<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant /X/
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PORTEC, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PORTEC, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 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 or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
PORTEC, Inc.
Suite 120
One Hundred Field Drive
Lake Forest, Illinois 60045
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 25, 1995
To the Stockholders of
PORTEC, Inc.
The Annual Meeting of Stockholders of PORTEC, Inc. will be held in Room 710
of the Union League Club, 65 West Jackson Boulevard, Chicago, Illinois, at 10:00
A.M., on Tuesday, April 25, 1995, for the following purposes:
1. To elect three directors to hold office for three-year terms.
2. To consider and vote upon an amendment to the Company's 1988 Employees'
Stock Benefit Plan which will (i) allow all stock options and stock
appreciation rights granted under the Plan to be exercised within five
years following termination of employment of the optionee (or
termination of service in case the optionee is a non-employee director)
if such termination is due to death, disability, or retirement in
accordance with the Company's retirement policy, or until the option
expires, whichever first occurs, (ii) authorize a one-time grant to each
non-employee director of a stock option for 7,000 shares of Common Stock
of the Company, and (iii) increase the annual grant of stock options to
each non-employee director to 2,000 shares of Common Stock of the
Company from the 1,000 already provided for in the Plan.
3. To act upon such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business March 7, 1995, are entitled
to notice of, and to vote at, this meeting or any adjournment thereof.
If you are unable to attend the meeting in person, you are urged to sign,
date and return promptly the enclosed proxy in the enclosed envelope, which
requires no postage if mailed in the United States. Any stockholder who attends
the meeting may vote in person.
By Order of the Board of Directors
N. A. DEDERT-KINDL
Vice President, Treasurer
and Secretary
March 24, 1995
<PAGE> 3
[LOGO]
PORTEC, Inc.
Suite 120
One Hundred Field Drive
Lake Forest, Illinois 60045
PROXY STATEMENT
This proxy statement is expected to be mailed to stockholders on or about
March 24, 1995. The accompanying proxy is solicited by the Board of Directors of
the Company for use at the Annual Meeting of Stockholders to be held April 25,
1995, and at any adjournment thereof.
The record date for determination of stockholders entitled to vote at the
Annual Meeting was March 7, 1995. At that date, the Company had issued only one
class of voting securities, namely, Common Stock having a par value of $1.00 per
share, of which there were 4,262,891 shares outstanding and entitled to vote.
Each stockholder is entitled to one vote for each share registered in his or her
name at the close of business on March 7, 1995.
Proxies in the accompanying form, properly executed and received by the
Secretary prior to the meeting and not revoked, will be voted as directed
therein. Any proxy may be revoked by the stockholder granting it at any time
prior to the voting at the meeting by giving written notice of such revocation
to the Secretary of the Company.
1
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with the term of
office of one class expiring each year. The Board of Directors' nominees for the
class of directors to be elected at the 1995 Annual Meeting for three-year terms
are Albert Fried, Jr., L. L. White, Jr., and Michael T. Yonker. Each is
presently a director having been elected by the stockholders at their 1992
Annual Meeting.
Except where authority to vote is withheld, it is intended that the proxies
solicited on behalf of the Board of Directors for the 1995 Annual Meeting will
be voted for the Board's nominees for three-year terms.
If, at the time of the 1995 Annual Meeting, a nominee is unable to or
declines to serve, the discretionary authority provided in the proxy will be
exercised to vote for a substitute. The Board of Directors has no reason to
believe that any substitute nominee will be required. If any nominee is elected
but thereafter is unable or declines to serve, vacancies thereby created on the
Board of Directors may be filled by the remaining directors in office.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" NOMINEES FRIED, WHITE, AND
YONKER. UNDER DELAWARE LAW AND THE COMPANY'S CERTIFICATE OF INCORPORATION AND
BYLAWS, DIRECTORS WILL BE ELECTED BY A PLURALITY VOTE. BECAUSE DIRECTORS ARE
ELECTED BY PLURALITY VOTE, ABSTENTIONS AND BROKER NON-VOTES WILL NOT AFFECT THE
OUTCOME OF THE ELECTIONS SINCE NO PARTICULAR MINIMUM VOTE OF THE SHARES PRESENT
OR REPRESENTED AT THE MEETING AND ENTITLED TO BE VOTED IS REQUIRED.
Information with respect to each nominee and each director whose term of
office will continue after the 1995 Annual Meeting is as follows:
NOMINEES FOR ELECTION AS DIRECTORS:
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 1998)
ALBERT FRIED, JR.
Mr. Fried, age 65, became a director in December 1988 and
the Company's Chairman of the Board in October 1989. He
has been the Managing Partner of Albert Fried & Company,
New York, New York (investment banking) for more than ten
years and also is the Managing Partner of Buttonwood
Specialists, L.P., New York, New York (specialists on the
New York Stock Exchange). He is a member of the New York
Stock Exchange, Inc. and the New York Futures Exchange,
Inc. He is a director and vice chairman of Oneita
Industries, Inc. and is also a director of
various civic and philanthropic organizations.
2
<PAGE> 5
L. L. WHITE, JR.
Mr. White, age 67, became a director in November 1988. He
presently is retired and was employed by the Company in
various executive capacities from 1967 until he retired
as Senior Vice President--Commercial and Government
Relations in 1984. Thereafter, he was a private investor
until he served as the Company's Chairman of the Board
from December 1988 until October 1989 and as acting Chief
Executive Officer in December 1988.
MICHAEL T. YONKER
Mr. Yonker, age 52, became a director in December 1989.
He joined the Company as President and Chief Executive
Officer in December 1988, and continues to serve in that
capacity. For the period of October 1981 until December
1988, he was the Vice President and Drive Division
Manager of P. T. Components, Inc. of Philadelphia,
Pennsylvania (industrial gear drives) which was formed as
a private company in October 1981. He is a director of
Crown Andersen, Inc., Modine Manufacturing Company, and
Woodward Governor Company.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1996:
J. GRANT BEADLE
Mr. Beadle, age 62, became a director in April 1984. He
retired in May 1991 from Union Special Corporation
(manufacturer of industrial sewing machines) after thirty
years service and was Chairman and Chief Executive
Officer of that Company from December 1984 until his
retirement. For the period of October 1991 until July
1993, he was an Associate Director of the Institute for
the Learning Sciences at Northwestern University
(educational research). He is a director of Woodward
Governor Company, Batts, Inc., and Oliver Products
Company.
3
<PAGE> 6
ARTHUR McSORLEY, JR.
Mr. McSorley, age 66, became a director in March 1977. He
is a director and President of Casey Co. (construction
management) and has held those positions with that
Company and its predecessor company, John F. Casey
Company, for more than ten years.
ROBERT D. MUSGJERD
Mr. Musgjerd, age 71, became a director in August 1990.
He retired in January 1991 as Senior Vice
President--Marketing of the Construction Equipment
Division of Komatsu-Dresser Company (construction
equipment) and held that position with that company and
its predecessor company, Dresser Industries, Inc., for
more than seven years.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1997:
FREDERICK J. MANCHESKI
Mr. Mancheski, age 68, became a director in September
1990. He is Chairman of the Board and Chief Executive
Officer of Echlin Inc., Branford, Connecticut
(manufacturer of products that improve the efficiency and
safety of motor vehicles) and has held that position
since 1969. He is a director of RB&W Corporation.
4
<PAGE> 7
JOHN F. McKEON
Mr. McKeon, age 69, became a director in January 1987. He
retired in April 1989 as President of Link-Belt
Construction Equipment Company (construction equipment),
a company owned 51 percent by FMC Corporation and 49
percent by Sumitomo Heavy Industries, Ltd., and held that
position commencing in 1986. He also retired in April
1989 as a Group Vice President of FMC Corporation
(construction equipment) and held that position for more
than ten years. He is a director of LinkBelt Equipment
Co.; LBS-Spa, an Italian company; Dumore Corp., and
Atwood
Industries.
