NACCO INDUSTRIES INC, DEF 14A, 1998-03-30

NACCO INDUSTRIES INC
DEF 14A, 1998-03-30
INDUSTRIAL TRUCKS, TRACTORS, TRAILORS & STACKERS

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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

NACCO INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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<PAGE> 2

[NACCO, Industries, Inc. logo]
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017

NOTICE OF ANNUAL MEETING

The Annual Meeting of stockholders of NACCO Industries, Inc. (the
"Company") will be held on Wednesday, May 13, 1998, at 9:00 A.M., at 5875
Landerbrook Drive, Mayfield Heights, Ohio, for the purpose of:

(1) Electing ten directors for the ensuing year.

(2) Confirming the appointment of the independent certified public
accountants of the Company for the current fiscal year.

(3) Transacting such other business as may properly come before the
meeting.

The Board of Directors has fixed the close of business on March 13, 1998 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof.

CHARLES A. BITTENBENDER
Secretary

March 30, 1998

THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1997 IS BEING
MAILED TO STOCKHOLDERS CONCURRENTLY HEREWITH. THE ANNUAL REPORT CONTAINS
FINANCIAL AND OTHER INFORMATION ABOUT THE COMPANY, BUT IS NOT INCORPORATED INTO
THE PROXY STATEMENT AND IS NOT DEEMED TO BE A PART OF THE PROXY SOLICITING
MATERIAL.

------------------------

PLEASE PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED FORM(S) OF PROXY
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING. IF YOU HOLD SHARES OF
BOTH CLASS A COMMON STOCK AND CLASS B COMMON STOCK, TWO FORMS OF PROXY ARE
ENCLOSED AND BOTH SHOULD BE FILLED OUT AND RETURNED. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE> 3

[NACCO, INDUSTRIES, INC. LOGO]
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017

PROXY STATEMENT -- MARCH 30, 1998

This Proxy Statement is furnished in connection with the solicitation by
the directors of NACCO Industries, Inc., a Delaware corporation (the "Company"),
of proxies to be used at the annual meeting of stockholders of the Company to be
held on May 13, 1998 (the "Annual Meeting"). This Proxy Statement and the
related form(s) of proxy are being mailed to stockholders commencing on or about
March 30, 1998.

If the enclosed form(s) of proxy are executed and returned, the shares
represented by them will be voted as directed on all matters properly coming
before the Annual Meeting for a vote. The proxies may be revoked at any time
prior to their exercise by giving notice to the Company in writing or by a later
executed proxy. Attendance at the Annual Meeting will not automatically revoke a
proxy, but a stockholder attending the Annual Meeting may request a ballot and
vote in person, thereby revoking a prior granted proxy.

Stockholders of record at the close of business on March 13, 1998 will be
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 6,495,254 shares of Class A Common Stock, par
value $1.00 per share ("Class A Common"), and 1,667,963 shares of Class B Common
Stock, par value $1.00 per share ("Class B Common"). Each share of Class A
Common is entitled to one vote for a nominee for each of the ten directorships
to be filled and one vote on each other matter brought before the Annual
Meeting. Each share of Class B Common is entitled to ten votes for each such
nominee and ten votes on each other matter brought before the Annual Meeting.

At the Annual Meeting, in accordance with Delaware law and the Company's
By-Laws, the inspectors of election appointed by the Board of Directors for the
Annual Meeting shall determine the presence of a quorum and shall tabulate the
results of stockholder voting. As provided by Delaware law and the Company's
By-Laws, the holders of a majority of the Company's stock, issued and
outstanding, and entitled to vote at the Annual Meeting and present in person or
by proxy at the Annual Meeting, shall constitute a quorum for such meeting. The
inspectors of election intend to treat properly executed proxies marked
"abstain" as "present" for purposes of determining whether a quorum has been
achieved at the Annual Meeting. Such inspectors shall also treat proxies held in
"street name" by brokers that are not voted on all proposals to come before the
Annual Meeting ("broker non-votes") as "present."

Class A Common and Class B Common will vote as a single class on all
matters anticipated to be brought before the Annual Meeting. In accordance with
Delaware law, nominees for election as directors receiving the greatest number
of votes will be elected directors. In accordance with Delaware law and the
Company's By-Laws, the holders of a majority of the Company's stock which has
voting power present in person or by proxy, and which is actually voted, shall
decide any other proposal which is brought before the Annual Meeting. As a
result, abstentions in respect of any proposal and broker non-votes will not be
counted for purposes of determining whether such proposal has received the
requisite approval by the Company's stockholders.

In accordance with Delaware law and the Company's By-Laws, the Company may,
by a vote of the stockholders, adjourn the Annual Meeting to a later date or
dates, without changing the record date. If the Company were to determine that
an adjournment were desirable, the appointed proxies would use the discretionary
authority granted pursuant to the proxy cards to vote in favor of such an
adjournment.

2
<PAGE> 4

BUSINESS TO BE TRANSACTED

The Board of Directors will present two proposals to the stockholders of
the Company at the Annual Meeting. Information concerning the first proposal,
"Election of Directors", is found on pages 3 to 24 of this Proxy Statement.
Information concerning the second proposal, "Confirmation of Appointment of
Independent Certified Public Accountants", is found on page 24 of this Proxy
Statement.

1. ELECTION OF DIRECTORS

It is intended that shares represented by proxies in the enclosed form(s)
will be voted for the election of the nominees named in the following table to
serve as directors for a term of one year and until their successors are
elected, unless contrary instructions are received. All of the nominees listed
below presently serve as directors of the Company and were elected at the
Company's 1997 annual meeting of stockholders. John J. Dwyer, who has been a
director of the Company since 1988, is not standing for reelection. If an
unexpected occurrence should make it necessary, in the judgment of the proxy
holders, to substitute some other person for any of the nominees, such shares
will be voted for such other person as the proxy holders may select.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING LAST FIVE YEARS AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS IN PUBLIC COMPANIES SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Owsley Brown II 55 Chairman and Chief Executive Officer of 1993
Brown-Forman Corporation (a diversified producer
and marketer of consumer products). From prior to
1993 to 1994, President of Brown-Forman
Corporation. Also director of Brown-Forman
Corporation, Hilliard Lyons Trust Company, LG&E
Energy Corp. and Louisville Gas and Electric
Company.
Robert M. Gates 54 Consultant, author and lecturer. From prior to 1993
1993 to 1993, Director of Central Intelligence
for the United States. Former Assistant to the
President of the United States and Deputy for
National Security Affairs, National Security
Council. Also director of LucasVarity plc and TRW
Inc., and trustee of Fidelity Funds.
Leon J. Hendrix, Jr. 56 Principal, Clayton, Dubilier & Rice, Inc. 1995
(private investment firm); Chairman and Chief
Executive Officer of Remington Arms Co. (a
manufacturer and marketer of sporting arms and
ammunition). From prior to 1993 through October
1993, Executive Vice President and Chief
Operating Officer of Reliance Electric Company.
Also director of Cambrex Corp., Keithley
Instruments, Inc., Remington Arms Co., Riverwood
Holding, Inc. and Wesco Distribution, Inc.
Dennis W. LaBarre 55 Partner in the law firm of Jones, Day, Reavis & 1982
Pogue.
Alfred M. Rankin, Jr. 56 Chairman, President and Chief Executive Officer 1972
of the Company. From prior to 1993 to 1994,
President and Chief Executive Officer of the
Company. Also director of The BFGoodrich Company,
The Standard Products Company and The Vanguard
Group.
Ian M. Ross 70 President Emeritus of AT&T Bell Laboratories (the 1995
research and development subsidiary of AT&T).
Also director of The BFGoodrich Company and
Thomas & Betts Corporation.
</TABLE>

3
<PAGE> 5

BENEFICIAL OWNERSHIP OF CLASS A COMMON AND CLASS B COMMON

Set forth in the following table is the indicated information as of
December 31, 1997 (except as otherwise indicated) with respect to (1) each
person who is known to the Company to be the beneficial owner of more than five
percent of the Class A Common, (2) each person who is known to the Company to be
the beneficial owner of more than five percent of the Class B Common and (3) the
beneficial ownership of Class A Common and Class B Common by the directors, the
Chief Executive Officer and the Company's four most highly compensated executive
officers other than the Chief Executive Officer (the "Named Executive Officers")
and all executive officers and directors as a group. Beneficial ownership of
Class A Common and Class B Common has been determined for this purpose in
accordance with Rules 13d-3 and 13d-5 of the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 (the "Exchange Act"), which
provide, among other things, that (a) a person is deemed to be the beneficial
owner of Class A Common or Class B Common if such person, directly or
indirectly, has or shares voting power or investment power with respect to such
stock or has the right to acquire such ownership within 60 days, and (b) when
two or more persons agree to act together for the purpose of holding, voting or
disposing of Class A Common or Class B Common, as the case may be, the group
formed thereby is deemed to be a person which has acquired beneficial ownership
of all Class A Common or Class B Common, as the case may be, beneficially owned
by each member of the group. Accordingly, the amounts shown in the table do not
purport to represent beneficial ownership for any purpose other than compliance
with SEC reporting requirements. Further, beneficial ownership as determined in
this manner does not necessarily bear on the economic incidence of ownership of
Class A Common or Class B Common.

