<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
MAXCO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
MAXCO LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Maxco, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Maxco,
Inc., a Michigan corporation, will be held at the corporate office, 1118
Centennial Way, Lansing, Michigan on August 25, 1998, at 3:30 p.m. local time
for the following purposes, all of which are more completely set forth in the
accompanying proxy statement.
1. To elect nine Directors;
2. To approve a new stock option plan authorizing shares on which qualified
and nonqualified options may be granted in the amount of 500,000 shares
of common stock of the Company; and
3. To transact such other business as may properly come before the meeting.
In accordance with the Bylaws of the Company and a resolution of the Board
of Directors, the record date for the meeting has been fixed at July 24, 1998.
Only Shareholders of record at the close of business on that date will be
entitled to vote at the meeting.
By Order of the Board of Directors
Eric L. Cross
Secretary
Lansing, Michigan
August 1, 1998
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY FORM, INDICATE YOUR CHOICE
WITH RESPECT TO THE MATTERS TO BE VOTED UPON, AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT
THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD WILL AID THE COMPANY IN REDUCING THE
EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
<PAGE> 3
MAXCO, INC.
1118 CENTENNIAL WAY
LANSING, MICHIGAN 48917
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Maxco, Inc. (the Company), 1118
Centennial Way, Lansing, Michigan 48917, for use at the Annual Meeting of
Shareholders of the Company to be held on August 25, 1998, at 3:30 p.m., or any
adjournments thereof. This Proxy Statement is being mailed to Maxco Shareholders
on or about August 1, 1998, to all holders of record of common stock of the
Company as of the close of business on July 24, 1998.
PURPOSE OF THE MEETING
The purpose of this Annual Meeting of Shareholders shall be to elect
Directors, approve a new stock option plan and to transact such other business
as may properly come before the meeting.
VOTING
Common Stock and Series Three Preferred Shares are the only voting stock of
the Company. Holders of record at the close of business on July 24, 1998, are
entitled to one (1) vote for each share of Common Stock held and twenty (20)
votes for each share of Series Three Preferred Stock held. As of May 31, 1998,
the Company had 3,296,710 shares of Common Stock and 14,988 shares of Series
Three Preferred Stock outstanding. Holders of stock entitled to vote at the
meeting do not have cumulative voting rights with respect to the election of
Directors.
All shares represented by proxies shall be voted "FOR" each of the matters
recommended by management unless the shareholder, or his duly authorized
representative, specifies otherwise or unless the proxy is revoked. Any
shareholder who executes the proxy referred to in this statement may revoke it
before it is exercised, provided written notice of such revocation is received
at the office of the Company in Lansing, Michigan at least twenty-four (24)
hours before the commencement of the meeting, or provided the grantor of the
proxy is present at the meeting and, having been recognized by the Chairman,
announces such revocation in open meeting. All shareholders are encouraged to
date and sign the enclosed proxy form, indicate your choice with respect to the
matters to be voted upon and return it to the Company.
In elections of directors where the number of nominees is equal to the
number of positions to be filled, the vote required to elect each director is
equal to the majority of the votes cast in such election. Actions other than
elections of directors are also authorized by a majority of the votes cast.
Although state law and the articles of incorporation and bylaws of the Company
are silent on the issue, it is the intent of the Company that proxies received
which contain abstentions or broker non-votes as to any matter will be included
in the calculation as to the presence of a quorum, but will not be counted as
votes cast in such matter in the calculation as to the needed majority vote.
ELECTION OF DIRECTORS
It is the intention of the persons named in the proxy to vote for election
of the following nominees to the Board of Directors to hold office until the
next Annual Meeting or until their successors are elected. In the event any
nominee should be unavailable, which is not anticipated, the shares may, in the
discretion of the proxy holders, be voted for the election of such persons as
the Board of Directors may submit. Directors are elected for a term of one (1)
year and until their successors are elected and qualified. Proxies will be voted
only to the extent of the number of nominees named.
2
<PAGE> 4
The following information is furnished concerning the nominees, all of whom
have been nominated by the Board of Directors and are presently Directors of the
Company.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SERVED AS DIRECTOR
NAME COMPANY AND PRINCIPAL OCCUPATION AGE OF MAXCO SINCE
---- -------------------------------- --- ------------------
<S> <C> <C> <C>
Max A. Coon................. Director, President and Chairman of the Board of 63 1969
MAXCO, INC.
