<PAGE>
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:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
North Star Universal, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- - --------------------------------------------------------------------------------
(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(i)(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:
------------------------------------------------------------------------
(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:*
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
[North Star Letterhead]
May 9, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders
of North Star Universal, Inc. (the "Company") to be held at the Sheraton Park
Place, 5555 Wayzata Boulevard, Minneapolis, Minnesota, on Tuesday, June 14,
1994, at 4:00 p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. Following the formal business
portion of the meeting there will be a report on the operations of the Company
and shareholders will be given the opportunity to ask questions.
The items requiring shareholder approval are:
1. Election of a Board of Directors for the ensuing year and until their
successors are elected and qualified; and
2. such other business as may properly come before the meeting or any
adjournment thereof.
We recommend that you vote FOR the slate of Directors that is set forth in
the accompanying Proxy Statement.
Whether or not you can attend the Annual Meeting, please complete, sign,
date and mail the enclosed proxy card promptly. This action will not limit your
right to revoke your proxy in the manner described in the accompanying Proxy
Statement or to vote in person if you wish to attend the Annual Meeting and vote
personally.
Sincerely,
/s/ Jeffrey J. Michael
Jeffrey J. Michael
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
NORTH STAR UNIVERSAL, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 14, 1994
------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of North Star
Universal, Inc., a Minnesota corporation (the "Company"), will be held at the
Sheraton Park Place, 5555 Wayzata Boulevard, Minneapolis, Minnesota, at 4:00
p.m., local time, on Tuesday, June 14, 1994.
This meeting is being held for the following purposes:
1. To elect six persons to serve as directors until the next annual
election of directors and until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on April 29, 1994, will
be entitled to notice of and to vote at the meeting. Whether or not you plan to
be present at the meeting, please sign and return the accompanying form of proxy
in the enclosed postage prepaid envelope at your earliest convenience.
By order of the Board of Directors
/s/ Peter E. Flynn
Peter E. Flynn
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
Minneapolis, Minnesota
May 9, 1994
<PAGE>
NORTH STAR UNIVERSAL, INC.
----------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 14, 1994
This Proxy Statement is furnished to shareholders of North Star Universal,
Inc. (the "Company"), 5353 Wayzata Boulevard, Minneapolis, Minnesota 55416-1370,
in connection with the solicitation of proxies on behalf of the Board of
Directors for use at the Annual Meeting of Shareholders to be held at the
Sheraton Park Place, 5555 Wayzata Boulevard, Minneapolis, Minnesota, at 4:00
p.m., local time on Tuesday, June 14, 1994 (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. This Proxy
Statement and the accompanying form of proxy are being mailed to shareholders
commencing on or about May 9, 1994.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and the form of proxy, including the reimbursement of
banks, brokers and other nominees for forwarding proxy materials to beneficial
owners, will be borne by the Company. Proxies may also be solicited personally
or by telephone by Directors, officers and regular employees of the Company who
will receive no additional compensation.
Shares represented by a proxy will be voted in the manner directed by the
shareholder. If no direction is made, the proxy will be voted (i) for the
election of the nominees for Directors named in this Proxy Statement and (ii) in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the meeting. Shares voted as abstentions on
any matter (or a "withhold vote for" as to Directors) will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting and as unvoted, although present and entitled to
vote, for purposes of determining the approval of each matter as to which the
shareholder has abstained. If a broker submits a proxy which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, those shares will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to vote with respect
to such matters. The Company has retained Norwest Bank Minnesota, National
Association to tabulate and report on the votes cast by shareholders.
A shareholder giving a proxy may revoke it at any time prior to the voting
of the proxy by filing with any officer of the Company a written notice of
revocation or another proxy bearing a later date. Any written notice of
revocation or subsequently dated proxy should be mailed or delivered to Peter E.
Flynn, Executive Vice President, Chief Financial Officer and Secretary, North
Star Universal, Inc., 610 Park National Bank Building, 5353 Wayzata Boulevard,
Minneapolis, Minnesota 55416-1370.
