<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(C) or Rule 14a-12
</TABLE>
LESCO, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined): 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 LOGO]
LESCO, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
April 15, 1999
TO OUR SHAREHOLDERS:
The annual meeting of the shareholders of LESCO, Inc., will be held at The
Forum Conference and Education Center, at One Cleveland Center, 1375 East 9th
Street, in Cleveland, Ohio, on Wednesday, May 19, 1999, at 10:00 a.m., local
time, for the following purposes:
1. To elect eleven directors, each to hold office for a one-year term
and until his successor is elected and qualified.
2. To transact all other business that properly comes before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 9, 1999 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,
/s/ Patricia W. Pribisko
PATRICIA W. PRIBISKO,
Vice President, General Counsel
and Corporate Secretary
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
About the Meeting........................................... 1
Election of Directors....................................... 4
Business Experience Of Directors And Nominees............... 5
Executive Compensation...................................... 7
Summary Compensation Table.................................. 7
Option Grants in Last Fiscal Year........................... 9
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Value..................................... 9
Report of the Compensation and Governance Committee......... 10
Performance Comparison...................................... 13
Security Ownership of Certain Beneficial Owners and
Management................................................ 15
Section 16(a) Beneficial Ownership Reporting Compliance..... 17
Certain Transactions........................................ 17
Independent Auditors........................................ 17
Other Matters............................................... 17
Directions to the Annual Meeting............................ 18
</TABLE>
<PAGE> 4
[LESCO LOGO]
LESCO, INC.
20005 LAKE ROAD
ROCKY RIVER, OHIO 44116
PROXY STATEMENT
April 15, 1999
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the annual meeting of shareholders of LESCO, Inc., to be
held at The Forum Conference and Education Center, at One Cleveland Center, 1375
East 9th Street, in Cleveland, Ohio, on Wednesday, May 19, 1999, at 10:00 a.m.,
local time, and at any adjournment thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting, shareholders will act upon the matters
outlined in the accompanying notice of meeting, including the election of eleven
directors. In addition, the Company's management will report on the performance
of the Company during fiscal 1998 and respond to questions from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record date,
April 9, 1999, are entitled to receive notice of the annual meeting and to vote
the common shares that they held on that date at the meeting, or any
postponement or adjournment of the meeting. Each outstanding share entitles its
holder to cast one vote on each matter to be voted upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting.
Parking is available at One Cleveland Center, which has entrances to its
parking garage on both St. Clair Ave. and Rockwell Ave. Fees for parking will be
approximately $8.25.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the common shares outstanding on the record date will constitute a
quorum, permitting the meeting to conduct its business. As of the record date,
8,357,651 common shares of the Company were outstanding. Proxies received but
marked as abstentions and broker non-votes will be included in the calculation
of the number of shares considered to be present at the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to the Company, it will be voted as you direct. If you are a registered
shareholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" shareholders who wish to vote at the meeting will need to
obtain a proxy form from the institution that holds their shares.
1
<PAGE> 5
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised either by filing with the Secretary of
the Company a notice of revocation or a duly executed proxy bearing a later date
or by providing us notice in open meeting. The powers of the proxy holders will
be suspended if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously granted proxy.
IS MY VOTE CONFIDENTIAL?
Yes. Proxy cards, ballots and voting tabulations that identify individual
shareholders are confidential. Only the inspectors of election and certain
Company employees associated with processing proxy cards and counting the vote
have access to your card. Additionally, all comments directed to management
(whether written on the proxy card or elsewhere) will remain confidential,
unless you ask that your name be disclosed.
WHO WILL COUNT THE VOTE?
National City Bank, the Company's transfer agent, will tabulate the votes.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board of Directors recommends a vote for election
of the nominated slate of directors (see page 4). With respect to any other
matter that properly comes before the meeting, the proxy holders will vote as
recommended by the Board of Directors or, if no recommendation is given, in
their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The eleven nominees who receive the most votes will be
elected. The aggregate number of votes cast depends on whether or not cumulative
voting is invoked.
HOW IS CUMULATIVE VOTING INVOKED?
Ohio law states that:
- If written notice is given by any shareholder to the President, a Vice
President or the Secretary of the Company not less than forty-eight hours
before the time set for the annual meeting;
- if the notice states that the shareholder wants cumulative voting for the
election of directors; and
- if the Chairman, Secretary or the shareholder giving the notice, or
someone on his behalf, announces at the beginning of the meeting that the
notice has been given;
- then each shareholder will have cumulative voting rights for the election
of directors.
HOW ARE DIRECTORS ELECTED IF CUMULATIVE VOTING IS INVOKED?
If cumulative voting is invoked:
- Each shareholder may cast an aggregate number of votes in the election of
directors and distribute such votes among nominees as the shareholder
sees fit. The aggregate number of votes for each shareholder is
determined by multiplying the number of nominees to be elected by the
number of shares the shareholder holds on the record date.
- The proxies will cumulate votes and distribute them among the persons
nominated by the Board of Directors as the proxies believe will maximize
the number of Board nominees elected, unless a shareholder gives specific
instructions in the proxy for the proxies to do otherwise.
2
<PAGE> 6
HOW ARE DIRECTORS ELECTED IF CUMULATIVE VOTING IS NOT INVOKED?