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<PAGE> 6

AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP

<TABLE>
<CAPTION>
SOLE
VOTING SHARED
AND VOTING OR PERCENT
TITLE OF INVESTMENT INVESTMENT AGGREGATE OF CLASS
NAME CLASS POWER POWER AMOUNT (1)(2)
---- -------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Clara Taplin Rankin, et al. (3) Class B (3) (3) 1,542,757(3) 92.04%
c/o KeyCorp Shareholder
Services, Inc.
P.O. Box 6477
Cleveland, OH 44101
CTR Family Associates, Class B (3)(4) (3)(4) 472,371(3)(4) 28.18%
L.P., et al. (4)
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Rankin Associates II, Class A (5) (5) 738,295(5) 11.40%
L.P., et al. (5)
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Clara Taplin Rankin Class A -- 752,295(5)(6) 752,295(5)(6) 11.61%
3151 Chagrin River Road Class B -- 479,371(3)(4)(6) 479,371(3)(4)(6) 28.60%
Chagrin Falls, OH 44022
Frank E. Taplin, Jr. Class A 347,548 14,000(6) 361,548(6) 5.58%
55 Armour Road Class B 284,728(3) 7,000(3)(6) 291,728(3)(6) 17.40%
Princeton, NJ 08540
Thomas E. Taplin Class A 528,500 14,000(6) 542,500(6) 8.38%
950 South Cherry St. #506 Class B 310,000(3) 7,000(3)(6) 317,000(3)(6) 18.91%
Denver, CO 80222
Owsley Brown II Class A 1,973 -- 2,007(7) --
Class B -- -- -- --
John J. Dwyer Class A 2,180 -- 2,248(7) --
Class B -- -- -- --
Robert M. Gates Class A 1,092 -- 1,126(7) --
Class B -- -- -- --
Leon J. Hendrix, Jr. Class A 2,411 -- 2,468(7) --
Class B -- -- -- --
Dennis W. LaBarre Class A 1,906 -- 1,940(7) --
Class B 100 -- 100 --
Alfred M. Rankin, Jr. Class A 122,939 878,991(5)(7) 1,026,930(5)(7) 15.79%
Class B -- 472,371(3)(4) 472,371(3)(4) 28.18%
Ian M. Ross Class A 1,031 -- 1,065(7) --
Class B -- -- -- --
John C. Sawhill Class A 6,130 -- 6,207(7) --
Class B -- -- -- --
Britton T. Taplin Class A 11,909 -- 11,943(7) 0.18%
Class B 27,495(3) -- 27,495(3) 1.64%
David F. Taplin Class A 21,878 32,306 54,218(7) 0.84%
Class B 13,550(3) -- 13,550(3) 0.81%
John F. Turben Class A 1,122 -- 1,156(7) --
Class B -- -- -- --
Reginald R. Eklund Class A -- 1,000 1,000 --
Class B -- -- -- --
Richard E. Posey Class A -- -- -- --
Class B -- -- -- --
Clifford R. Miercort Class A -- -- -- --
Class B 1,000 -- 1,000 --
Frank G. Muller Class A 678 -- 678 --
Class B -- -- -- --
All executive officers and Class A 185,821 946,981(5)(8) 1,160,042(5)(7)(8) 17.83%
directors as a group (37 persons) Class B 44,270(3)(4) 480,544(3)(4)(8) 524,814(3)(4)(8) 31.31%
</TABLE>

5
<PAGE> 7

- ---------------

(1) The shares included in note (7) were deemed to be outstanding as of December
31, 1997, for purposes of calculating the percentage owned at such date
pursuant to Rule 13d-3 under the Exchange Act.

(2) Less than 0.1%, except as otherwise indicated.

(3) A Schedule 13D filed with the SEC with respect to Class B Common on March
29, 1990, and amended on April 11, 1990 by Amendment No. 1, on March 15,
1991 by Amendment No. 2, on March 20, 1992 by Amendment No. 3 and on March
9, 1993 by Amendment No. 4, and amended and restated on March 30, 1994 by
Amendment No. 5, and amended on March 28, 1995 by Amendment No. 1 to the
amended and restated Schedule 13D, on March 21, 1996 by Amendment No. 2 to
the amended and restated Schedule 13D, on November 25, 1996 by Amendment No.
3 to the amended and restated Schedule 13D, on January 10, 1997 by Amendment
No. 4 to the amended and restated Schedule 13D and on March 19, 1997 by
Amendment No. 5 to the amended and restated Schedule 13D, reported that the
following individuals and entities, together in certain cases with related
revocable trusts and custodianships: Clara Taplin Rankin, Alfred M. Rankin,
Jr., Victoire G. Rankin, Helen R. Butler, Clara T. Rankin, Thomas T. Rankin,
Matthew M. Rankin, Claiborne R. Rankin, Chloe O. Rankin, Roger F. Rankin,
Bruce T. Rankin, Frank E. Taplin, Jr., Margaret E. Taplin, Martha S. Kelly,
Susan Sichel, Jennifer T. Jerome, Caroline T. Ruschell, David F. Taplin,
Thomas E. Taplin, Beatrice B. Taplin, Thomas E. Taplin, Jr., Theodore D.
Taplin, Britton T. Taplin, Frank F. Taplin, CTR Family Associates, L.P. (the
"Partnership"), Rankin Management, Inc. ("RMI") and National City Bank, as
trustee of certain trusts for the benefit of certain individuals named
above, their family members and others (collectively, together with such
individuals, revocable trusts and custodianships, the "Signatories"), are
parties with the Company and KeyCorp Shareholder Services, Inc. (successor
to Society National Bank), as depository, to a Stockholders' Agreement,
dated as of March 15, 1990, as amended, covering the shares of Class B
Common beneficially owned by each of the Signatories (the "Stockholders'
Agreement"). The Stockholders' Agreement requires that each Signatory, prior
to any conversion of such Signatory's shares of Class B Common into Class A
Common or prior to any sale or transfer of Class B Common to any permitted
transferee (under the terms of the Class B Common) who has not become a
Signatory, to offer such shares to all of the other Signatories on a
pro-rata basis. A Signatory may sell or transfer all shares not purchased
under the right of first refusal as long as they first are converted into
Class A Common prior to their sale or transfer. Accordingly, the Signatories
may be deemed to have acquired beneficial ownership of all of the Class B
Common subject to the Stockholders' Agreement, an aggregate of 1,542,757
shares, as a "group" as defined under the Exchange Act. The shares subject
to the Stockholders' Agreement constitute 92.04% of the Class B Common
outstanding on December 31, 1997, or 66.31% of the combined voting power of
all Class A Common and Class B Common outstanding on such date. Certain
Signatories own Class A Common, which is not subject to the Stockholders'
Agreement. Under the Stockholders' Agreement, the Company may, but is not
obligated to, buy any of the shares of Class B Common not purchased by the
Signatories following the trigger of the right of first refusal. The
Stockholders' Agreement does not restrict in any respect how a Signatory may
vote such Signatory's shares of Class B Common. The Class B Common shown in
the foregoing table as beneficially owned by named persons who are
Signatories is subject to the Stockholders' Agreement.

(4) A Schedule 13D filed with the SEC with respect to Class B Common on November
25, 1996, and amended on November 26, 1996 by Amendment No. 1 and on January
10, 1997 by Amendment No. 2, reported that the following individuals and
entities: Clara Taplin Rankin, Alfred M. Rankin, Jr., Thomas T. Rankin,
Claiborne R. Rankin, Roger F. Rankin, Bruce T. Rankin, Victoire G. Rankin,
RMI and the Partnership (collectively, the "Class B Parties" and all the
Class B Parties, except the Partnership, the "Class B Partners"), may be
deemed as a group to have acquired and to beneficially own 472,371 shares of
Class B Common, representing 28.18% of the outstanding Class B Common as of
December 31, 1997. Although the Partnership holds the 472,371 shares of
Class B Common, which were contributed by the Class B Partners, it does not
have any power to vote or to dispose of such shares of Class B Common. RMI
has the sole power to vote such shares and shares the power to dispose of
such shares with the other Class B Partners. RMI exercises such powers by
action of its board of directors, which acts by majority vote and consists
of Alfred M. Rankin, Jr., Thomas T. Rankin, Claiborne R. Rankin and Roger F.
Rankin, the shareholders of RMI. Under the terms of the Limited Partnership
Agreement of CTR Family Associates, L.P. (the "Class B Partnership
Agreement"), the Partnership may not dispose of Class B Common without the
consent of RMI and the approval of the holders of more than 75% of all

6
<PAGE> 8

Partnership interests. The Shareholders' Agreement among the shareholders of
RMI, the Articles of Incorporation of RMI and the Class B Partnership
Agreement restrict the transfer of RMI shares and Partnership interests by
RMI's shareholders and the Class B Partners and provide such persons with a
right of first refusal to acquire RMI shares or Partnership interests which
an RMI shareholder or a Class B Partner desires to sell and a call right to
compel the sale of RMI shares or Partnership interests held by RMI
shareholders or the Class B Partners who are not members of a "Family
Group," consisting of one of Clara Taplin Rankin's sons, his spouse and
their descendants. The Class B Common beneficially owned by each of the
Class B Partners and the Partnership is also subject to the Stockholders'
Agreement described in note (3).

(5) On February 18, 1998, the Company received a Schedule 13D filed with the SEC
by Rankin Associates II, L.P. ("Associates") with respect to Class A Common.
The Schedule 13D reported that the following individuals and entities: Clara
Taplin Rankin, Alfred M. Rankin, Jr., Thomas T. Rankin, Claiborne R. Rankin,
Roger F. Rankin, Bruce T. Rankin, RMI and Associates (collectively, the
"Class A Parties" and all the Class A Parties except Associates, the "Class
A Partners"), may be deemed as a group to have acquired and to beneficially
own 738,295 shares of Class A Common, representing 11.40% of the outstanding
Class A Common as of December 31, 1997. Although Associates holds the
738,295 shares of Class A Common, which were contributed by the Class A
Partners, it does not have any power to vote or to dispose of such shares of
Class A Common. RMI has the sole power to vote such shares and shares the
power to dispose of such shares with the other Class A Partners. RMI
exercises such powers by action of its board of directors, which acts by
majority vote. Under the terms of the Limited Partnership Agreement of
Rankin Associates II, L.P. (the "Class A Partnership Agreement"), Associates
may not dispose of Class A Common without the consent of RMI and the
approval of the holders of more than 75% of all partnership interests in
Associates. The Shareholders' Agreement among the shareholders of RMI, the
Articles of Incorporation of RMI and the Class A Partnership Agreement
restrict the transfer of RMI shares and partnership interests in Associates
by RMI's shareholders and the Class A Partners and provide such persons with
a right of first refusal to acquire RMI shares or partnership interests in
Associates which an RMI shareholder or a Class A Partner desires to sell and
a call right to compel the sale of RMI shares or partnership interests in
Associates held by RMI shareholders or the Class A Partners who are not
members of a "Family Group," consisting of one of Clara Taplin Rankin's
sons, his spouse and their descendants. The Class A Common shown in the
foregoing table as beneficially owned by each of the Class A Partners
includes the shares of Class A Common that are subject to the Class A
Partnership Agreement.

