<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 Section240.14a-11(c) or
Section240.14a-12
THE MIDDLEBY CORPORATION
- --------------------------------------------------------------------------------
(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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset 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:
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(4) Date Filed:
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Notes:
<PAGE>
THE MIDDLEBY CORPORATION
---------------------------------------------
2850 W. GOLF ROAD
SUITE 405
ROLLING MEADOWS, ILLINOIS 60008
April 9, 1999
Notice of Annual Stockholders Meeting:
You are hereby notified that the Annual Meeting of Stockholders of The Middleby
Corporation (the "Company") will be held at the Company's facility located at
1400 Toastmaster Drive, Elgin, Illinois at 10:30 a.m., local time, on Thursday,
May 13, 1999, for the following purposes:
1. To elect ten directors to hold office until the 2000 Annual Meeting.
2. To consider a proposal to ratify the selection of Arthur Andersen LLP as
independent auditors of the Company for the fiscal year ending January 1,
2000.
3. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 26, 1999 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Meeting.
You are urged to attend the Meeting in person. Whether or not you expect to be
present in person at the Meeting, please vote, sign and date the enclosed proxy
and return it in the envelope provided.
By Order of the Board of Directors
JOHN J. HASTINGS
SECRETARY
<PAGE>
THE MIDDLEBY CORPORATION
---------------------------------------------
2850 W. GOLF ROAD
SUITE 405
ROLLING MEADOWS, ILLINOIS 60008
1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy are furnished to stockholders of
The Middleby Corporation (the "Company") in connection with the solicitation of
proxies by the Company's Board of Directors for use at the 1999 Annual Meeting
of Stockholders (the "Meeting") to be held at the Company's facility located at
1400 Toastmaster Drive, Elgin, Illinois, at 10:30 a.m. local time, on Thursday,
May 13, 1999, for the purposes set forth in the accompanying Notice of Meeting.
The Proxy Statement, the form of proxy included herewith and the Company's
Annual Report to Stockholders for the fiscal year ended January 2, 1999 are
being mailed to stockholders on or about April 9, 1999.
Stockholders of record at the close of business on March 26, 1999 are entitled
to notice of and to vote at the Meeting. On such date there were outstanding
10,157,721 shares of common stock, par value $.01 per share, of the Company
("Common Stock"). The presence, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding and entitled to vote at the
Meeting is necessary to constitute a quorum. In deciding all questions, each
holder of Common Stock will be entitled to one vote, in person or by proxy, for
each share held on the record date.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
election inspectors appointed for the Meeting and will determine whether or not
a quorum is present. The election inspectors will treat abstentions as shares
that are present and entitled to vote but as not voted for purposes of
determining the approval of any matter submitted to the stockholders for a vote.
Abstentions will have the same effect as negative votes. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is made, such proxies will be voted FOR the
election of all nominees named under the caption "Election of Directors" as set
forth therein as directors of the Company and FOR the ratification of the
selection of Arthur Andersen LLP as Independent Auditors for the fiscal year
ending January 1, 2000. Any proxy may be revoked by the stockholder at any time
prior to the voting thereof by notice in writing to the Secretary of the
Company, either prior to the Meeting (at the above Rolling Meadows address) or
at the Meeting if the stockholder attends in person. A later dated proxy will
revoke a prior dated proxy. As of the date of this Proxy Statement, the Board of
Directors knows of no other business which will be presented for consideration
at the Meeting. If other proper matters are presented at the Meeting, however,
it is the intention of the proxy holders named in the enclosed form of proxy to
take such actions as shall be in accordance with their best judgment.
The information contained in this Proxy Statement relating to the occupations
and security holdings of directors and officers of the Company and their
transactions with the Company is based upon information received from each
individual as of March 26, 1999.
1
<PAGE>
HOLDINGS OF STOCKHOLDERS, DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth, as of March 26, 1999, the name, address and
holdings of each person known by the Company to be the beneficial owner of more
than five percent of the Company's Common Stock, and the amount of Common Stock
beneficially owned by each of the directors and executive officers of the
Company and by all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NAME OF NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C>
William F. Whitman, Jr. 1,943,571 shares(1) 19.1%
The Middleby Corporation
2850 W. Golf Road, Suite 405
Rolling Meadows, IL 60008
Robert R. Henry 1,627,769 shares(2)(3) 16.0%
Robert Henry & Co., Inc.
