12,000 per year, $750 per Board meeting attended and $1000 for the
chairman of a committee and $750 for each member for each committee meeting
attended (other than those held on the same day as a Board meeting). Directors
Emeritus are paid a retainer of $6,000 per year and $375 per Board meeting
attended.
REPORT OF THE COMPENSATION AND GOVERNANCE COMMITTEE
The Compensation and Governance Committee of the Board of
Directors (the "Compensation Committee") was responsible for determining
compensation paid to the Company's executive officers during 1995. The
Compensation Committee's members are J. Martin Erbaugh (Chairman), David H.
Clark, Drexel Bunch and Stanley M. Fisher. This report describes the
Compensation Committee's executive compensation philosophy and the policies and
actions of the Compensation Committee in fiscal 1995 in considering
compensation of the executive officers of the Company, including the Named
Executive Officers.
The basic philosophy of the Compensation Committee is to
provide compensation to the executive officers in a manner that (1) relates
total compensation appropriately to corporate performance and the individual
performance of each executive officer, (2) motivates the executive officers to
achieve increased shareholder value, and (3) aligns the interests of the
executive officers with the long-term interests of the Company's shareholders.
The Compensation Committee also intends to provide
compensation to the executive officers at a level consistent with compensation
available to executives with similar responsibilities at companies of similar
size in order to continue to attract and retain key executives. The
Compensation Committee has set base pay at levels slightly below the levels at
those companies and to set overall pay (base salary plus annual incentives plus
long-term incentives) at levels slightly above the levels at those companies.
The Compensation Committee has reviewed the Company's
compensation levels in connection with Section 162(m) of the Internal Revenue
Code, as amended, and, at this time, does not foresee exceeding the $1 million
deduction limitation for any executive officer.
For fiscal 1995, the Compensation Committee reviewed the
performance of management in connection with the considerations discussed
below.
BASE SALARY. Base salaries are set in accordance with the
Compensation Committee members' collective experience and perception of the
compensation paid to executives with similar responsibilities in companies of
similar size. In this context, the Compensation Committee reviews management
compensation reports, has used outside compensation consultants and considers
publicly available information concerning the peer group identified on page 10
(the "Peer Group") and concerning other competitors of, and other companies of
similar size to, the Company that are not included in the Peer Group.
Adjustments are made for individual performance, levels of experience and the
level of responsibility undertaken.
ANNUAL INCENTIVES. The Compensation Committee established a
Management Incentive Plan (the "Incentive Plan") in fiscal 1994 to enable the
Company to reward achievement of the objectives outlined in the Company's
Strategic Plan. The financial criteria used to measure achievement of these
objectives for fiscal 1995, as set forth in the Incentive Plan, were earnings
per share, total sales, net income, Common Share price and return on assets.
While the Company outperformed both the NASDAQ Industrial Index and its Peer
Group in shareholder value and growth, it did not achieve all of the Incentive
Plan objectives in 1995 and no Incentive Plan payout was made.
LONG-TERM INCENTIVES. The Company has an equity-based award
plan that provides for awards of share options, restricted shares, share
appreciation rights, limited share appreciation rights and performance units.
This plan is designed to create long-term incentives that align the interests
of the Company's shareholders and its
-8-
<PAGE> 11
management. The plan is available to midlevel and senior Company officers and
executives who are responsible for the Company's long-term growth. In 1995,
each Named Executive Officer was granted options to purchase 4,000 Common
Shares. The Compensation Committee believes that option grants should continue
to provide eligible employees a proprietary and vested interest in the growth
and performance of the Company, and does not specifically consider the number
of options held by an employee in making an award.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Company's
compensation philosophy for its Chief Executive Officer is based on the
principles of corporate and individual performance set forth above. The
Company has an employment agreement with William A. Foley, its Chairman of the
Board, President and Chief Executive Officer (the "Agreement"), which was
entered into in July 1993. Pursuant to the Agreement, Mr. Foley receives
annual compensation of $275,000, which was targeted as described in the third
paragraph of this report. Mr. Foley's annual compensation may be increased in
accordance with performance standards established by the Compensation Committee
and approved by the Board of Directors from time to time. The Compensation
Committee increased Mr. Foley's annual compensation by $25,000 to $300,000
effective January 1, 1996. Under the Agreement, Mr. Foley was granted options
to purchase up to 300,000 Common Shares. These options vest at the rate of 20%
per year over a five-year period beginning June 30, 1994. The below-market per
share exercise prices of $9.33 for the first 60,000 Common Shares and $10.00
per share for the remaining 240,000 Common Shares were set in lieu of
additional cash compensation and to provide Mr. Foley an enhanced proprietary
and vested interest in the future growth and performance of the Company. As
stated above under "LONG-TERM INCENTIVES," Mr. Foley was also granted options
during 1995 to purchase 4,000 Common Shares under the Company's equity-based
award plan.