The close of business on April 29, 1994 was fixed by the Board of Directors
as the record date for determination of shareholders entitled to notice of and
to vote at the Annual Meeting. At such date the Company had outstanding
9,438,000 shares of common stock, $.25 par value per share (the "Common Stock").
Each share of Common Stock entitles the holder to one vote on all matters to
come before the meeting. There is no cumulative voting.
A COPY OF THE COMPANY'S 1993 ANNUAL REPORT TO SHAREHOLDERS, INCLUDING
FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY WILL ALSO
PROVIDE UPON REQUEST A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH REQUEST
SHOULD BE MADE TO THE SECRETARY OF THE COMPANY AT THE ADDRESS SHOWN ABOVE.
ELECTION OF DIRECTORS
The Board of Directors has recommended that the number of Directors to be
elected for the coming year be set at six. The Board of Directors recommends
that shareholders elect the nominees named below as Directors of the Company for
the ensuing year and until their successors are elected and qualified.
<PAGE>
Unless otherwise indicated thereon, the persons named in the enclosed form of
proxy intend to vote FOR the election of the six nominees listed below. The
affirmative vote of a majority of the shares of the Company's Common Stock
present (or represented by proxy) and entitled to vote at the 1994 Annual
Meeting is required to elect each of the nominees as Directors for the ensuing
year or until their successors are elected and have qualified. With the
exception of Mr. Braun, all of the nominees are members of the present Board of
Directors. If for any reason any nominee shall be unavailable for election to
the Board of Directors, votes will be cast pursuant to authority granted by the
enclosed proxy for such other candidate or candidates as may be nominated by the
Board of Directors. The Board of Directors has no reason to believe that any of
the nominees listed below will be unable to serve if elected to office.
NOMINEES
The following table sets forth certain information regarding the nominees
for election as Directors, including the amount and percentage of outstanding
shares of Common Stock beneficially owned by such persons as of March 31, 1994.
<TABLE>
<CAPTION>
FIRST SHARES OF
BECAME A COMMON STOCK
DIRECTOR OF BENEFICIALLY PERCENT OF
NAME BIOGRAPHICAL INFORMATION THE COMPANY OWNED CLASS
- - --------------------- --------------------------------------------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Miles E. Efron Chairman of the Board since July 1991 and a senior 1968 445,000(2) 4.52%
Age 67 advisor to the Company. Mr. Efron was President
and Chief Executive Officer from October 1988 to
December 31, 1990 and was Senior Vice President of
the Company from 1985 until October of 1988. Mr.
Efron also is a director of Michael Foods, Inc.
("Michael Foods") and Employee Benefit Plans, Inc.
James H. Michael Chairman of the Board until July 1991. Mr. Michael 1968 3,099,400(1) 32.84%
Age 73 is Chairman of the Board of Michael Foods, and is
the father of Jeffrey J. Michael, the Company's
President and Chief Executive Officer.
Jeffrey J. Michael President and Chief Executive Officer since 1987 2,597,700(1) 27.52%
Age 37 December 1990. Mr. Michael served as Vice
President-Finance from April 1989 to December 1990
and as Vice President-Treasurer from August 1987
to April 1989. Prior to August 1987, Mr. Michael
was employed by the Company in various capacities.
Jeffrey J. Michael is the son of James H. Michael.
Mr. Michael is also a director of Michael Foods
and CorVel Corporation ("CorVel", formerly FORTIS
Corporation).
Fred E. Stout Mr. Stout is the retired President and Chief 1988 12,750(2) 0.13%
Age 73 Executive Officer of Superior Water, Light and
Power Company and is a director of M&I First
National Bank. Mr. Stout also served as a director
of the Company from 1984 to 1986.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FIRST SHARES OF
BECAME A COMMON STOCK
DIRECTOR OF BENEFICIALLY PERCENT OF
NAME BIOGRAPHICAL INFORMATION THE COMPANY OWNED CLASS
- - --------------------- --------------------------------------------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Peter E. Flynn Executive Vice President, Chief Financial Officer 1991 84,500(2) 0.89%
Age 34 and Secretary of the Company since December 1990.