If cumulative voting is not invoked, each shareholder may cast for each of
the eleven nominees up to the number of votes that equals the number of shares
held by the shareholder on the record date. Submission of a proxy which
withholds authority to vote for a nominee or a broker non-vote has the same
effect as failing to vote for a nominee, but does not act as a vote "against"
the nominee.
OTHER ITEMS. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote on
the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. An abstention
will have the effect of a negative vote.
WHEN ARE THE 2000 SHAREHOLDER PROPOSALS DUE?
Shareholders interested in presenting a proposal for consideration at the
Company's annual meeting in 2000 must submit the proposal to the Company at
20005 Lake Road, Rocky River, Ohio 44116. Proposals must be received by the
Company no later than December 16, 1999.
3
<PAGE> 7
ELECTION OF DIRECTORS
The Code of Regulations of the Company sets 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 of Regulations also authorizes the
Board of Directors to fill any vacancy by the affirmative vote of a majority of
the directors then in office. In 1999, the Board of Directors 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 contains information with respect to each nominee:
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AGE POSITION SINCE
---- --- -------- ------------
<S> <C> <C> <C>
William A. Foley.............. 51 Chairman of the Board of 1993
Directors, President and Chief
Executive Officer
Robert F. Burkhardt........... 62 Consultant and Director 1963
Drexel Bunch.................. 54 Director 1995
J. Martin Erbaugh............. 50 Director 1995
Michael J. FitzGibbon......... 33 Director 1996
Lee C. Howley................. 51 Director 1996
Ronald Best................... 63 Director 1997
Edward F. Crawford............ 59 Nominee for Director --
Michael E. Gibbons............ 47 Nominee for Director --
Robert B. Stein, Jr........... 41 Nominee for Director --
David L. Swift................ 62 Nominee for Director --
</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 Director Emeritus and attends Board meetings but does not vote.
F. Leon Herron, Jr. and Stanley M. Fisher retired from the Board on May 13,
1998. Paul H. Carleton resigned from the Board on July 10, 1998. David H. Clark
is retiring from the Board and will not stand for re-election as a director at
the annual meeting.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 1998?
During 1998, the Board of Directors of the Company met on eight occasions.
No director attended less than 75% of the meetings of the Board of Directors and
committees of which he was a member during 1998.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board has standing Finance, Compensation and Governance and Nominating
Committees.
FINANCE COMMITTEE. 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 consisted of Ronald Best, Chairman, David H. Clark, J.
Martin Erbaugh and Michael J. FitzGibbon, met seven times during 1998.
4
<PAGE> 8
COMPENSATION AND GOVERNANCE COMMITTEE. The Company has a Compensation and
Governance Committee that determines executive compensation and administers the
Company's compensation plans. The Compensation and Governance Committee, which
consisted of Drexel Bunch, Chairman, David H. Clark, J. Martin Erbaugh, Michael
J. FitzGibbon and Lee C. Howley, met four times during 1998.
NOMINATING COMMITTEE. The Company has a Nominating Committee that nominates
candidates for election to the Board of Directors and considers suggestions
forwarded by shareholders to the Secretary of the Company concerning qualified
candidates for election as directors. The Nominating Committee which consisted
of William A. Foley, Chairman, Ronald Best, Robert F. Burkhardt and Lee C.
Howley met one time during 1998.
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. 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,
and Libbey, Inc., a producer of glass products.
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.
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. He is a trustee and treasurer of the
Westlake (Ohio) Education Foundation and a trustee of the Nordson Corporation
Foundation and the Lorain County (Ohio) Chamber of Commerce.
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, President of Coer Inc., a real
estate development firm, and President of Homepure LLC, a bottled water company.
He is a director of Morgan Fun Shares, Inc., a closed-end investment company,
Vice Chairman 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 of the Ohio
Police and Friend's Pension and Disability Fund.
Michael J. FitzGibbon has been a director since March 1996. He is President
of Windward Course LLC, a management and consulting firm for nonprofit
organizations. Mr. FitzGibbon is a Ph.D. candidate in the Social Policy History
Program at Case Western Reserve University. He serves as a trustee of the
Diabetes Association of Greater Cleveland (Ohio) and the Westside YMCA.
Lee C. Howley has been a director since March 1996. Mr. Howley has been
President of Micro Medical Devices, Inc., a maker of miniature surgical devices
since 1999. 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
5
<PAGE> 9
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 management company. 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 the following publicly traded companies: Boykin Lodging Company, a hotel and
restaurant management company, International Total Services, a contract service
company, and CAPTEC Net Lease Realty, a real estate investment trust company.
Ronald Best has been a director since March 1997. Since 1995, Mr. Best has
been President and Managing Partner of First Marquis International, an equity
investor and workout consulting firm located in Toronto, Canada; and Chairman of
Eccobox Industries, a beverage processing company located in Richmond Hill,
Canada. From 1992 to 1994, Mr. Best was President and Chief Executive Officer of
Totes Incorporated, a rainwear manufacturing and distribution company, located
in Cincinnati, Ohio. From 1980 to 1991, Mr. Best held several executive
positions with Rubbermaid, Inc., a rubber and plastics products manufacturing
and distribution company, located in Wooster, Ohio, completing his career at
Rubbermaid as Senior Vice President, International and Business Development.
Prior to joining Rubbermaid, Mr. Best held several executive positions with G.E.
