CENTRAL SPRINKLER CORPORATION
------
Notice of Annual Meeting of Shareholders
To Be Held March 13, 1995
------
TO OUR SHAREHOLDERS:
You are invited to be present either in person or by proxy at the Annual
Meeting of Shareholders of Central Sprinkler Corporation (the "Company") to be
held at the Company's executive offices, 451 North Cannon Avenue, Lansdale,
Pennsylvania on Monday, March 13, 1995 at 11:00 a.m. for the following purposes:
1. To elect nine directors to serve for a one-year term and until
their successors are elected and qualified;
2. To consider and act upon a proposal to ratify the selection by the
Board of Directors of Arthur Andersen LLP as independent public
accountants for the Company for fiscal year 1995; and
3. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on February 3, 1995
as the record date for determining the shareholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournments thereof.
The Directors hope that you will find it convenient to attend the Meeting
in person, but whether or not you plan to attend, please sign, date and return
the enclosed proxy to assure that your shares are represented at the Meeting.
Returning your proxy does not deprive you of your right to attend the Meeting
and vote your shares in person.
/s/ George G. Meyer
--------------------------
George G. Meyer, Secretary
February 6, 1995
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Central Sprinkler
Corporation (the "Company") in connection with the solicitation by the Board of
Directors of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") to be held on Monday, March 13, 1995, at the time and place and for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
The approximate date upon which this Proxy Statement and the form of proxy
are to be mailed to shareholders is February 6, 1995.
If the enclosed proxy is executed and returned, it may nevertheless be
revoked at any time before it is exercised by giving written notice to the
Secretary of the Company, but mere attendance at the Meeting, without such
notice, will not revoke the proxy. Shares represented by a valid proxy that is
received pursuant to this solicitation and not revoked before it is exercised
will be voted as provided on the proxy at the Meeting or any adjournments
thereof.
The Company's executive offices are located at 451 North Cannon Avenue,
Lansdale, Pennsylvania 19446.
VOTING AT THE MEETING
Only holders of shares of Common Stock of the Company (the "Common Stock")
of record at the close of business on February 3, 1995 will be entitled to vote
at the Annual Meeting. On February 3, 1995, 3,717,322 shares of Common Stock,
the only outstanding voting securities of the Company, were issued and
outstanding. Each share of Common Stock is entitled to one vote on all matters.
The holders of a majority of the shares entitled to vote, present in person
or represented by proxy, constitute a quorum. Except for the election of
directors, for which a plurality is required, the affirmative vote of a majority
of the shares present in person or represented by proxy at the Meeting and
entitled to vote is required for the adoption of the proposal to ratify the
selection of the independent accountants or to take action with respect to any
other matter as may properly be brought before the Meeting. Shares cannot be
voted at the Meeting unless the holder of record is present in person or by
proxy. The enclosed proxy is a means by which a shareholder may authorize the
voting of his or her shares at the Meeting. The shares of Common Stock
represented by each properly executed proxy card will be voted at the Meeting in
accordance with each shareholder's directions. Shareholders are urged to specify
their choices by marking the appropriate boxes on the enclosed proxy; if no
choice has been specified, the shares will be voted as recommended by the Board
of Directors. If any other matters are properly presented to the Meeting for
action, the proxy holders will vote the proxies (which confer discretionary
authority to vote on such matters) in accordance with their best judgment.
<PAGE>
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect, other than for purposes of determining the presence of a
quorum. Abstentions may be specified on the proposal to ratify the selection of
the independent accountants (but not for the election of directors). Abstentions
will be considered present and entitled to vote at the Meeting, but will not be
counted as votes cast in the affirmative. Abstentions on the proposal to ratify
the selection of the independent accountants will have the effect of a negative
vote because these proposals require the affirmative vote of a majority of the
shares present at the Meeting in person or represented by proxy at the Meeting
and entitled to vote.
Brokers that are member firms of the New York Stock Exchange ("NYSE") and
who hold shares in street name for customers have the authority under the rules
of the NYSE to vote those shares with respect to the election of directors and
the proposal to ratify the selection of the independent accountants if they have
not received instructions from a beneficial owner. A failure by brokers to vote
those shares will have no effect in the outcome of the election of directors and
the adoption of the proposal to ratify the selection of the independent
accountants because such shares will not be considered shares present and
entitled to vote with respect to such matters.
Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy whether or not you plan to attend the
Meeting. If you plan to attend the Meeting to vote in person and your shares are
registered with the Company's transfer agent (StockTrans, Inc.) in the name of a
broker, bank or other custodian, nominee or fiduciary, you must secure a proxy
from such person assigning you the right to vote your shares.
