<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] 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>
Magnetek, 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) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
MagneTek, Inc. Logo
26 CENTURY BOULEVARD
NASHVILLE, TENNESSEE 37214
September 27, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
MagneTek, Inc. It will be held on Tuesday, October 19, 1999 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 1999 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,
/s/ Andrew G. Galef
Andrew G. Galef
Chairman of the Board of Directors,
President and Chief Executive Officer
<PAGE> 3
MagneTek, Inc. 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 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of MagneTek, Inc. (the "Company") will be held on Tuesday,
October 19, 1999, 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 approve the adoption of the Company's 1999 Stock Incentive Plan.
3. 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 1999 Annual Meeting is the close of
business on September 10, 1999. 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,
/s/ Samuel A. Miley
Samuel A. Miley
Vice President, General Counsel and Secretary
Nashville, Tennessee
September 27, 1999
<PAGE> 4
MagneTek, Inc. Logo
---------------------------
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 1999
The Board of Directors of the Company is soliciting the enclosed Proxy for
use at the 1999 Annual Meeting of Stockholders (the "Annual Meeting") of
MagneTek, Inc. (the "Company") to be held on Tuesday, October 19, 1999, 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 27, 1999.
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 $10,000 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 10, 1999, the record date, there were 29,458,367 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> 5
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of September 1, 1999
(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>
David L. Babson and Company Incorporated(3)....... 3,219,194 10.8% -- 10.8%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
ICM Asset Management, Inc.(4)..................... 2,565,455 8.6 -- 8.6
601 W. Main Avenue, Suite 600
Spokane, Washington 99201
Lazard Freres & Co. LLC(5)........................ 2,476,625 8.3 -- 8.3
30 Rockefeller Plaza
New York, New York 10020
Reich & Tang Asset Management L.P.(6)............. 1,992,500 6.7 -- 6.7
600 Fifth Avenue
New York, New York 10020
Mellon Bank Corporation(7)(8)..................... 1,794,174 6.0 -- 6.0
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Mellon Bank N.A.(9)(8)............................ 1,760,974 5.9 -- 5.9
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
The Dreyfus Corporation(10)(8).................... 1,566,226 5.3 -- 5.3
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Andrew G. Galef(11)............................... 1,220,891 4.0 -0- 4.0
Ronald N. Hoge(12)................................ 639,100 2.1 12,284 2.2
Thomas G. Boren(13)............................... 8,500 * 4,940 *
Dewain K. Cross(14)............................... 103,800 * 4,290 *
Paul J. Kofmehl(15)............................... 86,000 * 5,707 *
Frederick D. Lawrence............................. 2,000 * 3,093 *
Marguerite W. Sallee (16)......................... 30,000 * 3,398 *
Robert E. Wycoff (17)............................. 21,000 * 5,899 *
David P. Reiland (18)............................. 290,008 * 8,028 *
Brian R. Dundon (19).............................. 378,562 1.3 2,380 1.3
James E. Schuster (20)............................ 95,000 * 1,713 *
Alexander Levran (21)............................. 134,745 * 1,695 *
Executive Officers and Directors as a group,
including those persons named above (17
persons)(22).................................... 3,414,678 10.7 64,815 10.9
</TABLE>
- ---------------
* Less than one percent
2
<PAGE> 6
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 April 8, 1999, according to public filings. In its most recent
available public filings, David L. Babson and Company Incorporated states
that it has sole investment power with respect to all of these shares and
sole voting power with respect to 1,050 of these shares.
(4) As of February 10, 1999, 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 1,909,705 of these shares.
(5) As of February 10, 1999, according to public filings. In its most recent
available public filings, Lazard Freres & Co. LLC ("Lazard Freres") states
that it has sole investment power with respect to all of these shares and
sole voting power with respect to 2,072,430 of these shares.
(6) As of February 12, 1999, according to public filings. In its most recent
available public filings, Reich & Tang Asset Management L.P. ("Reich &
Tang") states that it has sole investment power and sole voting power with
respect to none of these shares.
(7) As of February 23, 1999, according to public filings. In its most recent
available public filings, Mellon Bank Corporation states that it has sole
investment power with respect to 1,505,674 of these shares and sole voting
power with respect to 1,530,174 of these shares.
(8) 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.
(9) As of February 23, 1999, 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 1,472,474 of these shares and sole
voting power with respect to 1,496,974 of these shares.
(10) As of February 23, 1999, 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
1,302,226 of these shares.
(11) Includes 622,500 shares issuable upon exercise of options by Mr. Galef.
Also includes 515,000 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.
(12) Includes 330,000 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. Mr. Hoge served as the Company's President
and Chief Executive Officer until May 1999. See "Executive
Compensation -- Severance Arrangement."
(13) Includes 6,000 shares issuable upon exercise of options by Mr. Boren.
(14) Includes 60,000 shares issuable upon exercise of options by Mr. Cross.
(15) Includes 76,000 shares issuable upon exercise of options by Mr. Kofmehl.
3
<PAGE> 7
(16) Includes 14,000 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.
(17) Includes 14,000 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.
(18) Includes 208,687 shares issuable upon exercise of options by Mr. Reiland
and 5,299 shares held in the 401(k) Plan as of June 30, 1999. Also includes
39,735 shares held in a living trust, as to which Mr. Reiland disclaims
beneficial ownership.
(19) Includes 241,796 shares issuable upon exercise of options by Mr. Dundon and
4,162 shares held in the MagneTek FlexCare Plus Retirement Savings Plan (a
401(k) plan, the "401(k) Plan") as of June 30, 1999.
(20) Includes 60,000 shares issuable upon exercise of options by Mr. Schuster.
In connection with the sale of the Company's motor business, Mr. Schuster
resigned as Executive Vice President of the Company in August 1999.
(21) Includes 133,417 shares issuable upon exercise of options by Dr. Levran and
578 shares held in the 401(k) Plan as of June 30, 1999.
(22) Includes 2,123,101 shares issuable upon exercise of options by executive
officers and directors as a group as of September 1, 1999, and 19,876
shares held in the 401(k) Plan as of July 31, 1999. 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> 8
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. Marguerite W.
Sallee is currently a director who is not standing for re-election to the Board
of Directors. The Company thanks Ms. Sallee for her contributions during her
years of service on MagneTek's Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew G. Galef........................... 66 Chairman of the Board of Directors, President and
Chief Executive Officer
Thomas G. Boren........................... 50 Director
Dewain K. Cross........................... 61 Director
Paul J. Kofmehl........................... 71 Director
Frederick D. Lawrence..................... 51 Director
Robert E. Wycoff.......................... 69 Director
</TABLE>
Mr. Galef has been the Chairman of the Board of Directors since July 1984
and the President and Chief Executive Officer of the Company since May 4, 1999.
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. Boren has been a director of the Company since October 1997. He is
Chairman of the Compensation Committee and a member of the Audit Committee. Mr.
Boren serves as Executive Vice President of PG&E Corporation, which markets
energy services and products throughout North America, heading the company's
national wholesale and retail energy businesses, and as President and Chief
Executive Officer of PG&E National Energy Group. From 1992 to July 1999, he
served as President and Chief Executive Officer of Southern Energy, Inc., a
subsidiary of The Southern Company. 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 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.
5
<PAGE> 9
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, Compensation and Pension Committees. Mr. Lawrence is
Chairman, Chief Executive Officer and President of Adaptive Broadband
Corporation (formerly known as 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.
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.
Ms. Sallee has been a director of the Company since January 1995. She is a
member of the Nominating and Corporate Governance and Pension Committees. Due to
time commitments associated with starting a new business, she has decided not to
stand for re-election to the Board of Directors. 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.
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 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 does not
receive any directors' fees. Directors may also receive stock option awards
pursuant to the Company's 1997 Non-Employee Director Stock Option Plan, as
described below.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Meetings. During fiscal year 1999,* the Board of Directors met in regular
or special sessions six times. The Audit Committee and the Compensation
Committee each met five times, and the Nominating and
- ---------------
* The Company uses a 52-53 week fiscal year which ends on the Sunday nearest
June 30. Fiscal years 1999, 1998 and 1997 each contained 52 weeks.
6
<PAGE> 10
Corporate Governance Committee and the Pension Committee each 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 all 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.
