<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of l934
Filed by Registrant [x]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only(as permitted by Rule
14a-6(e)(2))
National Sanitary Supply Company
................................................................................
(Name of Registrant as Specified in its Charter)
National Sanitary Supply Company
................................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
........................................................................
2) Aggregate number of securities to which transaction applies:
........................................................................
3) Per unit price of other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11_/
.........................................................................
4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid: .........................
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee previously paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Action
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 No.:
..........................................................................
3) Filing Party:
..........................................................................
4) Date Filed:
..........................................................................
<PAGE> 2
NATIONAL SANITARY
SUPPLY COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1996
The Annual Meeting of Stockholders of National Sanitary Supply Company will
be held at The Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday, May
20, 1996 at 11:30 a.m. for the following purposes:
(1) To elect directors;
(2) To ratify the selection by the Board of independent accountants; and
(3) To transact such other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on March 25, 1996 are
entitled to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR EARLIEST
CONVENIENCE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES.
Naomi C. Dallob
Secretary and General Counsel
April 8, 1996
1
<PAGE> 3
NATIONAL SANITARY SUPPLY COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of National Sanitary Supply Company (hereinafter called the
"Company" or "National") of proxies to be used at the Annual Meeting of
Stockholders of the Company to be held on May 20, 1996 ("Annual Meeting") and
any adjournments thereof. The Company's mailing address is 2900 Chemed Center,
255 E. Fifth Street, Cincinnati, Ohio 45202. The approximate date on which this
Proxy Statement and the enclosed proxy are being sent to stockholders is April
8, 1996. Each valid proxy received in time will be voted at the meeting and, if
a choice is specified on the proxy, the shares represented thereby will be voted
accordingly. The proxy may be revoked by the stockholder at any time before the
meeting by providing notice to the Secretary.
Only stockholders of record as of the close of business on March 25, 1996
will be entitled to vote at the meeting or any adjournments thereof. On such
date, the Company had outstanding 6,137,178 shares of common stock, $1 par value
("Common Stock"), entitled to one vote per share.
ELECTION OF DIRECTORS
Twenty directors are to be elected at the Annual Meeting to serve until the
following annual meeting of stockholders and until their successors are duly
elected and qualified. Set forth below are the names of the persons to be
nominated by the Board of Directors, together with a description of each
person's principal occupation during the past five years and other pertinent
information.
Unless authority is withheld or names are stricken, it is intended that the
shares covered by each proxy will be voted for the nominees listed. Votes that
are withheld will be excluded entirely from the vote and will have no effect.
The Company anticipates that all nominees listed in this Proxy Statement will be
candidates when the election is held. However, if for any reason any nominee is
not a candidate at that time, proxies will be voted for any substitute nominee
designated by the Board of Directors (except where a proxy withholds authority
with respect to the election of directors). The affirmative vote of the holders
of a plurality of the votes cast will be necessary to elect each of the nominees
for director.
NOMINEES
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and has held
Director since 1983 this position since November 1983. Mr. Hutton is
Age: 76 also Chairman, Chief Executive Officer, and a
director of Chemed Corporation, Cincinnati, Ohio
(a diversified public corporation with interests
in residential and commercial plumbing and drain
cleaning services, home-repair service contracts,
janitorial supply products distribution, medical
and dental disposable product supply distribution
and home healthcare services), a Delaware
corporation, the majority (84 percent) owner of
the Company's outstanding Common Stock ("Chemed")
and has held those positions since November 1993
and 1970, respectively. He was also President of
Chemed from 1970 to 1993. Mr. Hutton is Chairman
and a director of Omnicare, Inc., Cincinnati, Ohio
(healthcare services and medical equipment and
supplies) ("Omnicare"), a publicly held
corporation in which Chemed holds a 2.8 percent
ownership interest; and Chairman and a director of
Roto-Rooter, Inc., Cincinnati, Ohio (plumbing and
drain cleaning services and home-repair service
contracts) ("Roto-Rooter"), a publicly held
corporation in which Chemed holds a 58 percent
ownership interest. Mr. Hutton is the father of
Thomas C. Hutton, a director of the Company.
2
<PAGE> 4
KEVIN J. MCNAMARA Mr. McNamara is Vice Chairman of the Company and
Director since 1988 President of Chemed, having held these positions
Age: 42 since August 1994. Previously, he served as
General Counsel and Assistant Secretary of the
Company from August 1986, and as Executive Vice
President, General Counsel and Secretary of
Chemed, from November 1993. He served as a Vice
Chairman of Chemed from May 1992 to November 1993.
He is a director of Chemed, Omnicare and
Roto-Rooter
PAUL C. VOET Mr. Voet is President and Chief Executive Officer
Director since 1983 of the Company and has held these positions since
Age: 49 January 1992. Previously, from November 1983 to
January 1992, he was Vice Chairman and Chief
Executive Officer of the Company. Mr. Voet is also
an Executive Vice President of Chemed. He held the
position of Vice Chairman of Chemed from May 1988
to November 1993. He is a director of Chemed.