In December 1992, he also became the President and
Chief Operating Officer of Transition,
Engineering, Inc. ("Transition"), an indirect,
wholly owned subsidiary of the Company. Mr. Flynn
served as Treasurer of the Company from April 1989
to December 1990. Prior to joining the Company in
1990, Mr. Flynn was an Audit Manager with Arthur
Andersen & Co. Mr. Flynn was elected to the Board
of Directors in July 1991, and also serves as a
director of CorVel.
Richard J. Braun Mr. Braun is an independent management consultant. -- None 0.00%
Age 49 From 1992-1994, Mr. Braun served as Chief
Operating Officer and a Director of Employee
Benefit Plans, Inc., and from 1989-1991 was
Executive Vice President, Chief Operating Officer
and a Director of Reich and Tang L.P., a publicly
held investment advisor and broker-dealer. From
1988-1989, Mr. Braun served as President and Chief
Executive Officer of Super Cycle, Inc., a former
subsidiary of the Company. Mr. Braun currently
serves as a trustee of Household Personal
Portfolios, a registered investment company.
<FN>
- - ------------------------
(1) The 4J2R1C Limited Partnership ("4J2R1C", formerly The Michael
Partnership) owns 2,826,494 shares of the Company's Common Stock. Mr.
James H. Michael is the managing general partner and a limited partner of
4J2R1C and by reason of his status as the managing general partner is
deemed to beneficially own all shares held by 4J2R1C. Mr. James H. Michael
exercises sole voting and dispositive power with respect to the shares
held by 4J2R1C. Mr. Jeffrey J. Michael is the general partner of 3J2R
Limited Partnership ("3J2R"), which owns 2,597,000 shares of the Company's
Common Stock. By reason of his status as 3J2R's general partner, Mr.
Jeffrey J. Michael is deemed to beneficially own the shares of Common
Stock held by 3J2R. Mr. Jeffrey J. Michael exercises sole voting and
dispositive power with respect to the shares held by 3J2R.
(2) Shares shown as beneficially owned include, in the case of Mr. Efron,
405,000 shares of Common Stock not outstanding but which may be acquired
within 60 days through the exercise of stock options, in the case of Mr.
Stout, 7,500 shares not outstanding, but which may be acquired within
60 days through the exercise of stock options, and in the case of
Mr. Flynn, 84,500 shares of Common stock not outstanding but which may be
acquired within 60 days through the exercise of stock options.
</TABLE>
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
During the year ended December 31, 1993, the Board of Directors of the
Company held three regular meetings and no special meetings.
For the year ended December 31, 1993, the members of the Company's Audit
Committee were Messrs. Flynn and Stout and Mr. David Z. Johnson. Mr. Johnson is
recently deceased and will be replaced on the Audit Committee by Mr. Braun,
contingent upon his election to the Board of Directors. The Audit Committee
reviews and makes recommendations to the Board of Directors with respect to
designated financial and accounting matters. The Audit Committee held two
meetings during the year ended December 31, 1993.
For the year ended December 31, 1993, the members of the Company's Executive
Committee were Messrs. Michael, Michael and Efron. The Executive Committee
reviews and makes recommendations to the Board of Directors regarding certain
employee benefit matters. The Executive Committee held one meeting during the
year ended December 31, 1993.
The Company has no nominating committee.
3
<PAGE>
DIRECTOR COMPENSATION
During 1993, both non-employee and employee Directors of the Company
received a monthly retainer of $600 for serving as members of the Company's
Board of Directors. Directors incurring travel expenses to attend meetings are
reimbursed in full. Members of the Audit Committee each receive an additional
$300 for each committee meeting held. The total of all such payments for the
year ended December 31, 1993 was $45,000. The Company discontinued the payment
of such fees to employee Directors, commencing January 1, 1994.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
GENERAL. The Executive Committee of the Board of Directors (the
"Committee") establishes the specific compensation for each of the Company's
named executive officers. The Committee is made up of three members, James H.