Canada in its Consumer, Industrial and Power Generation Divisions, closing out
his career there as Vice President Finance and Strategic Planning (C.A.M.C.O.)
and a director of G.E. Capital Canada. He is a director of Milltronics, Inc., a
process control company; Moneysworth & Best, a shoe care and repair company; and
Battery Technology, Inc., a licensor of rechargeable consumer batteries.
Edward F. Crawford is a nominee for election as director. Mr. Crawford is
employed by Park-Ohio Industries, Inc., a diversified manufacturer and supplier
of logistics services which serves a wide variety of industrial markets. He has
been a director of Park-Ohio since 1992; Chairman and Chief Executive Officer
since 1992; President since 1997; and a former director from 1989 until 1991.
Mr. Crawford is also Chairman and Chief Executive Officer of Crawford Group,
Inc., a group of manufacturing businesses, and has been since 1964. He is also a
director of Continental Global Group, Inc., a public holding company.
Michael E. Gibbons is a nominee for election as director. Since September
1995, Mr. Gibbons has been Senior Managing Director of Brown, Gibbons, Lang &
Company, L.P., an investment banking firm headquartered in Cleveland, Ohio
specializing in mergers and acquisitions and private and public financings.
Prior to 1995, Mr. Gibbons was the President and Chief Executive Officer of
Brown, Gibbons & Company, Inc., an investment-banking firm he founded in 1989 in
Cleveland, Ohio. From 1985 to 1989, Mr. Gibbons was President and Chief
Executive Officer of Underwood, Neuhaus & Company, an investment and brokerage
firm headquartered in Houston, Texas. Prior to 1985, Mr. Gibbons was a Senior
Vice President of McDonald and Company Securities, Inc., a Cleveland, Ohio
investment banking firm. Mr. Gibbons is a Trustee and Secretary of the Great
Lakes Theater Festival and Magnificat High School in Rocky River, Ohio.
Robert B. Stein, Jr. is a nominee for election as director. Mr. Stein has
been employed by Dairy Mart Convenience Stores, Inc., a chain of convenience
stores, since 1983, where he has been Chairman and Chief Executive Officer since
1995, President since 1994 and a director since 1992. Prior to 1994, Mr. Stein
served in various positions with that company, including Treasurer, General
Manager of the Midwest Region and Executive Vice President - Operations and
Marketing. Prior to 1983, he was with Coopers & Lybrand, a public accounting
firm. Mr. Stein has served on the Boards of Directors of the Ohio Association of
Convenience Stores, the Ohio Retail Merchants Association and the American Soap
Box Derby.
David L. Swift is a nominee for election as director. Mr. Swift was
Chairman of the Board from 1993 and Chief Executive Officer and President from
1988 of Acme-Cleveland Corporation, a manufacturer of communications, motion
control and measurement products, until his retirement in 1996. Prior to 1988,
Mr. Swift served in the positions of Vice President, Administration and Vice
President, General Counsel. Prior to 1981, he was Manager of Acquisition
Planning and Control for Reliance Electric Company, a manufacturer of industrial
motors and related products. Mr. Swift is a director of Alltrista Corporation, a
consumer and industrial products manufacturing company, Cuno, Inc., a producer
of filtration products, and Twin Disc, Inc., a producer of power transmission
equipment.
6
<PAGE> 10
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 named executive officers (the "Named
Executive Officers") during or with respect to the fiscal years ended December
1998, 1997 and 1996 for services in all capacities to the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION AWARDS
COMPENSATION ----------------------------
----------------- RESTRICTED ALL OTHER
FISCAL SALARY BONUS STOCK AWARDS OPTIONS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (# OF SHARES) ($)
--------------------------- ------ ------- ------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William A. Foley 1998 350,014 -- 206,970 33,090 6,874
Chairman of the Board, President 1997 300,014 117,561 39,159 -- 5,556
and Chief Executive Officer 1996 300,014 84,450 90,002 18,000 10,231
Ware H. Grove(3) 1998 220,193 -- 83,972 -- 8,099
Vice President, Chief 1997 185,000 58,009 19,307 -- 12,893
Financial Officer 1996 106,731 37,015 73,975 33,000 3,207
Charles J. McGonigle(4) 1998 107,077 25,000 74,635 8,500 4,157
Vice President, Operations
Wayne W. Murawski(5) 1998 125,001 -- 49,974 -- 4,344
Vice President, 1997 116,058 25,858 8,620 -- 4,440
Chief Information Officer 1996 104,039 8,456 28,950 18,000 4,005
Kenneth S. Sekley(6) 1998 205,387 -- 79,968 -- 39,363
Vice President, Marketing 1997 11,538 66,000 18,758 16,000 1,182
C. Thomas Smith(7) 1998 85,847 -- -- -- 1,408
Vice President, Operations 1997 143,923 40,830 13,590 -- 3,235
1996 132,954 15,096 41,876 18,000 6,628
</TABLE>
- ---------------
(1) In 1998 Messrs. Foley, Grove, McGonigle, Murawski and Sekley were granted an
award of 4,651, 1,887, 1,391, 1,123 and 1,797 Restricted Shares,
respectively, which on the date of grant had a market value of $103,485,
$41,986, $31,993, $24,987 and $39,984, respectively. These Restricted Shares
are subject to forfeiture if Company performance goals are not met for
fiscal years 1998 and 1999. Dividends on the Restricted Shares are payable
in additional Restricted Shares also subject to forfeiture. Also in 1998
Messrs. Foley, Grove, McGonigle, Murawski and Sekley were granted an award
of 4,651, 1,887, 1,391, 1,123 and 1,797 Restricted Shares, respectively,
which on the date of grant had a market value of $103,485, $41,986, $31,993,
$24,987 and $39,984, respectively. These Restricted Shares are subject to
forfeiture if Company performance goals are not met for fiscal years 1998,
1999 and 2000. Dividends on the Restricted Shares are payable in additional
Restricted Shares also subject to forfeiture. Also in 1998, Mr. McGonigle
was granted an award of 463 Restricted Shares which on the date of grant had
a market value of $10,649. These Restricted Shares were subject to
forfeiture if Company performance goals were not met for fiscal years 1996,
1997 and 1998. Dividends on the Restricted Shares were payable in additional
Restricted Shares also subject to forfeiture. Based upon Company performance
for fiscal years 1996, 1997 and 1998, 80% of these Restricted Shares vested
and 20% were forfeited. In 1997 Mr. Sekley was granted an award of 915
Restricted Shares, which on the date of grant had a market value of $18,758.
