<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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PREMIER INDUSTRIAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PREMIER INDUSTRIAL CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
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(j)(2).
/ / $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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
<TABLE>
<S> <C>
LOGO PREMIER INDUSTRIAL CORPORATION
4500 EUCLID AVE. - PO. BOX 94884 - CLEVELAND, OHIO 44101-4884 - (216) 381-8300
</TABLE>
August 23, 1995
TO OUR
SHAREHOLDERS
We cordially invite you to attend the Annual Meeting of Shareholders which will
be held at the SHERATON CLEVELAND CITY CENTRE HOTEL, 777 St. Clair Avenue,
Cleveland, Ohio on TUESDAY, OCTOBER 10, 1995 at 11:00 A.M. Eastern Daylight
Time.
Exhibits will open at 10:30 a.m. At that time, you will have an opportunity to
meet and talk with Directors and officers.
The Notice of Meeting and Proxy Statement on the following pages contain
information as to matters to be acted upon, and your Directors' recommendations
as to your vote on each. We urge you to review the Proxy Statement carefully.
Following the formal business of the meeting, we will review with you our
current developments and outlook.
Your continuing interest in Premier is appreciated, and we hope you will find
it possible to attend the meeting. Should you be unable to do so, we ask your
assistance in signing and returning the enclosed proxy card promptly.
Sincerely,
Morton L. Mandel
Chairman of the Board
<PAGE> 3
<TABLE>
<S> <C>
LOGO PREMIER INDUSTRIAL CORPORATION
4500 EUCLID AVE. - PO. BOX 94884 - CLEVELAND, OHIO 44101-4884 - (216) 381-8300
</TABLE>
August 23, 1995
NOTICE OF
ANNUAL
MEETING OF
SHAREHOLDERS
The Annual Meeting of Shareholders of Premier Industrial Corporation will be
held at 11:00 A.M., Eastern Daylight Time, on TUESDAY, OCTOBER 10, 1995 at the
SHERATON CLEVELAND CITY CENTRE HOTEL, 777 St. Clair Avenue, Cleveland, Ohio for
the following purposes:
1. To fix the number of Directors at ten and to elect ten Directors for the
ensuing year;
2. To consider and vote on a proposal to approve the 1973 Stock Option Plan for
Management Employees, as Amended and Restated as of June 6, 1995;
3. To consider and vote on a proposal to approve the Director Stock Option
Plan;
4. To ratify the appointment of KPMG Peat Marwick LLP, as independent auditors
for the fiscal year ending May 31, 1996; and
5. To consider and act on such other matters as may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock of the Corporation of record at the close of business
on August 11, 1995 will be entitled to vote at the Annual Meeting.
Shareholders who are unable to attend the meeting in person are urged to date
and sign the enclosed proxy and return it in the enclosed envelope as promptly
as possible to assure that their shares are represented at the meeting.
By Order of the Board of Directors
Howard P. Frank
Secretary
3
<PAGE> 4
<TABLE>
<S> <C>
LOGO PREMIER INDUSTRIAL CORPORATION
4500 EUCLID AVE. - PO. BOX 94884 - CLEVELAND, OHIO 44101-4884 - (216) 381-8300
</TABLE>
August 23, 1995
PROXY
STATEMENT
The accompanying proxy is solicited by the Board of Directors of Premier
Industrial Corporation (the "Corporation") for use at the Annual Meeting of
Shareholders to be held on October 10, 1995 (the "Annual Meeting").
Holders of Common Stock of record at the close of business on August 11, 1995
will be entitled to vote at the meeting. On that date, 83,491,745 shares of
Common Stock of the Corporation, without par value ("Common Stock"), were
issued and outstanding. Each share of Common Stock is entitled to one vote on
all matters to come before the meeting.
This Proxy Statement and the accompanying form of proxy were first mailed to
shareholders on August 23, 1995.
If you are a participant in the Premier Dividend Reinvestment Plan, you will
not receive an additional form of proxy from National City Bank. Rather, the
shares held in your dividend reinvestment account will be voted in the same
manner as your vote on the enclosed proxy card.
ELECTION OF
DIRECTORS
A proposal will be presented at the Annual Meeting to fix the number of
Directors at ten and to elect the following ten nominees as Directors. All
nominees are presently Directors.
It presently is intended that shares represented by proxies in the enclosed
form will be voted in favor of fixing the number of Directors at ten and
electing as Directors the ten nominees named in the table below, each to serve
for a term of one year and to hold office until his successor is elected and
qualified. The ten nominees for Director receiving the greatest number of votes
will be elected. Should any nominee decline or be unable to accept such
nomination or to serve as a Director, an event which the Board of Directors
does not now expect, the persons voting the shares represented by such proxies
may either vote such shares for a full slate which includes a substitute
nominee or for a reduced number of nominees, as they may deem advisable.
The information concerning nominees set forth in the following table is based
in part on information received from the respective nominees and in part on the
Corporation's records.
4
<PAGE> 5
<TABLE>
<CAPTION>
PREMIER COMMON SHARES
BENEFICIALLY OWNED ON
JULY 12, 1995 (1)
NAME, AGE, PRINCIPAL OCCUPATION FOR THE -------------------------
LAST FIVE YEARS, AND DIRECTORSHIPS DIRECTOR % OF
IN PUBLIC COMPANIES SINCE NUMBER CLASS
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EDWARD B. BRANDON, 63 1990 3,200 (2)
Chairman of National City Corporation. Mr. Brandon served
as Chief Executive Officer of National City Corporation until
his retirement from such position on July 24, 1995, and as
Chairman of its lead bank, National City Bank, until April
1992. He is also a director of Standard Products Company
and RPM, Inc. (3)
HUGH CALK1NS, 71 1970 21,579 (4) (2)
President of Initiatives in Urban Education Foundation since
July, 1994. Mr. Calkins was a Teacher in the Cleveland
Public School System from September 1990 until June
1994 and a Partner of Jones, Day, Reavis and Pogue
(lawyers) until his retirement on December 31, 1989. (5) (6)
JOHN C. COLMAN, 68 1960 110,562 (7) (2)
Private investor and consultant. Mr. Colman is also a
director of Duplex Products, Inc. and Orion Capital Corp.
(3) (6)
SCOTT S. COWEN, 49 1986 3,532 (2)
Dean of the Weatherhead School of Management and
Professor of Accountancy, Case Western Reserve
University. Mr. Cowen is also a director of Fabri-Centers of
America, Inc., American Greetings Corporation, LDI Corp.,
Forest City Enterprises, Inc., and Society National Bank.(3) (5)
WILLIAM M. HAMILTON, 70 1987 44,369 (8) (2)
From March 1987 until his retirement on December 31,
1991. Mr. Hamilton was President of the Corporation. (5)
BRUCE W. JOHNSON, 54 1992 50,418 (9) (2)
President of the Corporation. Mr. Johnson served as
Executive Vice President from 1987 until January 1992.
