LANCER CORPORATION
235 West Turbo
San Antonio, Texas 78216
April 24, 1995
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Meeting") of Lancer Corporation (the "Company") to be held at
the Sheraton Fiesta San Antonio Hotel, 37 NE Loop 410, San Antonio,
Texas, on Friday, May 26, 1995 at 9:30 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement fully
describes the formal business to be transacted at the Meeting, which
includes: electing seven directors of the Company; approving the
appointment of KPMG Peat Marwick LLP as independent auditors for the
Company for the ensuing year; and transacting such other matters as
may properly come before the Meeting or any adjournments thereof.
Directors and officers of the Company, as well as a representative of
the Company's independent auditors, will be present at the annual
meeting to respond to any questions that our shareholders may have.
The Company's Board of Directors believes that a favorable vote on
each of the matters to be considered at the Meeting is in the best
interest of the Company and its shareholders and unanimously
recommends a vote "FOR" each such matter. Accordingly, we urge you to
review the accompanying material carefully and to please sign, date
and return the enclosed Proxy promptly. If you attend the Meeting,
you may vote in person even if you have previously mailed a Proxy.
Sincerely,
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President
LANCER CORPORATION
235 W. Turbo
San Antonio, Texas 78216
To Be Held on May 26, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of Lancer Corporation (the "Company" or "Lancer") will
be held at the Sheraton Fiesta San Antonio Hotel, 37 NE Loop 410,
San Antonio, Texas, on Friday, May 26, 1995 at 9:30 a.m.,local time.
A form of Proxy and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of a Board of Directors consisting of
seven directors for the ensuing year;
2. The approval of the appointment of KPMG Peat Marwick LLP
as independent auditors for the Company for the ensuing
year; and
3. Such other matters as may properly come before the
Meeting or any adjournments thereof.
The close of business on April 6, 1995 has been fixed by the Board
of Directors as the record date for determining shareholders entitled
to notice of and to vote at the Meeting or any adjournments thereof.
For a period of at least 10 days prior to the Meeting, a complete
list of shareholders entitled to vote at the Meeting shall be open to
the examination of any shareholder during ordinary business hours at
the Company's Corporate Headquarters, 235 West Turbo, San Antonio,
Texas 78216.
Information concerning the matters to be acted upon at the Meeting
is set forth in the accompanying Proxy Statement.
By Order of the Board of Directors
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President
San Antonio, Texas
April 24, 1995
LANCER CORPORATION
235 W. Turbo
San Antonio, Texas 78216
This Proxy Statement is being furnished to shareholders of Lancer
Corporation (the "Company" or "Lancer") in connection with the
solicitation of Proxies (the "Proxies") for use at the Annual Meeting
of Shareholders (the "Meeting") to be held at the Sheraton Fiesta
San Antonio Hotel, 37 NE Loop 410, San Antonio, Texas, on Friday,
May 26, 1995, at 9:30 a.m., local time, or at such other time and
place to which the Meeting may be adjourned. The enclosed Proxy is
solicited by the Board of Directors of the Company. Where a
shareholder has appropriately specified how a Proxy is to be voted, it
will be voted accordingly.
The Proxy may be revoked at any time by providing written notice of
such revocation to Frost National Bank, 100 West Houston Street,
San Antonio, Texas 78205, Attention: Proxy Department. This notice
must be received prior to 5:00 p.m., local time on May 10, 1995. If
notice of revocation is not actually received by the Proxy Department
by such date, a shareholder may nevertheless revoke a Proxy by
attending the Meeting and voting in person.
The address of the principal executive offices of the Company is
235 W. Turbo, San Antonio, Texas 78216. This Proxy Statement and
enclosed Proxy are first being mailed to shareholders on or about
April 25, 1995.
The record date for determining the shareholders entitled to vote at
the Meeting is the close of business on April 6, 1995 (the
"Record Date"), at which time the Company had issued an outstanding
2,574,602 shares of Common Stock, par value $.01 per share (the
"Common Stock"), which class of stock constitutes the only outstanding
securities of the Company entitled to vote at the Meeting.
The presence at the Meeting, in person or by Proxy, of the holders of
a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum. Each share of Common Stock is entitled to one
vote with respect to each matter to be voted on at the Meeting. The
approval of all proposals requires the affirmative vote of a majority
of the outstanding shares of Common Stock present in person or by
Proxy at the Meeting. Neither the Company's Articles of Incorporation
nor Bylaws provide for cumulative voting.
All shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted FOR (i) the election of the seven
persons named under "Election of Directors" of the Company; (ii) the
proposal to approve KPMG Peat Marwick LLP as independent auditors for
the Company for the ensuing year; and (iii) at the discretion of the
proxy holders, any other matter that may properly come before the
Meeting or any adjournment thereof.
