<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PORTEC, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $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
[PORTEC LOGO]
PORTEC, Inc.
Suite 120
One Hundred Field Drive
Lake Forest, Illinois 60045
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 23, 1996
To the Stockholders of
PORTEC, Inc.
The Annual Meeting of Stockholders of PORTEC, Inc. will be held in the
Adams Room of the Midland Hotel, 172 West Adams, Chicago, Illinois, at 10:00
A.M., on Tuesday, April 23, 1996, for the following purposes:
1. To elect three directors to hold office for three-year terms.
2. 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 5, 1996, 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. KINDL
Vice President, Treasurer
and Secretary
March 27, 1996
<PAGE> 3
[PORTEC LOGO]
PORTEC, Inc.
Suite 120
One Hundred Field Drive
Lake Forest, Illinois 60045
PROXY STATEMENT
This proxy statement is being mailed to stockholders on or about March 27,
1996. 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 23, 1996,
and at any adjournment thereof.
The record date for determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting was March 5, 1996. 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 4,304,913 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 5, 1996.
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 1996 Annual Meeting for three-year terms
are J. Grant Beadle, Arthur McSorley, Jr., and Frank T. MacInnis. Messrs. Beadle
and McSorley presently are directors in the class of directors whose terms
expire at the 1996 Annual Meeting. Mr. MacInnis is slated for the seat on the
Board currently filled by Mr. Robert D. Musgjerd. Mr. Musgjerd, who is in the
class of directors whose terms expire at the 1996 Annual Meeting, is retiring as
a member of the Board at that time.
Except where authority to vote is withheld, it is intended that the proxies
solicited on behalf of the Board of Directors for the 1996 Annual Meeting will
be voted "FOR" the election of the Board's nominees for three-year terms.
If, at the time of the 1996 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 BEADLE, MCSORLEY,
AND MACINNIS. 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 1996 Annual Meeting is as follows:
NOMINEES FOR ELECTION AS DIRECTORS:
(TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 1999)
[J. GRANT BEADLE J. GRANT BEADLE
PHOTO]
Mr. Beadle, age 63, 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.
2
<PAGE> 5
[FRANK T. MacINNIS FRANK T. MacINNIS
PHOTO]
Mr. MacInnis, age 49, is Chairman and Chief Executive
Officer of EMCOR Group, Inc. and has held that position
with that company and its predecessor company, JWP, Inc.,
since 1994. Prior to this he was Chairman of Comstock
Group, Inc. (New York-based construction group) and
before that he was Chairman and Chief Executive Officer
of H.C. Price Construction (builder of large diameter oil
and gas pipelines). Mr. MacInnis is a nominee for a three
year term.
[ARTHUR McSORLEY, JR. ARTHUR McSORLEY, JR.
PHOTO]
Mr. McSorley, age 67, 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.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1997:
[FREDERICK J. FREDERICK J. MANCHESKI
MANCHESKI
PHOTO] Mr. Mancheski, age 69, 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.
3
<PAGE> 6
[JOHN F. McKEON PHOTO] JOHN F. McKEON
Mr. McKeon, age 70, became a director in January 1987. He
retired in April 1989 as President of LinkBelt
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.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1998:
[ALBERT FRIED, JR. ALBERT FRIED, JR.
PHOTO]
Mr. Fried, age 66, 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,
LLC, New York, New York (investment banking) for more
than ten years and also is the Managing Partner of
Buttonwood Specialists, LLC, 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 Vice Chairman and a
director of Oneita Industries, Inc. and a director of
EMCOR Group, Inc. He is also a director of various civic
and philanthropic organizations.
[L. L. WHITE, JR. L. L. WHITE, JR.
PHOTO]
Mr. White, age 68, 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.
4
<PAGE> 7
[MICHAEL T. YONKER MICHAEL T. YONKER
PHOTO]
Mr. Yonker, age 53, 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.
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 (Chairman), Fried,
McSorley, White, 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.