JACK N. MANDEL, 83 1946 18,799,703 (10) 22.5%
Chairman, Finance Committee of the Corporation. (11)
JOSEPH C. MANDEL, 81 1946 19,290,806 (10) 23.1%
Chairman, Executive Committee of the Corporation. (11)
MORTON L. MANDEL, 73 1946 20,467,732 (10) 24.5%
Chairman and Chief Executive Officer of the Corporation. (11)
PHILIP S. SIMS,67 1991 1,451,803 (12) 1.7%
Vice Chairman of the Board (Chief Financial Officer).
Mr. Sims served as Vice Chairman of the Board and
Treasurer from October 1991 to November 1992; and
Executive Vice President and Treasurer from 1987 to
October 1991.(5)(6)(11)
</TABLE>
5
<PAGE> 6
(1) Reported in accordance with beneficial ownership rules of the Securities
and Exchange Commission (the "Commission" or the "SEC") under which a
person is deemed to be the beneficial owner of a security if he has or
shares voting power or investment power in respect of such security or has
the right to acquire such ownership within 60 days. Accordingly, the
amounts shown in the table do not purport to represent beneficial
ownership for any purpose other than compliance with the Commission's
reporting requirements. Except as otherwise indicated in the notes to this
table and to the following table, each of the nominees has sole voting and
investment power of the shares shown as beneficially owned by such
nominee. As of July 12, 1995, 83,491,595 shares of Common Stock of the
Corporation were outstanding.
(2) Less than one percent.
(3) Member of Audit Committee.
(4) Includes 1,995 shares owned by Mr. Calkins' wife. Mr. Calkins disclaims
beneficial ownership of his wife's shares.
(5) Member of Corporate Responsibility Committee.
(6) Member of Salary Committee.
(7) Includes 69,102 shares owned by Mr. Colman's wife. Mr. Colman disclaims
beneficial ownership of his wife's shares.
(8) Includes 14,671 shares owned by Mr. Hamilton's wife.
(9) Includes 293 shares credited to Mr. Johnson's account under the
Corporation's PAYSOP.
(10) For details of these holdings, see the notes to the following table.
(11) Member of Finance Committee and Executive Committee.
(12) Includes 62,948 shares owned by Mr. Sims' wife; 293 shares credited to his
account under the Corporation's PAYSOP; 439,645 shares owned by the
Corporation's pension trusts as to which he serves as one of the members
of the advisory committee; and 880,479 shares held in a charitable
foundation of which he is a trustee. Mr. Sims disclaims beneficial
ownership of the shares held in the charitable foundation.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Jack N., Joseph C. and Morton L. Mandel are brothers and co-founders of the
Corporation.
See also the matters described on page 15 of this Proxy Statement under the
caption "Compensation Committee Interlocks and Insider Participation."
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established six committees to assist it in the
discharge of its responsibilities: an Executive Committee, a Finance Committee,
a Corporate Responsibility Committee, an Audit Committee, a Salary Committee and
a Stock Option Committee. The Board does not have a standing Nominating or
Compensation Committee.
The Audit Committee, comprised of non-employee Directors, provides assistance to
the Board of Directors in fulfilling its fiduciary responsibilities relating to
corporate accounting, auditing, and reporting practices. Specifically, this
Committee reviews the scope and results of audits performed by the internal
audit staff and outside auditors, reviews certain consulting services provided
by the outside auditors, reports to the Board of Directors its findings,
recommends changes in the scope, methods or procedures of the auditing
functions, and recommends the selection of outside auditors. The Audit Committee
met twice during fiscal 1995 with the internal audit staff and the independent
auditors.
6
<PAGE> 7
During fiscal 1995, the Board of Directors held five regular meetings. All
Directors attended at least 75% of the meetings of the Board and any committees
thereof on which they served during the year.
COMPENSATION OF THE BOARD OF DIRECTORS
Directors who are not employees of the Corporation, and who provide no services
to the Corporation for which they charge a fee, are paid an annual retainer fee
of $12,000, plus $500 for each Board meeting attended, $250 for each committee
meeting attended, and any travel expenses incurred. Effective July 1, 1995, the
attendance fees for Board and committee meetings were increased to $1,000 and
$500, respectively. There was no change made to the amount of the annual
retainer. Directors who are officers of the Corporation receive no remuneration
for their services as Directors.
Mr. Colman and Mr. Hamilton perform consulting services for the Corporation for
which they charge a fee. During the fiscal year ended May 31, 1995, Mr. Colman
and Mr. Hamilton were paid $57,083 and $132,000, respectively, for such
consulting services, plus reimbursement of their expenses. Their consulting
arrangements provide for the performance of such services for such
consideration as may be mutually agreed from time to time, and are terminable
upon notice thereof by either party at any time.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership information (based on the
SEC rules referred to in note (1) to the preceding table), as of July 12, 1995
or such other date noted below, as to persons known by the Corporation to be
the beneficial owners of more than 5% of the outstanding Common Stock and as to
all Directors and executive officers as a group. Information concerning the
beneficial ownership of Common Stock by individual Directors and certain named
executive officers is set forth on pages 5-6 of this Proxy Statement.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME AND ADDRESS OF OWNED OR PERCENTAGE
BENEFICIAL OWNER CONTROLLED OF CLASS
------------------------------------------------------------------------------
<S> <C> <C>
Jack N. Mandel 18,799,703 (1) 22.5%
4500 Euclid Avenue
P.O. Box 94884
Cleveland, Ohio 44101-4884
Joseph C. Mandel 19,290,806 (2) 23.1%
4500 Euclid Avenue
P.O. Box 94884
Cleveland, Ohio 44101-4884
Morton L. Mandel 20,467,732 (3) 24.5%
4500 Euclid Avenue
P.O. Box 94884
Cleveland, Ohio 44101-4884
All Directors and executive officers as a group 53,549,744 64.1%
(after eliminating duplications) (4)
The Huntington Trust Company, N.A. 4,622,684 (5) 5.5%
41 South High Street, Suite 3400
Columbus, Ohio 43287
</TABLE>
7
<PAGE> 8
______________
(1) Includes: 44,766 shares owned by Mr. Mandel; 15,289,270 shares held in a
trust for the benefit of Mr. Mandel in which he retains a reversionary
interest; 240,479 shares held in a charitable foundation of which he is a
trustee; 185,964 shares held as co-trustee of a trust established by a
family member for the benefit of his grandchildren; 3,591 shares held as
co-trustee of a trust established by a family member for the benefit of his
grandchildren; 293 shares credited to his account under the Corporation's
PAYSOP; 1,290,584 shares held by a charitable entity for the benefit of
charity of which he is a co-trustee; 846,849 shares held by a charitable
entity created by a family member for the benefit of charity of which he is
a co-trustee; and 897,907 shares held by a charitable entity created by a
family member for the benefit of charity of which he is co-trustee.