SECURITY OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of January 1, 1995 by (1) each person known by
the Company to own beneficially more than 5% of the outstanding Common Stock,
(2) each director of the Company, (3) each executive officer named in the
summary compensation table included elsewhere herein and (4) all executive
officers and directors as a group. Percentages of less than one percent have
been omitted. Unless otherwise indicated, the shares listed in the table are
owned directly by the individual or entity, or by both the individual and the
individual's spouse, and the individual or entity has sole voting and investment
power as to shares shown or, in the case of the individual, such power is shared
with the individual's spouse.
<PAGE>
Amount and Nature Percent
of Beneficial of
Ownership Class
----------------- -------
Over 5% Shareholders
Central Sprinkler Corporation Employee Stock(1) . 689,000 18.5%
Ownership Plan (the "Central ESOP")
451 North Cannon Avenue, Lansdale, PA 19446
Wellington Management Company(2) ................. 402,823 10.8%
75 State Street, Boston, MA 02109
Delaware Management Company(2) ................... 398,900 10.7%
One Commerce Square, Philadelphia, PA 19103
Dimensional Fund Advisors Inc.(2) ................ 248,300 6.7%
1299 Ocean Avenue, Santa Monica, CA 90401
William J. Meyer(3)(4) ........................... 240,344 6.3%
George G. Meyer(3)(5) ............................ 221,501 5.8%
Stephen J. Meyer(3)(5) ........................... 221,466 5.8%
451 North Cannon Avenue, Lansdale, PA 19446
Directors
Winston J. Churchill(6) .......................... 9,885 --
Barbara M. Henagan(6) ............................ 4,508 --
Joseph L. Jackson(6) ............................. 4,325 --
Richard P. O'Leary(6) ............................ 7,000 --
Thomas J. Sharbaugh(6)(7) ........................ 4,498 --
Timothy J. Wagg(6)(8) ............................ 5,250 --
Executive Officers
James R. Buchanan(3)(9) .......................... 96,918 2.6%
Albert T. Sabol(3)(10) ........................... 41,285 1.1%
All executive officers and directors as a group .. 966,634 22.8%
(16 persons)(11)
- - - - ------
(1) The amount shown excludes 91,000 shares that have been allocated to
Central ESOP participants and will be voted by such participants
pursuant to the Central ESOP provisions. Shares that are not voted by such
participants, along with the remaining unallocated shares, will be voted
by the Central ESOP trustees pursuant to the provisions of the Central
ESOP, which provides that such shares shall be voted in accordance with
the directions received with respect to the plurality of the allocated
shares.
(2) Each of these shareholders holds all of its shares for the beneficial
interest of various clients or open-end investment companies for which it
acts as investment advisor. Of the shares held by Wellington Managment
Company, such holder has shared dispositive control over such shares, has
no voting control with respect to 206,513 shares (or 5.6%) and has shared
voting control with respect to the remaining 196,310 shares. The amount
shown for Delaware Management Company includes 375,200 shares (or 10.1%)
owned by Delaware Group Trend Fund, Inc. Of the shares held by Dimensional
Fund Advisors Inc. ("DFAI"), DFAI has sole dispositive power with respect
to such shares and sole voting power with respect to 197,500 shares
(or 5.3%). Certain officers of
<PAGE>
DFAI, who also act as officers of two open-end investment companies that
hold shares may vote the remaining 50,800 shares held by DFAI. The number
of shares listed for DFAI represents the shares held as of September 30,
1994 and DFAI disclaims beneficial ownership of all such shares.
(3) The amount shown includes shares that have been allocated to such
officer and are held in his account in the Central ESOP. Mr. George Meyer
and Mr. Sabol are two of three trustees of the Central ESOP and each of
them disclaims beneficial ownership of the shares owned of record by the
Central ESOP.
(4) The amount shown includes 118,125 shares that may be acquired under
options that are currently exercisable.
(5) The amount shown includes 113,125 shares that may be acquired under
options that are currently exercisable.
(6) The amount shown includes 4,000 shares that may be acquired under
options that are currently exercisable.
(7) The amount shown includes 125 shares that are owned by Mr. Sharbaugh's
minor daughter.
(8) Mr. Wagg disclaims beneficial ownership of an additional 625 shares
owned by his wife.
(9) The amount shown includes 51,875 shares that may be acquired under
options that are currently exercisable.
(10) The amount shown includes 39,375 shares that may be acquired under
options that are currently exercisable.
(11) The amount shown includes 528,375 shares that may be acquired under
options that are currently exercisable.
NOMINATION AND ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors will consist
of three to eleven directors, as determined from time to time by resolution of
the Board. The Board has fixed the number of directors at nine, all of whom are
to be elected at the 1995 Annual Meeting. Each such director will serve until
the 1996 Annual Meeting and until a successor has been elected and qualified or
until the director's earlier resignation or removal. Each nominee has consented
to be named in this Proxy Statement and to serve if elected.
