<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. )
<TABLE>
<S> <C>
Filed by the registrant /x/ / / Confidential, for Use of the
Filed by a party other than the registrant / / Commission Only (as permitted
Check the appropriate box: by Rule 14a-6(e)(2)
</TABLE>
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LSI Industries 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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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: 1/
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
- ---------------
1. Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
[LSI INDUSTRIES LOGI]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 14, 1996
Dear Shareholder:
We cordially invite you to attend our Annual Shareholders' Meeting to
be held at the Company's headquarters located at 10000 Alliance Road,
Cincinnati, Ohio on Thursday, November 14, 1996 at 10:00 a.m. Eastern Standard
Time.
The purposes of this Annual Meeting are to consider and act upon the
following proposals:
1) To elect three Class B directors to hold office until the
Annual Meeting of Shareholders in 1998 and until their
respective successors are duly elected and qualified; and
2) To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for fiscal year
1997; and
3) To transact such other business as may properly be
brought before the meeting or any other adjournment
thereof.
Shareholders of record at the close of business on Wednesday, September
18, 1996 are entitled to notice and to vote at the meeting. This notice is given
pursuant to an order of the Board of Directors.
Following the meeting, we will review the Company's progress over the
last year and our plans for the future, and will have an open house at the
Cincinnati Operations. Our directors and executive officers will be available to
discuss the Company's business with you.
Yours truly,
/s/ Robert J. Ready
Robert J. Ready
Chairman of the Board and President
Dated: September 26, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, SIGN AND PROMPTLY
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED BY
WRITTEN NOTICE OF REVOCATION, THE SUBMISSION OF A LATER PROXY OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
<PAGE> 3
LSI INDUSTRIES INC.
10000 ALLIANCE ROAD
CINCINNATI, OHIO 45242
TELEPHONE (513) 793-3200
------------------------------------------
P R O X Y S T A T E M E N T
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 14, 1996
INTRODUCTION
The Board of Directors of LSI Industries Inc. ("LSI Industries" or the
"Company") is requesting your Proxy for the Annual Meeting of Shareholders on
November 14, 1996, and at any adjournment thereof, pursuant to the foregoing
Notice. This Proxy Statement and the accompanying proxy were first mailed on
September 27, 1996, to shareholders of record on September 18, 1996.
VOTING AT ANNUAL MEETING
GENERAL INFORMATION
Shareholders may vote in person or by proxy at the Annual Meeting.
Proxies given may be revoked at any time by filing with the Company either a
written revocation or a duly executed proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person. All shares will be voted
as specified on each properly executed proxy. If no choice is specified, the
shares will be voted as recommended by the Board of Directors, namely "FOR"
Proposal 1 to elect the three persons nominated as Class B directors by the
Board of Directors, and "FOR" Proposal 2 (Ratification of Appointment of
Independent Public Accountants).
As of September 18, 1996, the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting, LSI Industries had
9,023,121 Common Shares outstanding. Each share is entitled to one vote. Only
shareholders of record at the close of business on September 18, 1996, will be
entitled to vote at the Annual Meeting. Abstentions and shares otherwise not
voted for any reason, including broker non-votes, will have no effect on the
outcome of any vote taken at the Annual Meeting. The principal shareholders have
indicated their intention to vote in favor of management proposals.
-1-
<PAGE> 4
PRINCIPAL SHAREHOLDERS
As of August 30, 1996, the following person is the only shareholder
known by the Company to own beneficially 5% or more of its outstanding Common
Shares:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership Of Class
<S> <C> <C>
Robert J. Ready 543,687 (a) 5.97%
</TABLE>
(a) Includes exercisable options for 54,602 shares and 130,488 shares held
in trust for Mr. Ready's children.
The business address of Mr. Ready is: 10000 Alliance Road, Cincinnati, Ohio
45242. Mr. Ready disclaims beneficial ownership of shares held by or in trust
for his children.
VOTING BY PROXY
All properly signed proxies will, unless a different choice is
indicated, be voted "FOR" the election of all three nominees for Class B
directors proposed by the Board of Directors and "FOR" ratification of the
appointment of independent public accountants.
If any other matters come before the meeting or any adjournment, each
proxy will be voted in the discretion of the individuals named as proxies on the
card.