(2) Includes: 84,000 shares owned by Mr. Mandel; 10,181,719 shares held in a
trust for the benefit of Mr. Mandel in which he retains a reversionary
interest; 1,630,948 shares held in irrevocable trusts for members of his
family of which he is trustee or trust advisor; 356,420 shares held in a
charitable foundation of which he is trustee; 3,998,495 shares held in a
trust for the benefit of his wife of which he is trustee; 3,591 shares held
as co-trustee of a trust established by a family member for the benefit of
his grandchildren; 293 shares credited to his account under the
Corporation's PAYSOP; 897,907 shares held by a charitable entity for the
benefit of charity of which he is a co-trustee; 1,290,584 shares held by a
charitable entity created by a family member for the benefit of charity of
which he is a co-trustee; and 846,849 shares held by a charitable entity
created by a family member for the benefit of charity of which he is
co-trustee.
(3) Includes: 39,000 shares owned by Mr. Mandel; 13,901,754 shares held in a
trust for the benefit of Mr. Mandel in which he retains a reversionary
interest; 422,541 shares held in a charitable foundation of which he is a
trustee; 64,642 shares held in a trust for the benefit of his wife of which
he is a trustee; 2,176,578 shares held in trusts for the benefit of certain
family members of which his wife is the trustee or trust advisor; 185,964
shares held as co-trustee of a trust established by a family member for the
benefit of his grandchildren; 641,620 shares owned by the Corporation's
pension and profit sharing trusts as to which he serves as one of the
members of the advisory committee; 293 shares credited to his account under
the Corporation's PAYSOP; 846,849 shares held by a charitable entity for
the benefit of charity of which he is a co-trustee; 1,290,584 shares held
by a charitable entity created by a family member for the benefit of
charity of which he is a co-trustee; 897,907 shares held by a charitable
entity created by a family member for the benefit of charity of which he is
co-trustee.
(4) The amounts shown as beneficially owned by Jack N., Joseph C. and Morton
L. Mandel include 3,035,340 shares of which each of them is deemed to be a
beneficial owner under SEC rules. The amounts shown as beneficially owned
by Jack N. and Joseph C. Mandel also include 3,591 shares of which they are
both deemed to be beneficial owners under SEC rules. Further, the amounts
shown as beneficially owned by Jack N. and Morton L. Mandel include 185,964
shares of which they are both deemed to be beneficial owners under SEC
rules. These duplications have been eliminated in computing the number of
shares beneficially owned by all Directors and officers as a group. In
addition, duplications relating to deemed beneficial ownership by officers
of shares owned by the Corporation's pension and profit sharing trusts, or
by charitable foundations for which such officers are co-trustees, have
been eliminated.
(5) This information is based on a Schedule 13G filed with the SEC reporting
that, as of December 31, 1994, The Huntington Trust Company, N.A. had sole
voting power for 4,616,634 shares; shared voting power for 250 shares; sole
investment power for 440,842 shares; and shared investment power for 58,318
shares.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), requires the Corporation's officers and Directors,
and persons who beneficially own more than 10% of the outstanding Common Stock,
to file with the SEC initial reports of beneficial ownership and reports of
Changes in beneficial ownership of equity securities of the Corporation on
Forms 3, 4 and 5. Based on the copies of such reports furnished to it, the
Corporation believes that during fiscal 1995 all Section 16(a) filing
requirements applicable to its officers, Directors and greater than 10%
beneficial
8
<PAGE> 9
owners were satisfied, except for the following: the filing of a Form 4 on
behalf of John H. Gerhart, a former officer, for a stock sale made in August
1994, was made timely with the NYSE but inadvertently went to an address other
than the SEC. A duplicate Form 4 was filed with the SEC one day late following
discovery of this situation.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth information with respect to compensation paid to
the Chief Executive Officer and each of the other four most highly compensated
executive officers of the Corporation for services in all capacities during the
fiscal years ended May 31, 1995, 1994 and 1993, as well as certain information
on grants and exercises of stock options under the Corporation's 1973 Stock
Option Plan for Management Employees (the "Employee Option Plan").
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
AWARDS
------
SECURITIES
NAME AND UNDERLYING
PRINCIPAL FISCAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY ($) (#)(1) COMPENSATION ($) (2)
------------------------- ----- ---------- ------------- --------------------
<S> <C> <C> <C> <C>
Morton L. Mandel 1995 $565,000 -0- $13,000
Chairman of the Board and 1994 540,000 -0- 9,000
Chief Executive Officer 1993 520,000 -0- 10,000
Jack N. Mandel 1995 260,000 -0- 4,000
Chairman of the 1994 255,000 -0- 3,000
Finance Committee 1993 250,000 -0- 13,000
Joseph C. Mandel 1995 260,000 -0- 5,000
Chairman of the 1994 255,000 -0- 22,000
Executive Committee 1993 250,000 -0- 14,000
Philip S. Sims 1995 312,000 8,000 2,000
Vice Chairman of 1994 297,000 4,000 3,000
the Board 1993 284,000 6,000 6,000
Bruce W. Johnson 1995 292,000 8,000 4,000
President 1994 278,000 4,000 5,000
1993 260,000 6,000 4,000
<FN>
--------------
(1) The number of shares covered by stock options granted in 1993 has been
adjusted for the 3-for-2 stock split in the form of a stock dividend
declared by the Board of Directors in December, 1992. The Corporation has no
plan providing for grants of stock appreciation righ (SARs), either in
tandem with or separate from stock options.
(2) All amounts in this column represent reimbursements for medical expenses
incurred during the respective years shown.
</TABLE>
9
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (4) (5)
------------------------------------------------------------------------------ -----------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE PRICE
GRANTED EMPLOYEES IN ($ PER SHARE) EXPIRATION
NAME (1) (#) (2) FISCAL YEAR (2) (2) (3) DATE 5% ($) 10% ($)
-------------- ------------ ---------------- ------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Philip S. Sims 8,000 1.3% $23.75 11-30-99 $52,500 $116,000
Bruce W. Johnson 8,000 1.3% $23.75 11-30-99 $52,500 $116,000
<FN>
(1) Morton L., Jack N. and Joseph C. Mandel are not eligible to participate in
the Employee Option Plan and therefore are omitted from the table above
and the following table.
(2) The Corporation has no plan providing for grants of SARs, either in tandem
with or separate from stock options.
(3) Options have an exercise price of not less than 100% of the fair market
value of the Common Stock on the date of grant. The exercise price may
be paid by cash and/or then owned shares, valued at their fair market
value at the time of option exercise.
(4) Options held by Mr. Sims and Mr. Johnson become exercisable five years
after the date of grant. No portion is exercisable before five years,
except that such options become fully exercisable for prescribed periods
following an optionee's death or, in certain circumstances, retirement.