If any nominee becomes unavailable for any reason or if a vacancy occurs
for any other reason before the election (which events are not anticipated), the
shares represented by the enclosed proxy may be voted for such other person as
may be determined by the holders of such proxies.
The Board of Directors recommends a vote FOR each of the nominees for director.
<PAGE>
Nominees
The persons nominated to be directors of the Company are listed below. All
of the nominees listed below are currently directors of the Company.
<TABLE>
<CAPTION>
Position(s) with the Company and, where
indicated, with the Company's primary
operating subsidiary, Central Sprinkler
Name Age Company ("Central Sprinkler")
---- --- ----------------------------------------
<S> <C> <C>
Winston J. Churchill 54 Chairman of the Board and Director
William J. Meyer 74 President and Director; Chairman of the Board and
Treasurer of Central Sprinkler
George G. Meyer 45 Chief Executive Officer, Secretary, Treasurer and
Director; President and Chief Executive Officer of
Central Sprinkler
Stephen J. Meyer 43 Director; Executive Vice President of Central
Sprinkler
Barbara M. Henagan 35 Director
Joseph L. Jackson 67 Director
Richard P. O'Leary 56 Director
Thomas J. Sharbaugh 43 Director
Timothy J. Wagg 60 Director
</TABLE>
WINSTON J. CHURCHILL - Mr. Churchill has been Chairman of the Board and a
director of the Company and a director of Central Sprinkler since 1984. Mr.
Churchill has been the President of Churchill Investment Partners, Inc., a
private investment firm, since 1989. He was a partner of Bradford Associates, a
private investment firm, from 1984 to 1989. Mr. Churchill is also Chairman of
the Board of IBAH, Inc. and Geotek Communications, Inc.
WILLIAM J. MEYER - Mr. Meyer has been President and a director of the
Company and Chairman of the Board of Central Sprinkler since 1984. He has also
served Central Sprinkler as a director and Treasurer since 1975 and as President
from 1975 to 1984.
GEORGE G. MEYER - Mr. Meyer has been Chief Executive Officer since 1987 and
Secretary and Treasurer of the Company since 1985, and a director of the Company
and President and a director of Central Sprinkler since 1984. He was Executive
Vice President of the Company from 1985 to 1987.
STEPHEN J. MEYER - Mr. Meyer has been a director of the Company and
Executive Vice President of Central Sprinkler since 1986. He has been a director
of Central Sprinkler since 1983.
BARBARA M. HENAGAN - Ms. Henagan has been a director of the Company since
1986. She has been a Senior Managing Director (since 1992) and a Managing
Director (since 1990) of Bradford Ventures Ltd., a private investment firm. Ms.
Henagan has been a general partner of Bradford Associates since 1986. Ms.
Henagan is also a director of The C.R. Gibson Company.
JOSEPH L. JACKSON - Mr. Jackson has been a director of the Company since
1986. He has been the Executive Vice President of Churchill Investment Partners,
Inc., a private investment firm, since 1990. Mr. Jackson was also Secretary and
Treasurer (from 1990 to 1993) and Chief Financial Officer (from 1992 to 1993) of
Affinity Biotech, Inc. He was Executive Director-Corporate Treasury of Bell
Atlantic Corporation from December 1987 until his retirement in December 1989.
<PAGE>
RICHARD P. O'LEARY - Mr. O'Leary has been a director of the Company since
1990. He is a Consultant, and he was former Vice President of Betz Laboratories,
Inc. from January 1990 until his retirement in March 1991. He was President and
Chief Operating Officer of Betz Equipment Systems, a division of Betz
Laboratories, Inc., from 1987 and Vice President & General Manager of Betz
Genesis Division of Betz Laboratories, Inc. prior to that time.
THOMAS J. SHARBAUGH - Mr. Sharbaugh has been a director of the Company
since 1986. He has been a partner in the law firm of Morgan, Lewis & Bockius
since 1988.
TIMOTHY J. WAGG -- Mr. Wagg has been a director of the Company since 1984.
He is a Financial Consultant and he was Vice President, Administration of
Stone-Consolidated Inc. (forest products and packaging, formerly
Consolidated-Bathurst Inc.) from March 1989 until his retirement in July 1991.
He served as Vice President, Planning and Administration from November 1988 to
March 1989, and as Vice President, Finance prior to that time.
George G. Meyer and Stephen J. Meyer are brothers and are sons of William
J. Meyer.
General Information About Board of Directors
There were four regular meetings and one special meeting of the Board of
Directors in the 1994 fiscal year. During this period, each incumbent director
attended at least 75% of the aggregate of (1) the total number of meetings of
the Board held during the period for which such incumbent was a director, and
(2) the total number of meetings held by all committees of the Board on which
such incumbent served.
