THE INTERLAKE CORPORATION
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(630) 852-8800
March 21, 1997
To Our Stockholders:
This year we are holding our annual meeting on Thursday, April 24, 1997, at
10:00 a.m. local time, at the Radisson Hotel Lisle/Naperville, located at
3000 Warrenville Road, Lisle, Illinois 60532.
Matters before the meeting are summarized in the formal notice of meeting
which appears on the next page. In addition, there will be a brief
statement concerning the affairs of The Interlake Corporation, after which
stockholders will be given an opportunity to ask questions or make
comments.
Inasmuch as many of our stockholders are unable to personally attend the
annual meeting, the Board of Directors solicits proxies so that each
stockholder is given an opportunity to vote. If you are a stockholder of
record (Interlake shares are registered in your name), please return the
white card to First Chicago Trust Company of New York. If your shares are
held for your account by a bank or broker, please return the accompanying
voting instructions to your bank or broker. If you participate in The
Interlake Corporation Employee Stock Ownership Plan or the Dexion UK Share
Award Scheme, enclosed are forms which you may use to direct the trustee to
vote certain shares in accordance with your instructions. If you
participate in the Chem-tronics, Inc. Employee Stock Ownership Plan, or the
Interlake Stock Fund of the Interlake Salaried Employees Retirement Savings
Plan, you will soon receive forms which you may use to direct the trustee
of your employee benefit plan to vote certain shares held by such plan in
accordance with its terms.
It is important to you and helpful to your directors that all stockholders
participate in the affairs of The Interlake Corporation. You may specify
your choices by marking the appropriate boxes on the proxy card or voting
instructions. To vote on all matters to be voted upon in accordance with
the recommendation of your Board of Directors, stockholders of record need
only sign and return the proxy card in the addressed, postage pre-paid
envelope provided.
Sincerely,
/s/W. Robert Reum
W. ROBERT REUM
Chairman of the Board, President
and Chief Executive Officer
THE INTERLAKE CORPORATION
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(630) 852-8800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of stockholders of The
Interlake Corporation, a Delaware corporation, will be held at the Radisson
Hotel Lisle/Naperville, located at 3000 Warrenville Road, Lisle, Illinois
60532, on Thursday, April 24, 1997, at 10:00 a.m. local time, for the
following purposes:
1. To elect three directors;
2. To approve the 1997 Stock Incentive Program; and
3. To transact such other business as may properly come before said
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 7, 1997, as
the record date for the determination of stockholders entitled to notice of
and to vote at such meeting or any adjournment thereof.
By order of the Board of Directors.
/s/Stephen R. Smith
STEPHEN R. SMITH
Vice President, Secretary
and General Counsel
Lisle, Illinois
March 21, 1997
YOUR VOTE IS IMPORTANT
Please complete, sign and date the proxy card or voting instructions form
and return it promptly in the postage pre-paid envelope.
THE INTERLAKE CORPORATION
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of The Interlake Corporation of proxies to
be used at the annual meeting of stockholders of Interlake to be held at
the Radisson Hotel Lisle/Naperville, 3000 Warrenville Road, Lisle, Illinois
60532, on April 24, 1997, at 10:00 a.m. local time. Throughout this proxy
statement, "Interlake" and the "Corporation" mean The Interlake
Corporation, "Board" means the Board of Directors of Interlake, "last
fiscal year" means the period which began on January 1, 1996 and ended on
December 29, 1996, "executive officers" means certain officers of Interlake
elected by the Board and operating executives not elected by the Board who
have been designated executive officers of Interlake for purposes of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), "Common
Stock" means Interlake's voting Common Stock, par value $1 per share, and
shares "outstanding" means shares issued less treasury shares.
Interlake's address is 550 Warrenville Road, Lisle, Illinois 60532-4387.
This proxy statement, the accompanying proxy card and the annual report to
stockholders are being mailed to stockholders commencing on March 21, 1997.
This proxy statement is also being distributed to participants in various
employee benefit plans of Interlake or its subsidiaries and to banks and
brokers for redistribution to their customers.
DIRECTORS AND NOMINEES
Interlake's Restated Certificate of Incorporation, as amended to date (the
"Certificate"), provides for a Board consisting of not fewer than seven nor
more than 15 directors, the exact number to be fixed by the Board. The
Board of Directors currently consists of eight members.
The Certificate further provides that the directors are to be divided into
three classes and each class is to be elected for a three year term. The
Board has nominated Frederick C. Langenberg, William G. Mitchell and Erwin
E. Schulze for three year terms ending at the 2000 annual meeting. All
three of the nominees are currently directors of Interlake whose terms
expire in 1997. If, for any reason not now anticipated, any one of the
three nominees becomes unable to serve, the number of directors
constituting the full Board and the number of directors to be elected at
the 1997 annual meeting will be reduced by one. If more than one of the
nominees becomes unable to serve, the proxy holders will vote for a
substitute or substitutes recommended by the Board Development Committee
and designated by the Board.
There follows information about the three nominees and other incumbent
directors whose terms of office as directors will continue after the 1997
annual meeting of stockholders. The period of each director's Board
service includes both Interlake and, if applicable, predecessors of
Interlake.
NOMINEES FOR TERM WHICH EXPIRES IN 2000
FREDERICK C. LANGENBERG, age 69, retired in 1991 as Chairman of the
Board and Chief Executive Officer of Interlake. Director of Carpenter
Technology Corporation and Peoples Energy Corporation. Interlake director
since 1979. Committees: Audit Review, Finance, and Board Development.
WILLIAM G. MITCHELL, age 66, retired as Vice Chairman and Director of
Centel Corporation, a communications and electric services company, in
1987. Director of The Northern Trust Company, The Sherwin-Williams Company
and Peoples Energy Corporation. Interlake director since 1984.
Committees: Audit Review, and Management Development and Compensation.
ERWIN E. SCHULZE, age 71, Chairman Emeritus of the Board of Governors
of the Chicago Stock Exchange. Retired as Chairman of the Board, President
and Chief Executive Officer, and Director, of The Ceco Corporation, a
manufacturer of building products and provider of concrete forming services
for the construction industry, in 1990. Director of AAR Corporation.
Interlake director since 1981. Committees: Management Development and
Compensation, and Finance.
TERM EXPIRES IN 1999
JOHN A. CANNING, JR., age 52, President of Madison Dearborn Partners,
Inc., a manager of private equity investment funds, since January 1993.
Formerly President of First Chicago Venture Capital from 1980 to 1993 and
Executive Vice President of The First National Bank of Chicago from 1987 to
1993. Director of Leslie's Poolmart, The Milnot Company, Milwaukee Brewers
Baseball Club, Inc., Norfolk Tides Baseball Club, Tyco Toys, Inc., and
Northwestern Memorial Corporation; member of the Board of Trustees of
Northwestern University and The Field Museum. Interlake director since
1993. Committees: Management Development and Compensation, and Finance.
JAMES C. COTTING, age 63, retired in 1995 as Chief Executive Officer
and in 1996 as Chairman of the Board of Navistar International Corporation,
a manufacturer of medium and heavy duty trucks. Director of Navistar
International Corporation, Asarco Incorporated and USG Corporation. Member
of the Board of Governors of the Chicago Stock Exchange. Director of
Junior Achievement of Chicago and a trustee of the Adler Planetarium.
Interlake director since 1989. Committees: Management Development and
Compensation, and Finance.
QUENTIN C. MCKENNA, age 70, retired as Chief Executive Officer in
1991 and as Chairman of the Board in 1996 of Kennametal, Inc., a
manufacturer of metal cutting tools, machining systems, and materials for
applications requiring wear resistance. Director of Kennametal. Past
Director of PNC Financial Corp. and its affiliate, Pittsburgh National Bank;
past director of the Federal Reserve Bank of Cleveland. Interlake director
since 1986. Committees: Audit Review, and Board Development.
TERM EXPIRES IN 1998
JOHN E. JONES, age 62, retired in 1996 as Chairman of the Board,
President, Chief Executive Officer and a Director of CBI Industries, Inc.,
a manufacturer of industrial gases, provider of construction services and
investor in oil transport and storage businesses. Director of Allied
Products Corporation, Amsted Industries Incorporated, BWAY Corp., NICOR
Inc. and Valmont Industries, Inc. Interlake director since 1988.
Committees: Audit Review, Finance, and Board Development.
W. ROBERT REUM, age 54, Chairman of the Board, President and Chief
Executive Officer of Interlake since 1991. Director of Amsted Industries
Incorporated. Interlake director since 1987. See "General-Certain
Transactions."
1997 STOCK INCENTIVE PROGRAM
On March 18, 1997, the Corporation's Board of Directors adopted, subject to
stockholder approval, the 1997 Stock Incentive Program (the "1997
Program"). The Corporation's 1986 Stock Incentive Program expired last
year and only 165,865 shares of Common Stock are currently available to be
the subject of awards under the Corporation's 1989 Stock Incentive Program.
General Information
The purpose of the 1997 Program is to attract and retain outstanding
individuals as directors, officers and key employees of the Corporation and
its subsidiaries and to furnish performance incentives to such individuals
by providing opportunities for such individuals to acquire shares of Common
Stock. Benefits may not be granted under the 1997 Program after April 24,
2007.
The 1997 Program will be administered by the Management Development and
Compensation Committee (the "Committee") of the Corporation's Board of
Directors. Each of the at least three members of the Committee must be a
"Non-Employee Director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and an "Outside
Director" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). The interpretation and construction by
the Committee of any provision of the 1997 Program or of any document
evidencing the grant of any Benefits and any determination by the Committee
pursuant to any provision of the 1997 Program or of any such document shall
be final and conclusive. No member of the Committee shall be liable for
any such action or determination made in good faith. The Corporation's
Secretary (or another officer designated from time to time by the
Corporation's Chief Executive Officer) will perform record-keeping
functions under the 1997 Program. Any decision by such officer, if
approved by the Committee, will be binding and conclusive for all purposes.
The Committee is authorized to designate the directors, officers and key
employees ("Participants") of the Corporation and its subsidiaries (or any
person who has agreed to commence serving in such capacity within 90 days)
who may receive Benefits under the 1997 Program. The granting of Benefits
to any such persons is entirely in the discretion of the Committee and the
Committee may consider such factors as it deems pertinent in designating
Participants and in determining the terms of such Benefits. Benefits which
may be granted under the 1997 Program include stock options, restricted
shares and shares in lieu of certain cash payments. Each type of Benefit
is described below.
Subject to adjustment as described below, the number of shares of Common
Stock that may be issued or transferred (i) upon the exercise of stock
options, (ii) as restricted shares and released from substantial risks of
forfeiture thereof, or (iii) as shares in lieu of certain cash payments
shall not exceed in the aggregate 1,150,000 shares plus any shares relating
to Benefits that expire or are forfeited or cancelled. Such shares may be
shares of original issuance or treasury shares or a combination of the
foregoing. The Corporation is not required to issue fractional shares
under the 1997 Program and may provide for elimination of fractions or the
settlement of fractions in cash. Upon the payment of any option price by
the transfer to the Corporation of shares of Common Stock or upon
satisfaction of any withholding amount by means of transfer or
relinquishment of shares of Common Stock, there shall be deemed to have
been issued or transferred under the 1997 Program only the net number of
shares of Common Stock actually issued or transferred by the Corporation.