Mancheski, McKeon, 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 1995, the Company's Board of Directors held five meetings and the
Board's Audit, Nominating, and Stock Option and Compensation Committees held
three, two 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
1995 quarterly retainer, Board meeting, and committee meeting attendance fees
were $3,500, $1,000, and $1,000, respectively. Additionally, the Chairman of
each of the Audit, Nominating, and Stock Option and Compensation Committees is
compensated at the annual rate of $2,600.
In addition to the foregoing cash compensation, each non-employee director
is granted a stock option to purchase 7,000 shares of Common Stock of the
Company upon election to the Board. Additionally, each year at the time of the
Annual Meeting each non-employee director is granted a
6
<PAGE> 9
stock option to purchase 2,000 shares of Common Stock of the Company. The prices
of all such stock options are set in accordance with the Company's 1988
Employees' Stock Benefit Plan.
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 since May 1995. 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, LLC................................. 1,101,041(b) 24.4%
40 Exchange Place
New York, New York 10005
Gabelli Funds, Inc. .............................................................. 472,610(c) 11.0%
One Corporate Center
Rye, New York 10580-1434
The TCW Group, Inc. .............................................................. 312,629(d) 7.3%
865 South Figueroa Street
Los Angeles, California 90017
Dimensional Fund Advisors, Inc. .................................................. 242,590(e) 5.6%
11th Floor
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
- ---------------
(a) The figures shown are as of March 5, 1996, except as otherwise indicated
below.
(b) Included in these shares are 205,080 shares related to stock options granted
to Mr. Fried which are exercisable within 60 days of March 5, 1996, and
7,383 shares held for his account by the Company's Savings and Investment
Plan. Albert Fried & Company, LLC, of which Mr. Fried is managing partner,
has sole voting and dispositive power with regard to 838,078 of these
shares.
(c) Gabelli Funds, Inc. has sole voting and dispositive power with regard to
these shares.
(d) The TCW Group, Inc. has sole voting and dispositive power with regard to
these shares.
(e) Dimensional Fund Advisors, Inc., ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 242,590 shares of
PORTEC, Inc. stock as of December 31,
7
<PAGE> 10
1995, 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 Fund
Advisors, Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
The following table contains information, as of March 5, 1996, relative to
each director and director 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............................................................ 13,560(c) (b)
Frank T. MacInnis.......................................................... 0 0.0%
Frederick J. Mancheski..................................................... 22,805(c) (b)
John F. McKeon............................................................. 16,421(c) (b)
Arthur McSorley, Jr. ...................................................... 13,702(c) (b)
Robert D. Musgjerd......................................................... 12,641(c) (b)
L. L. White, Jr. .......................................................... 57,022(c,d) 1.3%
Directors who are Executive Officers:
Albert Fried, Jr. ......................................................... 1,101,041(e) 24.4%
Michael T. Yonker.......................................................... 148,353(f) 3.3%
Other Executive Officers:
John S. Cooper............................................................. 19,426(g) (b)
Nancy A. Kindl............................................................. 37,718(h) (b)
Kevin C. Rorke............................................................. 26,520(i) (b)
All Directors and Executive Officers as a Group(12).......................... 1,469,209(j) 30.8%
</TABLE>
- ---------------
(a) All beneficial ownership is direct and arises from sole voting and
dispositive power except as otherwise indicated below.
(b) Less than one percent.
(c) Included in the shares listed are 10,100 shares related to stock options
which are presently exercisable.
(d) Mr. White has sole voting and dispositive power with respect to 46,069 of
these shares and his wife has sole voting and dispositive power with
respect to 853 of these shares.
(e) Included in these shares for Mr. Fried are 205,080 shares related to stock
options which are exercisable within 60 days of March 5, 1996, and 7,383
shares held for his account by the Company's Savings and Investment Plan.
Albert Fried & Company, LLC, of which Mr. Fried is managing partner, has
sole voting and dispositive power with regard to 838,078 of these shares.
8
<PAGE> 11
(f) Included in these shares for Mr. Yonker are 135,550 shares subject to stock
options which are exercisable within 60 days of March 5, 1996, and 5,303
shares which are held for his account by the Company's Savings and
Investment Plan.