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the Notice for
the 1997 Annual Meeting of Shareholders must submit their proposals to the
Company at its offices on or before May 30, 1997.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Code of Regulations provides that the Board of Directors
be composed of two classes of directors, Class A and Class B, with each class
elected for a two-year term. One class is elected annually. The terms of the
Class A directors expire at the 1997 Annual Meeting of Shareholders while the
terms of the Class B directors expire at the 1996 Annual Meeting of
Shareholders.
The Board is nominating for reelection its present Class B directors,
namely, Allen L. Davis, James P. Sferra, and Donald E. Whipple. Proxies
solicited by the Board will be voted for the election of these three nominees.
All Class B directors elected at the Annual Meeting will be elected to
hold office for two years and until their successors are elected and qualified.
In voting to elect directors, shareholders are entitled to one vote for
each share held of record. Shareholders are not entitled to cumulate their votes
in the election of directors.
-2-
<PAGE> 5
Should any of the nominees become unable to serve, proxies will be
voted for any substitute nominee designated by the Board. Nominees receiving the
highest number of votes cast for the positions to be filled will be elected.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote in FAVOR of each of the
directors nominated in this Proxy Statement. Nominees receiving the
highest number of votes will be elected.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed Arthur Andersen LLP as the Company's
independent public accountants for fiscal 1997. Arthur Andersen LLP has been the
independent public accounting firm for the Company since March, 1996. Although
not required by law, the Board is seeking shareholder ratification of its
selection. If ratification is not obtained, the Board intends to continue the
employment of Arthur Andersen LLP at least through fiscal 1997.
Representatives of Arthur Andersen LLP are expected to be present at
the Shareholders' Meeting and will be given an opportunity to comment, if they
so desire, and to respond to appropriate questions that may be asked by
shareholders.
During fiscal year 1996 the Company filed a Form 8-K related to a
change in its certifying accountant:
(a) On March 29, 1996, the Company determined to
terminate the engagement of Price Waterhouse LLP (Price
Waterhouse), the Company's independent accountants, who were
previously engaged as the independent accountant to audit the
consolidated financial statements of the Company.
(b) On March 29, 1996, the Company selected Arthur
Andersen LLP (Arthur Andersen) as the Company's independent
public accountants. Following a review of the Company's
accounting services in recent years, the Board of Directors
initiated a process to solicit proposals from both Price
Waterhouse and Arthur Andersen, who also serves as the
Company's tax advisor. The Audit Committee of the Company's
Board of Directors, after reviewing audit proposals from both
Price Waterhouse and Arthur Andersen, approved the selection
of Arthur Andersen as the Company's independent public
accountants and replacement for Price Waterhouse, effective
March 29, 1996.
(c) Price Waterhouse's report on the Company's
financial statements for fiscal years 1994 and 1995 did not
contain an adverse opinion or a disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope, or
accounting principles. During the Company's fiscal years 1994
and 1995 and through March 29, 1996, there were no
disagreements with Price Waterhouse on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which
disagreement(s), if not resolved to the satisfaction of Price
Waterhouse, would have caused them to make a reference to the
subject matter of the disagreement(s) in connection with its
report. The Company has authorized Price Waterhouse to respond
fully to any inquiries by Arthur Andersen.
-3-
<PAGE> 6
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote in FAVOR of Proposal 2. The
affirmative vote of a majority of Common Shares voting at the Annual
Meeting is required for ratification of this proposal.
OTHER MATTERS
Any other matters considered at the Annual Meeting, including
adjournment, will require the affirmative vote of a majority of Common Shares
voting.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of LSI Industries are:
<TABLE>
<CAPTION>
Common Shares
Beneficially Owned
Name and Age Position Amount Percentage
<S> <C> <C> <C>
Robert J. Ready (a) Chairman, President, and 543,687 (d) 5.97%
56 Chief Executive Officer
James P. Sferra (a) Executive Vice President- 214,439 (e) 2.35%
57 Manufacturing; Secretary
and Director
Donald E. Whipple (a) Director 182,667 (e) 2.01%
60
John N. Taylor, Jr. (b)(c) Director 241,370 (e) 2.65%
61
Michael J. Burke (b)(c) Director and Assistant 30,000 (e) *
53 Secretary
Allen L. Davis (b)(c) Director 27,812 (e) *
54
Peter F. Carey President, LSI Image Group 34,063 (e) *
49
Ronald S. Stowell Chief Financial Officer and 14,740 (e) *
46 Treasurer
All Directors and Executive Officers ________ ______
as a Group (Eight Persons) 1,288,778 14.15%
========= ======
</TABLE>
-4-
<PAGE> 7
- ------------------------------
Information as of August 30, 1996
(a) Executive Committee Member
(b) Compensation Committee Member
(c) Audit Committee Member
(d) See "Principal Shareholders"
(e) Includes options exercisable within 60 days for Mr. Sferra of 19,018
shares, Mr. Whipple of 8,119 shares, Mr. Taylor of 5,500 shares, Mr.