OTHER DIRECTOR COMPENSATION
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 1999, each of
Messrs. Boren, Cross, Kofmehl, Wycoff and Ms. Sallee received an option to
purchase 4,000 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. Based solely on a review of the copies of the forms that the Company
received, the Company believes that all Forms 4 or 5 were filed on a timely
basis.
7
<PAGE> 11
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
ANNUAL COMPENSATION RESTRICTED UNDERLYING LONG-TERM
FISCAL ------------------- STOCK OPTIONS INCENTIVE PLAN ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) AWARD(S) (SHARES) PAYOUTS COMPENSATION(2)
- --------------------------- ------ -------- -------- ---------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Andrew G. Galef(3).................... 1999 $ -- $ -- $ 0 0 $ 0 $ --
Chairman of the Board 1998 -- -- 0 0 0 --
of Directors, President and Chief 1997 -- -- 0 0 0 --
Executive Officer
Ronald N. Hoge........................ 1999 475,962 0 0 0 0 669,493(4)
Former President and 1998 550,000 0 0 0 2,372,251(5) 90,970(4)
Chief Executive Officer 1997 500,001 500,000 0 30,000 620,313(5) 158,764(6)
(resigned May 4, 1999)
David P. Reiland...................... 1999 357,500 0 0 62,439(7) 0 7,735
Senior Vice President 1998 325,000 0 0 134,445(7) 0 180,237(8)
and Chief Financial 1997 325,000 195,000 0 45,000 0 2,663
Officer
Brian R. Dundon....................... 1999 315,042 0 0 26,796(7) 0 19,218
Executive Vice 1998 300,040 0 0 20,000 0 206,429(8)
President 1997 300,040 200,000 0 55,000 0 4,801
James E. Schuster..................... 1999 300,105 0 0 60,000 0 9,394
Former Executive Vice 1998 285,000 0 0 60,000 0 3,599
President (resigned 1997 265,000 190,000 328,125 65,000 0 80,854(6)
August 2, 1999)
Alexander Levran...................... 1999 275,000 0 0 60,000 0 10,326
Senior Vice President, 1998 250,000 0 0 40,000 0 58,054(8)
Technology 1997 232,385 165,000 0 45,000 0 7,636
</TABLE>
- ---------------
Notes:
(1) The amounts reflect bonuses for services rendered during the fiscal year
indicated, which, as to fiscal year 1997, were paid in August of the
subsequent fiscal year.
(2) The 1999 amounts reflect, for Messrs. Hoge, Reiland, Dundon, Schuster and
Levran: $6,953, $7,322, $18,618, $8,794 and $9,885, respectively, reimbursed
under the Senior Executive Medical Reimbursement Plan; and $592, $413, $600,
$600 and $441, respectively, contributed by the Company to the MagneTek
FlexCare Plus Retirement Savings Plan (a 401(k) plan) for the account of
each such person. Mr. Galef is not covered in the foregoing plans.
(3) Mr. Galef was appointed as the Company's President and Chief Executive
Officer in May 1999. Mr. Galef receives no direct compensation from the
Company. Mr. Galef's services as Chairman of the Board of Directors,
President and Chief Executive Officer are provided to the Company in
accordance with the provisions of a management agreement with The Spectrum
Group, Inc. See "Report of the Compensation Committee of the Board of
Directors on Executive Compensation" and "Certain Transactions" below.
(4) The 1999 amount reported for Mr. Hoge includes $634,616 in connection with
his termination of employment with the Company, $10,577 accrued vacation pay
and $16,755 for an automobile provided by the Company to Mr. Hoge. See
"Severance Arrangement" below. 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.
8
<PAGE> 12
(5) The 1999 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."
(6) The 1997 amounts reported for Messrs. Hoge and Schuster include $110,400 and
$73,794, respectively, for reimbursement of relocation expenses.
(7) The 1999 amounts reflect, for Messrs. Reiland and Dundon, 12,439 and 6,796
options, respectively, granted pursuant to a reload feature applicable to
certain options issued under the Company's 1989 Incentive Stock Compensation
Plan. The 1998 amount reported for Mr. Reiland includes 109,445 options
granted pursuant to the reload feature.
(8) The 1998 amounts reflect, for Messrs. Reiland, Dundon and Levran: $177,188,
$202,500 and $40,500, respectively, for discretionary amounts paid during
the fiscal year. See "Report of the Compensation Committee of the Board of
Directors on Executive Compensation -- Bonuses."
OPTION GRANTS
Shown below is information regarding grants of stock options during the
fiscal year ended June 27, 1999 to the Named Officers:
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS
---------- PERCENTAGE POTENTIAL REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM
GRANTED(1) IN FISCAL BASE PRICE EXPIRATION ---------------------------
NAME (SHARES) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ---------- ---------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew G. Galef.................. -- -- -- -- -- --
Ronald N. Hoge................... 0 0.0% $ 0.0000 -- $ 0 $ 0
David P. Reiland................. 50,000 4.8 15.7813 7/20/08 496,245 1,257,533
12,439(2) 1.2 13.8125 11/6/08 108,054 273,819
Brian R. Dundon.................. 20,000 1.9 15.7813 7/20/08 198,498 503,013
6,796(2) 0.7 13.8125 8/10/08 59,035 149,600
James E. Schuster................ 60,000 5.8 15.7813 7/20/08 595,492 1,509,039
Alexander Levran................. 60,000 5.8 15.7813 7/20/08 595,492 1,509,039
</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.
9
<PAGE> 13
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>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew G. Galef............... 0 $ 0 622,500 0 $46,875 $ 0
Ronald N. Hoge................ 0 0 330,000 0 0 0
David P. Reiland.............. 2,561 12,890 170,217 131,667 0 0
Brian R. Dundon............... 0 0 210,130 66,666 42,500 17,500
James E. Schuster............. 0 0 53,333 131,667 43,750 21,875
Alexander Levran.............. 0 0 115,083 112,917 46,406 2,344
</TABLE>
- ---------------
Notes:
(1) Calculated using closing price on June 25, 1999 of $9 11/16 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 27, 1999 to the Named Officers who are eligible for benefits
thereunder. 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. Mr. Galef does not participate in the SERP, and
Messrs. Hoge and Schuster are no longer with the Company.
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER PERIOD
NAME NUMBER OF UNITS UNTIL MATURATION OR PAYOUT
- ---- --------------- ---------------------------
<S> <C> <C>
David P. Reiland.................... 2,595 five years or age 65
Brian R. Dundon..................... 2,380 five years or age 65
Alexander Levran.................... 1,695 five years or age 65
</TABLE>
SEVERANCE ARRANGEMENT
In connection with Mr. Hoge's resignation in May 1999, the Company
restructured his outstanding unsecured tax loans by (i) offsetting the net lump
sum severance amount payable to Mr. Hoge under his employment agreement against
the aggregate principal amount of such tax loans, reducing his indebtedness from
$1,717,887 to $1,307,762, (ii) extending the maturity date from August 3, 1999
to December 31, 2000 and (iii) accepting the pledge of 150,000 shares of the
Company's Common Stock as security for such loans. In addition, the Company
waived its right to accelerate the maturity of the $1 million loan previously
made to Mr. Hoge in connection with the purchase of his Nashville residence,
which loan remains secured by a junior lien on that residence, and bears
interest at the rate of 4.84% per annum.
CHANGE OF CONTROL AGREEMENTS
In October 1998, the Company entered into Change of Control Agreements with
each of Messrs. Reiland, Dundon and Levran that provide certain benefits upon
termination of employment in connection with a Change of Control (as defined in
such agreements). The executive's benefits upon termination would include: (a) a
single lump sum payment equal to: (1) any accrued base salary, vacation and
10
<PAGE> 14
bonus plus (2) a prorated portion of the executive's bonus for the fiscal year
in progress plus (3) an amount equal to 1 1/2 times the executive's base
compensation; (b) continuation of certain fringe benefits for a period of 18
months following termination of employment; and (c) outplacement services. In
addition, upon the occurrence of a Change of Control (as defined in such
agreements), the executive would become fully vested in all outstanding stock
options and restricted stock awards, if any, granted to him.
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," which for calendar 1999 was $33,000,
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 10-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. Reiland, Dundon and Levran
under the Retirement Plan upon retirement at normal retirement age (in life only
form) are approximately $95,960, $121,333 and $45,330, 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). Mr. Galef does not participate in the plan, and Messrs.
Hoge and Schuster are no longer with the Company.