(6) Clara Taplin Rankin, Frank E. Taplin, Jr. and Thomas E. Taplin are
co-settlors of a trust holding an aggregate of 42,000 shares of Class A
Common and 21,000 shares of Class B Common, in which each retains a
reversionary interest with respect to 14,000 of such shares of Class A
Common and 7,000 of such shares of Class B Common. The Class B Common held
by the foregoing trust is subject to the Stockholders' Agreement described
in note (3).

(7) Includes the following shares which such persons have, or had, within 60
days after December 31, 1997, the right to acquire upon the exercise of
stock options: Mr. Rankin, 25,000 shares of Class A Common; and all
executive officers and directors as a group, 26,800 shares of Class A
Common. Also includes the following shares which the directors have, or had,
within 60 days after December 31, 1997, the right to acquire pursuant to the
Company's Non-Employee Directors' Equity Compensation Plan for payment of
director's fees: Mr. Brown, 34 shares of Class A Common; Mr. Dwyer, 68
shares of Class A Common; Mr. Gates, 34 shares of Class A Common; Mr.
Hendrix, 57 shares of Class A Common; Mr. LaBarre, 34 shares of Class A
Common; Mr. Ross, 34 shares of Class A Common; Mr. Sawhill, 77 shares of
Class A Common; Mr. Britton T. Taplin, 34 shares of Class A Common; Mr.
David F. Taplin, 34 shares of Class A Common; and Mr. Turben, 34 shares of
Class A Common; and all executive officers and directors as a group, 440
shares of Class A Common.

(8) Includes 28,789 shares of Class A Common and 3,153 shares of Class B Common
owned by members of the immediate families of executive officers as to which
such executive officers disclaim beneficial ownership.

Frank E. Taplin, Jr. and Thomas E. Taplin are brothers, and Clara Taplin
Rankin is their sister. Britton T. Taplin is the son of Thomas E. Taplin, and
David F. Taplin is the son of Frank E. Taplin, Jr. Clara Taplin

7
<PAGE> 9

Rankin is the mother of Alfred M. Rankin, Jr., and J.C. Butler, Jr., an
executive officer of the Company, is the son-in-law of Alfred M. Rankin, Jr. The
combined beneficial ownership of such persons shown in the foregoing table
(including shares as to which such persons had the right to acquire beneficial
ownership within 60 days after December 31, 1997) equals 2,037,510 shares or
31.33% of Class A Common and 1,132,172 shares or 67.55% of Class B Common
outstanding on December 31, 1997 (including shares deemed to be outstanding for
purposes of calculating the percentage owned pursuant to Rule 13d-3 under the
Exchange Act). The combined beneficial ownership of all directors of the Company
(including shares as to which the directors had the right to acquire beneficial
ownership within 60 days after December 31, 1997), together with Clara Taplin
Rankin, Frank E. Taplin, Jr., Thomas E. Taplin and all of the executive officers
of the Company whose beneficial ownership of Class A Common and Class B Common
(including shares which would be held by such executive officers if they
exercised certain stock options) must be disclosed in the foregoing table in
accordance with Rule 13d-3 under the Exchange Act, equals 2,078,090 shares or
31.95% of Class A Common and 1,140,542 shares or 68.05% of Class B Common
outstanding on December 31, 1997 (including shares deemed to be outstanding for
purposes of calculating the percentage owned pursuant to Rule 13d-3 under the
Exchange Act). Such shares of Class A Common and Class B Common together
represent 57.95% of the combined voting power of all Class A Common and Class B
Common outstanding on such date (including shares deemed to be outstanding for
purposes of calculating the percentage owned pursuant to Rule 13d-3 under the
Exchange Act).

There exists no arrangement or understanding between any director and any
other person pursuant to which such director was elected. Each director and
executive officer serves until his successor is elected and qualified.

DIRECTORS' MEETINGS AND COMMITTEES

The Board of Directors has an Audit Committee and a Nominating,
Organization and Compensation Committee (the "Nominating and Compensation
Committee"). During 1997, the members of the Audit Committee were Robert M.
Gates (Chairman), Leon J. Hendrix, Jr., Dennis W. LaBarre, John C. Sawhill and
Britton T. Taplin, and the members of the Nominating and Compensation Committee
were John J. Dwyer (Chairman), Robert M. Gates, Ian M. Ross, John C. Sawhill and
John F. Turben (beginning May 14, 1997). The other standing committees of the
Board of Directors are the Executive Committee, which during 1997 was comprised
of John J. Dwyer, Dennis W. LaBarre, Alfred M. Rankin, Jr. (Chairman) and John
C. Sawhill, and the Finance Committee, which during 1997 was comprised of Leon
J. Hendrix, Jr., Dennis W. LaBarre, Alfred M. Rankin, Jr., John C. Sawhill
(Chairman), Britton T. Taplin, David F. Taplin (beginning May 14, 1997) and John
F. Turben (beginning May 14, 1997).

The Audit Committee held four meetings in 1997. The Audit Committee
recommends to the Board of Directors, subject to stockholder approval, the
selection of the Company's independent certified public accountants. The Audit
Committee discusses with the internal auditors and the independent public
accountants the overall scope and specific plans for their respective audits.
The Audit Committee meets regularly with the Company's internal auditors and
independent public accountants to discuss the results of their respective
examinations, their evaluations of the Company's internal controls, and the
Company's financial reporting.

The Nominating and Compensation Committee held five meetings in 1997. The
Nominating and Compensation Committee reviews executive compensation, fixes
compensation of the executive officers and incentive compensation, recommends
the adoption of and administers all benefit plans, and grants stock options. The
Nominating and Compensation Committee also reviews and recommends to the Board
of Directors criteria for membership to the Board of Directors, reviews and
recommends to the Board of Directors the optimum number and qualifications of
directors believed to be desirable, has established and monitors a system to
receive suggestions for nominees to directorships of the Company, and identifies
and recommends to the Board of Directors specific candidates for membership to
the Board of Directors.

8
<PAGE> 10

The Finance Committee held three meetings in 1997. The Finance Committee
reviews the financing and risk management strategies of the Company and its
principal subsidiaries and makes recommendations to the Board of Directors on
all matters concerning finance.

The Executive Committee held no meetings in 1997. The Executive Committee
may exercise all of the powers of the Board of Directors in the management and
control of the business of the Company during the intervals between meetings of
the Board of Directors.

The Board of Directors held five meetings in 1997. All of the incumbent
directors attended at least 75 percent of the total meetings held by the Board
of Directors and by the committees on which they served during 1997.

COMPENSATION OF DIRECTORS

Each director who is not an officer of the Company or its subsidiaries
receives a retainer of $30,000 for each calendar year for service on the Board
of Directors and on subsidiary boards of directors. In addition, each such
director receives $500 for attending each meeting of the Board of Directors and
each meeting of a committee thereof, as well as for each meeting of a subsidiary
board of directors or committee thereof on which such director serves. Such fees
for attendance at board meetings may not exceed $1,000 per day. In addition, the
chairman of each committee of the Board of Directors and the subsidiary boards
of directors receives $4,000 for each calendar year for service as committee
chairman. Under the Company's Non-Employee Directors' Equity Compensation Plan
(the "Non-Employee Directors' Plan"), each director who is not an officer of the
Company or its subsidiaries receives 50% of his annual retainer ($15,000) in
shares of Class A Common. These shares may not be assigned, pledged,
hypothecated or otherwise transferred by the director, voluntarily or
involuntarily, other than (a) by will or the laws of descent and distribution,
(b) pursuant to a qualifying domestic relations order, or (c) to a trust for the
benefit of the director, or his spouse, children or grandchildren. The foregoing
restrictions on transfer lapse upon the earliest to occur of (i) the date which
is ten years after the last day of the calendar quarter for which such shares
were earned, (ii) the date of the death or permanent disability of the director,
(iii) five years (or earlier with the approval of the Board of Directors) from
the date of the retirement of the director from the Board of Directors of the
Company, and (iv) the date that a director is both retired from the Board of
Directors of the Company and has reached 70 years of age. In addition, each
director has the right under the Non-Employee Directors' Plan to receive shares
of Class A Common in lieu of cash for up to 100% of the balance of his annual
retainer, meeting attendance fees and any committee chairman's fee. These
voluntary shares are not subject to the foregoing restrictions.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the annual, long-term and all other
compensation for services in all capacities to the Company of the Chief
Executive Officer and the four persons who were, as of December 31, 1997, the
Named Executive Officers of the Company and its principal subsidiaries, NACCO
Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex, Inc.
("Hamilton Beach/Proctor-Silex") and The North American Coal Corporation ("North
American Coal").

9
<PAGE> 11

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
PAYOUTS
ANNUAL COMPENSATION ------------
--------------------- LTIP ALL OTHER
FISCAL SALARY BONUS PAYOUTS COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($) ($) ($)
------------------------- ------ -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Alfred M. Rankin, Jr. 1997 $742,400(1) $ 464,900(2) $855,452(3) $333,002(4)(5)
Chairman, President and 1996 $704,700(1) $ 290,400(2) $677,162(3) $275,201(4)(5)
Chief Executive Officer 1995 $663,700(1)$1,098,171(2)(6) -- $255,313(4)(5)
of the Company
Reginald R. Eklund 1997 $410,300(1) $ 249,154(7) -- $ 90,298(8)
President and Chief 1996 $394,808(1) $ 109,785(7) -- $ 69,712(8)
Executive Officer of 1995 $373,100(1) $ 118,264(7) -- $ 77,767(8)
NMHG
Richard E. Posey (9) 1997 $372,604(1) $ 239,200(10) -- $ 85,093(11)
President and Chief 1996 $358,450(1) $ 170,500(10) -- $ 91,426(11)
Executive Officer of 1995 $121,086(1) $ 122,700(10) -- $ 13,568(11)
Hamilton Beach/Proctor-Silex
Clifford R. Miercort 1997 $343,982(1) $ 166,100(12) -- $ 44,811(13)
President and Chief 1996 $325,520(1) $ 170,717(12) -- $ 32,466(13)
Executive Officer of 1995 $307,747(1) $ 124,700(12) -- $ 34,329(13)
North American Coal
Frank G. Muller 1997 $254,800(1) $ 145,038(14) -- $ 52,710(15)
Vice President of NMHG, 1996 $241,000(1) $ 55,807(14) -- $ 39,509(15)
President of NMHG Americas 1995 $226,200(1) $ 60,969(14) -- $ 42,132(15)
</TABLE>

- ---------------

(1) Under current disclosure requirements of the SEC certain of the amounts
listed are being reported as "Salary", although the Company considers them
as payments of cash in lieu of perquisites, which are at competitive levels
as determined by the Company's Nominating and Compensation Committee. For
Mr. Rankin, the amounts listed for 1997, 1996 and 1995 include payments of
cash in lieu of perquisites of $72,400, $69,700 and $66,700, respectively.
For Mr. Eklund, the amounts listed for 1997, 1996 and 1995 include payments
of cash in lieu of perquisites of $46,300, $44,800 and $41,100,
respectively. For Mr. Posey, the amounts listed for 1997, 1996 and 1995
include payments of cash in lieu of perquisites of $34,600, $33,400 and
$11,500, respectively. For Mr. Miercort, the amounts listed for 1997, 1996
and 1995 include payments of cash in lieu of perquisites of $28,731,
$27,759 and $28,913, respectively. For Mr. Muller, the amounts listed for
1997, 1996 and 1995 include payments of cash in lieu of perquisites of
$25,700, $24,900 and $24,200, respectively.