Michael, Miles E. Efron and Jeffrey J. Michael. With respect to compensation
matters concerning Mr. Jeffrey J. Michael, the Company's President and Chief
Executive Officer, Mr. Jeffrey J. Michael is excluded from Committee
deliberations. After consideration of the Committee recommendations, the full
Board of Directors reviews and approves the salaries of each named executive
officer. The Committee is responsible for administering all other elements of
executive compensation, including annual incentive awards and stock option
grants.
EXECUTIVE COMPENSATION PHILOSOPHY AND GOALS. During 1991 North Star
initiated a strategic process to strengthen its balance sheet and focus its
management resources on its key holdings. In connection with this process the
Company sold several of its smaller businesses and substantially cut corporate
overhead. As a result, the Company has only two executive officers, Jeffrey J.
Michael, President and Chief Executive Officer, and Peter E. Flynn, Executive
Vice President, Chief Financial Officer and Secretary. The Committee believes
that the Company's success depends to a significant extent on the continuing
efforts and dedication of Messrs. Jeffrey J. Michael and Flynn. The executive
compensation arrangements are designed to motivate and reward those executives
responsible for attaining the financial and strategic objectives essential to
the Company's success and continued growth, while at the same time allowing the
Company to retain high-caliber executives. The key components of the Company's
compensation program are base salary, cash bonuses and, to a lesser extent,
stock option awards.
BASE SALARIES. While the Committee has not conducted formal independent
salary comparisons in determining individual executive compensation, the
Committee believes that base salaries should be moderate, yet competitive in
relation to salaries commanded by persons in similar positions. The base salary
for each named executive officer is reviewed annually and is set on the basis of
personal performance, the relative importance of the functions the officer
performs, the scope of the officer's ongoing responsibilities and the estimated
salary levels in effect at comparable companies for comparable positions. The
weight given to each of these factors varies between individuals.
CASH BONUSES. Annual cash bonuses are designed to reward executives with
operating responsibility for personal contributions to the success of the
Company and are earned under a structured formula. Individual performance
targets are established based on an annual operating budget which is submitted
for review and approval by the Chief Executive Officer of the Company after
consultation with the Committee. At the end of the calendar year, the Chief
Executive Officer evaluates actual financial performance against the individual
performance targets. In the case of Mr. Flynn, potential cash bonuses range from
25% to 75% of his annual base salary, beginning when operating profits
exceed minimum levels of performance (typically 80% of budget) and increasing
incrementally up to the maximum when profits equal or exceed a superior
performance target (typically 120% of budget). For 1993, Mr. Flynn was
paid a cash bonus of $97,500 for superior achievement of targeted performance
criteria. During 1991 and 1992, Mr. Michael received an annual discretionary
bonus of $50,000. In 1993 the Committee revised its policy and discontinued
payment of discretionary bonuses for officers without direct operating
responsibility. Accordingly, Mr. Michael did not receive a cash bonus for 1993.
4
<PAGE>
STOCK OPTIONS. Incentive stock options are periodically granted to motivate
executives to achieve positive long-term financial results, thereby enhancing
shareholder value. Due to the limited corporate staff, the Company does not have
formal policies or formulas for determining the timing, amount or particular
vesting schedules for stock option awards. Furthermore, the Company's stock
performance is significantly affected by changes in the value of its equity
holdings in Michael Foods and, to a lesser extent, the value of its CorVel
holdings. Although North Star has representatives on the boards of directors of
both Michael Foods and CorVel, the Company does not have direct management
control over the operations of either business. Accordingly, the Committee
believes that the Company's stock performance is often not the best indicator of
the performance of the Company's management team, and, as a result, has not
granted significant options to the Company's executives. Further, because of the
substantial beneficial holdings of Mr. Michael's family in the Company's Common
Stock, the Committee believes Mr. Michael's interests in stock performance
already parallel those of the Company's other shareholders. As a result, the
Committee historically has not granted any stock options to Mr. Michael. During
1993, there were no stock options granted to any executive officer.