P.O. Box 115
Far Hills, NJ 07931
Laura B. Whitman 449,875 shares(3)(4) 4.4%
David P. Riley 321,545 shares(5) 3.2%
A. Don Lummus 158,300 shares(6) 1.6%
Sabin C. Streeter 26,000 shares (7)
John R. Miller III 26,000 shares (7)
Philip G. Putnam 14,250 shares(3) (7)
Joseph G. Tompkins 18,250 shares(3) (7)
Robert L. Yohe 32,250 shares(3) (7)
John J. Hastings 38,897 shares(8) (7)
Wellington Management Company, LLP 973,500 shares(9) 9.6%
75 State Street
Boston, MA 02109
Fiduciary Management Associates, Inc. 564,300 shares(10) 5.6%
55 West Monroe St., Suite 2550
Chicago, IL 60603
Dimensional Fund Advisors, Inc. 757,344 shares(11) 7.5%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
Brinson Partners, Inc. 776,700 shares(12) 7.6%
209 S. LaSalle St.
Chicago, IL 60604-1295
All directors and executive 4,356,707 shares 42.9%
officers of the Company (2)(3)(4)(5)(6)(8)(13)
- --------------------------------------------------------------------------------------
</TABLE>
NOTES:
(1) Does not include 1,537,125 shares owned by the trusts described in Note (2)
below, as to which Mr. Whitman disclaims beneficial ownership. Includes
255,300 shares owned by Mr. Whitman's spouse. Also included are 40,000
shares of Common Stock deemed issued upon exercise of stock options granted
in February 1998.
2
<PAGE>
(2) Includes 1,537,125 shares of Common Stock held by Mr. Henry as trustee under
trusts as follows: (a) 1,255,875 shares for the benefit of Mr. Whitman's two
adult children, W. Fifield Whitman III and Laura B. Whitman (218,625 shares
owned by a trust for the benefit of Laura B. Whitman and 437,250 shares
owned by a trust for the benefit of W. Fifield Whitman III, and 300,000
shares owned by each of two other trusts, as to one of which Laura B.
Whitman is co-trustee -- See Note (4) below), and (b) 281,250 shares for the
benefit of Mr. Whitman's spouse. Mr. Henry disclaims beneficial ownership of
these shares.
(3) Includes 11,250 shares of Common Stock deemed issued upon exercise of stock
options granted in February 1996.
(4) Includes 300,000 shares owned by a trust for the benefit of Laura B. Whitman
of which Mr. Henry and Ms. Whitman are co-trustees; these shares are also
included in the shares owned by Mr. Henry as trustee as described in Note
(2) above. Does not include other shares owned by Mr. Henry as trustee for
the benefit of Ms. Whitman described in Note (2) above.
(5) Includes 48,650 shares of Common Stock owned by trusts for the benefit of
Mr. Riley's two adult children, for which Mr. Riley and his wife serve as
trustees. Mr. Riley disclaims beneficial ownership of these shares. Also
includes 173,670 shares of Common Stock held by Mr. Riley's spouse in trust
and 40,000 shares of Common Stock deemed issued upon exercise of stock
options granted in February 1998.
(6) Includes 1,000 shares of Common Stock deemed issued upon exercise of stock
options granted in May 1992.
(7) Represents less than 1% of all common shares outstanding.
(8) Mr. Hastings, age 43, is Executive Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company, and his holdings include 18,500
shares of Common Stock deemed issued upon exercise of stock options.
(9) Information taken from Schedule 13G which states that the information is as
of December 31, 1998 and shows shared voting power as to 340,000 shares and
shared power of disposition as to 973,500 shares. The Schedule 13G states
that all securities reported on the schedule are owned by advisory clients
of Wellington Management Company, LLP.
(10)Information taken from Schedule 13G which states that the information is as
of December 31, 1998 and shows sole voting power as to 564,300 shares and
sole power of disposition as to 564,300 shares.
(11)Information taken from Schedule 13G which states that the information is as
of December 31, 1998 and shows sole voting power as to 757,344 shares and
sole power of disposition as to 757,344 shares. The Schedule 13G states that
all securities reported on the schedule are owned by advisory clients of
Dimensional Fund Advisors, Inc., and Dimensional Fund Advisors, Inc.
disclaims beneficial ownership of all such securities.
(12)Information taken from Schedule 13G filed jointly by Brinson Partners, Inc.
and UBS AGT which states that the information is as of December 31, 1998 and
shows shared voting power of 776,700 shares and shared power of disposition
as to 776,700 shares. The Schedule 13G states that Brinson Partners, Inc.
disclaims ownership of all such securities.
(13)The 300,000 shares indicated in Notes (2) and (4) above have been included
only once in this calculation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to report to its stockholders those directors, officers
and owners of more than 10% of any class of the Company's equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), who fail to timely file reports of beneficial
ownership and changes in beneficial ownership, as required by Section 16(a) of
the Exchange Act. Upon a review of these reports, the Company believes that all
reports were filed on a timely basis.