There are seven directors to be elected. It is intended that the names
of the persons indicated in the following table will be placed in
nomination and that the persons named in the Proxy will vote for their
election unless otherwise instructed. Each of the nominees has
indicated his or her willingness to serve as a member of the Board of
Directors if elected; however, in case any nominee shall become
unavailable for election to the Board of Directors for any reason not
presently known or contemplated, the proxy holders will have
discretionary authority in that instance to vote the Proxy for a
substitute. To be elected, a nominee must receive the affirmative vote
of the holders of a majority of the shares of Common Stock present, in
person or by Proxy, at the Meeting. Each nominee elected will serve
as director for the ensuing year and until his or her other successor
shall have been elected and qualified.
The nominees are as follows:
Name Age Position
Alfred A. Schroeder (1) 58 Chairman of the Board
George F. Schroeder (1) 55 Director and President
Walter J. Biegler (2)(3) 53 Director
Jean M. Braley (3) 65 Director
Robert A. Shuey, III (2)(3) 40 Director
Michael E. Smith (2)(3) 53 Director
John P. Herbots 47 Vice President Administration
(1) Alfred A. Schroeder and George F. Schroeder are brothers. No
other nominee is related by blood, marriage or adoption to
another nominee or to any executive officer of the Company or
its subsidiaries.
(2) Member of the Compensation and Stock Option Committees.
(3) Member of the Audit Committee.
Mr. Alfred A. Schroeder was co-founder of the Company and has served
as Chairman of the Board of Directors of the Company since its
inception in 1967. His primary responsibilities include research and
development and corporate planning. He is also a partner in Lancer
Properties. See "Compensation and Certain Transactions."
Mr. George F. Schroeder was co-founder of the Company and has served
as its President and a director of the Company since 1967. His primary
responsibilities include financial, sales, engineering, production
management and corporate administration. He is also a partner in
Lancer Properties. See "Compensation and Certain Transactions."
Mr. Walter J. Biegler has served as a director of the Company since
1985. He has held the position of Chief Financial Officer of
Periodical Management Group, Inc., a San Antonio, Texas concern which
distributes periodicals, books and specialty items in the Southwestern
and Central portions of the United States, Mexico and the
Virgin Islands, since November 1991. Prior thereto he served as the
Chief Financial Officer and Senior Vice President-Finance of La Quinta
Motor Inns, Inc. of San Antonio, Texas, a national hotel chain.
Mr. Biegler also serves as a director of La Quinta Realty Corporation.
Ms. Jean M. Braley has served as a director of the Company since 1976.
She served as Secretary of the Company from 1982 to 1985.
Ms. Braley is currently and has been involved for the last ten years
in personal investments as her principal occupation. She is also a
partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. Robert A. Shuey, III has served as a director of the Company since
1985. Mr. Shuey was nominated to serve on the Board of Directors in
1985 pursuant to an understanding between the Company and
Rauscher Pierce Refsnes, Inc. ("RPR") in connection with the Company's
1985 public offering. Mr. Shuey is currently nominated in his
individual capacity not pursuant to any understanding or arrangement
between the Company and RPR. Mr. Shuey has been employed by
Dillon Gage, Incorporated, an investment banking firm (see
"Compensation and Certain Transactions"), since January 1, 1994, and
prior to that held the position of Senior Vice President,
Corporate Finance, of Dickinson & Company, a brokerage firm.
Mr. Shuey was a Vice President of RPR from June 1984 to September
1987. From May 1980 until June 1984, he was a director of the
corporate finance department and a Vice President of Institutional
Equity Corporation. Prior to that time, Mr. Shuey was an associate in
the corporate finance department of Salomon Brothers, Inc.
Mr. Michael E. Smith has served as a director of the Company since
1985. Mr. Smith is presently a principal shareholder and
Vice President of Bailey-Gosling Associates, Inc., an insurance
brokerage firm. He has been employed by the same firm since 1968.
Mr. Smith has been the Company's insurance broker since 1981. See
"Compensation and Certain Transactions."
Mr. John P. Herbots joined the Company as Vice President of
Administration on February 15, 1995. Prior to joining Lancer,
Mr. Herbots was Executive Vice President and General Manager of MK
Rail Corporation's Locomotive Operations based in Boise, Idaho. From
October 1990 until April 1992, he served as Vice President and Chief
Financial Officer for Morrison Knudsen Corporation's Rail Systems
Group. Prior to that he was Vice President and CFO of Avline Leasing
Corporation from December 1989, Lancer Corporation from September
1988 and Faircraft Aircraft Corporation from March 1985. From 1974
to 1985, he held varous management postions with Price Waterhouse &
Co., United Technologies Corporation, M. Lowenstein Corporation and
Fairchild Industries, Inc.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board of Directors. The Board meets on a periodic basis to review
significant developments affecting the Company and to act on matters
requiring Board approval. The Board of Directors met four times and
acted by unanimous written consent six times during the 1994 fiscal
year. During such period, each member of the Board participated in at
least 75% of all Board and applicable Committee meetings.