ROBERT B. GARBER Mr. Garber is a Vice Chairman of the Company and
Director since 1984 has held this position since January 1992.
Age: 69 Previously, from April 1986 to January 1992, he
was President and Chief Operating Officer of the
Company.
ARTHUR J. BENNERT, JR. Mr. Bennert is Vice President of Marketing of the
Director since 1992 Company and has held this position since February
Age: 38 1996. Previously, from April 1991, he was Vice
President of Corporate Planning.
JAMES A. CUNNINGHAM Mr. Cunningham is a Senior Chemical Adviser to
Director since 1990 Schroder Wertheim, Inc., New York, New York (an
Age: 51 investment banking, asset management and
securities firm) and has held this position since
March 1992. From October 1990 to March 1992 he was
a Managing Director of Furman Selz Incorporated,
New York, New York (an institutional investment
firm). He is a director of Roto-Rooter and Chemed.
NAOMI C. DALLOB Ms. Dallob is Secretary and General Counsel of the
Director since 1987 Company and has held these positions since
Age: 42 November 1986 and August 1994, respectively. Ms.
Dallob is also a Vice President and Secretary of
Chemed and has held these positions since February
1987 and August 1994, respectively. She is a
director of Roto-Rooter.
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W. R. Grace &
Director since 1989 Co., Boca Raton, Florida (international specialty
Age: 70 chemicals and health care) ("Grace") in August
1990, having held this position since July 1989.
Previously, from November 1986 to July 1989, he
served Grace as Chairman of its Executive
Committee. He is a director of Omnicare, Chemed
and Roto-Rooter.
NEAL GILLIATT Mr. Gilliatt is President of Neal Gilliatt/Stuart
Director since 1986 Watson, Inc., New York, New York (management
Age: 78 consulting), having held this position since April
1982. On April 1, 1982 he retired as Chairman of
the Executive Committee of the Interpublic Group
of Companies, Inc., New York, New York
(advertising and related communications), having
held that position since February 1980. Mr.
Gilliatt is a director of Consolidated Products,
Inc. (restaurants) and Roto-Rooter. He is a
director emeritus of Chemed.
3
<PAGE> 5
WILL J. HOEKMAN Mr. Hoekman is an Executive Vice President of
Director since May 1994 Firstar Bank Iowa, N.A. Des Moines, Iowa.
Age: 50 Previously, since November 1980, he was a Senior
Vice President of Firstar Bank Iowa, N.A. He is a
director of Roto-Rooter.
THOMAS C. HUTTON Mr. T. C. Hutton is a Vice President of Chemed and
Director since 1986 has held this position since February 1988. Mr.
Age: 45 Hutton is a director of Chemed, Omnicare, and
Roto-Rooter and is the son of Edward L. Hutton,
Chairman and a director of the Company.
W. DWIGHT JACKSON Mr. Jackson is an Executive Vice President of the
Director since February 1995 Company and Executive Vice President and General
Age: 49 Manager of its Century Papers, Inc. subsidiary
("Century"). He has held these positions since
November and October 1994, respectively.
Previously, from January 1990 to October 1994, he
was Director of Sales for Scott Paper Co.'s
Southwest Division.
CHARLES O. LANE Mr. Charles Lane retired in February 1996 as
Director since l984 Executive Vice President of Marketing and
Age: 65 Manufacturing of the Company having held this
position since April 1986. Mr. Lane is the brother
of Mr. Thomas Lane, Vice President-Administration
of the Company.
SANDRA E. LANEY Mrs. Laney is Senior Vice President and Chief
Director since 1986 Administrative Officer of Chemed and has held
Age: 52 these positions since November 1993 and May 1991,
respectively. She served as a Vice President of
Chemed from May 1984 to November 1993. Mrs. Laney
is a director of Chemed, Omnicare and Roto-Rooter.
JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount
Not previously a director Associates, Cincinnati, Ohio (management
Age: 54 consulting) and has held this position since
November 1993. From April 1991 to November 1993,
Mr. Mount was Senior Vice President of Diversey
Corporation, Detroit, Michigan (specialty
chemicals) and President of Diversey's DuBois
Industrial Division. He is a director of Chemed
and Omnicare.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and the
Director since May 1994 Treasurer of Chemed and has held these positions
Age: 40 since May 1992. Previously, from February 1989 to
May 1992, he held the positions of Vice President
and Treasurer of Chemed. He is a director of
Chemed, Vitas Healthcare Corporation, Roto-Rooter
and Omnicare.
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in
Director since 1991 January 1987 and thereafter became a consultant to
Age: 76 Grace until July 1995. He is a director of Chemed,
Omnicare and Roto-Rooter.
GARY H. SANDER Mr. Sander is Vice President, Treasurer and Chief
Director from May 1986 Financial Officer of the Company and has held
to May 1988 and since these positions since August 1988.