(5) The amounts shown reflect appreciation at the 5% and 10% rates prescribed
by applicable SEC rules for illustrative purposes. Therefore, they are not
intended to forecast future financial performance or potential future stock
appreciation, and are not necessarily indicative of the actual values that
may be realized by the named executive officers.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
---------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END
(#) (1) ($) (1)
--------------- ---------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---------------- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Philip S. Sims 8,100 $85,400 -0-/30,000 -0-/$107,250
Bruce W. Johnson 7,200 $76,800 -0-/28,800 -0-/$ 97,850
<FN>
---------------
(1) This value is calculated based on the difference between $25.125, the
closing price of the Common Stock on May 31,1995, and the exercise price
of the options.
</TABLE>
10
<PAGE> 11
RETIREMENT PROGRAM
Premier Master Pension Plan B provides pension benefits for eligible salaried
employees of the corporate office and certain divisions and subsidiaries.
Certain other employees who are not covered by Premier Master Pension Plan B
are eligible to participate in separate pension plans.
The following table sets forth the estimated annual retirement benefits payable
under Premier Master Pension Plan B (assuming payments made on the normal
straight-life basis and not under any of the various survivor options) in
various remuneration classifications upon retirement at age 65 after indicated
periods of service. These amounts are determined under the assumptions that all
of the indicated years of service occurred after June 1, 1973 and that the
Social Security amount equals the level of benefits payable to an employee
retiring at age 65 with the indicated compensation on January 1, 1995 based on
the Plan provisions as of December 31, 1994.
<TABLE>
PENSION PLAN TABLE
------------------
<CAPTION>
AVERAGE ANNUAL ANNUAL BENEFIT FOR INDICATED YEARS OF SERVICE
REMUNERATION --------------------------------------------------------------------------------
DURING FINAL
5-YEAR PERIOD 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 14,209 $ 22,542 $ 30,876 $ 39,209 $ 44,209
200,000 39,209 55,876 72,542 89,209 99,209
300,000 64,209 89,209 114,209 139,209 154,209
400,000 89,209 122,542 155,876 189,209 209,209
500,000 114,209 155,876 197,542 239,209 264,209
600,000 139,209 189,209 239,209 289,209 319,209
700,000 164,209 222,543 280,875 339,209 374,209
</TABLE>
Premier Master Pension Plan B provides for benefits based on the average of the
total compensation during the five consecutive calendar years of employment in
the final ten calendar years preceding retirement that yield the highest
average. Total compensation covered by the plan is all cash remuneration
payable by the Corporation to or for the benefit of a member of the plan for
services rendered while an employee (which corresponds to the amounts shown as
"salary" in the Summary Compensation Table), excluding any medical
reimbursement payments, bonuses, incentive compensation payments, life
insurance premiums and amounts arising under stock options. Actual benefits
payable would be subject to the applicable maximum established by the Internal
Revenue Service ($120,000 for retirement in 1995) and certain limitations would
be imposed on the compensation to be included for purposes of calculating
pension benefits ($150,000 limitation in 1995).
The pension benefit is equal to the greater of (1) 1 2/3% of average total
compensation times years of service (maximum 33 years), less 75% of the
employee's primary Social Security benefit payable at age 65 or (2) a minimum
benefit formula not related to compensation. The maximum Social Security
benefit payable at age 65 for a person retiring in 1995 is $14,388. The amounts
shown in this table reflect an offset for Social Security, as outlined above,
of $10,791 (75% of $14,388).
Certain employees are also entitled to benefits derived from the Corporation's
prior profit sharing plan; however, in these cases, the pension benefit payable
from the Corporation's Master Pension Plan B is reduced to reflect those years
in which the profit sharing programs were in effect.
11
<PAGE> 12
COMPENSATION
COMMITTEE
REPORT ON
EXECUTIVE
COMPENSATION
The applicable years of service as of January 1, 1995 for each of the
individuals named in the Summary Compensation Table are:
<TABLE>
<CAPTION>
YEARS OF
NAME SERVICE
-------------------------------------------------------
<S> <C>
Morton L. Mandel 49
Jack N. Mandel 49
Joseph C. Mandel 49
Philip S. Sims 39
Bruce W. Johnson 27
</TABLE>
---------------------
In accordance with rules promulgated by the SEC, the information
included in this Proxy Statement under the captions "Compensation Committee
Report on Executive Compensation" and "Five-Year Shareholder Return Comparison"
will not be deemed to be proxy "soliciting material" or to be "filed" or
incorporated by reference in any prior or future filings by the Corporation
under the Securities Act of 1933 or the Securities Exchange Act.
INTRODUCTION
The following report describes the philosophy and procedures relating to the
Corporation's executive officer compensation program for fiscal 1995, and
discusses specifically the compensation for the Chairman of the Board and Chief
Executive Officer.
The fiscal 1995 Cash Compensation of the Corporation's Chairman and Chief
Executive Officer, and of all other executive officers of the Corporation who
then served on its Board of Directors (Jack N. Mandel, Joseph C. Mandel, Philip
S. Sims and Bruce W. Johnson), was determined by the Board of Directors. The
Corporation's Board of Directors does not have a Compensation Committee. The
Chairman and Chief Executive Officer presented to the Board the amount of his
proposed remuneration, as well as the respective cash compensation amounts
recommended for such other four executive officers, and those amounts were
approved by the remaining members of the Board of Directors. The Board of
Directors authorized the Chairman to establish the compensation of the
Corporation's other executive officers or to delegate such determinations to
other appropriate executive officers.
The Board of Directors has delegated its authority under the Corporation's
Employee Option Plan to a Stock Option Committee comprised of three members
(Jack N., Joseph C. and Morton L. Mandel) who are not eligible to participate in
such plan. Generally, the stock option component of total compensation for
executive officers who qualify as eligible participants under the Employee
Option Plan is proposed by Morton L. Mandel, in accordance with the guidelines
described below, and is approved by the Stock Option Committee.
COMPENSATION PHILOSOPHY
The Corporation's general policies regarding compensation of its management
personnel, including its executive officers, are designed to help the
Corporation attract, motivate and retain the qualified management personnel that
it needs in order to maximize shareholder returns. Toward that end, the
Corporation seeks to provide fair levels of total compensation and integrate
compensation with corporate performance and shareholder values by including
equity-based compensation as a key component.
12
<PAGE> 13
The Corporation's compensation program for all of its executive officers,
except as noted below, consists of two basic elements: cash compensation
consisting of base salary, and equity-based compensation consisting of stock
option grants. The Corporation has not included annual bonuses or other cash
incentive programs as a part of executive officer compensation, because regular
stock options are believed to afford appropriate and adequate long-term
incentives, as well as an important direct link to shareholder interests.
Because the members of the Stock Option Committee are not eligible to receive
option grants under the terms of the Employee Option Plan, their basic
remuneration as executive officers of the Corporation consists solely of cash
salaries.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
generally limits corporate tax deductions for compensation paid to each of the
executive officers named in the Summary Compensation Table to one million
dollars, unless certain requirements are met. This limitation has no effect on
the Corporation's ability to deduct the compensation paid for tax purposes in
fiscal 1995 to such named executive officers. As the tax deductibility of
compensation is not an issue at this time, the Corporation believes it important
to retain fiexibility to design compensation programs that meet its objectives
as stated above.