5
<PAGE> 8
BOARD OF DIRECTORS MATTERS
COMMITTEES
The Company's Board of Directors has three standing committees: Audit,
Nominating, and Stock Option and Compensation. All actions taken by a committee
are reported to and reviewed by the Board of Directors.
The Audit Committee, comprised of Messrs. Beadle, Mancheski, McKeon
(Chairman), and Musgjerd, is responsible for recommending to the Board of
Directors independent accountants to be engaged by the Company, reviewing the
results and scope of the annual examinations performed by the independent
accountants, reviewing with the appropriate officers and independent accountants
(separately and jointly) the scope, adequacy and results of the Company's system
of internal controls and approving in advance services to be performed by the
independent accountants.
The Nominating Committee, comprised of Messrs. Beadle, Fried, McSorley,
White (Chairman), and Yonker, is responsible for making recommendations to the
Board of Directors as to its size and composition as well as finding, screening
and recommending to the Board persons to be considered as director nominees. The
Nominating Committee will consider persons recommended by stockholders as
nominees for directors. Such recommendations, together with the basis therefor,
should be sent to the Nominating Committee in care of the corporate offices of
the Company.
The Stock Option and Compensation Committee, comprised of Messrs. Beadle,
Mancheski, McSorley (Chairman), Musgjerd, and White, is responsible for making
recommendations to the Board of Directors for all compensation programs,
policies and levels for the directors, officers and other employees of the
Company.
MEETINGS
During 1994, the Company's Board of Directors held five meetings and the
Board's Audit, Nominating, and Stock Option and Compensation Committees held
three, one and three meetings, respectively. Each director attended more than 75
percent of the meetings of the Board and committees on which he served, except
Mr. Mancheski.
COMPENSATION
Directors of the Company, other than Mr. Yonker, are paid quarterly
retainer fees and fees for attendance at Board and Board committee meetings. The
1994 quarterly retainer, Board meeting, and committee meeting attendance fees
were $2,500, $750, and $600, respectively. The Chairman of the Board was paid an
additional $250 for each Board meeting he chaired. For 1995, the quarterly
retainer, Board meeting, and committee meeting fees have been increased to
$3,500, $1,000, and $1,000, respectively. In addition, for both 1994 and 1995,
the Chairman of each of the Audit, Nominating, and Stock Option and Compensation
Committees is compensated at the annual rate of $2,600.
6
<PAGE> 9
In addition to the foregoing cash compensation, each year at the time of
the Annual Meeting each non-employee director is granted a stock option to
purchase 1,000 shares of Common Stock of the Company, at a price equal to the
fair market value of the stock on the date of the grant, under the Company's
1988 Employees' Stock Benefit Plan. The amendment to such Plan to be acted upon
at the 1995 Annual Meeting will increase the annual stock option grant to 2,000
shares and authorize a one-time grant to each non-employee director of an
additional stock option to purchase 7,000 shares of Common Stock of the Company
at a price equal to the fair market value of the stock on the date of the grant.
See "Amendment to the 1988 PORTEC, Inc. Employees' Stock Benefit Plan," infra,
for further information concerning such stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The present members of the Stock Option and Compensation Committee of the
Company's Board of Directors identified under the heading "Committees," supra,
were the members of that Committee throughout 1994. Of these members, Mr. L. L.
White, Jr. was employed by the Company in various executive capacities from 1967
until he retired as Senior Vice President--Commercial and Government Relations
in 1984. Thereafter, he also served as the Company's Chairman of the Board from
December 1988 until October 1989 and as acting Chief Executive Officer in
December 1988.
STOCK OWNERSHIP
The following table contains information relative to persons known to the
management of the Company to be beneficial owners of more than five percent of
the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE
OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNER(A) CLASS
- ------------------------------------------------------------------------------------ -------- ------
<S> <C> <C>
Albert Fried, Jr. and Albert Fried & Company........................................ 892,558(b) 19.9%
40 Exchange Place
New York, New York 10005
The TCW Group, Inc. ................................................................ 338,179(c) 7.9%
865 South Figueroa Street
Los Angeles, California 90017
FMR Corp. .......................................................................... 300,030(d) 7.0%
82 Devonshire Street
Boston, Massachusetts 02109-3614
Gabelli Funds, Inc. ................................................................ 265,910(e) 6.2%
One Corporate Center
Rye, New York 10580-1434
Dimensional Fund Advisors, Inc. .................................................... 248,090(f) 5.8%
11th Floor
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
- ---------------
(a) The figures shown are as of March 7, 1995, except as otherwise indicated
below.
(b) Included in these shares are 228,580 shares related to stock options granted
to Mr. Fried which are presently exercisable and 6,600 shares held for his
account by the Company's Savings and Investment Plan. Albert Fried &
Company, of which Mr. Fried is managing partner, has the sole voting and
dispositive powers with regard to 657,378 of these shares.
7
<PAGE> 10
(c) The TCW Group, Inc. has sole voting and dispositive powers with regard to
these shares.
(d) Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and an investment adviser registered under Section
203 of the Investment Advisers Act of 1940, is the beneficial owner of
300,030 shares as a result of acting as investment adviser to several
investment companies registered under Section 8 of the Investment Company
Act of 1940. Edward C. Johnson 3d, FMR Corp., through its control of
Fidelity, and the funds each has dispositive power of the 300,030 shares
owned by the funds, however, the funds' Boards of Trustees have sole voting
power, which is carried out by Fidelity under written guidelines
established by the funds' Boards of Trustees.
(e) Gabelli Funds, Inc. has sole voting and dispositive powers with regard to
these shares.
(f) Dimensional Fund Advisors, Inc., ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 248,090 shares of
PORTEC, Inc. stock as of December 31, 1994, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
The following table contains information, as of March 7, 1995, relative to
each director and nominee to continue as a director, the two non-director
executive officers of the Company named in the Summary Compensation Table shown
on Page 10, and all directors and executive officers as a group as to their
beneficial ownership of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON
NAME OF INDIVIDUAL STOCK AND NATURE
OR NUMBER OF OF BENEFICIAL PERCENT OF
PERSONS IN GROUP OWNERSHIP(A) COMMON STOCK
- ----------------------------------------------------------------------------- ---------------- -------------
<S> <C> <C>
Directors and Nominees:
J. Grant Beadle............................................................ 4,560(c) (b)
Frederick J. Mancheski..................................................... 13,805(c) (b)
John F. McKeon............................................................. 7,421(c) (b)
Arthur McSorley, Jr........................................................ 4,702(c) (b)
Robert D. Musgjerd......................................................... 3,641(c) (b)
L. L. White, Jr............................................................ 48,022(c,d) 1.1%
Directors who are Executive Officers:
Albert Fried, Jr........................................................... 892,558(e) 19.9%
Michael T. Yonker.......................................................... 143,047(f) 3.3%
Other Executive Officers:
John S. Cooper............................................................. 18,967(g) (b)
Nancy A. Dedert-Kindl...................................................... 35,524(h) .8%
All Directors and Executive Officers as a Group(10).......................... 1,172,247(i) 25.1%
</TABLE>
- ---------------
(a) All beneficial ownership is direct and arises from sole voting and
dispositive powers unless otherwise noted.
(b) Less than .5 percent.
8
<PAGE> 11
(c) Included in the shares listed are 1,100 shares related to stock options
which are presently exercisable.
(d) Mr. White has sole voting and dispositive powers with respect to 46,069 of
these shares and his wife has sole voting and dispositive powers with
respect to 853 of these shares.
(e) Included in these shares for Mr. Fried are 228,580 shares related to stock
options which are presently exercisable and 6,600 shares held for his
account by the Company's Savings and Investment Plan. Albert Fried &
Company, of which Mr. Fried is managing partner, has the sole voting and
dispositive powers with regard to 657,378 of these shares.
