<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
[ ] 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
NORTH STAR UNIVERSAL , INC.
-------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
-------------------------------------------------------
(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 Rules 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:
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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 :
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(5) Total fee paid:
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[ ] 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:
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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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<PAGE>
[North Star Universal, Inc. Letterhead]
May 9, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 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 Friday,
June 9, 1995, 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 9, 1995
- --------------------------------------------------------------------------------
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 Friday, June 9, 1995.
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 28,
1995, 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, 1995
<PAGE>
NORTH STAR UNIVERSAL, INC.
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
June 9, 1995
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 Friday, June 9, 1995 (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, 1995.
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
<PAGE>
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 28, 1995 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 1994 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. 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 1995 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. 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 15, 1995.
-2-
<PAGE>
<TABLE>
<CAPTION>
First Shares of
Became a Common
Director Stock Percent
Biographical of the Beneficially of
Name Information Company Owned Class
---- ------------ ------- ----- -----
<S> <C> <C> <C> <C>
Miles E. Efron Chairman of the Board since 1968 440,800(2) 4.48%
Age 68 July 1991 and a senior 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 1968 3,099,400(1) 32.84%
Age 74 July 1991. Mr. Michael 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 1987 2,597,700(1) 27.52%
Age 38 Officer since 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).
-3-
<PAGE>
Fred E. Stout Mr. Stout is the retired 1988 7,750(2) 0.08%
Age 74 President and Chief Executive
Officer of Superior Water,
Light and Power Company.
Mr. Stout also served as a
director of the Company from
1984 to 1986.
Peter E. Flynn Executive Vice President, Chief 1991 124,500(2) 1.30%
Age 35 Financial Officer 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 the Managing 1994 None 0.00%
Age 50 Director of Headwaters Capital
Management L.L.C. 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.
-4-
<PAGE>
<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, 2,500 shares not outstanding, but which may be acquired within 60
days through the exercise of stock options, and in the case of Mr. Flynn,
124,500 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, 1994, the Board of Directors of the
Company held four regular meetings and no special meetings.
During the year ended December 31, 1994, the members of the Company's
Audit Committee were Messrs. Flynn, Stout and Mr. David Z. Johnson, until Mr.
Johnson's death in the first quarter of 1994. Upon his election to the Board of
Directors in June of 1994, Mr. Braun was elected to the Audit Committee to
replace Mr. Johnson. 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, 1994.
For the year ended December 31, 1994, 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, 1994.
The Company has no nominating committee.
DIRECTOR COMPENSATION
During 1994, Directors of the Company, other than Messrs. Jeffrey J.
Michael and Flynn, who are also executive officers 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, other than Mr. Flynn, each
receive an additional $300 for each committee meeting held. The total of all
such payments for the year ended December 31, 1994 was $28,200.
-5-
<PAGE>
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 these executives
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 generally 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. After 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, who had day-to-day
responsibility for
-6-
<PAGE>
the operation of Transition during 1994 (in addition to his responsibilities as
an executive officer of the Company), potential cash bonuses ranged from 25% to
75% of his annual base salary, beginning when operating profits exceed minimum
levels of performance (80% of budget) and increasing incrementally up to the
maximum when profits equal or exceed a superior performance target (120% of
budget). During 1992, Mr. Michael received a discretionary annual 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 or 1994.
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 1994, there were no stock options granted to any executive
officer.
1994 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 1994, Mr.
Michael was paid a base salary of $235,000. 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 employee stock
option plan. Mr. Michael's base salary was continued at $235,000 in 1995.
As described in more detail below, Mr. Flynn entered into an
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. During 1994,
approximately 84% of Mr. Flynn's base salary was paid by Transition and related
to his work as President of that company. The remainder of his base salary in
1994 was paid by North Star and related to his continued responsibilities as
Chief Financial Officer of the Company. In 1994, Mr. Flynn's base salary
increased 5.2% from his base salary in 1993, from
-7-
<PAGE>
$165,211 to $173,816. Also, for 1994, Mr. Flynn was paid a discretionary bonus
of $45,000, notwithstanding that minimum levels of performance were not met,
because the Committee determined that operating results were not necessarily
indicative of how Transition had performed during the year.
As described in more detail below, Mr. Flynn's employment agreement
was modified effective as of April 1, 1995. At the request of the Company, Mr.
Flynn will devote more of his time to Company matters, while still overseeing
the day-to-day operations of Transition. In 1995, approximately 76% of Mr.
Flynn's base salary, or $136,000, will be paid by the Company, and approximately
24% of Mr. Flynn's base salary, or $42,500, will be paid by Transition. In a
departure from its historical policy, because of the changes in Mr. Flynn's
responsibilities made during 1995 (which were requested by the Company), Mr.