The Compensation Committee
J. Martin Erbaugh, Chairman
David H. Clark
Drexel Bunch
Stanley M. Fisher
-9-
<PAGE> 12
PERFORMANCE COMPARISON
The following graph illustrates the return that would have
been realized (assuming reinvestment of dividends) by an investor who invested
$100 on December 31, 1990 in each of (i) the Company's Common Shares, (ii) the
NASDAQ Industrial Index, and (iii) a fund investing proportionately, based on
respective market capitalization, in the common stocks of the group of
companies which the Company has identified as its peer group solely for this
purpose.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
LESCO $ 100.00 $ 174.46 $ 230.39 $ 327.85 $ 265.14 $ 315.03
NASDAQ $ 100.00 $ 164.75 $ 178.53 $ 191.31 $ 185.19 $ 237.58
PEER GROUP $ 100.00 $ 122.28 $ 138.54 $ 162.03 $ 149.29 $ 162.90
</TABLE>
The Company is engaged in the manufacture and marketing of an
extensive line of golf course and lawn care products. These products include
fertilizers, turf protection products, grass seed, turf care equipment,
replacement parts and golf course accessories. In reviewing published industry
and line of business indexes, the Company has not identified an index which
portrays the Company's line of business. The Company competes with national
suppliers that market strictly fertilizers, turf protection products or
equipment directly to the end users. The Company also competes with numerous
privately held regional and local suppliers which offer a more diverse line of
turf care products than do the national suppliers. LESCO believes it is the
only national, publicly held company that supplies a full range of products to
the turf industry and sells directly to the end user.
Therefore, for purposes of preparing the above graph, LESCO
has selected a peer group of publicly held companies as follows:
. Toro Company - Manufactures lawn maintenance equipment.
. General Host - Operates a chain of specialty retail stores devoted to
the sale of lawn and garden products, craft and Christmas merchandise.
. Ringer Corp. - Develops and sells environmentally compatible
lawn, garden and turf products.
. The Scotts Company - Manufactures and markets consumer do-it-yourself
lawn care and professional golf course turf care products. (Scotts
commenced trading on NASDAQ in 1992 and is included in the peer group
index only after December 31, 1992.)
The above list represents publicly held companies that manufacture or
market turf care related products. The Company intends to add to this peer
group list as additional publicly held companies are identified.
-10-
<PAGE> 13
PROPOSAL ONE: TO APPROVE AMENDMENTS TO
THE LESCO, INC. 1992 STOCK INCENTIVE PLAN
PROPOSED AMENDMENTS TO THE PLAN
The number of shares currently available for grant of Awards under the
1992 Stock Incentive Plan (the "1992 Plan") is 94,158 shares. The Board of
Directors has determined that this number is insufficient to maintain the 1992
Plan as an incentive device and has therefore adopted and proposed for
shareholder approval this proposal to increase by 400,000 to 1,000,000 the
aggregate number of Common Shares available for awards under the 1992 Plan.
In addition, the Board has proposed that the 1992 Plan be amended to
permit the Committee (defined in the 1992 Plan) to fix, in its discretion, the
exercise period for options held by an employee subject to Section 16 of the
Securities Exchange Act, as amended (the "1934 Act"), following that employee's
termination of employment with the Company. This amendment will allow the
Committee greater flexibility in establishing severance compensation
arrangements with employees. Currently, any vested unexercised options held by
an employee upon termination must be exercised within three months of that
termination or be forfeited.
DESCRIPTION OF THE PLAN
PURPOSE
The 1992 Plan was adopted in May 1992, and its purpose is to encourage
selected employees of the Company and its subsidiaries and directors who are
not members of the Compensation and Governance Committee of the Company (the
"Committee") to acquire a proprietary and vested interest in the growth and
performance of the Company, and thus generate an increased incentive to
contribute to the Company's future success and prosperity.