(2) For Mr. Rankin, the amounts listed for 1997, 1996 and 1995 include payments
of cash of $464,900, $290,400 and $256,455, respectively, pursuant to the
NACCO Industries, Inc. Annual Incentive Compensation Plan and the NACCO
Industries, Inc. Supplemental Annual Incentive Compensation Plan.

(3) For Mr. Rankin, the amounts listed for 1997 and 1996 were distributed in
the form of 7,614 and 7,912 shares of Class A Common and cash payments in
the amount of $299,493 and $237,049, respectively. The foregoing cash
payments are intended to be the approximate amounts required to be withheld
by the Company and paid to applicable federal, state and local income
taxing authorities based upon statutorily determined withholding rates.
These amounts were distributed under the NACCO Industries, Inc. Executive
Long-Term Incentive Compensation Plan (the "NACCO Long-Term Plan").

(4) For Mr. Rankin, the amounts listed for 1997, 1996 and 1995 include $4,000,
$3,750 and $3,750, respectively, consisting of matching contributions by
the Company under the NACCO Materials Handling Group, Inc. Profit Sharing
Plan (the "NMHG Profit Sharing Plan"); and $66,038, $44,806 and $37,294,
respectively, consisting of amounts credited and interest under The NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (the "NMHG Unfunded
Benefit Plan").

10
<PAGE> 12

(5) For 1997, the amount listed includes credits and interest of $262,964 to
The Retirement Benefit Plan for Alfred M. Rankin, Jr. by the Company. For
1996, the amount listed includes credits and interest of $226,645 to such
plan by the Company. For 1995, the amount listed is an amended profit
sharing amount which includes credits and interest of $214,269 to such plan
by the Company. Mr. Rankin receives no other pension benefit from the
Company.

(6) The amount listed for 1995 includes $841,716, which was distributed in the
form of 9,641 shares of Class A Common and a cash payment in the amount of
$294,637. These amounts were distributed under the NACCO Long-Term Plan.
The foregoing cash payment is intended to be the approximate amount
required to be withheld by the Company and paid to applicable federal,
state and local income taxing authorities based upon statutorily determined
withholding rates. Under current executive compensation disclosure
requirements of the SEC these distributions are required to be reported as
"Bonus," although the Company considers them to be long-term incentive
compensation payouts, because the amounts are distributed largely in the
form of shares of Class A Common, the transfer of which is restricted for
ten years. As of April 1995, the Nominating and Compensation Committee took
steps under the NACCO Long-Term Plan so that the performance measurement
period for awards would be longer than one year. Under the disclosure
requirements of the SEC, awards for years after 1995 are characterized as
"long-term." See note (3) above. See also note (1) under "Long-Term
Incentive Plans" on pages 12 and 13 for a further description of the NACCO
Long-Term Plan.

(7) For Mr. Eklund, these amounts were paid in cash pursuant to the NACCO
Materials Handling Group, Inc. Annual Incentive Compensation Plan.

(8) For Mr. Eklund, the amounts listed for 1997, 1996 and 1995 include $20,300,
$17,639 and $10,295, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; and $69,998, $52,073 and $67,472,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan.

(9) Mr. Posey commenced employment with Hamilton Beach/Proctor-Silex effective
September 1, 1995.

(10) For Mr. Posey, the amounts listed for 1997 and 1996 were paid in cash
pursuant to the Hamilton Beach/Proctor-Silex, Inc. Annual Incentive
Compensation Plan. In 1995, $62,700 was paid in cash pursuant to the
Hamilton Beach/Proctor-Silex, Inc. Annual Incentive Compensation Plan and
$60,000 was paid as a signing bonus.

(11) For Mr. Posey, the amounts listed for 1997, 1996 and 1995 include $17,744,
$1,500 and $375, respectively, consisting of contributions by Hamilton
Beach/Proctor-Silex under the Hamilton Beach/Proctor-Silex Employees'
Retirement Savings Plan; $48,003, $0, and $0, respectively, consisting of
amounts credited by Hamilton Beach/Proctor-Silex under the Hamilton
Beach/Proctor-Silex, Inc. Unfunded Benefit Plan; and $19,346, $89,926 and
$13,193, respectively, for reimbursement of moving expenses.

(12) For Mr. Miercort, these amounts were paid in cash pursuant to The North
American Coal Corporation Annual Incentive Compensation Plan.

(13) For Mr. Miercort, the amounts listed for 1997, 1996 and 1995 include
$8,000, $7,500 and $7,500, respectively, consisting of matching
contributions by North American Coal under the North American Coal Savings
Plan; and $36,811, $24,966 and $26,829, respectively, consisting of amounts
credited and interest under the North American Coal Deferred Compensation
Plan.

(14) For Mr. Muller, these amounts were paid in cash pursuant to the NACCO
Materials Handling Group, Inc. Annual Incentive Compensation Plan.

(15) For Mr. Muller, the amounts listed for 1997, 1996 and 1995 include $20,300,
$17,639 and $15,150, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; and $32,410, $21,870 and $26,982,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan.

11
<PAGE> 13

STOCK OPTION GRANTS

The Company did not grant any stock options under the Company's 1975 Stock
Option Plan or 1981 Stock Option Plan (the "Stock Option Plans") during the
fiscal year ended December 31, 1997 to any person, including the Named Executive
Officers. The Company has not granted stock options since 1989 in the belief
that the likely value realized is unclear both in amount and in its relationship
to performance. There are no outstanding options to purchase shares of the
Company's Class B Common.

STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth information for the fiscal year ended
December 31, 1997 with respect to the exercised and unexercised options to
purchase the Company's Class A Common granted to the Named Executive Officers in
prior years under the Stock Option Plans.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE (#)(1) AT FISCAL YEAR-END ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alfred M. Rankin, Jr. -- -- 25,000 -- $1,790,638 --
Reginald R. Eklund -- -- -- -- -- --
Richard E. Posey -- -- -- -- -- --
Clifford R. Miercort -- -- -- -- -- --
Frank G. Muller -- -- -- -- -- --
</TABLE>

- ---------------

(1) Shares of Class A Common.

LONG-TERM INCENTIVE PLANS

The following table sets forth information concerning awards to the Named
Executive Officers during fiscal year 1997, and estimated payouts in the future,
under long-term incentive plans of the Company and its principal subsidiaries.

LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR FOR FUTURE YEARS

<TABLE>
<CAPTION>
NUMBER OF
SHARES, PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
UNITS OR OR OTHER NON-STOCK PRICE-BASED PLANS
OTHER PERIOD UNTIL -----------------------------------
RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME ($ OR #) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------ ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Alfred M. Rankin, Jr.(1) $728,600 2 years $0 $ 728,600 $1,131,150
$728,600 5 years $0 $ 0 $ 418,034
Reginald R. Eklund(2) 52,645 Units 10 years $0 $1,809,274 (2)
Richard E. Posey(3) 94,240 Units 10 years $0 $2,054,098 (3)
Clifford R. Miercort(4) $192,465 2 years $0 $ 192,465 (4)
Frank G. Muller(2) 20,887 Units 10 years $0 $ 717,833 (2)
</TABLE>

- ---------------

(1) Under the NACCO Long-Term Plan, participants, including Mr. Rankin, are
eligible for awards paid partly in shares of Class A Common and partly in
cash for performance against a target which is based upon the Company's
consolidated adjusted return on equity over multiple-year periods. Effective
January 1, 1997, participants were granted dollar-denominated target awards.
Final awards, if any, will be received in 1999 ("base period awards") based
upon the Company's consolidated adjusted return on equity for the period
from January 1, 1997 through December 31, 1998 against a pre-established
target. Participants are also eligible to receive a supplemental payout on
such awards in 2002 ("consistent

12
<PAGE> 14

performance awards") based upon the Company's consolidated adjusted return
on equity performance for the 5-year period from January 1, 1997 through
December 31, 2001 against the same pre-established target. No consistent
performance award is payable if the Company's consolidated adjusted return
on equity performance for the relevant period is at or below target. The
maximum payouts of the consistent performance awards cannot exceed 50
percent of the base period target awards, plus an annual inflation factor.
Sixty-five percent of all payouts are distributed in shares of Class A
Common, with the number of shares based upon the average closing price of
Class A Common on the New York Stock Exchange at the end of each week during
1998 (in the case of the base period awards) and 2001(in the case of
consistent performance awards).

The shares of Class A Common issued as a portion of these awards under the
NACCO Long-Term Plan are fully vested but may not be transferred until the
earlier of (a) December 31, 2008, (b) the participant's death or disability,
or (c) five years after retirement. A participant may also request at any
time after three years that the Nominating and Compensation Committee
authorize the lapse of restrictions on up to 20% of shares issued under the
NACCO Long-Term Plan for the purchase of a principal residence or payments
of certain medical or educational expenses. Because the total value of a
final award is currently taxable as income to the participant, the balance
of the final award is paid in cash in an amount which is intended to be the
approximate amount required to be withheld by the Company and paid to
applicable federal, state and local income taxing authorities based upon
statutorily determined withholding rates.