August 1988
Age: 46
4
<PAGE> 6
KENNETH F. VUYLSTEKE Mr. Vuylsteke is an Executive Vice President of
Director since 1991 the Company and General Manager of National West
Age: 49 and has held these positions since January 1992
and July 1991, respectively. Previously, from
February 1989 to July 1991, he was Vice President
and General Manager of the Company's Northwest
division.
GEORGE J. WALSH III Mr. Walsh is a Partner in the law firm of Gould &
Not previously a director Wilkie, New York, New York and has held this
Age: 50 position since January 1978. He is a director of
Chemed.
COMPENSATION OF DIRECTORS
During 1995 each member of the Board of Directors who was not an executive
officer or an officer-employee of the Company was paid $925 for attendance at
each meeting of the Board and $500 for each meeting of a Committee of the Board
attended. The Chairman of each Committee was paid $550 for each Committee
meeting attended.
Effective February 7, 1996, each member of the Board of Directors who is not
an executive officer or an officer-employee of the Company is paid $1,000 for
attendance at each meeting of the Board and $550 for each meeting of a Committee
of the Board attended. The Chairman of each committee is paid $600 for each
Committee meeting attended. Members of the Incentive Committee are also paid a
fee at the rate of $1,200 per annum. Since May 1991, each member of the Board of
Directors (other than those serving on the Incentive Committee and Mr. Robbins)
has been granted an annual unrestricted stock award covering 100 shares of the
Company's Common Stock under the 1988 Stock Incentive Plan. Incentive Committee
members and Mr. Robbins were paid the cash equivalent of the stock award. In
addition, each member of the Board of Directors and of a Committee is reimbursed
for reasonable travel expenses incurred in connection with such meetings.
COMMITTEES AND MEETINGS OF THE BOARD
The Company has the following Committees of the Board of Directors: Audit
Committee, Compensation Committee, and Incentive Committee. It does not have a
nominating committee of the Board of Directors.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and work and other
matters regarding the Company's accounting, financial reporting and internal
control systems. The Audit Committee consists of Messrs. Erhart, T. C. Hutton
and Hoekman. The Audit Committee met twice during 1995.
The Incentive Committee administers the Company's 1986, 1988 and 1995 Stock
Incentive Plans. In addition, the Incentive Committee grants stock options and
stock awards to key employees of the Company and recommends to the Board of
Directors additional year-end contributions by the Company under The National
Sanitary Supply Company Employees Thrift and Profit Sharing Plan. The Incentive
Committee consists of Messrs. Cunningham, Erhart and Gilliatt. The Incentive
Committee met twice during 1995.
The Compensation Committee reviews, approves and recommends to the Board of
Directors matters concerning base salary and annual cash incentive compensation
for key executives of the Company. The Compensation Committee, consisting of
Messrs. McNamara and Cunningham and Mrs. Laney, met three times in l995.
During 1995 there were five meetings of the Board of Directors. Each
incumbent director attended at least 75 percent of the aggregate of (a) the
total number of meetings held by the Board of Directors and (b) the total number
of meetings held by all Committees of the Board of Directors on which he served
that were held during the period for which he was a director or member of any
such Committee.
5
<PAGE> 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. McNamara, a member of the Company's Compensation Committee, is Vice
Chairman of the Company and is an executive officer and director of Chemed. Mrs.
Laney, also a member of the Compensation Committee, is also an executive officer
and a director of Chemed. Messrs. E. L. Hutton and Voet are directors of Chemed.
EXECUTIVE COMPENSATION
JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE ON EXECUTIVE
COMPENSATION
The Company believes that executive compensation must align executive
officers' interests with those of the Company's shareholders and that such are
best served by directly and materially linking compensation to financial and
operating performance criteria, which, when successfully achieved, will enhance
shareholder value.
The Company attempts to achieve this objective with an executive compensation
package for its senior executives which combines base salary, annual cash
incentive compensation, long-term incentive compensation in the form of stock
options and restricted stock awards along with various benefit plans, including
pension plans, savings plans and medical benefits generally available to the
employees of the Company.
The executive compensation program is administered through the coordinated
efforts of the Compensation and the Incentive Committees of the Board of
Directors. The membership of the Incentive and Compensation Committees is
composed of outside directors (i.e., non-employees of the Company), although the
Compensation Committee includes two officers of Chemed (see "Compensation
Committee Interlocks and Insider Participation in Compensation Decisions"
above). The recommendations of the Compensation Committee on base salary and
annual cash incentive compensation for key executives must be approved by the
full Board of Directors. The Incentive Committee administers the Company's stock
incentive plans under which it reviews and approves grants of stock options and
restricted stock awards.
Both the Compensation and Incentive Committees may use their discretion
subjectively to set executive compensation where, in their collective judgment,
external, internal or individual circumstances warrant. The Compensation and
Incentive Committees have considered, and are continuing to review, the
qualifying compensation regulations issued by the Internal Revenue Service in
December of 1995. As compensation is currently not expected to exceed the $1
million base, it is not presently affected by these regulations.