Based upon Company performance for fiscal years 1996, 1997 and 1998, 80% of
these Restricted Shares vested and 20% were forfeited. In 1996 Messrs.
Foley, Grove, Murawski and Smith were granted an award of 6,207, 2,551,
1,379 and 1,848 Restricted Shares, respectively, which on the date of grant
had a market value of $90,002, $36,990, $19,996 and $26,796, respectively.
Based on the Company's performance for fiscal years 1996, 1997 and 1998, 80%
of these Restricted Shares vested and 20% were forfeited, with the exception
of Mr. Smith, who forfeited 100% of his shares on April 14, 1998. In 1998,
Messrs. Foley, Grove, Murawski and Smith received 1,726, 851, 380 and 599
common shares, respectively, which on the date of grant had a market value
of $39,159, $19,307, $8,620 and $13,590, respectively, representing a
portion of their bonus payable for 1997; and, in 1997, Messrs. Grove,
Murawski and Smith received 2,276, 551 and 928 common shares, respectively,
which on the date of grant had a market value of $36,985, $8,954 and
$15,080, respectively, representing a portion of their bonus payable for
1996. These common shares are not forfeitable, but were restricted from
transfer until February 27, 1999 (except for Mr. Foley, whose common shares
were restricted from transfer until August 27, 1998) for those common shares
granted as a bonus payable for 1997 and until March 10, 1998 for those
common shares granted as a bonus payable for 1996 (except to satisfy tax
withholding obligations). Dividends on these common shares are paid in cash.
7
<PAGE> 11
(2) 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, except for Kenneth S. Sekley, for
whom the figure includes a relocation allowance for fiscal years 1997 and
1998, and Charles J. McGonigle, for whom the figure includes a relocation
allowance for fiscal year 1998.
(3) Mr. Grove joined the Company as an executive officer June 3, 1996, and the
salary for fiscal year 1996 reflects the period June 3 through December 31.
(4) Mr. McGonigle joined the Company as an executive officer April 28, 1998, and
the salary for fiscal year 1998 reflects the period April 28 through
December 31.
(5) Mr. Murawski was named an executive officer May 13, 1998.
(6) Mr. Sekley joined the Company as an executive officer December 9, 1997 and
the salary for fiscal year 1997 reflects the period December 9 through
December 31.
(7) Mr. Smith left the Company April 14, 1998, and the salary for fiscal year
1998 includes salary continuation benefits pursuant to a written agreement
between Mr. Smith and the Company.
8
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains the stock options granted during the year
ended December 31, 1998, to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- --------------------------------------------------------------------------------------- -----------------------------
% OF TOTAL OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ------- ------------------ -------- ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Foley(2).............. 19,042 15.3 22.00 6/30/04 -0- 124,600 278,000
5,130 4.1 22.00 6/30/05 -0- 33,600 74,900
8,918 7.2 22.00 4/01/06 -0- 58,300 130,200
Ware H. Grove.................... 0
Charles J. McGonigle(3).......... 4,000 3.2 23.00 4/28/08 -0- 57,900 146,600
4,500 3.6 14.50 4/28/08 38,300 103,300 203,200
Wayne W. Murawski................ 0
Kenneth S. Sekley................ 0
C. Thomas Smith.................. 0
</TABLE>
- ---------------
(1) Amounts have been calculated using the exercise price per share at assumed
compound annual rates of stock appreciation from the date of grant to the
date of expiration of 0%, 5% and 10%, respectively.
(2) The options were granted March 5, 1998 as restoration options under the 1992
Stock Incentive Plan and became exercisable on September 5, 1998. (See the
section on restoration options in the Report of the Compensation and
Governance Committee at page 11.)
(3) The options were granted April 28, 1998 and became fully exercisable on
December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table contains information for each Named Executive Officer
with regard to the aggregate stock options exercised during the year ended
December 31, 1998, and the stock options held as of December 31, 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Foley........... 50,058 569,508 279,621 0 667,046 0
Ware H. Grove.............. 0 0 33,000 0 0 0
Charles J. McGonigle....... 0 0 8,500 0 0 0
Wayne W. Murawski.......... 6,000 48,750 18,000 0 0 0
Kenneth S. Sekley.......... 0 0 16,000 0 0 0
C. Thomas Smith............ 18,000 135,405 0 0 0 0
</TABLE>
- ---------------
(1) Market value of underlying securities at December 31, 1998, of $12.875 minus
the exercise price.