The Board of Directors has established audit, compensation and stock
option committees to devote attention to specific subjects and to
assist it in the discharge of its responsibilities. The Audit
Committee is responsible for the review of the audited financial
results and coordination of the annual audit. The Compensation
Committee is responsible for officer compensation. The Stock Option
Committee is responsible for administering the Company's stock option
plans. The Compensation Committee met once during the 1994 fiscal
year to consider officer compensation. The Audit committee met once
during the 1994 fiscal year.
The Board of Directors has appointed the firm KPMG Peat Marwick LLP
as independent auditors to make an examination of the accounts of the
Company for the fiscal year 1995 and has directed that the
appointment be submitted to the shareholders for their approval at
the annual meeting. KPMG Peat Marwick LLP has audited the Company's
financial statements for a period in excess of 15 years. It is
expected that a representative of the firm will be present at the
meeting with an opportunity to make a statement if he so desires and
will be available to respond to appropriate questions by
shareholders. If the shareholders do not approve this appointment,
the Board of Directors will consider the selection of other
auditors.
During the fiscal year ended December 31, 1994, KPMG Peat Marwick LLP
provided audit services to the Company consisting of the audit of
the consolidated financial statement of the Company, services related
to filings with the Securities and Exchange Commission, and tax
preparation and consultation services.
The following table sets forth information as of March 3, 1995,
regarding the beneficial ownership of common stock of Lancer by each
person known by Lancer to own 5% or more of the outstanding shares of
each class of Lancer's Common Stock, each director of Lancer and the
directors and officers of Lancer as a group. The persons named in the
table have sole voting and investment power with respect to all
shares of Common Stock owned by them, unless otherwise noted.
Title Number of
Name of Beneficial Owner and of Shares Percent of
Number of Persons in Group Class Beneficially Class
Owned
Alfred A. Schroeder(1)(2)(7) Common Stock 371,019 13.8
George F. Schroeder(1)(3)(7) Common Stock 413,601 15.4
Walter J. Biegler Common Stock 2,000 *
Jean M. Braley (1)(4) Common Stock 157,226 5.9
Michael E. Smith Common Stock 1,600 *
Robert A. Shuey III Common Stock 500 *
James R. Sprinkle (5) Common Stock 2,700 *
Daniel A. Martinez (6) Common Stock 2,013 *
Samuel Durham (7) Common Stock 12,332 *
GHS Management, Inc. (8) Common Stock 244,369 9.1
All directors and officers Common Stock 969,026 36.1
officers as a group
(fifteen persons) (9)
*Less than 1%
(1) The mailing address for Mr. Alfred A. Schroeder, Mr. George F.
Schroeder and Mrs. Jean Braley is 235 West Turbo, San Antonio,
Texas 78216.
(2) Includes 46,620 shares purchasable pursuant to options which are
exercisable within the next 60 days, but excludes 59,825 shares
held of record by Mr. Alfred A. Schroeder's two adult children.
(3) Includes 132,600 shares held of record by trusts for the children
of Mr. George F. Schroeder, of which Mr. George F. Schroeder is
the trustee, and includes 46,620 shares purchasable pursuant to
options which are exercisable within the next 60 days. Excludes
4,500 shares held by Mr. George F. Schroeder's three adult
children.
(4) Includes 78,613 shares held by the Estate of William V. Braley
for which Mrs. Braley serves as sole independent executrix.
(5) Includes 2,700 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(6) Includes 2,013 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(7) Includes 9,324 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(8) GHS Management, Inc. is a Dallas-based investment firm whose
mailing address is 8235 Douglas Avenue, Suite 420, Dallas, Texas
75225.
(9) Includes 108,877 shares purchasable pursuant to options which
are exercisable within the next 60 days.
The following table sets forth certain information concerning the
executive officers of the Company:
Name Age Position with the Company
Alfred A. Schroeder 58 Chairman of the Board
George F. Schroeder 55 President
Dennis D. Stout 41 Chief Financial Officer
John P. Herbots 47 Vice President Administration
Robert W. Abbott 56 Vice President Euro-Asia Sales
James R. Sprinkel 47 Vice President Domestic Sales
Daniel A. Martinez 44 Vice President Latin America Sales
Samuel Durham 46 Vice President Engineering
Michael U. Raymondi 47 Vice President Operations
Mr. Alfred A. Schroeder was a co-founder of the Company and has served
as Chairman of the Board of Directors of the Company since its
inception in 1967. His primary responsibilities include research and
development and corporate planning. He is also a partner in Lancer
Properties, see "Compensation and Certain Transactions."