Director Compensation
Directors of the Company who are not full time employees of the Company or
its operating subsidiaries receive $2,000 for each meeting attended, as well as
an annual retainer of $8,000. In addition, upon the date that directors are
elected or reelected, each non-employee director shall receive options to
acquire 2,000 shares of Common Stock under the Non-Employee Director Stock
Option Plan. The price per share shall be equal to the fair market value of the
Common Stock as determined in accordance with the terms of the plan. The options
are exercisable immediately and for ten years from the date of grant.
With each option grant, the director shall also receive option surrender
rights ("OSRs"). A participant may exercise an OSR only during the 60-day period
following a Change of Control (as defined in the plan). Upon exercise of an OSR
and the surrender of the related option, the participant has the right to
receive an amount in cash equal to the difference between the exercise price of
the related option and the higher of (i) the highest price paid for a share of
Common Stock in a Change of Control transaction or transactions or (ii) the
highest price paid for the Common Stock during the 60-day period immediately
preceding the Change of Control. When an OSR is exercised, a corresponding
amount of the related option is canceled, and conversely, when an Option is
exercised, a corresponding amount of the related OSR is canceled.
Board Committees
The Board of Directors has several committees, including a Compensation
Committee and an Audit Committee, but it does not have a nominating committee.
Non-employee directors are paid $750 for each Audit Committee meeting or other
committee meeting that is held independently of a meeting of the full Board, and
$500 for each other committee meeting held in connection with a meeting of the
full Board.
<PAGE>
The Audit Committee consists of two non-employee directors, Messrs. Wagg
and Jackson. The Committee meets with the Company's independent auditors and
with the appropriate corporate officers for the purposes of reviewing matters
relating to the corporate financial reporting and accounting procedures and
policies of the Company and its subsidiaries and reporting thereon to the Board
of Directors. The Audit Committee also recommends to the Board the appointment
of the Company's independent auditors, subject to ratification by the
shareholders at the Annual Meeting. The Audit Committee held three meetings
during the 1994 fiscal year.
The Compensation Committee consists of five directors, Ms. Henagan and
Messrs. Churchill, William J. Meyer, O'Leary and Sharbaugh. The Committee
reviews with the principal executive officers of the Company the compensation of
all officers of the Company and its subsidiaries. It also negotiates the terms
of employment of the principal executive officers of the Company and its
subsidiaries and negotiates such employment contracts as may be necessary in
connection therewith. The Compensation Committee held three meetings during the
1994 fiscal year.
EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company or its operating subsidiary, Central Sprinkler for the fiscal
years ended October 31, 1994, 1993 and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Name and Principal ------------------------- ------------ Other
Position Year Salary Bonus Payout(1) Compensation(2)
-------- ---- ------ ----- --------- ---------------
<S> <C> <C> <C> <C> <C>
George G. Meyer 1994 $250,962 $137,386 -- $ 16,318
Chief Executive Officer 1993 231,315 55,452 -- 16,658
1992 195,750 10,418 -- 16,075
William J. Meyer 1994 217,629 172,290 $120,000 26,778
President 1993 201,484 71,811 30,000 28,088
1992 195,750 13,627 -- 26,727
Stephen J. Meyer 1994 190,915 80,093 -- 15,241
Executive Vice President, 1993 167,387 55,841 -- 16,174
Central Sprinkler 1992 162,623 52,713 -- 15,685
James R. Buchanan 1994 155,918 36,385 -- 13,356
Vice President of Sales, 1993 151,887 19,809 -- 12,607
Central Sprinkler 1992 147,566 18,010 -- 12,442
Albert T. Sabol 1994 133,726 36,385 -- 12,624
Vice President, Finance 1993 110,661 8,180 -- 10,166
of the Company and 1992 107,512 1,855 -- 9,157
Central Sprinkler
</TABLE>
- - - - --------
(1) Amount represents payments under a deferred compensation arrangement,
pursuant to such executive officer's employment agreement, which pays the
executive officer $10,000 per month from August 1993 through July 1998.
<PAGE>
(2) (a) Includes the following amounts paid by the Company on behalf of the
executive officer for the year indicated to his respective account under
the Company's 401(k) Profit Sharing Plan and Trust: 1994 - George G. Meyer
and William J. Meyer, $4,716; Stephen J. Meyer, $4,282; James R. Buchanan,
$3,989; and Albert T. Sabol, $3,435; 1993 - George G. Meyer, William J.
Meyer and Stephen J. Meyer, $4,576; James R. Buchanan, $3,240; and Albert
T. Sabol, $2,288; and 1992 - George G. Meyer and William J. Meyer, $4,440;
Stephen J. Meyer, $4,224; James R. Buchanan, $3,073; and Albert T. Sabol,
$2,204.