Notwithstanding the foregoing, the aggregate number of shares of Common
Stock actually issued or transferred by the Corporation upon the exercise
of stock options intended to qualify as "incentive stock options" under
Section 422 of the Code shall not exceed 1,150,000 shares, subject to
adjustments as described below. The Committee shall make or provide for
such adjustments in the purchase price and in the number and kind of shares
covered by outstanding stock options as it may determine in good faith is
equitably required to prevent dilution or enlargement of the rights of
optionees as a result of any stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, spin-off, reorganization,
partial or complete liquidation or other corporate transaction or event
having a similar effect. In the event of any such transaction or event,
the Committee, in its discretion, may also provide in substitution for any
or all outstanding Benefits under the 1997 Program such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
Benefits so replaced. In such circumstances, the Committee shall also make
adjustments in the maximum number of shares issuable under the 1997 Program
and in the per individual limits contained therein as it deems appropriate.
Stock Options
The Committee is authorized to grant stock options to Participants. The
terms of each stock option will be determined by the Committee and set
forth in an option agreement delivered to the optionee. No Participant
shall be granted stock options for more than 575,000 shares of Common Stock
during any three year period, subject to adjustments as described above.
Stock options may be "incentive stock options" intended to qualify under
Section 422 of the Code, stock options which are not intended to so
qualify ("nonqualified stock options") or a combination of both. Each
stock option grant must specify the number of shares to which it pertains
and the option price, which may not be less than the fair market value of
such shares on the date of grant. "Fair market value" means, at any date,
the average of the high and low price of the Common Stock on that date (or,
if no sales of Common Stock occurred on that date, the last preceding date
upon which sales of Common Stock occurred) on the New York Stock Exchange
Composite Transactions or any other securities exchange on which the Common
Stock is traded if it is not traded on the New York Stock Exchange or The
Nasdaq Stock Market if the Common Stock is listed thereon and is not traded
on any national securities exchange, in each case as reported (corrected
for reporting errors) in The Wall Street Journal. As of March 14, 1997,
the fair market value of the Common Stock determined in accordance with the
1997 Program was $3.3125.
The Committee is authorized to fix the other terms and conditions of all
stock options granted under the 1997 Program, including the period or
periods of continuous employment or continuous service as a director or the
achievement of Management Objectives necessary prior to the stock option
becoming exercisable and any provision accelerating, for any reason stated,
such exercisability. Management Objectives are measurable performance
objectives established by the Committee and described in terms of
Corporation-wide objectives or objectives that are related to the
performance of the Common Stock, another corporation, the individual
Participant or of the subsidiary, division, department, region or function
within the Corporation or subsidiary in which the Participant is employed.
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Corporation, or the manner
in which it conducts its business, or other events or circumstances render
the Management Objectives unsuitable, the Committee may in its discretion
modify such Management Objectives, in whole or in part, as the Committee
deems appropriate and equitable. The term of each stock option is also
determined by the Committee. No stock option may be granted for a term of
more than ten years from the date of grant.
Upon the exercise of any stock option, the option price is payable in cash
or check acceptable to the Corporation. The Committee may also provide
that the option price may be paid by the transfer to the Corporation of
shares of Common Stock owned by the optionee and having a fair market value
on the date of exercise equal to the Option Price or by a combination of
cash and delivery of shares of Common Stock owned by the optionee. The
Committee may also determine, at or after the date of grant of a stock
option (other than an "incentive stock option"), that payment of the option
price may also be made in whole or in part in the form of restricted shares
or other shares of Common Stock that are forfeitable or subject to
restrictions on transfer (based, in each case, on the fair market value per
share on the date of exercise) or other stock options (based on the
difference (the "Spread") between the fair market value and the exercise
price of such option on the date of exercise). Unless otherwise determined
by the Committee at or after the date of grant of a stock option, whenever
any option price is paid in whole or in part by means of any of the forms
of consideration specified in the preceding sentence, the shares of Common
Stock received upon the exercise of the stock options shall be subject to
such risks of forfeiture or restrictions on transfer as may correspond to
any that apply to the consideration surrendered, but only to the extent of
(i) the number of shares so surrendered, or (ii) the Spread of any
unexercisable portion of stock options. Any grant may provide for deferred
payment of the option price from the proceeds of sale through a bank or
broker on a date satisfactory to the Corporation of some or all of the
shares to which such exercise relates.
The Committee may, with the agreement of the affected optionee, amend or
cancel any stock option granted under the 1997 Program, provided that no
such amendment may cause a stock option to cease to qualify as
"performance-based" under Section 162(m) of the Code. In the event of any
such cancellation, the Committee may authorize the granting of new stock
options (which may or may not cover the same number of shares which had
been the subject of any prior stock option) in such manner, at such option
price and subject to the same terms and conditions as would have been
applicable had the cancelled stock options not been granted.
Restricted Shares
The Committee is authorized to grant restricted shares, which constitute an
immediate transfer of ownership of shares of Common Stock to the
Participant in consideration of the performance of services, entitling such
Participant to voting, dividend and other ownership rights, but subject to
the substantial risk of forfeiture and restrictions on transfer referred to
below. No Participant may receive more than 100,000 restricted shares in
any one calendar year, subject to adjustments as described above. Each
grant must specify the number of shares of Common Stock subject thereto and
must be subject to forfeiture or lapse in such circumstances as the
Committee may determine. Restricted shares must be subject, for a period
to be determined by the Committee, to a substantial risk of forfeiture
within the meaning of Section 83 of the Code. Any grant of restricted
shares may specify Management Objectives which, if achieved, will result in
termination or early termination of the restrictions applicable to such
shares. Each grant may be made without additional consideration or in
consideration of a payment by such Participant that is less than fair
market value. Each grant of restricted shares shall provide that during
the period for which a substantial risk of forfeiture continues, the
transferability of the restricted shares shall be prohibited or restricted
in the manner and to the extent prescribed by the Committee at the date of
grant (which restrictions may include, without limitation, rights of
repurchase or first refusal in the Corporation or provisions subjecting the
restricted shares to a continuing substantial risk of forfeiture in the
hands of any transferee). Any grant of restricted shares may require that
any or all dividends or other distributions paid thereon during the period
of such restrictions be automatically deferred and reinvested in additional
restricted shares, which may be subject to the same restrictions and
substantial risks of forfeiture as the underlying award. Unless otherwise
directed by the Committee, all certificates representing restricted shares
shall be held in custody by the Corporation until all restrictions thereon
have lapsed. Each grant will specify that the Committee may at any time
amend, suspend or terminate the restricted share grant, provided that, in
the case of amendment, the amended grant conforms to the provisions of the
1997 Program.
Shares in Lieu of Certain Cash Payments
The Committee is also authorized to grant shares of Common Stock in lieu of
cash which would otherwise be payable as a bonus to officers and key
employees of the Corporation and its subsidiaries pursuant to any incentive
compensation plan. Each grant may contain such terms and conditions as the
Committee may determine and must specify the proportion of any such bonus
to be paid in shares of Common Stock; however, no shares shall be subject
to a substantial risk of forfeiture within the meaning of Section 83 of the
Code. The number of whole shares of Common Stock to be delivered in lieu
of cash will be determined by dividing the value of the portion of the
bonus to be paid in shares of Common Stock by the fair market value of the
Common Stock as of a date selected by the Committee. The value of
fractional shares will be paid in cash.
Miscellaneous Benefit Terms
Except as otherwise determined by the Committee, no stock option will be
transferable other than by will or the laws of descent and distribution and
stock options will be exercisable during the Participant's lifetime only by
the Participant or his or her guardian or legal representative, and after
the participant's death, only by his or her legal representative. Any
Benefit may also be subject to other provisions as the Committee determines
appropriate, including restrictions on resale, provisions directed at
compliance with federal and state securities laws and stock exchange rules,
and conditions as to employment. The Committee may also authorize the
issuance or assumption of Benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon
such terms and conditions as it may deem appropriate.
It shall be a condition to the receipt of any payment made or benefit
realized by a Participant under the Plan that the Participant make
arrangements satisfactory to the Corporation for payment of any federal,
state, local or foreign taxes required to be withheld in connection
therewith. The Committee has discretion to permit the Participant to
relinquish a portion of such payment or benefit to pay any taxes.
The designation of a director, executive officer or employee as a
participant under the 1997 Program will not enlarge or otherwise affect
such participant's right, if any, to continued employment or service as a
director.
The Committee may accelerate the time at which a stock option may be
exercised or the time at which a restriction or substantial risk of
forfeiture will lapse if a participant dies, becomes disabled or retires or
in case of hardship or other special circumstances.
1997 Program Amendment Provisions
The Committee is authorized to amend, suspend or terminate the 1997 Program
at any time and from time to time, provided, however, that any amendment
which must be approved by the stockholders of the Corporation in order to
comply with applicable law or the rules of the principal national
securities exchange upon which the shares of Common Stock are traded or
quoted shall not be effective unless and until such approval has been
obtained. Presentation of the 1997 Program or any amendment thereto for
stockholder approval is not to be construed to limit the Corporation's
authority to offer similar or dissimilar benefits through plans that are
not subject to stockholder approval.
Benefits to be Granted Under the 1997 Program
The amount and types of Benefits that may be granted under the 1997 Program
will be at the sole discretion of the Committee and cannot therefore be
determined. See "Report of the Management Development and Compensation
Committee on Executive Compensation -- Future Implementation of
Philosophy." It is also not possible to determine what Benefits might have
been granted during 1996 under the 1997 Program if it had been in effect.
Certain awards, however, were made under the 1989 Stock Incentive Program
during 1996. See "Executive Compensation."
Federal Income Tax Consequences
The following is a summary of certain of the federal income tax
consequences of certain transactions under the 1997 Program. Sections 1
through 4 address the tax consequences to all participants of the various
benefits contemplated under the 1997 Program. Section 5 addresses certain
special rules applicable only to those participants who are directors or
officers of the Corporation subject to Section 16(b) of the Exchange Act
(collectively, "Insiders"). Finally, Section 6 considers certain general
matters.
1. Incentive Stock Options
A participant will not recognize income upon the grant of an incentive
stock option. Furthermore, a participant will not recognize income upon
the exercise of an incentive stock option if he or she satisfies certain
employment and holding period requirements. To satisfy the employment
requirement, a participant must exercise the option not later than three
months after he or she ceases to be an employee of the Corporation (one
year if he or she is disabled). To satisfy the holding period requirement,
a participant must hold the optioned shares for more than two years from
the grant of the option and more than one year after the shares are
transferred to him or her. If these requirements are satisfied, the
participant will be taxed on any gain (measured by the difference between
the participant's basis in the shares and the net proceeds of the sale) at
long-term capital gains rates on the sale of the shares.