Mr. George F. Schroeder was a co-founder of the Company and has served
as President and a director of the Company since 1967. His primary
responsibilities include financial, sales, engineering, production
management and corporate administration. He is also a partner in
Lancer Properties, see "Compensation and Certain Transactions."
Mr. Dennis D. Stout joined the Company as manager of Cost Accounting
in December 1988 and has held the position of Chief Financial Officer
since December 1989. From 1987 to 1988 he was Finance Director for
three subsidiaries of Fairchild Aircraft Corporation, a San Antonio
based manufacturer of turboprop commuter aircraft. From 1983 to 1987
he held various other management positions with Fairchild, and from
1980 to 1983, was an accountant in the San Antonio offices of Touch
Ross & Co., an international accounting firm.
Mr. John P. Herbots joined the Company as Vice President of
Administration on February 15, 1995. Prior to joining Lancer,
Mr. Herbots was Executive Vice President and General Manager of MK
Rail Corporation's Locomotive Operations based in Boise, Idaho. From
October 1990 until April 1992, he served as Vice President and Chief
Financial Officer for Morrison Knudsen Corporation's Rail Systems
Group. Prior to that he was Vice President and CFO of Avline Leasing
Corporation from December 1989, Lancer Corporation from September 1988
and Fairchild Aircraft Corporation from March 1985. From 1974 to 1985,
he held various management positions with Price Waterhouse & Co.,
United Technologies Corporation, M. Lowenstein Corporation and
Fairchild Industries, Inc.
Mr. Robert W. Abbott has been employed by the Company since 1974.
Mr. Abbott is primarily responsible for marketing Lancer products and
has held the position of Vice President Euro-Asia Sales since 1976.
Prior to his employment by Lancer, Mr. Abbott was employed by the
Coca-Cola Company.
Mr. James R. Sprinkle joined the Company in April 1984 as Director of
National Accounts. Mr. Sprinkle assumed the responsibilities of Vice
President Domestic Sales in May 1993. Before joining the Company, he
was employed by the DuPont de Nemours Company and the 3M Company
holding positions in Market Development and Research and Development,
respectively.
Mr. Samuel Durham joined the Company in June 1979 and he has held the
position of Vice President, Engineering since May 1993. He is
primarily responsible for coordinating new product design through its
introduction into the market and works directly with the engineering
department of the Company's primary customer. Before joining the
Company, Mr. Durham was employed by Polyvend, a manufacturer of
vending equipment.
Mr. Michael U. Raymondi joined the Company as Vice President of
Operations on August 1, 1994. Prior to joining Lancer, Mr. Raymondi
was employed by Minnesota Rubber, a rubber and plastics products
company, as General Manager for three years. Prior to that,
Mr. Raymondi was employed by National O-Ring as Plant Manager for
five years.
EXECUTIVE COMPENSATION
The Company believes that compensation of its executive officers and
others should be directly and materially linked to operating
performance. For fiscal 1994, the executive compensation program
consisted of base salary, a bonus plan based on Company profitability
and individual performance, and stock options. The compensation levels
of all executives were based primarily on achievement of specific
quantitative and qualitative goals set at the beginning of the period.
COMPENSATI0N AND STOCK OPTION COMMITTEES' REPORT
The Compensation and the Stock Option Committees (the "Committees") of
the Board of Directors, which usually meet once a year, determine the
Company's executive composition. Salaries and awards are made under
stock option plans at the Committees' meeting in the first quarter
with respect to that fiscal year. Compensation for a newly-hired
executive may be established by the Committees at a special meeting.
The Committees believe that compensation of the Company's key
executives should be sufficient to attract and retain highly qualified
personnel and also provide meaningful incentives for measurably
superior performance. They also believe that compensation should be
directly and materially linked to operating performance and the extent
to which cash for growth is generated by operations instead of debt.
As a result, the Company places special emphasis on long and short-
term performance goals as measured by leverage ratios and improvements
in net income. The Company's performance goals were set in part by an
evaluation of its level of operational complexity and competitive
environment. Special awards are contemplated to compensate for the
achievement of superior goals in specific departments, such as
research and development, production and sales.
During 1994, executive compensation included a base salary, cash bonus
contingent on the achievement of specified short-term net income
goals, and long-term incentive compensation in the form of stock
options. Based on available data, the Committees believe the base
salaries, cash bonuses and long-term incentivecompensation of its
executives were set below the levels of comparable companies as
measured by market capitalization.
During 1994, Mr. George F. Schroeder, the Company's CEO, received a
base salary of $101,296 and a bonus of $65,000 as determined by the
Compensation Committee and approved by the Board of Directors. As
co-founder of the Company, Mr. George F. Schroeder's tenure provides
the management stability and experience necessary to confront the
unique challenges offered by a company engaged in worldwide exporting
as well as domestic operations.