1993 EXECUTIVE COMPENSATION. Mr. Jeffrey J. Michael, as Chief Executive
Officer of North Star, has overall responsibility for the strategic
direction of the Company and for the performance of the Company's wholly owned
operating companies. Mr. Michael was elected to his present position in December
1990 and is not a party to an employment agreement. During 1993, Mr. Michael was
paid a base salary of $188,200, and, effective January 1, 1994, his base salary
was increased to $237,200, constituting a 26% annual increase. In establishing
Mr. Michael's current base salary, the Committee took into account that Mr.
Michael does not participate in the Company's incentive cash bonus program or
the employee stock option plan.
As described in more detail below, Mr. Flynn entered into a new employment
agreement with the Company and Transition effective April 1, 1993, in connection
with his assumption of the duties of President of Transition. In this role,
Mr. Flynn is responsible for the day-to-day operations and the financial
performance of Transition. Additionally, Mr. Flynn has agreed to continue to act
as the Chief Financial Officer of North Star. Approximately 84% of Mr. Flynn's
base salary is paid by Transition and relates to his work as President of that
company. The remainder of his base salary is paid by North Star and relates to
his continued responsibilities as Chief Financial Officer of the Company.
Mr. Flynn is also eligible to receive a bonus, payable by Transition. During
1993, Mr. Flynn earned a bonus equal to 75% of his base salary for achieving
superior targeted performance criteria at Transition. Effective January 1, 1994,
Mr. Flynn's base salary was increased 8.7% to $141,300.
In the negotiation of Mr. Flynn's employment agreement, the base salary paid
and the 1993 bonus formula reflect the Committee's conclusion, based upon the
results of negotiations with Mr. Flynn, knowledge of other opportunities
possibly available to Mr. Flynn and the continued need for Mr. Flynn's services
as an officer of North Star, that this level of compensation was required to
retain him in light of his expanded role at the Company and Transition.
This report of the Committee 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 or under the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
JAMES H. MICHAEL,
MILES E. EFRON
JEFFREY J. MICHAEL
The Members of the Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jeffrey J. Michael, James H. Michael and Miles E. Efron served on the
Executive Committee of the Company for the past fiscal year, which Committee
determines compensation levels for the Company's executive officers. Each of
Messrs. James H. Michael and Efron was formerly an executive officer of the
Company, and James H. Michael has on occasion borrowed funds from the
5
<PAGE>
Company. As of December 31, 1993, Mr. Michael owed the Company approximately
$457,872. The maximum amount of such indebtedness, including accrued but unpaid
interest, owed to the Company by Mr. Michael during 1993 was approximately
$544,500. The currently outstanding indebtedness is evidenced by an unsecured
note which provides for quarterly interest payments and an annual principal
payment of $50,000. The unsecured note accrues interest at the rate of one
percent over the reference rate of First Bank, National Association (7% at
December 31, 1993).
Effective September 1, 1985, the Board of Directors established a formal
policy governing future loans to officers. The policy permits unsecured loans to
officers of up to $50,000. Loans in excess of $50,000 must be approved in
advance by the Board of Directors and must be secured by readily marketable
negotiable securities. Loans to officers will bear interest at one percent over
the prevailing prime rate of interest and must mature within five years.
Interest is to be paid quarterly. In addition to the foregoing, an officer may
borrow annually an amount not exceeding 10 percent of annual compensation. These
loans are without interest and are payable on termination of employment. Mr.
James H. Michael's loans from the Company predate this policy.
Pursuant to the foregoing policy, the Company made a single loan of $50,000
to Mr. Jeffrey J. Michael in September 1992. The proceeds of this loan were
subsequently made available by Mr. Michael to Mr. James H. Michael. Mr. Jeffrey
J. Michael repaid the loan in full, including all accrued interest, in October
1992.
Although Jeffrey J. Michael, the Company's President and Chief Executive
Officer, served on the Company's Executive Committee during 1993, as
previously indicated, he did not participate in any decisions regarding his own
compensation as an executive officer.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of Jeffrey J.