HOW ARE DIRECTORS COMPENSATED?
The Company pays each non-employee director a retainer of $16,000 per year,
$1,000 per Board meeting attended, and $1,000 per committee meeting attended,
with the exception of committee chairmen, who are paid $1,250 per committee
meeting they chair. The compensation for Directors Emeritus is an annual
retainer of $8,000 and $500 per Board meeting attended.
Non-employee directors are permitted to defer all or a portion of their
fees under the Company's Directors' Deferred Compensation Plan. The plan is
unfunded and participants' contributions are converted to units, the value of
which fluctuates according to the market value of the common shares. Under the
Directors' Stock Option Plan, each non-employee director (other than William B.
Nicol who is a Director Emeritus) received, for his service in 1997, an option
to purchase 1,000 common shares for $23 per common share (the fair market value
of a common share on February 24, 1998, the date the option was granted), first
exercisable on December 31, 1998 and to expire on February 24, 2008.
9
<PAGE> 13
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 1998. The Compensation Committee's
members are Drexel Bunch, Chairman, David H. Clark, J. Martin Erbaugh, Michael
J. FitzGibbon and Lee C. Howley. This report describes the Compensation
Committee's executive compensation philosophy and the policies and actions of
the Compensation Committee with respect to fiscal year 1998 in considering
compensation for the executive officers of the Company, including the Named
Executive Officers.
WHAT IS THE COMPANY'S PHILOSOPHY OF EXECUTIVE OFFICER COMPENSATION?
The basic philosophy of the Compensation Committee is to provide
compensation to the executive officers in a manner that:
- relates total compensation appropriately to corporate performance and the
individual performance of each executive officer,
- motivates the executive officers to achieve increased shareholder value,
- aligns the interests of the executive officers with the long-term
interests of the Company's shareholders, and
- provides 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.
To implement this philosophy, executive compensation programs at the
Company are designed to:
- provide annual incentive opportunities that relate the competitive level
of total cash compensation directly to the annual performance of the
Company,
- provide long-term incentives with grant values targeted at median
competitive levels which allow total overall compensation for the
Company's executives to outperform the market if the shareholders
outperform the market, and
- place more emphasis on long-term and stock-based compensation at higher
levels in the Company.
The comparison group used for competitive compensation purposes includes
some of the companies in the Peer Group from the performance graph on page 13,
other competitors and other companies similar in size to the Company.
WHAT ARE THE COMPONENTS OF EXECUTIVE COMPENSATION?
ANNUAL COMPENSATION Total annual compensation consists of base salary and annual
incentives.
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. Data from
management compensation reports, outside consultants and public disclosure is
used to make these judgments. Adjustments are made for individual performance,
levels of experience and the level of responsibility undertaken.
ANNUAL INCENTIVES The annual incentive plan provides an opportunity for the
Company's eligible executives to earn an annual payment based on financial and
individual performance.
- TARGET INCENTIVES A target incentive stated as a percent of salary is
approved for each eligible executive. Targets vary between 50% for the
CEO and 10% for the lowest-level eligible executive. Incentive amounts
may vary between a threshold of 25% and a maximum of 200% of target based
on performance.
- FINANCIAL MEASURES Early each year, the Compensation Committee
establishes a performance range for each of the financial measures at
which threshold, target and maximum incentives will be paid. The
financial measures for 1998 were earnings per share growth and sales
growth.
10
<PAGE> 14
- INDIVIDUAL MEASURES In addition, each of the executive officers had
individual performance measures as determined by the CEO. In the case of
the CEO, the Compensation Committee determines the individual performance
measures. Performance against these objectives provides the opportunity
to earn an additional 20% of target incentive.
- STOCK PAYOUT The annual incentive plan provides that the Compensation
Committee may designate that up to one-half of an incentive award be paid
in shares of the Company's stock. The stock portion of the award can be
used to exercise outstanding stock options with the provision that any
shares gained from the exercise of the options be held for at least one
year.
For 1998, earnings growth and sales growth resulted in the calculation of
incentive amounts below threshold, therefore no annual incentive was paid.
LONG-TERM COMPENSATION The 1992 Stock Incentive Plan that was approved by
shareholders in May 1992 and amended and restated in May 1998 authorizes the use
of the Company's stock in equity-based awards that include stock 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 management. Key
managers and executives who are responsible for the Company's long-term growth
are eligible for awards under the Plan.
The Compensation Committee has approved two types of awards.
STOCK OPTIONS Stock Options allow the participant to purchase shares of the
Company's stock for ten years at a price equal to 100% of the fair market value
on the date they were granted. Since the executive's gain is solely related to
the increase in stock price, options are a direct incentive to increase
shareholder value.
- ELIGIBLE PARTICIPANTS Mid-level managers and senior level executives are
eligible for awards under this program. Presently, about 100 of the
Company's managers and executives participate in the stock option
program.
- NORMAL AWARD FREQUENCY FOR NONEXECUTIVE OFFICERS The Compensation
Committee typically grants option awards annually based on competitive
grant guidelines.
- EXECUTIVE OFFICER AWARDS The executive officer group received a
front-loaded stock option grant in 1996 equal to three years of normal
competitive grants. In exchange for this, no annual grants were made to
this group in 1997 or 1998. The exercise price of these grants was 100%
of fair market value on the date of grant, and the options became
exercisable in one-third increments on December 31 of 1996, 1997 and
1998.