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.
11
<PAGE> 15
The Committee's decisions concerning the base salary and total cash
compensation (base salary plus bonus) of individual executive officers during
fiscal year 1999 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 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 are awarded to provide incentives for superior long-term future
performance as well as for retention of executive officers. Stock options 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 have been
made under the 1989 Incentive Stock Compensation Plan, which was approved by the
Company's stockholders and expired in September 1999. See "Proposal 2" for a
description of the new plan that is being proposed to replace the expired plan.
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 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. The Committee has stock ownership guidelines for officers. 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.
Bonuses. For fiscal year 1999 the Committee adopted a formula (which
varies from year to year) at the beginning of the fiscal year. The formula used
for fiscal year 1999 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. 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 1999.
Stock Options. The Committee awarded a total of 352,273 non-qualified
stock options to the executive officers during the Company's 1999 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
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 1999.
Chief Executive Officer. Mr. Galef's services as Chairman of the Board of
Directors, and as President and Chief Executive Officer commencing upon Mr.
Hoge's resignation in May 1999, are provided to the Company in accordance with
the provisions of a management agreement with The Spectrum Group, Inc.
("Spectrum"), as amended. Under this agreement, Spectrum provides management
services to the Company for an annual fee plus certain allocated and
out-of-pocket expenses. The annual fee paid under this agreement in fiscal 1999
was $726,000, and such fee and expenses totaled $805,000 for fiscal 1999. In
addition, Spectrum or its designee is paid an annual management bonus in an
amount to be determined by, and within the
12
<PAGE> 16
discretion of, the Compensation Committee. No bonus was paid to Spectrum
pursuant to this provision during fiscal 1999. Such payments reflect the
Committee's evaluation of Mr. Galef's personal strengths and performance. Mr.
Galef, Chairman, President, Chief Executive Officer and owner of Spectrum, has
provided strategic management services to a variety of companies for more than
20 years. The Board of Directors of the Company considers the management
services provided by Spectrum important to achieving its strategy. For a
discussion of the severance arrangements with Mr. Hoge upon his resignation, see
"Severance Arrangement" above.
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. None of the named
executive officers received compensation in excess of $1 million in 1999. The
Committee does not currently expect the compensation of any of the named
executive officers to exceed the $1 million threshold in fiscal year 2000. While
the Company intends to pursue a strategy of maximizing the deductibility of
compensation paid to executive officers in fiscal year 2000, 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:
Thomas G. Boren (Chairman)
Paul J. Kofmehl
Frederick D. Lawrence
Robert E. Wycoff
13
<PAGE> 17
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,
1994 to June 30, 1999. The information assumes that the value of the investment
in the Company's Common Stock, and each index, was $100 on June 30, 1994, and
that all dividends were reinvested.
<TABLE>
<CAPTION>
Dow Jones
MagneTek, Inc. S&P 500 S&P Electrical Electrical
<S> <C> <C> <C> <C>
6/30/94 100.000 100.000 100.000 100.000
6/30/95 93.960 126.041 126.046 126.893
6/30/96 66.379 158.794 96.227 149.076
6/30/97 114.655 213.871 137.374 193.852
6/30/98 108.621 278.345 149.734 211.802
6/30/99 72.841 341.702 232.288 280.540
</TABLE>
14
<PAGE> 18
CERTAIN TRANSACTIONS
The Company has an agreement with the Spectrum Group, Inc. ("Spectrum")
whereby Spectrum will provide management services to the Company through fiscal
2000 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 $805,000 for the year ended June 27, 1999.
During the year ended June 27, 1999, the Company paid approximately
$120,000 in fees to charter an aircraft owned by a company in which the Chairman
is the principal shareholder.
Certain loans were made to Mr. Hoge that were subsequently restructured in
connection with Mr. Hoge's separation from the Company, as described under
"Executive Compensation -- Severance Arrangement."
COMPANY PROPOSALS
The following proposals will be submitted for stockholder consideration and
voting at the Annual Meeting.
PROPOSAL 1
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 six 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
Thomas G. Boren
Dewain K. Cross
Paul J. Kofmehl
Frederick D. Lawrence
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 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.
PROPOSAL 2
ADOPTION OF 1999 STOCK INCENTIVE PLAN
At the Annual Meeting, stockholders will be asked to approve the Company's
1999 Stock Incentive Plan (the "Plan"), which was adopted by the Board of
Directors in July 1999, subject to approval by the Company's stockholders. The
Plan is intended to replace the Company's 1989 Incentive Stock Compensation Plan
(the "1989 Plan"), which expired in September 1999.
15
<PAGE> 19
SUMMARY OF THE PLAN
The following summary of the main features of the Plan is qualified in its
entirety by reference to the complete text of the Plan, which is set forth as
Appendix A to this Proxy Statement.
General
The Plan is designed to enable the Company to attract, retain and motivate
its officers and other key employees, and to further align their interests with
those of the stockholders of the Company, by providing for or increasing the
proprietary interest of such persons in the Company.
The Plan authorizes the grant and issuance of awards that may take the form
of Options, Incentive Bonuses and Incentive Stock (any such arrangement, an
"Award" and each as described below under "Awards"). The Plan has various
provisions so that Awards under it may, but need not, qualify for an exemption
from the "short swing liability" provisions of Section 16(b) of the Exchange Act
pursuant to Rule 16b-3 and/or qualify as "performance based compensation" that
is exempt from the $1 million limitation on the deductibility of compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). Stockholder approval of the Plan is required in order for each of these
exemptions to be satisfied.
The Plan differs from the 1989 Plan in the following respects, among
others:
- The number of shares subject to the Plan is not tied to the number of
shares outstanding.
- Repricing of Options, whether by reducing the exercise price of
outstanding Options or canceling outstanding Options and regranting them
at a lower price, is prohibited without stockholder approval.
- Automatic grants of Options (known as "reload" options) based upon the
exercise of Options by optionees are prohibited without stockholder
approval.
- Non-employee directors are not eligible under the Plan.
- A limited number of shares may be granted as non-Option Awards.
- A limited number of shares may be granted to any one employee during any
calendar year.
- The vesting period for any Award of Incentive Stock (as defined below)
must be a minimum of one year.
- The exercise price for Options may not be less than 100% of the fair
market value of the Common Stock on the date the Option is granted,
except in the event an employee pays or foregoes any amount of cash for
an Option, in which case the exercise price plus such cash amount shall
equal or exceed 100% of the fair market value.
- Company-provided loans to assist an employee in paying the purchase price
of any Award are expressly prohibited.
Eligibility
Any person who is an officer or other key employee of the Company or any of
its affiliates is eligible to be selected as a recipient of an Award (a
"Participant") under the Plan. The Compensation Committee of the Board of
Directors has not yet determined how many individuals ultimately will
participate in the Plan. While it is generally expected that executives and
senior middle managers will be eligible to participate, Awards may from time to
time be granted to employees who are not in these groups but who have otherwise
distinguished themselves for their contributions to the Company.
16
<PAGE> 20
Administration
The Plan will be administered by the Committee (i.e., the Compensation
Committee), although the Board of Directors may exercise any authority of the
Committee under the Plan in lieu of the Committee's exercise thereof.
Subject to the express provisions of the Plan, the Committee has authority
to administer and interpret the Plan, including the authority to determine who
is eligible to participate in the Plan and to which of such persons, and when,
Awards are granted under the Plan, to grant Awards, to determine the number of
shares of Common Stock ("Shares") subject to Awards and the exercise or purchase
price of such Shares under an Award, to establish and verify the extent of
satisfaction of any performance goals applicable to Awards, to prescribe and
amend the terms of the agreements evidencing Awards made under the Plan, and to
make other determinations deemed necessary or advisable for the administration
of the Plan. While the Committee has the discretion to determine the type of
Awards granted, the Plan limits the number of non-Option Awards to 350,000
Shares.