(2) Messrs. Eklund and Muller are participants in the NACCO Materials Handling
Group, Inc. Long-Term Incentive Compensation Plan (the "NMHG Long-Term
Plan"). Under the NMHG Long-Term Plan, participants are awarded "book value
appreciation units" which vest ten years from the date of award, or earlier
in the event of the participant's death, permanent disability or retirement,
or in the event of any other termination of employment with the approval of
the NMHG Nominating, Organization and Compensation Committee. At any time
following the fifth anniversary of the date of an award, a participant may
also annually request that such Committee permit the vesting of up to (a)
20% of the number of book value appreciation units for the purchase of a
principal residence for the individual or the payment of certain medical or
educational expenses of the individual, his spouse or dependents or (b) 10%
of the number of book value appreciation units for any other purpose,
provided that such request may only apply to an aggregate of 40% of the
number of book value appreciation units originally granted in an award. Upon
vesting, the participant is entitled to receive a payment in cash equal to
the appreciation in the book value per unit from the base period price per
unit to the value of the book value unit at the end of the calendar quarter
immediately preceding the date of vesting, and vested book value units as to
which payment is made are canceled. There are no threshold or maximum values
for an award. Assuming a target adjusted return on equity over ten years,
Mr. Eklund's 52,645 book value appreciation units awarded effective January
1, 1998 would entitle him to a cash payment on December 31, 2007 of
$1,809,274. The actual payout to Mr. Eklund on such date may be greater or
less, depending upon whether NMHG's actual book value has increased or
decreased as compared to the target for book value growth over the period.
Mr. Eklund was previously awarded 65,000 book value appreciation units
effective on January 1, 1990, which units will vest on December 31, 1999,
21,690 book value appreciation units effective on January 1, 1993, which
units will vest on December 31, 2002, and 100,403 book value appreciation
units effective January 1, 1994, which units will vest on December 31, 2003.
Assuming a target adjusted return on equity over ten years, Mr. Muller's
20,887 book value appreciation units awarded effective January 1, 1998 would
entitle him to a cash payment on December 31, 2007 of $717,833. The actual
payout to Mr. Muller may be greater or less, depending upon whether NMHG's
actual book value has increased or decreased as compared to the target for
book value growth over the period. Mr. Muller was previously awarded 15,154
book value appreciation units effective on January 1, 1990, which units will
vest on December 31, 1999, 3,958 book value appreciation units effective on
January 1, 1993, which units will vest on December 31, 2002, 31,739 book
value appreciation units effective on July 1, 1993, which units will vest on
June 30, 2002, and 43,558 book value appreciation units effective on January
1, 1994, which units will vest on December 31, 2003.

13
<PAGE> 15

(3) Mr. Posey is a participant in the Hamilton Beach/Proctor-Silex, Inc.
Long-Term Incentive Compensation Plan (the "HBPS Long-Term Plan"). Under the
HBPS Long-Term Plan, participants are awarded "book value appreciation
units" which vest ten years from the date of award, or earlier in the event
of the participant's death, permanent disability or retirement, or in the
event of any other termination of employment with the approval of the
Hamilton Beach/Proctor-Silex Nominating, Organization and Compensation
Committee. At any time following the fifth anniversary of the date of an
award, a participant may also annually request that such Committee permit
the vesting of up to (a) 20% of the number of book value appreciation units
for the purchase of a principal residence for the individual or the payment
of certain medical or educational expenses of the individual, his spouse or
dependents or (b) 10% of the number of book value appreciation units for any
other purpose, provided that such request may only apply to an aggregate of
40% of the number of book value appreciation units originally granted in an
award. Upon vesting, the participant is entitled to receive a payment in
cash equal to the appreciation in the book value per unit from the base
period price per unit to the value of the book value unit at the end of the
calendar quarter immediately preceding the date of vesting, and vested book
value units as to which payment is made are canceled. There are no threshold
or maximum values for an award. Assuming a target adjusted return on equity
over ten years, Mr. Posey's 94,240 book value appreciation units awarded
effective January 1, 1998 would entitle him to a cash payment on December
31, 2007 of $2,054,098. The actual payout to Mr. Posey may be greater or
less, depending upon whether Hamilton Beach/Proctor-Silex's actual book
value has increased or decreased as compared to the target for book value
growth over the period. Mr. Posey was previously awarded 166,240 book value
appreciation units effective on October 1, 1995, which units will vest on
September 30, 2005.

(4) Effective on January 1, 1990, Mr. Miercort was awarded the right to
participate in The North American Coal Corporation Value Appreciation Plan
(the "North American Coal Long-Term Plan") at a rate equal to a specified
percentage of his salary range midpoint, as determined by the North American
Coal Nominating, Organization and Compensation Committee. When the North
American Coal Long-Term Plan was adopted, the North American Coal
Nominating, Organization and Compensation Committee set net income
appreciation goals which are based upon achieving underlying year-by-year
targets for each year during the ten-year term of the Plan. These goals are
adjusted each year for inflation and to take into account any "new projects"
initiated in the interim. Once a plan year is completed, the actual net
income during that plan year is measured against the adjusted net income
goal for that plan year to determine the annual net income appreciation of
current and new projects (the "Annual Factor"). Similarly, actual cumulative
net income for the term of the Plan to date is measured against the
cumulative adjusted net income goals to date to determine the cumulative net
income appreciation of current and new projects (the "Cumulative Factor")
against the ten-year target.

When the Plan was adopted, the Committee also set a goal for the cumulative
net income appreciation due to new projects over the term of the Plan. At
the end of each plan year, the present value of expected cumulative net
income appreciation of all new projects initiated during that year is
measured against the cumulative new project goal to determine the net income
appreciation due to the acquisition of new projects (the "New Project
Factor"). In addition, if it is determined in any plan year (an "Adjustment
Year") that a new project has provided significantly less net income
appreciation than originally expected, then the amount of any prior award
previously attributed to that project as the result of a prior year's New
Project Factor will reduce the New Project Factor in the Adjustment Year
(the "New Project Adjustment"). If the New Project Adjustment is large
enough, it is possible for participants to receive negative awards in a
given year.

At the start of each year during the ten-year term of the Plan, a target
award is set for each participant as a percentage of salary midpoint. The
amount shown for Mr. Miercort represents the target award which is based
upon his salary range midpoint for 1998. Following the end of the year, this
target amount is adjusted by the Annual Factor, the Cumulative Factor and
the New Project Factor. In addition, the New Project Adjustment is made, if
applicable. Target amounts as so adjusted are credited or debited to an
account for the benefit of the participant, which earns interest based upon
the average monthly rate of ten-year U.S. Treasury Bonds. There are no
threshold or maximum values for an award. All amounts in these accounts vest
at the rate of 10% each year, and become fully vested on December 31, 1999.
Vested

14
<PAGE> 16

amounts are payable in cash on the earlier of December 31, 1999, or the
participant's death, disability, retirement or other reasons within the
discretion of the North American Coal Nominating, Organization and
Compensation Committee. Earlier payments of vested amounts may be permitted
within the discretion of the North American Coal Nominating, Organization
and Compensation Committee in the event of a financial hardship or
unforeseen financial emergency.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Nominating and Compensation Committee of the Company's Board of
Directors and the Nominating, Organization and Compensation Committees of the
Company's subsidiary boards of directors (collectively, the "Compensation
Committee") have furnished the following report on executive compensation. The
members of the Nominating and Compensation Committee for 1997 were John J. Dwyer
(Chairman), Robert M. Gates, Ian M. Ross, John C. Sawhill and John F. Turben
(beginning May 14, 1997). The members of the Nominating, Organization and
Compensation Committees of the Company's principal subsidiaries, NMHG, Hamilton
Beach/Proctor-Silex and North American Coal consist of these individuals, as
well as Dennis W. LaBarre and Alfred M. Rankin, Jr. Messrs. LaBarre and Rankin
are not members of the Nominating and Compensation Committee of the Company, and
their participation in this report is limited to the portions of the report
relating to the Company's subsidiaries.

COMPENSATION POLICY

The guiding principle of the executive compensation program of the Company
and its subsidiaries in recent years has been the maintenance of a strong link
between an executive officer's compensation and individual performance and the
performance of the Company or the subsidiary for which the executive officer has
responsibility. Comprehensively defined target total compensation is established
for each executive officer position following rigorous evaluation standards to
ensure internal equity. Such total compensation is targeted explicitly in dollar
terms as the sum of base salary plus perquisites, short-term incentives and
long-term incentives. While the Company offers opportunities for its executive
officers to earn truly superior compensation for outstanding results, this link
includes significantly reduced compensation for weak results.

In accordance with the foregoing philosophy, the Compensation Committee
approves a mix of base salaries and incentive plans for each executive officer
such that base salary levels are at levels appropriate to allow incentive plans
to serve as significant motivating factors. Base salary and incentive
compensation levels for each officer are based upon the recommendations of the
Company's independent outside compensation consultant, which bases its
recommendations upon an analysis of similar positions at a broad range of
domestic industries, as well as an understanding of the Company's philosophy, as
summarized above. Incentive-based compensation plans are designed to provide
significant rewards for achieving or surpassing annual operating and financial
performance objectives, as well as to align the compensation interests of
executive officers with the long-term interests of stockholders by basing a
substantial portion of the incentive compensation package upon return on equity
performance and book value appreciation rather than on cyclical movements in
stock price. Finally, in addition to providing certain other perquisites, target
levels of perquisites for executive officers are converted into fixed dollar
amounts and paid in cash, an approach which recognizes that perquisites are
largely just another form of compensation, albeit separate and distinct from
salary and incentive compensation.

The Company has not granted stock options since 1989 in the belief that the
likely value realized is unclear both in amount and in its relationship to
performance. If management ultimately determines that any changes in the federal
income tax laws significantly diminish or otherwise undercut the incentives
intended to be created by the NACCO Long-Term Plan, the Company may reconsider
its previously announced intention to not make further awards under its Stock
Option Plans.

In sum, the executive compensation program at the Company and its
subsidiaries is designed to reward executive officers with competitive total
compensation for achievement of specific corporate and individual goals, while
at the same time making them long-term stakeholders in the Company. In years
when the Company has lower financial results, payouts under the incentive
components of the Company's compensation

15
<PAGE> 17

plans will reflect these results. In years when the Company has better financial
results, payouts under the incentive components of the Company's compensation
plans will be greater. The Company believes that over time the program will
encourage executive officers to earn incentive pay significantly greater than
100% of target by delivering outstanding managerial performance.