Burke of 16,000 shares, Mr. Davis of 16,000 shares, Mr. Carey of 20,751
shares and Mr. Stowell of 10,040 shares; and indirect beneficial
ownership for Mr. Sferra of 26,931 shares, Mr. Whipple of 19,947
shares, and Mr. Taylor of 143,860 shares
* Less than 1%
Robert J. Ready is the founder of the Company and has been its
President and a Director since 1976. Mr. Ready was appointed Chairman of the
Board of Directors in February 1985. Mr. Ready is also a Director of Meridian
Diagnostics, Inc. (a Nasdaq listed company) and of Superior Label Systems, Inc.
James P. Sferra shared in the formation of the Company. Mr. Sferra has
served as Corporate Vice President of Manufacturing from November 1989 to
November 1992, and as Executive Vice President-Manufacturing since then. Prior
to that, he served as Vice President-Manufacturing of LSI Lighting Systems, a
division of the Company. Mr. Sferra has served as a Director since 1976, and was
appointed Secretary in 1996.
Donald E. Whipple shared in the formation of the Company. Mr. Whipple
served as President of the LSI Lighting Systems and the Insight Graphics
divisions of LSI Industries from November 1989 and November 1991, respectively,
until his retirement in June 1996. Prior to that, he served as Executive Vice
President of the Company. Mr. Whipple has served as Director since 1976, and as
Secretary from 1976 to 1996.
John N. Taylor, Jr. was elected a Director of the Company in November
1992. Mr. Taylor is Chairman and Chief Executive Officer of Kurz-Kasch, Inc., a
specialty manufacturer of plastic-based components, precision solenoids, stators
and coil products headquartered in Dayton, Ohio. Prior to that, Mr. Taylor
founded and was Chairman and Chief Executive Officer of Component Technology
Corp., a Nasdaq listed company in Erie, Pennsylvania, until its sale in 1989.
Mr. Taylor is a Director of Robbins & Myers Inc. (a Nasdaq listed company),
Dayton, Ohio, and serves as a Director of the Cincinnati branch of the Federal
Reserve Bank of Cleveland.
Michael J. Burke was elected a Director and Assistant Secretary of the
Company in February 1985. Mr. Burke is a Managing Partner of the Cincinnati law
firm of Keating, Muething & Klekamp, P.L.L., counsel to the Company, and has
been associated with that firm since 1968.
Allen L. Davis was elected a Director of the Company in February 1985.
Mr. Davis has been the President and Chief Executive Officer, and a Director of
Provident Bancorp, Inc. and The Provident Bank, Cincinnati, Ohio since 1986 and
1984, respectively.
Ronald S. Stowell has served as Chief Financial Officer since joining
the Company in December 1992, and was appointed Treasurer in November 1993. From
1985 to November 1992, Mr. Stowell served as Corporate Controller of Essef
Corporation (a Nasdaq listed Company), Chardon, Ohio, a manufacturer of high
performance composite and engineered plastics products. Mr. Stowell is also a
Director of KDM Signs, Inc., Cincinnati, Ohio.
-5-
<PAGE> 8
Peter F. Carey has been President of the Image Group of LSI Industries
since July, 1996. Mr. Carey was President of SGI Integrated Graphic Systems from
November 1993 through June 1996, and was the Executive Vice President and Chief
Operating Officer from October 1991 to his appointment as President in November
1993. From 1990 to September 1991 he was Executive Vice President of Stout
Industries, a screen printer of point of purchase signs. Prior to that he was
Vice President of Marketing of PlastiLine, Inc., a manufacturer of outdoor
signs.