(f) Included in these shares for Mr. Yonker are 138,050 shares subject to stock
options which are presently exercisable and 4,997 shares which are held for
his account by the Company's Savings and Investment Plan.
(g) Included in the shares for Mr. Cooper are 8,855 shares subject to stock
options which are exercisable within 60 days of March 24, 1995, and 10,112
shares which are held for his account by the Company's Savings and
Investment Plan.
(h) Included in these shares for Ms. Dedert-Kindl are 25,080 shares subject to
stock options which are exercisable within 60 days of March 24, 1995, and
9,168 shares which are held for her account by the Company's Savings and
Investment Plan.
(i) Included in these shares are 407,165 shares covered by stock options which
are exercisable within 60 days of March 24, 1995. Also, 30,877 shares are
held for the accounts of officers by the Company's Savings and Investment
Plan.
9
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth the total compensation
paid or accrued by the Company and its subsidiaries for the three completed
years ended December 31, 1994, for each of the executive officers of the Company
whose salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------ SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR $(A) $ $(B) (SHARES) $(D)
- ----------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Yonker...... 1994 $240,612 $225,223 -- 11,000(c) $5,205
President and Chief 1993 233,604 210,960 -- -- 6,836
Executive Officer 1992 226,800 95,823 -- -- 9,295
Albert Fried, Jr....... 1994 $130,577 $ 53,624 -- 11,000(c) $4,602
Chairman of the Board 1993 128,040 50,228 -- -- 6,233
1992 123,600 -- -- -- 4,887
John S. Cooper......... 1994 $122,220 $ 13,566 -- 2,200(c) $5,842
Senior Vice President 1993 121,008 12,463 -- 3,630(c) 7,006
and General Manager 1992 108,907 11,838 -- 3,025(c) 6,569
of the Railway
Maintenance Products
Division
Nancy A.
Dedert-Kindl......... 1994 $122,258 $ 68,663 -- 3,300(c) $4,535
Vice President, 1993 118,692 64,311 -- 3,630(c) 6,133
Secretary, Treasurer 1992 111,035 28,147 -- -- 3,792
and Controller
</TABLE>
- ---------------
(a) Includes amounts deferred under the Company's Savings and Investment Plan
and Directors Fees for Mr. Fried as follows: 1994 -- $16,000,
1993 -- $16,800, 1992 -- $15,600.
(b) The dollar value of perquisites and other personal benefits for each of the
above named executive officers was less than the established reporting
threshold.
(c) Adjusted for 10% stock dividend paid December 15, 1994.
(d) The total amounts shown in this column for the last fiscal year consist of
the following: (i) Mr. Yonker: $3,765 -- Company contribution to the
Savings and Investment Plan; $1,440 -- Benefit attributed to Company owned
life insurance policy; (ii) Mr. Fried: $3,765 -- Company contribution to
the Savings and Investment Plan; $837 -- Benefit attributed to Company
owned life insurance policy; (iii) Mr. Cooper: $3,485 -- Company
contribution to the Saving and Investment Plan; $2,357 -- Benefit
attributed to Company owned life insurance policy; (iv) Ms. Dedert-Kindl:
$3,765 -- Company contribution to Savings and Investment Plan;
$770 -- Benefit attributed to Company owned life insurance policy.
10
<PAGE> 13
OPTIONS AND SARS
The following table sets forth the details of stock options granted by the
Company to the individuals named in the Summary Compensation Table during 1994.
OPTION/SAR GRANTS DURING 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/ PRICE APPRECIATION(D)
UNDERLYING SARS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES OR BASE EXPIRATION ---------------------
NAME GRANTED(#) IN 1994 PRICE(C, E) DATE 5% 10%
- --------------------------- ---------- ------------ ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
11,000(a,
Michael T. Yonker.......... e) 7.69% $ 11.65 6/27/04 $80,577 $204,198
11,000(a,
Albert Fried, Jr. ......... e) 7.69% $ 11.65 6/27/04 $80,577 $204,198
2,200(b,
John S. Cooper............. e) 1.54% $ 14.77 10/25/04 $20,439 $51,797
3,300(b,
Nancy A. Dedert-Kindl...... e) 2.31% $ 14.77 10/25/04 $30,659 $77,695
</TABLE>
- ---------------
(a) These options are exercisable commencing December 29, 1994 through the
expiration date and were granted without stock appreciation rights.
(b) These options are exercisable commencing April 27, 1995 through the
expiration date and were granted without stock appreciation rights.
(c) The option price of the shares of Common Stock covered by this option was
the fair market value of the shares determined under the plan as the
average of the high and low prices of a share on the Composite Tape for the
day immediately preceding the date of grant.
(d) Amounts reflect certain assumed rates of appreciation set forth in the
Securities and Exchange Commission's executive compensation disclosure
rules. Actual gains, if any, on stock option exercises depend on future
performance of the Company's Common Stock. No assurance can be made that
the amounts reflected in these columns will be achieved.
(e) Adjusted for 10% stock dividend paid on December 15, 1994.
The following table shows for the individuals named in the Summary
Compensation Table the value of the options exercised during 1994 and the value
of unexercised options and SARs at December 31, 1994.
11
<PAGE> 14
AGGREGATE OPTIONS/SARS EXERCISED DURING 1994,
AND VALUE OF OPTIONS/SARS AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT DECEMBER IN-THE-MONEY OPTIONS/SARS
ACQUIRED VALUE 31, 1994, AT DECEMBER 31, 1994,
NAME ON EXERCISE REALIZED(A) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(B)
- ------------------------ ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael T. Yonker....... -- -- 138,050/0 $1,244,227/0
Albert Fried, Jr. ...... 20,000 $ 227,850 228,580/0 $2,122,106/0
John S. Cooper.......... -- -- 6,655/2,200 $40,476/0
Nancy A. Dedert-Kindl... -- -- 21,780/3,300 $191,547/0
</TABLE>
- ---------------
(a) Based on the closing price of the Common Stock on the Composite Tape on the
date the options were exercised, less the applicable option price.
(b) Based on the closing price of the Common Stock on December 31, 1994, less
the applicable option price.
PENSION PLANS
Substantially all of the Company's employees, including executive officers,
are participants in the Company's Employees' Retirement Program. Also, officers
and certain other managerial employees of the Company employed by the Company
prior to 1982 may be participants in the Company's Supplemental Non-Qualified
Retirement Income Plan.
The following table shows the estimated pension benefits from the above
program and plan based on a straight life annuity that an executive officer will
receive if he or she retires at age 65, the normal retirement age:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE
FIVE-YEAR AVERAGE
EARNINGS DURING YEARS OF CREDITED SERVICE
FINAL -------------------------------------------------------------------------------
10 YEARS OF SERVICE 5 10 15 20 25 30 35
-------------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 8,374 $ 16,748 $ 25,122 $ 33,496 $ 41,870 $ 50,244 $ 58,618
150,000 12,874 25,748 38,622 51,496 64,370 77,244 90,118
200,000 17,374 34,748 52,122 69,496 86,870 104,244 121,618
250,000 21,874 43,748 65,622 87,496 109,370 131,244 153,118
300,000 26,374 52,748 79,122 105,496 131,870 158,244 184,618
350,000 30,874 61,748 92,622 123,496 154,370 185,244 216,118
400,000 35,374 70,748 106,122 141,496 176,870 212,244 247,618
450,000 39,874 79,748 119,622 159,496 199,370 239,244 279,118
500,000 44,374 88,748 133,122 177,496 221,870 266,244 310,618
550,000 48,874 97,748 146,622 195,496 244,370 293,244 342,118
600,000 53,374 106,748 160,122 213,496 266,870 320,244 373,618
</TABLE>
12
<PAGE> 15
For purposes of this program and plan, "earnings" means the amounts paid to
the employee by the Company as reported to the Internal Revenue Service on Form
W-2 plus the amount of compensation deferred by the employee pursuant to the
Company's benefit plans. Earnings for the individuals who are participants under
this program and plan and named in the above Summary Compensation Table are
included in the amounts set forth in said table.