3
<PAGE>
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Ten directors are to be elected by a plurality of the stockholder votes cast at
the Meeting to serve until the 2000 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify. The following persons have
been nominated:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S) DIRECTOR OF
DURING PAST FIVE YEARS COMPANY OR
NAME AGE AND OTHER PUBLIC DIRECTORSHIPS PREDECESSOR SINCE
<S> <C> <C> <C>
Robert R. Henry 58 President of Robert R. Henry Co., Inc., a 1996
venture capital firm, since 1989. Managing
Director of Morgan Stanley & Co., Inc. from
1977 to 1989. Advisory Director of Morgan
Stanley and a director of Somanetics
Corporation, a medical monitor manufacturer.
A. Don Lummus 63 Chairman and Chief Executive Officer of 1984
Crudgington Machine Tools, a CNC machine
tool manufacturer, since 1995. From 1984 to
1994, Vice Chairman of Sasib Bakery North
America, Inc. (formerly Stewart Systems,
Inc.), manufacturer of automated bakery
equipment. Prior thereto, Chairman,
President and Chief Executive Officer of
Stewart Systems, Inc.
John R. Miller III 58 President of Equal Opportunity Publications, 1978
Inc., publisher of special market trade
magazines. Director of First National Bank
of Long Island and its holding company, the
First of Long Island Corporation.
Philip G. Putnam 58 Executive Vice President, Brean Murray & Co. 1978
Inc., investment bankers, since 1996. From
1983 to 1996, Executive Vice President of
American Asset Management Company,
investment advisers.
David P. Riley 52 President and Chief Executive Officer of the 1983
Company and its principal subsidiary,
Middleby Marshall Inc. ("MM"). Director of
Zebra Technologies Corporation, an
industrial equipment manufacturer.
Sabin C. Streeter 57 Adjunct Professor and Executive-in-Residence 1987
at Columbia Business School. Managing
Director and Vice President of Donaldson,
Lufkin & Jenrette Securities Corp.,
investment bankers, 1976 to 1990 and 1993 to
1997. Managing Director of Sprout Group, its
venture capital affiliate, 1991 to 1993.
Director of Oakwood Homes Corporation, and
Parker/ Hunter Incorporated.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S) DIRECTOR OF
DURING PAST FIVE YEARS COMPANY OR
NAME AGE AND OTHER PUBLIC DIRECTORSHIPS PREDECESSOR SINCE
<S> <C> <C> <C>
Joseph G. Tompkins 58 President, Saga Investment Co. Inc., an 1996
investment advisor, 1992 to present. From
1967 to 1995, Morgan Stanley & Co., Inc.,
serving as Advisory Director from 1992 to
1995 and Managing Director and Head of Asian
Equity Business from 1976 to 1994. Member of
Advisory Committee, Center for Japanese
Studies, Columbia Business School.
William F. Whitman, Jr. 59 Chairman of the Board of the Company and MM. 1978
Laura B. Whitman (1) 31 Assistant Vice President of Christie's, New 1996
York. Specialist in Chinese Paintings,
Christie's, New York, 1995 to 1997, and
Sotheby's, New York, 1990 to 1995.
Robert L. Yohe 63 Independent Director and Corporate Advisor. 1996
Vice Chairman and Director of Olin
Corporation, a chemicals manufacturer, 1993
to 1994, and from 1985 to 1992, President of
Olin Chemicals, a division of Olin
Corporation. Director of Airgas, Inc.,
Calgon Carbon Corporation, LaRoche
Industries, Inc. and Marsulex Inc.
</TABLE>
- --------------
(1) Ms. Whitman is the daughter of the Chairman of the Company.
The Board of Directors knows of no reason why any of the foregoing nominees will
be unavailable to serve, but, in the event of any such unavailability, the
proxies received will be voted for such substitute nominees as the Board of
Directors may recommend.
COMMITTEES; BOARD MEETINGS
The Company has an Audit Committee composed of Messrs. Putnam (Chairman),
Streeter and Tompkins, and Ms. Whitman. During the fiscal year ended January 2,
1999, the Audit Committee met twice for the purposes of (i) approving the
selection of the Company's independent auditors; (ii) reviewing the arrangements
for and scope of the audit; (iii) discussing any matters of concern to the
Committee and/or the Board of Directors with regard to the Company's financial
statements or other results of the audit; and (iv) reviewing the Company's
internal accounting procedures and controls and the activities and
recommendations of the Company's independent auditors.
The Company has a Compensation Committee composed of Messrs. Yohe (Chairman),
Henry, Lummus and Miller. The Compensation Committee met once during the fiscal
year ended January 2, 1999. The function of the Compensation Committee is to
review and approve recommendations concerning the compensation of the Chairman
of the Board and the President and Chief Executive Officer of the Company. The
Company does not have a Nominating Committee.