If the shares of Common Stock acquired upon the timely exercise of an
incentive stock option are sold, exchanged or otherwise disposed of without
satisfying the holding period requirement (a "Disqualifying Disposition"),
the participant will usually recognize a portion of any gain as ordinary
income at the time of disposition up to the amount of the excess of the
fair market value of the underlying Common Stock at the time of exercise
over the option price (the "Spread"). Upon a Disqualifying Disposition
that constitutes a sale or exchange with respect to which any loss would be
recognized, the amount includable in ordinary income will be limited to any
excess of the net amount realized on the sale or exchange over the
participant's basis in the shares. A Disqualifying Disposition is usually
a transaction with an unrelated third party that is not subject to the
wash-sale provisions of the Code.
If the participant pays the option price of an incentive stock option by
the surrender of unrestricted shares of Common Stock that he or she already
owns, he or she will not recognize gain or loss on the shares surrendered
to the extent that their fair market value equals that of the shares
received. To that extent, the shares received will have a basis equal to
the basis of the shares surrendered, and the participant's holding period
of the shares received will include the holding period of the shares
surrendered. To the extent that the value of the shares received exceeds
the value of the shares surrendered, those shares received that represent
such excess in value will have a basis equal to zero and a holding period
that will commence on the day they are acquired. However, if a participant
surrenders shares that were acquired through the previous exercise of an
incentive stock option before the end of the requisite holding period, the
participant may recognize ordinary income on the surrender of those shares.
Individuals are subject to an alternative minimum tax ("AMT") based upon an
expanded tax base to the extent that the AMT exceeds the regular tax
liability. The AMT is imposed on alternative minimum taxable income in
excess of an exemption amount. Alternative minimum taxable income
generally is the taxpayer's taxable income increased or decreased by
certain adjustments and increased by certain preferences. For AMT
purposes, incentive stock options are generally treated in a manner similar
to the regular tax treatment of nonqualified stock options (see Section 2,
below). For example, upon the exercise of an incentive stock option, the
amount of the Spread will be included in alternative minimum taxable
income, and the basis of the shares will equal their fair market value when
the incentive stock option is exercised. A tax credit may be available in
a subsequent taxable year for some or all of any AMT paid.
Options otherwise qualifying as incentive stock options will be treated as
nonqualified stock options to the extent that the fair market value of the
shares with respect to which incentive stock options granted after 1986 are
exercisable for the first time by a participant during any calendar year
(under all of the Corporation's plans and those of any of its subsidiaries)
exceeds $100,000. This rule is applied by taking the options into account
in the order in which they are granted.
2. Nonqualified Stock Options
A participant will not recognize income upon the grant of a nonqualified
stock option. Generally, the participant will recognize ordinary income at
the time of exercise equal to the amount of the Spread. Upon a subsequent
sale of the shares received upon exercise, any difference between the net
proceeds of the sale and the fair market value of the shares on the date of
exercise will be taxed as long-term or short-term capital gain or loss
depending on the holding period.
If a participant pays the option price of a nonqualified stock option in
whole or in part by the surrender of Common Stock that the participant
already owns, the participant will not recognize gain or loss on the shares
surrendered to the extent that their fair market value equals that of the
shares received. To that extent, the shares received will have a tax basis
equal to the basis of the shares surrendered, and the participant's holding
period of the shares received will include the holding period of the shares
surrendered. To the extent that the value of the shares received upon
exercise exceeds the value of the shares surrendered, the excess (reduced
by the amount of any cash paid by the participant) will be ordinary income.
Furthermore, the shares received that represent such excess in value will
have a basis equal to their fair market value and a holding period that
will commence on the day after they are acquired. However, if the shares
surrendered are considered substantially nonvested property within the
meaning of Section 83 of the Code, a Section 83(b) Election (as defined in
Section 3 below) with respect to the shares has not been made, and certain
shares received upon exercise are considered substantially nonvested
property, the participant will generally recognize ordinary income in the
year during which the restrictions terminate on the shares received.
3. Restricted Shares
A participant will not recognize income upon the receipt of a restricted
share unless the participant makes an election under Section 83(b) of the
Code (a "Section 83(b) Election") within 30 days after the shares are
transferred to the participant to have the shares taxed to the participant
as ordinary income at their fair market value on the date of transfer less
any amount paid by him or her.
If a participant makes a Section 83(b) Election, the participant will
recognize ordinary income in the year of receipt in an amount equal to the
excess of the fair market value of the shares (determined without regard to
the restrictions thereon) at the time of transfer over any amount paid by
the participant therefor. Upon a sale of such shares after the
restrictions terminate or are otherwise removed, any difference between the
net proceeds of the sale and the fair market value of the shares
(determined without regard to the restrictions thereon) at the time of
transfer will be taxed as long-term or short-term capital gain or loss
depending on the holding period. If a participant makes a Section 83(b)
Election with respect to Common Shares that are subsequently forfeited, the
participant will not be entitled to deduct any amount previously included
in income by reason of that election.
If a participant does not make a Section 83(b) Election, the participant
will recognize ordinary income in the year during which the restrictions
terminate in an amount equal to any excess of the fair market value of the
shares on the date that the restrictions terminate or are otherwise removed
over any amount paid by the participant therefor. Upon a sale of such
shares after the restrictions terminate or are otherwise removed, any
difference between the net proceeds of the sale and the fair market value
of the shares on the date that the restrictions terminate or are otherwise
removed will be taxed as long-term or short-term capital gain or loss
depending on the holding period. If a Section 83(b) Election has not been
made, any unrestricted dividends received with respect to Common Shares
that are subject to restrictions will be treated as additional compensation
income and not as dividend income.
4. Shares in Lieu of Certain Cash Payments
A participant will recognize ordinary income upon receipt of shares of
Common Stock in lieu of certain cash payments, equal in amount to the fair
market value of the shares at the time of the transfer.
5. Special Rules Applicable to Insiders
In limited circumstances where the sale of Common Stock received as a
result of a grant or award could subject an Insider to suit under Section
16(b) of the Exchange Act, the tax consequences to the Insider may differ
from the tax consequences described above. In these circumstances, unless
an election under Section 83(b) of the Code has been made, the principal
difference (in cases where the Insider would otherwise be currently taxed
upon the receipt of the stock) usually will be to postpone valuation and
taxation of the stock received so long as the sale of the stock received
could subject the Insider to suit under Section 16(b) of the Exchange Act,
but no longer than six months.
6. General Matters
To the extent that a participant recognizes ordinary income in the
circumstances described above, his or her employer will be entitled to a
corresponding deduction provided, among other things, that the deduction
meets the test of reasonableness, is an ordinary and necessary business
expense, is not disallowed by the $1 million limitation on certain
executive compensation and is not an "excess parachute payment" within the
meaning of Section 280G of the Code.
THE BOARD OF DIRECTORS AND COMMITTEES
There were ten meetings of the Board in 1996. Each director, other than
John A. Canning, Jr., attended at least 75% of the aggregate of the total
number of meetings of the Board held during the period during which he was
a director and the total number of meetings held by all committees of the
Board on which he served during the period that he was a committee member.
The Audit Review Committee recommends to the Board the appointment of
independent accountants; meets periodically with Interlake's management,
internal audit management and independent accountants and reviews internal
accounting controls, the internal audit program and accounting practices;
reviews consolidated financial statements; and reviews Interlake's non-financial
auditing practices. The Audit Review Committee met two times in 1996.
The Management Development and Compensation Committee provides for annual
evaluation of the Chief Executive Officer; reviews and makes
recommendations to the Board regarding key employee compensation policies,
plans and programs, including recommending to the Board the salaries of all
executive officers; and administers certain compensation programs. The
Management Development and Compensation Committee met two times in 1996.
The Board Development Committee's primary responsibility is to seek out,
evaluate and recommend to the Board qualified nominees for election as
directors; and to implement systems for evaluation of the Board.
Biographical and other information about possible nominees recommended by
stockholders in accordance with the provisions of Interlake's by-laws
should be sent to the attention of the Secretary of Interlake. The Board
Development Committee met once in 1996.
The Finance Committee consults with management upon request and makes
recommendations to the Board as to major debt and equity financing
transactions, financial aspects of major acquisitions or dispositions, and
allocation of resources for capital expenditures; and reviews the general
administration of the retirement plans of the Corporation. The Finance
Committee met two times in 1996.
VOTING SECURITIES AND SECURITY OWNERSHIP BY CERTAIN
PERSONS AND MANAGEMENT
Holders of record of shares of Common Stock at the close of business on
March 7, 1997 will be entitled to vote at the meeting. On that date,
23,151,792 shares of Common Stock were outstanding, each share being
entitled to one vote.
On March 7, 1997, officers, directors and employees of Interlake and its
subsidiaries had voting rights with respect to approximately 3,194,222
shares, or 13.8% of the shares of Common Stock then outstanding, exclusive
of shares owned outright by employees who are not executive officers. Such
voting rights arise from shares owned outright (in the case of directors
and officers), shares as to which the individual holder's beneficial
interest is limited to voting rights, and shares owned by various employee
benefit plans under which the plan trustee receives voting instructions
from plan participants.
Security Ownership by Certain Persons and Management
This section of the proxy statement relates to beneficial ownership of
Interlake's Common Stock based on information available to the Corporation
as of March 7, 1997. Common Stock is the only class of capital stock
entitled to be voted at the meeting. For the purposes of this section, a
person is deemed to be a beneficial owner if such person has or shares
voting power or investment power in respect of such shares or has the right
to acquire beneficial ownership within 60 days.
The table which follows shows beneficial ownership of Interlake's Common
Stock by each person who has advised management that such person
beneficially owns more than five percent of Interlake's Common Stock.
Number of
Shares Percent(1)
FIRST CHICAGO NBD CORPORATION
and FIRST CHICAGO EQUITY CORPORATION
One First National Plaza
Chicago, Illinois 60670 7,224,771(2) 23.8%
LONGWOOD INVESTMENT ADVISORS, INC. and
ROBERT A. DAVIDSON
735 Chesterbrook Blvd., Suite 305
Wayne, Pennsylvania 19087 2,029,000(3) 8.8%
J.O. HAMBRO & COMPANY LIMITED,
J.O. HAMBRO ASSET MANAGEMENT LIMITED,
J.O.HAMBRO & PARTNERS LIMITED,
J.O. HAMBRO INVESTMENT MANAGEMENT LIMITED,
CHRISTOPHER HARWOOD BERNARD MILLS,
GROWTH FINANCIAL SERVICES LIMITED,
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC,
AMERICAN OPPORTUNITY TRUST PLC,
ORYX INTERNATIONAL GROWTH FUND LIMITED, and
CONSULTA (CHANNEL ISLANDS) LIMITED
10 Park Place
London SQ1A 1LP England 1,976,600(4) 8.5%
(1) Percentages are percentages of Interlake's Common Stock computed as
provided in Rule 13d-3(d)(1) under the Securities Exchange Act of
1934, as amended. This means that, in the case of any holder of
Series A Convertible Exchangeable Preferred Shares ("Series A
Shares"), that holder's Series A Shares are treated as being converted
into shares of Common Stock, but no other Series A Shares are treated
as converted. In the case of all other holders, no Series A Shares
are treated as converted; computations are based solely upon
outstanding shares of Common Stock.