(b) Includes the following amounts paid by the Company on behalf of the
executive officer for the year indicated to his respective account under
the Central ESOP: 1994 - George G. Meyer, William J. Meyer and Stephen J.
Meyer, $9,331; James R. Buchanan, $8,022; and Albert T. Sabol, $6,916;
1993 - George G. Meyer and William J. Meyer, $10,909; Stephen J. Meyer,
$10,710; James R. Buchanan, $8,449; and Albert T. Sabol, $6,011; and 1992
- George G. Meyer and William J. Meyer, $10,887; Stephen J. Meyer,
$10,755; James R. Buchanan, $8,634; and Albert T. Sabol, $5,819.
(c) Includes premiums for term life insurance paid by the Company on behalf
of the executive officer for the year indicated: 1994 - George G. Meyer,
$2,271; William J. Meyer, $12,731; Stephen J. Meyer, $1,628; James R.
Buchanan, $1,345; and Albert T. Sabol, $2,273; 1993 - George G. Meyer,
$1,173; William J. Meyer, $12,603; Stephen J. Meyer, $888; James R.
Buchanan, $918; and Albert T. Sabol, $1,867; and 1992 - George G. Meyer,
$748; William J. Meyer, $11,400; Stephen J. Meyer, $706; James R. Buchanan,
$735; and Albert T. Sabol, $1,134. The death benefit under such life
insurance is three times the executive officer's annual salary.
The following table summarizes certain information regarding the number and
value of stock options for the persons named in the Summary Compensation Table
at October 31, 1994. Year end values are based upon the closing price of a share
of the Company's Common Stock on October 31, 1994 of $10.375. No stock options
were granted to or exercised by the executive officers of the Company during
fiscal 1994.
AGGREGATED FISCAL YEAR-END STOCK OPTION VALUES
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options at In-the-Money
October 31, 1994 Options at
Number of Shares October 31, 1994
Name (All Exercisable) (All Exercisable)
- - - - ---- ----------------- -----------------
George G. Meyer ................. 113,125 $55,469
William J. Meyer ................ 118,125 55,469
Stephen J. Meyer ................ 113,125 55,469
James R. Buchanan ............... 51,875 22,188
Albert T. Sabol ................. 39,375 --
<PAGE>
Incentive Compensation Plan
The Company has an Incentive Compensation Plan, administered by the Board
of Directors, which provides awards to designated officers and other employees.
The plan provides for aggregate awards in an amount equal to 7.1% of
consolidated monthly operating income, as defined in the plan, to be credited to
the incentive compensation fund each year. In fiscal 1994, this total was
allocated to executive officers based on specified percentage participation in
the Plan. The awards made to the persons named in the Summary Compensation Table
are included in the amounts listed in the table.
401(k) Profit Sharing Plan and Trust
All non-union Central Sprinkler employees who have attained age 21 and
completed one year of service are eligible to participate in Central Sprinkler's
401(k) Profit Sharing Plan and Trust. Under the terms of the plan, the Company
has agreed to match 100% of each participant's basic contributions ("Basic
Contributions"). The Basic Contribution is limited to 2% of the participant's
total compensation. A participant may also make supplemental contributions of up
to the maximum permissible amount allowed by law ("Supplemental Contributions").
Basic and Supplemental Contributions are made on a pre-tax basis. In addition, a
participant may contribute up to 10% of compensation as an after-tax
contribution ("Voluntary Contribution"). The Company may also, in its
discretion, make an additional contribution to the Plan out of its current or
accumulated net profits. Any additional Company contribution would be allocated
to the accounts of all participants in the proportion that each participant's
Basic Contributions for the year bear to the total Basic Contributions of all
participants for the year. All such contributions are subject to applicable
contribution and annual addition limitations imposed by the Internal Revenue
Code of 1986, as amended.
Company contributions become vested at the rate of 25% after three years of
service and an additional 25% for each succeeding year of service. A participant
is fully vested in his Basic, Supplemental and Voluntary Contributions at all
times and in his Company contributions upon the earliest of completion of six
years of service, attainment of age 55, death or disability. A participant may
withdraw his Voluntary Contributions once a year. Basic Contributions and
earnings on both Basic and Supplemental Contributions may be withdrawn by a
participant upon attainment of age 59 1/2 or for financial hardship. At
termination of employment for any reason, a participant receives his vested
benefits in the form of a lump sum cash payment or annuity, or a combination of
both.
A participant may borrow up to the amount of the sum of his Basic,
Supplemental and Voluntary Contributions and the vested balance of his Company
contributions, except that if the loan amount exceeds $10,000, the limitation is
50% of such sum, and in no event may the loan exceed $50,000. Loans must be
repaid within a period and at an interest rate determined by the plan committee.