Following is a discussion of the components of the executive officer
compensation program.
In determining base salary levels for the Company's executive officers, the
Compensation Committee takes into account the magnitude of responsibility of
the position, individual experience and performance and specific issues
particular to the Company. In general, base salaries are set at levels
believed by this Compensation Committee to be sufficient to attract and
retain qualified executives when considered with the other components of the
Company's compensation structure.
The Compensation Committee believes that a significant portion of total cash
compensation should be linked to annual performance criteria. Consequently,
the purpose of annual incentive compensation for senior executives and key
managers is to provide a direct financial incentive in the form of an annual
cash bonus to these executives to achieve their business unit's and the
Company's annual goals. Operational and financial goals are established at
the beginning of each fiscal year and generally take into account such
measures of performance as sales and earnings growth, profitability, cash
flow and return on investment. Other non-financial and somewhat subjective
measures of performance relate to organizational development, service
expansion and strategic positioning of the Company's assets.
6
<PAGE> 8
Individual performance is also taken into account in determining individual
bonuses. It is the Company's belief that bonuses as a percent of a senior
executive's salary should be sufficiently high to provide a major incentive
for achieving annual performance targets. Bonuses for senior executives of
the Company generally range from 10 percent to 40 percent of base salary.
The stock option and restricted stock award program forms the basis of the
Company's incentive plans for executive officers and key managers. The
objective of these plans is to align executive and long-term shareholder
interests by creating a strong and direct link between executive pay and
shareholder return.
Stock options and restricted stock awards are generally granted annually and
are generally regarded as the primary incentive for long-term performance as
they are granted at fair market value and have vesting restrictions which
generally lapse over three or four year periods. The Committee considers each
grantee's current option and award holdings in making grants. Both the
amounts of restricted stock awards and proportion of stock options increase
as a function of higher salary and positions of responsibility within the
Company.
Mr. P. C. Voet's compensation costs were paid 75 percent by the Company and
25 percent by Chemed Corporation in 1995, with the exception of a $35,000
special bonus in December, 1995, paid wholly by Chemed. His base salary was
not increased in 1995, remaining at the base rate of $264,500. His cash bonus
paid 75 percent by the Company in respect of 1995 services was $106,250,
which represents an increase of 25 percent over 1994 and 40 percent of his
current base salary. Restricted stock awards granted to Mr. Voet in respect
of 1995 services are consistent with his responsibilities and relative
position in the Company and are shown on the Summary Compensation Table. He
received 40,000 stock options in 1995.
By the Compensation Committee: Kevin J. McNamara, Chairman
James A. Cunningham
Sandra E. Laney
By the Incentive Committee: Neal Gilliatt, Chairman
Charles H. Erhart, Jr.
James A. Cunningham
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<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table shows the plan and non-plan compensation awarded to,
earned by, or paid to the Chief Executive Officer and the four most highly
compensated executive officers of the Company for the past three years for all
services rendered in all capacities to the Company and its subsidiaries:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
- -------------------------------------------------------------------
NAME RESTRICTED SECURITIES ALL
AND STOCK UNDERLYING OTHER
PRINCIPAL AWARDS STOCK COMPEN-
POSITION YEAR SALARY $ BONUS $ $ (1) OPTIONS # SATION $
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul C. Voet 1995 $198,378 $79,688 $109,992 40,000 $199,154(3)
President and 1994 171,150 59,500 79,625 -- 37,854
CEO(2) 1993 156,325 45,500 55,125 -- 33,958
Kenneth F 1995 152,500 57,609 49,996 20,000 19,850(4)
Vuylsteke 1994 143,958 42,000 42,875 -- 8,672
Executive Vice 1993 132,500 35,000 28,788 -- 3,804
President
Charles O. Lane 1995 135,000 12,000 -- -- 12,857(5)
Executive Vice 1994 135,000 12,000 -- -- 10,109
President- 1993 174,215 12,000 -- -- 8,343
Marketing and
Manufacturing
W. Dwight 1995 125,000 56,215 39,997 15,000 12,517(6)
Jackson 1994 120,000 7,500 18,375 -- 1,837
Executive Vice 1993 -- -- -- -- --
President
Gary H. Sander 1995 96,250 35,568 29,998 7,500 96,893(8)
Vice President, 1994 93,125 26,000 24,500 -- 17,209
Treasurer and 1993 88,417 22,000 20,213 -- 18,878
Chief Financial
Officer(7)
</TABLE>
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<PAGE> 10
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(1) The number and value of aggregate restricted stock holdings at December 31,
1995 are as follows:Paul C. Voet 18,861 shares, $226,367; Charles O. Lane 0
shares, $0; Kenneth F. Vuylsteke 9,322 shares, $112,067; W. Dwight Jackson
4,904 shares, $58,372; Gary H. Sander 5,653 shares, $67,973. Dividends are
paid to the holders of restricted stock, who are entitled to vote them,
whether or not vested. Restricted stock awards vest evenly over three-year
periods.