(2) First Chicago Equity Corporation ("FCEC") is the record and
beneficial owner of 31,500 shares of Interlake's Series A2 Convertible
Exchangeable Preferred Stock ("Series A2 Shares"). First Chicago NBD
Corporation is the parent company of FCEC. As of the date hereof,
the Series A2 Shares of FCEC are convertible into 7,224,771 shares of
Non-Voting Common Stock at any time, and into the same number of
shares of Common Stock in certain limited circumstances. (The number
of shares of Common Stock into which the Series A2 Shares are
convertible increases on each June 30th and December 31st if
preferential cash dividends accruing at the rate of nine percent per
annum are not paid.) Series A2 Shares may be converted into Series A1
Shares, which in turn are convertible at any time into shares of
Common Stock, by any holder who can certify that by virtue of such
conversion it would not have a regulatory problem under certain laws
or regulations applicable to banks, bank holding companies, small
business investment companies or their affiliates. Interlake believes
that as of March 7, 1997, FCEC would have had such a regulatory
problem.
(3) In its Schedule 13G filed with the Securities and Exchange Commission,
Longwood Investment Advisors, Inc. indicated that it has sole
dispositive power over 1,967,000 shares; and Robert A. Davidson
indicated that he had sole dispositive power over such 1,967,000
shares by virtue of being responsible for the selection, acquisition
and disposition of portfolio securities on behalf of Longwood
Investment Advisors, Inc., and sole dispositive power over an
additional 62,000 shares.
(4) In the most recent Schedule 13G filed with the Securities and Exchange
Commission, J.O. Hambro & Company Limited, J.O. Hambro Asset
Management Limited, and Christopher Harwood Bernard Mills indicated
that they are the beneficial owner of 1,976,600 (8.5%) shares of
Common Stock, over all of which they had shared voting and dispositive
power; and related entities held shared voting and dispositive power
over the following numbers of shares: J.O. Hambro & Partners Limited,
1,860,800 (8.0%); J.O. Hambro Investment Management Limited, 115,800
(0.5%); Growth Financial Services Limited and North Atlantic Smaller
Companies Investment Trust plc 988,300 (4.3%); American Opportunity
Trust plc, 400,000 (1.7%); and Oryx International Growth Fund Limited
and Consulta (Channel Islands) Limited, 300,000 (1.3%).
The table which follows shows the beneficial ownership of Interlake's
Common Stock by directors, nominees, named executive officers, and
incumbent directors and incumbent executive officers as a group, including
an immaterial number of shares held in joint tenancy with close family
members. The table includes options exercisable within 60 days held by
Messrs. Langenberg, Reum, Greisch, Wilson, Gregory, Fulton and incumbent
executive officers as a group to purchase 62,336; 143,698; 44,907; 36,089;
40,000; 40,000; and 513,298 shares respectively. The percentage of
outstanding shares beneficially owned is computed in accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934. This means that, in
the case of any holder or group of holders of options exercisable within 60
days, that holder's or group's options are treated as exercised, but no
other options are treated as exercised.
Number of
Name Shares Percent(1)
--------- ----------- -----------
JOHN A. CANNING, JR.(2) 1,200 *
JAMES C. COTTING 3,200 *
ROBERT J. FULTON 168,141 0.7
STEPHEN GREGORY 159,453 0.7
JOHN J. GREISCH 179,282 0.8
JOHN E. JONES 3,200 *
FREDERICK C. LANGENBERG 193,702 0.8
QUENTIN C. MCKENNA 3,200 *
WILLIAM G. MITCHELL 6,800 *
W. ROBERT REUM 507,453 2.2
ERWIN E. SCHULZE 32,200 0.1
DANIEL P. WILSON 105,345 0.5
All Directors and Executive
Officers 1,966,861 8.5
(1) An asterisk in the table means that less than one-tenth of one percent
of the outstanding shares are beneficially owned.
(2) Mr. Canning is President of Madison Dearborn Partners, Inc., a private
equity investment fund. Madison Dearborn Partners VIII, of which Mr.
Canning is a partner, owns 3,500 of the outstanding shares of
Interlake's Series A2 Convertible Exchangeable Preferred Stock, which
shares are in certain circumstances convertible into shares of Common
Stock. Mr. Canning disclaims beneficial ownership of the Series A2
Convertible Exchangeable Preferred Stock and the shares of Common
Stock into which it is convertible.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of Forms 3 and 4 received, Interlake is not aware of any
director, officer or other person that failed to file on a timely basis
with respect to Interlake reports required by Section 16(a) during the most
recent fiscal year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table which follows shows the compensation paid to or earned by
Interlake's Chief Executive Officer and the four executive officers who, in
1996, were the next most highly compensated.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation
Long-Term
Compensation
Securities
Underlying All Other
Salary Bonus Options/SAR's Compensation
Name and Principal Position Year ($) ($) (#) ($)(1)(2)
<S> <C> <C> <C> <C> <C>
W. Robert Reum 1996 $455,004 $416,454 0 $146,599
Chairman of the Board, President 1995 455,004 373,085 0 145,171
and Chief Executive Officer 1994 437,964 383,503 0 69,348
John J. Greisch 1996 $220,008 $193,707 0 $56,596
President-Material Handling 1995 210,000 139,159 0 50,770
Group 1994 189,770 123,910 0 23,004
Daniel P. Wilson 1996 $180,000 $215,669 20,000 $45,359
President - Material 1995 162,000 117,200 0 36,052
Handling North America 1994 148,000 93,240 0 24,352
Stephen Gregory 1996 $210,000 $163,197 0 $49,334
Vice President-Finance 1995 190,008 109,059 0 62,952
and Chief Financial Officer 1994 175,100 120,263 0 31,789
Robert J. Fulton(3) 1996 $240,000 $92,322 0 $137,023
President- 1995 230,004 200,000 40,000 170,357
Hoeganaes Corporation 1994 101,680 55,101 0 65,241
(1) Includes contributions to defined contribution retirement plans plus,
for Messrs. Reum, Greisch, Wilson and Gregory, tax-adjusted amounts
paid or payable in cash which would have been payable as contributions
pursuant to such plans had contributions not been statutorily limited.
Mr. Fulton's totals and Mr. Gregory's 1995 total also include
relocation expenses.
(2) Under the Corporation's Key Executive Retention Program discussed
below, Mr. Reum holds 327,600 shares of restricted stock, of which the
fair market value of as December 29, 1996 was $1,146,600; Mr. Greisch,
126,000 shares ($441,000); Mr. Wilson, 49,572 shares ($173,502); Mr.
Gregory, 114,000 shares ($399,000); and Mr. Fulton, 127,500 shares
($446,250). As of such date, these shares were performance vested,
but were subject to forfeiture in the event of cessation of
employment.
(3) Mr. Fulton joined Hoeganaes on July 15, 1994.
</TABLE>
Options Granted in 1996
The table which follows shows the numbers, certain terms of, and the grant
date values of the options granted during fiscal year 1996 to the named
executive.
<TABLE>
Options Granted in 1996 Fiscal Year(1)
Percent of
Total Options Market
Options Granted to Exercise Price on Grant Date
Granted(2) Employees in Price Grant Expiration Values
Name (#) Fiscal Year ($/Share) Date(3) Date ($)(4)
<S> <C> <C> <C> <C> <C> <C>
DANIEL P. WILSON 20,000 12.1% $4.00 $2.25 1/25/2006 $26,079
(1) No stock appreciation rights (SARs) were granted in 1996.
(2) All options listed are exercisable to the extent of 30% after the date
of grant, 60% after January 25, 1997, and 100% after January 25, 1998.
(3) Computed as the average of the high and low on January 25, 1996.
(4) Determined using the Black-Scholes option pricing model and utilizing
expected volatility of 50% based on Interlake's historical data from
December 30, 1990, one year after Interlake's 1989 recapitalization.
</TABLE>
Aggregated Option/SAR Exercises in Last Year and
Fiscal Year-End Option/SAR Values
During fiscal year 1996, there were no stock option or SAR exercises. The
number of unexercised options at fiscal year end for each of the named
executive officers is set forth in the table which follows. None of the
unexercised options, either exercisable or unexercisable, was in-the-money
as of the fiscal year end and therefore no year-end values have been
indicated.
Options Outstanding at 1996 Fiscal Year-End
Number of Securities Underlying
Unexercised Options/SARs at
Fiscal Year End (#)
Name Exercisable Unexercisable
W. ROBERT REUM 143,698 0
JOHN J. GREISCH 44,907 0
DANIEL P. WILSON 30,089 14,000
STEPHEN GREGORY 40,000 0
ROBERT J. FULTON 40,000 0
Long-Term Incentive Plans
In January 1996, the Board of Directors put into place the 1996 Senior
Executive Incentive Compensation Program (the "SEIC Program") for
Interlake's key executives, which included a long-term incentive for these
executives.
<TABLE>
Long-Term Incentive Plan Awards in 1996 Fiscal Year(1)
Name Number of Performance Minimum Award Target Maximum
Shares(#) Period (at Threshold)($) Award($) Award ($)
<S> <C> <C> <C> <C> <C>
W. ROBERT REUM 1996-1998 $42,972 $171,889 $343,778
JOHN J. GREISCH 1996-1998 15,750 63,000 126,000
DANIEL P. WILSON 49,572(2) 1996
1996-1998 10,912 43,649 87,298
STEPHEN GREGORY 1996-1998 14,260 57,040 114,080
ROBERT J. FULTON 1996-1998 17,250 69,000 138,000
(1) The long term incentive under the SEIC Program is based on the
achievement of a targeted three year EBIT margin level for the period 1996
through 1998. Awards, if any, would be payable in early 1999, with 30
percent of the payouts being paid either in shares of Common Stock, valued
at the price at the beginning of the three-year period ($2.275), or by
means of a cash payment of an equivalent value.
(2) These 49,572 shares of restricted stock were awarded to Mr. Wilson in
1996, in lieu of cash opportunity previously awarded under the Key
Executive Retention Program in 1995. Based on 1996 performance, these
shares are performance vested but continue to be subject to forfeiture in
the event of cessation of employment.
</TABLE>
Under the Key Executive Retention Program adopted by the Board of Directors
in February 1995, the named executive officers and certain other executive
officers earned long-term cash compensation based on the achievement of
specified EBIT targets. Based on performance during the 1995-96 period,
Messrs. Reum, Greisch, Wilson, Gregory and Fulton have earned, subject to
certain continuing conditions pertaining to their employment, cash payments
of $764,400, $294,000, $225,828, $266,000 and $332,500, respectively. In
addition, under this program the named executive officers received the
shares of restricted stock listed in footnote (2) to the Summary
Compensation Table. Other than the stock award to Mr. Wilson shown in the
immediately preceding table, no awards or payments were made under the Key
Executive Retention Program to the named executives in 1996.
Defined Benefit Plans
Mr. Fulton participates in the Hoeganaes Corporation Pension Plan for
Exempt Employees. The following table shows estimated annual benefits
payable for life, upon retirement, including benefit amounts which would
have been payable under the pension plan had such payments not been
statutorily limited.