COMPENSATION PROGRAM
Base Salary. Management recommendations for each executive officer's salary
generally reflect a determination as to whether the amount of the executive
officer's current salary should be increased based on senior
management judgments and perceptions relating to: the individual's leadership,
experience, skills and overall job performance; the nature and level of his job
responsibilities; any actual or planned changes in the scope of such
responsibilities; and overall salary levels of management personnel of the
Corporation. In fixing cash compensation of its executive officers, the
Corporation does not generally employ compensation consultants or undertake
formal, scheduled surveys of compensation paid to executives of other
corporations. The recommended compensation is believed to be that appropriate
for the particular position at the Corporation, irrespective of the
Corporation's performance. Therefore, the cash compensation of executive
officers generally does not fluctuate on the basis of the Corporation's
performance.
Broad-Based Stock Option Plan. The Employee Option Plan is an important element
of the overall compensation program for the Corporation's management employees,
including its participating executive officers. During each year since 1973,
all management employees of the Corporation, including all of its eligible
executive officers, in the Corporation's employ on the date fixed have been
offered options under the Employee Option Plan.
Providing management personnel with the opportunity to increase their ownership
aligns their long-term interests with those of the Corporation's shareholders
and encourages the retention and continuity of management. Options underscore
the importance of improving shareholder value over the long term, since the
full benefit of the compensation package will be realized only if there is an
appreciation in the stock price over a number of years to the benefit of all of
the Corporation's shareholders.
Grants under the Employee Option Plan are of non-qualified options with an
exercise price not less than the fair market value of the shares on the date of
grant. The number of shares subject to options granted to individual
participants generally is based upon the respective salary bracket, among those
set from time to time by the Corporation,
13
<PAGE> 14
within which the individual's base salary falls, thereby indirectly reflecting
such individual's level of management responsibility. The size of a grant does
not take into account the number of shares then owned by the optionee.
Options typically have had a term of and become exercisable over a five-year
period. Upon exercise of options, executive officers of the Corporation are
expected to retain the shares received for some time thereafter in order to
grow their equity stake in the Corporation.
As described above, none of the co-founders of the Corporation (Jack N., Joseph
C. or Morton L. Mandel) is eligible to participate in the Employee Option Plan.
Since they, alone or together with spouses and various trusts for family
members, are principal shareholders of the Corporation, they are believed to
derive sufficient incentive to maximize corporate performance through their
status as such shareholders, without the need for incentive compensation in
addition to, or as part of, their regular compensation.
COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The recommendation by the Chairman of the Board and Chief Executive Officer of
the Corporation of his own salary, and the determination by the Board of
Directors of the amount thereof, are made consistent with the procedures and
considerations described above. The Chairman's 1995 compensation was based to a
substantial extent on historical compensation practices applicable to him and
the recognition of the incentives implicit in his status as a principal
shareholder of the Corporation.
Although no formal comparisons were undertaken, Mr. Morton L. Mandel's cash
compensation from the Corporation was believed to be appropriate and
reasonable, particularly given his tenure with the Corporation since its
formation, his knowledge regarding all aspects of its business, and the
significance of his ongoing contribution in terms of experience, vision and
leadership. During his thirty-five year tenure as President and then Chairman
of the Board and Chief Executive Officer, the Corporation has experienced
strong, sustained performance, even in difficult economic environments.
Submitted by the Board of Directors:
Edward B. Brandon
Hugh Calkins
John C. Colman
Scott S. Cowen
William M. Hamilton
Bruce W. Johnson
Jack N. Mandel
Joseph C. Mandel
Morton L. Mandel
Philip S. Sims
and the Stock Option Committee:
Jack N. Mandel
Joseph C. Mandel
Morton L. Mandel
14
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since there is no compensation committee of the Board of Directors, all members
of the Board of Directors participated in deliberations in respect of executive
officer compensation for fiscal 1995. The compensation of the executive
officers then also serving as Directors, Jack N., Joseph C. and Morton L.
Mandel, Philip S. Sims and Bruce W. Johnson, was approved by the remaining
Directors. Members of the Stock Option Committee, consisting of Jack N., Joseph
C. and Morton L. Mandel, approved all stock option grants.
Those participating in executive officer compensation deliberations included
Jack N., Joseph C. and Morton L. Mandel, Philip S. Sims and Bruce W. Johnson,
all of whom are executive officers of the Corporation.
Also participating in the Board determination of executive officer compensation
was one former executive officer. Until his retirement on December 31, 1991,
William M. Hamilton was the President of the Corporation. Mr. Hamilton also
performs consulting services for the Corporation, for which he received
$132,000, plus reimbursement of his expenses, during the fiscal year ended May
31, 1995.
Edward B. Brandon, a Director, is the Chairman and former Chief Executive
Officer of National City Corporation. Its lead bank, National City Bank, has
served as the Transfer Agent and Registrar of Common Stock since July, 1987 and
performs various banking services for the Corporation.
FIVE-YEAR
SHAREHOLDER
RETURN
COMPARISON
The following graph compares the cumulative total returns (assuming
reinvestment of dividends) for the five years ended May 31, 1995, assuming $100
was invested on May 31, 1990 in the stock of Premier Industrial Corporation,
the S&P 500 Index and an index of peer companies (the "Peer Group"). As Premier
Industrial Corporation is a large national distributor of electronic components
for industrial and consumer products and essential maintenance and repair
products for industrial, commercial and institutional applications, the Peer
Group is comprised of other industrial distributors that had market
capitalizations exceeding $50 million at the beginning of the five-year period
and that are classified under Standard Industrial Classification (S.I.C.)
durable wholesale trade codes 5000 (Durable Goods - Wholesale), 5063
(Electrical Apparatus & Equipment), 5065 (Electronic Parts & Equipment), 5072
(Hardware) or 5080 (Machinery & Equipment, Wholesale). Companies so identified
by Standard & Poor's Compustat Services, Inc. that comprise the Peer Group are:
AAR Corp., Arrow Electronics Inc., Avnet Inc., Bearings Inc., Bell Industries
Inc., W.W. Grainger Inc., Hughes Supply Inc., Itel Corp., Kaman Corp., Lawson
Products, Marshall Industries, Pioneer-Standard Electronics, Inc., Rexel Inc.,
Richardson Electronics Ltd., Sun Distributors L.P., and Wyle Laboratories.
Changes from last year in the composition of the Peer Group result from
application of the above criteria by Standard & Poor's Compustat Services, Inc.
and reflect the deletion of Anthem Electronics Inc. (due to its acquisition by
Arrow Electronics Inc., also in the Peer Group), the deletion of North Star
Universal Inc., (due to reclassification of its primary SIC Code by Standard &
Poor's Compustat Services, Inc.), the addition of Pioneer-Standard Electronics,
Inc. (due to the change in its market capitalization from 1989 to 1990) and the
change in company name of Willcox & Gibbs Inc. to Rexel Inc.