(2) Represents 75 percent of total compensation, as charged to the Company by
Chemed in 1995, 70 percent in 1994, and 65 percent in 1993. Excludes a
$35,000 special bonus paid by Chemed in each December of l994 and 1995.
(3) Composed of contributions to defined contribution plans - $181,424 which
includes $122,676 allocated to Mr. Voet's account under Chemed's Employee
Stock Ownership Plans with respect to an adjustment for prior periods and
vesting over a five year period beginning September 1995 ("ESOP
Adjustment"); term life insurance premiums - $4,712; $13,018, which is the
value of premium payments made by the Company for his benefit under a split
dollar life insurance policy, which provides for refund of premiums to the
Company on termination of the policy ("Split Dollar Premiums").
(4) Composed of contributions to defined contribution plans - $9,446; term life
insurance premiums - $276; Split Dollar Premiums - $10,128.
(5) Composed of contributions to defined contribution plans - $7,328; term life
insurance premiums - $5,529.
(6) Mr. Jackson was hired in October, 1994. Composed of contributions to defined
contribution plans - $4,076; term life insurance premiums - $168; Split
Dollar Premiums - $8,273.
(7) Mr. Sander is an employee of Chemed Corporation, these costs are reimbursed
100 percent by the Company.
(8) Composed of contributions to defined contribution plans - $90,525 which
includes $66,154 in ESOP Adjustment; term life insurance premiums - $711;
Split Dollar Premiums - $5,657.
OPTION GRANTS
The table below shows information concerning stock options granted in l995 to
the executive officers named in the Summary Compensation Table.
STOCK OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration
Name Granted(#)(1) Year $/Sh Date 5%($) 10%($)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P. C. Voet 40,000 19.8% $12.00 3/01/06 $340,800 $889,600
K. F. Vuylsteke 20,000 9.9% 12.00 3/01/06 170,400 440,800
C. O. Lane -- -- -- -- -- --
W. D. Jackson 15,000 7.4% 12.00 3/01/06 127,800 333,600
G. H. Sander 7,500 3.7% 12.00 3/01/06 63,900 166,800
- ------------------------------------------------------------------------------------
</TABLE>
(1) These options, which were granted on March 1, 1995, provide for the purchase
price of option shares equal to the fair market value of Common Stock on
that date and become exercisable in four equal annual installments beginning
December 1, 1995.
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<PAGE> 11
The following table summarizes stock option exercises during 1995 and the
year-end number and value of unexercised stock options held by the named
executive officers.
AGGREGATED OPTION EXERCISES IN 1995 AND
STOCK OPTION VALUES AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/95 (#) OPTIONS AT 12/31/95 (1)
ACQUIRED VALUE ------------------------------------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul C. Voet 13,223 $66,115 57,500 30,000 $164,925 $0
Kenneth F. -- -- 8,688 15,000 17,640 0
Vuylsteke
Charles O. Lane 8,750 54,688 50,000 0 137,500 0
W. Dwight -- -- 3,750 11,250 0 0
Jackson
Gary H. -- -- 9,875 5,625 33,860 0
Sander
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the market value of the underlying securities at year-end, minus
the exercise or base price.
EMPLOYMENT AGREEMENTS
The Company had an employment agreement with Mr. C. Lane, who retired in
February 1996, providing for his services to the Company through December 31,
1995 and has an agreement with Mr. Jackson providing for services through
October 31, 1996, at specified minimum annual rates of compensation of $135,000
and $125,000, respectively. These agreements also provide for limited
restrictions against competition during and for a two-year period after the term
of employment, and provide assurances to the Company concerning use or
disclosure of trade secrets and confidential information.
The Company has an employment agreement with Mr. Vuylsteke providing for his
continued employment as an executive until May 31, 1998 at a specified base
salary rate of $155,000 per year. In the event of employment termination without
cause, the Company shall pay him monthly severance for the remaining term of the
agreement, at the rate of 150 percent of his then-current base salary and
incentive bonus and the fair market value of all stock awards which vested
during the twelve months prior to termination.
Messrs. Voet and Sander are employed by Chemed pursuant to agreements
providing for their continued employment as senior executives until May 31, 1999
and 1998, respectively. The remaining terms and conditions of these agreements
are the same as those of Mr. Vuylsteke's agreement, except that Mr. Voet is to
be a management nominee for election as a Chemed director. The Company
reimburses Chemed for 80 percent of such costs in 1996 with respect to Mr. Voet,
and 100 percent with respect to Mr. Sander, valued at $705,931 in the aggregate
for l995, pursuant to a services agreement with Chemed referred to below under
"Certain Arrangements and Transactions."