Years of Service
Remuneration 10 15 20 25 30
125,000 $14,300 $21,450 $28,600 $35,750 $42,899
150,000 17,541 26,311 35,082 43,852 52,622
175,000 20,782 31,173 41,563 51,954 62,345
200,000 24,023 36,034 48,045 60,057 72,068
225,000 27,264 40,895 54,527 68,159 81,791
250,000 30,505 45,757 61,009 76,261 91,514
300,000 36,986 55,480 73,973 92,466 110,959
400,000 49,950 74,925 99,900 124,875 149,850
450,000 56,432 84,648 112,864 141,080 169,296
500,000 62,914 94,371 125,827 157,284 188,741
The Plan gives credit for the salary and bonus amounts reflected in the
Summary Compensation Table, averaged for the final five years of
employment. Mr. Fulton has approximately two years of credited service.
Benefits are not subject to deduction for social security or other offset
amounts. Benefits are calculated for an employee who retires in 1997 at
age 65.
Key Executive Severance Pay Agreements
Interlake has entered into Key Executive Severance Pay Agreements (the
"Severance Pay Agreements") with Messrs. Reum, Greisch, Wilson, Gregory and
Fulton, and the other incumbent executive officers of Interlake (as
designated for purposes of the Exchange Act).
Under the Severance Pay Agreements, an executive officer is entitled to
severance benefits if there is a termination of his or her employment
without cause and other than due to death or disability at any time within
a severance period of three years, subject to extension for an additional
year each year unless written notice is given to the contrary (or, if less
than the term of such severance period, within the period ending at the
participant's attainment of age 65, death or permanent disability) after a
change in control as defined in the agreements. In addition, following a
change in control, a participant may elect to terminate his employment
without loss of severance benefits in certain specified circumstances.
For purposes of the Severance Pay Agreements, a change in control is deemed
to have occurred if (i) Interlake is merged or reorganized into or with, or
sells all or substantially all of its assets to, another company in a
transaction in which former Interlake stockholders own less than 75 percent
of the outstanding securities of the surviving or acquiring company after
the transaction, (ii) a filing is made with the Securities and Exchange
Commission disclosing the beneficial ownership by any person or group of 25
percent or more of the voting power of Interlake, subject to certain
limited exceptions, (iii) during any period of two consecutive years
individuals who were directors at the beginning of such period cease to
constitute a majority of the Board without the approval of two-thirds of
the remaining Board members, or (iv) the Corporation files a report or
proxy statement with the Securities and Exchange Commission disclosing that
a change in control has occurred or will occur in the future.
In the event of a change in control, any executive officer who is
terminated or terminates his employment with rights to severance
compensation will be entitled to receive a lump sum payment equal to, in
the case of Messrs. Reum, Greisch, Wilson, Gregory and Fulton, three times
the sum of his highest base pay in effect for any period prior to the
termination, plus the target bonus established for either the fiscal year
in which the change in control occurs or the fiscal year in which the
termination occurs, whichever is higher. In addition, such executive will
be entitled to certain benefits for a three year period following the
termination.
In addition, the Severance Pay Agreements provide that, in the case of a
termination other than for cause or upon death or permanent disability, and
other than upon termination during a change in control severance period,
the executive is entitled to a lump sum amount equal to one year's base pay
at the rate in effect at the time of the termination, plus the executive's
target bonus for the year of termination. In addition, such executive will
be entitled to certain benefits for a one year period after the
termination.
The Severance Pay Agreements provide that Interlake will pay for the legal
expenses of an executive if he has to enforce his rights under the
agreement following a change in control. A letter of credit has been
obtained for the purpose of securing the payment of such expenses. The
terms of the Severance Pay Agreements run through February 28, 1998,
subject to automatic one-year extensions absent notice to the contrary.
Compensation of Outside Directors
For the 1996-97 year, each outside director was paid a retainer at the
annual rate of $20,000 and a fee of $750 for attending a meeting of the
Board or a meeting of a committee of the Board; the chairmen of the Audit
Review, Management Development and Compensation, Finance, and Board
Development Committees were paid an additional annual retainer of $2,000.
For the 1997-98 year, each outside director will be paid a retainer of
$30,000, with no additional amounts to be paid for attendance at meetings
or service as committee chairpersons. Interlake provides accidental death
and dismemberment insurance for its directors, and non-employee directors
are reimbursed their expenses of attendance at meetings of the Board or
committees of the Board.
Under the 1989 Stock Incentive Program, each non-employee director was
granted a stock award of up to 3,000 shares. The final 600 share
installment of these awards was delivered after the 1995 annual meeting.
In addition, as of January 28, 1997, each non-employee director was granted
options for 10,000 shares of Common Stock, vesting in virtually equal
amounts at the start of the annual meeting of stockholders occurring in
1998, 1999 and 2000.
Under the Directors' Post-Retirement Income Plan, each outside director
with four years' service as a director prior to April 1, 1997, is entitled
to annual post-retirement income beginning at age 65 or retirement from the
Board, whichever is later, and continuing for the lifetime of the retired
director. The annual benefit upon the retirement of any current director
who qualifies will be $30,000, reduced 10 percent for each full year that
his service as a non-employee director of Interlake is less than 10 years.
In 1988, Interlake established a trust for the payment of post-retirement
income to outside directors and provided the trustee with funds to purchase
annuities for retired directors covered by the plan and for incumbent
directors having more than four years' service. Should Interlake become
insolvent, the assets of the trust would be subject to the claims of
Interlake's creditors.
The Directors' Post-Retirement Income Plan provides that Interlake will pay
the legal expenses of a participant if he has to take legal action to
enforce his rights under the plan.
Report of the Management Development and Compensation Committee on
Executive Compensation
The Management Development and Compensation Committee of the Board of
Directors (the "Committee") is composed entirely of non-employee directors.
The Committee makes recommendations to the full Board as to the salaries of
key Board-elected officers (other than assistant officers) and heads of
certain key operating units, and as to the terms of payments under
Interlake's incentive compensation plans for key executives of Interlake
and certain operating units. In addition, any stock options or stock
awards are granted to executives upon the authorization of the Committee.
Compensation Philosophy and Strategy
The Corporation's compensation philosophy and strategy has been designed to
produce median level compensation upon achievement of improved financial
performance. To implement this strategy in 1996, the Committee targeted
base salaries at levels below median market practice, while offering the
potential for above-market variable compensation if "stretch" performance
objectives were met.
Implementation of Philosophy in 1996
Base pay. In 1996, base salaries remained below the median based on The
Hay Group Executive Compensation Report. The Hay report is a database of
approximately 500 publicly traded industrial companies.
Annual incentive. With respect to incentive compensation, the
Corporation's 1996 Senior Executive Incentive Compensation ("SEIC") Program
was designed to provide an opportunity for above median incentive awards
which, if earned, would result in median overall compensation levels,
consistent with the Corporation's compensation philosophy. The financial
measures against which executives were measured were EBIT, average
controllable working capital as a percentage of sales, and revenue growth
for their respective operating units or, in the case of Interlake
executives, Interlake as a whole. In addition, 20 percent of operating unit
executives' opportunities was tied to overall corporate performance on a
consolidated basis against the same performance measures, and eight to ten
percent of all executives' opportunities was dependent upon their
individual performance against certain key competencies which have been
identified as being essential to driving success at Interlake. All
amounts paid for 1996 under the SEIC annual plan were due to meeting the
performance levels stipulated in the plan, with the exception of amounts
paid with respect to performance related to the key competencies, and the
payment of a small number of discretionary bonuses in connection with the
successful sale of the Corporation's packaging businesses during 1996. In
order to further heighten executives' focus on stock price, 30 percent of
payouts under the SEIC annual plan were either paid in shares of common
stock, valued at the market price at the beginning of the plan year, or by
means of a cash payment of an equivalent value.
Long term incentive. The long term incentive under the 1996 SEIC Program
is based on the achievement of a targeted three year EBIT margin level for
the period 1996 through 1998. Awards, if any, would be payable in early
1999, with 30 percent of the payouts being stock-based.
In addition to the long term incentive under the 1996 SEIC Program, in 1996
certain key executives completed the performance period under the
Corporation's Key Executive Retention Program (the "Program"). The Program
had been put in place in February 1995, in the face of substantial
impending indebtedness maturities and the need to successfully refinance
them, and was intended to reward the continued improvement in operating
earnings desirable to facilitate the anticipated refinancing while at the
same time promoting the retention of key executives. The Program provided
for rewards for the achievement by Interlake of levels of EBIT in 1995
substantially in excess of the already improved levels of 1994, and in 1996
substantially in excess of the 1995 target level. Based on the
Corporation's EBIT of $72 million in 1995, the maximum payments and stock
awards attributable to 1995 performance were made in January 1997. With
respect to 1996 performance, EBIT adjusted for the sale of Interlake's
packaging businesses of $77.3 million entitles participants who continue to
be employed at the end of 1997 (or cease to be employed due to death,
disability or certain involuntary terminations) to maximum payments and
awards attributable to 1996 performance.
Future Implementation of Philosophy
In the light of substantial impending debt maturities at the end of the
decade, Interlake is pursuing a multi-part strategy of increasing earnings
to higher levels, selling assets where appropriate, reducing its tax
burden, and minimizing historical environmental costs. As part of this
strategy, Interlake announced in the first quarter of 1997 the proposed
sale of the Corporation's material handling businesses. It is the
Committee's belief that certain senior executive officers ought to be
provided a long term incentive to proceed with the implementation of this
strategy. In this regard, if the 1997 Stock Incentive Program is approved
by the stockholders, the Committee may choose to issue options for a
significant number of shares to senior executive officers.
Limitations on Deductibility
Through 1996, Section 162(m) of the Internal Revenue Code (the "Code") has
not had any material effect on the deductibility of compensation expense
paid by the Corporation. Although the 1996 SEIC Program was a performance-based
plan, the Corporation chose not to take the steps to meet the tests
for performance-based compensation under Section 162(m) due to the
resulting costs and reduction in flexibility in administration. The 1997
Stock Incentive Program has been designed to enable deductions with respect
to benefit awards thereunder.
CEO Compensation
In keeping with the Committee's general philosophy, Mr. Reum's compensation
has been structured to provide a base salary below median market practice,
but incentive compensation opportunity above the median, so that if the
Corporation meets significant financial targets, he will receive median
level total compensation. Consistent with this philosophy, Mr. Reum's base
salary in 1996 remained below median market practice. Mr. Reum's annual
bonus under the 1996 SEIC Program, based primarily upon the achievement of
levels of EBIT, average controllable working capital as a percentage of
sales and revenue growth specified at the beginning of the plan year,
reflected a third straight year of improved financial performance; his
payout was enhanced by a 50 percent increase from December 1995 to January
1997 in Interlake's common stock price, to which the valuation of 30
percent of his annual bonus was tied. Under the Key Executive Retention
Program, Mr. Reum received payment in January 1997 of the portion of award
opportunity based on the Corporation's 1995 EBIT performance, and based on
1996 EBIT performance, will receive in late 1997 or early 1998, subject to
his continued employment, the total opportunity related to 1996 EBIT
performance.
The Management Development and Compensation
Committee
John A. Canning, Jr.