(g) Included in the shares for Mr. Cooper are 10,855 shares subject to stock
options which are exercisable within 60 days of March 5, 1996, and 8,571
shares which are held for his account by the Company's Savings and
Investment Plan.
(h) Included in these shares for Ms. Kindl are 26,747 shares subject to stock
options which are exercisable within 60 days of March 5, 1996, and 9,695
shares which are held for her account by the Company's Savings and
Investment Plan.
(i) Included in these shares for Mr. Rorke are 21,203 shares subject to stock
options which are exercisable within 60 days of March 5, 1996, and 2,567
shares which are held for his account by the Company's Savings and
Investment Plan.
(j) Included in these shares are 460,035 shares covered by stock options which
are exercisable within 60 days of March 5, 1996. Also, 33,519 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, 1995, for each of the executive officers of the Company
whose salary and bonus exceeded $100,000 in 1995.
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) $(C)
- ----------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Yonker...... 1995 $247,836 $ 0 -- 15,000 $ 7,090
President and Chief 1994 240,612 225,223 -- 11,000 5,205
Executive Officer 1993 233,604 210,960 -- -- 6,836
Albert Fried, Jr....... 1995 $139,020 $ 0 -- 15,000 $ 11,950
Chairman of the 1994 130,577 53,624 -- 11,000 4,602
Board 1993 128,040 50,228 -- -- 6,233
John S. Cooper......... 1995 $125,896 $ 13,181 -- 2,000 $ 8,169
Senior Vice President 1994 122,220 13,566 -- 2,200 5,842
and General Manager 1993 121,008 12,463 -- 3,630 7,006
of the Railway
Maintenance
Products Division
Nancy A. Kindl......... 1995 $125,878 $ 0 -- 5,000 $ 6,401
Vice President, 1994 122,258 68,663 -- 3,300 4,535
Secretary, Treasurer 1993 118,692 64,311 -- 3,630 6,133
and Controller
Kevin C. Rorke......... 1995 $125,571 $ 60,180 -- 5,000 $ 6,134
Vice President 1994 118,760 59,380 -- 5,500 5,068
and General Manager 1993 112,758 11,232 -- 6,050 6,180
of the Flomaster
Division
</TABLE>
- ---------------
(a) Includes amounts deferred under the Company's Savings and Investment Plan
and Directors Fees for Mr. Fried as follows: 1995 -- $21,000,
1994 -- $16,000, 1993 -- $16,800.
(b) The dollar value of perquisites and other personal benefits for each of the
above named executive officers was less than the established SEC reporting
threshold.
(c) The total amounts shown in this column for the last fiscal year consist of
the following: (i) Mr. Yonker: $5,650 -- Company contribution to the
Savings and Investment Plan, $1,440 -- Benefit attributed to Company owned
life insurance policy; (ii) Mr. Fried: $5,650 -- Company contribution to
the Savings and Investment Plan, $6,300 -- Benefit attributed to Company
owned life insurance policy; (iii) Mr. Cooper: $5,572 -- Company
contribution to the Saving and
10
<PAGE> 13
Investment Plan, $2,597 -- Benefit attributed to Company owned life
insurance policy; (iv) Ms. Kindl: $5,598 -- Company contribution to Savings
and Investment Plan, $803 -- Benefit attributed to Company owned life
insurance policy; (v) Mr. Rorke: $5,650 -- Company contribution to the
Saving and Investment Plan, $484 -- Benefit attributed to Company owned
life insurance policy.
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 1995.