15
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Among Premier Industrial Corporation, the S&P 500 Index and the Peer Group
Index. Data supplied by Standard and Poor's Compustat Services, Inc.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$200
$175
$150
$125
$100
1990 1991 1992 1993 1994 1995
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE RETURNS AS OF MAY 31,
---------------------------------------------------------
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PREMIER INDUSTRIAL $100.00 $105.01 $134.38 $158.53 $121.01 $151.11
S&P 500 INDEX $100.00 $111.79 $122.81 $137.06 $142.90 $171.75
PEER GROUP INDEX $100.00 $103.39 $116.11 $150.78 $157.47 $178.13
</TABLE>
APPROVAL OF THE
1973 STOCK
OPTION PLAN FOR
MANAGEMENT
EMPLOYEES,
AS AMENDED
AND RESTATED AS
OF JUNE 6, 1995
INTRODUCTION
The 1973 Stock Option Plan for Management Employees was originally approved and
adopted by the Board of Directors of the Corporation on June 7, 1973, and then
approved by shareholders of the Corporation at their annual meeting on
September 26, 1973. Subsequent amendments were approved by the shareholders at
their annual meetings held in 1977, 1980, 1983 and 1988. The 1973 Stock Option
Plan for Management Employees, as originally adopted and as amended prior to
1995, is referred to herein as the "Employee Option Plan."
The Corporation continues to believe that the availability of stock option
benefits helps to attract and retain key management personnel and serves to
align their interests with those of other shareholders. As a result, on June 6,
1995, the Board of Directors of the Corporation approved and adopted an amended
and restated Employee Option Plan, subject to shareholder approval, that would
increase the number of shares authorized for issuance thereunder and revise
certain other features. The 1973 Stock Option Plan for Management Employees, as
so amended and restated as of June 6, 1995, is referred to herein as the
"Amended Employee Option Plan."
The material features of the Amended Employee Option Plan are summarized below.
This summary is qualified in its entirety by reference to the complete text of
the Amended Employee Option Plan, a copy of which is attached as Exhibit A to
this Proxy Statement.
16
<PAGE> 17
PROPOSED AMENDMENTS. The principal reason for amending the Employee Option Plan
at this time is to increase the total number of shares of Common Stock that may
be issued thereunder. After reflecting two shareholder-approved increases and a
number of adjustments due to stock splits, 15,187,500 shares of Common Stock
were authorized for issuance under the Employee Option Plan prior to these
proposed amendments. Since the plan's inception in 1973, 12,427,160 shares have
been issued upon the exercise of options and another 1,451,498 shares are
reserved in respect of outstanding but unexercised options, leaving only
1,308,842 shares available for future option grants. In order to ensure that a
sufficient number of shares is available for future grants, the Amended
Employee Option Plan authorizes an additional 6,000,000 shares.
Other amendments include: (i) an extension of the term of options subject to
payroll accumulation arrangements from five to six years, so that such options
would continue to be fully exercisable after five years, but would not expire
for six years; and (ii) the provision of a uniform period of one year in which
to exercise options following termination of an optionee's employment upon
normal or approved early retirement, qualifying disability or death.
GENERAL TERMS OF THE AMENDED EMPLOYEE OPTION PLAN
Eligibility. Options to purchase shares of Common Stock may be granted to
"Eligible Employees," defined to include officers and other management
employees of the Corporation or any participating subsidiary, but to exclude
Jack N., Joseph C., and Morton L. Mandel.
Authorized Shares. The total number of shares authorized and available for
issuance under the Amended Employee Option Plan, subject to adjustment as
described below, is 21,187,500, representing a 6,000,000 share increase over
the amount previously authorized. This plan maximum, and the number, kind and
option price of securities covered by outstanding options, are subject to such
adjustments as the Board of Directors may determine is equitably required to
prevent dilution or enlargement of the rights of optionees that otherwise would
result from stock dividends, stock splits, reorganizations or other similar
events affecting the Corporation or its capital structure. Shares of Common
Stock related to the unexercised or undistributed portion of any terminated,
expired, surrendered or forfeited option will be available for future option
grants.
Option Price. The price payable upon exercise of options is fixed by the Board
of Directors at the date of grant and remains the same throughout the option
term, subject only to the above-described adjustments. Such option price may
not be less than the fair market value of the shares subject to option as of
such date of grant. The Common Stock is traded on the New York Stock Exchange
and, on August 4, 1995, the per share closing price was $24.375.
Transferability. Rights of an optionee may be assigned or transferred only by
will or the laws of descent and distribution. During an optionee's lifetime,
options would not be assignable or transferable and would be exercisable only
by the optionee or, in certain circumstances, by his or her authorized legal
representative.
17
<PAGE> 18
TYPES OF OPTIONS
In general, the Amended Employee Option Plan continues to permit the grant of
two types of options. One type is linked to arrangements designed to provide a
convenient means of accumulating funds for option exercises through payroll
deductions ("Payroll Accumulation Arrangements"). Such options are subject to
detailed provisions concerning the acceptance of option grants, the
authorization of payroll deductions, the exercise of options and other matters.
This type of option is used in making grants to management employees on a
systematic basis.
The other type of option is not subject to the Payroll Accumulation
Arrangements, but is subject instead to the terms and conditions of stock
option agreements approved in connection with the particular option grants.
This type of option is used on a highly selective basis.
OPTIONS GRANTED SUBJECT TO PAYROLL ACCUMULATION ARRANGEMENTS
Option Term. Options granted subject to Payroll Accumulation Arrangements under
the Amended Employee Option Plan will expire on the last day of the month
preceding the sixth anniversary of their date of grant, as compared to a
five-year term under the prior Employee Option Plan. If the Board of Directors
so determines, options may be granted subject to Payroll Accumulation
Arrangements which extend for a term of, and become exercisable over, ten
years.
Exercisability. In the ordinary case under the Amended Employee Option Plan, as
was true prior to the most recent amendments, options become exercisable over
five years from the date of grant to the extent of one-fifth per year. Option
exercise opportunities exist for 30 days after the end of each of the first
four years and, for options granted under the Amended Employee Option Plan,
during the entire fifth year until expiration of the options on the last day of
the month preceding the sixth anniversary of their date of grant. Any
exercisable portion of an option which an Eligible Employee elects not to
exercise in a permitted exercise period generally will become exercisable again
during the applicable exercise period in the following year. If, however, an
Eligible Employee chooses at any time to discontinue payroll deductions and
receive a refund of accumulated funds, any remaining unexercised portion of the
option to which such deductions relate will be cancelled. These exercise
carry-forward provisions will not permit an option to be extended beyond its
basic six-year term.