At December 31, 1994, the individuals named in the Summary Compensation
Table had the indicated years of credited service under the aforementioned
program: Mr. Yonker--6 years, Mr. Fried--5.2 years, Mr. Cooper--15.5 years, and
Ms. Dedert-Kindl--19.8 years.
Pension benefits as above described are for the employee's life and are not
subject to any reduction for Social Security benefits or other offset amounts.
The Internal Revenue Code places certain limitations on pensions which may be
paid under the Employees' Retirement Program as qualified under the Internal
Revenue Code.
EMPLOYMENT, TERMINATION, AND CHANGE-IN-CONTROL AGREEMENTS
Mr. Yonker, President and Chief Executive Officer of the Company, entered
into an agreement with the Company in December 1988, which has been amended
through December 1990, that sets forth the terms of his employment with the
Company. His current annual compensation rate is $247,848 and he participates in
the employee benefit plans as generally provided to executive officers of the
Company. He has agreed not to voluntarily terminate his employment with the
Company without giving 60 days prior written notice. The agreement also provides
termination benefits if his employment terminates (for any reason other than
death, disability, or certain specified causes) after an "event" whereby the
Company is acquired or 22 percent of its outstanding Common Stock is acquired by
a party who does not obtain the approval of the Company's Board of Directors
prior to the transaction and prior to acquiring as much as 17 percent of the
Company's Common Stock. The agreement provides that the "22 percent" figure is
changed to "27 percent" as applicable to the acquisition of voting securities of
the Company by Albert Fried & Company, The Fried Foundation, and Albert Fried,
Jr. (collectively called "Mr. Fried"). An event also includes the situation when
during any period of 24 consecutive months the individuals who at the beginning
of such period constitute the members of the Board of Directors of the Company,
plus all other members of such Board whose election or appointment to such Board
or nomination for election to such Board was approved by the vote of at least a
majority of the directors then still in office who either were directors of the
Company at the beginning of the period or whose election or appointment or
nomination for such election was previously so approved, cease for any reason to
constitute at least 75 percent of the members of such Board. If he elects to
exercise his right of termination of his employment because of an event, this
must be done within ninety (90) days following the event. If the Company
terminates the agreement for reasons other than good cause or Mr. Yonker
terminates the agreement because of the Company's breach or an event, for a
period of two years from the date of such termination or until his death,
whichever is the shorter period, the Company shall (i) pay to him, in monthly
installments, a cash amount equal to his monthly salary from the Company in
effect immediately prior to such termination, and (ii) provide him with health,
disability and life insurance coverage in amounts substantially equal to those
he was receiving at the
13
<PAGE> 16
time of termination. In the event his employment is terminated as a result of an
event, Mr. Yonker may elect to receive a lump sum cash settlement of the then
present value of the cash payments due.
Ms. Dedert-Kindl, Vice President, Treasurer and Secretary of the Company,
entered into an agreement with the Company in November 1989, which has been
amended through December 1990, and sets forth the terms of her employment with
the Company. Her current annual compensation rate is $125,460 and she
participates in the employee benefit plans as generally provided to officers of
the Company. Ms. Dedert-Kindl's agreement includes substantially the same
"change in control" provisions as described in the first paragraph of this
Section, except that the figure "22 percent" referred to in said paragraph is
changed to "20 percent", and the "20 percent" figure is changed to "27 percent"
as applicable to the acquisition of voting securities of the Company by Mr.
Fried. If she elects to exercise her right of termination of her employment
because of an event, this must be done within ninety (90) days following the
event. In the event of a termination of the agreement by the Company for reasons
other than good cause or Ms. Dedert-Kindl terminates the agreement because of
the Company's breach or an event, for a period of one year from the date of such
termination or until her death, whichever is the shorter period, the Company
shall (i) pay to her, in monthly installments, a cash amount equal to her
monthly salary from the Company in effect immediately prior to such termination,
and (ii) provide her with health, disability and life insurance coverage in
amounts substantially equal to those she was receiving at the time of
termination. In the event her employment is terminated as a result of an event,
Ms. Dedert-Kindl may elect to receive a lump sum cash settlement of the then
present value of the cash payments due.
Mr. Cooper, Senior Vice President of the Company, entered into an agreement
with the Company in December 1989, which provides for his employment with the
Company until a date determined by the Company with six months notice. While an
employee, he is to be paid at a monthly rate of $10,387 and participates in the
Company's employee benefit plans as generally provided to officers of the
Company. Following the termination date, he will be paid severance benefits
equal to his aforementioned compensation rate until the earlier of (i) six
months after the termination date, and (ii) the date he accepts new employment.
If he commences non-competitive new employment while receiving severance
benefits, in lieu of receiving additional severance benefits, he will receive a
lump sum payment equal to 50% of any remaining severance benefits he would have
received during said six month period. While he receives severance benefits, he
also will receive certain insurance benefits equal to what he received while an
employee. If he resigns prior to the termination date with the consent of the
Company, he will be paid a lump sum amount of $30,250.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Stock Option and Compensation Committee of the Board of Directors
("Committee") is composed of five non-employee directors. It is the
responsibility of the Committee to make recommendations to the Board of
Directors for all compensation policies for the Company and for compensation
levels for the executive officers.
14
<PAGE> 17
Compensation Policies Regarding Executive Officers
The objectives of the Company's executive compensation program are to
attract and retain qualified personnel and to provide a total executive
compensation plan that rewards the achievement of both short- and long-term
performance goals. The Company's executive compensation program is comprised of
a base salary, an annual cash incentive program, a long-term incentive
compensation plan in the form of stock options, and severance agreements for
certain key executives. The Committee is cognizant of provisions under Section
162(m) of the Internal Revenue Code which limit the deductibility of certain
compensation expense. The Committee believes that it will not limit the
deductibility of any compensation paid by the Company since the Company
currently does not anticipate paying compensation in excess of $1 million per
annum to any employee.
Base Salary
Base salaries, bonus, and stock option awards for the Company's executive
officers were determined by comparing salaries of its executives to those of
executives in companies of similar size and industry, by evaluating the
responsibilities of the various positions and by reviewing individual
performance. Survey data, published by Wyatt Data Services, Inc. for 39 durable
goods manufacturing companies with sales in the $50-$125 million range, were
used for comparative purposes. The Company was somewhat above the third quartile
in sales of this group and salaries were in the third quartile for both Mr.
Yonker, the President and Chief Executive Officer of the Company, and the
executive officers as a group. Based primarily on that comparison, during 1994,
base salary increases of approximately 3.0% were made to the executive officers
of the Company, and Mr. Yonker received a 3.0% increase in base pay.
The survey data used by the Committee does not correspond to the peer group
index in the Comparison of Five Year Total Return graph included in this proxy
statement since many of the companies in the peer group are substantially larger
than the Company and do not necessarily compete with the Company for executive
talent.
Management Incentive Program
Under an Incentive Compensation Plan for Key Executives, a target bonus is
paid when pre-tax profit objectives and working capital-to-sales ratio
objectives are met by the Company. These objectives are set by the Committee
early each year and are directly related to the budgeted annual financial
targets for the Company established by the Board of Directors. If both
objectives are not met, the target bonus will be reduced. No bonus is paid below
a minimum threshold for both objectives. If performance exceeds the objectives,
additional bonus is paid subject to a cap. The Incentive Compensation Plan fixes
a cap (permitted maximum) for a bonus under the plan of 100 percent of base
salary for the Chief Executive Officer and limits ranging from 50 to 60 percent
of base salary for other officers, dependent upon the particular office. The
Summary Compensation Table, supra, in the "Bonus" column, shows the annual
bonuses of the executive officers of the Company for the years 1992-1994 awarded
under the plan. In 1992, Mr. Fried, Jr. was not covered by the Incentive
Compensation Plan for Key Executives and during the 1992-1994 period,
15
<PAGE> 18
Mr. Cooper was covered by a profit-sharing plan based on divisional performance.