Michael, the Company's President and Chief Executive Officer, and Peter E.
Flynn, the Company's only other executive officer, for the fiscal years ended
December 31, 1991, 1992 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
NAME AND ----------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS COMPENSATION(2)(3)
- - ------------------------------ ---- -------- ------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Jeffrey J. Michael 1993 $188,200 $ 0 0 $4,497
President and Chief Executive 1992 $194,562 $50,000 0 $4,364
Officer 1991 $186,200 $50,000 0 $4,237
Peter E. Flynn 1993 $173,011 $97,500 0 $4,497
Executive Vice President, 1992 $185,400 $65,000 30,000 $4,364
Chief Financial Officer and 1991 $169,600 $65,000 60,000 $4,237
Secretary
<FN>
- - ------------------------
(1) In each of 1993, 1992 and 1991, Messrs. Michael and Flynn earned $7,200,
$6,600, and $5,200 and $7,800, $7,200 and $3,600, respectively, in their
capacities as Directors of the Company. Such fees are included in each
officer's calculation of annual salary amounts.
(2) Represents amounts contributed by the Company for the benefit of each of
Messrs. Michael and Flynn pursuant to the Company's 401(k) Plan.
(3) Neither of the named executive officers held or received any awards of
restricted shares.
</TABLE>
6
<PAGE>
STOCK OPTIONS, AWARDS, EXERCISES AND HOLDINGS
During 1993, there were no stock options granted to any executive officer.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during the last fiscal year and unexercised options held as of the end of the
fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END($)
SHARES ACQUIRED -------------------------- --------------------------
NAME ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------------------------- --------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Jeffrey J. Michael....................... 0 0 0 0 0
Peter E. Flynn........................... 0 84,500 50,000 $ 19,563 $ 5,000
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Effective December 31, 1990, Mr. Efron's employment agreement with the
Company was terminated, and he resigned as President and Chief Executive Officer
of the Company. Mr. Efron continues as an employee of the Company, providing
advisory and consulting services. Pursuant to an agreement with the Company, he
continues to receive annual compensation of $50,000 through December 1996 for
his consulting and advisory services to the Company and is eligible to
participate in other fringe benefits established by the Company for its
executive officers. Mr. Flynn is a party to an employment agreement with the
Company and Transition, which terminates December 31, 1997, subject to annual
extensions thereafter at the option of the parties. The agreement provides for
an annual base salary of $130,000 in connection with Mr. Flynn's duties as
President and Chief Operating Officer of Transition, plus annual compensation of
$25,000 for services rendered for the benefit of the Company. The agreement
entitles Mr. Flynn to participate in other fringe benefits established by the
Company for its executive officers. Mr. Flynn is entitled to receive a bonus of
25%, 50% or 75% of his base salary for his duties at Transition if certain
"minimum," "budgeted" or "superior" targeted performance criteria are met each
year. Such criteria are determined annually by the Company based on budgeted
information prepared by Transition. Upon the voluntary termination of his
employment with the Company, Mr. Flynn is entitled to receive a single lump
sum payment equal to his then current base salary relating to his duties at
Transition plus $25,000. If Mr. Flynn dies, he becomes disabled and unable to
continue his employment, his employment is terminated by the Company for any
reason, or he voluntarily terminates his employment following (i) certain
actions by the Company constituting constructive termination or (ii) a change
in control of the Company, Mr. Flynn is entitled to receive a single lump sum
payment equal to two times his then current base salary relating to his duties
at Transition plus $25,000. Also, if Mr. Flynn is terminated by the Company, all
of his then outstanding options immediately become vested.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five year
period ended December 31, 1993, with the cumulative total return on each of the
S&P 500 Index, the S&P Food Group Index, the S&P Healthcare Composite Index and
the S&P Computer Systems Index. Each of the component S&P indices represent each
of the Company's separate lines of business. The comparison assumes $100 was
invested on December 31, 1988 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
7
<PAGE>
[PERFORMANCE GRAPH HAS BEEN SUBMITTED UNDER FORM SE]
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company as of March 31, 1994, by
each shareholder who is known by the Company to own beneficially more than 5
percent of the outstanding Common Stock of the Company, and by all officers and
Directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - ---------------------------------------- -------------------- -----------