Payment. If an Eligible Employee decides to exercise his or her option, in
whole or in part, payment for the shares will be made by application of the
funds accumulated through the Payroll Accumulation Arrangements. In addition,
the Board of Directors has authorized the exercise of options through the
surrender of Common Stock already owned by an Eligible Employee at the time of
exercise, which would be credited against the option exercise price at the then
current market price for such Common Stock.
Termination of Options. Options terminate completely upon termination of the
optionee's employment for any reason, except in limited circumstances.
Exceptions are provided where employment terminates by reason of (i) death,
(ii) retirement at normal retirement age under any retirement plan of the
Corporation or retirement at an earlier age with the consent of the Board of
Directors, or (iii) under the Amended Employee Option Plan, certain defined
qualifying disabilities. In the case of such exceptions, the Amended Employee
Option Plan affords the Eligible Employee or his or her duly authorized legal
representative the right to exercise the entire unexercised balance of
18
<PAGE> 19
such Eligible Employee's option during a period of one year from the date of
termination of his or her employment, as compared to 90 days following death or
retirement under the prior Employee Option Plan.
OPTIONS NOT SUBJECT TO PAYROLL ACCUMULATION ARRANGEMENTS
Certain members of management of the Corporation, upon specific authorization
by its Board of Directors or Stock Option Committee, have been and may be
granted options not subject to the above-described Payroll Accumulation
Arrangements. As of the most recent grant date in October, 1994, less than 2%
of management employees were granted this type of options.
This type of option is governed by stock option agreements, which may contain
such terms and conditions not inconsistent with plan terms (other than those
specifically relating to options subject to Payroll Accumulation Arrangements),
as the Board of Directors may determine. The Amended Employee Option Plan, like
its predecessor, does not fix the term of such options, but instead
contemplates that option expiration terms will be specified in individual stock
agreements. Under the Employee Option Plan, these options generally had a term
of five years, with some becoming exercisable to the extent of one-fifth per
year and others becoming exercisable at the end of the fifth year. It is
presently anticipated that grants of future options not subject to Payroll
Accumulation Arrangements generally will have a term of six years, with
exercisability occurring over five years. Such options also are expected to
terminate upon termination of an optionee's employment, except that exercise
would be permitted during a one-year period following employment termination
(but in no event later than the six-year option expiration date) in limited
situations involving retirement, qualifying disability or death.
PLAN EFFECTIVENESS, ADMINISTRATION, DURATION AND AMENDMENT
Effectiveness. If shareholders of the Corporation approve the Amended Employee
Option Plan, it will become effective as of June 6, 1995, the date of its
approval by the Board of Directors. Its terms therefore would apply only to
stock option grants made to management employees after that date.
Administration. The Board of Directors will continue to administer and have
final authority to interpret the Amended Employee Option Plan and apply its
terms. The Board may delegate its authority to a stock option committee,
composed of not less than three directors, none of whom may receive any option
grants without the specific authorization of the Board. Historically, a stock
option committee, consisting of Jack N., Joseph C. and Morton L. Mandel (none
of whom is an Eligible Employee), has acted under such delegated authority.
Duration. Like its predecessor, the Amended Employee Option Plan does not
provide for termination on a specified date. It will continue in effect until
all shares authorized thereunder have been sold or until terminated at an
earlier date by the Board of Directors.
Amendment. The Amended Employee Option Plan may be amended by the Board of
Directors, but no amendment or termination may adversely affect the rights of
any Eligible Employee in respect of any outstanding option without his or her
consent. In addition, any amendments that would increase the aggregate number
of authorized shares, alter the definition of Eligible Employee or make other
changes adversely affecting plan qualification for purposes of Rule 16b-3 under
the Exchange Act would require further shareholder approval.
19
<PAGE> 20
PLAN BENEFITS
It is impossible to determine the amount or value of stock option grants that
will be granted to any Eligible Employees under the Amended Employee Option
Plan, since such grants are within the discretion of the Board of Directors or
Stock Option Committee. The following table sets forth the number of shares
subject to options granted in 1994 to the following persons and groups:
<TABLE>
NEW PLAN BENEFITS
-----------------
1973 STOCK OPTION PLAN FOR MANAGEMENT EMPLOYEES, AS AMENDED AND RESTATED
------------------------------------------------------------------------
<CAPTION>
NUMBER OF UNITS (2)
NAME AND POSITION (1) (SHARES SUBJECT TO OPTION)
--------------------- --------------------------
<S> <C>
Philip S. Sims 8,000
Vice Chairman of the Board
Bruce W. Johnson 8,000
President
Executive Officer Group (14 persons) 55,100
Non-Executive Officer Employee Group (approximately 740 persons) 637,335
<FN>
------------------
(1) The Chairman of the Board, Morton L. Mandel, and the other two persons
named in the Summary Compensation Table, Jack N. and Joseph C. Mandel,
are not eligible to participate in the Empioyee Option Plan and therefore
are omitted from the above table. Also omitted is the group of Directors
who are not executive officers, as they are not eligible to participate
in, and received no grants under, the Employee Option Plan.
(2) The exercise price for these options granted in 1994 is $23.75 per share.
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the U.S. federal income tax
consequences of certain transactions under the Amended Employee Option Plan.
Tax Consequences to Optionees. Options to purchase shares of Common Stock under
the Amended Employee Option Plan may be options intended to qualify under
particular provisions of the Code or options not intended to qualify under the
Code ("non-qualified options"). All of the options heretofore granted under the
Amended Employee Option Plan have been, and it is presently anticipated that
future granted options will be, non-qualified options. In general: (i) no
income will be recognized by an optionee at the time a non-qualified option is
granted; (ii) at the time of exercise of a non-qualified option, ordinary income
will be recognized by the optionee in an amount equal to the difference between
the option price paid for the shares and the fair market value of the shares on
the date of exercise; and (iii) at the time of sale of shares acquired pursuant
to the exercise of a non-qualified option, any appreciation (or depreciation) in
the value of the shares after the date of exercise will be treated as either
short-term or long-term capital gain (or loss) depending on how long the shares
have been held.
In the limited circumstance where the sale of stock that is received as the
result of the exercise of a non-qualified option could subject an officer to
suit under Section 16(b) of the Exchange Act, the tax consequences to the
officer may differ from the tax consequences described above. In these
circumstances, unless a special election has been made, the principal difference
usually will be to postpone valuation and taxation of
20
<PAGE> 21
the stock received so long as the sale of stock received could subject the
officer to suit under Section 16(b) of the Exchange Act, but no longer than six
months.
Tax Consequences to the Corporation or Subsidiary. To the extent that an
optionee recognizes ordinary income as described above, the Corporation or
subsidiary for which the optionee performs services will be entitled to a
corresponding deduction provided that, among other things, the income meets the
test of reasonableness, is an ordinary and necessary business expense, is not
disallowed by the annual compensation limitation set forth in Section 162(m) of
the Code, and is not an "excess parachute payment" within the meaning of
Section 280G of the Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
1973 STOCK OPTION PLAN FOR MANAGEMENT EMPLOYEES, AS AMENDED AND RESTATED AS
OF JUNE 6, 1995.