James C. Cotting
William G. Mitchell
Erwin E. Schulze
Performance Graph
The following graph compares the yearly percentage change in Interlake's
cumulative stockholder return on its Common Stock with that of the Standard
& Poor's 500 Stock Index and that of the Standard & Poor's Manufacturing
Index (Diversified Industrials) over the period of Interlake's last five
fiscal years. The graph assumes an investment of $100 on December 30, 1991.
Interlake has not paid any dividends since 1989, when it paid a special
dividend of $45 per share, incurring $535 million of indebtedness to do so.
<TABLE>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
The Interlake Corporation 100.00 70.73 53.66 34.15 48.78 68.29
S&P 500 Index 100.00 111.44 121.75 123.18 166.99 209.75
S&P Manufacturing Index 100.00 115.28 137.21 142.96 199.58 280.70
Assumes reinvestment of all dividends
December 1991 = 100
</TABLE>
GENERAL
The solicitation of proxies in the form which accompanies this proxy
statement is made on behalf of the Board. Proxies in such form will confer
discretionary authority with respect to any other matters which may
properly be brought before the meeting.
For a matter to be properly brought before the meeting, or for a
stockholder nomination of director candidates to be considered, notice
containing the information specified in Interlake's By-laws must have been
received by the close of business on February 28, 1997. If other matters
properly come before the meeting, the persons holding such proxies intend
to vote the proxies in accordance with their judgment on all such matters.
A stockholder who signs and returns the enclosed form of proxy may revoke
the same at any time before it is voted by submitting a subsequently dated
proxy or giving notice to the Secretary of Interlake.
The cost of solicitation of proxies will be borne by Interlake. In addition
to the use of the mails, proxies may be solicited personally or by
telephone by a few executive officers or regular employees of Interlake,
none of whom will receive any compensation therefor in addition to their
regular remuneration. Interlake will reimburse brokers and certain other
persons holding stock in their names or in the names of nominees for their
expenses in sending proxy material to principals and obtaining their
proxies.
As in past years, Interlake has retained Georgeson & Co., Wall Street
Plaza, New York, New York, to aid in the solicitation of proxies from
brokers, banks, nominees and other institutional owners, but not individual
holders of record, by personal interview, telephone, fax or mail. Interlake
will pay Georgeson & Co. a fee not expected to exceed $5,500 and will
reimburse such organization for certain expenses incurred by it.
Vote Required
A majority of the outstanding shares of Common Stock of the Company will
constitute a quorum. Each share has one vote on each matter to be voted
on at the meeting. As voting rights are not cumulative, each share may be
voted once for each directorship, and only once for the same director
nominee. The Delaware General Corporation Law requires that each of the
three nominees for director be elected by a plurality of the votes of the
shares of Common Stock present in person or represented by proxy at the
Annual Meeting and that the 1997 Stock Incentive Program be approved by the
affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting. The rules of the New
York Stock Exchange require that the 1997 Stock Incentive Program be
approved by a majority of votes cast on the proposal and that the shares
cast represent a majority of the shares entitled to vote.
At the Annual Meeting, the results of stockholder voting will be tabulated
by the inspector of elections appointed for the Annual Meeting. Under
Delaware law and the Company's Restated Certificate of Incorporation and
By-laws, properly executed proxies that are marked "abstain" or are held in
"street name" by brokers that are not voted on one or more particular
proposals (if otherwise voted on at least one proposal) will be counted for
purposes of determining whether a quorum has been achieved at the Annual
Meeting. Abstentions will have the same effect as a vote against the
proposal to which such abstention applies. Broker non-votes will be
treated neither as a vote for nor a vote against any of the proposals to
which such broker non-votes apply. Proxy cards which are timely signed and
returned with no other marking will be voted in accordance with the
recommendation of the Board of Directors.
Certain Transactions
Mr. Reum's brother, James Reum, is a partner in the law firm of Winston &
Strawn, which provided legal services to Interlake in 1996 billed at
$136,305.
Stockholder Proposals
In order to be considered for inclusion in Interlake's proxy statement and
form of proxy for the 1998 annual meeting of stockholders, any stockholder
proposal intended to be presented at that meeting must be received by
Interlake at 550 Warrenville Road, Lisle, Illinois 60532-4387 on or before
November 23, 1997, and must set forth the matters detailed in the
Corporation's By-laws.
By order of the Board of Directors.
/s/Stephen R. Smith
STEPHEN R. SMITH
Vice President, Secretary
and General Counsel
Lisle, Illinois
Dated: March 21, 1997
EXHIBIT
THE INTERLAKE CORPORATION
1997 STOCK INCENTIVE PROGRAM
1. Purpose. The purpose of The Interlake Corporation 1997 Stock
Incentive Program (the "Program") is to attract and retain outstanding
individuals as directors, officers and key employees of The Interlake
Corporation (the "Corporation") and its Subsidiaries (as defined herein)
and to furnish incentives for superior performance by providing such
persons opportunities ("Benefits") to acquire shares of the Corporation's
common stock, $1 par value, or any security into which such shares may be
changed by reason of any transaction or event of the type described in
Paragraph 15(a) hereof ("Common Stock").
2. Administration. The Program will be administered by the Management
Development and Compensation Committee (the "Committee") of the
Corporation's Board of Directors (the "Board"). The Committee shall
consist of not less than three directors as the Board may designate from
time to time, each of whom shall be a "Non-Employee Director" within the
meaning of Rule 16b-3 of the Securities and Exchange Commission and an
"Outside Director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The interpretation and
construction by the Committee of any provision of the Program or of any
agreement, notification or document evidencing the grant of any Benefits
and any determination by the Committee pursuant to any provision of this
Program or of any such agreement, notification or document shall be final
and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith.
3. Participants. Participants in the Program will consist of such
directors, officers or key employees of the Corporation or any Subsidiary
(or any person who has agreed to commence serving in any of such capacities
within 90 days following the granting of Benefits to such person) as the
committee in its sole discretion may designate from time to time to receive
Benefits hereunder (each a "Participant"). The Committee's designation of
a Participant at any time shall not require the Committee to designate such
person to receive a Benefit at any other time, or, if so designated, to
receive the same type or amount of Benefit at any other time, or as may be
received by any other Participant at any time. The Committee shall
consider such factors as it deems pertinent in selecting Participants and
in determining the type and amount of their respective Benefits.
4. Types of Benefits. Benefits under the Program may be granted in
any one or a combination of (a) Stock Options, (b) Restricted Shares, and (c)
Shares in Lieu of Certain Cash Payments, all as described below in
Paragraphs 6 through 9 hereof.
5. Shares Reserved Under the Program. (a) Subject to adjustment as
provided in Section 15(a) of this Program, the number of shares of Common
Stock that may be issued or transferred (i) upon the exercise of Stock
Options, (ii) as Restricted Shares and released from substantial risks of
forfeiture thereof, or (iii) as Shares in Lieu of Certain Cash Payments
shall not exceed in the aggregate 1,150,000 shares plus any shares relating
to Benefits that expire or are forfeited or cancelled. Such shares may be
shares of original issuance or treasury shares or a combination of the
foregoing. Upon the payment of any Option Price by the transfer to the
Corporation of shares of Common Stock or upon satisfaction of any
withholding amount by means of transfer or relinquishment of shares of
Common Stock, there shall be deemed to have been issued or transferred
under this Program only the net number of shares of Common Stock actually
issued or transferred by the Corporation.
(b) Notwithstanding anything in this Section 5, or elsewhere in
this Program, to the contrary, the aggregate number of shares of Common Stock
actually issued or transferred by the Corporation upon the exercise of
Incentive Stock Options shall not exceed 1,150,000 shares, subject to
adjustments as provided in Section 15(a) of this Program. Further, no
Participant shall be granted Stock Options for more than 575,000 shares of
Common Stock during any three year period, subject to adjustments as
provided in Section 15(a) of this Program.
(c) Notwithstanding any other provision of this Program to the
contrary, in no event shall any Participant in any calendar year receive
more than 100,000 Restricted Shares, subject to adjustments as provided in
Section 15(a) of this Program.
6. Definitions. As used in the Program,
(a) The term "Date of Grant" means the date specified by the
Committee on which a grant of a Stock Option, Restricted Shares or Shares
in Lieu of Certain Cash Payments shall become effective (which date shall
not be earlier than the date on which the Committee takes action with
respect thereto).
(b) The term "Effective Date" shall be the date on which the 1997
Stock Incentive Program is approved by the stockholders of the Corporation
in accordance with Section 18.
(c) The term "Incentive Stock Options" means Stock Options that
are intended to qualify as "incentive stock options" under Section 422 of the
Code or any successor provision.
(d) The term "Management Objectives" means measurable performance
objectives established by the Committee pursuant to this Program for
Participants who have received, when so determined by the Committee, Stock
Options or Restricted Shares. Management Objectives may be described in
terms of Corporation-wide objectives or objectives that are related to the
performance of the Common Stock, the individual Participant or of the
Subsidiary, division, department, region or function within the Corporation
or Subsidiary in which the Participant is employed. The Management
Objectives may be made relative to the performance of other corporations.
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Corporation, or the manner
in which it conducts its business, or other events or circumstances render
the Management Objectives unsuitable, the Committee may in its discretion
modify such Management Objectives, in whole or in part, as the Committee
deems appropriate and equitable.
(e) The term "Market Value per Share" means, at any date, the
average of the high and low price of the Common Stock on that date (or, if
there are no sales on that date, the last preceding date on which there was
a sale) on (i) the New York Stock Exchange Composite Transactions or (ii)
any national securities exchange on which the Common Stock is traded if it
is not traded on the New York Stock Exchange or (iii) The Nasdaq Stock
Market if the Common Stock is listed thereon and is not traded on any
national securities exchange, in each case as reported by The Wall Street
Journal, corrected for reporting errors.
(f) The term "Optionee" means the optionee named in an agreement
evidencing an outstanding Stock Option.
(g) The term "Option Price" means the purchase price per share
payable on exercise of a Stock Option.
(h) The term "Restricted Shares" means an award of shares of
Common Stock granted pursuant to Paragraph 8 of the Program.
(i) The term "Shares in Lieu of Certain Cash Payments" means
shares of Common Stock granted pursuant to Paragraph 9 hereof.
(j) The term "Stock Option" means an option to purchase Common
Stock granted pursuant to Paragraph 7 of the Program.
(k) The term "Subsidiary" means a corporation, company or other
entity (i) more than 50 percent of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares or
securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50 percent of whose ownership
interest representing the right generally to make decisions for such other
entity is, now or hereafter, owned or controlled, directly or indirectly,
by the Corporation except that for purposes of determining whether any
person may be a Participant for purposes of any grant of Incentive Stock
Options, "Subsidiary" means any corporation in which at the time the
Corporation owns or controls, directly or indirectly, more than 50 percent
of the total combined voting power represented by all classes of stock
issued by such corporation.
7. Stock Options. The Committee may, from time to time and upon such
terms and conditions as it may determine, authorize the granting to
Participants of options to purchase shares of Common Stock. Each such
grant may utilize any or all the authorizations, and shall be subject to
all of the limitations, contained in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock
to which it pertains, subject to limitations set forth in Section 5 of this
Program.