Stock Subject to the Plan
The aggregate number of Shares that can be issued under the Plan may not
exceed 1,500,000, plus the number of shares subject to options granted under the
1989 Plan that were not exercised but instead were canceled, expired or
forfeited. The number of Shares subject to the Plan and to outstanding Awards
under the Plan will be appropriately adjusted by the Board of Directors if the
Common Stock is affected through a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than
quarterly cash dividends) or other distribution, stock split, spin-off or sale
of substantially all of the Company's assets. For purposes of calculating the
aggregate number of Shares issued under the Plan, only the number of Shares
actually issued upon exercise or settlement of an Award and not returned to the
Company upon cancellation, expiration or forfeiture of an Award or in payment or
satisfaction of the purchase price, exercise price or tax withholding obligation
of an Award shall be counted, provided that no more than 1,500,000 Shares may be
issued pursuant to ISOs (as defined below). As of August 1, 1999, approximately
200,000 Shares subject to the 1989 Plan were available for grant.
Awards
The Plan authorizes the grant and issuance of the following types of
Awards: Options, Incentive Bonuses and Incentive Stock:
Options. Subject to the express provisions of the Plan and as discussed in
this paragraph, the Committee has discretion to determine the vesting schedule
of Options, the events causing an Option to expire, the number of shares subject
to any Option, the restrictions on transferability of an Option, and such
further terms and conditions, in each case not inconsistent with the Plan, as
may be determined from time to time by the Committee. Options granted under the
Plan may be either Incentive Stock Options qualifying under Code Section 422
("ISOs") or Options not intended to qualify as ISOs ("NQSOs"). The exercise
price for Options may not be less than 100% of the fair market value of the
Common Stock on the date the Option is granted, except that (i) the exercise
price of an Option may be higher or lower in the case of Options granted to an
employee of a company acquired by the Company in assumption and substitution of
options held by such employee at the time such company is acquired and (ii) in
the event an employee is required to pay or forego the receipt of any cash
amount in consideration of receipt of an Option, the exercise price plus such
cash amount shall equal or exceed 100% of the fair market value of the Common
Stock on the date the Option is granted. The exercise price of an Option may be
paid through various means specified by the Committee, including in cash or
check, by delivering to the Company of shares of Common Stock or by a reduction
in the number of Shares issuable pursuant to such Option. The Committee may, but
need not, provide that the holder of an Award has a right (such as a stock
appreciation right) to receive a number of Shares or cash, or a combination
thereof, the amount of which is determined by reference to the value of the
Award.
Incentive Bonuses. The Plan authorizes the grant of Incentive Bonuses
pursuant to which a Participant may become entitled to receive an amount based
on satisfaction of such performance criteria as are specified
17
<PAGE> 21
by the Committee. Subject to the express provisions of the Plan and as discussed
in this paragraph, the Committee has discretion to determine the terms of any
Incentive Bonus, including the target and maximum amount payable to a
Participant as an Incentive Bonus, the performance criteria (which may be based
on financial performance and/or personal performance evaluations) and level of
achievement versus these criteria that determines the amount payable under an
Incentive Bonus, the fiscal year as to which performance will be measured for
determining the amount of any payment, the timing of any payment earned by
virtue of performance, restrictions on the alienation or transfer of an
Incentive Bonus prior to actual payment, forfeiture provisions, and such further
terms and conditions, in each case not inconsistent with the Plan, as the
Committee may determine from time to time. All or any portion of an Incentive
Bonus may be designed to qualify as "performance based compensation" that is
exempt from the $1 million limit on deductible compensation under Section 162(m)
of the Code. The performance criteria for any portion of an Incentive Bonus that
is intended to satisfy the requirements for "performance-based compensation"
will be a measure based on one or more Qualifying Performance Criteria (as
defined below). Notwithstanding satisfaction of any performance goals, the
amount paid under an Incentive Bonus may be reduced by the Committee on the
basis of such further considerations as the Committee in its sole discretion
shall determine.
Incentive Stock. Incentive Stock is an award or issuance of Shares the
grant, issuance, retention, vesting and/or transferability of which is subject
during specified periods of time to such conditions (including continued
employment or performance conditions) and terms as the Committee deems
appropriate. Subject to the express provisions of the Plan and as discussed in
this paragraph, the Committee has discretion to determine the terms of any
Incentive Stock Award, including the number of Shares subject to an Incentive
Stock Award or a formula for determining such, the purchase price, if any, for
the Shares (which may be below fair market value), the performance criteria, if
any, and level of achievement versus these criteria that determine the number of
Shares granted, issued, retainable and/or vested, the period as to which
performance shall be measured for determining achievement of performance or, if
not subject to performance criteria, the period of continued employment upon
which vesting of the Shares is subject, which period in any case (except in the
event of death or disability of the Participant or upon a Change of Control (as
defined in the Plan)) shall be not less than one year, forfeiture provisions,
the effect of termination of employment for various reasons, and such further
terms and conditions, in each case not inconsistent with the Plan, as may be
determined from time to time by the Committee. The performance criteria upon
which Performance Shares are granted, issued, retained and/or vested may be
based on financial performance and/or personal performance evaluations, except
that for any Incentive Stock that is intended by the Committee to satisfy the
requirements for "performance-based compensation" under Code Section 162(m) the
performance criteria shall be a measure based on one or more Qualifying
Performance Criteria. Notwithstanding satisfaction of any performance goals, the
number of Shares granted, issued, retainable and/or vested under a Incentive
Stock Award may be reduced by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
Amendments and Termination
The Board of Directors may amend, alter or discontinue the Plan or any
agreement evidencing an Award made under the Plan, but no such amendment shall,
without the approval of the stockholders of the Company:
- Increase the maximum number of shares of Common Stock for which Awards
may be granted under the Plan.
- Reduce the price at which Options may be granted below the price provided
for in the Plan.
- Reduce the exercise price of outstanding Options.
- After any Change of Control, impair the rights of any Award holder,
without such holder's consent.
- Extend the term of the Plan.
- Change the class of persons eligible to be Participants.
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- Provide for the automatic grant of Options (known as "reload" options)
based upon the exercise of Options by optionees.
- Increase the number of shares that are eligible for non-Option Awards.
No Award may be granted under the Plan more than 10 years after the date of
the adoption of the Plan by the Company's stockholders.
Qualifying Performance Criteria and Section 162(m) Limits
Subject to stockholder approval of the Plan, the performance criteria for
any Incentive Bonus or any Incentive Stock that is intended to satisfy the
requirements for "performance based compensation" under Code Section 162(m)
shall be any one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to either the Company
as a whole or to a business unit or subsidiary, either individually,
alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as specified by the Committee in the Award: (a) cash flow,
(b) earnings per share, (c) earnings before interest, taxes and amortization,
(d) return on equity, (e) total stockholder return, (f) return on capital, (g)
return on assets or net assets, (h) revenue, (i) income or net income, (j)
operating income or net operating income, (k) operating profit or net operating
profit, (l) operating margin, (m) return on operating revenue, (n) market share
and (o) overhead or other expense reduction. The Committee shall appropriately
adjust any evaluation of performance under a Qualifying Performance Criteria to
exclude any of the following events that occurs during a performance period: (i)
asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for reorganization and
restructuring programs, and (v) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in management's
discussion and analysis of financial condition and results of operations
appearing in the Company's annual report to stockholders for the applicable
year.
The aggregate number of Shares subject to Options granted under the Plan
during any calendar year to any one Participant may not exceed 500,000, unless
such limitation is not required under Code Section 162(m). The aggregate number
of Shares issued or issuable under all Awards granted under the Plan (other than
Options) during any calendar year to any one Participant shall not exceed
100,000, unless such limitation is not required under Code Section 162(m). The
maximum amount payable pursuant to that portion of an Incentive Bonus Award
granted for any fiscal year to any person that is intended to satisfy the
requirements for "performance based compensation" under Code Section 162(m)
shall not exceed $1,000,000.
Change of Control
The Committee may provide that in connection with a Change of Control (as
defined in the Plan), Awards will become exercisable, payable, vested, paid, or
canceled, and may provide for an absolute or conditional exercise, payment or
lapse of conditions or restrictions on an Award that would be effective only if,
upon the announcement of a transaction intended or reasonably expected to result
in a Change of Control, no provision is made under the terms of such transaction
for the holder of an Award to realize the full benefit of the Award.
Transferability of Awards
Generally, Awards granted under the Plan may not be sold, assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions applicable thereto,
other than by will or the laws of descent and distribution, except that the
Committee may permit an Award to be transferable to a member or members of the
Participant's family or to entities owned or established for the benefit of a
Participant's family.
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Sub-Committees
The Board of Directors or the Committee may appoint one or more
Sub-Committees which shall have the powers of the Committee solely with respect
to the grant of Options, provided that the aggregate number of Shares subject to
Options so granted during any calendar year to any one Participant may not
exceed 15,000.