In 1994, bonus amounts under the Incentive Compensation Plan for Key Executives,
exclusive of Mr. Yonker, ranged from 47% to 56% of base salary. Mr. Yonker
received a bonus of 94% of base salary.
Stock Options
The Company uses stock options as its principal long-term incentive device
to promote strategic management and enhance stockholder value. Awards of stock
options or stock appreciation rights are granted under the Company's stock
option plan at the discretion of the Committee, with Board of Directors
approval, based on the Company's performance toward stated long-term goals,
individual performance, and the employee's position in the Company. The number
of options to be granted is determined by a comparison of the relationship of
the value of option grants to base salary with the value of option grants
defined as the number of shares under option times the stock option price. The
stock option price is equal to the fair market value on the day of grant.
Outstanding options held are considered in the award of new options. During the
years 1992-1994, stock options were granted to the executive officers in the
Summary Compensation Table herein as follows. Mr. Albert Fried, Jr., Chairman of
the Board, received an option for 10,000 shares of Common Stock in June, 1994,
Mr. John S. Cooper, Senior Vice President, received an option for 2,000 shares
of Common Stock in October, 1994, and Ms. Nancy A. Dedert-Kindl, Vice President,
received an option for 3,000 shares of Common Stock in October, 1994. Mr. Yonker
received an option for 10,000 shares of Common Stock in June, 1994.
Benefit Plans
The Company provides its executive officers with insurance protection plans
including medical, dental, life, accidental death and long-term disability,
retirement programs and vacation and holiday plans. These plans are generally
available to all Company employees.
Arthur McSorley, Jr.,
Chairman of Stock Option and
Compensation Committee
J. Grant Beadle, Member
Frederick J. Mancheski, Member
Robert D. Musgjerd, Member
L. L. White, Jr., Member
16
<PAGE> 19
PERFORMANCE GRAPH
The Securities and Exchange Commission requires a five-year comparison of
the Company's Common Stock with the cumulative total return of (i) a broad
equity market index, and (ii) a published industry or line-of-business index, or
a peer companies index. The Company's Common Stock is traded on the New York
Stock Exchange and Chicago Stock Exchange and one index selected was the S&P 500
Index. The Company, because of its diversified business activities, does not
have a readily definable peer group; so it has selected the Dow Jones
Industrial-Diversified Index as its second comparative index.
COMPARISON OF FIVE YEAR TOTAL RETURN
OF PORTEC, INC., S&P 500 INDEX,
AND DOW JONES INDUSTRIAL-DIVERSIFIED INDEX*
<TABLE>
<CAPTION>
(line graph depicting table below)
DOW JONES
INDUSTRIAL-
MEASUREMENT PERIOD S&P 500 IN- DIVERSIFIED
(FISCAL YEAR COVERED) PORTEC, INC. DEX INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 50 97 93
1991 69 126 115
1992 141 136 134
1993 236 150 164
1994 323 152 150
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 at December 31, 1989, and that all dividends were
reinvested.
There can be no assurance that the Company's Common Stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make nor endorse any predictions as to future Common
Stock performance.
17
<PAGE> 20
PROPOSAL 2
AMENDMENT TO THE 1988 PORTEC, INC.
EMPLOYEES' STOCK BENEFIT PLAN
Introduction. The Board of Directors believes that the Company's success
and long-term progress are dependent upon attracting, retaining, motivating and
rewarding key salaried employees and in nonemployee directors having a close
identity with the Company and its financial success. In regard to key salaried
employees, the Board believes that the 1988 Employees' Stock Benefit Plan (the
"1988 Plan"), first approved by stockholders in 1988, has been beneficial to the
Company in regard to such objectives. Under the 1988 Plan, as heretofore
amended, awards may be granted to key salaried employees of the Company and its
subsidiaries in one or more of the following forms: (i) incentive stock options,
(ii) non-qualified stock options, (iii) stock appreciation rights, (iv)
restricted stock awards, and (v) performance units; and each non-employee
director is to be granted a Non-qualified Stock Option to purchase 1,000 shares
of Common Stock of the Company on the date of each Annual Meeting of the
Stockholders held on or after April 26, 1994.
Amendment. The Board of Directors has adopted, subject to approval of the
stockholders at the 1995 Annual Meeting, an amendment to the 1988 Plan which
will make three changes in the Plan. The Board believes these changes will
enhance the incentives intended to be provided by the stock options and stock
appreciation rights granted under the 1988 Plan.
Specifically, the Board of Directors believes that increasing the period
during which stock options and stock appreciation rights may be exercised
following termination of employment (or termination of service in the case of
optionees who are non-employee directors) due to death, disability, or
retirement will improve for the holder of, and thus enhance the incentive
intended by, such stock options and stock appreciation rights. The longer period
for exercise should better assure that persons granted stock options and stock
appreciation rights will have the opportunity to benefit from any long-term
growth in value of the Company's Common Stock, and allow them to avoid
exercising their options or rights during short-term adverse market conditions
that might happen to exist at the time of termination of employment or service
as a director due to death, disability, or retirement. Further, the Board of
Directors believes that a one-time grant to each non-employee director of a
Non-qualified Stock Option to purchase 7,000 shares of Common Stock, and an
increase in the annual grant of such options to 2,000 shares from the 1,000
shares to each such director at the time of each Annual Meeting as already
provided in the Plan, will increase the incentive for such directors to continue
to promote the best interests of the Company's stockholders and to enhance
long-term performance of the Company.
Accordingly, the Board has adopted an amendment of the 1988 Plan, and
recommends approval thereof by the stockholders, to make the following three
changes:
First, the amendment will allow stock options and stock appreciation rights
granted under the Plan to be exercised within five years after employment with
the Company ceases (or after service as a director ceases in the case of
non-employee directors) due to death, disability, or retirement or until the
option or right expires by its own terms, whichever first occurs, to the extent
the option or
18
<PAGE> 21
right was exercisable on the date employment (or service as a non-employee
director) ceased for any of those reasons. This will change the existing
provisions which allow stock options and stock appreciation rights to be
exercised within three months after employment (or service) ceases for any
reason other than death, and for one year in the case of death, or until the
option or right expires by its own terms, whichever first occurs.
Second, the amendment provides for a one-time grant of a Non-qualified
Stock Option to purchase 7,000 shares of Common Stock of the Company to each
existing non-employee director, and to each future non-employee director upon
election to office, in each case having an exercise price equal to the fair
market value of the shares on the date of grant.
At the February 20, 1995 meeting of the Board of Directors of the Company
at which the amendment to the 1988 Plan was adopted, Non-qualified Stock Options
to purchase 7,000 additional shares of the Company's Common Stock were granted,
subject to approval of the amendment by the stockholders at the 1995 Annual
Meeting, to each of the six existing non-employee directors. The expiration date
for each of those options is 10 years from the date of grant and the exercise
price under each of the stock options is $12.50 per share, which was the fair
market value of the shares on the day following the date of the grant. The
average of the high and low prices for the Common Stock of the Company on the
Composite Tape on March 22, 1995, was $12.3125 per share.
Third, the amendment provides for the granting at the time of each Annual
Meeting a Non-qualified Stock Option to purchase 2,000 shares of Common Stock of
the Company to each non-employee director then in office. If the amendment is
approved, the increase in the annual grants of Non-qualified Stock Options will
commence at the time of the 1995 Annual Meeting. This provision increases the
annual grant to each non-employee director by 1,000 shares from the 1,000 shares
already provided in the 1988 Plan, as amended in 1994.