Flynn will be eligible to receive a discretionary bonus depending on the
Committee's subjective evaluation of his performance during the year. Mr Flynn
will also receive a bonus of $25,000 based on the performance of Transition
through the first quarter of 1995.
The terms of Mr. Flynn's employment agreement, as amended, and last
year's increase in Mr. Flynn's base salary 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 these levels of compensation
were required to retain him in light of his roles at both 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 Company.
As of December 31, 1994, Mr. Michael owed the Company approximately $407,872.
The maximum amount of such indebtedness, including accrued but unpaid interest,
owed to the Company by Mr. Michael during 1994 was approximately $476,686. 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
-8-
<PAGE>
percent over the reference rate of First Bank, National Association (8.5% at
December 31, 1994).
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 and
1994, 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, 1992, 1993 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Name and Securities Underlying All Other
Principal Position Year Salary(1) Bonus Options Compensation (2)(3)
------------------ ---- --------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
Jeffrey J. Michael 1994 $235,000 $ 0 0 $4,620
President and Chief 1993 $188,200 $ 0 0 $4,497
Executive Officer 1992 $194,562 $50,000 0 $4,364
Peter E. Flynn 1994 $173,816 $45,000 0 $4,620
Executive Vice President, 1993 $173,011 $97,500 0 $4,497
Chief Financial Officer 1992 $185,400 $65,000 30,000 $4,364
and Secretary
<FN>
- --------------------------
(1) In each of 1993 and 1992, Messrs. Michael and Flynn earned $7,200, and
$6,600, and $7,800 and $7,200, respectively, in their capacities as Directors of
the Company. Such fees are included in each officer's calculation of annual
salary amounts. The Company discontinued the payment of such fees to Messrs.
Michael and Flynn commencing January 1, 1994.
(2) Represents amounts contributed by the Company for the benefit of each
of Messrs. Michael and Flynn pursuant to the Company's 401(k) Plan.
-9-
<PAGE>
(3) Neither of the named executive officers held or received any awards of
restricted shares.
</TABLE>
STOCK OPTIONS, AWARDS, EXERCISES AND HOLDINGS
During 1994, there were no stock options granted to any executive
officer.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of
options during the last fiscal year and unexercised options held as of the end
of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End($)
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 0 109,500 25,000 $9,750 0
</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. Mr. Flynn's employment agreement was
modified effective April 1, 1995. As modified, the agreement provides for an
annual base salary of $136,000 for services rendered for the benefit of the
Company, plus annual compensation of $42,500 in connection with Mr. Flynn's
duties as President and Chief Operating Officer of Transition. The agreement
entitles Mr. Flynn to participate in other fringe benefits established by the
Company for its executive officers. In addition, Mr. Flynn will receive
a bonus of $25,000 based on the performance of Transition through the first
quarter of 1995, and Mr. Flynn is eligible for a discretionary bonus in 1995
based upon his performance in executing North Star's strategic plans. The
discretionary bonus will be an amount ranging up to $75,000, as determined
by North Star's Board of Directors.
-10-
<PAGE>
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 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 certain actions by
the Company constituting constructive termination, Mr. Flynn is entitled to
receive a single lump sum payment equal to two times his then current base
salary plus $25,000. If Mr. Flynn's employment is terminated due to a change in
control of the Company, Mr. Flynn is entitled to receive a single lump sum
payment of $297,000. Also, if Mr. Flynn is terminated by the Company, all of
his then outstanding options immediately become vested.
STOCK PRICE PERFORMANCE GRAPH AND TABLE
The following graph and table compare the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock during the
five year period ended December 31, 1994, 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, 1989 in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
-11-
<PAGE>
[Performance Graph plotting cumulative annual returns
indicated below is omitted from electronic filing]
TABLE OF CUMULATIVE ANNUAL RETURNS
<TABLE>
<CAPTION>
Company/Index Name 1990 1991 1992 1993 1994
- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
North Star Universal, Inc. 112.7 149.1 90.9 70.9 65.5
S&P 500 Index 96.9 126.4 136.1 149.8 151.7
S&P Food Group Index 107.8 157.3 156.9 144.0 160.9
S&P Healthcare 117.5 180.9 151.4 138.7 156.9
Composite Index
S&P Computer 112.1 99.6 73.1 75.9 98.0
Systems Index
</TABLE>
-12-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to
the beneficial ownership of Common Stock of the Company as of March 15, 1995, 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
All officers and directors as 6,270,150(3) 62.89%
a group (6 persons)
<FN>
(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.
(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) Shares shown as beneficially owned include 532,000 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, 1995. Grant Thornton audited the financial statements of the
Company for the year ended December 31, 1994. 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
-13-
<PAGE>
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 9, 1996. 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, 1995
-14-
<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 28,
1995, at the annual meeting of shareholders to be held on June 9, 1995, 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)
<PAGE>
(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: , 1995
- --------------------- ---------------------------------- ------
Signature Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