Under Section 162(m) of the Internal Revenue Code of 1986, as amended, a
public company will be denied deductions in certain circumstances for
compensation paid to the chief executive officer and the other four most highly
compensated executive officers to the extent that the compensation for any of
such individuals exceeds one million dollars for the taxable year. In response
to this law and the regulations promulgated thereunder, the stockholders of the
Company have approved the Supplemental Annual Incentive Compensation Plan (the
"Supplemental Short-Term Plan") and the NACCO Long-Term Plan. Both plans were
designed so that, together with steps taken by the Compensation Committee in the
administration of the NACCO Long-Term Plan, payouts on awards made under the
plans should not count towards the one million dollar cap which the law imposes
for purposes of federal income tax deductibility. The Compensation Committee
intends to consider other changes in the Company's executive compensation
programs where it makes sense to do so and is consistent with the Company's
compensation objectives, as may be necessary from time to time to preserve the
deductibility of compensation awards.

EXECUTIVE COMPENSATION AND COMPANY PERFORMANCE

The three main elements of the Company's executive compensation program --
base salary, short-term incentive compensation and long-term incentive
compensation -- are carefully reviewed by the Compensation Committee as to their
relationship to the performance of the Company and its subsidiaries.

Base Salary. To assist the Compensation Committee in fixing base salary
levels which are at adequately competitive levels, an independent outside
consultant analyzes a survey of a broad group of domestic industrial
organizations from all segments of industry ranging in size from under $150
million to over $5 billion in annual revenues. Organizations participate in the
survey based upon their voluntary submission of data to the independent
consultant, as well as their ability to pass the consultant's quality assurance
controls. For 1997, participants included 371 parent organizations and 552
independent operating units. Comparing positions of similar scope and
complexity, the consultant derives a median salary level for each executive
officer position at the Company and its principal subsidiaries and provides that
information to the Compensation Committee. All information provided to the
Compensation Committee is on an industry-wide basis as opposed to a comparison
with individual companies that may compete with the Company and its principal
subsidiaries. The Compensation Committee uses the median, or salary midpoint
("Salary Midpoint"), for purposes of determining the salary range for each
executive officer. The Compensation Committee then sets the salary for each
executive officer, which is within the salary range, and is dependent upon
additional factors such as the executive officer's performance.

Because the Compensation Committee uses Salary Midpoints based on studies
of domestic industrial organizations from all segments of industry, the Company
does not believe that there is a meaningful relationship between executive
salary levels of each subsidiary determined by the Compensation Committee and
the executive salary levels of the companies that make up the S&P Diversified
Machinery Index. That index, which is used by the Company as the published
industry index for comparison to the Company's stock price performance, was
chosen because NMHG is the Company's largest subsidiary in terms of asset value
and revenues.

Short-Term Incentive Compensation. At the beginning of 1997, the
Compensation Committee adopted target performance levels for consolidated
adjusted return on equity for the Company (upon which awards under the Company's
Supplemental Short-Term Plan are based), and various performance criteria for
the Company's subsidiaries such as net income, return on equity in properly
capitalized tangible assets, market share, sales development and support costs
(depending on the business unit) (upon which awards under the Company's Annual
Incentive Compensation Plan (the "Short-Term Plan") are based) for that year.
The short-term incentive plans for the Company and its subsidiaries essentially
follow the same basic pattern for award determination. Performance targets are
established within the Compensation Committee's discretion,
16
<PAGE> 18

and are generally based upon management's recommendations as to the performance
objectives of the particular business for the year. Target awards for executive
officers are established at specified percentages of each individual's Salary
Midpoint.

Final awards for each individual under the short-term incentive plans of
the Company and its subsidiaries are based on the individual's target award,
adjusted for performance by the business unit against the established targets,
and for all such plans except the Supplemental Short-Term Plan for performance
by the individual against individual goals. The Compensation Committee, in its
discretion, may also increase or decrease awards under all such plans (except
for the Supplemental Short-Term Plan pursuant to which awards may be decreased,
but not increased), and may approve the payment of awards where business unit
performance would otherwise not meet the minimum criteria set for payment of
awards. In no event will short-term incentive payments exceed 150% of the target
amount.

The short-term annual incentive plans of the Company and its subsidiaries
provide target compensation of 20% to 65% of Salary Midpoint, depending on the
executive officer's position and subsequent performance during the fiscal year.
Although it varies by business unit, target awards generally are tied to the
annual operating and financial targets for the particular business unit, and in
most cases, to longer-term objectives such as long-term adjusted return on
equity performance targets for the business unit.

Long-Term Incentive Compensation. For 1997, the long-term incentive
compensation plans for the Company and its subsidiaries, established at target
performance levels by the Compensation Committee, were designed to provide the
equivalent of 10% to 105% of Salary Midpoint (unless the amount is currently
taxable, in which case the targets are adjusted accordingly).

The long-term incentive compensation plan for the parent holding company
uses the Company's consolidated adjusted return on equity as a measure of
incentive compensation. The consolidated adjusted return on equity targets are
established by the Compensation Committee, and are set at levels believed to
provide an appropriate measure of stockholder protection. In general, each year
participants are granted dollar-denominated target base period awards based on
performance periods of two years and target consistent performance awards based
on performance periods of up to five years. Target awards are set based on a
percentage of each executive officer's Salary Midpoint, and are adjusted as of
the end of the base period based upon the Company's consolidated adjusted return
on equity. Consistent performance awards are intended to supplement the base
period awards granted to participants. No consistent performance award is
payable if the Company's consolidated adjusted return on equity performance for
the relevant period is at or below target.

Approximately sixty-five percent of all of the foregoing awards are
distributed in shares of Class A Common, the transfer of which is restricted for
ten years, with the number of shares awarded being based on the average closing
price of Class A Common on the New York Stock Exchange at the end of each week
during the last year of the appropriate performance period. An average price
mechanism, rather than year-end price or price on the date of payment, is used
in determining the number of shares to be awarded because the Compensation
Committee believes that valuation at a single point in time in a year is likely
to lead to inappropriate results. The balance of the award is paid in cash and
is intended to be the approximate amount required to be withheld by the Company
and paid to applicable federal, state and local income taxing authorities based
upon statutorily determined withholding rates.

The Compensation Committee believes that these incentive compensation plan
awards promote a long-term focus on the profitability of the Company because,
although a recipient may receive a payout after the end of the base period and
each consistent performance period, he is effectively required to invest the
noncash portion of the payout in the Company for a ten-year period. This is
because the shares distributed may not be transferred for ten years following
the year the original target awards are established. During the restriction
period, the ultimate value of a payout is subject to change based upon the value
of the Class A Common. The value is enhanced as the value of the Class A Common
appreciates (or is decreased as the value of the Class A Common is reduced), and
thus such awards provide the recipient with an incentive over the ten-year
period to increase the value of the Company, to be reflected in the increased
value of the Class A Common.

17
<PAGE> 19

The subsidiaries' long-term incentive compensation plans are linked to
future performance of the particular business unit. Similar to the parent
holding company's long-term incentive plan, each subsidiary plan establishes
target awards based on an executive officer's Salary Midpoint. Under the plans
at NMHG and Hamilton Beach/Proctor-Silex, the target award is set with the grant
of "book value appreciation units." The actual amount paid ten years after the
date of original grant depends upon the increase in the book value of the
particular business unit over the time period. The North American Coal long-term
incentive compensation plan provides for awards of the right to participate in
the plan at a rate equal to a specified percentage of the individual's Salary
Midpoint. The target amount allocated to a participant is adjusted at the end of
each year for the actual net income during that plan year to determine the
annual net income appreciation of current and new mining projects against
previously set annual targets. Similarly, the target amount is adjusted at the
end of each year for the actual cumulative net income for the term of the plan
to date to determine the cumulative net income appreciation of current and new
projects against previously set targets. At the end of each plan year, the
target amount is also adjusted for the present value of expected cumulative net
income appreciation of all new projects initiated during that year to determine
the net income appreciation due to the acquisition of new projects against
previously set targets. Finally, if it is determined in any plan year that a new
project has provided significantly less net income appreciation than originally
expected, then the amount of any prior award previously attributed to that
project will reduce the new project adjustment in that year. If the new project
adjustment is large enough, it is possible for participants to receive negative
awards in a given year. Amounts credited under the North American Coal plan,
which became effective on January 1, 1990, vest at the rate of 10% for each year
following the effective date of the initial award and are fully vested on
December 31, 1999, and will be paid in cash during the first calendar quarter of
2000.

The long-term incentive plans at the Company and its subsidiaries generally
require long-term commitment on the part of the Company's executive officers,
and cash withdrawals or stock sales are generally not permitted for a number of
years. Rather, the awarded amount is effectively invested in the enterprise for
an extended period to strengthen the tie between stockholders' and executive
officers' long-term interests. The ultimate compensation purpose of such
long-term incentive plans is to enable executive officers to accumulate capital
through future managerial performance which contributes to the future success of
the Company's businesses.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The compensation awarded to the Company's chief executive officer reflects
the basic philosophy generally discussed above that compensation for all
employees should be based on Company and individual performance.

The Nominating and Compensation Committee considered that in 1997 the
Company had much improved earnings and made substantial progress towards its
strategic and financial objectives. The Committee believes that this progress
further enhances opportunities for improvements in stockholder value, which have
been increasingly recognized in the marketplace. The Committee believes that
these trends reflect the solid leadership of Mr. Rankin over the past six and
one-half years that he has served as chief executive officer of the Company. In
particular, 1997's results reflected the impact of the Company's cost-reduction,
operating efficiencies and profit improvement programs over the past several
years as well as the Company's efforts to increase market share and improve
product positioning at its principal subsidiaries in order to further enhance
the long-term competitive advantage of the Company's businesses.