The non-employee directors of the Company during 1994 and subsequently to
the present are J. Grant Beadle, Frederick J. Mancheski, John F. McKeon, Arthur
McSorley, Jr., Robert D. Musgjerd and L.L. White, Jr. In 1994, each of them was
granted a Non-qualified Stock Option to purchase 1,000 shares of Common Stock of
the Company as the first of the annual grants of stock options to be made to
non-employee directors under the 1988 Plan, as amended in 1994. Information
concerning each of such stock options is as follows:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION(B)
FOR OPTION TERM
NUMBER OF DATE OF EXERCISE PRICE EXPIRATION ---------------------
NAME SHARES COVERED GRANT PER SHARE DATE 5% 10%
- ----------------- -------------- -------------- -------------- -------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Each Person...... 1,100(a) April 26, 1994 $11.37(a) April 25, 2004 $ 7,865 $19,932
Total for
Group.......... 6,600 $47,191 $119,591
============== ======== =========
</TABLE>
- ---------------
(a) Adjusted for 10% stock dividend paid on December 15, 1994.
19
<PAGE> 22
(b) Amounts reflect certain assumed rates of appreciation set forth in the
Securities and Exchange Commission's executive compensation disclosure
rules. Actual gains, if any, on stock option exercises depend on future
performance of the Company's Common Stock. No assurance can be made that
the amounts reflected in these columns will be achieved.
If the amendment to be acted upon at the 1995 Annual Meeting of
Stockholders had been in effect during 1994, the amounts in the "Number of
Shares Covered" and "Potential Realizable Value at Assumed Rates of Stock
Appreciation for Option Term" in the above Table would have been doubled.
In addition to the annual stock option grants, under the amendment to be
acted upon at the 1995 Annual Meeting of Stockholders, and subject to obtaining
approval of the amendment at such meeting, each of the non-employee directors
has been granted a one-time Non-qualified Stock Option to purchase additional
shares of Common Stock of the Company. Information concerning each such option
is as follows:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION(B)
FOR OPTION TERM
NUMBER OF DATE OF EXERCISE PRICE EXPIRATION ---------------------
NAME SHARES COVERED GRANT PER SHARE DATE 5% 10%
- ----------------- -------------- ------------- -------------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Each Person...... 7,000 Feb. 20, 1995 $12.50 Feb. 19, 2005 $ 55,028 $139,452
Total for
Group.......... 42,000 $ 330,170 $836,715
============== ======== =========
</TABLE>
- ---------------
(a) Amounts reflect certain assumed rates of appreciation set forth in the
Securities and Exchange Commission's executive compensation disclosure
rules. Actual gains, if any, on stock option exercises depend on future
performance of the Company's Common Stock. No assurance can be made that
the amounts reflected in these columns will be achieved.
The total of the shares of Common Stock of the Company for which stock
options have been granted and are currently outstanding under the 1988 Plan,
plus the shares of such stock obtained by exercise of stock options previously
granted under such plan, are as follows for the persons and groups indicated:
Michael T. Yonker, President and Chief Executive Officer, 198,050 shares; Albert
Fried, Jr., Chairman of the Board, 248,580 shares; John S. Cooper, Senior Vice
President, 8,855 shares; Nancy A. Dedert-Kindl, Vice President, Secretary,
Treasurer and Controller, 32,080 shares; all current executive officers as a
group, 487,565 shares; all current directors (including those who are nominees
for re-election) as a group, 495,230 shares; and all employees, excluding
executive officers, as a group, 194,038 shares.
Effective Date. The amendment to the 1988 Plan became effective February
20, 1995, the date it was adopted by the Board, subject to its approval at the
1995 Annual Meeting of Stockholders. If such stockholder approval is not
obtained, the amendment will be null and void, and the one-time grant to each
non-employee director on February 20, 1995, of a Non-qualified Stock Option to
purchase 7,000 shares of the Company's Common Stock will be cancelled.
20
<PAGE> 23
Additional features of the 1988 Plan are set forth below.
Administration. The 1988 Plan is administered by a committee of not less
than three members of the Board (the "Committee"), none of whom have received an
award during his tenure on the Committee, or during the 12 month period prior to
commencing service on the Committee, except as permitted by Rule
16b-3(c)(2)(i)(A)-(D), or any successor provisions, under the Securities and
Exchange Act of 1934. Subject to provisions of the 1988 Plan, the Committee
recommends to the Board the Company's key employees to whom, and the time or
times at which, awards shall be granted and the form and amount of and any
limitations, restrictions and conditions applicable to any such awards.
Stock Options. The Board may grant Incentive Stock Options and
Non-qualified Stock Options under the 1988 Plan for shares of Common Stock. The
option price of shares of Common Stock subject to Incentive Stock Options
granted under the 1988 Plan shall not be less than 100% (110% in certain
situations) of the fair market value of shares of Common Stock as determined on
the date on which the option is granted or the par value of such stock,
whichever is higher. The option price of shares of Common Stock subject to
Non-qualified Stock Options granted under the 1988 Plan shall be such price as
shall be set forth in an individual agreement with a key employee; provided,
however, such price shall not be set less than the greater of 50% of the fair
market value or the par value of such stock. The option price of shares of
Common Stock subject to Non-qualified Stock Options granted to non-employee
directors shall be 100% of the fair market value of a share of Common Stock on
the date of grant. No such option shall be exercisable more than 10 years from
the date it is granted. During the lifetime of an optionee, the stock option may
be exercised only by him. At the time a stock option granted under the 1988
Plan, or any part thereof, is exercised, payment for the Common Stock issuable
thereunder shall be made in full in cash, by check, in shares of Common Stock of
the Company at current market value, or by a combination of the above. In
addition, the Committee may authorize, in accordance with rules and regulations
adopted by it, payment of the option price by delivery to the Company of a
properly executed exercise notice together with irrevocable instructions to a
broker to (i) sell an amount of Common Stock sufficient to pay the option price
and to deliver the proceeds from such sale promptly to the Company; or (ii) lend
sufficient funds to pay the option price and to deliver such funds promptly to
the Company. If the funds from the loan are not sufficient to pay the option
price, then the Company will not deliver any shares until it receives payment to
cover the deficiency. Incentive Stock Options are distinguished from
Non-qualified Stock Options by special limitations related to their Federal tax
status (see "Federal Tax Treatment" below). Furthermore, the aggregate fair
market value of shares of Common Stock (valued at the date of grant) with
respect to which Incentive Stock Options are exercisable for the first time by a
key employee during any calendar year may not exceed $100,000, determined in
accordance with Section 422(d) of the Internal Revenue Code.
Stock Appreciation Rights. In connection with any stock option granted
under the 1988 Plan, the Board may include a Stock Appreciation Right either at
the time of grant or thereafter while the option is outstanding, subject,
however, to the condition that a Stock Appreciation Right may be granted in
conjunction with an Incentive Stock Option only where such grant will not
disqualify the Incentive Stock Option under Section 422 of the Internal Revenue
Code. A Stock Appreciation
21
<PAGE> 24
Right permits the holder to surrender to the Company his stock option, to the
extent it is unexercised, and to receive in exchange therefor shares of Common
Stock of the Company having an aggregate fair market value equal to the excess
of the fair market value of one share over the option price per share specified
in the option multiplied by the number of shares subject to the option
surrendered. Subject to certain limitations, the Company can elect to settle
part or all of its obligations arising out of the exercise of a Stock
Appreciation Right by the payment of cash, shares of Common Stock of the
Company, or partly in cash and partly in shares of Common Stock of the Company.
A Stock Appreciation Right is exercisable only to the extent the underlying
stock option is exercisable and only for such period as the Committee may
determine. In the event that the Company shall cancel all unexercised stock
options as of the effective date of the sale of all or substantially all of its
assets, a merger or a consolidation, or in the case of the dissolution of the
Company, each Stock Appreciation Right held by a grantee shall be automatically
exercised on such date within 30 days prior to the effective date of such
transaction or dissolution as the Committee shall determine and, in the absence
of such determination, on the last business day prior to such effective date
unless both the Committee and the holder of such Stock Appreciation Right agree
in writing that such right shall not be exercised at that time.