The 1992 Plan permits the granting of (1) Options to purchase Common
Shares which are either "Non-Statutory Stock Options" not intended to qualify
for special tax treatment under the Internal Revenue Code of 1986 as amended
(the "Code"), or Options which are intended to qualify as "Incentive Stock
Options" under the Code, (2) SARs either in conjunction with Options or
separately, (3) Restricted Stock Awards, (4) Stock Awards, and (5) Performance
Shares. All employees of the Company and its subsidiaries are eligible to be
participants in the 1992 Plan. In addition, the 1992 Plan provides for the
grant of Options to directors of the Company who are not employees of the
Company or any of its subsidiaries and do not serve on the Committee.
ADMINISTRATION
The 1992 Plan is administered by the Compensation and Governance
Committee of the Board of Directors which consists of not less than three Board
members, all of whom are ineligible to participate in the 1992 Plan while they
so serve and are "disinterested persons" (within the meaning of the rules
promulgated under Section 16(b) of the 1934 Act). The Committee has full
authority to select the individuals to whom Awards are granted, to determine
the type and amount of Award(s) to be granted to each participant, to determine
the terms and conditions of Awards granted, to establish rules and regulations
for the administration of the 1992 Plan, and to determine the terms and
conditions of agreements which are entered into with participants conforming to
the provisions of the 1992 Plan. Option agreements set forth the number of
Common Shares that are subject to the Option, the type of Option granted, the
Option Price to be paid upon exercise, the manner in which the Option is to be
exercised, the Option period, and such other terms as may be approved by the
Committee.
SHARES SUBJECT TO THE 1992 PLAN
The total shares available under the 1992 Plan for the grant of awards
is limited to 400,000, and the number of shares currently available for awards
is 94,158.
-11-
<PAGE> 14
The number of Common Shares which remain available for grant pursuant
to the 1992 Plan and Common Shares subject to outstanding Awards will be
appropriately and proportionately adjusted to reflect changes in the Company's
capitalization, including stock splits, stock dividends, mergers,
reorganizations, consolidations, and recapitalizations.
As of April 4, 1996, the closing price of the Common Shares on the
NASDAQ National Market System was $15.125.
OPTIONS
For Options granted to employees under the 1992 Plan, the Option Price
per share is 100% of the Fair Market Value of Common Shares on the date of
grant. The Option Price per Common Share under an Incentive Stock Option is
determined by the Committee at the time of grant and will be not less than 110%
of the Fair Market Value of the Common Shares at the date of grant in the case
of a participant who, at the date of grant, owns shares possessing more than
10% of the total combined voting power of all classes of stock of the Company.
Payment of the Option Price upon exercise of an Option may be made in cash,
Common Shares, or a combination, as set forth in the Option agreement. The
purchase price per share under outstanding Options will also be appropriately
adjusted to reflect capitalization changes, or other changes in corporate
structure affecting the Common Shares.
The term of each Option is fixed by the Committee, except that
Incentive Stock Options will not be exercisable after ten years from the grant
date, or five years in the case of a participant who at the date of grant owns
shares possessing more than 10% of the voting power of the Company. The grant
and terms of Incentive Stock Options will be limited to the extent required by
the Code. The Committee will determine the time or times at which, and the
conditions under which, each Option may be exercised. Generally, Options will
not be exercisable prior to six months following the date of grant. The
Committee may provide that Options may be exercisable only in installments and
the Committee may waive such installment exercise provisions.
If the Option Price of any Option granted to a participant under the
1992 Plan is paid in whole or in part by surrendering Common Shares already
owned by the optionee, there will automatically be granted, when the Committee
next otherwise grants Options to employees generally, a "reload" or
"replacement" Option for the number of Common Shares surrendered. Common
Shares acquired upon the exercise of a "reload" or "replacement" Option may not
be sold or otherwise transferred while the holder is an employee or director of
the Company, but may be used to pay the Option Price of other Options granted
under the 1992 Plan.
All outstanding Options will become exercisable with respect to 100%
of the subject shares upon the occurrence of a Change in Control, except that
no Option may be exercised prior to six months from the date of grant. Options
granted under the 1992 Plan are not assignable or transferrable other than by
inheritance.