Eric L. Cross............... Director, Executive Vice President and Secretary 55 1972
of MAXCO, INC.
Charles J. Drake............ Director of MAXCO, INC., President of Medar, 58 1982
Inc., a Farmington Hills, Michigan based
manufacturer of micro-processor based controls
and inspection systems of which Maxco owns 24%.
Joel I. Ferguson............ Director of MAXCO, INC., President of F&S 59 1985
Development Company, a Lansing, Michigan based
company which develops, contracts and/or owns
and manages real estate properties
Richard G. Johns............ Director and Vice President of MAXCO, Inc. 54 1990
Vincent Shunsky............. Director, Vice President of Finance and 49 1983
Treasurer of MAXCO, INC.
J. Michael Warren........... Director of MAXCO, INC., General Counsel of 58 1979
MAXCO, INC., and President of Warren Cameron
Faust & Asciutto, P.C.
Michael W. Wisti............ Director of MAXCO, INC., President of Atmosphere 59 1997
Annealing, Inc., a Lansing, Michigan based
provider of heat treating services which was
acquired by Maxco, Inc. in January 1997.
Andrew S. Zynda............. Director of MAXCO, INC., Chairman of the Board 77 1972
of Midwest Bridge Company, a Williamston,
Michigan based bridge and road building
contractor
</TABLE>
All of the foregoing Directors and nominees have been engaged in the
principal occupation specified for the previous five (5) years.
Messrs. Coon, Shunsky, and Drake are also Directors of Medar, Inc., a 24%
owned investment of Maxco, Inc. whose stock is traded on the Nasdaq Stock
Market.
Mr. Coon and Mr. Cross are brothers-in-law. There are no other family
relationships between any Directors or Executive Officers.
The Board of Directors has established Compensation and Audit Committees
whose members are Max A. Coon, J. Michael Warren and Andrew S. Zynda. The
Compensation Committee is also responsible for administering the Company's Stock
Option Plan, including designating the recipients and terms of specific option
grants. The Compensation Committee met one time during the fiscal year to
establish compensation levels for the Executive Officers and to authorize the
levels and timing of bonuses. One meeting of the Audit Committee was held during
the last fiscal year. The Audit Committee recommends the annual employment of
the Company's auditors with whom the Audit Committee will review the scope of
audit and non-audit assignments, related fees, the accounting principles used by
the Company in financial reporting, internal financial auditing procedures and
the adequacies of the Company's internal control procedures. The Company does
not have a standing nominating committee.
During the last fiscal year there were a total of 4 meetings of the Board
of Directors. Messrs. Ferguson, Drake and Zynda attended less than 75% of the
meetings.
3
<PAGE> 5
DIRECTOR COMPENSATION
The Directors of the Company are paid $100 per meeting attended. Fees are
not paid to Directors for attendance at committee meetings.
EXECUTIVE OFFICERS
The following table sets forth information concerning the Executive
Officers of the Company.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE
NAME COMPANY AND PRINCIPAL OCCUPATION AGE
---- -------------------------------- ---
<S> <C> <C>
Max A. Coon................. President, Director and Chairman of the Board of MAXCO, INC. 63
Eric L. Cross............... Executive Vice President, Secretary and Director of MAXCO, 55
INC.
Richard G. Johns............ Vice President and Director of MAXCO, INC. 54
Vincent Shunsky............. Vice President of Finance, Treasurer and Director of MAXCO, 49
INC.
</TABLE>
All of the foregoing Officers of the Company have been engaged in the
principal occupations specified above for the previous five years.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of Max A. Coon, Andrew S. Zynda, and J. Michael Warren. Although the
presence of Mr. Coon on the Committee, as Chief Executive Officer of the
Company, could be considered to present a conflict of interest, Mr. Coon's input
is considered very important and he has agreed to abstain from voting on any
matter related to his own compensation.
OVERVIEW AND PHILOSOPHY
The Committee is responsible for developing and making recommendations to
the Board with respect to the Company's executive compensation policies. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company.