BOARD ACTIONS AND COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF
1934
The Board of Directors met eight times, including three telephone
conference calls, during fiscal 1996.
The Executive Committee, composed of Messrs. Ready (Chairman), Sferra,
and Whipple, is responsible, during the intervals between meetings of the Board
of Directors, for exercising all the powers of the Board of Directors in the
management and control and the business of the Company to the extent permitted
by law. The Executive Committee met once during fiscal 1996.
The Audit Committee, composed of Messrs. Davis (Chairman), Burke, and
Taylor, is responsible for reviewing the Company's internal accounting
operations. It also recommends the appointment of the Company's independent
accountants and reviews the relationships between the Company and these
independent accountants. The Audit Committee met two times during fiscal 1996.
The Compensation Committee, composed of Messrs. Burke (Chairman),
Davis, and Taylor, is responsible for establishing compensation levels for
management and for administering the Company's stock option plans and Deferred
Compensation Plan. The Compensation Committee met two times during fiscal 1996
and had two telephone conference meetings.
The Company does not have a Nominating Committee.
Directors who are not employees of the Company receive $11,000 per year
for serving as a Director plus $1,000 for each meeting attended. Committee
members receive $750 per year for serving as Chairman of a committee plus $600
for each committee meeting attended. Directors who are employees of the Company
do not receive any compensation for serving as a Director. All directors
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and Committees of which they were members. Non-employee
directors receive an annual grant of an option to purchase 1,000 Common Shares.
The option is fully vested at the time of grant and has a ten year life.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than ten percent of the
Company's Common Shares to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon its review of copies of such forms received by it, or
upon written representation from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal 1996 all
filing requirements were met.
-6-
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth information regarding annual, long-term,
and other compensation paid by the Company to its Chief Executive Officer and
each of the other four most highly compensated executive officers at June 30,
1996 during each of the last three fiscal years for services rendered to the
Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Other Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position Year Salary Bonus (1) Options (2) (3)
- ------------------ ---- ------ ----- --- ----------- ---
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ready 1996 $375,000 $125,250 $19,604 22,500 $97,743
Chairman, President 1995 350,000 175,000 13,152 -- 47,869
and Chief Executive 1994 335,000 164,150 16,192 27,563 27,800
Officer
James P. Sferra 1996 275,000 99,069 16,485 15,000 58,626
Executive Vice President- 1995 260,000 130,000 13,015 -- 24,666
Manufacturing; Secretary 1994 250,000 122,500 13,190 10,238 30,200
Donald E. Whipple (4) 1996 257,250 92,674 17,837 3,000 58,167
President, LSI Lighting 1995 245,000 122,500 13,600 -- 26,020
Systems and Insight 1994 235,000 115,150 13,496 9,608 32,700
Graphic Systems (retired)
Peter F. Carey 1996 154,350 45,041 12,000 15,000 28,448
President, LSI Image 1995 147,000 73,500 9,600 -- 14,617
Group 1994 140,000 68,600 9,600 13,703 16,300
Ronald S. Stowell 1996 130,000 53,420 14,981 15,000 29,446
Chief Financial Officer 1995 115,000 57,500 12,019 -- 18,598
and Treasurer 1994 95,000 56,550 11,682 8,663 9,000
</TABLE>
- ----------------------
(1) Other Annual Compensation consists of automobile allowances for all
executive officers as well as professional fee allowances for Mr. Ready,
Mr. Sferra, and Mr. Whipple.
(2) Represents Common Shares underlying options awarded under the Company's
stock option plans.
(3) All Other Compensation includes Retirement Plan and Deferred Compensation
Plan contributions, and premiums paid on long-term disability and life
insurance policies, and payment of accrued vacation.
(4) Mr. Whipple retired from all management positions effective June 30, 1996.
He remains as a Director.