OPTION/SAR GRANTS DURING 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS/ APPRECIATION
UNDERLYING SARS GRANTED EXERCISE FOR OPTION TERM(E)
OPTIONS TO EMPLOYEES OR BASE EXPIRATION ------------------------
NAME GRANTED(#) IN 1995 PRICE(D) DATE 5% 10%
- --------------------------- ---------- ------------ -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Yonker.......... 15,000(a) 14.42% $10.19 10/19/05 $96,103 $243,544
Albert Fried, Jr. ......... 15,000(a) 14.42% $10.19 10/19/05 $96,103 $243,544
John S. Cooper............. 2,000(b) 1.92% $10.19 10/19/05 $12,814 $32,473
Nancy A. Kindl............. 5,000(c) 4.81% $10.19 10/19/05 $32,034 $81,181
Kevin C. Rorke............. 5,000(c) 4.81% $10.19 10/19/05 $32,034 $81,181
</TABLE>
- ---------------
(a) These options are exercisable as follows: 5,000 shares on April 26, 1996,
5,000 shares on April 26, 1997, and 5,000 shares on April 26, 1998. All
shares are exercisable through the expiration date and were granted without
stock appreciation rights.
(b) These options are exercisable commencing April 21, 1995 through the
expiration date and were granted without stock appreciation rights.
(c) These options are exercisable as follows: 1,667 shares on April 26, 1996,
1,667 shares on April 26, 1997, and 1,666 shares on April 26, 1998. All
shares are exercisable through the expiration date and were granted without
stock appreciation rights.
(d) The exercise price of the shares of Common Stock covered by this option was
the average of the high and low reported sales prices of a share of Common
Stock on the Composite Tape for the ten consecutive trading days
immediately preceding the date of grant.
(e) 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.
11
<PAGE> 14
The following table shows for the individuals named in the Summary
Compensation Table information with respect to options exercised during 1995 and
the value of unexercised options and SARs at December 31, 1995.
AGGREGATED OPTIONS/SARS EXERCISED DURING 1995,
AND VALUE OF OPTIONS/SARS AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT DECEMBER IN-THE-MONEY OPTIONS/SARS
ACQUIRED VALUE 31, 1995, AT DECEMBER 31, 1995,
NAME ON EXERCISE REALIZED(A) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(B)
- --------------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael T. Yonker.......... 7,500 $ 49,296 130,550/15,000 $785,774/0
Albert Fried, Jr. ......... 28,500 $ 236,012 200,080/15,000 $1,242,779/0
John S. Cooper............. -- -- 8,855/2,000 $19,679/0
Nancy A. Kindl............. -- -- 25,080/5,000 $123,485/0
Kevin C. Rorke............. -- -- 19,536/5,000 $59,838/0
</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 exercise price.
(b) Based on the closing price of the Common Stock on December 31, 1995, less
the applicable exercise 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.
12
<PAGE> 15
The following table shows the estimated annual pension benefits from the
above program and plan based on a straight life annuity that a participant 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 $ 8,357 $16,713 $25,070 $ 33,426 $ 41,783 $ 50,140 $ 58,496
150,000 12,857 25,713 38,570 51,426 64,283 77,140 89,996
200,000 17,357 34,713 52,070 69,426 86,783 104,140 121,496
250,000 21,857 43,713 65,570 87,426 109,283 131,140 152,996
300,000 26,357 52,713 79,070 105,426 131,783 158,140 184,496
350,000 30,857 61,713 92,570 123,426 154,283 185,140 215,996
400,000 30,857 61,713 92,570 123,426 154,283 185,140 215,996
450,000 30,857 61,713 92,570 123,426 154,283 185,140 215,996
500,000 30,857 61,713 92,570 123,426 154,283 185,140 215,996
550,000 30,857 61,713 92,570 123,426 154,283 185,140 215,996
600,000 30,857 61,713 92,570 123,426 156,283 185,140 215,996
</TABLE>
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, 1995, the individuals named in the Summary Compensation
Table had the indicated years of credited service under the aforementioned
program and plan: Mr. Yonker -- 7 years, Mr. Fried -- 6.2 years, Mr.
Cooper -- 16.5 years, Ms. Kindl -- 20.8 years, and Mr. Rorke -- 8.9 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 $247,836 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
13
<PAGE> 16
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 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. 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. 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. 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. Kindl may elect to receive a lump sum
cash settlement of the then present value of the cash payments due.