The objectives of the Company's executive compensation program are to:
-- Support the achievement of desired Company performance.
-- Provide compensation that will attract and retain superior talent and
reward performance.
-- Align the executive officers' interests with the success of the Company
by placing a portion of pay at risk, with payout dependent upon
corporate performance.
The executive compensation program provides an overall level of
compensation opportunity that is competitive with companies of comparable size
and complexity. The Compensation Committee will use its discretion to set
executive compensation where in its judgment external, internal or an
individual's circumstances warrant it.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, and various benefits, including medical and deferred
compensation plans, generally available to employees of the Company.
4
<PAGE> 6
BASE SALARY
Base salary levels for the Company's executive officers are competitively
set relative to other comparable companies. In determining salaries the
Committee also takes into account individual experience and performance.
ANNUAL INCENTIVE COMPENSATION
The Company's annual incentive program for executive officers and key
managers provides direct financial incentives in the form of an annual cash
bonus to executives to achieve the Company's annual goals. Goals for Company
performance are set at the beginning of each fiscal year. In the year ended
March 31, 1998, the following measures of Company performance were selected: net
sales, consolidated net income, market penetration, and customer satisfaction.
Specific individual performance was also taken into account in determining
bonuses, including meeting department goals, attitude, dependability,
cooperation with co-workers, and creativity or ideas that benefit the Company.
STOCK OPTION PROGRAM
The stock option program is the Company's long-term incentive plan for
executive officers and key employees. The objectives of the program are to align
executive and shareholder long-term interests by creating a strong and direct
link between executive pay and shareholder return, and to enable executives to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock.
On August 30, 1983, the Shareholders ratified an Employee Stock Option Plan
to grant options on up to 250,000 shares of the Company's common stock to
officers and key employees of the Company and its subsidiaries. The Plan was
amended by Shareholder action on August 25, 1987, to increase the number of
shares on which options may be granted to 500,000 shares. It expired on August
25, 1997. The options which were granted under this plan are intended to qualify
as "incentive stock options" within the meaning of Section 422A of the Internal
Revenue Code, as amended.
The stock option plan authorized a committee of directors to award
executive and key employee stock options. Stock options are granted at an option
price equal to the fair market value of the Company's Common Stock on the date
of grant, have ten year terms and can have exercise restrictions established by
the Option Committee. Awards are made at a level calculated to be competitive
with companies of comparable size and complexity.
A new stock option plan authorizing options on 500,000 shares of common
stock of the Company on substantially the same terms is proposed to be approved.
See "Proposed Stock Option Plan."
DEFERRED COMPENSATION
The Company has two 401(k) Employee Savings Plans covering substantially
all employees of the Company. The 401(k) plans are "cash or deferred" plans
under which employees may elect to contribute a certain portion of their annual
compensation which they would otherwise be eligible to receive in cash. The
Company has agreed to make a matching contribution in the percentages specified
in the plan documents. In addition, a separate employer contribution may be made
at the discretion of the Board. The plans do not contain established termination
dates and it is not anticipated that they will be terminated at any time in the
foreseeable future.
BENEFITS
The Company provides medical benefits to the executive officers that are
generally available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the Securities and Exchange
Commission relating to executive compensation, did not exceed 10% of salary for
the year ended March 31, 1998.
5
<PAGE> 7
CHIEF EXECUTIVE OFFICER
Max A. Coon has served as the Company's Chief Executive Officer since 1969.
His base salary for the year ended March 31, 1998 was $220,000 and his bonus for
such year was $300,000.
Significant factors in establishing Mr. Coon's compensation were the 38%
increase in net sales from continuing operations and a $2.9 million improvement
in operating earnings from the prior year. Mr. Coon's role in the acquisition of
interests in Strategic Interactive, Inc. and Blasen-Brogan Asset Management
Company was also a major factor.
The Committee believes Mr. Coon managed the Company well in a challenging
business climate and has achieved above-average results in comparison to other
comparable companies.