(b) Each grant shall specify an Option Price which shall not be
less than the Market Value per Share on the Date of Grant.
(c) Each grant shall specify that the Option Price shall be
payable at the time of exercise in cash or by check acceptable to the
Corporation. Any grant may also provide for payment of the Option Price by the
transfer to the Corporation of (i) shares of Common Stock owned by the Optionee
and having a Market Value at the time of exercise equal to the total Option
Price or (ii) a combination of cash and shares of Common Stock owned by the
Optionee and having a combined Market Value equal to the total Option
Price.
(d) The Committee may also determine, at or after the Date of
Grant, that payment of the Option Price of any option (other than an Incentive
Stock Option) may also be made in whole or in part in the form of
Restricted Shares or other shares of Common Stock that are forfeitable or
subject to restrictions on transfer (based, in each case, on the Market
Value per Share on the date of exercise) or other Stock Options (based on
the difference (the "Spread") between the Market Value and the exercise
price of such option on the date of exercise). Unless otherwise determined
by the Committee at or after the Date of Grant, whenever any Option Price
is paid in whole or in part by means of any of the forms of consideration
specified in this paragraph, the shares of Common Stock received upon the
exercise of the Stock Options shall be subject to such risks of forfeiture
or restrictions on transfer as may correspond to any that apply to the
consideration surrendered, but only to the extent of (i) the number of
shares so surrendered, or (ii) the Spread of any unexercisable portion of
Stock Options.
(e) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker on a date satisfactory
to the Corporation of some or all of the shares to which such exercise
relates.
(f) Successive grants may be made to the same Participant whether
or not any Stock Options previously granted to such Participant remain
unexercised.
(g) Each grant shall specify the period or periods of continuous
employment by the Optionee with the Corporation or of continuous service by
the Optionee as a director of the Corporation which is necessary before a
Stock Option or any installment thereof will become exercisable and may
provide that the exercise of a Stock Option or any installment thereof will
be accelerated for any reason stated therein. Any grant may specify
Management Objectives that must be achieved as a condition to the exercise
of such Stock Option.
(h) Stock Options granted under the Program may be (i) options
which are intended to qualify under particular provisions of the Code (including
Incentive Stock Options), (ii) options which are not intended to so
qualify, or (iii) combinations of the foregoing.
(i) No Stock Option shall be exercisable more than ten years from
the Date of Grant.
(j) Each grant of Stock Options shall be evidenced by an agreement
executed on behalf of the Corporation by an officer thereof and delivered
to the Optionee and containing such terms and provisions, consistent with
the Program, as the Committee may approve.
8. Restricted Shares. The Committee may from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Participants of Restricted Shares. A Restricted Share constitutes an
immediate transfer of ownership of Common Shares to the Participant in
consideration of the performance of services, entitling such Participant to
voting, dividend and other ownership rights, but subject to the substantial
risk of forfeiture and restrictions on transfer hereinafter referred to.
Each grant may utilize any or all of the authorizations, and shall be
subject to all of the limitations, contained in the following provisions:
(a) Subject to the provisions of Section 5, each such grant shall
specify the number of shares of Common Stock to which it relates.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than Market Value per Share at the Date of Grant.
(c) Each such grant shall be subject to such conditions,
limitations, restrictions and other matters, and shall be subject to
forfeiture or lapse in such circumstances, as the Committee may prescribe;
provided, however, that all or a portion of the shares of Common Stock
covered by such grant shall be subject, for a period to be determined by
the Committee at the Date of Grant, to a substantial risk of forfeiture
within the meaning of Section 83 of the Code or any successor or substitute
provision thereof and of the regulations issued thereunder. Any grant of
Restricted Shares may specify Management Objectives which, if achieved,
will result in termination or early termination of the restrictions
applicable to such shares. The Committee shall have authority to cause a
grant of Restricted Shares to provide that termination of restrictions
applicable to such Restricted Shares or any installment thereof will be
accelerated for any reason stated therein.
(d) Each such grant shall specify that the Committee may at any
time amend, suspend or terminate the Restricted Share grant covered thereby,
provided that, in the case of an amendment, the amended grant of Restricted
Shares shall conform to the provisions of the Program.
(e) Each such grant or sale shall provide that during the period
for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares shall be prohibited or restricted
in the manner and to the extent prescribed by the Committee at the Date of
Grant (which restrictions may include, without limitation, rights of
repurchase or first refusal in the Corporation or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture in the
hands of any transferee).
(f) Any such grant or sale of Restricted Shares may require that
any or all dividends or other distributions paid thereon during the period of
such restrictions be automatically deferred and reinvested in additional
Restricted Shares, which may be subject to the same restrictions and
substantial risks of forfeiture as the underlying award.
(g) Each grant or sale of Restricted Shares shall be evidenced by
an agreement executed on behalf of the Corporation by any officer and
delivered to and accepted by the Participant and shall contain such terms
and provisions, consistent with this Program, as the Committee may approve.
Unless otherwise directed by the Committee, all certificates representing
Restricted Shares shall be held in custody by the Corporation until all
restrictions thereon shall have lapsed, together with a stock power
executed by the Participant in whose name such certificates are registered,
endorsed in blank and covering such Shares.
9. Shares in Lieu of Certain Cash Payments. The Committee may also
authorize the granting of shares of Common Stock in lieu of cash which
would otherwise be payable as a bonus, pursuant to any incentive
compensation plan or otherwise, to Participants. Each such grant may
utilize any or all of the authorizations, and shall be subject to all of
the limitations, contained in the following provisions:
(a) The proportion of any such bonus to be paid in shares of
Common Stock shall be as determined by the Committee.
(b) The number of whole shares to be delivered in lieu of cash
shall be determined by dividing the value of the portion of the bonus to be paid
in shares of Common Stock by the Market Value per Share as of a date
selected by the Committee. The value of fractional shares shall be added to
the cash portion of the bonus.
(c) None of the shares of Common Stock granted pursuant to this
Paragraph 9 shall be subject to a substantial risk of forfeiture within the
meaning of Section 83 of the Code or any successor or substitute provision
thereof and of the regulations issued thereunder.
(d) Each grant shall be evidenced by a written notification
executed on behalf of the Corporation by an officer thereof and delivered to the
Participant.
(e) Except to the extent provided in this Paragraph 9, no cash
bonus, whether payable pursuant to an incentive compensation plan or
otherwise, shall constitute a part of the Program or be affected by the
Program.
10. Limitation of Transferability. Except as otherwise determined by
the Committee, no Stock Option shall be transferable otherwise than by will or
the laws of descent and distribution and Stock Options shall be exercisable
during the lifetime of the Participant to whom such Stock Option has been
granted only by him or by his guardian or legal representative, and after
such Participant's death shall be exercisable only by his legal
representative.
11. Other Provisions. The award of any Benefit under the Program may
also be subject to other provisions (whether or not applicable to the
Benefit awarded to any other Participant) as the Committee determines
appropriate, including, without limitation, restrictions on resale or other
disposition, such provisions as may be appropriate to comply with federal
and state securities laws and stock exchange requirements, and
understandings or conditions as to the Participant's employment, in
addition to those specifically provided for under the Program.
12. Manner of Action by the Corporation. The Secretary of the
Corporation (or such other officer as the Chief Executive Officer of the
Corporation may from time to time designate) shall supervise the
maintenance of records for all Participants in the Program. Any
determination of such officer, if approved by the Committee, shall be
binding and conclusive for all purposes.
13. Taxes. To the extent that the Corporation is required to withhold
federal, state, local or foreign taxes in connection with any payment made
or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for the withholding are
insufficient, it shall be a condition to the receipt of any such payment or
the realization of any such benefit that the Participant or such other
person make arrangements satisfactory to the Corporation for payment of the
balance of any taxes required to be withheld. At the discretion of the
Committee, any such arrangements may include relinquishment of a portion of
any such payment or benefit. The Corporation and any Participant or such
other person may also make similar arrangements with respect to the payment
of any taxes with respect to which withholding is not required.
14. Tenure. A Participant's right, if any, to continue to serve the
Corporation as a director, officer or employee shall not be enlarged or
otherwise affected by the establishment of the Program or his designation
as a Participant.
15. Adjustment Provisions. (a) The Committee shall make or provide for
such adjustments in the number of shares of Common Stock covered by
outstanding Stock Options granted hereunder, in the Option Price applicable
to such Stock Options, and in the kind of securities covered thereby, as
the Committee in its sole discretion, exercised in good faith, determines
is equitably required to prevent dilution or enlargement of the rights of
Optionees that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the
capital structure of the Corporation, or (b) any merger, consolidation,
spin-off, reorganization, partial or complete liquidation, repurchase or
exchange of shares, issuance of rights or warrants to purchase securities,
or (c) any other corporate transaction or event having an effect similar to
any of the foregoing. Moreover, in the event of any such transaction or
event, the Committee, in its discretion, may provide in substitution for
any or all outstanding Benefits under this Program such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
Benefits so replaced. The Committee shall also make or provide for such
adjustments in the numbers of shares specified in Section 5 of the Program
as the Committee in its sole discretion, exercised in good faith,
determines is appropriate to reflect any transaction or event described in
the preceding sentence.
(b) Notwithstanding any other provision of the Program, and
without affecting the number of shares available hereunder, the Committee may
authorize the issuance or assumption of Benefits in connection with any
merger, consolidation, acquisition of property or stock, or reorganization
upon such terms and conditions as it may deem appropriate.
16. Fractional Shares. The Corporation shall not be required to issue
any fractional shares of Common Stock pursuant to this Program. The
Corporation may provide for the elimination of fractions or for the
settlement of fractions in cash.
17. Amendment and Termination of Benefits and the Program. (a) The
Committee may at any time and from time to time amend, suspend or terminate
the Program; provided, however, that any amendment which must be approved
by the stockholders of the Corporation in order to comply with applicable
law or the rules of the principal national securities exchange upon which
the shares of Common Stock are traded or quoted shall not be effective
unless and until such approval has been obtained. No Benefit shall be
granted pursuant to the Program after the tenth anniversary of the
Effective Date.
(b) The Committee may, with the concurrence of the affected
Optionee, amend or cancel any agreement evidencing Stock Options granted
under this Program; provided, however, that no such amendment will cause
any Stock Option to cease to qualify as "performance-based" within the
meaning of Section 162(m) of the Code. In the event of cancellation, the
Committee may authorize the granting of new Stock Options (which may or may
not cover the same number of shares which had been the subject of the prior
agreement) in such manner, at such Option Price, and subject to the same
terms, conditions and descriptions, as under the Program would have been
applicable had the cancelled Stock Options not been granted.
(c) In case of termination of employment or cessation of services
as a director, in each case by reason of death, disability or retirement under
a retirement plan of the Corporation or any Subsidiary or in the case of
hardship or other special circumstances of a Participant who holds a Stock
Option not immediately exercisable in full, or any Restricted Shares as to
which a condition, limitation, restriction or substantial risk of
forfeiture has not lapsed, the Committee may, in its sole discretion,
accelerate the time at which such Stock Option may be exercised or the time
at which such condition, limitation, restriction or substantial risk of
forfeiture will lapse.