The 1994 fiscal year was a good year for the Company, as reflected by
the earnings per share. These factors will be taken into consideration
in determining future stock bonus and short-term cash awards.
Internal Revenue Code Section 162(m), enacted in 1993, precludes a
public corporation from taking a deduction in 1994 or subsequent
years for compensation in excess of $1 million for its chief executive
officer or any of its four other highest-paid officers. Certain
performance-based compensation, however, is specifically exempt from
the deduction limit. Since the vesting of options under the 1992 Plan
and the 1987 Plan is not subject to the attainment of performance
objectives, it is possible that awards to named executive officers
under either of these Plans, when taken in conjunction with their
annual compensation, could become subject to the limitations of
Section 162(m). However, based upon the current and anticipated levels
of executive compensation and outstanding and anticipated stock
options under the 1992 Plan and 1987 Plan, it is not anticipated that
any executive compensation will in the foreseeable future become
subject to the limitations imposed by Section 162(m). Therefore, the
Committee has determined not to make any changes to the Company's
executive compensation programs at this time, but will continue to
review and assess the impact of this tax legislation on future
executive compensation and determine what action, if any, may be
appropriate.
Compensation and Stock Option Committees
Walter J. Biegler, Chairman
Robert A. Shuey, III
Michael E. Smith
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no
compensation for serving as a director. Directors who are not
employees of the Company receive an annual fee of $8,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Michael E. Smith is a member of the Company's Compensation
Committee. Mr. Smith is a principal shareholder and Vice President of
the insurance brokerage firm of Bailey-Gosling Associates, Inc. In
1994, the Company paid approximately $265,000 in premiums for various
insurance policies placed by or through Bailey-Gosling Associates, Inc.
Mr. Robert A. Shuey, III is a member of the Company's Compensation
Committee. Mr. Shuey is employed by Dillon Gage, Incorporated, an
investment banking firm. In 1994, the Company paid a commission of
$170,000 to the firm for underwriting a 200,000 share common stock
offering.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or to be paid by
the Company to the Chief Executive Officer, the Chairman of the Board,
and the named executive officers for services rendered in all
capacities for the years ended December 31, 1994, 1993 and 1992.
Long Term
Compensation
Annual Compensation Awards
Other Securities All
Annual Underlying Other
Salary Bonus Compensation Options Compensation
(1) (2)
Name/Title Year ($) ($) ($) (#) ($)
Alfred Schroeder 1994 101,296 65,000 4,000 - 52,005
Chairman of the 1993 101,296 35,000 2,689 22,700 16,680
Board 1992 101,296 30,000 1,743 33,000 16,296
George Schroeder 1994 101,296 65,000 4,000 - 33,197
President & CEO 1993 101,296 35,000 2,689 22,700 13,386
1992 101,296 30,000 1,743 33,000 11,629
Robert Abbott 1994 89,728 13,514 2,900 3,000 2,393
Vice President 1993 88,504 8,000 1,904 - 2,350
Euro-Asia Sales 1992 91,908 5,000 1,250 - 2,022
James Sprinkle 1994 86,190 16,504 2,800 - 1,533
Vice President 1993 83,574 10,000 49,756 4,500 1,391
Domestic Sales 1992 81,978 10,150 1,188 6,600 667
Samuel Durham 1994 91,254 26,886 3,200 - 2,179
Vice President 1993 88,463 20,000 2,140 4,540 1,964
Engineering 1992 88,269 15,000 1,332 6,600 912
(1) These amounts reflect Company contributions to its profit
sharing plan for the benefit of the named officers for the years
indicated and taxable income of $47,909 from the exercise of non-
statutory stock options by James R. Sprinkle in 1993.
(2) These amounts include insurance premiums paid for the benefit of
the named officers and certain other taxable fringe benefits.
OPTIONS GRANTS DURING THE 1994 FISCAL YEAR
The following table discloses, for Mr. Robert W. Abbott, Vice
President Euro-Asia Sales, information on Common Stock options of the
Company ("Options") granted during the 1994 fiscal year. There are no
other named executive officers who received options during 1994.
Individual Grants Option Value
Potential Realizable
Value At Assumed Annual
Rates of Stock Price
Appreciation for Option
Number of
Options Securities
Granted Underlyling Exercise
(#) Options Price Expiration 0% 5% 10%
Name/Title (1) Granted ($/Sh) Date ($) (2) (2)
Robert Abbot 3,000 3,000 16.75 10/16/99 0 13,883 30,000
Vice President
Euro-Asia Sales
(1) The options are 20% vested and exercisable to that extent. The
options are not transferable, other than by will or the laws of
decent and distribution or pursuant to a qualified domestic
relations order.