The Board of Directors of the Company held four meetings during the fiscal year
ended January 2, 1999, and each director attended at least 75% of all Board and
applicable Committee meetings.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation for services to the Company in all capacities for the fiscal years
ending January 2, 1999 (the "1998 fiscal year"), January 3, 1998 (the "1997
fiscal year") and December 28, 1996 (the "1996 fiscal year"), received by those
persons who were, during the 1998 fiscal year, (i) the chief executive officer
and (ii) the most highly compensated executive officers of the Company whose
total annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----
AWARDS
----
ANNUAL COMPENSATION SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
POSITION YEAR ($)(1) ($) ($)(2) SARS(#)(3) ($)
<S> <C> <C> <C> <C> <C> <C>
David P. Riley 1998 $325,555 $ 0 $42,000 100,000 $6,995
President and Chief 1997 $306,534 $320,000 $39,000 -- $7,852
Executive Officer 1996 $285,000 $228,615 $38,000 -- $6,960
William F. Whitman, Jr. 1998 $359,815 $ 0 $88,000 100,000 $7,273
Chairman of the 1997 $337,238 $320,000 $64,000 -- $8,234
Board 1996 $312,500 $228,615 $63,000 -- $7,343
John J. Hastings (5) 1998 $151,882 $ 0 -- -- $5,568
Executive Vice 1997 $148,405 $139,870 -- -- $6,529
President, Chief 1996 $138,375 $ 76,205 -- 5,000 $5,742
Financial Officer,
Secretary and
Treasurer
- ---------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(1) Figures for the 1997 fiscal year represent a 53 week year.
(2) Amounts in 1998, 1997 and 1996 for Mr. Riley and Mr. Whitman represent
director's fees for services to the Company and its subsidiaries.
(3) Amounts in 1998 to Mr. Riley and Mr. Whitman represent options to purchase
shares of the Company's Common Stock awarded under the Company's 1998 Stock
Incentive Plan. The amount in 1996 to Mr. Hastings represents options to
purchase shares of the Company's Common Stock awarded under the Company's
Amended and Restated 1989 Stock Incentive Plan (the "1989 Stock Incentive
Plan" or the "1989 Plan").
(4) All Other Compensation consists of the following: (i) the Company's Profit
Sharing Contributions on behalf of the executive officers above in the
amounts of $4,489, $5,520 and $4,768 for 1998, 1997 and 1996 respectively;
and (ii) insurance premiums paid by the Company on a group term life
insurance policy as follows: Mr. Riley $2,506, $2,332 and $2,192; Mr.
Whitman $2,784, $2,714 and $2,575 and Mr. Hastings $1,079, $1,009 and $974
(amounts shown are for each of 1998, 1997 and 1996 respectively).
(5) Mr. Hastings was appointed to these positions on August 27, 1993.
6
<PAGE>
EMPLOYMENT AGREEMENTS
DAVID P. RILEY. The Company and MM entered into an employment agreement with Mr.
Riley dated as of January 1, 1988, as restated and amended January 1, 1995 and
as amended as of January 1, 1998. The employment agreement, as amended, provides
for Mr. Riley to serve as President of the Company and President and Chief
Executive Officer of MM (or in such other executive capacities as the Board of
Directors of the Company and MM may designate) for a term ending December 31,
2003, and for a specified minimum amount of annual compensation. The agreement
further provides that Mr. Riley shall be entitled to one-half of the amounts
credited to the Company's executive bonus pool (i.e., 6% of the operating
profits of MM, calculated prior to tax, interest, corporate office, and other
allocation charges). The agreement contains provisions for termination in the
event of death or disability, or for cause, and for the payment of base salary
(subject to adjustment) for certain periods following termination of employment
in certain events. The agreement provides that after Mr. Riley's termination for
any reason, the Company will pay Mr. Riley or his designee retirement benefits
in equal monthly installments commencing on the first day of the month following
the later to occur of (i) the date of such termination of employment, or (ii)
Mr. Riley's 55th birthday (whether or not he is then living). Each monthly
installment of retirement benefits shall be in an amount (subject to consumer
price index ("CPI") adjustments) equal to one-twelfth ( 1/12) of certain
percentages (ranging from 10% to 50%) of Mr. Riley's total compensation in
effect during the last year of his employment with the Company, depending on the
date of termination of employment. Retirement benefits will be paid to Mr. Riley
for his life, or if he dies before age 75, such benefits, reduced by 50%, will
be paid to his spouse until Mr. Riley would have attained age 75.