10
<PAGE> 12
COMPARATIVE STOCK PERFORMANCE GRAPH
The line graph below compares the yearly percentage change in the Company's
cumulative total shareholder return on its Common Stock, as measured by dividing
(i) the sum of (A) the cumulative amount of dividends for the period January 1,
1991 to December 31, 1995, assuming dividend reinvestment, and (B) the
difference between the Company's share price at January 1, 1991 and December 31,
1995; by (ii) the share price at January 1, 1991, with
(i) the cumulative total return, assuming reinvestment of dividends, of the
Media General Market Index; and
(ii) the cumulative total return, assuming reinvestment of dividends, of the
Media General Wholesale-Nondurable Index.
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1995
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
December 31 . . . 1990 1991 1992 1993 1994 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Sanitary Supply Co. 100.00 106.15 138.99 206.88 191.59 187.93
- ----------------------------------------------------------------------------------------
Media General Market Index 100.00 129.09 134.25 154.11 152.83 198.15
- ----------------------------------------------------------------------------------------
Media General Wholesale-Nondurable Index 100.00 143.42 156.87 168.76 164.68 211.60
- ----------------------------------------------------------------------------------------
</TABLE>
(a) Fiscal year ends 12/31. Assumes $100 invested on 1/1/91.
SOURCE: MEDIA GENERAL
11
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1995 information with
respect to the only persons who are known to be the beneficial owner of more
than 5 percent of the Common Stock of the Company:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF BENEFICIAL OF
TITLE OF CLASS OWNER OWNERSHIP (1) CLASS (4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Chemed Corporation 5,144,551 84%
Par Value $1 2600 Chemed Center Shares; Direct
Per Share 255 East Fifth St. (2)
Cincinnati, OH 45202
- --------------------------------------------------------------------------------
Common Stock PNC Bank Corporation 346,670 shares; 5.7%
Par Value $1 One PNC Plaza Trustee of the Company's
Per Share 249 Fifth Avenue Profit Sharing and Thrift
Pittsburgh, PA 15222 Savings Plan (3)
- --------------------------------------------------------------------------------
</TABLE>
(1) As reported to the Securities and Exchange Commission by the beneficial
owners.
(2) Sole voting power, 5,144,551 shares; sole dispositive power, 5,144,551
shares.
(3) Shared voting power, 346,670 shares; shared dispositive power 346,670
shares.
(4) For purposes of calculating percent of class, all shares subject to stock
options which were exercisable within 60 days from December 31, 1995 were
assumed to have been issued.
The following table sets forth information as of December 31, 1995 with
respect to the Common Stock of the Company and the capital stock of Chemed
beneficially owned by all nominees and Directors of the Company, each of the
executive officers named in the Summary Compensation Table, and its directors
and executive officers as a group:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
E.L. Hutton National Common Stock 28,729 Direct
57,223 Option
3,194 Trustee
Chemed Capital Stock 42,321 Direct
36,750 Option
3,967 Trustee
P.C. Voet National Common Stock 35,959 Direct
57,500 Option
Chemed Capital Stock 24,883 Direct
750 Option
Trustee(3)
R.B. Garber National Common Stock 41,184 Direct
2,500 Option
Chemed Capital Stock 677 Direct
A.J. Bennert, Jr. National Common Stock 5,490 Direct
1,875 Option
Chemed Capital Stock 4,535 Direct
- --------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
J. A. Cunningham National Common Stock 1,000 Direct
Chemed Capital Stock 1,000 Direct
500 Trustee
N. C. Dallob National Common Stock 3,637 Direct
2,375 Option
Chemed Capital Stock 6,846 Direct
750 Option
C. H. Erhart, Jr. National Common Stock 5,000 Direct
Chemed Capital Stock 1,500 Direct
N. Gilliatt National Common Stock 1,000 Direct
Chemed Capital Stock 3,400 Direct
W. J. Hoekman National Common Stock 1,000 Trustee(4)
Chemed Capital Stock 109,100 Trustee(4) 1.09%
T. C. Hutton National Common Stock 3,673 Direct
2,750 Option
3,194 Trustee
Chemed Capital Stock 16,607 Direct
1,750 Option
4,467 Trustee
W. D. Jackson National Common Stock 1,644 Direct
3,750 Option
Chemed Capital Stock 90 Direct
C. O. Lane National Common Stock 29,092 Direct
50,000 Option
Chemed Capital Stock 8,484 Direct
S. E. Laney National Common Stock 3,988 Direct
1,313 Option
Chemed Capital Stock 23,319 Direct
31,000 Option
Trustee(3)
J. M. Mount National Common Stock None
Chemed Capital Stock 7,520 Direct
600 Trustee
K. J. McNamara National Common Stock 3,072 Direct
3,750 Option
Chemed Capital Stock 12,611 Direct
7,500 Option
Trustee(3)
T. S. O'Toole National Common Stock 2,898 Direct
500 Option
Chemed Capital Stock 12,458 Direct
5,250 Option
D. W. Robbins, Jr. National Common Stock 2,000 Trustee
Chemed Capital Stock 2,000 Trustee
G. H. Sander National Common Stock 8,782 Direct
9,875 Option
Chemed Capital Stock 7,847 Direct
1,250 Option
- --------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
J. E. Schnee National Common Stock 600 Direct
Chemed Capital Stock None
K. F. Vuylsteke National Common Stock 12,012 Direct