(2) The information in these columns illustrates the value that
might be realized upon exercise of the options granted during
fiscal year 1994 assuming the specified compound rates of
appreciation of the Company's Common Stock over the term of the
options. The potential realizable value columns of the foregoing
table do not take into account certain provisions of the options
providing for termination of the option following termination of
employment or nontransferability.
OPTIONS EXERCISED DURING THE 1994 FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table discloses, for the Chief Executive Officer, the
Chairman of the Board, and the named executive officers information
concerning options exercised during the fiscal year ended December 31,
1994, and the number and value of the options held at the end of
fiscal year 1994 based upon the closing price of $18.375 per share of
Common Stock on December 31, 1994.
Number of Value of
Securities Unexercised
Underlying In-the Money
Shares Unexercised Option Options at
Acquired at FY-End (#) FY-End
on Value Exercisable/ Exercisable/
Name/Title Exercise Realized Unexercisable Unexercisable
Alfred Schroeder 0 0 42,080/ $548,941/
Chairman of the 13,620 $130,412
George Schroeder 0 0 42,080/ $548,941/
President & CEO 13,620 $130,412
Robert Abbott 0 0 600/ $975/
Vice President 2,400 $3,900
Euro-Asia Sales
James Sprinkle 0 0 1,800/ $18,675/
Vice President 2,700 $28,013
Domestic Sales
Samuel Durham 0 0 8,416/ $111,241/
Vice President 2,724 $28,262
Engineering
The Company has no Long-Term Incentive Plans or a Pension Plan and has
therefore omitted these tables from the Proxy Statement.
COMPANY PERFORMANCE
The following table shows a comparison of cumulative total returns for
the Company, the Dow Jones Industrial Average and the Dow Jones
Electrical Components and Equipment ("ECE") indices for the five year
period ended December 31, 1994.
1989 1990 1991 1992 1993 1994
Lancer Corp. 100 94 100 169 323 420
Dow Jones 100 99 124 133 155 163
Industrial
Dow Jones 100 92 115 115 125 131
Peer Group
The total cumulative return on investment (change in the year end
stock price plus reinvested dividends) for each year for the Company,
the Dow Jones Industrial Average and the Dow Jones Electrical
Components and Equipment ("ECE") Indices is based on the stock price
or composite index on December 31 of each year presented. The
comparison assumes that $100 was invested in the Company's Common
Stock and in each of the two indices.
EMPLOYEE STOCK OPTION PLANS
1992 Stock Option Plan. On December 18, 1991, the Board of Directors
adopted the 1992 Non-statutory Stock Option Plan (the "1992 Plan")
under which options may be granted to key management employees of the
Company, which include officers and directors of the Company who are
also employees. The 1992 Plan is intended to encourage stock ownership
by key management employees of the Company and its subsidiaries, to
provide additional incentive for such employees to expand and improve
the profitability of the Company and to attract and retain key
personnel.
The maximum number of shares of Common Stock approved for issuance
under the 1992 Plan was 115,000 (subject to certain adjustments), all
of which had been granted as of December 31, 1994. The Stock Option
Committee of the Board of Directors administers and interprets the
1992 Plan. Options are granted on such terms and prices as determined
by the Committee in its sole discretion; provided, however, that the
per share exercise price of the options granted may not be less than
the fair market value of the Common Stock on the date of grant.
Options are exercisable after six months have elapsed from date of
grant.
As of the date of this Proxy Statement, options to purchase an
aggregate of 79,530 shares of Common Stock are outstanding under the
1992 Plan exercisable at an average exercise price of $4.375 per share.
Options granted to officers include 33,000 shares to each of
Alfred A. Schroeder and George F. Schroeder, 4,290 shares to
Dennis D. Stout, 6,600 shares to James R. Sprinkle, 4,950 shares to
Daniel A. Martinez, and 6,600 shares to Samuel Durham, all of whom
are executive officers of the Company. Options for 8,250 shares under
this plan were exercised during 1994.
1987 Stock Option Plan. On April 14, 1987, the Board of Directors
adopted and on May 29, 1987, the Shareholders approved the 1987 Stock
Option Plan (the "1987 Plan") under which options may be granted to
key employees of the Company, which include officers and directors of
the Company who are also employees, supervisory personnel and other
employees of the Company or a subsidiary corporation of the Company.
The 1987 Plan is intended to advance the interests of the Company by
providing officers and other key employees who have substantial
responsibility for the direction and management of the Company with
additional incentive and increase their proprietary interest in the
success of the Company. The maximum number of shares of Common Stock
approved for issuance under the 1987 Plan is 100,000 (subject to
certain adjustments). Shares by reason of the expiration of an option
that are no longer subject to purchase pursuant to an option granted
under the 1987 Plan may be issued in connection with new options
granted thereunder. All options granted under the 1987 Plan intended
to qualify under Section 422A of the Internal Revenue Code, as amended,
for incentive stock option treatment.