STOCK APPRECIATION RIGHTS
SARs may be granted pursuant to the 1992 Plan separately or in tandem
("Tandem SARs") with other Awards. SARs related to stock Options may be
granted when the Option is granted, and with respect to Non-Statutory Options,
also may be granted at any time before exercise or expiration of the Option.
Tandem SARs terminate upon the termination or exercise of the related Option
subject to such provisions as the Committee may specify at grant if an SAR is
granted with respect to less than the full number of shares covered by the
related Option. Upon exercise of an SAR, the holder receives payment from the
Company in an amount equal to the excess of the then Fair Market Value of the
Common Shares covered by the SAR over the Option or grant price of the SAR.
The Committee may impose such conditions or restrictions on the exercise of any
SAR as it deems appropriate from time to time. SARs granted under the 1992
Plan are not assignable or transferrable other than by inheritance.
Tandem SARs are exercisable only at such time or times and to the
extent that the Options to which they relate are exercisable, and SARs granted
separately are exercisable as the Committee may determine, provided that an SAR
granted to a participant subject to Section 16(b) of the 1934 Act subsequent to
the grant of the related Option is not exercisable during the first six months
of its term, except in the event of death or disability of the
-12-
<PAGE> 15
optionee prior to the expiration of the six-month period. The exercise of SARs
held by participants subject to Section 16(b) of the 1934 Act are made only in
accordance with the "window period" provisions of Rule 16b-3, to the extent
applicable.
The Committee may also grant "Limited" SARs that become exercisable
only in the event of a Change in Control, subject to such terms and conditions
as the Committee may specify at grant. Such Limited SARs shall be settled
solely in cash. The Committee may also provide that, in the event of a Change
in Control, the amount to be paid upon the exercise of an SAR or Limited SAR
shall be based on the Change in Control price, subject to such terms and
conditions as the Committee may specify at grant.
RESTRICTED STOCK AWARDS
Restricted Stock Awards may be granted pursuant to the 1992 Plan
either separately or in conjunction with other Awards. Common Shares covered
by Restricted Stock Awards may not be sold, pledged, assigned, or otherwise
transferred or encumbered by the recipient, except by will or by the laws of
descent and distribution, until termination of the restrictions applicable to
the Award, which are established by the Committee and need not be the same for
each Award. However, during the Restriction Period, recipients have full
voting rights and are entitled to dividends relating to such Common Shares.
Stock dividends issued with respect to restricted stock shall be
treated as additional shares of restricted stock that are subject to the same
restrictions and other terms and conditions that apply to the restricted stock
with respect to which such dividends are issued. If an employee ceases to be
employed before the end of the Restriction Period, all Common Shares subject to
restriction will be forfeited to the Company, except that in the event of
retirement, permanent disability, death, or in cases of special circumstances,
the Committee is permitted to waive or accelerate all or part of any remaining
restrictions.
STOCK AWARDS
Awards of Common Shares may be granted under the 1992 Plan either
separately or in conjunction with other Awards. The Committee has complete
authority as to the employees to whom Stock Awards will be granted, the number
of Common Shares to be awarded, and all terms and conditions of each Award.
PERFORMANCE SHARES
Performance Share Awards may be granted under the 1992 Plan either
separately or in conjunction with other Awards. The Committee has complete
authority to select the employees to whom Performance Shares shall be awarded,
the number of shares to be awarded, and all the terms and conditions of each
Award.
Each Performance Share will be deemed to be equivalent to one share.
The value of each Performance Share at the time of its grant is zero. The
value of each Performance Share shall, at the end of each fiscal year of the
Company, be increased or decreased (but in no event below zero) by an amount
equal to the increase or decrease in the Fair Market Value of one Common Share
of the Company, plus amounts equal to dividends payable in cash or property
paid from time to time on each issued and outstanding share of Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
With respect to nonqualified stock options, in general, for federal
income tax purposes under present law:
(i) The grant of a nonqualified stock option, by itself, will
not result in income to the optionee.
(ii) Except as provided in (v) below, the exercise of a
nonqualified stock option (in whole or in part, according to its
terms) will result in ordinary income to the optionee at that time in
an amount equal to the excess (if any) of the fair market value of the
shares on the date of exercise over the option price.