Initial Grants
No Awards have yet been granted under the Plan, and the identity of, and
the benefits and amounts to be received by, any Participants are not presently
determinable.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the Plan
is intended to be a summary of applicable federal law as currently in effect.
State and local tax consequences may differ, and tax laws may be amended or
interpreted differently during the term of the Plan or of Awards thereunder.
Because the federal income tax rules governing Awards and related payments are
complex and subject to frequent change, and they depend on the Participant's
individual circumstances and the nature of the Award, Participants are advised
to consult their tax advisors prior to exercise of Options or other Awards or
dispositions of stock acquired pursuant to Awards.
ISOs and NQSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Code.
NQSOs need not comply with such requirements.
An optionee is not taxed on the grant or, except as described below,
exercise of an ISO. The difference between the exercise price and the fair
market value of the Shares on the exercise date will, however, be a preference
item for purposes of the alternative minimum tax, and thus an optionee could be
subject to the alternative minimum tax as a result of the exercise of an ISO. If
an optionee holds the Shares acquired upon exercise of an ISO for at least two
years following the Option grant date and at least one year following exercise,
the optionee's gain, if any, upon a subsequent disposition of such Shares is
long-term capital gain. The measure of the gain is the difference between the
proceeds received on disposition and the optionee's basis in the Shares (which
generally equals the exercise price). If an optionee disposes of Shares acquired
pursuant to exercise of an ISO before satisfying the one and two-year holding
periods described above, the optionee may recognize both ordinary income and
capital gain in the year of disposition. The amount of the ordinary income will
be the lesser of (i) the excess of the amount realized on disposition over the
optionee's adjusted basis in the Shares (usually the exercise price) or (ii) the
excess of the fair market value of the Shares on the exercise date over the
exercise price. The balance of the consideration received on such a disposition
will be long-term capital gain if the stock had been held for at least one year
following exercise of the ISO.
An optionee is not taxed on the grant of an NQSO. On exercise, however, the
optionee recognizes ordinary income equal to the difference between the Option
price and the fair market value of the shares acquired on the date of exercise.
Any gain on subsequent disposition of the shares is long term capital gain if
the shares are held for at least one year following exercise.
Participants generally are required to recognize ordinary income with
respect to Incentive Stock equal to the fair market value of the Shares (less
any amount paid to acquire the Shares) when the Shares are both received and no
longer subject to vesting restrictions, except that a Participant who receives
Incentive Stock that is subject to vesting restrictions and who properly makes
an election under Section 83(b) of the Code (an "83(b) election") within 30 days
of receipt will recognize ordinary income based on the value of the underlying
Shares (determined without regard to the vesting restrictions) on the date of
initial receipt (as opposed to the date of vesting) and may treat appreciation
subsequent to the date of receipt as capital gain (depending on the holding
period for the Shares). Participants receiving Incentive Stock should consult
their tax advisors regarding the ability and advisability of making the 83(b)
election, including the limitations on claiming a loss if the Shares decline in
value or are forfeited after receipt.
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Certain officers and significant stockholders of the Company who are
subject to Section 16(b) of the Exchange Act should consult their tax advisors
regarding the effect of Section 16(b) on the amount and timing of income to be
recognized in connection with an Award, including the ability and advisability
of making an 83(b) election in connection with an Award.
Special rules will apply in cases where a recipient of an Award pays the
exercise or purchase price of the Award or applicable withholding tax
obligations under the Plan by delivering previously owned Shares or by reducing
the number of Shares otherwise issuable pursuant to the Award. The surrender or
withholding of such Shares will in certain circumstances result in the
recognition of income with respect to such Shares or a carryover basis in the
Shares acquired, and may constitute a disposition for purposes of applying the
ISO holding periods discussed above. The Company generally will be entitled to
withhold any required taxes in connection with the exercise or payment of an
Award, and may require the Participant to pay such taxes as a condition to
exercise of an Award.
The terms of the agreements or other documents pursuant to which specific
Awards are made under the Plan may provide for accelerated vesting or payment of
an Award in connection with a change in ownership or control of the Company. In
that event and depending upon the individual circumstances of the Participant,
certain amounts with respect to such Awards may constitute "excess parachute
payments" under the "golden parachute" provisions of the Code. Pursuant to these
provisions, a Participant will be subject to a 20% excise tax on any "excess
parachute payments" and the Company will be denied any deduction with respect to
such payments. Participants should consult their tax advisors as to whether
accelerated vesting of an Award in connection with a change of ownership or
control of the Company would give rise to an excess parachute payment.
As described above, Awards under the Plan may qualify as "performance-based
compensation" under Section 162(m) of the Code in order to preserve federal
income tax deductions by the Company with respect to any compensation relating
to an Award that is paid to a Covered Employee (as defined in Section 162).
Compensation for any year that is attributable to an Award granted to a Covered
Employee and that does not so qualify may not be deductible by the Company to
the extent such compensation, when combined with other compensation paid to such
employee for the year, exceeds $1,000,000.
For federal income tax purposes, the maximum compensation payable to
employees pursuant to the Plan, during the term of the Plan and Awards granted
thereunder, is equal to the number of Shares with respect to which Incentive
Bonuses and Incentive Stock may be issued thereunder, multiplied by the value of
such Shares on the date such compensation is measured, plus the number of Shares
that may be issued pursuant to Options multiplied by the excess of the value of
the underlying Shares on the date the compensation is measured over the
applicable exercise price.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE ADOPTION OF THE 1999 STOCK INCENTIVE PLAN.
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 2000 Annual
Meeting of Stockholders of the Company must be received by the Secretary of the
Company not later than May 29, 2000, to be considered for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. The
Company may have discretionary authority to vote on a a stockholder proposal if
it is not received by the Company before August 13, 2000. The Company
anticipates that next year's annual meeting will take place on October 24, 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
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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 1999 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 27, 1999 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,
/s/ Samuel A. Miley
Samuel A. Miley
Vice President, General Counsel and Secretary
Nashville, Tennessee
September 27, 1999
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APPENDIX A
1999 STOCK INCENTIVE PLAN
OF
MAGNETEK, INC.
SECTION 1. PURPOSE OF PLAN
The purpose of this 1999 Stock Incentive Plan of MagneTek, Inc. (this
"Plan") is to enable MagneTek, Inc., a Delaware corporation (the "Company"), to
attract, retain and motivate its officers and other key employees, and to
further align the interests of such persons with those of the stockholders of
the Company by providing for or increasing the proprietary interest of such
persons in the Company.
SECTION 2. ADMINISTRATION OF PLAN
2.1 Composition of Committee. Subject to Section 2.4, this Plan shall be
administered by the Compensation Committee of the Board of Directors (the
"Committee"), as appointed from time to time by the Board of Directors,
provided, however, that (a) with respect to any Award (as defined in Section
5.1) that is intended to satisfy the conditions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") the term
"Committee" shall refer to a committee of two or more "non-employee directors"
as determined for purposes of applying Exchange Act Rule 16b-3; and (b) with
respect to any Award that is intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), the term "Committee" shall refer to a
committee of two or more "outside directors" as determined for purposes of
applying Code Section 162(m). The Board of Directors shall fill vacancies on and
from time to time may remove or add members to the Committee. The Committee
shall act pursuant to a majority vote or unanimous written consent. The
Committee may designate the Secretary of the Company or other Company employees
to assist the Committee in the administration of this Plan, and may grant
authority to such persons to execute agreements or other documents evidencing
Awards made under this Plan or other documents entered into under this Plan on
behalf of the Committee or the Company.