The Stock Option Committee of the Board of Directors administers and
interprets the 1987 Plan. Options are granted on such terms and prices
as determined by the "Committee" in its sole discretion; provided,
however, that the per share exercise price of the options granted to
less than 10% shareholders may not be less than the fair market value
of the Common Stock on the date of grant. The exercise price of
options granted to 10% shareholders may not be less than 110% of the
fair market value of the Common stock on the date of grant. Unless
sooner terminated by action of the Board of Directors, the 1987 Plan
will terminated on April 13, 1997 and no options may thereafter be
granted under the 1987 Plan. The 1987 Plan may be amended, altered or
discontinued by the Board without the approval of the shareholders,
except that the Board does not have the power of authority to increase
the maximum number of shares for which options may be granted under
the 1987 Plan (except for certain adjustments) either in the aggregate
or as to any individual employee, to change the minimum purchase
prices that may be established under the 1987 Plan (except for certain
adjustments), to extend the period or periods that options may be
granted or exercised, to change the provisions relating to the
termination of employees to whom options are granted and the number of
shares to be covered by such options or to change the provisions
relating to adjustments to be made upon changes in capitalization.
Each option is exercisable after the period or periods specified in
the option agreement but no option is exercisable after the expiration
of ten years from date of grant. Options are not transferable other
than by will or the laws of descent and distribution without the
consent of the Board. The aggregate fair market value (determined at
the time of the grant) of the Common Stock with respect to which
options under the 1987 Plan are exercisable for the first time by a
grantee of an option in any calendar year shall not exceed $100,000.
Other than this restriction, there is no restriction in the 1987 Plan
on the minimum number of shares of Common Stock covered by options
that may be granted to any person or that may be made purchasable by
exercise by any person at any time.
As of the date of this Proxy Statement, options to purchase 84,495
shares of Common Stock are outstanding under the 1987 Plan exercisable
at an average exercise price of $8.87 per share. Options to purchase
3,680 shares of Common Stock remain available for grant. Options
granted to executive officers include 22,700 shares to each of
Alfred A. Schroeder and George F. Schroeder, 3,950 shares to
Dennis D. Stout, 3,000 shares to Michael U. Raymondi, 3,000 to
Robert W. Abbott, 4,500 shares to James R. Sprinkle, 3,355 shares to
Daniel A. Martinez, and 4,540 shares to Samuel Durham. Options for
4,193 shares under this plan were exercised during 1994.
PROFIT SHARING PLAN
In 1991 the Company restated the non-contributory profit sharing plan
it originally adopted in 1985 to comply with changes in the law. The
amount of annual contributions is at the discretion of the Board of
Directors but may not exceed an amount equal to fifteen percent of the
compensation paid or accrued during the year to all participating
employees. Substantially all United States employees are eligible to
participate. The Company's consolidated statements of income for the
years ended December 31, 1994, 1993, and 1992 include provisions of
$269,652, $184,622 and $105,081 respectively, attributable to the plan.
CERTAIN TRANSACTIONS
Michael E. Smith, a principal shareholder and Vice President of the
insurance brokerage firm of Bailey-Gosling Associates, Inc., has been
the Company's insurance broker since 1981. The Company paid
approximately $264,497 in premiums for various insurance policies
placed by or through Bailey-Gosling Associates, Inc. in 1994 for which
Mr. Smith's services were used in connection therewith.
Mr. Robert A. Shuey, III is a member of the Company's Compensation
Committee. Mr. Shuey is employed by Dillon Gage, Incorporated, an
investment banking firm. In 1994, the Company paid a commission of
$170,000 to the firm for underwriting a 200,000 share common stock
offering.
Lancer Properties is a Texas general partnership that owns the land
and building at 235 West Turbo in San Antonio, Texas where the
Company's administrative facilities and a portion of its production
operations are located. Lancer Properties leased the premises to the
Company for a term of 21 years beginning June 1, 1977 at a rental of
$6,600 per month. The Company also leases adjoining operating
facilities at 257R West Turbo, from Lancer Properties on a month-to-
month basis for $800 per month. The Company pays all maintenance
expenses, property taxes, assessments and insurance premiums on these
facilities. In conjunction with a debt refinancing in 1992, the
Company advanced $219,893 to this partnership. Repayment of this
advance will be made through a reduction of lease payments otherwise
due between the Company and the partnership and includes an interest
charge at a rate of 9.25%. Included in other assets and prepaid
expenses in the Company's consolidated balance sheet at December 31,
1994 is $112,954 remaining due from the partnership for this advance.