-13-
<PAGE> 16
(iii) Except as provided in (v) below, the tax basis of the
shares acquired upon exercise of a nonqualified stock option, which
will be used to determine the amount of any capital gain or loss on a
future taxable disposition of such shares, will be the fair market
value of the shares on the date of exercise.
(iv) No deduction will be allowable to the employer
corporation upon the grant of a nonqualified stock option but, upon
the exercise of a nonqualified stock option, a deduction will be
allowable to the employer corporation at that time in an amount equal
to the amount of ordinary income realized by the optionee exercising
such option if the employer corporation deducts and withholds
appropriate federal withholding tax.
(v) With respect to the exercise of a nonqualified stock
option and the payment of the option price by the delivery of Common
Shares, to the extent that the number of shares received does not
exceed the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of the shares
received will be the same as the tax basis of the shares surrendered,
and the holding period of the optionee in the shares received will
include his holding period in the shares surrendered. To the extent
that the number of shares received exceeds the number of shares
surrendered, ordinary income will be realized by the optionee at that
time in the amount of the fair market value of such excess shares; the
tax basis of such excess shares will be equal to the fair market value
of such shares at the time of exercise; and the holding period of the
optionee in such shares will begin on the date such shares are
transferred to the optionee.
With respect to incentive stock options, in general, for federal
income tax purposes under present law:
(i) Neither the grant nor the exercise of an incentive stock
option, by itself, will result in income to the optionee; however, the
excess of the fair market value of the shares at the time of exercise
over the option price is (unless there is a disposition of the shares
acquired upon exercise of an incentive stock option in the taxable
year of exercise) includable in alterative minimum taxable income
which may, under certain circumstances, result in an alterative
minimum tax liability to the optionee.
(ii) If the shares acquired upon exercise of an incentive
stock option are disposed of in a taxable transaction after the later
of two years from the date on which the option is granted or one year
from the date on which such shares are transferred to the optionee,
long-term capital gain or loss will be realized by the optionee in an
amount equal to the difference between the amount realized by the
optionee and the optionee's basis which, except as provided in (v)
below, is the option price.
(iii) Except as provided in (v) below, if the shares acquired
upon the exercise of an incentive stock option are disposed of within
the two-year period from the date of grant or the one-year period
after the transfer of the shares to the optionee (a "disqualifying
disposition"):
(a) Ordinary income will be realized by the optionee
at the time of such disposition in the amount of the excess,
if any, of the fair market value of the shares at the time of
such exercise over the option price, but not in an amount
exceeding the excess, if any, of the amount realized by the
optionee over the option price.
(b) Short-term or long-term capital gain will be
realized by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any, of the
amount realized over the fair market value of the shares at
the time of such exercise.
(c) Short-term or long-term capital loss will be
realized by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any, of the
option price over the amount realized.
(iv) No deduction will be allowed to the employer corporation
with respect to incentive stock options granted or shares transferred
upon exercise thereof, except that if a disposition is made by the
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<PAGE> 17
optionee within the two-year period or the one-year period referred to
above, the employer corporation will be entitled to a deduction in the
taxable year in which the disposition occurred in an amount equal to
the amount of ordinary income realized by the optionee making the
disposition.
(v) With respect to the exercise of an incentive stock option
and the payment of the option price by the delivery of Common Shares,
to the extent that the number of shares received does not exceed the
number of shares surrendered, no taxable income will be realized by
the optionee at that time, the tax basis of the shares received will
be the same as the tax basis of the shares surrendered, and the
holding period (except for purposes of the one-year period referred to
in (iii) above) of the optionee in shares received will include his
holding period in the shares surrendered. To the extent that the
number of shares received exceeds the number of shares surrendered, no
taxable income will be realized by the optionee at that time; such
excess shares will be considered incentive stock option stock with a
zero basis; and the holding period of the optionee in such shares will
begin on the date such shares are transferred to the optionee. If the
shares surrendered were acquired as the result of the exercise of an
incentive stock option and the surrender takes place within two years
from the date the option relating to the surrendered shares was
granted or within one year from the date of such exercise, the
surrender will result in a disqualifying disposition and the optionee
will realize ordinary income at that time in the amount of the excess,
if any, of the fair market value at the time of exercise of the shares
surrendered over the basis of such shares. If any of the shares
received are disposed of in a disqualifying disposition, the optionee
will be treated as first disposing of the shares with a zero basis.