THE COMPENSATION COMMITTEE
Max A. Coon
Andrew S. Zynda
J. Michael Warren
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and to the three other executive officers whose
compensation exceeded $100,000:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION OTHER
NAME AND ---------------------------- ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMP(1) OPTIONS COMP(2)
------------------ ---- ------ ----- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Max A. Coon............................ 1998 220,000 300,000 400 0 3,500
Chief Executive Officer 1997 220,000 1,250,000(3) 500 0 3,400
1996 220,000 0 400 0 3,348
Eric L. Cross.......................... 1998 132,000 200,000 400 0 3,184
Executive Vice President 1997 132,000 400,000 500 0 3,400
1996 132,000 0 400 42,500 2,904
Richard G. Johns....................... 1998 125,000 50,000 300 0 2,750
Vice President 1997 125,000 200,000 400 0 3,400
1996 125,000 0 300 22,500 2,750
Vincent Shunsky........................ 1998 132,000 200,000 400 0 3,184
Vice President of Finance 1997 132,000 400,000 500 0 3,400
1996 132,000 0 400 42,500 2,904
</TABLE>
- -------------------------
(1) Represents annual director fees.
(2) Represents the Company's 20% match of employee deferrals of currently earned
income into the 401(k) Employee Savings Plan and a profit sharing
contribution made by the Company for all of its eligible employees to the
401(k) Employee Savings Plan at the rate of 1% of eligible compensation.
(3) Includes $500,000 which did not become payable until July 1997.
6
<PAGE> 8
OPTIONS
The following table summarizes the options exercised by the persons named
in the Summary Compensation Table, above, and the value of the options held by
such persons at the year end. No options were granted to the named individuals
during the year ended March 31, 1998. All of the options held by the named
individuals are presently exercisable.
OPTION EXERCISES DURING FISCAL 1998
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
NAME AND SHARES ACQUIRED VALUE OPTIONS AT OPTIONS AT
PRINCIPAL POSITION ON EXERCISE(#) REALIZED ($) FISCAL YEAR END FISCAL YEAR END
------------------ --------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Max A. Coon............................. 0 0 0 0
Chief Executive Officer
Eric L. Cross........................... 0 0 62,500 $209,900
Executive Vice President
Richard G. Johns........................ 0 0 32,500 $106,825
Vice President
Vincent Shunsky......................... 20,000 $157,400 42,500 $ 52,500
Vice President of Finance
</TABLE>
TRANSACTIONS WITH MANAGEMENT
The Company's joint venture, L/M Associates, LLC, is a 25% partner in CJF
Partnership, a real estate development general partnership which owns office
building sites for development, along with Max A. Coon and Richard G. Johns,
both of whom are directors and executive officers of the Company, and several
individuals who are not related to the Company.
Mr. J. Michael Warren is currently a Director of the Company. During the
year ended March 31, 1998, the Company and its subsidiaries paid $206,939 to
Warren Cameron Faust & Asciutto, P.C., a law firm of which Mr. Warren is
President, for legal services.
On July 9, 1996 the Company closed a transaction in which it sold the
4,045,000 shares which it has previously owned in FinishMaster, Inc. As part of
that transaction, the Buyer required the individuals named in the Summary
Compensation Table, above, to enter into non-competition agreements, with
consideration of $84,089 which was paid to each of the named individuals in July
1997.
Effective January 1, 1998, the Company purchased 600 shares, representing
one third of the outstanding stock, of AMI Energy, Inc., a client based
wholesale distributor of natural gas in the Midwest, for $250 per share. Four
hundred of the shares were purchased from AMI and 100 from each of the two other
shareholders, one of whom is the son of Max A. Coon, the Company's president and
chairman.
COMPLIANCE WITH REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and Executive Officers or beneficial owners of over 10% of any class
of the Company's equity securities to file certain reports regarding their
ownership of the Company's securities or any changes in such ownership. During
the year ended March 31, 1998, J. Michael Warren filed one late Form 4 covering
a transaction by the employee 401(k) plan of the law firm of which he is
president. Max A. Coon filed two late Form 4s covering a transaction on behalf
of a grandchild and a transaction in a wholly owned corporation. Michael W.
Wisti was late in filing the Form 3, Initial Statement of Beneficial Ownership
of Securities upon his election to the board of directors. All of the required
forms have now been filed.