2.2 Powers of the Committee. Subject to the express provisions of this
Plan, the Committee shall be authorized and empowered to do all things necessary
or desirable, in its sole discretion, in connection with the administration of
this Plan, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations relating to
this Plan and to define terms not otherwise defined herein; provided that,
unless the Committee shall specify otherwise, for purposes of this Plan (i)
the term "fair market value" shall mean, as of any date, the closing price
for a Share (as defined in Section 3.1) reported for that date by the New
York Stock Exchange (or such other stock exchange or quotation system on
which Shares are then listed or quoted) or, if no Shares are traded on the
New York Stock Exchange (or such other stock exchange or quotation system)
on the date in question, then for the next preceding date for which Shares
traded on the New York Stock Exchange (or such other stock exchange or
quotation system); and (ii) the term "Company" shall mean the Company and
its subsidiaries and affiliates, unless the context otherwise requires;
(b) to determine which persons are Eligible Persons (as defined in
Section 4), to which of such Eligible Persons, if any, Awards shall be
granted hereunder and the timing of any such Awards, and to grant Awards;
(c) to determine the number of Shares subject to Awards and the
exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any
performance goals applicable to Awards;
(e) to prescribe and amend the terms of the agreements or other
documents evidencing Awards made under this Plan (which need not be
identical);
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(f) to determine whether, and the extent to which, adjustments are
required pursuant to Section 10;
(g) to interpret and construe this Plan, any rules and regulations
under this Plan and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions in good faith and
for the benefit of the Company; and
(h) to make all other determinations deemed necessary or advisable for
the administration of this Plan.
2.3 Determinations of the Committee. All decisions, determinations and
interpretations by the Committee regarding this Plan shall be final and binding
on all Eligible Persons and Participants. The Committee shall consider such
factors as it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any director, officer or employee of the Company and such attorneys, consultants
and accountants as it may select.
2.4. Authority of the Board of Directors. The Board of Directors, in its
sole discretion, may exercise any authority of the Committee under this Plan in
lieu of the Committee's exercise thereof.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 Aggregate Limits. At any time, the aggregate number of shares of the
Company's Common Stock, $.01 par value ("Shares"), issued and issuable pursuant
to all Awards (including all ISOs (as defined in Section 5.1(a))) granted under
this Plan shall not exceed 1,500,000, plus the number of shares subject to
options granted under the second Amended and Restated 1989 Incentive Stock
Compensation Plan of MagneTek, Inc. but which shares are not issued as of the
cancellation, expiration or forfeiture of such options; provided that no more
than 350,000 of such Shares may be issued pursuant to all Incentive Bonuses and
Incentive Stock Awards granted under this Plan, and provided further that,
notwithstanding Section 3.3, the aggregate number of Shares that may be issued
pursuant to the exercise of ISOs granted under this Plan shall not exceed
1,500,000. Such limits shall be subject to adjustment as provided in Section 10.
The Shares subject to this Plan may be either reacquired by the Company,
including Shares purchased in the open market, or authorized but unissued
Shares.
3.2 Code Section 162(m) Limits. The aggregate number of Shares subject to
Options granted under this Plan during any calendar year to any one Employee
shall not exceed 500,000. The aggregate number of Shares issued or issuable
under all Awards granted under this Plan, other than Options, during any
calendar year to any one Employee shall not exceed 100,000. Notwithstanding
anything to the contrary in this Plan, the foregoing limitations shall be
subject to adjustment under Section 10 only to the extent that such adjustment
will not affect the status of any Award intended to qualify as "performance
based compensation" under Code Section 162(m). The foregoing limitations shall
not apply to the extent that they are no longer required in order for
compensation in connection with grants under this Plan to be treated as
"performance-based compensation" under Code Section 162(m).
3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number
of Shares issued under this Plan at any time shall equal only the number of
Shares actually issued upon exercise or settlement of an Award and shall not
include Shares subject to Awards that have been canceled, expired or forfeited
or Shares subject to Awards that have been used in payment or satisfaction of
the purchase price, exercise price or tax withholding obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person who is an officer or other key employee of the Company as
determined, in its discretion and for purposes only of this Plan, by the
Committee (an "Eligible Person"), shall be eligible to be considered for the
grant of Awards hereunder. A "Participant" is any current or former Eligible
Person to whom an Award has been made and any person (including any estate) to
whom an Award has been assigned or transferred pursuant to Section 9.1.
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SECTION 5. PLAN AWARDS
5.1 Award Types. The Committee, on behalf of the Company, is authorized
under this Plan to enter into certain types of arrangements with Employees and
to confer certain benefits on them. The following arrangements or benefits are
authorized under this Plan if their terms and conditions are not inconsistent
with the provisions of this Plan: Options, Incentive Bonuses and Incentive
Stock. Such arrangements and benefits are sometimes referred to herein as
"Awards." The authorized types of arrangements and benefits for which Awards may
be granted are defined as follows:
(a) Options: An Option is a right granted under Section 6 to purchase
a number of Shares at such exercise price, at such times, and on such other
terms and conditions as are specified in the agreement or terms and
conditions or other document evidencing the Award (the "Option Document").
Options intended to qualify as Incentive Stock Options ("ISOs") pursuant to
Code Section 422 and Options not intended to qualify as ISOs ("Nonqualified
Options") may be granted under Section 6.
(b) Incentive Bonus: An Incentive Bonus is a bonus opportunity awarded
under Section 7 pursuant to which a Participant may become entitled to
receive an amount based on satisfaction of such performance criteria as are
specified in the agreement or other document evidencing the Award (the
"Incentive Bonus Document").
(c) Incentive Stock: Incentive Stock is an award or issuance of Shares
made under Section 8, the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of time to
such conditions (including continued employment or performance conditions)
and terms as are expressed in the agreement or other document evidencing
the Award (the "Incentive Stock Document").
5.2 Grants of Awards. An Award may consist of one such arrangement or
benefit or two or more of them in tandem or in the alternative.
SECTION 6. OPTIONS
The Committee may grant an Option or provide for the grant of an Option,
either from time to time in the discretion of the Committee or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals, the satisfaction of an event or condition
within the control of the recipient of the Award or within the control of
others.
6.1 Option Document. Each Option Document shall contain provisions
regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions of
exercisability as may be determined from time to time by the Committee, (e)
restrictions on the transfer of the Option and forfeiture provisions and (f)
such further terms and conditions, in each case not inconsistent with this Plan
as may be determined from time to time by the Committee. Option Documents
evidencing ISOs shall contain such terms and conditions as may be necessary to
qualify, to the extent determined desirable by the Committee, with the
applicable provisions of Section 422 of the Code.
6.2 Option Price. The purchase price per share of the Shares subject to
each Option granted under this Plan shall equal or exceed 100% of the fair
market value of such Stock on the date the Option is granted, except that (a)
the exercise price of an Option may be higher or lower in the case of Options
granted to an employee of a company acquired by the Company in assumption and
substitution of options held by such employee at the time such company is
acquired, and (b) in the event an Employee is required to pay or forego the
receipt of any cash amount in consideration of receipt of an Option, the
exercise price plus such cash amount shall equal or exceed 100% of the fair
market value of such Stock on the date the Option is granted.
6.3 Option Term. The "Term" of each Option granted under this Plan,
including any ISOs, shall be 10 years from the date of its grant, unless the
Committee provides otherwise.
6.4 Option Vesting. Options granted under this Plan shall be exercisable
at such time and in such installments during the period prior to the expiration
of the Option's Term as determined by the Committee. The Committee shall have
the right to make the timing of the ability to exercise any Option granted under
this
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Plan subject to such performance requirements as deemed appropriate by the
Committee. At any time after the grant of an Option the Committee may reduce or
eliminate any restrictions surrounding any Participant's right to exercise all
or part of the Option.
6.5 Termination of Employment. Subject to Section 11, upon a termination
of employment by a Participant prior to the full exercise of an Option, the
unexercised portion of the Option shall be subject to such procedures as the
Committee may establish.
6.6 Payment of Exercise Price. The exercise price of an Option shall be
paid in the form of one of more of the following, as the Committee shall
specify, either through the terms of the Option Document or at the time of
exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of
capital stock of the Company that have been held by the Participant for such
period of time as the Committee may specify, (c) other property deemed
acceptable by the Committee, (d) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Option or (e) any combination of
(a) through (d).
6.7 No Option Repricing; No Reload Options. Without the approval of
stockholders, the Company shall not (a) reprice any Options or (b) provide for
"reload options," which means that unless approved by stockholders the Company
shall not provide for Options to be granted automatically in connection with and
to the extent of the exercise of other Options. For purposes of this Plan, the
term "reprice" means amending, canceling or replacing Options within the meaning
of Item 402(i) under Securities and Exchange Commission Regulation S-K including
by (i) reducing the exercise price of outstanding Options and (ii) canceling
outstanding Options and granting new Options to the holders of canceled Options.
SECTION 7. INCENTIVE BONUSES
Each Incentive Bonus Award will confer upon the Employee the opportunity to
earn a future payment tied to the level of achievement with respect to one or
more performance criteria established for a performance period of not less than
one year.