- RESTORATION OPTIONS To encourage the Company's executives to convert
stock options into owned shares, each option includes the right to
receive a restoration option at exercise. Restoration options have an
exercise price equal to 100% of the market price of the Company's stock
when they are granted, and expire on the same date as the original option
that was exercised and become exercisable six months after grant.
Restoration options are only granted when the stock price is at least 20%
higher than the exercise price of the original option, and when currently
owned shares are used to pay for the exercise cost and tax withholding
related to the option exercise.
RESTRICTED SHARES The Compensation Committee also awarded restricted shares to
the executive officers in 1998.
- PERFORMANCE CYCLE Restricted shares were granted in 1998 for the
1998-1999 Performance Plan and for the 1998-2000 Performance Plan.
Restricted shares were granted in 1996 for the 1996-1998 Performance
Plan.
- PERFORMANCE MEASURE Cumulative earnings per share targets were set at the
beginning of each cycle for threshold, target and maximum performance at
levels believed by the Committee to represent a significant stretch
relative to industry peers.
11
<PAGE> 15
- SHARES EARNED On December 31, 1998, 80% of the restricted shares issued
in connection with the 1996-1998 Performance Plan vested. The remaining
20% of these restricted shares were not earned. With respect to the
restricted shares issued in connection with the 1998-1999 and 1998-2000
Performance Plans, 100% of the shares granted would be earned for target
performance, 50% of the shares granted would be earned for threshold
performance, and 150% of the shares granted for maximum performance.
Performance between designated levels will result in interpolated
payouts.
HOW IS THE COMPANY'S CHIEF EXECUTIVE OFFICER COMPENSATED?
The compensation of the Chief Executive Officer is based on the programs
and principles of corporate and individual performance described above. William
A. Foley served as the Company's Chairman of the Board, President and Chief
Executive Officer for all of 1998. Compensation decisions regarding him are
subject to employment agreements which were entered into in July 1993 and 1998.
PERFORMANCE EVALUATION The Compensation Committee conducts a formal evaluation
of Mr. Foley's performance each year. This process involves the entire board,
and examines the following areas: strategic planning, financial results,
succession planning, external communications, board relations and
leadership/human resources.
BASE SALARY Mr. Foley's base salary for fiscal year 1998 was $350,014. In
consideration of Mr. Foley's performance during 1998 and the competitive
analysis reviewed by the Compensation Committee, Mr. Foley's annualized base
salary was increased to $425,000, effective July 1, 1998, however, Mr. Foley
elected to defer the increase to January 1, 1999. This placed him slightly below
median when compared to the executive compensation comparison group.
ANNUAL INCENTIVE Mr. Foley did not receive an annual incentive for 1998.
LONG-TERM INCENTIVE
- During 1998, Mr. Foley was awarded 4,651 restricted shares, which are
subject to forfeiture if growth objectives for 1998 and 1999 are not met
and 4,651 restricted shares, which are subject to forfeiture if growth
objectives for 1998, 1999 and 2000 are not met.
- During 1996, Mr. Foley was awarded 6,207 restricted shares, which were
subject to forfeiture if growth objectives for 1996, 1997 and 1998 were
not met. Based on the Company's performance for 1996, 1997 and 1998, Mr.
Foley received 4,966 of these restricted shares (80% vested and 20% were
not earned).
HOW IS THE COMPENSATION COMMITTEE ADDRESSING INTERNAL REVENUE CODE LIMITS ON
DEDUCTIBILITY OF COMPENSATION?
The Compensation Committee regularly reviews the Company's compensation
plan in connection with Section 162(m) of the Internal Revenue Code, as amended.
Generally, the executive compensation programs are designed to comply with these
regulations. The $1 million limitation did not impact the deductibility of any
compensation paid to the Company's executive officers in 1998. The amendments to
the 1992 Stock Incentive Plan which the shareholders approved in 1998 were
intended to ensure that grants under that plan will be "performance-based" as
defined in the regulations and that compensation from those grants will be
deductible.
The Committee may approve compensation that does not comply with these
regulations if compliance would not be in the best interests of the Company or
the shareholders or consistent with the executive compensation philosophy.
The Compensation Committee
Drexel Bunch, Chairman
David H. Clark
J. Martin Erbaugh
Michael J. FitzGibbon
Lee C. Howley
12
<PAGE> 16
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, 1993 in each of (i) the Company's common shares, (ii) the NASDAQ
Industrial Index, (iii) the Russell 2000 Index; and (iv) two funds investing
proportionately, based on respective market capitalization, in the common stocks
of the group of companies which the Company has identified as its initial peer
group and a new 1999 peer group solely for this purpose.
<TABLE>
<CAPTION>
INITIAL PEER 1999 PEER
LESCO NASDAQ GROUP RUSSELL 2000 GROUP
----- ------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
'1993' 100.00 100.00 100.00 100.00 100.00
'1994' 80.25 96.80 126.34 96.82 134.17
'1995' 95.60 124.19 141.31 122.19 165.84
'1996' 106.42 142.85 145.23 140.23 176.37
'1997' 135.75 157.19 184.30 169.01 187.25
'1998' 86.01 167.90 181.64 163.18 157.80
</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. The Company 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.