The Company maintains a nonqualified Deferred Compensation Plan that is
designed to motivate certain executives and to further align the interests of
these executives with those of Company Shareholders. Beginning in the first
quarter of fiscal year 1997, the Plan will permit executives to defer any
portion of their salary and bonus, with a portion of that deferral being matched
by the Company. If the executive's salary deferral is voluntarily invested in
LSI Common Shares, and if a certain minimum return on average shareholders
equity is achieved, then the Company will match (in LSI Common Shares) a portion
of the executive's deferral. Additionally, beginning in fiscal year 1996, the
Company will make contributions into the Deferred Compensation Plan for certain
executives to make up the retirement contribution that would have been credited
to their accounts in the qualified LSI Industries Inc. Retirement Plan if it
were not for ERISA-imposed limits on covered compensation. Such Deferred
Compensation Plan contribution aggregating $143,000 for the named executives is
included in the Summary Compensation Table for fiscal year 1996.
-7-
<PAGE> 10
STOCK OPTIONS
The following tables contain information concerning (a) the grant of
stock options to the Named Executives and (b) the exercise and appreciation of
stock options held by Named Executives.
Fiscal 1996 Option Grants
<TABLE>
<CAPTION>
Number of Potential Realizable Value
Securities % of at Assumed Annual Rates
Underlying Total Options Exercise of Share Price
Options Granted to Employees Price Expiration Appreciation for Option Term (1)
Name Granted in Fiscal 1996 ($/Share) Date 5% 10%
- ---- ------- --------------------- -------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ready 22,500 6.6% $12.83 7/3/00 $79,756 $176,239
James P. Sferra 15,000 4.4% $12.83 7/3/00 $53,170 $117,493
Donald E. Whipple 3,000 .9% $12.83 7/3/00 $10,634 $ 23,499
Peter F. Carey 15,000 4.4% $12.83 7/3/00 $53,170 $117,493
Ronald S. Stowell 15,000 4.4% $12.83 7/3/00 $53,170 $117,493
</TABLE>
(1) Potential realizable value is net of option exercise price, but before
taxes associated with exercise. These amounts represent compounded
rates of appreciation and exercise of the options immediately prior to
expiration of their term. Actual gains, if any, are dependent on the
future performance of the Common Shares, overall stock market
conditions, and the optionee's continued employment through the vesting
period. The amounts in this table may not necessarily be achieved.
Fiscal 1996 Option Exercises and Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of
Shares Unexercised Options Unexercised In-the-Money
Acquired on Value at Fiscal Year-End Options at Fiscal Year-End(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ready 44,738 $554,871 57,645 / 43,921 $822,530 / $398,807
James P. Sferra 25,608 $327,671 21,026 / 22,955 $300,085 / $177,468
Donald E. Whipple 31,281 $445,860 -- / 8,119 -- / $ 86,135
Peter F. Carey -- -- 17,758 / 23,388 $236,397 / $361,581
Ronald S. Stowell -- -- 9,055 / 20,908 $119,244 / $140,000
</TABLE>
(1) In-the-Money Options are options for which the market value of the
underlying Common Shares exceeds the exercise price. Calculation is
based upon the market value of the underlying Common Shares at fiscal
year-end, minus the exercise price.
-8-
<PAGE> 11
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Shares during the five fiscal years ended June 30, 1996,
with a cumulative total return on the Nasdaq Stock Market Index (U.S. companies)
and the Dow Jones Electrical Equipment Index. The comparison assumes $100 was
invested June 30, 1991 in the Company's Common Shares and in each of the indexes
presented; it also assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
LSI Nasdaq Dow Jones
Industries Market Index Electrical
June 30 Inc. (U.S.) Equipment Index
------- ---- ------ ---------------
<S> <C> <C> <C> <C>
1991 100 100 100
1992 64 120 99
1993 95 151 114
1994 209 153 112
1995 412 204 140
1996 565 261 169
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 1996.
The LSI Industries Inc. Compensation Committee annually establishes
salaries, bonuses and stock option awards for executive officers and key
management personnel. The Committee reviews the performance of the Company's
executive officers on an individual basis and also reviews each executive's
performance in connection with the Company's overall performance. The Committee
desires to establish executive compensation that enhances the Company's overall
fundamental objective of providing long-term value for its shareholders and
employees. The Committee believes that the interests of management and
shareholders can be more closely aligned by providing executives with
competitive levels of compensation that will enable LSI Industries to attract
and retain executives with the highest qualifications by recognizing exceptional
individual performance and by tying executive pay to overall corporate
performance.