Approval of this Proposal requires the affirmative vote of the holders
of a majority of the Common Shares represented at the meeting, in person or by
proxy. Abstentions will have the same effect as a vote against approval of
this Proposal, and broker non-voters will not affect the outcome of the vote.
If the Proposal is approved by the shareholders, the 1992 Plan will be amended
effective immediately.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TWO: TO APPROVE AN AMENDMENT TO
THE LESCO, INC. 1987 STOCK OPTION PLAN
PROPOSED AMENDMENT TO THE PLAN
The Board has proposed that the 1987 Stock Option Plan (the "1987
Plan") also be amended to permit the Committee (defined in the 1987 Plan) to
fix, in its discretion, the exercise period for options held by an employee
subject to Section 16 of the Securities Exchange Act, as amended (the "1934
Act"), following that employee's termination of employment with the Company.
This amendment will allow the Committee greater flexibility in establishing
severance compensation arrangements with employees. Currently, any vested
unexercised options held by an employee upon termination must be exercised
within three months of that termination or be forfeited.
DESCRIPTION OF THE PLAN
PURPOSE
The Plan was adopted by the shareholders in 1987. The purpose of the
1987 Plan is to promote the interests of the Company and its shareholders by
attracting, retaining and developing employees and Directors capable of
furthering the future success of the Company and to provide such persons an
additional incentive through stock ownership or through payments tied to
increases in the value of the Company's Common Shares. Employees of the
Company and its subsidiaries, and Directors of the Company (other than those on
the Committee), are eligible for grants of Options, SARs and Performance
Shares. However, non-employee Directors are ineligible for Incentive Stock
Options.
-15-
<PAGE> 18
ADMINISTRATION
The 1987 Plan is administered by the Committee of the Board of
Directors described under the prior discussion of the 1992 Plan above. See
"Description of Plan--Administration" described under Proposal One above.
SHARES SUBJECT TO THE 1987 STOCK OPTION PLAN
No shares are currently available under the 1987 Plan for the grant of
additional awards. The aggregate number of Common Shares that presently are
subject to awards under the 1987 Plan is 161,726. To the extent an Option
expires unexercised, the shares covered thereby become available for additional
grants. The above limits and each grant under the 1987 Plan are subject to
adjustments for any changes in the number of shares outstanding due to a
merger, recapitalization, stock split, stock dividend or other change in the
Company's corporate or capital structure.
OPTIONS
The Committee may grant Non-Qualified Stock Options or Incentive Stock
Options. The term of an Option may not exceed ten years from its date of
grant. An Option may be granted subject to vesting of the right to exercise.
The price per share to be paid upon the exercise of an Option cannot be less
than the Fair Market Value of a share on the date of grant. The grantee may
pay the purchase price in cash, or by surrendering shares valued at their Fair
Market Value on the date of exercise, or a combination of cash and shares equal
to the Option Price, in the discretion of the Committee. Each Option is
exercisable during the grantee's lifetime only by the grantee, and is not
transferable except upon the grantee's death by will or the laws of descent and
distribution.
STOCK APPRECIATION RIGHTS
The Committee may grant Performance Share Awards which are to be
credited to a Performance Share Account maintained for each participant. Each
Performance Share is deemed to be equivalent to one share. Payments to holders
of Performance Shares shall be equal to the excess of the Fair Market Value of
the number of shares equal to the number of Performance Shares at the
expiration of the award period, over the Fair Market Value of those shares at
the time of grant, plus the amount of any dividends or property distributions
made with respect to those shares during the award period which amount was
credited to the participant's Performance Share Account. Payments at the
expiration of the award period are made in cash or in shares, or a combination
of both, in the discretion of the Committee.
AMENDMENT OF THE PLAN
The Board of Directors may amend, suspend or discontinue the 1987
Plan, but may not alter the terms or provisions of any Incentive or
Non-Qualified Stock Option, SAR or Performance Shares granted before the date
of the amendment, without the consent of the employee to whom such a grant has
been made.