7.1 Incentive Bonus Document. Each Incentive Bonus Document shall contain
provisions regarding (a) the target and maximum amount payable to the
Participant as an Incentive Bonus, (b) the performance criteria and level of
achievement versus these criteria that shall determine the amount of such
payment, (c) the term of the performance period as to which performance shall be
measured for determining the amount of any payment, (d) the timing of any
payment earned by virtue of performance, (e) restrictions on the alienation or
transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions and (g) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee. The maximum amount payable as an Incentive Bonus may be a multiple of
the target amount payable, but the maximum amount payable pursuant to that
portion of an Incentive Bonus Award granted under this Plan for any fiscal year
to any Participant that is intended to satisfy the requirements for "performance
based compensation" under Code Section 162(m) shall not exceed $1,000,000.
7.2 Performance Criteria. The Committee shall establish the performance
criteria and level of achievement versus these criteria that shall determine the
target and maximum amount payable under an Incentive Bonus Award, which criteria
may be based on financial performance and/or personal performance evaluations.
The Committee may specify the percentage of the target Incentive Bonus that is
intended to satisfy the requirements for "performance-based compensation" under
Code Section 162(m). Notwithstanding anything to the contrary herein, the
performance criteria for any portion of an Incentive Bonus that is intended by
the Committee to satisfy the requirements for "performance-based compensation"
under Code Section 162(m) shall be a measure based on one or more Qualifying
Performance Criteria (as defined in Section 9.2) selected by the Committee and
specified at the time the Incentive Bonus Award is granted. The Committee shall
certify the extent to which any Qualifying Performance Criteria has been
satisfied, and the amount payable as a result thereof, prior to payment of any
Incentive Bonus that is intended to satisfy the requirements for
"performance-based compensation" under Code Section 162(m).
7.3 Timing and Form of Payment. The Committee shall determine the timing
of payment of any Incentive Bonus. The Committee may provide for or, subject to
such terms and conditions as the Committee
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<PAGE> 30
may specify, may permit a Participant to elect for the payment of any Incentive
Bonus to be deferred to a specified date or event.
7.4 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the amount paid under an Incentive Bonus Award on account of
either financial performance or personal performance evaluations may be reduced
by the Committee on the basis of such further considerations as the Committee
shall determine.
SECTION 8. INCENTIVE STOCK
Incentive Stock is an award or issuance of Shares the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment or
performance conditions) and terms as the Committee deems appropriate.
8.1 Incentive Stock Document. Each Incentive Stock Document shall contain
provisions regarding (a) the number of Shares subject to such Award or a formula
for determining such, (b) the performance criteria, if any, and level of
achievement versus these criteria that shall determine the number of Shares
granted, issued, retainable and/or vested, (c) the period, if any, as to which
performance shall be measured for determining achievement of performance or, if
not subject to performance criteria, the period of continued employment upon
which vesting of the Shares is subject, which period in any case (except in the
event of death or disability of the Participant or upon a Change of Control (as
defined in Section 11.2)) shall be not less than one year, (d) forfeiture, (e)
transferability and (f) such further terms and conditions not inconsistent with
this Plan as may be determined from time to time by the Committee.
8.2 Sale Price. Subject to the requirements of applicable law, the
Committee shall determine the price, if any, at which Shares of Incentive Stock
shall be sold or awarded to an Eligible Person, which may vary from time to time
and among Eligible Persons and which may be below the fair market value of such
Shares at the date of grant or issuance.
8.3 Performance Criteria. The grant, issuance, retention and/or vesting of
each Incentive Share may but need not be subject to such performance criteria
and level of achievement versus these criteria as the Committee shall determine,
which criteria may be based on financial performance and/or personal performance
evaluations. Notwithstanding anything to the contrary herein, the performance
criteria for any Incentive Stock that is intended to satisfy the requirements
for "performance-based compensation" under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria selected by the
Committee and specified at the time the Incentive Stock Award is granted.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under an Incentive Stock Award on account of either financial performance
or personal performance evaluations may be reduced by the Committee on the basis
of such further considerations as the Committee shall determine.
8.5 Termination of Employment. Subject to Section 11, upon a termination
of employment by a Participant prior to the vesting of or the lapsing of
restrictions on Incentive Stock, the Incentive Stock Awards granted to such
Participant shall be subject to such procedures as determined by the Committee.
SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS
9.1 Transferability. Unless the agreement or other document evidencing an
Award (or an amendment thereto authorized by the Committee) expressly states
that the Award is transferable as provided hereunder, no Award granted under
this Plan, nor any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any manner prior to
the vesting or lapse of any and all restrictions applicable thereto, other than
by will or the laws of descent and distribution or pursuant to a "domestic
relations order," as defined in the Code. The Committee may grant an Award or
amend an outstanding Award to provide that the Award is transferable or
assignable to a member or members of the Participant's "immediate family," as
such term is defined in Rule 16a-1(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or to a trust for the benefit solely of a
member or members of
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the Participant's immediate family, or to a partnership or other entity whose
only owners are members of the Participant's immediate family, provided that
following any such transfer or assignment the Award will remain subject to
substantially the same terms applicable to the Award while held by the
Participant, as modified as the Committee shall determine appropriate, and the
transferee shall execute an agreement agreeing to be bound by such terms.
9.2 Qualifying Performance Criteria. For purposes of this Plan, the term
"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years' results or to a
designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow, (b) earnings per share, (c) earnings before interest,
taxes and amortization), (d) return on equity, (e) total stockholder return, (f)
return on capital, (g) return on assets or net assets, (h) revenue, (i) income
or net income, (j) operating income or net operating income, (k) operating
profit or net operating profit, (l) operating margin, (m) return on operating
revenue, (n) market share and (o) overhead or other expense reduction. The
Committee shall appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation or
claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
stockholders for the applicable year.
9.3 Dividends. Unless otherwise provided by the Committee, no adjustment
shall be made in Shares issuable under Awards on account of cash dividends that
may be paid or other rights that may be issued to the holders of Shares prior to
their issuance under any Award. The Committee shall specify whether dividends or
dividend equivalent amounts shall be paid to any Participant with respect to the
Shares subject to any Award that have not vested or been issued or that are
subject to any restrictions or conditions on the record date for dividends.
9.4 Documents Evidencing Awards. The Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which for
purposes of this Plan shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of this Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing Awards under
this Plan and may, but need not, require as a condition to any such agreement's
or document's effectiveness that such agreement or document be executed by the
Participant and that such Participant agree to such further terms and conditions
as specified in such agreement or document. The grant of an Award under this
Plan shall not confer any rights upon the Participant holding such Award other
than such terms, and subject to such conditions, as are specified in this Plan
as being applicable to such type of Award (or to all Awards) or as are expressly
set forth in the agreement or other document evidencing such Award.
9.5 Tandem Stock or Cash Rights. Either at the time an Award is granted or
by subsequent action, the Committee may, but need not, provide that an Award
shall contain as a term thereof, a right, either in tandem with the other rights
under the Award or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a combination
thereof, the amount of which is determined by reference to the value of the
Award.
9.6 Financing. The Committee may not provide financing to a Participant to
pay the purchase price of any Award or to pay the amount of taxes required by
law to be withheld with respect to any Award.
9.7 Sub-Committees. The Board of Directors or the Committee may from time
to time appoint one or more Sub-Committees (as defined below) comprised of one
or more officers, directors or others, which Sub-Committee shall have the powers
of the Committee described in Section 6 of this Plan solely with respect to the
grant of Options (as defined in Section 5.1(a)) to employees who are not then
officers of the Company
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<PAGE> 32
within the meaning of Rule 16a-1(f) promulgated under the Exchange Act, if and
as such Rule is then in effect. Each such Sub-Committee may be subject to any
such additional restrictions or limitation as the Board of Directors or the
Committee may impose at any time. Each Sub-Committee so appointed may be
disbanded by the Board of Directors or the Committee at any time, provided that
no such termination shall affect the validity of any Option theretofore approved
by any such Sub-Committee. "Sub-Committee" shall mean any Sub-Committee,
comprised of one or more individuals, of the Committee appointed as provided in
Section 2.1. The aggregate number of Shares subject to Options granted by a
Sub-Committee hereunder during any calendar year to any one Employee shall not
exceed 15,000.