For the past three years, the Company has made no discretionary
contributions. The Company's matching contributions that were credited to the
accounts of the named persons listed in the Summary Compensation Table above are
included in such table.
Deferred Compensation Plan
In August 1978, Central Sprinkler established a Deferred Compensation Plan
for selected officers, at the level of Vice President and above of Central
Sprinkler who have been employees for at least three years. There is presently
only one officer (Albert H. Schoenberger, Jr.) in the plan. The plan provides
retirement benefits based on individually established percentages of average
annual pretax earnings for the three years prior to leaving Central Sprinkler.
Vesting is based on age and the num-
<PAGE>
ber of years of service with Central Sprinkler. Vested amounts are payable to
the participant or a surviving spouse over a ten-year period commencing the
later of the date the selected officer leaves Central Sprinkler or age 60. The
plan also provides for forfeiture of all rights to benefits under certain
circumstances.
Inasmuch as the payments to be made under the plan are tied to earnings,
Central Sprinkler has guaranteed minimum retirement payments to those officers
selected to participate in the plan. These guaranteed payments equal $20,000 per
year for Mr. Schoenberger. To be eligible for the minimum payments, the par-
ticipant must remain in the employ of Central Sprinkler until age 62 and,
thereafter, not engage in any activities which compete with Central Sprinkler.
These minimum payments are to be reduced by amounts earned under the formula
described above. Currently, the minimum payments exceed the amount provided
under the average earnings formula.
Employment Contracts
In March 1990, William J. Meyer, George G. Meyer and Stephen J. Meyer,
entered into employment agreements with Central Sprinkler, under which their
employment could not be terminated without five years' prior notice by either
party. The employment agreements of William J. Meyer and George G. Meyer provide
for a minimum annual salary of not less than $220,000 and $250,000,
respectively, and entitle the executive to an annual bonus for each fiscal year
in an amount equal to $12.50 for each $1,000 increase over the Company's
consolidated net profits for the 1985 fiscal year (the "Income-Based Bonus").
The Income-Based Bonus to each officer was $6,375 and $27,500 for the 1993 and
1994 fiscal years, respectively. There was no Income-Based Bonus for the 1992
fiscal year. Each agreement also guarantees a minimum participation interest in
the Company's Incentive Compensation Plan. Stephen J. Meyer's employment
agreement provides for a minimum annual salary of not less than $195,000 and
entitles him to a minimum participation interest in the Company's Incentive
Compensation Plan. Effective June 1992, the Company established a monthly
commission program for Stephen J. Meyer under which commissions were paid on
sales of certain Company products. The program was terminated in January 1993.
The commissions of $19,851 earned in the two-month period of fiscal 1993 and
$45,651 earned in the five-month period of fiscal 1992 during which this program
was effective are included in the Summary Compensation Table above.
In September 1992, James R. Buchanan, William J. Pardue and Albert T. Sabol
each entered into an amended employment agreement with Central Sprinkler, which
provides for a minimum annual salary of $156,000, $130,000 and $138,000,
respectively, for an additional five-year term effective August 1993 through
August 1998, and successive one-year renewals, unless notice of termination is
given by either the employee or Central Sprinkler at least ninety days prior to
the end of the initial or a renewal term. The agreement also guarantees a
minimum participation interest in the Company's Incentive Compensation Plan.
George S. Polan entered into a five-year employment agreement with Central
Sprinkler in October 1992. The agreement provides for an annual salary of not
less than $84,000. The agreement automatically renews for additional one-year
terms unless either party terminates the agreement at the end of a term.
Albert H. Schoenberger, Jr. entered into a five-year employment agreement
with Central Sprinkler in February 1986. The agreement provides for an annual
salary of not less than $85,000. The agreement automatically renews for
additional one-year terms unless either party terminates the agreement at the
end of a term. The agreement has been renewed for a one-year term through
February 1996.
<PAGE>
James E. Golinveaux entered into a three-year employment agreement with
Central Sprinkler in February 1993. The agreement provides for an annual salary
of not less than $105,000. The agreement automatically renews for additional
one-year terms unless notice of termination is given by either the employee or
Central Sprinkler at least ninety days prior to the end of the initial or a
renewal term.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
William J. Meyer, the President of the Company, served on the Compensation
Committee during fiscal 1994.
Winston J. Churchill and Barbara M. Henagan served on the Compensation
Committee during fiscal 1994. Ms. Henagan is a partner in Bradford Associates,
which is the general partner of Bradford Venture Partners, L.P. ("Bradford
Partners"). Bradford Associates, through an investment group that includes
Bradford Partners, has a non-controlling investment in a customer of the
Company. In addition, Mr. Churchill and another partner in Bradford Associates
are directors of this company. Sales by the Company to this customer accounted
for less than 1% of the Company's net sales during the 1994 fiscal year. All
sales to this customer were made in the ordinary course of business in
arm's-length transactions at prices as favorable to the Company as those that
could have been obtained from an unrelated third party. In August 1994, the
non-controlling investment was sold by such investment group.