7
<PAGE> 9
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five years with the cumulative total
return on the CRSP Total Return Index for the NASDAQ Stock Market (US Companies)
(1) and a peer group of companies (2) over the same period, assuming the
investment of $100 in the Company's Common Stock, the NASDAQ Index and the peer
group on March 31, 1993, and reinvestment of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MAXCO, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
NASDAQ
STOCK
MEASUREMENT PERIOD MAXCO, PEER MARKET
(FISCAL YEAR COVERED) INC GROUP (U.S.)
<S> <C> <C> <C>
3/93 100.00 100.00 100.00
3/94 150.00 88.14 107.94
3/95 160.00 78.80 120.07
3/96 173.75 110.10 163.03
3/97 137.50 66.27 181.21
3/98 185.00 52.85 275.21
</TABLE>
- -------------------------
* $100 invested on 3/31/93 in stock or index -- including reinvestment of
dividends. Fiscal year ending March 31.
(1) The CRSP Total Return Index for the NASDAQ Stock Market (US Companies) is
composed of all domestic common shares traded on the NASDAQ National Market
and the NASDAQ Small-Cap Market.
(2) The peer group consists of ten companies whose stock is publicly traded and
whose market capitalizations are slightly above and below the Company's
capitalization in a range from $30.45 million to $30.68 million. Because of
the diversified nature of the businesses represented by its subsidiary
companies, the Company is unable to identify a published industry or line of
business index or a group of peer issuers in comparable businesses which are
sufficiently similar to allow meaningful comparison. Therefore, the Company
has elected to compare its performance with a group of issuers having
similar market capitalizations as allowed by SEC rules.
8
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following Table sets forth certain information as of June 30, 1998, as
to the equity securities of the Company owned beneficially by beneficial owners
of 5% or more of the Company's securities, by each Director and Nominee and by
all Directors and Officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------------------------------------
SOLE VOTING SHARED VOTING
AND INVESTMENT AND INVESTMENT % OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS POWER POWER CLASS
------------------------ -------------- -------------- -------------- -----
<S> <C> <C> <C> <C>
Max A. Coon(1)................. Common Stock 859,709 15,487(2) 26.5%
Series Three Preferred Stock 3,240(3) 21.0%
Series Four Preferred Stock(4) 7,000 15.1%
Series Five Preferred Stock(4) 3,216 47.3%
Andrew S. Zynda(1)............. Common Stock 372,740 6,000 11.8%
Series Four Preferred Stock(4) 10,000 21.5%
Eric L. Cross.................. Common Stock 158,775(5) 650 4.6%
Charles J. Drake............... 0 *
Joel I. Ferguson............... Common Stock 5,000 *
Richard G. Johns............... Common Stock 115,160(6) 3.5%
Vincent Shunsky................ Common Stock 117,742(7) 3.5%
Series Three Preferred Stock 30 *
J. Michael Warren.............. Common Stock 16,000 *
Michael W. Wisti............... 500 *
All Directors and Officers as a
group, including the above,
totaling in number 9......... Common Stock 1,629,626 59,407(8) 48.9%
Series Three Preferred Stock 30 3,240 21.2%
Series Four Preferred Stock(4) 17,000 36.6%
Series Five Preferred Stock(4) 3,216 47.3%
ROI Capital Management,
Inc.(9)...................... Common Stock 327,504 9.9%
</TABLE>
- -------------------------
* Beneficial ownership does not exceed one percent (1%)
(1) The addresses of Mr. Coon and Mr. Zynda are both 1118 Centennial Way,
Lansing, Michigan.
(2) Represents shares owned by Mr. Coon's immediate family.
(3) Represents shares owned by a charitable foundation of which Mr. Coon is one
of the trustees.
(4) Series Four and Series Five Preferred Stock are both nonvoting.
(5) Includes 62,500 shares on which Mr. Cross is presently eligible to exercise
options.
(6) Includes 32,500 shares on which Mr. Johns is presently eligible to exercise
options.
(7) Includes 42,500 shares on which Mr. Shunsky is presently eligible to
exercise options.
(8) Includes 21,270 shares owned by Maxco, Inc. 401(k) Employees Savings Plan of
which Messrs. Coon, Shunsky, and Cross are Trustees.