Restricted Stock Awards. The Board may also grant Restricted Stock Awards
under the 1988 Plan for shares of Common Stock of the Company upon such terms as
the Committee may determine. All such awards shall be evidenced by a written
Restricted Stock Agreement. Subject to the following, the grantee of a
Restricted Stock Award shall be issued or transferred the number of shares of
Common Stock granted thereunder, and a certificate or certificates for such
shares shall be issued in the grantee's name, and the grantee shall thereupon
have all the rights of a stockholder with respect to such shares. Each share
issued pursuant to a Restricted Stock Award shall be subject, in addition to any
other restrictions set forth in the related Restricted Stock Agreement, to the
following restrictions: (i) none shall be sold, transferred, pledged, or
otherwise disposed of except upon the death of the grantee, and (ii) all shares
shall be forfeited to the Company without notice and without consideration upon
the occurrence of any of the following: (A) termination of the grantee's
employment with the Company for any reason other than retirement, disability, or
death; or (B) without the consent of the Company, performance of services by the
grantee for, or the acquisition of an ownership interest in excess of 5% in, any
competitor of the Company at a time when the grantee is an employee of the
Company, or any subsidiary; or (C) an attempt by the grantee to transfer such
shares in violation of (i) above. To the extent any shares issued under a
Restricted Stock Award have not theretofore been forfeited pursuant to (i) or
(ii) above, the restrictions on such shares shall lapse and the shares shall be
appropriately distributed (unless otherwise stated in the Restricted Stock
Agreement) on the first to happen of: (a) death of the grantee, (b) termination
of the grantee's employment by reason of his disability, or (c) as otherwise
determined by the Committee. In aid of such restrictions, certificates for
shares awarded thereunder shall be held by the Company for the account of each
grantee until the restrictions lapse.
Performance Units. Under the 1988 Plan, the Board may also grant one or
more Performance Units to any key employee. Performance Units shall be evidenced
by written Performance Unit Agreements. Upon making any such award, the
Committee shall determine the number and Stated Value of the Performance Units
awarded to the grantee. The Stated Value of each Unit shall be the
22
<PAGE> 25
fair market value of a share of Common Stock of the Company on the date the
Performance Units are granted. The Committee also shall establish the primary
and minimum Performance Targets for each Unit for an Award Period of not
exceeding five years. Each Performance Target shall be expressed as an increase
in the Company's earnings per share, net income, or return on equity, or in
terms of any other standard the Committee shall determine. Attainment by the
Company of a primary Performance Target will result in the Stated Value of all
Units included in the Performance Unit Agreement being earned. Failure of the
Company to attain a minimum Performance Target shall mean the Stated Value of
none of the Units included in the Performance Unit Agreement has been earned.
Attainment between the primary and minimum Performance Targets shall result in
the Stated Value of a proportionate number of the Units included in the
Performance Unit Agreement being earned. For purposes of determining whether
Performance Targets have been met, the Committee may, in its discretion
equitably restate the Company's earnings per share, net income, or any other
factor utilized in establishing the Performance Targets to take into account the
effect, if any, of: (i) acquisitions or dispositions of businesses by the
Company, (ii) extraordinary or non-recurring events, (iii) increases or
decreases in the number of shares of issued Common Stock of the Company
resulting from a division or consolidation of shares, or payment of a share
dividend or other increase or decrease in number of shares outstanding effected
without the receipt of consideration by the Company, and (iv) changes in
accounting principles, tax laws, or other laws and regulations that
significantly affect the Company's financial performance. Payment in respect to
those Performance Units which have been earned shall be in an amount equal to
the Stated Value of the Performance Units earned. Payment for earned Performance
Units shall be in cash of shares of Common stock at current market value, or
partly in cash and partly in shares of Common Stock of the Company, as the
Committee shall determine.
Certain Transactions. The 1988 Plan provides that, subject to any required
action by the stockholders, in the event the Company shall be a party to a
transaction involving a sale of substantially all its assets, a merger or a
consolidation, the Committee may in its discretion revise, alter, amend, or
modify any Incentive Stock Option. Non-qualified Stock Option, Stock
Appreciation Right, Restricted Stock Award, or Performance Unit outstanding
under the 1988 Plan in any one or more of various respects, and other
adjustments may be made in the discretion of the Committee to provide grantees
of awards payable in Common Stock with equivalent benefits offered or provided
to stockholders of the Company generally in connection with the transaction.
Additionally, in the event of dissolution of the Company, (i) every outstanding
stock option and Stock Appreciation Right shall terminate; provided, however,
that each optionee shall have 30 days prior written notice of such event during
which time he shall have the right to exercise (without regard to installment
limitations) his wholly or partially unexercised stock option and Stock
Appreciation Right, (ii) all restrictions relating to outstanding Restricted
Stock Awards shall lapse at least 30 days prior to such dissolution, and (iii)
equitable adjustments may be made, in the discretion of the Committee, to
outstanding Performance Units, including modification of Performance Targets and
acceleration of Award Periods.
Termination of Employment. In the event that a grantee under the 1988 Plan
shall die or leave the employ of the Company and its subsidiaries, the grantee
or his estate, or the person who acquires his option by bequest or inheritance
shall have the right to exercise his stock option or
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Stock Appreciation Right for the period discussed under the subcaption
"Amendment," supra, but in either event only to the extent such stock option or
Stock Appreciation Right was exercisable at the date of his cessation of
employment. In its discretion, the Committee may provide that if a former
employee holds a Non-qualified Stock Option or a Stock Appreciation Right and
enters into a non-compete agreement with the Company when his actual employment
ends, his employment for purposes of his right to exercise such option or Right
will continue until such agreement is violated or terminated. All Performance
Units granted to a grantee under the 1988 Plan shall terminate without notice of
payment upon grantee's death, retirement, or other termination of employment
with the Company and its subsidiaries, except that grantees of Performance Units
whose employment ceases prior to the expiration of the applicable Award Period,
or their legal representatives, heirs or legatees, shall be entitled to receive
within 120 days after the end of the Award Period, payment with respect to
Performance Units to the extent, if at all, as would the grantee if the grantee
were an employee throughout the Award Period, provided, however, such payment
shall be reduced proportionately for the portion of the Award Period the grantee
was not so employed.
Certain Adjustments to Maximum Limitations. As indicated above, the maximum
number of shares of Common Stock and of Performance Units available for grant
under the 1988 Plan may be adjusted in the event of a recapitalization, stock
dividend, or other similar event. In addition, in the event that, prior to the
end of the period during which an option, right, award, or unit may be granted
under the 1988 Plan, (i) any stock option expires unexercised or is terminated,
surrendered, or cancelled (other than in connection with the exercise of a Stock
Appreciation Right) without being exercised, in whole or in part, for any
reason, (ii) any Restricted Stock Award is forfeited, in whole or in part, for
any reason, or (iii) all or any part of the Performance Units included in a
Performance Unit Agreement are terminated or unearned for any reason, then the
number of shares theretofore subject to such option or award plus the number of
units included in such Performance Unit Agreement, or the unexercised, forfeited
or unearned portion thereof, shall be added to the remaining maximum number of
shares of Common Stock and Performance Units available for grant as an option,
award, or unit under the Plan, including a grant to a former holder of such
option, award, or unit, on such terms and conditions as the Committee shall
determine, which terms may be more or less favorable than those applicable to
such former option, award, or unit.