The Company has elected to change its peer group comparison for 1999. This
decision was made due to the acquisition of General Host during 1998 and the
decline in market capitalization of Verdant Brands, Inc. (formerly known as
Ringer Corporation). The market capitalization of Verdant is less than two
percent of the total peer group market capitalization and therefore its
contribution is insignificant to the overall peer group results. The 1999 peer
group consists of two of the initial peer group companies, Toro and Scotts,
along with Terra Industries and Central Garden & Pet Company.
In addition, the Company has elected to change its published market index
from the NASDAQ Industrial Index to the Russell 2000 Index, as the Company
believes that the Russell 2000 Index is more indicative of companies with a
market capitalization similar to that of the Company.
13
<PAGE> 17
Therefore, for purposes of preparing the above graph, LESCO is presenting
the initial peer group along with the 1999 peer group and the Russell 2000 Index
along with the NASDAQ Industrial Index. A description of the peer group
companies is as follows:
INITIAL PEER GROUP:
- General Host -- Operates a chain of specialty retail stores devoted to
the sale of lawn and garden products, crafts and Christmas
merchandise.
- Ringer Corporation -- 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.
- Toro Company -- Manufactures lawn maintenance equipment.
1999 PEER GROUP:
- Central Garden & Pet Company -- Supplier of consumer lawn and garden
and pet supply products and a manufacturer of proprietary products.
- Terra Industries Inc. -- Marketer and producer of nitrogen fertilizer,
crop protection products, seed and services for agricultural, turf,
ornamental and other growers.
- The Scotts Company -- Manufactures and markets consumer do-it-yourself
lawn care and professional golf course turf care products.
- Toro Company -- Manufactures lawn maintenance equipment.
The above lists represent publicly held companies that manufacture or
market turf care-related products. The Company intends to add to its peer group
list as additional publicly held companies are identified.
14
<PAGE> 18
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information with respect to the
beneficial ownership of the Company's common shares as of March 23, 1999 (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>
Ronald Best(3).......................................... 1,000 *
Drexel Bunch(3)......................................... 1,600 *
Robert F. Burkhardt(2)(3)(4)............................ 538,686 6.4
Paul H. Carleton(3)..................................... 2,000 *
David H. Clark(3)....................................... 11,750 *
Edward F. Crawford...................................... 0 *
J. Martin Erbaugh(3)(5)................................. 26,384 *
Stanley M. Fisher(3)(6)................................. 23,750 *
Michael J. FitzGibbon(3)(7)............................. 20,087 *
William A. Foley(2)(3)(8)............................... 354,300 4.1
Michael E. Gibbons...................................... 0 *
Ware H. Grove(2)(3)..................................... 53,825 *
F. Leon Herron, Jr.(3)(9)............................... 3,700 *
Lee C. Howley(3)(10).................................... 14,500 *
Charles J. McGonigle(2)(3).............................. 30,359 *
Wayne W. Murawski(2)(3)................................. 35,557 *
William B. Nicol........................................ 1,000 *
Kenneth S. Sekley(2)(3)................................. 29,648 *
C. Thomas Smith......................................... 0 *
Robert B. Stein, Jr..................................... 0 *
David L. Swift.......................................... 0 *
All directors, nominees and executive officers as a
group (21 persons).................................... 1,148,146 13.0
Naomi C. FitzGibbon(11)................................. 751,651 9.0
1285 Gulfshore Blvd., North 6-D
Naples, Florida 34102
Christopher Harwood Bernard Mills(12)................... 722,300 8.6
JO Hambro Capital Management
JO Hambro Capital Management Holdings
10 Park Place
London SW1A 1LP England
Kalmar Investments Inc.(13)............................. 445,975 5.3
3701 Kennett Pike
Greenville, Delaware 19807
Dimensional Fund Advisors Inc.(14)...................... 465,475 5.6
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Wellington Management Company, LLP(15).................. 554,600 6.6
75 State Street
Boston, Massachusetts 02109
</TABLE>
15
<PAGE> 19
- ---------------
* Less than one percent
(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, 155,056 shares; Mr. Foley, 2,717 shares; Mr. Grove,
1,249 shares; Mr. McGonigle, 414 shares; Mr. Murawski, 231 shares; and Mr.
Sekley, 468 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. Best, 1,000 shares; Mr. Bunch, 1,000 shares; Mr. Burkhardt, 58,000
shares; Mr. Carleton, 1,000 shares; Mr. Clark, 1,000 shares; Mr. Erbaugh,
1,000 shares; Mr. Fisher, 1,000 shares; Mr. FitzGibbon, 1,000 shares; Mr.
Foley, 279,621 shares; Mr. Grove, 39,000 shares; Mr. Herron, Jr., 1,000
shares; Mr. Howley, 1,000 shares; Mr. McGonigle, 14,500 shares; Mr.
Murawski, 29,000 shares; and Mr. Sekley, 22,000 shares.
(4) Includes 68,885 shares owned by Mr. Burkhardt's wife; 13,700 shares owned
by the Robert and Virginia Burkhardt Charitable Foundation; 115,100 shares
owned by the Burkhardt Family Limited Partnership (Mr. Burkhardt disclaims
beneficial ownership with respect to 110,496 of these shares); and 6,140
shares owned by Mr. Burkhardt's wife as custodian for minor grandchildren.
(5) Includes 1,800 shares owned by Mr. Erbaugh's wife and 4,684 shares owned by
his minor children.
(6) Includes 400 shares held by Stanley M. Fisher, Trustee, and 200 shares
owned by Mr. Fisher's wife.