FEDERAL INCOME TAX CONSEQUENCES
See "Federal Income Tax Consequences" described under Proposal One
above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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<PAGE> 19
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with
respect to the beneficial ownership of the Company's Common Shares as of April
1, 1996 (unless otherwise indicated) by each of the Directors (including
nominees to be elected as Directors), each of the Named Executive Officers, the
Directors and executive officers as a group, and each person known to the
Company to be the beneficial owner of five percent or more of the outstanding
Common Shares.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED (1)
BENEFICIAL NUMBER PERCENT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Drexel Bunch -0- *
Robert F. Burkhardt (2)(3)(4) 595,583 7.4
Paul H. Carleton 300 *
David H. Clark (3) 10,750 *
Daniel G. Dunstan (2)(3) 186,697 2.3
J. Martin Erbaugh (5) 20,450 *
Stanley M. Fisher (6) 20,610 *
Michael J. FitzGibbon (7) 35,000 *
William A. Foley (2)(3)(8) 126,000 1.6
John M. Freise (3) 10,000 *
Philip R. Gardner (2)(3) 53,859 *
F. Leon Herron, Jr. (9) 2,700 *
Lee C. Howley (10) 2,700 *
William B. Nicol 600 *
C. Thomas Smith (3) 6,000 *
Michael A. Sotak (2)(3) 7,641 *
Karl E. Ware (11) 14,700 *
All directors, nominees and 1,093,590 13.2
executive officers as a group
(17 persons)
Naomi C. FitzGibbon (2)(12) 1,021,288 12.8
1330 Galleon Drive
Naples, Florida 33940
Kalmar Investments Inc. (13) 407,175 5.1
1300 Market Street, Suite 500
Wilmington, DE 19801
- ----------------------------
</TABLE>
* Less than one percent
-17-
<PAGE> 20
(1) The persons named in the table have sole voting and investment power
with respect to all shares shown as beneficially owned by them, subject to the
information contained in the footnotes below.
(2) Includes shares held by the LESCO, Inc. Stock Investment and Salary
Savings Plan and Trust which are beneficially owned by the named persons as
follows: Mr. Burkhardt, 150,773 shares; Mr. Dunstan, 54,128 shares; Mrs.
FitzGibbon, 197,009 shares; Mr. Foley, 1,400 shares; Mr. Gardner, 27,582
shares; and Mr. Sotak, 641 shares. Persons who beneficially own shares held by
the LESCO, Inc. Stock Investment and Salary Savings Plan and Trust have sole
voting power with respect to such shares.
(3) The following hold exercisable options to purchase the shares as
indicated: Mr. Burkhardt, 77,900 shares; Mr. Clark, 7,500 shares; Mr.
Dunstan, 41,000 shares; Mr. Foley, 101,960 shares; Mr. Freise, 10,000 shares;
Mr. Gardner, 26,000 shares; Mr. Smith, 6,000 shares; and Mr. Sotak, 7,000
shares.
(4) Includes 68,885 shares owned by Mr. Burkhardt's wife; 15,700 shares
owned by the Robert and Virginia Burkhardt Charitable Foundation; 121,100
shares owned by the Burkhardt Family Limited Partnership (Mr. Burkhardt
disclaims beneficial ownership with respect to 116,256 of these shares); and
4,440 shares owned by Mr. Burkhardt's wife as custodian for minor
grandchildren.
(5) Includes 1,800 shares owned by Mr. Erbaugh's wife and 5,950 shares
owned by his minor children.
(6) Includes 19,750 shares in the Employee Retirement Plan and Trust,
Stanley M. Fisher, Trustee.
(7) Excludes 162,195 shares owned by the FitzGibbon Family Limited
Partnership, of which Mr. FitzGibbon has a 32% limited partnership interest and
Naomi C. FitzGibbon, Mr. FitzGibbon's mother, is general partner.
(8) Includes 1,840 shares owned by Mr. Foley's minor children.
(9) Includes 200 shares owned by Mr. Herron's wife.
(10) Includes 2,700 shares owned by the Howley Family Partnership.
(11) Includes 8,700 shares owned jointly by Mr. Ware and his wife, and
6,000 shares owned by his daughter.
(12) Includes 162,195 shares owned by the FitzGibbon Family Limited
Partnership, of which Mrs. FitzGibbon is general partner (Mrs. FitzGibbon
disclaims beneficial ownership with respect to 155,707 of these shares);
137,961 shares owned by the Naomi C. FitzGibbon Charitable Remainder Unitrust,
of which Mrs. FitzGibbon is sole trustee; 12,200 shares held by the FitzGibbon
Family Foundation (of which Mrs. FitzGibbon disclaims beneficial ownership), of
which Mrs. FitzGibbon is sole trustee; and 20,050 shares owned by the estate of
James I. FitzGibbon, of which Mrs. FitzGibbon is personal representative.