Federal Tax Treatment of Options. Under Section 422(a) of the Internal
Revenue Code, as now in effect, at the time an Incentive Stock Option is granted
or exercised, there are generally no tax consequences to the employee or the
Company. The excess of the fair market value of a share of Common Stock over the
per share option price (i.e., the "spread") at the date of exercise is a tax
preference item, however, and this may cause the employee to incur alternate
minimum tax liability. If the employee holds the stock received on exercise for
at least two years from the date of grant and one year from the date of
exercise, any gain realized on the disposition of the stock will be accorded
long-term capital gain treatment and no business expense deduction will be
allowed to the Company. If the holding period requirements are not satisfied,
the employee will recognize ordinary income at the time of sale equal to the
lesser of (i) the gain realized on the sale or (ii) the spread at the date of
exercise. Any additional gain on the sale not reflected above will be long-term
or short-term capital gain. In such case the Company will be entitled to a
deduction equal to the amount of ordinary income recognized by the employee at
the date of sale.
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An optionee issued shares of Common Shares of Common Stock under a
Non-qualified Stock Option will realize ordinary income for Federal income tax
purposes upon the exercise of the option, measured by the excess of the then
fair market value of the shares of Common Stock over the option price.
Generally, this income will be measured as of the date of exercise. In the case
of an optionee subject to Section 16(b) under the Securities and Exchange Act of
1934, income will be measured as of the date the restrictions of Section 16(b)
terminate (usually six months after exercise) unless the optionee elects, within
30 days of exercise, to be taxed as of the date of exercise. The Company will be
entitled to a deduction for Federal income tax purposes in an amount equal to
the ordinary income recognized by the optionee.
Withholding. The Company, as a condition of receiving a deduction with
respect to the ordinary income recognized by the grantee of a Non-qualified
Stock Option as described above, or a deduction attributable to ordinary income
recognized by a grantee in connection with any other award under the Plan, must
withhold for taxes of the grantee attributable to such income. Participants may,
with the approval of the Committee, pay withholding taxes in cash or check, by
means of contributing shares of the Company's Common Stock previously acquired
or by having cash or shares of Common Stock deducted from the amount to be
received upon the exercise or vesting of an award.
Amendment or Termination. The Board of Directors, without further action
on the part of the stockholders, may from time to time, alter, amend, or suspend
the 1988 Plan, or any option, right, award, or unit granted thereunder, or may
at any time, terminate the 1988 Plan, except that without stockholder approval
it may not (i) change the total number of shares of Common Stock and of
Performance Units available for grant or award under the 1988 Plan (except as
such number may be adjusted in the event of recapitalization, stock dividend, or
similar event), (ii) extend the duration of the 1988 Plan, (iii) increase the
maximum term of Incentive Stock Options or Non-qualified Stock Options, (iv)
decrease the minimum option price below par value per share of Common Stock, or
(v) change the class of employees eligible to be granted options, rights, units,
or awards under the 1988 Plan. No such amendment may materially and adversely
affect any outstanding option, right, unit, or award without the consent of the
holder thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL NO.
2 TO AMEND THE 1988 EMPLOYEES' STOCK BENEFIT PLAN. THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY PRESENT OR
REPRESENTED AND ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS AT WHICH
A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY IS VOTED ON
PROPOSAL NO. 2, IS NECESSARY FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE 1988
EMPLOYEES' STOCK BENEFIT PLAN. ABSTENTIONS WITH RESPECT TO PROPOSAL NO. 2 BY
SHARES REPRESENTED IN PERSON OR BY PROXY AT THE ANNUAL MEETING OF STOCKHOLDERS
WILL HAVE THE EFFECT OF BEING SUBSTANTIALLY EQUIVALENT TO VOTES AGAINST THE
PROPOSAL BECAUSE A MINIMUM NUMBER OF FAVORABLE VOTES, BASED UPON THE NUMBER OF
SHARES HELD BY PERSONS PRESENT OR REPRESENTED AND ENTITLED TO VOTE AT THE ANNUAL
MEETING OF STOCKHOLDERS, IS REQUIRED FOR APPROVAL AND SUCH SHARES WILL BE
CONSIDERED AS ENTITLED TO VOTE ON THE PROPOSAL. BROKER NON-VOTES (WHEN A BROKER
HOLDING SHARES FOR CLIENTS IN STREET NAME IS NOT PERMITTED TO VOTE ON CERTAIN
MATTERS WITHOUT THE CLIENTS' INSTRUCTIONS) WILL NOT AFFECT THE OUTCOME OF THE
VOTE ON PROPOSAL NO. 2. SUCH SHARES ARE NOT CONSIDERED TO BE "ENTITLED TO VOTE"
ON THAT MATTER AND THEREFORE ARE NOT COUNTED IN DETERMINING THE NUMBER OF VOTES
ELIGIBLE TO BE CAST ON THE PROPOSAL.
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INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Price
Waterhouse LLP as its independent accountants for the year 1995 and Price
Waterhouse LLP has agreed to serve in this capacity. This appointment was made
upon the recommendation of the Audit Committee, which is composed of directors
who are not officers or otherwise employees of the Company. Price Waterhouse LLP
commenced serving as the Company's independent accountants in 1974.
Representatives of Price Waterhouse LLP will be present at the 1995 Annual
Meeting and will be given an opportunity to make a statement, if they desire to
do so, and will be expected to respond to appropriate questions presented at the
meeting.
STOCKHOLDER PROPOSALS
The Company's By-Laws provide that the Company's Annual Meeting to be held
in 1996 will be held April 23, 1996. Therefore, in order to be considered for
inclusion in the Company's Proxy Statement for the Company's Annual Meeting to
be held in 1996, all stockholders' proposals must be received by the Secretary,
PORTEC, Inc., One Hundred Field Drive, Suite 120, Lake Forest, Illinois 60045,
on or prior to November 25, 1995.
OTHER MATTERS
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, officers and other regular employees of the
Company may, without additional compensation, solicit proxies by telephone, by
telegraph, by telefax or in person. The Company will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to beneficial owners of stock and
obtaining their proxies. The Company also has engaged Proxy Services
Corporation, a proxy solicitation firm, to assist in the solicitation of proxies
at a cost not anticipated to exceed $4,500 plus customary expenses.
The Board of Directors of the Company knows of no matters other than those
hereinbefore specified that will be presented at the meeting. If any other
matters properly come before the meeting or any adjournment thereof, the person
or persons voting the accompanying proxies will vote them in accordance with
their best judgment on such matters.
Even though you intend to attend the meeting in person, you are requested
to sign, date and return the enclosed proxy. If you do attend, you may revoke
the proxy and vote in person should you so desire. A prompt response will be
appreciated.
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The preceding information relating to directors and officers of the Company
and other persons in the Sections entitled 'Election Of Directors' and 'Stock
Ownership' is based on information furnished to the Company by such persons and
SEC reports.
By Order of the Board of Directors
N. A. DEDERT-KINDL
Vice President, Treasurer and
Secretary
March 24, 1995
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PROXY PROXY
PORTEC, INC.
ANNUAL MEETING OF STOCKHOLDERS APRIL 25, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Grant Beadle, John F. McKeon and
Robert D. Musgjerd, and each of them, as Proxies, with full power of
substitution, to vote all shares of Common Stock of PORTEC, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held in Chicago, Illinois, on April 25, 1995, at 10:00 A.M., Chicago time, or
any adjournment thereof.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON
THE REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSAL 2.
(Continued and to be signed on reverse side.)
PORTEC, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
<TABLE>
<S><C>
1. Election of Directors For All
Nominees: Albert Fried, Jr., For Withheld Except For Against Abstain
L.L. White, Jr. and Michael T. Yonker. / / / / / / 2. Proposal to amend the / / / / / /
(INSTRUCTION: To withhold authority _________________ 1988 Employees' Stock
to vote for any individual nominee Nominee Exception Benefit Plan.
write that nominee's name in the
space provided.) 3. In their discretion, the Proxies are authorized
to vote upon such other matters as may properly
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 come before the meeting or any adjournment
thereof.
DATED:_____________, 1995
PLEASE SIGN HERE AND
RETURN PROMPTLY
________________________________________________
________________________________________________
Please sign exactly as your name or names appear
above. For joint accounts, each owner should
sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please
give your full title.
</TABLE>