The Committee uses base salaries, incentive compensation arrangements
and stock options designed to tie a portion of the executive's compensation to
the stock market performance of LSI's Common Shares. This year the Compensation
Committee developed the Deferred Compensation Plan described in the Executive
Compensation section above. This Deferred Compensation Plan was subsequently
approved by the Board of Directors.
-9-
<PAGE> 12
BASE COMPENSATION
The Committee annually reviews the base salaries of the Company's
executive officers. The Committee individually reviews each executive's level of
responsibility, potential, and salary levels offered by competitors. The
executive's particular division of the Company is reviewed, and its contribution
to the overall results of the Company are assessed. The Committee uses this
information to determine the executive's base compensation level and performance
goals for the upcoming year.
The Committee applies a collective, subjective evaluation of the above
factors to determine the annual base compensation level of its executive
officers in light of the Company's performance and, in certain cases, its
various divisions. The Committee does not utilize a particular objective formula
as a means of establishing annual base compensation levels. Mr. Ready's salary
was established on the same basis. The Committee did not compare the Company's
executive compensation with the level of compensation paid by companies in the
Dow Jones Electrical Equipment Index, nor did it attempt to correlate executive
compensation levels with the Company's relative performance as shown in the
Corporate Performance Graph above.
INCENTIVE COMPENSATION
The Committee made its incentive compensation awards for performance
during fiscal 1996 by examining net earnings for the year and determining that a
bonus pool of approximately $415,000 should be made available for bonuses to
executive officers. From the amount determined, the Committee allocated bonuses
to various executive officers based on the Committee's analysis of the
performance of the particular individual and his contribution to the success of
the Company or the particular division for which he was primarily responsible.
Mr. Ready's bonus was handled in the same manner as the other executive
officers. This process resulted in the bonuses shown in the Summary Compensation
Table.
STOCK OPTION GRANTS
The shareholders of LSI Industries established a stock option plan to
provide a method of attracting, retaining and providing appropriate incentives
to key employees. The Committee is responsible for the administration of this
Plan both with respect to executive officers and all other employees. To that
end, the Committee determines which employees receive options, the time of grant
and the number of shares subject to the option. All option prices are set at
100% of market value on the date of grant.
Compensation Committee
Michael J. Burke, Chairman
Allen L. Davis
John N. Taylor, Jr.
-10-
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Michael J. Burke, who is Chairman of the Compensation Committee, is a
co-managing partner of Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, a
law firm that provided legal services to the Company in fiscal year 1996.
OTHER MATTERS
LSI Industries is not aware of any other matters to be presented at the
Annual Meeting other than those specified in the Notice.
By order of the Board of Directors
/s/ James P. Sferra
James P. Sferra
Secretary
Dated: September 26, 1996
-11-
<PAGE> 14
LSI INDUSTRIES INC.
PROXY The undersigned hereby appoints MICHAEL J. BURKE, ROBERT J. READY,
AND JOHN N. TAYLOR, JR. or any one of them, proxies
FOR of the undersigned, each with the power of substitution, to vote all
Common Shares which the undersigned would be entitled
ANNUAL to vote at the Annual Meeting of Shareholders of LSI Industries Inc.
MEETING to be held on November 14, 1996 at 10:00 A.M. Eastern time at the
Company's headquarters located at 10000 Alliance Road, Cincinnati,
Ohio and any adjournment of such meeting on the matters specified
below and in their discretion with respect to such other business
as may properly come before the meeting or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. AUTHORITY TO ELECT AS CLASS B DIRECTORS THE THREE NOMINEES BELOW.
FOR ___ WITHHOLD AUTHORITY ___
ALLEN L. DAVIS, JAMES P. SFERRA, AND DONALD E. WHIPPLE
WRITE THE NAME OF ANY NOMINEE(S) FOR
WHOM AUTHORITY TO VOTE IS WITHHELD ___________________________________
2. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR FISCAL 1997.
FOR ___ AGAINST ___ ABSTAIN ___
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
_________________, 1996 _____________________________________________
_____________________________________________
IMPORTANT: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON INDICATING, WHERE PROPER,
OFFICIAL POSITION OR REPRESENTATIVE CAPACITY.
IN THE CASE OF JOINT HOLDERS, ALL SHOULD SIGN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