In recognition of the Company's accomplishments in 1997, the Nominating and
Compensation Committee increased Mr. Rankin's base salary approximately six
percent in 1998 over his 1997 base salary. With respect to incentive
compensation, Mr. Rankin's awards for 1997 under the Company's short-term and
long-term incentive compensation plans were determined in the same manner as for
all other participants in those plans. The Nominating and Compensation Committee
established Mr. Rankin's short-term incentive compensation participation for
1997 at 65% of his Salary Midpoint. The actual performance of the Company in
1997 in terms of consolidated adjusted return on equity, and the actual
performance of certain subsidiaries in terms of net income, market share and
other strategic factors was predominantly above targeted levels of performance.
The overall performance against target, and accordingly the annual incentive
awards to plan
18
<PAGE> 20

participants, was 116.9% under the Company's Short-Term Plan and 107.0% under
the Company's Supplemental Short-Term Plan, for an aggregate annual incentive
compensation plan performance against target of 112.9%. In recognition of Mr.
Rankin's leadership in 1997, the Nominating and Compensation Committee awarded
Mr. Rankin 108.1% of the payout he otherwise would have received under the
Short-Term Plan and 100.0% of the payout under the Supplemental Short-Term Plan.

The Company's 1997 financial results also had a positive impact on
long-term incentive compensation payouts for 1997, but to a lesser extent
because the NACCO Long-Term Plan bases its payouts on consolidated adjusted
return on equity against pre-established targets for multiple years. The
long-term award targeted for Mr. Rankin in 1997 by the Nominating and
Compensation Committee was 120.75% of his Salary Midpoint (adjusted from 105.0%
to take into consideration the fact that the award is currently taxable to Mr.
Rankin). Although the Company's consolidated adjusted return on equity for 1997
was above target, this was offset somewhat by the Company's 1996 consolidated
adjusted return on equity which was below the same target. Accordingly, awards
to plan participants, including Mr. Rankin, under the NACCO Long-Term Plan for
the two-year period from January 1, 1996 through December 31, 1997, which was
paid in early 1998, was 103.0% of targeted amounts. The NACCO Long-Term Plan
also provides for payment of "consistent performance awards" when the Company's
consolidated adjusted return on equity over multiple-year periods exceeds a
pre-established target. The consolidated adjusted return on equity calculated
pursuant to the 1995 NACCO Long-Term Plan for the three-year period ending
December 31, 1997 exceeded the target established in 1995. Accordingly, plan
participants, including Mr. Rankin, received consistent performance awards equal
to 12% of their respective 1995 actual long-term awards.

JOHN J. DWYER, CHAIRMAN
ROBERT M. GATES
IAN M. ROSS
JOHN C. SAWHILL

JOHN F. TURBEN
DENNIS W. LABARRE*
ALFRED M. RANKIN, JR.*

* Messrs. LaBarre and Rankin are members of the compensation committees of the
Company's principal subsidiaries only.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Dennis W. LaBarre, a director of the Company and its principal subsidiaries
and a member of the compensation committees of the principal subsidiaries of the
Company (but not of the Company), is a partner in the law firm of Jones, Day,
Reavis & Pogue. Such firm provided legal services on behalf of the Company and
its principal subsidiaries during 1997 on a variety of matters, and it is
anticipated that such firm will provide such services in 1998.

Alfred M. Rankin, Jr., a director of the Company and its principal
subsidiaries and a member of the compensation committees of the principal
subsidiaries of the Company (but not of the Company), is chairman, president and
chief executive officer of the Company.

19
<PAGE> 21

STOCK PRICE PERFORMANCE PRESENTATION

The following graphs compare the Company's total annual stock price
performance on Class A Common against the total stock price performance of the
S&P 500 Composite Stock Index and the S&P Diversified Machinery Composite Index
for the periods indicated. The graphs present the year-end value of a $100
investment, at the base point, for each index assuming the reinvestment of
dividends.

In accordance with the regulations promulgated by the SEC, Graph 1 compares
the stock price performance based upon the difference between the stock price at
the beginning of each fiscal year and the stock price at the end of the fiscal
year for the five-year period commencing January 1, 1993 (base point December
31, 1992) and ending December 31, 1997.

1993-1997 Stock Price Performance
Graph 1

<TABLE>
<CAPTION>
S&P
Measurement Period S&P Diversified
(Fiscal Year Covered) NACCO 500 Machinery
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 100.84 110.08 148.07
1994 95.86 111.53 144.14
1995 111.37 153.44 177.88
1996 108.90 188.67 221.71
1997 220.74 251.61 293.28
</TABLE>

Assumes $100 invested at December 31, 1992 with dividends reinvested

20
<PAGE> 22

The Company believes that the measurement set forth in Graph 1, which is
based upon the stock price at a single point in time in each year, does not
adequately reflect the Company's stock price performance over the period because
of the numerous periodic fluctuations throughout the year in both the price of
the Company's stock and the level of the composite indices. The Company,
therefore, has provided Graph 2 which compares the returns for the Company and
the S&P 500 Composite Stock Index based upon the average of the daily closing
stock price (portrayed by the data presented in bold type) compared with the
corresponding information from Graph 1 which is based upon the change in the
stock price for each fiscal year for the same period as in Graph 1.

1993-1997 Stock Price Performance
Graph 2

<TABLE>
<CAPTION>
S&P
NACCO 500
Measurement (12- (12-
Period Month Month
(Fiscal Year S&P Moving Moving
Covered) NACCO 500 Average) Average)
<S> <C> <C> <C> <C>
1992 100.00 100.00 100.00 100.00
1993 100.84 110.08 104.05 111.82
1994 95.86 111.53 119.09 117.17
1995 111.37 153.44 123.28 141.80
1996 108.90 188.67 117.12 179.67
1997 220.74 251.61 163.56 237.79
</TABLE>

Assumes $100 invested at December 31, 1992 with dividends reinvested
12-month moving average data is based upon the daily closing price

21
<PAGE> 23

The Company believes that although sustained operating and financial
performance will ultimately be reflected in stock price, the five-year period
portrayed in the foregoing graphs is too brief a period over which to measure
the results of significant strategic activities, and that corporate financial
and strategic performance will be reflected in stock price only when measured
over the long term. Accordingly, the long-term incentive compensation plans of
the Company and its subsidiaries are linked to values reflecting long-term
operating and financial achievement, not short-term stock price fluctuations, as
further described in the "Report of the Compensation Committee on Executive
Compensation -- Executive Compensation and Company Performance -- Long-Term
Incentive Compensation" on pages 17 and 18. The Company, therefore, has included
Graph 3 which compares the 10-year returns for the Company and the S&P 500
Composite Stock Index based upon the average stock price for the year computed
using the same method as in Graph 2 for the 10-year period commencing January 1,
1988 (base point December 31, 1987) and ending December 31, 1997.

1993-1997 Stock Price Performance
Graph 3

<TABLE>
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) NACCO 500
<S> <C> <C>
1987 100.00 100.00
1988 126.36 109.12
1989 190.13 137.47
1990 213.52 147.14
1991 195.40 171.55
1992 215.19 195.52
1993 223.91 218.64
1994 256.27 229.11
1995 265.29 277.28
1996 252.04 351.34
1997 351.98 464.99
</TABLE>

Assumes $100 invested at December 31, 1987 with dividends reinvested
12-month moving average data is based upon the daily closing price

22
<PAGE> 24

The following table contains the annual returns expressed in percentages
for the indices set forth in the preceding graphs.

ANNUAL RETURNS OF INDICES INCLUDED ON STOCK PRICE PERFORMANCE GRAPHS

<TABLE>
<CAPTION>
YEAR-END CLOSING PRICE
------------------------------ AVERAGE OF DAILY
S&P 500 CLOSING PRICE
DIVERSIFIED ----------------
YEAR NACCO S&P 500 MACHINERY NACCO S&P 500
- ---- ------ ------- ----------- ------ -------
<S> <C> <C> <C> <C> <C>
1987 0.00% 0.00%
1988 26.36% 9.12%
1989 50.47% 25.98%
1990 12.30% 7.03%
1991 -8.49% 16.59%
1992 10.13% 13.97%
1993 0.84% 10.08% 48.07% 4.05% 11.82%
1994 -4.94% 1.32% -2.66% 14.45% 4.79%
1995 16.18% 37.58% 23.41% 3.52% 21.02%
1996 -2.22% 22.96% 24.64% -4.99% 26.71%
1997 102.70% 33.36% 32.28% 39.65% 32.35%
</TABLE>

PENSION PLANS

NORTH AMERICAN COAL PENSION PLANS

The following table sets forth the estimated maximum annual benefits under
the North American Coal defined benefit pension plans (both qualified and
non-qualified) which would be payable on a straight life annuity basis, in
various compensation classifications upon retirement at age 65, after selected
periods of service:

<TABLE>
<CAPTION>
FINAL
AVERAGE YEARS OF SERVICE AT RETIREMENT
ANNUAL PAY ----------------------------------------------------
AGE 65 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 27,802 $ 37,070 $ 46,337 $ 55,604 $ 58,729
150,000 33,802 45,070 56,337 67,604 71,354
175,000 39,802 53,070 66,337 79,604 83,979
200,000 45,802 61,070 76,337 91,604 96,604
225,000 51,802 69,070 86,337 103,604 109,229
250,000 57,802 77,070 96,337 115,604 121,854
300,000 69,802 93,070 116,337 139,604 147,104
350,000 81,802 109,070 136,337 163,604 172,354
400,000 93,802 125,070 156,337 187,604 197,604
450,000 105,802 141,070 176,337 211,604 222,854
500,000 117,802 157,070 196,337 235,604 248,104
550,000 129,802 173,070 216,337 259,604 273,354
600,000 141,802 189,070 236,337 283,604 298,604
650,000 153,802 205,070 256,337 307,604 323,854
700,000 165,802 221,070 276,337 331,604 349,104
750,000 177,802 237,070 296,337 355,604 374,354
800,000 189,802 253,070 316,337 379,604 399,604
</TABLE>

For computing pension benefits under the North American Coal plans, "Final
Average Annual Pay" is based on the average annual earnings for the highest five
consecutive years during the last ten years prior to retirement. Earnings
include those amounts shown in the "Salary" and "Bonus" columns of the Summary
Compensation Table on page 10, which are paid to the executive officers, other
than amounts which represent

23
<PAGE> 25

severance payments, relocation allowances and other similar fringe benefits. The
1997 earnings of Mr. Miercort that would be taken into account under the plans
is $514,699.