In addition, MM and the Company may terminate the agreement without cause upon
two years notice; further, Mr. Riley may terminate the agreement and continue to
receive his base salary (subject to adjustment) for two years (but not beyond
December 31, 2003) if the Company and MM relocate their executive offices
outside of the Chicago metropolitan area. If Mr. Riley voluntarily terminates
his employment for certain reasons, or if the Company terminates the agreement
for cause, then Mr. Riley may not compete with the Company or MM for a period of
two years following termination of his employment. Moreover, the agreement
extends to Mr. Riley rights similar to those extended to Mr. Whitman in the
event of a change in control of the Company.
If Mr. Riley remains an employee of the Company until the first to occur of (i)
his 55th birthday, or (ii) his death, the Company will maintain for the
continued benefit of Mr. Riley and his spouse after termination of his
employment all health and medical plans and programs which the Company maintains
for its senior executives and their families.
WILLIAM F. WHITMAN, JR. The Company and MM entered into an employment agreement
with Mr. Whitman dated as of March 10, 1978, as amended and restated January 1,
1995 and as amended as of January 1, 1998. The employment agreement, as amended,
provides, among other things, for Mr. Whitman to serve as Chairman of the Board
of Directors of the Company and Chairman of the Board of MM for a term ending
December 31, 2003 and for a specified minimum amount of annual compensation. The
agreement provides that Mr. Whitman is to be entitled to a distribution equal to
one-half of the amounts credited to the Company's executive bonus pool, along
with similar distributions of any other bonus or similar program established by
the Company or MM. In addition, the employment agreement provides that Mr.
Whitman shall be entitled to certain retirement benefits in the event of Mr.
Whitman's termination of employment for any reason, including death or
disability, such payments to commence on the first day of the month following
the date of such termination of employment. Each monthly installment of
retirement benefits shall be in an amount (subject to CPI adjustments) equal to
one-twelfth ( 1/12) of 75% of Mr. Whitman's total compensation in effect during
the last year of his employment with the Company. Any such retirement benefits
will be reduced, commencing March 1, 2005, by the amount per month which Mr.
Whitman is entitled to receive under the Salaried Retirement Plan of the Company
which was terminated in 1982. Retirement benefits will be paid to Mr. Whitman
for his life, or if he dies before age 75, until he would have attained age 75.
The employment agreement gives both parties the right to terminate in the event
of a breach (willful breach, if the Company is terminating) of the obligations
of the other party under the agreement,
7
<PAGE>
with certain payments to Mr. Whitman in certain events. The agreement may also
be terminated by the Company at any time without cause upon 90 days notice, such
termination to be effective in two years, but in such event Mr. Whitman would be
entitled to salary and bonus for such two-year period. After termination for any
reason except breach by the Company or MM, the Company and MM may elect to pay
Mr. Whitman his base salary for an additional year, in which event Mr. Whitman
may not compete with the Company or MM for such period of time. Moreover, the
agreement extends to Mr. Whitman the right to terminate his employment at any
time during a two-year period following a change in control of the Company, and
upon such termination Mr. Whitman is entitled to receive as severance pay an
amount equal to two years of his base salary, all accrued but unpaid salary, all
benefits under the executive bonus pool and all retirement benefits under the
agreement.
In addition, the Company maintains for the continued benefit of Mr. Whitman and
his spouse all health and medical plans and programs which the Company maintains
for its senior executives and their families. Mr. Whitman and his spouse are
entitled to such health and medical benefits for life.
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
The Company has terminated the supplemental retirement benefit plan (which was
originally adopted July 5, 1993) which it maintained for the benefit of senior
management employees who retired from the Company or MM. There is one individual
with rights remaining under this plan.
The supplemental retirement benefit plan, which is unfunded, provides for an
annual retirement benefit equal to 1.25% of base salary for each year of service
beginning January 1, 1993, with a twenty year maximum. The maximum annual
benefit is 25% of base salary after 20 years of service, beginning January 1,
1993. Retirement age is 65, and participants must be employees of the Company or
MM at the time of retirement to obtain this benefit. For the purpose of the
plan, base salary is the average salary for the last three years of service
prior to retirement. The number of years of service is based on the date of hire
or January 1, 1993, whichever is later. Partial years of service are not
counted. Plan benefits are not subject to off-set for social security or other
non-plan benefits.