(d) Presentation of the Program or any amendment to the Program
for stockholder approval is not to be construed to limit the Corporation's
authority to offer similar or dissimilar benefits through plans or programs
that are not subject to stockholder approval.
18. Effective Date. This 1997 Stock Incentive Program shall become
effective on the date (the "Effective Date") that it is approved by the
affirmative vote of a majority of the shares present or represented at an
annual or special meeting of stockholders of the Corporation and entitled
to vote on the subject matter; provided that such stockholder approval is
obtained within 12 months after the adoption of this 1997 Stock Incentive
Program by the Board.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
and Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
______________________________________________________________________
THE INTERLAKE CORPORATION
550 Warrenville Road
Lisle, Illinois 60532-4387
(630) 852-8800
Stephen R. Smith
Vice President, Secretary and General Counsel
______________________________________________________________________
Payment of Filing Fee (Check the appropriate box):
X No fee required
( ) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
( ) 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange 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 by written 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:
PROXY
THE INTERLAKE CORPORATION
550 Warrenville Road
Lisle, Illinois 60532-4387
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned acknowledges receipt of the accompanying notice of meeting
and 1997 proxy statement and hereby appoints Stephen Gregory, W. Robert
Reum and Stephen R. Smith, and each of them, with power of substitution,
attorneys and proxies to vote all shares of the Company's common stock, par
value $1.00 per share, held of record by the undersigned on March 7, 1997,
on behalf of the undersigned at the annual meeting of stockholders of The
Interlake Corporation to be held at the Radisson Hotel Lisle/Naperville
located at 3000 Warrenville Road, Lisle, Illinois 60532, on Thursday, April
24, 1997, at 10:00 a.m. local time, and at any adjournment thereof, on the
following matters:
1. ELECTION OF DIRECTORS, Nominees:
Frederick C. Langenberg William G. Mitchell Erwin E. Schulze
2. Proposal to approve the adoption of the 1997 Stock Incentive Program.
3. Such other business as may properly come before said meeting or any
adjournment thereof.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. The Proxy
Committee cannot vote your shares unless you sign and return this card.
(See Reverse Side)
( X ) Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted for all nominees listed in Proposal 1; for Proposal 2; and in
accordance with the discretion of the proxyholders on all other business.
Directors recommend a vote "FOR"
1. Election of Directors FOR ( ) WITHHOLD AUTHORITY ( )
(See Reverse)
*For, except vote withheld from the following nominees:
________________________________
2. Approval of 1997 Stock Incentive Program
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. In their discretion to vote upon such other business as may properly
come before said meeting or any adjournment thereof.
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: , 1997
Signature
Signature if held jointly
seproxcd.97b
VOTING INSTRUCTIONS TO UNION BANK, TRUSTEE
UNDER THE CHEM-TRONICS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
TO:
You have received, or will soon receive The Interlake Corporation's annual
report to shareholders for 1996 and the proxy statement for the 1997 annual
meeting of shareholders. Please read both documents before deciding how to
vote.
Management and the Board of Directors have recommended a vote FOR the three
nominees named below, and FOR approval of the 1997 Stock Incentive Program. To
support these matters as recommended by management and the Board of Directors,
you need only sign and date the voting instructions below and return them to
Union Bank in the return envelope provided.
Participants who give timely voting instructions determine how both the
allocated and unallocated shares will be voted. On the other hand,
participants who don't give timely voting instructions will have their
shares treated as unallocated shares for voting purposes. If Union Bank
does not receive your signed voting instructions by April 17, 1997, other
participants will effectively be exercising the voting rights which the
ESOP makes available to you. Your voting instructions are confidential.
Your employer will not know how you vote or whether you vote at all.
Finally, the ESOP also provides that participants who provide the Trustee
with voting instructions shall be "named fiduciaries" under the ESOP for
such purposes.
To be effective, these voting instructions must be signed and mailed to
Union Bank in the accompanying return envelope in time to be received by
the close of business on April 17, 1997.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW ( ) WITHHOLD AUTHORITY ( )
(except as marked to the contrary below) to vote for all nominees listed below
F. C. Langenberg, W. G. Mitchell and E. E. Schulze
(INSTRUCTIONS: To direct the Trustee to withhold authority to vote for
any individual nominee, write that nominee's name in the space provided
below).
------------------------------------------
2. Approval of the 1997 Stock Incentive Program
( ) FOR ( ) AGAINST ( ) ABSTAIN
Dated this day of , 1997.
Name: Signature of ESOP Participant
Social Security Number:
Number of Allocated Shares:
To: Dexion UK Share Award Scheme Participant
Enclosed with these voting instructions are The Interlake Corporation's
annual report to shareholders for 1996 and the proxy statement for the
1997 annual meeting of shareholders to be held on April 24, 1997.
Please read both documents before deciding how to vote.
The Dexion UK Share Award Scheme provides that the trustee must vote
your Scheme shares of Interlake stock as you direct; and, if you do not
send your voting instructions to the trustee at least five business days
prior to the shareholders' meeting, your Scheme shares will be voted in
accordance with Management's recommendations which are set forth in the
1997 proxy statement.
Your Scheme shares of Interlake stock is your account balance in the
Share Award Scheme as of December 31, 1996 and is shown above.
VOTING INSTRUCTIONS TO TRUSTEE
To: The Royal Bank of Scotland plc, Trustee under the DEXION UK SHARE
AWARD SCHEME of Dexion Group plc and its subsidiaries:
In accordance with provisions of the Scheme, I hereby direct that at the
Annual Meeting of Shareholders of THE INTERLAKE CORPORATION, a Delaware
corporation, to be held in Lisle, Illinois, on April 24, 1997, and at
any adjournment thereof, my Scheme shares of Interlake stock shall be
voted or caused to be voted as follows, on the following matters set
forth in the 1997 proxy statement.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW ( ) WITHHOLD AUTHORITY ( )
(except as marked to the contrary below) to vote for all nominees listed below
F. C. Langenberg, W. G. Mitchell and E. E. Schulze
(INSTRUCTIONS: To direct the Trustee to withhold authority to vote for
any individual nominee, write that nominee's name in the space provided
below).
------------------------------------------
2. Approval of the 1997 Stock Incentive Program
( ) FOR ( ) AGAINST ( ) ABSTAIN
Dated this day of , 1997
Signature of Participant
These voting instructions will be voted as directed, but will be voted FOR
the above proposals if no direction is given to the contrary by April 17,
1997.
VOTING INSTRUCTIONS TO LASALLE NATIONAL BANK ("LaSalle"),
TRUSTEE UNDER THE INTERLAKE CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Dear Interlake ESOP Participant:
Enclosed with these voting instructions are The Interlake Corporation's
annual report to shareholders for 1996 and the proxy statement for the
April 24, 1997 annual meeting of shareholders. Please read both documents
before deciding how to vote.
Management and the Board of Directors have recommended a vote FOR the three
nominees named below, and FOR approval of the 1997 Stock Incentive Program.
To support these matters as recommended by management and the Board of
Directors, you need only sign and date the voting instructions below and
return them to The Wyatt Company in the return envelope provided.
Of the 978,862 shares held by the ESOP Trustee at this time, 675,724 have
been allocated to participants' accounts. Shares which have not yet been
allocated to participants' accounts are unallocated shares. The ESOP plan
documents provide that participants who provide voting instructions to the
Trustee will at the same time be directing the Trustee on how to vote a
proportional number of the unallocated shares and the allocated shares for
which no participant instructions are received.
Participants who give timely voting instructions determine how both the
allocated and unallocated shares will be voted. On the other hand,
participants who don't give timely voting instructions will have their
shares treated as unallocated shares for voting purposes. If The Wyatt
Company does not receive your signed voting instructions by April 17, 1997,
other participants will effectively be exercising the voting rights which
the ESOP makes available to you. LaSalle encourages all ESOP participants
to exercise their right to vote their allocated ESOP shares by returning
their voting instructions promptly. Your voting instructions are
confidential and your employer will not know how you vote or whether you
vote at all.
To be effective, these voting instructions must be signed and mailed to The
Wyatt Company in the accompanying return envelope in time to be received by
the close of business on April 17, 1997.
Sincerely,
LASALLE NATIONAL BANK
VOTING INSTRUCTIONS TO LASALLE NATIONAL BANK ("LaSalle"),
TRUSTEE UNDER THE INTERLAKE CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW ( ) WITHHOLD AUTHORITY ( )
(except as marked to the contrary below) to vote for all nominees
listed below
F. C. Langenberg, W. G. Mitchell and E. E. Schulze
(INSTRUCTIONS: To direct the Trustee to withhold authority to vote
for any individual nominee, write that nominee's name in the space provided
below).
------------------------------------------
2. Approval of the 1997 Stock Incentive Program
( ) FOR ( ) AGAINST ( ) ABSTAIN
Dated this day of , 1997.
Signature of ESOP Participant
Name:
Social Security Number:
Number of Allocated Shares:
VOTING INSTRUCTIONS UNDER THE INTERLAKE STOCK FUND
To: Interlake Stock Fund Participant
You have received, or soon will receive, The Interlake Corporation's
annual report to shareholders for 1996 plus a notice of meeting and
proxy statement for the 1997 annual meeting of shareholders to be held
on April 24, 1997. Please read both documents before deciding how to
vote.
Each Plan provides that the trustee must vote your proportionate share
of the Interlake Stock Fund as you direct; and, if the trustee does not
receive your voting instructions at least five business days prior to
the shareholders' meeting, your shares will not be voted.
Your proportionate share of the Interlake Stock Fund is your account
balance in the Interlake Stock Fund as of December 31, 1996 divided by
the account balance in the Interlake Stock Fund of all participants,
and is shown above as a decimal equivalent.
VOTING INSTRUCTIONS TO TRUSTEE
To: Marshall & Ilsley Trust Company, Trustee under the SALARIED
EMPLOYEES RETIREMENT SAVINGS PLAN of The Interlake Corporation:
In accordance with provisions of the Plans, I hereby direct that at the
Annual Meeting of Shareholders of THE INTERLAKE CORPORATION, a Delaware
corporation, to be held in Lisle, Illinois, on April 24, 1997, and at
any adjournment thereof, my proportionate share of the Interlake Stock
Fund shall be voted or caused to be voted as follows, on the following
matters identified in the notice of 1997 annual meeting of shareholders
and set forth in the 1997 proxy statement.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW ( ) WITHHOLD AUTHORITY ( )
(except as marked to the contrary below) to vote for all nominees
listed below
F. C. Langenberg, W. G. Mitchell and E. E. Schulze
(INSTRUCTIONS: To direct the Trustee to withhold authority to vote for
any individual nominee, write that nominee's name in the space provided
below).
------------------------------------------
2. Approval of the 1997 Stock Incentive Program
( ) FOR ( ) AGAINST ( ) ABSTAIN
Dated this day of , 1997
________________________________
Signature of Participant
These shares will be voted as directed, but will not be voted unless
direction is received by the trustee by April 17, 1997.
Sevoting.97b