SECTION 10. CHANGES IN CAPITAL STRUCTURE
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (a) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to Awards theretofore granted under
this Plan and the exercise or settlement price of such Awards, provided,
however, that such adjustment shall be made in such a manner that will not
affect the status of any Award intended to qualify as an ISO under Code Section
422 or as "performance based compensation" under Code Section 162(m) and (b) the
maximum number and type of shares or other securities that may be issued
pursuant to such Awards thereafter granted under this Plan.
SECTION 11. CHANGE OF CONTROL
11.1 Effect of Change of Control. The Committee may, through the terms of
the Award or otherwise, provide that any or all of the following shall occur, in
connection with a Change of Control or a Change of Control Transaction (as
defined in Section 11.2), or upon termination of the Participant's employment
following a Change of Control or a Change of Control Transaction: (a) in the
case of an Option, the acceleration of the Participant's ability to exercise any
portion of the Option not previously exercisable or the payment to the
Participant of cash equal to the difference between the exercise price and the
price being paid to the holders of Shares, (b) in the case of an Incentive
Bonus, the acceleration of the Participant's right to receive a payment equal to
the target amount payable or, if greater, a payment based on performance through
a date determined by the Committee prior to the Change of Control and (c) in the
case of Shares issued in payment of any Incentive Bonus, and/or in the case of
Incentive Stock, the lapse and expiration of any conditions to the grant,
issuance, retention, vesting or transferability of, or any other restrictions
applicable to, such Award. The Committee also may, through the terms of the
Award or otherwise, provide for an absolute or conditional exercise, payment or
lapse of conditions or restrictions on an Award that shall only be effective if,
upon the announcement of a Change of Control Transaction, no provision is made
in such Change of Control Transaction for the exercise, payment or lapse of
conditions or restrictions on the Award, or other procedure whereby the
Participant may realize the full benefit of the Award.
11.2 Definitions. Unless the Committee provides otherwise,
"Change of Control" means the first to occur of the following:
(a) the merger or consolidation of the Company with or into another
corporation;
(b) the acquisition by another corporation person or group of all or
substantially all of the Company's assets or 40% or more of the Company's
then outstanding voting stock;
(c) the liquidation or dissolution of the Company; or
(d) during any period of 12 consecutive months, individuals who at the
beginning of such 12-month period constituted the Board of Directors
(together with any new directors whose election by the Board of
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<PAGE> 33
Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office,
provided, however, that a Change of Control will not be deemed to have occurred
in respect of a merger in which (x) the Company is the surviving corporation,
(y) no person or group acquires 40% or more of the Company's outstanding voting
stock and (z) the Shares outstanding prior to the merger remain outstanding
thereafter; and provided further, that a merger or consolidation will not be
considered a Change of Control if such transaction results only in the
reincorporation of the Company in another jurisdiction or its restructuring into
holding company form.
"Change of Control Transaction" shall mean any tender offer, offer,
exchange offer, solicitation, merger, consolidation, reorganization or other
transaction that is intended to or reasonably expected to result in a Change of
Control.
SECTION 12. TAXES
12.1 Withholding Requirements. The Committee may make such provisions or
impose such conditions as it may deem appropriate for the withholding or payment
by a Participant of any taxes that the Committee determines are required in
connection with any Award granted under this Plan, and a Participant's rights in
any Award are subject to satisfaction of such conditions.
12.2 Payment of Withholding Taxes. Notwithstanding the terms of Section
12.1, the Committee may provide in the agreement or other document evidencing an
Award or otherwise that all or any portion of the taxes required to be withheld
by the Company or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise of a Nonqualified Option or the
exercise, vesting, settlement or transfer of any other Award shall be paid or,
at the election of the Participant, may be paid by the Company by withholding
shares of the Company's capital stock otherwise issuable or subject to such
Award, or by the Participant delivering previously owned shares of the Company's
capital stock, in each case having a fair market value equal to the amount
required or elected to be withheld or paid. Any such election is subject to such
conditions or procedures as may be established by the Committee and may be
subject to disapproval by the Committee.
SECTION 13. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue this Plan or any agreement or
other document evidencing an Award made under this Plan, but no such amendment
shall, without the approval of the stockholders of the Company:
(a) increase the maximum number of shares of Common Stock for which
Awards may be granted under this Plan;
(b) reduce the price at which Options may be granted below the price
provided for in Section 6.2;
(c) reduce the exercise price of outstanding Options;
(d) after any Change of Control, impair the rights of any Award holder
without such holder's consent;
(e) extend the term of this Plan;
(f) change the class of persons eligible to be Participants;
(g) provide for the automatic grant of Options based upon the exercise
of Options by holders of Options; or
(h) increase the number of shares that are eligible for non-Option
Awards.
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<PAGE> 34
SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
This Plan, the grant and exercise of Awards thereunder, and the obligation
of the Company to sell, issue or deliver Shares under such Awards, shall be
subject to all applicable federal, state and foreign laws, rules and regulations
and to such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a Participant's name
or deliver any Shares prior to the completion of any registration or
qualification of such Shares under any federal, state or foreign law or any
ruling or regulation of any government body which the Committee shall determine
to be necessary or advisable. This Plan is intended to constitute an unfunded
arrangement for a select group of management or other key employees, directors
and consultants.
No Option shall be exercisable unless a registration statement with respect
to the Option is effective or the Company has determined that such registration
is unnecessary. Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person receiving an Award
and/or Shares pursuant to any Award may be required by the Company to give a
representation in writing that such person is acquiring such Shares for his or
her own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
SECTION 15. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual's employment at any time. The agreements or other documents
evidencing Awards may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.
SECTION 16. EFFECTIVENESS AND EXPIRATION OF PLAN
This Plan shall be effective on the date the Company's stockholders adopt
this Plan. All Awards granted under this Plan are subject to, and may not be
exercised before, the approval of this Plan by the stockholders prior to the
first anniversary date of the effective date of this Plan, by the affirmative
vote of the holders of a majority of the outstanding shares of the Company
present, or represented by proxy, and entitled to vote, at a meeting of the
Company's stockholders or by written consent in accordance with the laws of the
State of Delaware; provided that if such approval by the stockholders of the
Company is not forthcoming, all Awards previously granted under this Plan shall
be void. No Awards shall be granted pursuant to this Plan more than 10 years
after the effective date of this Plan.
SECTION 17. NON-EXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as either may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
SECTION 18. GOVERNING LAW
This Plan and any agreements or other documents hereunder shall be
interpreted and construed in accordance with the laws of the State of Delaware
and applicable federal law. The Committee may provide that any dispute as to any
Award shall be presented and determined in such forum as the Committee may
specify, including through binding arbitration. Any reference in this Plan or in
the agreement or other document evidencing any Award to a provision of law or to
a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.
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<PAGE> 35
---------
---------
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below.
</TABLE>
Nominees: Andrew G. Galef, Thomas G. Boren, Dewain K. Cross, Paul J. Kofmehl,
Frederick D. Lawrence 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. Approval of adoption of the 1999 Stock Incentive Plan of MagneTek, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. 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.
I plan to attend the meeting.
Yes [ ] No [ ]
Change of Address or Comments Mark Here [ ]
Receipt of copies of the Annual Report to
Stockholders, the Notice of the Annual Meeting of
Stockholders and the Proxy Statement dated
September 27, 1999 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.)
Votes MUST be indicated (x) in Black or Blue ink.
[ ]
Please return this proxy promptly in the enclosed envelope, which requires no
postage if mailed in the U.S.
PROXY
MAGNETEK, INC.
ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 19, 1999
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 19, 1999,
at 10:00 a.m. and any adjournment thereof.
1. Election of Directors
Nominees are: Andrew G. Galef, Thomas G. Boren, Dewain K. Cross, Paul J.
Kofmehl, Frederick D. Lawrence and Robert E. Wycoff
2. Approval of adoption of the 1999 Stock Incentive Plan of MagneTek, Inc.
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> 36
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
participant, 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, Thomas G. Boren, Dewain K. Cross, Paul J.
Kofmehl, Frederick D. Lawrence and Robert E. Wycoff.
[ ] FOR all nominees listed above.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
[ ] EXCEPTIONS:
-----------------------------------------------------------------------
2. Approval of adoption of the 1999 Stock Incentive Plan of MagneTek, Inc.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
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