(13) Based on information set forth on a Schedule 13G dated January 25,
1996.
SECTION 16 COMPLIANCE
Based solely on the Company's review of Forms 3, 4 and 5 filed
by or on behalf of the Company's directors, executive officers and principal
shareholders and certain written representations from those persons, which have
been submitted to the Company with respect to the 1995 fiscal year, pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended, all required
reports were filed on a timely basis except for a Form 4 filed on behalf of
Daniel G. Dunstan. Mr. Dunstan borrowed funds under this 401(k) account which
resulted in a disposition of Common Shares in November 1995. The disposition
was reflected on the Form 5 for the fiscal year ended December 31, 1995.
-18-
<PAGE> 21
CERTAIN TRANSACTIONS
The Company has advanced funds, evidenced by demand promissory
notes, to Philip R. Gardner, Vice President-Lawn Care Sales and National
Accounts. These loans bear interest (payable on demand) at the prime rate. As
of March 31, 1996, the aggregate amount outstanding (including accrued but
unpaid interest) on the loan to Mr. Gardner was $86,996.
Arter & Hadden, a law firm with which Mr. Fisher is Of
Counsel, performed legal services for the Company during 1995. Mr. Fisher is
a director of the Company.
Paul H. Carleton is Managing Director of, and a principal in,
Carleton McCreary, Holmes & Co., an investment banking firm located in
Cleveland. Since December, 31, 1994, Carleton, McCreary, Holmes & Co. has
performed services for LESCO, Inc., for which it has billed LESCO, Inc.
$121,916.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the independent
auditors for the Company for the fiscal year ended December 31, 1995, and the
Company has selected Ernst & Young LLP to so serve for the year ending December
31, 1996. A representative of Ernst & Young LLP is expected to be present at
the annual meeting of shareholders. This representative will be afforded an
opportunity to make a statement at the meeting, if he so desires, and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered for inclusion in the
Proxy Statement for next year's annual meeting of shareholders must be received
by the Company at 20005 Lake Road, Rocky River, Ohio 44116 on or before
December 10, 1996.
OTHER MATTERS
The management of the Company does not know of any matters
which may properly be presented at the meeting other than as specifically set
forth in the Notice of Annual Meeting. If any other matter comes before the
meeting or any adjournment thereof, the persons named in the accompanying form
of Proxy and acting thereunder will vote in accordance with their best judgment
with respect to such matter.
LESCO, INC.
Patricia W. Pribisko, Secretary
DATED: April 11, 1996
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<PAGE> 22
LESCO, Inc. PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR ANNUAL MEETING MAY 15, 1996
The undersigned appoints William A. Foley, Patricia W. Pribisko and Rhonda Piar
Lawson as Proxies, each with full power to appoint his or her substitute, and
hereby authorizes them to represent and to vote as designated below, all the
Shares of LESCO, Inc. held of record by the undersigned on April 5, 1996, at
the Annual Meeting of shareholders to be held on May 15, 1996, or any
adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ]FOR all nominees listed below [ ]WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
William A. Foley, Robert F. Burkhardt, Paul H. Carleton, David H. Clark,
Karl E. Ware, F. Leon Herron, Jr., Stanley M. Fisher,
Drexel Bunch, J. Martin Erbaugh, Michael J. FitzGibbon and
Lee C. Howley
(Instructions: To withhold authority for any individual nominee(s), write the
name of such nominee(s) in the space provided below.)
________________________________________________________________________________
2. Proposal to amend the LESCO, Inc. 1992 Stock Option Plan:
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. Proposal to amend the LESCO, Inc. 1987 Stock Option Plan:
[ ]FOR [ ]AGAINST [ ]ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse side)
(Continued from other side)
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the nominees listed in item 1 above and FOR items 2 and 3 above. If
voting for directors is cumulative, the Proxies may cumulate or distribute
votes in such fashion as they believe will maximize the number of persons
elected from among nominees for whom authority is granted.
Please sign exactly as name appears below. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated _____________________, 1996
______________________________________________
Signature
______________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