The Company has agreements with Bradford Ventures Ltd., an affiliate of
Bradford Associates, and Churchill Investment Partners, Inc., a company of which
Mr. Churchill is the President, under which each entity has agreed to provide
various financial consulting services to the Company until October 1995 for an
annual fee of $87,500, plus out-of-pocket expenses. The agreements automatically
renew for successive one-year terms unless notice of termination is given by
either party at least 90 days prior to the end of any term. During the 1994
fiscal year, the Company paid each entity $87,500 for services rendered and
expenses Oincurred under such agreements or under a prior agreement that expired
during fiscal 1994.
Mr. Sharbaugh served on the Compensation Committee during fiscal 1994. He
is a partner in the law firm of Morgan, Lewis & Bockius. The Company retained
this firm for various matters during the 1994 fiscal year and expects to do so
again during the 1995 fiscal year.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee and the performance graph on page 14 shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT
The Company's Compensation Committee consists of five directors: Winston J.
Churchill, Barbara M. Henagan, William J. Meyer, Richard P. O'Leary and Thomas
J. Sharbaugh.
The Company's compensation policies, plans and programs, as developed and
implemented by the Compensation Committee, seek to maintain the high level of
technical expertise necessary to ensure profitability, to attract and retain
professional management and to motivate the Company's executive officers to
perform to the full extent of their capabilities.
<PAGE>
The Company has entered into employment agreements with George G. Meyer,
the Company's chief executive officer and eight other current executive officers
of the Company. The agreements set the base salary of these officers. These
agreements expire at various dates from 1996 to 1999, but have renewal terms.
During fiscal 1993, the Committee approved an increase in the base salary
for Mr. George Meyer from $201,000 to $250,000. The increase was the result of
the Committee's review of Mr. Meyer's performance relating to the Company's
improving market share in the sprinkler industry, the results of the Company's
investment in research and development, the successful acquisition and
integration of assets that the Company had acquired during the past year, the
performance of the Company's stock on the NASDAQ/NMS stock market, the results
of operations of the Company during the past two years and Mr. Meyer's
achievement of the Committee's specific goal that he guide the Company with a
view toward its long-term competitive position. There were no changes to Mr.
Meyer's base salary during fiscal 1994.
In adjusting an executive officer's base salary and in determining the
salary of new executive officers, the Committee sets salaries to be competitive
with other comparable companies, taking into consideration the results of the
Company, if applicable, the position's complexity and responsibility and the
need for special expertise. In addition, the Committee also uses the performance
criteria that were used in determining Mr. George Meyer's base salary discussed
above. The Company has enjoyed a long-standing relationship with its executive
officers, most of whom have worked for the Company for many years. The Committee
will continue to match the Company's goals of increased profitability and
shareholder return with executive performance.
The Committee, as Plan Administrator of the Company's Incentive and
Non-Qualified Stock Option Plans and Employee Stock Ownership Plan, uses stock
options and grants of stock as an additional incentive to employees. The
objective of these plans is to align employee interests, including senior
management, with shareholder long-term interests. Individual grants under the
plans are based on individual performance or, with respect to the Central ESOP,
annual compensation.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deduction that may be claimed by a "public company" for total compensation in
excess of $1 million paid to the chief executive officer or to any of the other
four most highly compensated officers except to the extent that any compensation
in excess of $1 million is paid pursuant to a performance-based plan. This
provision became effective November 1, 1994 with respect to the Company. After
considering the application of Section 162(m) to its compensation policies, the
Committee has determined that the provisions of that Section would not affect
the compensation of any of the executive officers of the Company. To the extent
that this might not continue to be the case, the Committee would consider any
changes necessary to conform to the provisions of Section 162(m).
Compensation Committee of the Board of Directors
Winston J. Churchill Barbara M. Henagan William J. Meyer
Richard P. O'Leary Thomas J. Sharbaugh
<PAGE>
Certain Transactions
The Company leases an aircraft from a business in which Stephen J. Meyer, a
director and executive officer of the Company, is the sole proprietor. During
fiscal 1994, the Company paid such business $270,000 for the use of such
aircraft.
RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Arthur Andersen LLP as
independent public accountants to audit the books, records and accounts of the
Company for fiscal year 1995. This firm audited the Company's books for fiscal
year 1994, has no ownership interest in the Company and is considered to be well
qualified.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting, will have an opportunity to make a statement if he desires to do
so and will be available to respond to appropriate questions at the Meeting. If
the shareholders do not ratify the selection of this firm, the selection of
another firm of independent public accountants will be considered by the Board
of Directors.