Improvements to these properties paid by the Company are recorded as
an offset against the lease payments. Alfred A. Schroeder,
George F. Schroeder and Jean M. Braley, all of whom were directors of
the Company during 1993, own 13.33%, 13.33% and 15%, respectively, of
Lancer Properties. The Estate of William V. Braley, for which
Mrs. Braley serves as sole independent executrix, also holds a 15%
interest in the partnership. As of December 31, 1994, Alfred A.
Schroeder and George F. Schroeder were indebted to the Company for
$138,327 for cash sums advanced. The obligation to repay this
indebtedness is evidenced by promissory notes due to and payable to
the Company on or before December 31, 1995, together with interest
at the rate of 6% per annum.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more
than ten percent of the Company's Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and American Stock Exchange. Based solely on reprots and
other information submitted by executive officers and directors, the
Company believes that during the year ended December 31, 1994 each of
its executive officers, directors and persons who own more than ten
percent of the Company's Common Stock filed all reports required by
Section 16(a), except for a late filing by Mr. Michael U. Raymondi
after he joined the Company and a late filing by Mr. Michael U.
Raymondi and Mr. Robert W. Abbott pursuant to stock option grants of
3,000 shares each.
Shareholders may submit proposals on matters appropriate for
shareholder action at subsequent annual meetings of the Company
consistent with Rule 14a-8 promulgated under the Securities Exchange
Act of 1934, as amended. For such proposals to be considered for
inclusion in the Proxy Statement and Proxy relating to the 1996
Annual Meeting of Shareholders, such proposals must be received by the
Company no later than December 26, 1995. Such proposals should be
directed to Lancer Corporation, 235 W. Turbo, San Antonio, Texas 78216,
Attn: Shareholder Relations.
The Board of Directors knows of no matter other than those described
herein that will be presented for consideration at the Meeting.
However, should any other matters properly come before the Meeting or
any adjournment thereof, it is the intention of the persons named in
the accompanying Proxy to vote in accordance with their best judgment
in the interest of the Company.
The expenses of preparing, printing and mailing this notice of meeting
and proxy material and all other expenses of soliciting proxies will
be borne by the Company. Georgeson & Company Inc., New York, New York,
will distribute proxy soliciting material to brokers, banks, and
institutional holders and will request such parties to forward
soliciting material to the beneficial owners of the Common Stock held
of record by such persons. The Company will pay Georgeson & Company Inc.
a minimum fee of $600 not to exceed $1,500 covering its services and
will reimburse Georgeson & Company Inc. for payments made to brokers
and other nominees for their expenses in forwarding soliciting material.
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1994 accompanies this Proxy statement. The Annual Report
is not deemed to be part of this Proxy Statement.
By order of the Board of Directors
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President
San Antonio, Texas
April 24, 1995
LANCER CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS - MAY 26, 1995
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of LANCER CORPORATION, a Texas
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 24, 1995
and hereby appoints George F. Schroeder and Alfred A. Schroeder or
either of them, proxies and attorneys-in-fact, with full power to each
of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 1995 Annual Meeting of Shareholders
of Lancer Corporation to be held May 26, 1995 at 9:30 a.m., local time,
at Sheraton-Fiesta San Antonio Hotel, 37 NE Loop 410, San Antonio,
Texas, and at any adjournment or adjournments thereof, and to vote all
shares of common stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth on the
reverse side hereof and in their discretion, upon such other matter or
matters which may properly come before the meeting or any adjournment
or adjournments thereof.
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of all listed directors, FOR
the ratification of the appointment of KPMG Peat Marwick as independent
auditors, and as said proxies deem advisable on such other matters as
may come before the meeting.
(Continued, and to be signed and dated, on the reverse side.)
LANCER CORPORATION
PO BOX 11214
NEW YORK, NY 10203-0214
1. ELECTION OF DIRECTORS
FOR all WITHHOLD AUTHORITY to EXCEPTIONS
nominees vote
listed below for all nominees listed
______ below ______ ______
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK HE EXCEPTIONS BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME
IN THE LIST BELOW:
Alfred A. Schroeder; George F. Schroeder; Walter J. Biegler; Jean M.
Braley; Robert A. Shuey, III; Michael E. Smith; John P. Herbots
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1995.
FOR ______ AGAINST ______ ABSTAIN ______
Address Change
and/or
Comments
Mark Here ________
(This Proxy should be marked,dated and signed
by the shareholder(s) exactly as his or her
name appears hereon, and returned promptly in
the enclosed envelope. Persons signing in a
fiduciary capacity should so indicate, if
shares are held by joint tenants both should
sign.)
Dated _________________________ , 1995
______________________________________
Signature
_______________________________________
Signature
Votes MUST be indicated (x) in Black or Blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