As of December 31, 1997, the number of years of service under the North
American Coal plans for Mr. Miercort is 22 years. The benefits under the North
American Coal plans for Mr. Miercort are not subject to a Social Security
offset.

HAMILTON BEACH/PROCTOR-SILEX PENSION PLANS

For 1995 and 1996, Mr. Posey was covered by the defined benefit cash
balance plans (both qualified and non-qualified) of Hamilton
Beach/Proctor-Silex. Hamilton Beach/Proctor-Silex credited an amount to a
notional account for each covered employee under the plans based on a formula
which took into account the employee's age, compensation and the company's
profits. Effective as of December 31, 1996, the defined benefit cash balance
plans (both qualified and non-qualified) of Hamilton Beach/Proctor-Silex were
permanently frozen for all participants.

The frozen notional account balances are credited with interest equal to 1%
above the one-year Treasury Bill rate (with a minimum of 5% and a maximum of
12%) until benefit commencement. The notional account balances are paid in the
form of a lump sum or are converted to an annuity to provide monthly benefit
payments. The estimated annual pension benefit for Mr. Posey under the cash
balance plans, based on compensation, service and interest credits through
December 31, 1997, which would be payable on a straight life annuity basis at
age 65 is $726.

2. CONFIRMATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors of the Company recommends a vote for confirmation of
the appointment of Arthur Andersen LLP as the independent certified public
accountants of the Company and its subsidiaries to audit the books and accounts
for the Company and its subsidiaries for the current fiscal year. It is intended
that the shares represented by proxies in the enclosed form(s) will be voted for
confirmation of Arthur Andersen LLP as the independent certified public
accountants, unless contrary instructions are received. It is expected that
representatives of Arthur Andersen LLP will attend the Annual Meeting, with the
opportunity to make a statement if they so desire, and will be available to
answer appropriate questions.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the SEC and the New
York Stock Exchange. Officers, directors and greater than ten percent beneficial
owners are required by applicable regulations to furnish the Company with copies
of all Section 16(a) forms they file.

Based upon its review of the copies of Section 16(a) forms received by it,
and upon written representations from reporting persons concerning the necessity
of filing a Form 5-Annual Statement of Changes in Beneficial Ownership, the
Company believes that, during 1997, all filing requirements applicable for
reporting persons were met, except as follows:

Frank F. Taplin filed a report on Form 4 which identified one
transaction not reported on a timely basis; Jennifer Dickerman filed a report on
Form 5 which identified two transactions not reported on a timely basis; David
F. Taplin filed a report on Form 5 which identified two transactions not
reported on a timely basis; Richard B. Tullis filed a report on Form 5 which
identified two transactions not reported on a timely basis; Yoshinori Ohno filed
a late Form 3; Jennifer T. Jerome filed a report on Form 4 which identified one
transaction not reported on a timely basis; Martha S. Kelly filed a report on
Form 4 which identified one transaction not reported on a timely basis; Bruce T.
Rankin filed a report on Form 4 which identified one transaction not reported on
a timely basis; Clara L.T. Rankin filed a report on Form 5 which identified one
transaction not reported on a timely basis; Alfred M. Rankin, Jr. filed a report
on Form 4 which identified one transaction by him, one transaction by his
retirement account, one transaction by a trust of which he serves as

24
<PAGE> 26

trustee and one transaction by each of his wife and two children not reported on
a timely basis; Alfred M. Rankin, Jr. filed a report on Form 5 which identified
one transaction by a trust of which he serves as trustee not reported on a
timely basis; Helen R. Butler filed a report on Form 4 which identified one
transaction by her, one transaction by her father's retirement account, one
transaction by a trust of which her father serves as trustee and one transaction
by each of her father, mother and sister not reported on a timely basis; Helen
R. Butler filed a report on Form 5 which identified one transaction by a trust
of which her father serves as trustee not reported on a timely basis; J.C.
Butler, Jr. filed a report on Form 4 which identified one transaction by his
spouse not reported on a timely basis; Clara T. Rankin filed a report on Form 4
which identified one transaction by her, one transaction by her father's
retirement account, one transaction by a trust of which her father serves as
trustee and one transaction by each of her father, mother and sister not
reported on a timely basis; Clara T. Rankin filed a report on Form 5 which
identified one transaction by a trust of which her father serves as trustee not
reported on a timely basis; Victoire G. Rankin filed a report on Form 4 which
identified one transaction by her, one transaction by her husband's retirement
account, one transaction by a trust of which her husband serves as trustee and
one transaction by each of her husband and two children not reported on a timely
basis; Victoire G. Rankin filed a report on Form 5 which identified one
transaction by a trust of which her husband serves as trustee not reported on a
timely basis; Susan Sichel filed a report on Form 5 which identified two
transactions not reported on a timely basis; Margaret E. Taplin filed a report
on Form 5 which identified two transactions not reported on a timely basis;
Frank E. Taplin, Jr. filed a report on Form 5 which identified two transactions
not reported on a timely basis.

SUBMISSION OF STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting must be received at the Company's executive offices on or before
November 30, 1998. Such proposals should be submitted by certified mail, return
receipt requested, addressed to the Company, 5875 Landerbrook Drive, Mayfield
Heights, Ohio 44124-4017, Attention: Secretary. The Company's Nominating and
Compensation Committee will consider stockholder suggestions for nominees for
election to the Company's Board of Directors if such suggestions are in writing,
set forth the nominee's name, address and ownership of Class A Common and Class
B Common, and are accompanied by a resume of the nominee's education and
business experience (including directorships, employments and civic activities)
and a written consent by the nominee that such nominee is desirous of being
considered as a nominee and, if nominated and elected, such nominee will serve
as a director. Such suggestions should be submitted in the manner and to the
address set forth above and must be received at the Company's executive offices
on or before December 31, 1998.

SOLICITATION OF PROXIES

The Company will bear the costs of soliciting proxies from its
stockholders. In addition to the use of the mails, proxies may be solicited by
the directors, officers and employees of the Company by personal interview,
telephone or telegram. Such directors, officers and employees will not be
additionally compensated for such solicitation, but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of Class A
Common and Class B Common held of record by such persons, and the Company will
reimburse such brokerage houses, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.

25
<PAGE> 27

OTHER MATTERS

The directors know of no other matters which are likely to be brought
before the meeting, but if any such matters properly come before the meeting the
persons named in the enclosed proxy, or their substitutes, will vote the proxy
in accordance with their best judgment.

CHARLES A. BITTENBENDER
Secretary

Mayfield Heights, Ohio
March 30, 1998

IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE URGED TO FILL OUT, DATE AND MAIL THE
ENCLOSED FORM(S) OF PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. STOCKHOLDERS WHO HOLD BOTH CLASS A COMMON AND CLASS
B COMMON SHOULD FILL OUT, SIGN, DATE AND RETURN BOTH FORMS OF PROXY.

26
<PAGE> 28
NACCO INDUSTRIES, INC.
Class A Common Stock
Solicited on behalf of the Board of Directors
P for Annual Meeting, May 13, 1998
R
O The undersigned hereby appoints Owsley Brown II, Robert M. Gates and Alfred
X M. Rankin, Jr., and each of them, as proxies, with full power of
Y substitution, to vote and act for and in the name of the undersigned as
fully as the undersigned could vote and act if personally present at the
annual meeting of stockholders of NACCO Industries, Inc. to be held on May
13, 1998, and at any adjournment or adjournments thereof, as follows and in
accordance with their judgment upon any other matter properly presented.

The election of the nominees listed below as directors are:

Owsley Brown II, Robert M. Gates, Leon J. Hendrix, Jr., Dennis W. LaBarre,
Alfred M. Rankin, Jr., Ian M. Ross, John C. Sawhill, Britton T. Taplin,
David F. Taplin and John F. Turben.

- -------------------------------------------------------------------------------
FOLD AND DETACH HERE

NACCO INDUSTRIES, INC. ANNUAL
MEETING OF
STOCKHOLDERS

MAY 13, 1998

<PAGE> 29
- ------
| | Please mark your
| X | vote as in this 2057
| | example.
- ------
This proxy when properly executed will be voted in the manner
directed herein. If no direction is made, this proxy will be voted FOR
the election of Directors and FOR proposal 2.
- ------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- ------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Proposal to confirm
Directors the appointment of
(see reverse) Arthur Andersen LLP
as independent
For, except vote withheld certified public
from the following accountants.
nominee(s):

- ------------------------
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such.

--------------------------------------------

--------------------------------------------
SIGNATURES(S) DATE

- ------------------------------------------------------------------------------
FOLD AND DETACH HERE

IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
<PAGE> 30
NACCO INDUSTRIES, INC.
Class B Common Stock
Solicited on behalf of the Board of Directors
for Annual Meeting, May 13, 1998

P The undersigned hereby appointees Owsley Brown II, Robert M. Gates and
R Alfred M. Rankin, Jr., and each of them, as proxies, with full power
O of substitution, to vote and act for and in the name of the
X undersigned as fully as the undersigned could vote and act if
Y personally present at the annual meeting of stockholders of NACCO
Industries, Inc. to be held on May 13, 1998, and at any adjournment
or adjournments thereof, as follows and in accordance with their
judgment upon any other matter properly presented.

The election of the nominees listed below as directors are:

Owsley Brown II, Robert M. Gates, Leon J. Hendrix, Jr., Dennis W.
LaBarre, Alfred M. Rankin, Jr., Ian M. Ross, John C. Sawhill, Britton
T. Taplin, David F. Taplin and John F. Turben.

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

NACCO INDUSTRIES, INC. ANNUAL
MEETING OF
STOCKHOLDERS

MAY 13, 1998

<PAGE> 31
- ------
| | Please mark your
| X | vote as in this 2056
| | example.
- ------
This proxy when properly executed will be voted in the manner
directed herein. If no direction is made, this proxy will be voted FOR
the election of Directors and FOR proposal 2.
- ------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- ------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Proposal to confirm
Directors the appointment of
(see reverse) Arthur Andersen LLP
as independent
For, except vote withheld certified public
from the following accountants.
nominee(s):

--------------------------------------------

--------------------------------------------
SIGNATURES(S) DATE

- ------------------------------------------------------------------------------
FOLD AND DETACH HERE

IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED