<PAGE>
[LOGO]26 Century Boulevard
Nashville, Tennessee 37214
September 22, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
MagneTek, Inc. It will be held on Tuesday, October 20, 1998 at 10:00 a.m., at
the offices of MagneTek, Inc., 26 Century Boulevard, Nashville, Tennessee 37214.
The matters on the agenda for the meeting are set forth in the attached
Notice of Annual Meeting of Stockholders. In addition to the agenda items, there
will be a report on operations and an opportunity for questions. We have also
included the Annual Report for the 1998 fiscal year.
We hope you can attend the meeting. Whether or not you can attend, it is
important that you sign, date and return your proxy as soon as possible. If you
decide to attend the meeting, you may vote in person if you desire, even if you
previously mailed your proxy card. Your vote, regardless of the number of shares
you own, is important. We urge you to indicate your approval by voting FOR the
matters indicated in the Notice.
On behalf of the Board of Directors, we thank you for your cooperation.
Sincerely,
[SIGNATURE]Andrew G. Galef
Chairman of the Board of Directors
<PAGE>
[LOGO]26 Century Boulevard
Nashville, Tennessee 37214
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
TO THE STOCKHOLDERS OF MAGNETEK, INC.:
Notice is hereby given that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of MagneTek, Inc. (the "Company") will be held on Tuesday,
October 20, 1998, at 10:00 a.m., at the offices of the Company, 26 Century
Boulevard, Nashville, Tennessee 37214 for the following purposes:
1. To elect the Company's Board of Directors for the ensuing year to serve
until the next Annual Meeting of Stockholders and thereafter until their
respective successors are elected and have been qualified.
2. To transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
The record date for purposes of determining stockholders entitled to receive
notice of and to vote at the 1998 Annual Meeting is the close of business on
September 11, 1998. Only stockholders of record as of that time are entitled to
such notice and to vote at the Annual Meeting.
All of the Company's stockholders are invited to attend the Annual Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED ENVELOPE
PROVIDED WITH THIS NOTICE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON, EVEN
THOUGH YOU SEND IN YOUR PROXY PRIOR TO THE MEETING.
By Order of the Board of Directors,
[SIGNATURE]Samuel A. Miley
Vice President, General Counsel and Secretary
Nashville, Tennessee
September 22, 1998
<PAGE>
[LOGO]
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 20, 1998
The Board of Directors of the Company is soliciting the enclosed Proxy for
use at the 1998 Annual Meeting of Stockholders (the "Annual Meeting") of
MagneTek, Inc. (the "Company") to be held on Tuesday, October 20, 1998, at 10:00
a.m., at the offices of the Company, 26 Century Boulevard, Nashville, Tennessee
37214. This Proxy Statement was initially sent to stockholders on or about
September 22, 1998.
Shares represented by a Proxy will be voted at the Annual Meeting as
directed if it is properly executed and delivered. In the absence of
instructions, shares represented by valid Proxies will be voted in accordance
with the recommendations of the Board of Directors set forth herein. At any time
prior to the voting, a Proxy may be revoked by written notice to the Secretary
of the Company or by subsequently filing another properly executed Proxy. Any
stockholder present at the meeting may vote in person even though the
stockholder may have previously given a Proxy.
The cost of solicitation of Proxies will be paid by the Company. The Company
has retained D.F. King & Co., Inc. to aid in the solicitation of Proxies at a
fee not expected to exceed $7,000 plus reasonable disbursements. In addition to
solicitation of Proxies by use of the mail, D.F. King & Co., Inc. and directors,
officers or employees of the Company may, without additional compensation,
solicit Proxies personally, by telephone or by other appropriate means. The
Company will request banks, brokerage firms and other custodians, nominees or
fiduciaries holding shares of the common stock of the Company in their names for
others to send proxy materials and annual reports to and to obtain proxies from
their principals, and the Company will reimburse them for the reasonable
expenses incurred in doing so.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
Voting rights are vested exclusively in holders of the Company's common
stock, par value $.01 per share ("Common Stock"). As of the close of business on
September 11, 1998, the record date, there were 31,545,239 shares (excluding
14,367 treasury shares) of Common Stock outstanding. Each share of Common Stock
outstanding on such date is entitled to one vote on all matters. The presence of
a majority of the outstanding shares of Common Stock, either represented in
person or by proxy at the meeting, is necessary to constitute a quorum for
purposes of conducting business at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence of a quorum for the transaction of business. With regard to the
election of directors, votes may be cast in favor of or withheld; votes that are
withheld will be excluded entirely from the vote and will have no effect.
Abstentions may be specified on proposals other than the election of directors
and will be counted as present for purposes of the item on which the abstention
is noted. Therefore, such abstentions will have the effect of a negative vote.
Under applicable Delaware law, broker non-votes are not counted for purposes of
determining the votes cast on a proposal. To the Company's knowledge, no matters
other than those described in this Proxy Statement will be presented at the
meeting.
<PAGE>
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of September 1, 1998
(except as otherwise indicated) by (i) each person believed by the Company to
own beneficially more than 5% of its outstanding shares of Common Stock, (ii)
each of the Company's directors, (iii) each of the Company's executive officers
named in the Summary Compensation Table below, and (iv) all current executive
officers and directors of the Company as a group. Except as otherwise indicated
below, the address of each such person is that of the Company, 26 Century
Boulevard, Nashville, Tennessee 37214.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF COMMON STOCK ADJUSTED
SHARES(1) PERCENT(1) EQUIVALENTS(2) PERCENT(2)
---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
J.P. Morgan & Co., Incorporated (3) 3,034,516 9.6% -- 9.6%
60 Wall Street New York,
New York 10260
Mellon Bank Corporation (4)(5) 2,935,704 9.3 -- 9.3
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
ICM Asset Management, Inc. (6) 2,726,941 8.6 -- 8.6
601 W. Main Avenue, Suite 600
Spokane, Washington 99201
Harris Associates L.P. (7) 2,545,000 8.1 -- 8.1
2 North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Harris Associates Investment Trust (8) 2,500,000 7.9 -- 7.9
2 North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Mellon Bank N.A. (9)(5) 1,989,253 6.3 -- 6.3
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
The Dreyfus Corporation (10)(5) 1,833,226 5.8 -- 5.8
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
David L. Babson and Company Incorporated (11) 1,669,050 5.3 -- 5.3
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Andrew G. Galef (12) 1,220,891 3.8 -0- 3.8
Ronald N. Hoge (13) 309,100 * 28,131 *
Thomas G. Boren (14) 4,500 * 1,161 *
Dewain K. Cross (15) 88,300 * 1,716 *
Paul J. Kofmehl (16) 82,000 * 2,038 *
Frederick D. Lawrence -0- * 248 *
Marguerite W. Sallee (17) 26,000 * 985 *
Robert E. Wycoff (18) 17,000 * 2,272 *
David P. Reiland (19) 249,594 * 7,934 *
Brian R. Dundon (20) 348,992 1.1 3,392 1.1
James E. Schuster (21) 88,333 * 2,958 *
Alexander Levran (22) 100,178 * 2,523 *
Executive Officers and Directors as a group, including those 2,958,716 8.9 67,493 9.1
persons named above(19 persons) (23)
</TABLE>
- ------------------------
* Less than one percent
2
<PAGE>
NOTES:
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any security as of a given date when such person has the
right to acquire such security within 60 days after such date. Except as
indicated in the footnotes to this table and pursuant to applicable
community property laws, to the knowledge of the Company, the persons named
in this table have sole voting and investment power with respect to all
shares beneficially owned by them. The number of shares and percentage
ownership amounts do not reflect amounts listed in the table representing
common stock equivalents.
(2) Represents amounts allocated to accounts as of a recent date under the
MagneTek, Inc. Amended and Restated Director Compensation and Deferral
Investment Plan, the MagneTek, Inc. Deferral Investment Plan, the MagneTek,
Inc. Performance-Based Pension Restoration Plan and the MagneTek, Inc.
Shareholder Return Plan deemed to be invested in stock equivalents.
(3) As of February 13, 1998, according to public filings. In its most recent
available public filings, J.P. Morgan & Co., Incorporated ("J.P. Morgan")
states that some of these shares may be held by its subsidiaries; J.P.
Morgan has sole investment power with respect to 3,034,516 shares and sole
voting power with respect to 2,739,236 of these shares.
(4) As of January 28, 1998, according to public filings. In its most recent
available public filings, Mellon Bank Corporation states that it has sole
investment power with respect to 2,807,404 of these shares and sole voting
power with respect to 2,813,453 of these shares.
(5) The Company has been informed by one of these holders that there is a
substantial degree of duplicative reporting in the shares shown in the
table for these holders.
(6) As of February 10, 1998, according to public filings. In its most recent
available public filings, ICM Asset Management, Inc. ("ICM") states it has
sole investment power with respect to all these shares and sole voting
power with respect to 2,102,541 of these shares. According to its public
filings, ICM is an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940.
(7) As of February 4, 1998, according to public filings. In its most recent
public filings, Harris Associates L.P. ("Harris") states that it serves as
investment adviser to Harris Associates Investment Trust, which owns
2,500,000 of these shares; Harris has sole voting power and sole investment
power with respect to none of these shares. According to its public
filings, Harris is an investment adviser registered under Section 203 of
the Investment Advisers Act of 1940.
(8) As of February 4, 1998, according to public filings. In its most recent
available public filings, Harris Associates Investment Trust, Series
Designated The Oakmark Smallcap Fund ("Harris Trust") states that it has
neither sole voting power nor sole investment power with respect to any of
these shares. According to its public filings, Harris Trust is an
Investment Company registered under Section 8 of the Investment Company
Act.
(9) As of January 28, 1998, according to public filings. In its most recent
available public filings, Mellon Bank N.A. ("Mellon") states that it has
sole investment power with respect to 1,860,953 of these shares and sole
voting power with respect to 1,874,653 of these shares. According to its
public filings, Mellon is a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934.
(10) As of January 28, 1998, according to public filings. In its most recent
available public filings, The Dreyfus Corporation ("Dreyfus") states that
it has sole investment power and sole voting power with respect to
1,719,926 of these shares. According to its public filings, Dreyfus is an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940.
3
<PAGE>
(11) As of January 20, 1998, according to public filings. In its most recent
available public filings, David L. Babson and Company Incorporated states
that it has sole investment power and sole voting power with respect to
all of these shares.
(12) Includes 622,500 shares issuable upon exercise of options by Mr. Galef.
Also includes 593,391 shares held in a trust, as to which Mr. Galef
disclaims beneficial ownership. Also includes 5,000 shares held by Mr.
Galef's spouse, as to which Mr. Galef disclaims beneficial ownership.
(13) Includes 100,000 shares issuable upon exercise of options by Mr. Hoge.
Also includes 3,000 shares held by Mr. Hoge's children, as to which Mr.
Hoge disclaims beneficial ownership.
(14) Includes 2,000 shares issuable upon exercise of options by Mr. Boren.
(15) Includes 44,500 shares issuable upon exercise of options by Mr. Cross.
(16) Includes 72,000 shares issuable upon exercise of options by Mr. Kofmehl.
Also includes 10,000 shares held by his spouse, as to which Mr. Kofmehl
disclaims beneficial ownership.
(17) Includes 10,000 shares issuable upon exercise of options by Ms. Sallee.
Also includes 15,000 shares held by Ms. Sallee's spouse, as to which Ms.
Sallee disclaims beneficial ownership.
(18) Includes 10,000 shares issuable upon exercise of options by Mr. Wycoff.
Also includes 7,000 shares held in a living trust, as to which Mr. Wycoff
disclaims beneficial ownership.
(19) Includes 172,778 shares issuable upon exercise of options by Mr. Reiland
and 4,886 shares held in the 401(k) Plan as of June 30, 1998. Also
includes 39,735 shares held in a living trust, as to which Mr. Reiland
disclaims beneficial ownership.
(20) Includes 212,609 shares issuable upon exercise of options by Mr. Dundon
and 3,799 shares held in the MagneTek FlexCare Plus Retirement Savings
Plan (a 401(k) plan, the "401(k) Plan") as of June 30, 1998.
(21) Includes 53,333 shares issuable upon exercise of options by Mr. Schuster.
(22) Includes 98,833 shares issuable upon exercise of options by Dr. Levran and
595 shares held in the 401(k) Plan as of June 30, 1998.
(23) Includes 1,718,393 shares issuable upon exercise of options by executive
officers and directors as a group as of September 1, 1998, and 23,954
shares held in the 401(k) Plan as of July 31, 1998. Also includes, for
certain executive officers and directors, shares held by spouses or
children, as to which such executive officers and directors disclaim
beneficial ownership, and shares held by limited partnerships or trusts,
as to which such executive officers and directors disclaim beneficial
ownership.
4
<PAGE>
DIRECTORS
The following table sets forth certain pertinent information regarding the
individuals who have been nominated by the Nominating and Corporate Governance
Committee of the Board of Directors to serve as directors of the Company. All of
the individuals listed are currently directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------- --- ----------------------------------------
<S> <C> <C>
Andrew G. Galef............................... 65 Chairman of the Board of Directors
Ronald N. Hoge................................ 53 President, Chief Executive Officer and
Director
Thomas G. Boren............................... 49 Director
Dewain K. Cross............................... 60 Director
Paul J. Kofmehl............................... 70 Director
Frederick D. Lawrence......................... 50 Director
Marguerite W. Sallee.......................... 52 Director
Robert E. Wycoff.............................. 68 Director
</TABLE>
Mr. Galef has been the Chairman of the Board of Directors since July 1984.
He also is the Chairman of the Nominating and Corporate Governance Committee.
Mr. Galef was the Chief Executive Officer of the Company from September 1993
until June 1996. He has been President of The Spectrum Group, Inc. ("Spectrum"),
a private investment and management firm, since its incorporation in California
in 1978 and its Chairman and Chief Executive Officer since 1987. Prior to the
formation of Spectrum, Mr. Galef was engaged in providing professional interim
management services to companies with serious operating and financial problems.
Mr. Galef is presently a director of Warnaco, Inc., a diversified apparel
manufacturer, and its parent, The Warnaco Group, Inc., and was formerly Chairman
of Aviall, Inc., a company providing aircraft engine refurbishment and related
products and services, and Exide Corporation, a manufacturer of automotive and
industrial batteries. Mr. Galef also currently serves as a director, and was
formerly the Chairman, of Petco Animal Supplies, Inc. In addition, Mr. Galef
serves as chairman or a director of other privately held Spectrum portfolio
companies.
Mr. Hoge was elected as the President and Chief Executive Officer of the
Company in June 1996. He also is a member of the Pension Committee. Mr. Hoge
became a director of the Company in July 1996. From 1993 until May 1996, he was
President of the Aerospace Equipment Systems Division of Allied Signal, Inc.
From 1986 to 1993, he was President and Chief Executive Officer of Onan
Corporation, the generator subsidiary of Cummins Engine Company. He also served
as President of Cummins Brasil S.A. for five years. From 1971, when he first
joined Cummins, until 1978, he served in progressive staff positions, including
Manager of Corporate Responsibilities, and managed the start-up of Cummins'
diesel engine factory in Daventry, England. Mr. Hoge earned a Bachelor's degree
in Mathematics from Amherst College in 1967. He received his MBA in Marketing
from Stanford University in 1970, completing graduate studies in Public
Administration at the University of California, Berkeley, the same year. Mr.
Hoge has been serving as a director of Merrill Corporation since June 1989.
Mr. Boren has been a director of the Company since October 1997. He is a
member of the Audit and Compensation Committees. Mr. Boren serves as President
and Chief Executive Officer of Southern Energy, Inc., a subsidiary of The
Southern Company. Southern Energy is a global energy company ranked as one of
the world's largest independent power producers and a top five-energy marketer
in the United States. Mr. Boren serves on the board of numerous privately held
Southern Energy portfolio companies. From 1989 to 1992, Mr. Boren served as
Senior Vice President and chief administrative officer of Georgia Power Company,
another Southern Company subsidiary. From 1981 to 1989, Mr. Boren served as
Georgia Power Vice President with responsibility for a wide range of corporate
functions in the finance, external affairs, strategic planning and
administrative areas. From 1968 to 1981, Mr. Boren served in various power
supply engineering and finance positions at Georgia Power Company. He earned his
Bachelor of Science degree in Industrial Management from Georgia Tech in 1971,
receiving his MBA in Finance from Georgia
5
<PAGE>
State University in 1974, and graduated from the Harvard Advanced Management
Program in 1987. Mr. Boren also serves as a director of Mobile Energy Services
Holdings, Inc.
Mr. Cross has been a director of the Company since November 1994. He is
Chairman of the Audit Committee and a member of the Nominating and Corporate
Governance Committee. Mr. Cross joined Cooper Industries, Inc. in 1966 as
Manager of Taxation and subsequently served as Director, Accounting and
Taxation, Assistant Controller, and Treasurer. Mr. Cross was appointed Vice
President, Finance of Cooper Industries in 1972 and was named Senior Vice
President, Finance of Cooper Industries in 1980. Mr. Cross retired from Cooper
Industries in April 1995. Mr. Cross served for several years as a member of the
Financial Council II of the Manufacturers' Alliance for Productivity and
Innovation, and he is a member of the American Institute of Certified Public
Accountants.
Mr. Kofmehl has been a director of the Company since November 1990. He is a
member of the Audit and Compensation Committees. In 1991 Mr. Kofmehl joined
Franklin Health Group ("Franklin") as a partner, and in 1995 Franklin was merged
with Corning, Inc., where he was employed until February 1997. In 1997 Franklin
was acquired by a private investment group and Mr. Kofmehl currently serves as
advisor to the President and Chief Executive Officer of such group. Mr. Kofmehl
held various positions with International Business Machines Corp. from 1955
until his retirement in 1988, most recently serving as IBM Vice President and
Group Executive, Americas Group, and as a member of the IBM Corporate Management
Board. During his career at IBM, Mr. Kofmehl had executive responsibilities for
various international sectors, including Europe, Canada, Latin America, the
Middle East and Africa.
Mr. Lawrence has been a director of the Company since July 1998. He is a
member of the Audit and Pension Committees. Mr. Lawrence is Chairman, Chief
Executive Officer and President of California Microwave, Inc., which he joined
in 1997. From 1994 to 1997, he served as Chief Executive Officer of ComStream
and President of the Transmission Group of ADC Telecommunications. From 1982 to
1994, he held executive positions with Sprint Corporation, becoming President
and Chief Executive Officer of United Telephone of Florida, Sprint's largest
local telephone division. Prior to that, Mr. Lawrence served in positions of
increasing responsibility with Michigan Bell/AT&T.
Ms. Sallee has been a director of the Company since January 1995. She is
Chairman of the Compensation Committee and a member of the Nominating and
Corporate Governance Committee. Ms. Sallee is the President and Chief Executive
Officer and a director of Bright Horizons Family Solutions, a successor
corporation to CorporateFamily Solutions, which she co-founded in 1987. In 1994
Ms. Sallee was named the first woman chairman of the Nashville Area Chamber of
Commerce, and is active in civic and business matters in Tennessee. Ms. Sallee
also serves as a director of Proffitt's.
Mr. Wycoff has been a director of the Company since January 1996. He is
Chairman of the Pension Committee and a member of the Compensation Committee.
Mr. Wycoff was President and Chief Operating Officer of Atlantic Richfield
Company ("ARCO") from January 1986 until June 1993. He was also a director of
ARCO, a director of ARCO Alaska, Inc., and a director of ARCO Foundation, Inc.
In addition, he served as Chairman of the Board and as a director of Lyondell
Petrochemical Company. Following his retirement from these positions on June 1,
1993, he became President Emeritus of ARCO. Mr. Wycoff is currently a Board
Member of the Electric Power Research Institute (EPRI) and Santa Fe
International. He is also Chairman Emeritus of LEARN and serves on the Board of
Governors of LAMP, civic organizations dedicated to education reform.
Directors serve for one year and thereafter until their successors are duly
elected and qualified. Directors who are not employees of the Company receive
(i) an annual fee of $26,000, (ii) an annual fee of $4,000 for chairmanship of
each committee, (iii) $1,500 for each Board meeting attended in person, and (iv)
$1,000 for each committee meeting attended in person or by telephone (applicable
only to the chairman and members of a given committee). Pursuant to the
MagneTek, Inc. Amended and Restated Director Compensation and Deferral
Investment Plan, directors who are not employees or officers of the Company may
elect to defer up to 100% of the annual retainer fees and meeting fees described
above. The
6
<PAGE>
plan also permits eligible directors to receive shares of Common Stock in the
lieu of such cash meeting fees, and requires eligible directors to receive
shares of Common Stock in lieu of such cash annual retainer fees. Officers serve
at the discretion of the Board of Directors. Mr. Galef and Mr. Hoge do not
receive any directors' fees. Directors may also receive stock option awards
pursuant to the Company's 1997 Non-Employee Director Stock Option Plan, and
stock appreciation rights ("SARs") pursuant to the 1991 Discretionary Director
Incentive Compensation Plan, each as described below.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
MEETINGS. During fiscal year 1998,* the Board of Directors met in regular
or special session five times. The Audit Committee met four times, the
Compensation Committee met three times, the Nominating and Corporate Governance
Committee met twice and the Pension Committee met once. The number of meetings
includes telephonic meetings and does not include actions taken by unanimous
written consent of the members of the Board of Directors or the Committees. Each
of the Company's directors who has been nominated for re-election (or election)
attended at least 75% of the meetings of the Board of Directors (held during the
period for which he or she has been a director) and the meetings of the
committees of which he or she is a member (held during the period for which he
or she has been a member).
STANDING COMMITTEES. The Audit Committee makes recommendations regarding
the selection of the Company's independent auditors, reviews the scope of the
annual audit as proposed by the Company's independent auditors and reviews the
findings of the annual audit with the independent auditors. The Audit Committee
also reviews the annual plan of the Company's internal audit department,
monitors plan achievement periodically throughout the fiscal year and reviews
with management significant financial and accounting policies and procedures.
The Compensation Committee reviews and approves the compensation of
executive officers and of certain key employees and generally approves grants
under stock option plans, incentive compensation plans and any other
equity-based or long-term incentive plans. The Compensation Committee also
reviews contributions to the Company's retirement plans and reviews new
executive compensation programs, annual performance evaluations and the Proxy
Statement Compensation Committee Report. See "Executive Compensation" and
"Report of the Compensation Committee of the Board of Directors on Executive
Compensation."
The Nominating and Corporate Governance Committee determines the
qualifications required of candidates for selection to the Board of Directors,
reviews the desirability of each director's standing for election for the next
year, proposes nominees for election or re-election to the Board of Directors,
and recommends the assignment of directors to various committees. The Nominating
and Corporate Governance Committee also evaluates and recommends director
compensation and benefits to the Board of Directors, periodically reviews each
director's stock ownership and determines if the recommended level is being
acquired, evaluates the performance of the Chief Executive Officer and reports
its evaluation to the Compensation Committee.
The Pension Committee establishes and reviews investment policies and
guidelines for the Company's qualified pension plan, reviews investment results
and performance of the pension plan, reviews the accounting impact and costs
related to the Company's retirement plans, and reviews plan design, amendments
and other issues related to the Company's retirement plans.
- ------------------------
* The Company uses a 52-53 week fiscal year which ends on the Sunday nearest
June 30. Fiscal years 1998, 1997 and 1996 contained 52 weeks.
7
<PAGE>
OTHER DIRECTOR COMPENSATION
1991 DISCRETIONARY DIRECTOR INCENTIVE COMPENSATION PLAN. The 1991
Discretionary Director Incentive Compensation Plan of MagneTek, Inc. authorizes
the Compensation Committee to grant SARs to the Company's non-employee directors
who are not members of the Compensation Committee. The Compensation Committee
selects the non-employee directors to whom the SARs will be granted from time to
time, determines the number of shares to be subject to such SARs and determines
the terms and conditions of such SARs, including when they become exercisable.
The base price of the shares of Common Stock subject to the SARs is also set by
the committee but may not be less than the fair market value of such shares on
the grant date. Certain significant transactions involving the Company or its
stock will accelerate the vesting of all SARs then outstanding. SARs under this
plan expire ten years from the date of grant and are exercisable for cash only.
No SARs were granted under this plan in fiscal year 1998.
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Under the Company's 1997
Non-Employee Director Stock Option Plan, each qualifying director (any director
of the Company who on the date of the grant is neither an officer nor an
employee of the Company or a subsidiary of the Company) is automatically granted
annually, on each June 30, a non-qualified stock option to purchase 4,000 shares
of the Company's Common Stock. The per share exercise price of the option is the
fair market value of a share of the Company's Common Stock on the date of the
grant. In fiscal year 1998, each of Messrs. Cross, Kofmehl, Wycoff and Ms.
Sallee received an option to purchase 4,000 shares and Mr. Boren received
options to purchase 8,000 shares. Options with respect to 50% of the shares are
exercisable one year after the date of the grant and options with respect to the
remaining 50% of the shares are exercisable two years after the date of the
grant.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of any equity security of
the Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and to furnish copies of these reports to the
Company. The Company has been advised that one Form 4 was not timely filed on
behalf of Mr. Wycoff to report an initial grant of stock options. This
transaction was subsequently reported on Form 4, thereby correcting the
oversight.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company for the three most recent fiscal years
of those persons who served as the Company's Chief Executive Officer during the
last fiscal year, and the four other most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 during the last fiscal
year (collectively, the "Named Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
------------------------ -----------
SECURITIES LONG-TERM
NAME AND ANNUAL COMPENSATION RESTRICTED UNDERLYING INCENTIVE
PRINCIPAL FISCAL -------------------- STOCK OPTIONS PLAN ALL OTHER
POSITION YEAR SALARY BONUS(1) AWARD(S)(2) (SHARES) PAYOUTS COMPENSATION(3)
- -------------------------- ----------- --------- --------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald N. Hoge 1998 $ 550,000 $ 0 $ 0 0 $ 2,372,251(4) $ 90,970(5)
President and Chief 1997 500,001 500,000 0 30,000 620,313(4) 158,764(6)
Executive Officer 1996 75,000 0 1,100,100 400,000 0 0
David P. Reiland 1998 325,000 0 0 134,445(7) 0 180,237(8)
Senior Vice President 1997 325,000 195,000 0 45,000 0 2,663
and Chief Financial 1996 325,000 37,800 0 20,000 0 69,934(6)
Officer
Brian R. Dundon 1998 300,040 0 0 20,000 0 206,429(8)
Executive Vice 1997 300,040 200,000 0 55,000 0 4,801
President 1996 288,756 80,000 0 20,000 0 9,341
James E. Schuster 1998 285,000 0 0 60,000 0 3,599
Executive Vice 1997 265,000 190,000 328,125 65,000 0 80,854(6)
President 1996 9,173 0 0 0 0 0
Alexander Levran 1998 250,000 0 0 40,000 0 58,054(8)
Senior Vice 1997 232,385 165,000 0 45,000 0 7,636
President, Technology 1996 225,001 50,000 0 45,000 0 54,956(6)
</TABLE>
- --------------------------
NOTES:
(1) The amounts reflect bonuses for services rendered during the fiscal year
indicated, which, as to the 1996 and 1997 fiscal years, were paid in August
of the subsequent fiscal year.
(2) As of the end of fiscal year 1998, the number of Mr. Hoge's and Mr.
Schuster's aggregate restricted stock holdings were 115,800 and 35,000
shares, respectively, and the value of such holdings as of such date was
$1,751,475 and $529,375, respectively. These restricted shares vested on
August 31, 1997 and June 18, 1997 for Mr. Hoge and Mr. Schuster,
respectively. No dividends are expected to be paid on any of the Company's
outstanding shares of Common Stock.
(3) The 1998 amounts reflect, for Messrs. Hoge, Reiland, Dundon, Schuster and
Levran: $5,086, $2,449, $3,329, $2,999 and $16,954, respectively, reimbursed
under the Senior Executive Medical Reimbursement Plan; and $600 contributed
by the Company to the MagneTek FlexCare Plus Retirement Savings Plan (a
401(k) plan) for the account of each such person.
(4) The 1998 amount represents the value of stock and cash compensation paid to
Mr. Hoge pursuant to his employment agreement. The 1997 amount represents
the value of stock compensation paid to Mr. Hoge pursuant to his employment
agreement. See "Report of the Compensation Committee of the Board of
Directors on Executive Compensation--Chief Executive Officer."
(5) The 1998 amount reported for Mr. Hoge includes $75,141 for reimbursement of
relocation expenses and $10,143 for an automobile provided by the Company to
Mr. Hoge.
9
<PAGE>
(6) The 1997 amounts reported for Messrs. Hoge and Schuster include $110,400 and
$73,794, respectively, for reimbursement of relocation expenses. The 1996
amounts reported for Messrs. Reiland and Levran include $65,557 and $52,950,
respectively, for reimbursement of relocation expenses.
(7) The amount reported for Mr. Reiland includes 109,445 options granted
pursuant to a reload feature applicable to certain options issued under the
Company's 1989 Incentive Stock Compensation Plan.
(8) The 1998 amounts reflect, for Messrs. Reiland, Dundon and Levran: $177,188,
$202,500 and $40,500, respectively, for discretionary amounts paid during
the fiscal year. See "Report of the Compensation Committee of the Board of
Directors on Executive Compensation--Bonuses."
OPTION GRANTS
Shown below is information regarding grants of stock options during the
fiscal year ended June 28, 1998 to the Named Officers:
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS POTENTIAL REALIZABLE
----------- VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
GRANTED(1) EMPLOYEESIN BASE PRICE EXPIRATION ------------------------
NAME (SHARES) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------------------ ----------- ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald N. Hoge 0 0.0% $ 0.0000 -- $ 0 $ 0
David P. Reiland 25,000 2.3 17.5625 7/21/07 276,128 699,735
94,591(2) 8.9 18.8750 4/1/08 1,122,842 2,845,401
14,854(2) 1.4 18.6875 4/15/08 174,573 442,386
Brian R. Dundon 20,000 1.9 17.5625 7/21/07 220,902 559,788
James E. Schuster 60,000 5.6 17.5625 7/21/07 662,706 1,679,364
Alexander Levran 40,000 3.8 17.5625 7/21/07 441,804 1,119,576
</TABLE>
- --------------------------
NOTES:
(1) Options were granted under the Company's 1989 Incentive Stock Compensation
Plan and are exercisable with respect to one third of the shares covered
thereby on each anniversary of the grant date with full vesting occurring on
the third anniversary date. Certain significant transactions involving the
Company or its stock will make the options granted under this plan
exercisable immediately and, should the Company's Common Stock cease to be
publicly traded, option holders would be entitled to receive cash in lieu of
exercising and selling the shares subject to their options.
(2) These options were granted pursuant to a reload feature applicable to
certain options issued under the Company's 1989 Incentive Stock Compensation
Plan.
10
<PAGE>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
Shown below is information relating to the fiscal year-end value of
unexercised options for each of the Named Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ------------- --------- ------------- ----------- -------------
EXERCISABLE
-----------
<S> <C> <C> <C> <C> <C> <C>
Ronald N. Hoge 0 $ 0 100,000 330,000 $ 491,668 $ 441,457
David P. Reiland 25,555 176,921 40,000 179,445 2,813 179,063
Brian R. Dundon 0 0 187,608 71,667 411,818 224,065
James E. Schuster 0 0 16,667 108,333 112,502 244,685
Alexander Levran 0 0 66,750 101,250 185,625 255,938
</TABLE>
- --------------------------
NOTES:
(1) Calculated using closing price on June 26, 1998 of $15.125 per share.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
Shown below is information regarding grants of awards under the MagneTek,
Inc. Performance-Based Pension Restoration Plan (the "SERP") during the fiscal
year ended June 28, 1998 to the Named Officers. Under the SERP, phantom stock
units are allocated to participants' accounts annually pursuant to a formula
based on the excess of a participant's compensation over the Internal Revenue
Code section 401(a)(17) limit (currently $160,000), multiplied by a factor which
varies based on Company performance. Phantom stock units accrue earnings based
on a phantom stock growth rate. A participant attains a nonforfeitable interest
in his phantom stock units upon completing at least five years of continuous
participation in the SERP or attaining age 65. Payment is made in cash or shares
of Common Stock, as determined by the Compensation Committee, upon a
participant's termination of employment or retirement.
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER PERIOD
UNTIL
NAME NUMBER OF UNITS MATURATION OR PAYOUT
- -------------------------- ----------------- --------------------------------
<S> <C> <C>
Ronald N. Hoge 3,561 five years or age 65
David P. Reiland 1,482 five years or age 65
Brian R. Dundon 1,400 five years or age 65
James E. Schuster 1,256 five years or age 65
Alexander Levran 1,029 five years or age 65
</TABLE>
EMPLOYMENT AGREEMENT
The Company has an employment agreement with Mr. Hoge. See "Report of the
Compensation Committee of the Board of Directors on Executive
Compensation--Chief Executive Officer."
MAGNETEK FLEXCARE PLUS RETIREMENT PENSION PLAN
The MagneTek FlexCare Plus Retirement Pension Plan (the "Retirement Plan")
is a defined benefit retirement plan which covers employees of the Company
(excluding employees of certain divisions and certain union employees). The
Retirement Plan was established upon the merger of certain defined benefit
retirement plans previously maintained by the Company. Although the Retirement
Plan is a defined benefit plan, each non-union participating employee's accrued
benefit is determined by the "cash balance" credited to the employee's
retirement account. Such account is maintained for bookkeeping purposes only.
"Contribution" amounts are credited to each employee's retirement account
annually ranging from 3.5% to 4.5% of an employee's compensation up to the
"integration level" and from 7% to 9% of compensation in excess of the
"integration level" (as of January 1, 1998, compensation is limited to
$160,000). The actual percentage varies depending upon years of vesting service
with the Company. The "integration level,"
11
<PAGE>
which for calendar 1998 was $31,000, may vary annually. "Interest," based upon
the rates payable on certain U.S. Treasury debt instruments, is also credited to
the employee's bookkeeping account each year.
Distributions are made in the event of retirement, death, disability or
other termination of employment. Distributions are paid to vested participants
in the form of a ten-year certain life annuity (unless a joint and survivor
annuity is required or an alternative form of payment is elected) in a monthly
amount equal to the balance of the employee's retirement account, divided by
120.
The estimated annual benefits payable to Messrs. Hoge, Reiland, Dundon,
Schuster and Levran under the Retirement Plan upon retirement at normal
retirement age (in life only form) are approximately $25,446, $112,522,
$121,333, $50,184 and $50,178, respectively (assuming continued compensation at
the present amounts (subject to the $160,000 limit) until normal retirement age
and continued crediting of interest at the current rate, and disregarding
probable future cost-of-living increases to the limit on the amount of
compensation that may be taken into account and to the Social Security wage
base).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocks between the Company and other entities involving the
Company's executive officers and directors and those of other entities.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors, consisting entirely of
non-employee directors, approves all policies under which compensation is paid
or awarded to the Company's executive officers.
GENERAL. The Company's compensation program for executive officers
currently consists of annual base salary and bonus as well as awards of stock
options and occasionally, restricted stock grants. The Committee believes that
the compensation of executive officers should reflect the scope of their
responsibilities, the success of the Company and the contributions of each
executive to that success. In addition, the Committee believes that base
salaries should be consistent with competitive salaries derived from market
surveys and that short-term and long-term incentive compensation should reflect
the performance of the Company and the contributions of each executive. Salary
and bonus payments are primarily designed to reward current and past
performance. The primary goal of the Company and the Committee is to excel in
the creation of long-term value for stockholders. The principal incentive tool
used to achieve this goal is the periodic grant of stock options and less
frequently, of restricted stock awards, to key employees. The Committee and
management believe that awards of stock options accomplish many objectives.
The Committee's decisions concerning the base salary and total cash
compensation (base salary plus bonus) of individual executive officers during
fiscal year 1998 were made primarily in the context of executive performance in
light of the Company's circumstances, historical practice and the current
competitive environment. The Compensation Committee considered competitive
compensation data from three independent sources. These sources included
broad-based compensation surveys of various manufacturing and/or electrical
equipment companies with sales volumes comparable to the Company's. External
competitiveness is an important element of the Committee's compensation policy.
The Committee found that the executive officers' compensation levels were
consistent with companies included in each of the foregoing sources. Equitable
principles are also central to the Committee's compensation policies.
Compensation considered for the Company's executive officers, whether cash or
stock-based incentives, is also evaluated by comparing it to compensation of
other executives within the Company with comparable levels of responsibility.
Stock options and restricted stock are awarded to provide incentives for
superior long-term future performance as well as for retention of executive
officers. Stock option and restricted stock awards are directly linked to the
stockholders' interests, since the potential value of the awards to the
executive officers is directly related to the future price of the Company's
Common Stock. All stock option and restricted stock grants are made under the
1989 Incentive Stock Compensation Plan, which was approved by the Company's
stockholders.
12
<PAGE>
STOCK OWNERSHIP POLICIES. The Company's compensation program is also
designed to encourage executives to own shares of the Company's Common Stock and
a significant portion of executive compensation, in particular that of the Chief
Executive Officer, is tied to the performance of the Company's stock. The
Committee believes that encouraging executives to acquire and retain Common
Stock provides additional incentive for executive officers to follow strategies
designed to maximize long-term values to stockholders. During fiscal year 1997,
the Company adopted the Company's Deferral Investment Plan, a deferred
compensation plan pursuant to which executives may elect to defer significant
portions of salary and bonus and may choose an investment vehicle that
replicates the performance of the Company's stock over the deferral period.
These deferred compensation amounts may in turn, at the Company's option, be
paid in common stock. Also during fiscal year 1997, the Committee instituted
stock ownership guidelines for officers that are being phased in over a
thirty-six month period. These guidelines specify appropriate levels of
ownership of the Company's common stock based upon the officer's compensation
and duration of the officer's position with the Company. The Committee made a
special stock option grant to selected officers under which vesting was tied to
achievement of the individual's target level of stock ownership during the
thirty-six month period following these option grants. The Committee used the
ownership guidelines as a measure in determining the size of option grants to
executives during fiscal year 1998. Additionally during fiscal 1997, the
Committee adopted the Company's Shareholder Return Plan pursuant to which
executives may earn bonuses based on the Company's total stockholder return as
compared on a three-year basis to the Standard & Poors Mid-Cap Electrical Index.
Each participant is allocated a potential maximum number of shares by the
Company's Chief Human Resources Officer, who determines the actual number of
shares of common stock earned as of each measuring period using a formula based
on the total stockholder return of the Company as compared to the Standard &
Poors Mid-Cap Electrical Index on a percentile ranking basis. The bonus payable
to each participant will be paid 50% in common stock and 50% in cash and will be
subject to deferral pursuant to the Deferral Investment Plan. No payments have
been made under the plan to date. During fiscal year 1998, the Company adopted
an incentive replacement option program permitting the issuance of options to
purchase the Company's common stock in exchange for foregone bonus cash
compensation. The amount of options granted is determined by dividing the
foregone compensation by the current Black-Scholes value of an option minus 25%.
Under this program eligible executives may elect to forego up to 100% of their
bonus for options that vest immediately and are exercisable for ten years.
BONUSES. For fiscal year 1998 the Committee adopted a formula (which varies
from year to year) at the beginning of the fiscal year. The formula used for
fiscal year 1998 was based upon the performance of the relevant corporate
business unit and upon individual performance. Business units were rated based
upon the achievement of targets which were in turn based upon an "economic value
added" by the particular unit. The Committee believes this to be the key driver
of stock performance over time. Executive's individual performance ratings are
based on each executive's achievement of specific annual financial objectives as
well as other factors, such as realization of strategic plans and progress in
organization and management development. For the executive officers, cash
bonuses are determined by multiplying a target incentive rate (a percentage of
salary that increases with the level of responsibility) by the average of the
performance rating of the individual executive, the applicable business unit and
the Company overall. Target incentive percentages range from 35% to 100% of an
executive's salary, and performance ratings range from 0 to 1.5. Due to failure
of the Company to meet its minimum "economic value added" target, no cash
bonuses were paid to officers in respect of fiscal year 1998. However, the
Committee approved the payment of discretionary amounts to Messrs. Reiland,
Dundon and Levran, in the amounts of $177,188, $202,500 and $40,500,
respectively, as well as to certain other executive officers. These amounts were
paid in fiscal year 1998 following an overall assessment of the adequacy of
these individuals' cash and non-cash compensation packages.
STOCK OPTIONS AND RESTRICTED STOCK. The Committee awarded a total of
587,674 non-qualified stock options to the executive officers during the
Company's 1998 fiscal year, all of which were granted under the 1989 Incentive
Stock Compensation Plan. In awarding these non-qualified stock options, the
Committee reviewed the number of options previously granted to each executive
officer, as well as the aggregate
13
<PAGE>
awards granted to all executive officers and associates of the Company, in light
of a study prepared for the Company by Hewitt Associates, an independent
compensation consulting firm. The size of the individual awards is determined
with input from management and is designed to maintain competitiveness and
promote long-term productivity from the executive officers. No restricted stock
awards were made to executive officers during fiscal year 1998.
CHIEF EXECUTIVE OFFICER. Mr. Hoge is paid a base salary of $550,000 per
year and participates in the Company's annual incentive bonus program.
Additionally, pursuant to his employment agreement, in 1996 Mr. Hoge was granted
115,800 shares of restricted stock and four stock options, each for 100,000
shares of Common Stock, with varying exercise prices and vesting schedules. All
but one of these stock options was granted at exercise prices exceeding fair
market value on the date of grant, in some cases, substantially. The employment
agreement with Mr. Hoge also provides for (i) a term of employment through June
1, 1999, which term may be automatically renewed annually thereafter until
terminated by Mr. Hoge or the Company or until the annual meeting of
stockholders that first follows Mr. Hoge's 65th birthday and (ii) additional
stock grants during each of the years from 1997 through 2001 depending on the
achievement of certain performance criteria measured by the average fair market
value of the Company's Common Stock. As of June 30, 1998, Mr. Hoge had earned an
aggregate of 75,000 shares as additional stock grants pursuant to the agreement.
The employment agreement with Mr. Hoge also provides that (i) if his
employment is terminated involuntarily other than for death, disability, cause
or following a change in control, he will receive a lump-sum cash payment equal
to all accrued and unpaid base salary plus a pro rata portion of any bonus
compensation for such year, his outstanding stock options will become fully
exercisable, and, if Mr. Hoge so elects, the Company will repurchase his primary
residence in the Nashville, Tennessee area at its fair market value; and (ii) if
his employment is terminated following a change in control, his outstanding
stock options will become fully exercisable, and he will receive a lump-sum cash
payment equal to the sum of his accrued and unpaid base salary and bonus plus an
amount equal to the lesser of (A) 2.99 times the sum of (x) his base salary plus
(y) the bonus for the most recent fiscal year in which he received a bonus and
(B) the maximum amount that the Company would be entitled to deduct as a
compensation expense on its federal income tax return without regard to the $1
million limitation of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
TAX DEDUCTIBILITY CONSIDERATIONS. The Committee has reviewed the Company's
compensation plans with regard to the deduction limitation under the Code.
Section 162(m) disallows a tax deduction for any publicly-held corporation for
individual compensation exceeding $1 million in any taxable year for any of the
Named Officers, unless compensation is performance-based. The compensation of
the Chief Executive Officer exceeded $1 million in 1998; none of the other named
executive officers received compensation in excess of $1 million in 1998. The
Committee does not believe that the amount by which the Chief Executive
Officer's compensation exceeded $1 million was significant. The Committee does
not currently expect the compensation of any of the named executive officers
other than the Chief Executive Officer to exceed the $1 million threshold in
fiscal year 1999. While the Company intends to pursue a strategy of maximizing
the deductibility of compensation paid to executive officers in fiscal year
1999, it also intends to maintain the flexibility to take actions that it
considers to be in the Company's best interests and to take into consideration
factors other than tax deductibility.
The foregoing report on executive compensation is provided by the following
directors who comprise the Compensation Committee of the Board of Directors:
Marguerite W. Sallee (Chairman)
Thomas G. Boren
Paul J. Kofmehl
Robert Wycoff
14
<PAGE>
PERFORMANCE GRAPH
Shown below is information comparing the cumulative total return to
stockholders of the Company's Common Stock, the Standard & Poors 500 Index ("S&P
500"), the Standard & Poors Electrical Equipment Index ("S&P Electrical") and
the Dow Jones Electrical Components Index ("Dow Jones Electrical") from June 30,
1993 to June 30, 1998. The information assumes that the value of the investment
in the Company's Common Stock, and each index, was $100 on June 30, 1993, and
that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MAGNETEK, INC. S&P 500 S&P ELECTRICAL DOW JONES ELECTRICAL
<S> <C> <C> <C> <C>
6/30/93 $100 $100 $100 $100
6/30/94 $76.316 $101.412 $99.317 $102.065
6/30/95 $71.711 $127.820 $123.769 $128.616
6/30/96 $50.658 $161.035 $180.609 $150.228
6/30/97 $87.500 $216.890 $260.078 $188.288
6/30/98 $82.895 $282.274 $347.797 $196.966
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
----------- --------- --------- --------- --------- ---------
MagneTek, Inc...................... $ 100 $ 76.316 $ 71.711 $ 50.658 $ 87.500 $ 82.895
S&P 500............................ 100 101.412 127.820 161.035 216.890 282.274
S&P Electrical..................... 100 99.317 123.769 180.609 260.078 347.797
Dow Jones Electrical............... 100 102.065 128.616 150.228 188.288 196.966
</TABLE>
15
<PAGE>
CERTAIN TRANSACTIONS
The Company has an agreement with the Spectrum Group, Inc. ("Spectrum")
whereby Spectrum will provide management services to the Company through fiscal
1999 at an annual fee plus certain allocated and out of pocket expenses. The
Company's Chairman is also the chairman of Spectrum. The services provided
include consultation and direct management assistance with respect to
operations, strategic planning and other aspects of the business of the Company.
Fees and expenses paid to Spectrum for these services under the agreement
amounted to $772,000 for the year ended June 28, 1998.
During the year ended June 28, 1998, the Company paid approximately $270,000
in fees to charter an aircraft owned by a company in which the Chairman is the
principal shareholder. The Company believes the fees paid were equivalent to
those that would be paid under an arm's-length transaction.
Under the terms of his employment agreement, Mr. Hoge has received
$1,000,000 from the Company under an interest-free loan in connection with the
purchase of a residence.
The Company has provided to Messrs. Hoge, Schuster, Gerard P. Gorman (an
executive officer) and Daryl D. David (a former executive officer) unsecured
loans to pay income tax liability in connection with the vesting of their
restricted stock or receipt of stock awards in the aggregate amounts of
$1,542,555, $245,000, $340,368 and $175,000, respectively. In the case of Mr.
Hoge, such loans are pursuant to his employment agreement. Such loans bear
interest and are due upon the earliest of (i) the date on which the borrower has
sold more than a specified number of shares of Common Stock, (ii) 90 days after
the date of the borrower's termination of employment and (iii) the fifth
anniversary of the loan.
COMPANY PROPOSALS
The following proposal will be submitted for stockholder consideration and
voting at the Annual Meeting.
PROPOSAL
ELECTION OF DIRECTORS
The Nominating and Corporate Governance Committee of the Board of Directors
of the Company has nominated and recommends for election as directors the
following eight persons to serve for the ensuing year until the next Annual
Meeting of Stockholders and thereafter until their respective successors are
elected and have been qualified:
Andrew G. Galef
Ronald N. Hoge
Thomas G. Boren
Dewain K. Cross
Paul J. Kofmehl
Frederick D. Lawrence
Marguerite W. Sallee
Robert E. Wycoff
All of the nominees are presently directors of the Company. The enclosed
Proxy will be voted in favor of the persons nominated unless otherwise
indicated. If any of the nominees should be unable to serve or should decline to
do so, the discretionary authority in the Proxy will be exercised to vote for a
substitute or substitutes to be designated by the Board of Directors. The Board
of Directors has no reason to believe that any substitute nominee or nominees
will be required. In the event that a nominee for director is proposed at the
Annual Meeting, the enclosed Proxy may be voted in favor of or against such
nominee or any other nominee proposed by the Board of Directors unless otherwise
indicated. Shares may not be
16
<PAGE>
voted cumulatively for election of directors. Directors are elected by a
plurality of the votes cast at the Annual Meeting either in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE
NOMINEES.
STOCKHOLDER PROPOSALS
No proposals have been submitted by stockholders for consideration at the
Annual Meeting. Any proposal relating to a proper subject which an eligible
stockholder of the Company may intend to present for action at the 1999 Annual
Meeting of Stockholders of the Company must be received by the Secretary of the
Company not later than May 25, 1999, to be considered for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. The
Company anticipates that next year's annual meeting will take place on October
19, 1999.
OTHER MATTERS
The Company does not know of any business other than that described herein
which will be presented for consideration or action by the stockholders at the
Annual Meeting. If, however, any other business shall properly come before the
Annual Meeting, shares represented by Proxies will be voted in accordance with
the best judgment of the persons named therein or their substitutes.
Representatives of Ernst & Young LLP, the Company's independent auditors, are
expected to be present at the Annual Meeting. At that time they will have the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report of the Company for the 1998 fiscal year is being mailed to
stockholders together with this Proxy Statement.
THE COMPANY WILL SEND TO STOCKHOLDERS UPON WRITTEN REQUEST, WITHOUT CHARGE,
A COPY OF THE ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED
JUNE 28, 1998 WHICH THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE REQUEST MUST BE DIRECTED TO THE ATTENTION OF THE SECRETARY, AT
THE ADDRESS OF THE COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
By Order of the Board of Directors,
[SIGNATURE]Samuel A. Miley
Vice President, General Counsel and
Secretary
Nashville, Tennessee
September 22, 1998
17
<PAGE>
PROXY
MAGNETEK, INC.
ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 20, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ANDREW G. GALEF and SAMUEL A. MILEY, or
either of them, attorneys and proxies to represent the undersigned, with power
of substitution, to appear and to vote all shares of stock of MAGNETEK, INC.
(the "Company") which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the offices of the Company,
26 Century Boulevard, Nashville, Tennessee 37214 on October 20, 1998, at 10:00
a.m. and any adjournment thereof.
1. ELECTION OF DIRECTORS
Nominees are: Andrew G. Galef, Ronald N. Hoge, Thomas G. Boren,
Dewain K. Cross, Paul J. Kofmehl, Frederick D. Lawrence,
Marguerite W. Sallee and Robert E. Wycoff
UNMARKED PROXIES WILL BE VOTED "FOR" THE FOREGOING MATTERS UNLESS SPECIFIED TO
THE CONTRARY.
(Continued and to be voted, dated and signed on the reverse side.)
MAGNETEK, INC.
P.O. BOX 11128
NEW YORK, N.Y. 10203-0128
<PAGE>
/ /
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to EXCEPTIONS
listed below vote for all nominees
listed below.
Nominees: Andrew G. Galef, Ronald N. Hoge, Thomas G. Boren, Dewain K. Cross,
Paul J. Kofmehl, Frederick D. Lawrence, Marguerite W. Sallee and
Robert E. Wycoff
(INSTRUCTIONS: TO VOTE YOUR SHARES FOR ALL DIRECTOR NOMINEES, MARK THE "FOR" BOX
ON ITEM 1. TO WITHHOLD VOTING FOR ALL DIRECTOR NOMINEES, MARK THE "WITHHELD" BOX
ON ITEM 1. IF YOU WISH TO VOTE FOR SOME BUT NOT ALL DIRECTOR NOMINEES, MARK THE
"EXCEPTIONS" BOX ON ITEM 1 AND ENTER THE NAME(S) OF THE DIRECTOR NOMINEE(S) FOR
WHOM YOU WISH TO WITHHOLD VOTING IN THE SPACE PROVIDED.)
Exceptions ____________________________________________________________________
2. The undersigned confers upon I plan to attend the
the proxies hereby appointed meeting. CHANGE OF ADDRESS OR
discretion to act upon such COMMENTS MARK HERE
other business as may properly
come before said meeting or
adjournment thereof.
Yes No
Receipt of copies of the Annual Report
to Stockholders, the Notice of the
Annual Meeting of Stockholders and the
Proxy Statement dated September 22, 1998
is hereby acknowledged.
Dated _________________________________
_______________________________________
Signature of Stockholder
_______________________________________
Signature of Stockholder
(Please date and sign exactly as name
appears on this proxy. Joint owners
should each sign. If the stockholder is
a corporation, please set forth full
corporate name and a duly authorized
officer should sign stating name and
title. Executors and trustees should
give full title as such.)
PLEASE RETURN THIS PROXY PROMPTLY IN VOTES MUST BE INDICATED X
THE ENCLOSED ENVELOPE, WHICH REQUIRES (X) IN BLACK OR BLUE INK.
NO POSTAGE IF MAILED IN THE U.S.
<PAGE>
Bankers Trust Company
Date: September 26, 1998
To: MagneTek, Inc. Deferral Investment Plan (MDIP) Participants
From: Bankers Trust Company, Trustee
[Banker's Trust Logo]
Re: Shares of MagneTek, Inc. Common Stock Held in the
MagneTek, Inc. Executive Benefit Plans Trust (Rabbi Trust)
Dear MDIP Participant:
In accordance with provisions of the Rabbi Trust, we are forwarding a copy of
the MagneTek, Inc. annual shareholder proxy solicitation material. As a MDIP
particpant, you have been given the right to direct Bankers Trust Company as
trustee how to vote the MagneTek, Inc. common stock shares held in the Rabbi
Trust. Please complete this form and return it to Bankers Trust Company in
the envelope provided.
1. ELECTION OF DIRECTORS
Nominees: Andrew G. Galef, Ronald N. Hoge, Thomas G. Boren, Dewain K.
Cross, Paul J. Kofmehl, Frederick D. Lawrence, Marguerite W. Sallee,
and Robert E. Wycoff
/ / FOR all nominees listed above.
/ / WITHHOLD AUTHORITY to vote for all nominees listed above.
/ / EXCEPTIONS:
-----------------------------------------------------------------
INSTRUCTIONS: TO VOTE YOUR SHARES FOR ALL DIRECTOR NOMINEES, MARK THE
"FOR" BOX ON ITEM 1. TO WITHHOLD VOTING FOR ALL DIRECTOR NOMINEES, MARK
THE "WITHHOLD AUTHORITY" BOX ON ITEM 1. IF YOU WISH TO VOTE FOR SOME
BUT NOT ALL DIRECTOR NOMINEES, MARK THE "EXCEPTIONS" BOX ON ITEM 1 AND
ENTER THE NAME(S) OF THE DIRECTOR NOMINEE(S) FOR WHOM YOU WISH TO
WITHHOLD VOTING IN THE SPACE PROVIDED.
If no direction is given, Bankers Trust Company as trustee will vote
your shares. Bankers Trust Company holds your voting instructions in
confidence and will not release them to any person, including officers
of MagneTek, Inc.
-------------------------------- ---------------------------
Signature Date
I plan to attend the meeting:
/ / YES
/ / NO
PLEASE RETURN THIS FORM IN THE ENVELOPE PROVIDED
500 Washington Avenue Telephone: 314 244-6800
Suite 1010
St. Louis, MO 63102
<PAGE>
MAGNETEK, INC. MAGNETEK, INC.
IER Proxy Services
P.O. Box 7008 Annual Meeting of Stockholders, October 20, 1998
San Carlos, CA 94070-7008 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ANDREW G. GALEF and SAMUEL A. MILEY, or
either of them, attorneys and proxies to represent the undersigned, with
power of substitution, to appear and to vote all shares of stock of
MAGNETEK, INC. (the "Company") which the undersigned would be entitled to
vote at the Annual Meeting of Stockholders of the Company to be held at the
offices of the Company, 26 Century Boulevard, Nashville, Tennessee 37214 on
October 20, 1998, at 10:00 a.m. and any adjournment thereof.
WITHHOLD
AUTHORITY
FOR to vote for all
all nominees nominees
listed at right listed at right *EXCEPTIONS
/ / / / / /
Proxy Number:
1. Election of Directors
Nominees are: Andrew G. Galef, Ronald N. Hoge, Thomas G. Boren, Dewain K.
Cross, Paul J. Kofmehl, Frederick D. Lawrence, Marguerite W. Sallee and
Robert E. Wycoff
(INSTRUCTIONS: To vote your shares for all Director nominees, mark the
"For" box on Item 1. To withhold voting for all Director nominees, mark the
"Withhold" box on Item 1. If you wish to vote for some but not all director
nominees, mark the "exceptions" box on Item 1 and enter the name(s) of the
Director nominee(s) for whom you wish to withhold voting in the space
provided.)
*Exceptions
__________________________________________________________________________
2. The undersigned confers upon the proxies hereby appointed discretion to
act upon such other business as may properly come before said meeting or
adjournment thereof.
- ------------------------------------------------------------------------------
MAGNETEK, Inc.
MagneTek Plan
As a participant in the MagneTek FlexCare Plus Retirement Savings Plan or the
MagneTek Unionized Employee Savings Plan (collectively, the "Plan"), you have
the right to direct Merrill Lynch Trust Company FSB, (the "Plan Trustee") to
vote the shares of Common Stock of MagneTek, Inc. (the "Company") represented
by your interest attributable to such shares held in the MagneTek Stock Fund
under the Plan at the Annual Meeting of Stockholders of the Company to be
held on October 20, 1998.
For your information, a Proxy Statement and an Annual Report are enclosed. In
addition, a postage-paid return envelope addressed to IER Proxy Services is
enclosed for your use in returning your completed, signed and dated proxy
card to the Plan Trustee.
The Plan Trustee will hold your voting instructions in confidence and will
not divulge or release specific information regarding your instructions to
any person, including officers or employees of the Company, except to the
extent required by law.
If your completed proxy card is not received by the Plan Trustee by October
15, 1998, the Administrative Committee for the Plan may direct the Plan
Trustee to vote your shares.
Merrill Lynch Trust Company FSB
- ------------------------------------------------------------------------------
Receipt of copies of the Annual Report to Stockholders, the Notice of the
Annual Meeting of Stockholders and the Proxy Statement dated September 22,
1998 is hereby acknowledged.
Dated:________________
________________________________________________________
Signature of Stockholder
________________________________________________________
Signature of Stockholder
(Please date and sign exactly as name appears on this proxy. Joint owners
should each sign. If the stockholder is a corporation, please set forth full
corporate name and a duly authorized officer should sign stating name and
title. Executors and trustees should give full title as such.)
PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE U.S.
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