The Board of Directors recommends a vote FOR the proposal to ratify the
selection of Arthur Andersen LLP as independent public accountants.
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock with the cumulative total shareholder return of (i) the Standard &
Poors Building Material Index (the "S&P Index") and (ii) the NASDAQ Stock Market
(U.S.) Index (the "NASDAQ Index"), assuming an investment of $100 on October 31,
1989 in each of the Common Stock of the Company, the NASDAQ Index stocks and the
S&P Index stocks. The graph assumes dividend reinvestment.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CENTRAL SPRINKLER CORPORATION, THE NASDAQ STOCK MARKET-US INDEX
AND THE S&P BUILDING MATERIALS INDEX
200|------------------------------------------------------------------------|
| |
| N N |
|- |
| |
150|------------------------------------------------------------------------|
| N S |
|- |
| N |
| S S |
100|SCN---------------------------------------------------------------------|
| |
|- N S |
| |
| S C C |
50 |----------C--------------------------------------------------C----------|
| C |
|- |
| |
| |
0 |--|----------|----------|-----------|----------|-----------|--------|---|
10/89 10/90 10/91 10/92 10/93 10/94
C = Central Sprinkler Corp. N = Nasdaq - US S = S&P Building Materials
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
Central Sprinkler Corp. 100 51 53 39 64 49
S&P Building Materials 100 58 89 106 141 113
Nasdaq Stock Mrkt. - US 100 74 126 141 181 182
* $100 INVESTED ON 10/31/89 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING OCTOBER 31.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matter which will be presented at
the Meeting for action by the shareholders. However, if other matters properly
come before the Meeting, or any adjournment thereof, it is intended that the
proxies will be voted according to the best judgment of the person authorized to
act by the proxies. If the enclosed proxy is properly executed and returned
prior to voting at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. In the absence of such
instructions, the shares will be voted for the nominees of the Company in the
election of directors and for the other proposal specified in the Notice.
The expense of this solicitation will be paid by the Company. If necessary,
some of the officers of the Company and regular employees of Central Sprinkler
may solicit proxies personally or by telephone.
Further information regarding the Company is set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1994 which has
been filed with the Securities and Exchange Commission. The Form 10-K (including
financial statements and schedules, but without exhibits) may be obtained free
of charge by writing to: Central Sprinkler Corporation, 451 North Cannon Avenue,
Lansdale, Pennsylvania 19446. Copies of exhibits to the Form 10-K will be
furnished upon request and the payment of a reasonable fee.
A copy of the Company's 1994 Annual Report to Shareholders, which includes
financial statements, is being transmitted herewith, but does not form a part of
the proxy solicitation materials.
Shareholders are reminded that proposals of shareholders intended to be
presented at the Company's next Annual Meeting of Shareholders in 1996 must be
received by the Company for inclusion in its Proxy Statement and form of proxy
relating to that Meeting by October 8, 1995.
The Board of Directors will appreciate the prompt return of the enclosed
proxy, dated and signed. You may revoke your proxy before it is exercised by
giving written notice to the Secretary of the Company, and you may vote in
person if you attend the Meeting.
<PAGE>
PROXY CENTRAL SPRINKLER CORPORATION PROXY
Annual Meeting of Shareholders, March 13, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM J. MEYER and GEORGE G. MEYER, and
each of them, jointly and severally, proxies, with full power of substitution,
to vote, as designated below and on the reverse side hereof, all shares of
Common Stock which the undersigned is entitled to vote on the election of
directors and the proposal on the reverse side hereof and on all other matters
which may come before the 1995 Annual Meeting of Shareholders of Central
Sprinkler Corporation or any adjournment thereof.
The shares represented by this Proxy, duly executed, will be voted. If
instructions are given in the spaces below and on the reverse side hereof, the
shares will be voted in accordance therewith; if instructions are not given, the
shares will be voted for the election of the directors named in Proposal 1 below
and in favor of Proposal 2 set forth on the reverse side hereof.
1. ELECTION OF DIRECTORS.
FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for [ ]
(except as marked to all nominees listed below
the contrary)
(Winston J. Churchill, William J. Meyer, George G. Meyer, Stephen J. Meyer,
Barbara M. Henagan, Joseph L. Jackson, Richard P. O'Leary, Thomas J. Sharbaugh
and Timothy J. Wagg)
(INSTRUCTION: To withold authority to vote for any individual nominee, strike a
line through that nominee's name in the list above.)
(Continued and to be signed on reverse side)
2. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:--------------------------------------, 1995
--------------------------------------------[SEAL]
Signature
-------------------------------------------------
Signature if held jointly
<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / 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 Section 240.14a-11(c) or Section 240.14a-12
Central Sprinkler Corporation
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Name of registrant as specified in its charter)
Central Sprinkler Corporation
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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