8,688 Option
Chemed Capital Stock 867 Direct
G. J. Walsh III National Common Stock None
Chemed Capital Stock 1,000 Direct
Directors and National Common Stock 187,960 Direct 2.99%
Executive Officers 202,099 Option 3.21%
as a Group 6,194 Trustee
(19 Persons) Chemed Capital Stock 175,365 Direct 1.76%
113,000 Option 1.13%
172,778 Trustee(5) 1.73%
</TABLE>
FOOTNOTES TO STOCK OWNERSHIP TABLE
(1) Includes securities beneficially owned (a) by the named persons or group
members, their spouses and their minor children (including shares of Chemed
capital stock and the Company's Common Stock allocated as at December 31,
1995 to the account of each named person or member of the group
participating under Chemed's Savings and Investment Plan, Chemed's Employee
Stock Ownership Plans, and the Company's Thrift and Profit Sharing Plan),
(b) by trusts and custodianships for their benefit and (c) by trusts and
other entities as to which the named person or group has or shares the power
to direct voting or investment of securities. "Direct" refers to securities
in categories (a) and (b) and "Trustee" to securities in category (c). Where
securities would fall into both "Direct" and "Trustee" classifications, they
are included under "Trustee" only. "Option" refers to shares which the named
person or group has a right to acquire within 60 days from December 31,
1995. For purposes of determining the Percent of Class, all shares subject
to stock option, which were exercisable within 60 days of December 31, 1995,
were assumed to have been issued.
(2) Percent of Class under 1.0 percent is not shown.
(3) Messrs. T. C. Hutton, McNamara and Voet and Mrs. Laney are trustees of the
Chemed Foundation which holds 57,971 shares of Chemed capital stock over
which the trustees share both voting and investment power. This number is
included in the total number of "Trustee" shares held by the Directors and
Executive Officers as a group, but is not reflected in the respective
holdings of the individual trustees.
(4) Comprises shares with respect to which Mr. Hoekman shares the power to
direct the voting as a member of a bank trust committee.
(5) Shares over which more than one individual holds beneficial ownership have
only been counted once in calculating the aggregate number of shares owned
by Directors and Executive Officers as a Group.
14
<PAGE> 16
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and the regulations
thereunder require the Company's directors and certain officers, and persons who
own more than 10 percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
10 percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based on review of the copies of such forms furnished to the Company and on
the written representations of those who have not furnished such forms that,
with respect to 1995, no Forms 5 were required to be filed with the SEC, the
Company believes that during the period January 1, 1995 through December 31,
1995, the Company's officers, directors and greater than 10 percent shareholders
have complied with all Section 16(a) filing requirements.
CERTAIN ARRANGEMENTS AND TRANSACTIONS
TRANSACTIONS WITH CHEMED
CASH MANAGEMENT AND FINANCING. The Company deposits funds in excess of its
working capital requirements with Chemed for short-term investment and Chemed
may make short-term loans to the Company for working capital needs. These
unsecured demand deposits and short-term loans bear interest at fifty basis
points over U.S. Treasury Notes. At February 28, 1995, the Company had a
short-term loan from Chemed of $12,618,000, which represented the largest loan
balance during the year. The amount of interest expense paid to Chemed during
1995 for the combination of demand deposits and short-term loans was $629,000.
Chemed loaned the Company $11 million on November 10, 1988 at an interest
rate of 10.67 percent, due in eleven equal annual installments beginning
November 1, 1993. The Company paid $1 million on this note November 1, 1995. The
Company borrowed $8 million from Chemed on January 1, 1993, executing a
promissory note at an interest rate of 7.66 percent, with interest payable
quarterly and the principal payable in full on January 1, 1998. The Company paid
Chemed interest of $1,555,000 in l995 on these loans. The Company used these
funds to acquire Century and real estate in Tempe, Arizona. The loans are
evidenced by promissory notes which provide Chemed with a call at any time in
the event the debtor becomes insolvent; files, or consents to the filing of, a
petition for protection under any bankruptcy or insolvency law in any
jurisdiction; makes an assignment for the benefit of its creditors; or assigns
its obligations thereunder to any third party without Chemed's consent.
During 1995, non-union employees of the Company participated in Chemed's
ESOPs. The Company paid Chemed 75 percent of the average monthly price of Chemed
stock during 1995 for these shares to be allocated to employees' accounts, or
$1,502,000.
SERVICE ARRANGEMENTS. As a subsidiary of Chemed and pursuant to an agreement
with Chemed, the Company uses certain administrative, financial, insurance, tax,
audit, legal, managerial and other services provided by Chemed. The Company pays
fees for these services based on Chemed's costs. During 1995, the Company paid
Chemed $567,000 for such services.