<S> <C> <C>
James H. Michael 3,099,400(1) 32.84%
142 North Mississippi River Blvd.
St. Paul, MN 55104
Jeffrey J. Michael 2,597,700(2) 27.52%
343 St. Louis Avenue
Minneapolis, MN 55416
Wellington Management Company 553,430 5.86%
75 State Street
Boston, Massachusetts 02109
All officers and directors as a group (6 6,248,850(4) 62.85%
persons)
<FN>
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(1) Includes 2,826,494 shares of Common Stock held by 4J2R1C Limited
Partnership, as to which Mr. James H. Michael, as managing general
partner, exercises sole voting and dispositive power.
</TABLE>
8
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<TABLE>
<S> <C>
(2) Includes 2,597,000 shares of Common Stock held by 3J2R Limited Partnership
as to which Mr. Jeffrey J. Michael, as general partner, exercises sole
voting and dispositive power.
(3) According to filings made with the Securities and Exchange Commission,
Wellington Management Company ("WMC"), in its capacity as investment
advisor, may be deemed to be the beneficial owner of the shares of Common
Stock, which are owned by numerous investment advisory clients. Also,
according to such filings, WMC shares voting power with respect to 283,430
shares and shares dispositive power with respect to all of the indicated
shares.
(4) Shares shown as beneficially owned include 504,500 shares not outstanding,
but which may be acquired within 60 days through the exercise of stock
options by all officers and Directors as a group.
</TABLE>
AUDITORS
The Board of Directors of the Company intends to appoint Grant Thornton as
independent auditors for the Company for the year ending December 31, 1994.
Grant Thornton audited the financial statements of the Company for the year
ended December 31, 1993. Representatives of Grant Thornton will be present at
the annual meeting and will be given an opportunity to make a statement if they
desire to do so and to respond to appropriate questions raised at the meeting.
SHAREHOLDER PROPOSALS FOR THE
1995 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder who wishes to present a proposal for action at the next
annual meeting of shareholders and who wishes to have it set forth in the Proxy
Statement and identified in the form of proxy prepared by the Company must
notify the Company at the Company's principal executive offices, 5353 Wayzata
Boulevard, Minneapolis, Minnesota 55416-1370, in such manner so that such notice
is received by the Company by January 22, 1995. Any such proposal must be in the
form required under the rules and regulations promulgated by the Securities and
Exchange Commission.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters that are
intended to be brought before the Annual Meeting. If other matters, of which the
Board of Directors is not aware, are presented for action, it is the intention
of the persons named in the enclosed form of proxy to vote on such matters in
their sole discretion.
By Order of the Board of Directors,
/s/ Peter E. Flynn
Peter E. Flynn
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
May 9, 1994
9
<PAGE>
PROXY
NORTH STAR UNIVERSAL, INC.
5353 Wayzata Boulevard
Minneapolis, Minnesota 55416
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey J. Michael and Peter E. Flynn, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to present and to vote, as designated below, all the shares of Common
Stock of North Star Universal, Inc., held of record by the undersigned on
April 29, 1994, at the annual meeting of shareholders to be held on June 14,
1994, or any adjournment thereof.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the to vote all nominees
contrary below) listed below
Miles E. Efron, James H. Michael, Jeffrey J. Michael,
Fred E. Stout, Peter E. Flynn, Richard J. Braun
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- - --------------------------------------------------------------------------------
(continued, and to be dated and signed, on other side)
(continued from other side)
2. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL OF THE NOMINEES SPECIFIED ON THE REVERSE SIDE HEREOF.
Please sign exactly as your name appears as printed below. When shares are held
by joint tenants, both should sign. When signing as attorney, as 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: _____, 1994
Signature Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