The following table indicates examples of annual pension benefits to be paid in
an annuity of equal monthly installments upon normal retirement at age 65:
ESTIMATED ANNUAL PENSION BENEFITS AT AGE 65
<TABLE>
<CAPTION>
AVERAGE FINAL THREE 5 YEARS 10 YEARS 15 YEARS 20 YEARS
YEARS OF BASE SALARY SERVICE SERVICE SERVICE SERVICE
- -------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 100,000 $ 6,250 $ 12,500 $ 18,750 $ 25,000
150,000 9,375 18,750 28,125 37,500
200,000 12,500 25,000 37,500 50,000
250,000 15,625 31,250 46,875 62,500
300,000 18,750 37,500 56,250 75,000
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In place of the supplemental retirement benefit plan, the Company adopted a
supplemental executive retirement plan, effective July 1, 1998, for a select
group of management or highly compensated employees, as designated by the
committee appointed to administer the plan. The purpose of the plan is to
provide supplemental retirement benefits to selected key employees upon
termination of employment, disability or death in order to recruit and retain
such employees. The committee responsible for administering the plan consists of
the Chief Executive Officer, the Chief Financial Officer and the Treasurer or
Assistant Treasurer of the Company (the "Committee"). The Committee has sole and
absolute discretion to determine the eligibility of individuals for benefits
under the plan, as well as the timing and amount of awards to plan participants.
Each individual award that
8
<PAGE>
the Committee grants to a plan participant has a five (5) year vesting period
and is accounted for in separate bookkeeping participant accounts.
Upon retirement, at or after age 60, a plan participant is eligible to receive
100% of those awards in which the participant is vested. In general,
participants are not eligible to receive any portion of awards in which they are
not vested. Participants who terminate employment with the Company at or after
age 60 and with 20 or more years of service are vested in all awards previously
granted to them. The Committee also has the discretion to vest all of a
participant's awards upon retirement with a lesser number of years of service to
the Company. Upon retirement, each of the retiring individual's vested awards
are multiplied by the interest rate applicable to each award, as provided in the
plan, and these amounts are paid to the individual in fifteen (15) annual
payments.
In the event of a participant's death or disability prior to retirement, the
participant's beneficiary will be able to receive the participant's vested award
balance plus interest payable in fifteen (15) annual payments. At the discretion
of the Committee, and upon the beneficiary's request, a participant's
beneficiary may receive a reduced lump sum payment, in lieu of the fifteen (15)
annual payments.
If a participant's employment is terminated prior to retirement the individual
is entitled to a lump sum payment of all vested awards under the plan without
interest.
In certain circumstances, participants may also receive in-service distributions
of all or a portion of vested awards (i.e., unforeseeable emergency or complete
cash-out from the plan).
In the event that a retired participant who is receiving retirement benefits
under the plan engages in competition with the Company, the Committee has the
option to cease all annual installment benefits and pay the participant a
reduced lump-sum amount in complete satisfaction of all benefits to such
participant. The determination of whether competition exists will be made by the
Committee in the exercise of its sole and absolute judgment.
PROFIT SHARING PLAN
The Company maintains a tax-qualified Profit Sharing and Savings Plan for those
of its employees and the employees of affiliated employers who are not union
employees, non-resident aliens or leased employees. Each eligible employee
becomes a participant upon employment. This Plan provides for an annual
discretionary contribution by the Company and affiliated companies. The
contribution is allocated to individual accounts of participants in proportion
to their compensation and is integrated with the applicable Social Security
taxable wage base. A participant's profit sharing account begins vesting after 3
years of service with the Company and affiliated employers and is fully vested
after 7 years of service. A participant whose employment terminates for reasons
other than death, total disability or retirement on or after attaining age 65 is
entitled only to the vested portion of his account. The Plan also permits
participants to contribute to their own accounts on a pre-tax basis by means of
compensation reduction elections. The portion of a participant's account that is
attributable to compensation reduction contributions is always 100% vested. The
Plan also permits the Company and affiliated employers to make discretionary
matching contributions under the Savings Plan that are allocated to participants
as a uniform percentage of their compensation reduction contributions for the
same year. The portion of a participant's account that is attributable to
matching contributions is subject to the same vesting rules that apply to that
participant's profit sharing account. During the fiscal year ended January 2,
1999, the Company made Profit Sharing Plan contributions of $300,000 and no
matching contributions to the Savings Plan. Aggregate contributions to executive
officers in such fiscal year totaled an estimated $13,467.
9
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information concerning individual grants
of stock options made during the fiscal year ended January 2, 1999 to the named
executive officer of the Company receiving such grants under the Company's 1998
Stock Incentive Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER OF PERCENT
SECURITIES OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS/SARS EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS/SARS GRANTED TO BASE PRICE PRICE APPRECIATION
GRANTED EMPLOYEES IN PER SHARE EXPIRATION FOR OPTION TERM
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
William F. Whitman,
Jr. 100,000(1) 50% $ 7.094(2) 2/19/08 $ 446,138 $1,130,601
David P. Riley 100,000(1) 50% $ 7.094(2) 2/19/08 $ 446,138 $1,130,601
- -----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(1) 40,000 of such options became immediately exercisable. An additional 30,000
of such options become exercisable when the price of the Company's Common
Stock reaches $10.094 and the remaining 30,000 shares become exercisable
when the price of the Company's Common Stock reaches $14.094.