14
<PAGE> 17
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 $10,803 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.
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. During 1995, the Committee engaged an independent outside
consulting firm to review base salary, bonus, and stock option awards for the
Company's executive officers. Survey data, compiled and reviewed by the
consultants, for durable goods manufacturing companies with sales in the
$50-$350 million range, was used for comparative purposes. Company salaries were
slightly below median 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
15
<PAGE> 18
1995, base salary increases of approximately 3.0% were approved for the
executive officers of the Company, and the Committee approved a 3.0% increase in
base pay for Mr. Yonker. Mr. Yonker, Mr. Fried, and Ms. Kindl declined the 3.0%
increase based on the performance of the Company in 1995.
Annual Cash 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 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 1993-1995 awarded under the plan. During
the 1993-1995 period, Mr. Cooper was covered by a profit-sharing plan based on
divisional performance. In 1995, the bonus amounts awarded under the Incentive
Compensation Plan for Key Executives, was 48% of base salary. Mr. Yonker, Mr.
Fried, and Ms. Kindl declined bonus payments of 7.5%, 3.8%, and 4.5%,
respectively, of base salary due to the 1995 Company performance.
Long-Term Incentive Compensation Plan
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 with respect to 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 exercise price. The stock option exercise 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 1993-1995, stock options were
granted to the executive officers in the Summary Compensation Table herein. Mr.
Albert Fried, Jr., Chairman of the Board, received an option for 15,000 shares
of Common Stock in October, 1995. Mr. John S. Cooper, Senior Vice President,
received an option for 2,000 shares of Common Stock in October, 1995. Ms. Nancy
A. Kindl, Vice President, received an option for 5,000 shares of Common Stock
in October, 1995. Mr. Kevin C. Rorke, Vice President, received an option for
5,000 shares of Common Stock in October, 1995. Mr. Yonker received an option
for 15,000 shares of Common Stock in October, 1995.
16
<PAGE> 19
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
Frederick J. Mancheski, Member
John F. McKeon, Member
Robert D. Musgjerd, Member
L. L. White, Jr., Member
17
<PAGE> 20
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. Since the Company's Common Stock is traded on the New
York Stock Exchange and Chicago Stock Exchange, the S&P 500 Index was selected
as a broad equity market index. The Company, because of its diversified business
activities, does not have a readily definable peer group. 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>
(Time Chart Depicting Table Below)
DOW JONES
INDUSTRIAL-
MEASUREMENT PERIOD S&P 500 DIVERSIFIED
(FISCAL YEAR COVERED) PORTEC, INC. INDEX INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 138 130 124
1992 283 140 144
1993 472 155 176
1994 646 157 161
1995 537 215 211
</TABLE>
- -------------------------
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 at December 31, 1990, 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 does not make nor endorse any predictions as to future Common
Stock performance.
18
<PAGE> 21
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Price
Waterhouse LLP as its independent accountants for the year 1996 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 1996 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 1997 will be held April 22, 1997. Therefore, in order to be considered for
inclusion in the Company's Proxy Statement for the Company's Annual Meeting to
be held in 1997, 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 24, 1996.
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.
19
<PAGE> 22
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. KINDL
Vice President, Treasurer and
Secretary
March 27, 1996
20
<PAGE> 23
PROXY PROXY
PORTEC, INC.
ANNUAL MEETING OF STOCKHOLDERS APRIL 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frederick J. Mancheski, John F. McKeon,
and L.L. White, Jr., 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 23, 1996, 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.
(Continued and to be signed on reverse side.)
PORTEC, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
[ ]
<S> <C> <C> <C>
1. Election of Directors For All
Nominees: J. Grant Beadle, Frank T. MacInnis For Withheld Except
and Arthur McSorley, Jr. / / / / / / 2. In their discretion, the Proxies
(INSTRUCTION: To withhold authority to vote are authorized to vote upon such
for any individual nominee write that nominee's other matters as may properly
name in the space provided.) _________________ come before the meeting or any
Nominee Exception adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1
Dated:____________, 1996
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>