LEASES. The Company has lease arrangements with Chemed for its headquarters
office facility in Cincinnati, Ohio and for a portion of its transportation
equipment. The rents paid by the Company to Chemed totaled $392,000 in 1995 and
represented Chemed's cost to provide such leases.
STATE AND LOCAL INCOME TAXES. Should any state or locality impose an income
or franchise tax on Chemed or the Company by combining or consolidating all or
part of the income, losses, properties, payrolls, sales or other attributes of
Chemed and the Company or one of Chemed's subsidiaries, Chemed and the Company
have agreed the Company will reimburse Chemed for the Company's share of such
franchise or income tax, or Chemed shall reimburse the Company for Chemed's
share of such franchise or income tax, as the case may be. The amount to be
reimbursed is equal to the tax that would have been required to be paid had the
Company or Chemed, as the case may be, filed a separate return without the
inclusion of any income, losses, properties, payrolls, sales or other attributes
of any related parent or subsidiary corporation.
15
<PAGE> 17
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1996. This firm has acted as independent accountants for Chemed since
1970 and for the Company since 1983. Although the submission of this matter to
the stockholders is not required by law or by the By-Laws of the Company, the
selection of Price Waterhouse will be submitted for ratification at the Annual
Meeting. The affirmative vote of the holders of a majority of the voting power
of the stockholders represented at the meeting with abstentions having the
effect of negative votes and broker nonvotes deemed to be absent shares, will be
necessary to ratify the selection of Price Waterhouse as independent accountants
for the Company and its consolidated subsidiaries for the year 1996. If the
selection is not ratified at the meeting, the Board of Directors will reconsider
its selection of independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
It is expected that a representative of Price Waterhouse will be present at
the Company's Annual Meeting. Such representative shall have the opportunity to
make a statement if he so desires and shall be available to respond to
appropriate questions raised at the meeting.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be included in the proxy materials
for presentation at the 1997 Annual Meeting of Stockholders must be in writing
and received by the Secretary of the Company no later than December 10, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other matters
which will be presented for consideration at the Annual Meeting. However, if any
other business should come before the meeting, the persons named in the enclosed
proxy (or their substitutes) will have discretionary authority to take such
action as shall be in accordance with their best judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be borne by
the Company. The Company will request banks, brokers and other persons holding
shares beneficially owned by others to send proxy materials to the beneficial
owners and to secure their voting instructions, if any. The Company will
reimburse such persons for their expenses in so doing. In addition to
solicitation by mail, officers and regular employees of the Company may solicit,
without extra remuneration, proxies personally, by telephone or by facsimile
from some stockholders if such proxies are not promptly received. This Proxy
Statement and the accompanying Notice of Meeting are sent by order of the Board
of Directors.
Naomi C. Dallob
Secretary
April 8, 1996
16
<PAGE> 18
<TABLE>
<CAPTION>
NATIONAL SANITARY SUPPLY COMPANY
2900 Chemed Center
255 East Fifth Street PLEASE MARK, SIGN, DATE AND RETURN PROXY
Cincinnati, Ohio 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- -----------------------------------------------------------------------------------------------------------
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY
20, 1996.
R
The undersigned hereby appoints E. L. Hutton and P. C. Voet as Proxies, both with the power to appoint
O a substitute, and hereby authorizes them to represent and to vote, as designated below, all of the
shares of stock of National Sanitary Supply Company held of record by the undersigned on March 25, 1996
X at the Annual Meeting of Stockholders to be held on May 20, 1996, or at any adjournment thereof.
Y
(Continued and to be signed on reverse side)
(1) Election of Directors:
<S> <C> <C> <C>
FOR FOR WITHHOLD Edward L. Hutton, Paul C. Voet, Robert B. Garber, Arthur J. Bennert, Jr.,
all nominees ALL James A. Cunningham, Naomi C. Dallob, Charles H. Erhart, Jr.,
nominees listed AUTHORITY Neal Gilliatt, Will J. Hoekman, Thomas C. Hutton, W. Dwight Jackson,
listed EXCEPT those to vote in Charles O. Lane, Sandra E. Laney, Kevin J. McNamara, John M. Mount,
whose names I the election Timothy S. O'Toole, D. Walter Robbins, Jr., Gary H. Sander, Kenneth F.
have stricken of directors Vuylsteke, George J. Walsh, III
[ ] [ ] [ ]
(2) Ratifying the selection of (3) In their discretion, the Proxies are
independent accountants. authorized to vote upon such other business
as may properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSALS (1) AND (2).
DATED: , 1996
-------------------------------
(Be sure to date Proxy)
SIGNED:
------------------------------------
---------------------------------------------
(Please sign exactly as names appear at left)
When signed on behalf of a corporation,
partnership, estate, trust, or other
shareholder, state your title or capacity or
otherwise indicate that you are authorized to
sign.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES
</TABLE>