(2) The exercise price was based upon a calculation of the average closing price
of the Company's Common Stock for the four business days subsequent to the
release of fourth quarter 1997 earnings.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning the exercise of
stock options during the fiscal year ended January 2, 1999 by each of the named
executive officers and the fiscal year-end value of unexercised options under
the 1998 Stock Incentive Plan and the 1989 Stock Incentive Plan. Options awarded
under these plans become exercisable in accordance with the terms of the grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
David P. Riley 0 n/a 40,000/60,000 $0/$0
William F. Whitman,
Jr. 0 n/a 40,000/60,000 $0/$0
John J. Hastings 0 n/a 18,500/2,500 $19,750/$0
</TABLE>
10
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares five-year cumulative total return for a stockholder
investing $100 in the Company on December 31, 1993 with the Nasdaq Stock Market
Index and the Index of Nasdaq Non-Financial Stocks over the same period,
assuming reinvestment of dividends. The Company does not believe it is feasible
to provide a comparison against a group of peer companies, as there is an
insufficient number of other similar publicly traded companies. The following
graph 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 (the "Securities Act") or the Exchange Act, except to the
extent the Company specifically incorporates the information contained therein
by reference, and shall not otherwise be deemed filed under such Acts.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
The Middleby Corporation 100 161.90 361.90 242.86 297.64 138.10
The Nasdaq Stock Market Index 100 97.75 138.26 170.00 208.58 293.21
Nasdaq Non-Financial Stocks Index 100 96.16 134.03 162.84 191.05 279.82
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE AND BOARD OF DIRECTORS
This Report of the Compensation Committee and Board of Directors shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act or under
the Exchange Act except to the extent the Company specifically incorporates the
information contained herein by reference, and shall not otherwise be deemed
filed under such Acts.
The Compensation Committee reviews and approves recommendations concerning the
compensation of the Chairman and the President and Chief Executive Officer of
the Company. The full Board of Directors reviews the Company's operating profit
target levels and the bonus component of the compensation of executive officers
and senior managers of the Company, other than the Chairman and the President
and Chief Executive Officer. The basic strategy of the Compensation Committee is
to have a significant portion of executive compensation at risk, where payment
of bonuses is tied to performance and creating shareholder value.
William F. Whitman, Jr., Chairman of the Board, and David P. Riley, President
and Chief Executive Officer, are employed by the Company pursuant to individual
employment agreements. These employment agreements are summarized elsewhere in
this Proxy Statement. Mr. Whitman's employment agreement establishes the
components of his compensation arrangement as a minimum base salary plus a bonus
based upon Company performance as measured by a percentage of defined operating
profits. Mr. Riley's employment agreement also provides for a minimum base
salary plus
11
<PAGE>
a bonus identical to that of Mr. Whitman (i.e., based on Company performance as
measured by the same percentage of defined operating profits). The current
levels of base salary for Messrs. Whitman and Riley have been determined on the
basis of the value contributed by these individuals to the longstanding
operations of the Company and MM. The bonus formula for the Chairman and the
President and Chief Executive Officer was originally established in 1978 and
amended in 1992, and is directly related to the operating profits of the
Company. The Compensation Committee believes that such formula emphasizes paying
for performance, the achievement of operating profits, where bonuses are tied to
generating shareholder value.
The compensation of other executive officers and senior managers of the Company
are set at levels to be competitive with amounts paid to executive officers and
senior managers with comparable qualifications, experience and responsibilities
at other businesses of similar type or with similar market capitalization. Such
individuals receive a salary and also participate in an annual Management
Incentive Compensation Plan. The Plan provides for payment of bonuses determined
as a percentage of such participant's base salary depending on the achievement
of certain levels of operating profits, earnings before tax and/or return on
investment percentage. Target levels are set annually to be in line with the
Company's annual budget, and are presented by the President and Chief Executive
Officer to the Board of Directors for review and approval.
The Board of Directors believes that awards under the Company's incentive plans
link the financial interests of management with those of the stockholders.
Grants during any fiscal year, including the fiscal year ended January 2, 1999,
are based on an individual's long-term contribution to the operations of the
Company and MM.