(9) Information obtained from Schedule 13G dated June 18, 1998, filed with the
Securities and Exchange Commission and sent to the Company pursuant to
Section 13(d) of the Securities Exchange Act of 1934. The address of ROI
Capital Management, Inc. is 17 E. Sir Francis Drake Blvd., Suite 225,
Larkspur, CA 94939.
9
<PAGE> 11
PROPOSED STOCK OPTION PLAN
The Company proposes to adopt a new 1998 Stock Option Plan under which
options to purchase five hundred thousand (500,000) shares of the Company's
common stock may be granted to officers and other employees of the Company, and
to non-employee directors, advisors and consultants who may be in a position to
contribute materially to the welfare of the Company. Option recipients and the
level of the award will be determined by the Compensation Committee of the Board
of Directors on the basis of the recipient's services and value to the Company.
The 1998 Stock Option Plan provides for the grant of both incentive stock
options intended to qualify for preferential tax treatment under Section 422 of
the Internal Revenue Code of 1986, as amended, and nonqualified stock options
which do not qualify for such treatment. Stock options are granted at an option
price equal to the fair market value of the Company's common stock on the date
of grant, have ten year terms and can have exercise restrictions established by
the Compensation Committee. On July 15, 1998, the fair market value of the
Company's common stock was $8 7/8 per share.
In the case of incentive stock options, there is no tax liability to the
recipient upon either grant or exercise of the options. Upon sale of the
security, the recipient is taxed at capital gains rates on the difference
between the sales price and the amount paid for the option. There is no tax
consequence to the Company with regard to issuance, exercise or sale of the
options.
At the time a nonqualified option is exercised, the option holder must
recognize compensation income in the amount of the spread between the option
price and the fair market value at date of exercise. The Company is entitled to
a corresponding tax deduction.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP served as auditors for the Company for the
fiscal year ended March 31, 1998. The Company periodically evaluates its
external audit requirements and will make a decision based on cost, response
time and quality of services available. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting of Shareholders and will be
available to respond to appropriate questions, and will have the opportunity to
make a statement if they desire to do so.
SHAREHOLDER PROPOSALS
Any proposals which shareholders of the Company intend to present at the
next annual meeting of the Company must be received by the Company by April 1,
1999, for inclusion in the Company's proxy statement and proxy form for that
meeting.
OTHER BUSINESS
The management knows of no other matters that will come before the meeting.
However, if other matters do come before the meeting, the proxy holders will
vote in accordance with their best judgement. The cost of solicitation of
proxies will be borne by the Company. In addition to solicitations by use of the
mails, Officers and regular employees of the Company may solicit proxies by
telephone or in person.
By Order of the Board of Directors
Eric L. Cross
Secretary
10
<PAGE> 12
SKU 0358-PS-98
<PAGE> 13
MAXCO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 25, 1998.
The undersigned hereby constitutes and appoints Max A. Coon and Eric L.
Cross, and each or any of them, attorney and proxy for and in the names and
stead of the undersigned, to vote all stock of Maxco, Inc. (Maxco) on all
matters, unless the contrary is indicated herein, at the Annual Meeting of
Shareholders to be held at the corporate office, 1118 Centennial Way, Lansing,
Michigan, on August 25, 1998 at 3:30 p.m. local time or at any adjournments
thereof, according to the number of votes that the undersigned could vote if
personally present at said meeting. The undersigned directs that this proxy be
voted as follows:
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary
below).
M. Coon V. Shunsky
E. Cross J. M. Warren
C. Drake M. Wisti
J. Ferguson A. Zynda
R. Johns
WITHHOLD AUTHORITY to vote for all
nominees listed below
INSTRUCTION: To WITHHOLD AUTHORITY to vote for any individual nominee
write that nominee's name in the space provided below:
________________________________________________________________________
2. STOCK OPTION PLAN. Adoption of new stock option plan authorizing
qualified and nonqualified options to be granted on up to 500,000
shares of the common stock of the Company
(__) FOR (__) AGAINST (__) ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting.
<PAGE> 14
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 Proposals 1 and 2.
DATED:________________________,1998
____________________________________
____________________________________
NOTE: 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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