(7) Excludes 98,195 shares owned by Lakeshore Partners, of which Mr. FitzGibbon
has a 32% limited partnership interest and Naomi C. FitzGibbon, Mr.
FitzGibbon's mother, is the sole shareholder of J & N Corporation, the
General Partner.
(8) Includes 3,790 shares owned by Mr. Foley's minor children.
(9) Includes 200 shares owned by Mr. Herron's wife.
(10) Includes 13,500 shares owned by the Howley Family Partnership.
(11) Includes 98,195 shares owned by Lakeshore Partners, of which Mrs.
FitzGibbon is the sole shareholder of J & N Corporation, the General
Partner (Mrs. FitzGibbon disclaims beneficial ownership with respect to
94,267 of these shares); 112,961 shares owned by the Naomi C. FitzGibbon
Charitable Remainder Unitrust, of which Mrs. FitzGibbon is sole trustee;
17,000 shares owned by the Naomi C. FitzGibbon Charitable Remainder
Unitrust II, of which Mrs. FitzGibbon is the sole trustee; 9,680 shares
held by the FitzGibbon Family Foundation (of which Mrs. FitzGibbon
disclaims beneficial ownership), of which Mrs. FitzGibbon is sole trustee;
and 13,050 shares owned by the James I. FitzGibbon Trust, of which Stanley
M. Fisher is Trustee.
(12) These entities have shared voting power and shared dispositive power, based
on information set forth on a Schedule 13G dated February 16, 1999.
(13) Based on information set forth on a Schedule 13G dated January 8, 1999.
(14) In its role as investment manager and investment advisor to certain
investment portfolios, Dimensional Fund Advisors Inc. possesses both voting
and investment power over the shares. All shares, however, are owned by
these portfolios; and Dimensional Fund Advisors Inc. disclaims beneficial
ownership of these shares.
(15) Wellington Management Company, LLP does not have sole voting power over any
of these shares. It has shared voting power with respect to 365,500 shares
and shared dispositive power with respect to 554,600 shares. Wellington
Management Company serves as an investment advisor and all of these shares
are owned by its clients.
16
<PAGE> 20
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING 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 for the 1998 fiscal year, according to Section 16(a) of
the Securities Exchange Act of 1934, as amended, it appears that a Form 4 for
each of Robert F. Burkhardt, William A. Foley, Ware H. Grove, Wayne W. Murawski
and Kenneth S. Sekley to report a 401(k) Plan transaction was filed late because
of a clerical error, that a Form 4 for Lee C. Howley reporting the purchase of
1,000 shares by the Howley Family Partnership was filed late and that a Form 4
for Wayne W. Murawski was filed late, because he was a new reporting person and
he did not realize Dividend Reinvestment Plan transactions are reported. In
addition, a Form 5 for Michael J. FitzGibbon was filed to reflect a name change
and to correct a share amount.
CERTAIN TRANSACTIONS
Arter & Hadden, a law firm where Stanley M. Fisher is Of Counsel, performed
legal services for the Company during 1998. Mr. Fisher was a director of the
Company during 1998.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the independent auditors for the
Company for the fiscal year ended December 31, 1998, and the Company has
selected Ernst & Young LLP to serve for the year ending December 31, 1999. A
representative of Ernst & Young LLP is expected to be present at the annual
meeting of shareholders. This representative will be given an opportunity to
make a statement at the meeting and will be available to respond to appropriate
questions.
OTHER MATTERS
The management of the Company knows of no business that will be presented
for consideration at the meeting other than the items referred to above. If any
other matter comes before the meeting or any adjournment of the meeting, the
persons named in the accompanying Proxy form will vote in their discretion.
LESCO, INC.
/s/ Patricia W. Pribisko
Patricia W. Pribisko,
Vice President, General Counsel
And Corporate Secretary
DATED: April 15, 1999
17
<PAGE> 21
[MAP WITH DIRECTIONS TO SHAREHOLDER MEETNG AT THE FORUM]
[THE FORUM LOGO]
18
<PAGE> 22
(RECYCLED PAPER LOGO)
<PAGE> 23
DETACH CARD
- --------------------------------------------------------------------------------
LESCO, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR ANNUAL MEETING MAY 19, 1999
The undersigned appoints William A. Foley and Patricia W. Pribisko 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 common
shares of LESCO, Inc. held of record by the undersigned on April 9, 1999, at the
Annual Meeting of shareholders to be held on May 19, 1999, or any adjournment
thereof.
1. ELECTION OF DIRECTORS.
<TABLE>
<C> <S> <C> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
[ ] (except as marked to the contrary below) [ ] to vote for all nominees listed below
</TABLE>
Ronald Best, Drexel Bunch, Robert F. Burkhardt, Edward F. Crawford, J. Martin
Erbaugh, Michael J. FitzGibbon, William A. Foley, Michael E. Gibbons, Lee C.
Howley, Robert B. Stein, Jr. and David L. Swift
(Instructions: To withhold authority for any individual nominee(s), write the
name of such nominee(s) in the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote on all other business
that properly comes before the meeting.
(Continued and to be signed on reverse side)
<PAGE> 24
DETACH CARD
- --------------------------------------------------------------------------------
(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 in the discretion of the Proxies on
all other business that properly comes before the meeting, as stated in item 2
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
---------------------------------------------------------------------,
1999
------------------------------
Signature
------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