The Compensation Committee:
Robert L. Yohe, Chairman, Robert R. Henry,
A. Don Lummus and John R. Miller III
Other Directors:
William F. Whitman, Jr., David P. Riley, Philip
G. Putnam,
Sabin C. Streeter, Joseph G. Tompkins and Laura
B. Whitman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Robert R. Henry, A. Don Lummus, John R.
Miller III and Robert L. Yohe, all of whom are independent directors of the
Company and are not officers of the Company. William F. Whitman, Jr., the
Chairman of the Board, and David P. Riley, the President and Chief Executive
Officer of the Company, participate with the full board in reviewing and
approving certain components of compensation of other executive officers and
senior managers. Recommendations concerning the compensation of Messrs. Whitman
and Riley, however, are subject to the review and approval of the Compensation
Committee.
DIRECTORS' COMPENSATION
Each director of the Company receives an annual fee of $12,000, and each
director who is not an officer of the Company receives an additional fee of
$1,000 for each meeting of the Board of Directors or committee thereof that he
or she attends. Each director who serves as a committee chair receives an
additional annual fee of $2,000.
DIRECTORS' RETIREMENT PLAN
The Company maintains an unfunded retirement plan for non-employee directors.
The plan provides for an annual benefit upon retirement from the Board of
Directors at age 70, equal to 100% of the director's last annual retainer,
payable on a quarterly basis for a number of years equal to the director's years
of service, up to a maximum of 10 years.
12
<PAGE>
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has audited the books and records of the Company
since its inception and the Board of Directors desires to continue the services
of this firm for the current fiscal year ending January 1, 2000. Accordingly,
the Board of Directors will recommend at the Meeting that the stockholders
ratify the appointment of the firm of Arthur Andersen LLP to audit the accounts
of the Company for the current fiscal year. Representatives of that firm are
expected to be present at the Meeting with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP.
MISCELLANEOUS
The Company's 1998 Annual Report to Stockholders is being mailed to stockholders
contemporaneously with this Proxy Statement.
COST OF SOLICITATION
All expenses incurred in the solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited on behalf
of the Company by directors, officers and employees of the Company or by
telephone or telecopy. The Company will reimburse brokers and others holding
Common Stock as nominees for their expenses in sending proxy material to the
beneficial owners of such Common Stock and obtaining their proxies.
PROPOSALS OF SECURITY HOLDERS
Proposals of stockholders intended to be presented at the 2000 Annual Meeting of
Stockholders under SEC Rule 14a-8 must be made in accordance with the Company's
By-Laws, and must be received by the Secretary of the Company at the Company's
principal executive offices for inclusion in the Company's Proxy Statement and
form of proxy relating to that meeting no later than December 13, 1999.
Notice of stockholder matters intended to be submitted at the next annual
meeting outside the processes of Rule 14a-8 will be considered untimely if not
received by the Company by February 25, 2000.
By order of the Board of Directors.
JOHN J. HASTINGS
SECRETARY
Dated: April 9, 1999
13
<PAGE>
THE MIDDLEBY CORPORATION
2850 W. GOLF ROAD, SUITE 405, ROLLING MEADOWS, ILLINOIS 60008
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William F. Whitman, Jr., David P. Riley and
John J. Hastings, and each of them, with full power of substitution, attorneys
and proxies to represent the undersigned at the 1999 Annual Meeting of
Stockholders of THE MIDDLEBY CORPORATION (the "Company") to be held at the
Company's facility located at 1400 Toastmaster Drive, Elgin, Illinois at 10:30
a.m. local time, on Thursday, May 13, 1999, or at any adjournment thereof, with
all power which the undersigned would possess if personally present, and to vote
all shares of stock of the Company which the undersigned may be entitled to vote
at said Meeting as follows:
<TABLE>
<C> <C>
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (unless name of nominee is / / WITHHOLD
crossed out) AUTHORITY
Robert R. Henry A. Don Lummus John R. Miller III David P. Riley Sabin C.
Streeter Philip G. Putnam
Joseph G. Tompkins William F. Whitman, Jr. Laura B. Whitman Robert L.
Yohe
2. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING (which the Board of Directors does not know of prior to April 9,
1999)
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
Management recommends your vote FOR all proposals.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS AND FOR THE RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS, AND WILL CONFER
THE AUTHORITY IN PARAGRAPH 3.
Receipt is hereby acknowledged of the Notice of the Meeting and Proxy
Statement dated April 9, 1999, as well as a copy of the 1998 Annual Report to
Stockholders.
Dated:
------------------------, 1999.
---------------------------------------------------
---------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE TITLE. EACH JOINT OWNER
IS REQUESTED TO SIGN. IF A
CORPORATION OR PARTNERSHIP, PLEASE
SIGN BY AN AUTHORIZED OFFICER OR
PARTNER. PLEASE SIGN IN THE SAME
MANNER AS YOUR CERTIFICATE(S) IS
(ARE) REGISTERED.
PLEASE COMPLETE, DATE, SIGN AND RETURN this proxy in the envelope provided.