APPROVAL OF
DIRECTOR STOCK
OPTION PLAN
INTRODUCTION
On June 6, 1995, the Board of Directors of the Corporation adopted, subject to
shareholder approval, a new stock option plan for non-employee Directors of the
Corporation. The Director Stock Option Plan (the "Director Option Plan") is
intended to provide the Corporation with an additional means to attract and
retain the services of qualified persons who are not employees to serve as
Directors and to promote the mutuality of interest between such Directors and
shareholders through ownership of Common Stock.
The material features of the Director Option Plan are summarized below. This
summary is qualified in its entirety by reference to the complete text of the
plan, which is attached as Exhibit B to this Proxy Statement.
GENERAL TERMS OF THE DIRECTOR OPTION PLAN
Eligibility. A Director is eligible to receive an option grant under the
Director Option Plan if the Director is not an officer or employee of the
Corporation or any of its subsidiaries and has not received any stock option
grant under the Employee Option Plan, as amended, for at least one year
preceding such date (each such Director referred to as an "Eligible Director").
Five members of the Board of Directors presently qualify as Eligible Directors.
Under the express terms of the Director Option Plan, Jack N., Joseph C. and
Morton L. Mandel do not qualify as Eligible Directors and therefore are not
eligible to participate.
Shares Subject to Option. The total number of shares of Common Stock available
for grant to Eligible Directors under the Director Option Plan is 100,000. This
plan maximum, and the number, kind and option price of shares subject to
outstanding options, are subject to such adjustments in the number or kind of
securities as the Board of Directors may determine is equitably required to
prevent dilution or enlargement of the rights of optionees that otherwise would
result from stock dividends, stock splits, reorganizations or similar events
affecting the Corporation or its capital structure. No such adjustments,
however, will be made in the annual grant amount described below.
Shares provided upon exercise of options may be newly issued shares, treasury
shares or a combination thereof. Shares of Common Stock related to the
unexercised or undistributed portion of any terminated, expired, surrendered or
forfeited option granted
21
<PAGE> 22
under the Director Option Plan will be available in connection with future
option grants. The Corporation presently intends to register the shares
issuable pursuant to the Director Option Plan under the Securities Act of 1933,
after receipt of shareholder approval.
Option Grants. On November 1 of each year following the effective date of the
Director Option Plan, each Eligible Director automatically will be granted an
option to purchase 1,500 shares of Common Stock as of such date. If the number
of shares remaining available for grant under the Director Option Plan is
insufficient to make all such automatic annual grants, all Eligible Directors
will participate ratably in options on the remaining shares.
Option Price and Payment. The price payable upon exercise of options will be
the fair market value of the Common Stock on the date of grant, generally
determined based on its closing price on the New York Stock Exchange on the
date of grant ("Fair Market Value"). On August 4, 1995, the reported per share
closing price of Common Stock was $24.375. Payment of the option exercise price
may, at the election of the Eligible Director, be made in cash, previously
acquired Common Stock valued at its Fair Market Value on the date of exercise,
or a combination of both.
Option Exercisability and Term. Each option will become fully exercisable
beginning on the first anniversary of its date of grant and will expire six
years after such date of grant, unless the Eligible Director earlier ceases
service as a Director. If an Eligible Director ceases to be a member of the
Board of Directors for any reason whatsoever, then the entire unexercised
balance of any outstanding options, whether or not otherwise then exercisable,
may be exercised, in whole or in part, at any time within one year after such
person's departure from the Board. In no event, however, may any option be
exercised after the scheduled expiration thereof six years after its date of
grant.
Transferability. No option or rights therein will be transferable by any
Eligible Director other than by will or by the laws of descent and
distribution. Options therefore will be exercisable during the lifetime of an
Eligible Director only by such Eligible Director or his or her duly authorized
legal representative.
PLAN EFFECTIVENESS, DURATION, ADMINISTRATION AND AMENDMENT
Effectiveness and Duration. The Director Option Plan will become effective
immediately following approval by the shareholders of the Corporation. It does
not provide for termination on a particular date. Instead, it will continue in
effect until such date as all shares of Common Stock available for grant
thereunder have been sold or until terminated at an earlier date by the Board
of Directors.
Administration. The Director Option Plan will be administered by the Board of
Directors. The Board may delegate its authority to a Plan Committee, whose
members need not be Directors. The initial Plan Committee appointed by the
Board consists of the Chairman of the Board, the Vice Chairman of the Board and
the Vice President and General Counsel.
Amendment. The Director Option Plan may be amended or discontinued by the Board
of Directors, but generally no such amendment or termination is permitted which
would (a) impair the rights of an Eligible Director in respect of any
outstanding option, without his or her consent, or (b) disqualify grants or
other transactions from the exemption afforded by Rule 16b-3 under the Exchange
Act. In addition, certain amendments
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<PAGE> 23
affecting the eligibility, vesting, exercise price, timing or amount of options
or materially increasing the aggregate number of shares issuable under the
Director Option Plan may not be made by the Board without further shareholder
approval.
PLAN BENEFITS
The following table sets forth the number of options that will be granted
automatically to the current non-executive Directors as a group under the
Director Option Plan in 1995, if it is approved by the shareholders:
<TABLE>
NEW PLAN BENEFITS
-----------------
DIRECTOR STOCK OPTION PLAN
--------------------------
<CAPTION>
NUMBER OF UNITS (1)
NAME AND POSITION (SHARES SUBJECT TO OPTION)
----------------- --------------------------
<S> <C>
Non-Executive Director Group (5 persons) 7,500
<FN>
-------------
(1) The value of such options is not presently determinable, because their
exercise price will be the market price of the underlying Common Stock on
the date of grant (November 1, 1995).
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
All options under the Director Option Plan will be non-statutory options. The
following is a brief summary of the U.S. federal income tax consequences of
certain transactions under the Director Option Plan.
Tax Consequences to Optionees. In general, (i) no income will be recognized by
an optionee at the time an option is granted; (ii) at the time of exercise of an
option, ordinary income will be recognized by the optionee in an amount equal
to the difference between the exercise price paid for the shares and the fair
market value of the shares on the date of exercise; and (iii) at the time of
sale of shares acquired pursuant to the exercise of an option, any appreciation
(or depreciation) in the value of the shares after the date of exercise will be
treated as either short-term or long-term capital gain (or loss) depending on
how long the shares have been held.
In the limited circumstances where the sale of stock that is received as the
result of the exercise of a Director option could subject the optionee to suit
under Section 16(b) of the Exchange Act, the tax consequences to the optionee
may differ from the tax consequences described above. In these circumstances,
unless a special election has been made, the principal difference usually will
be to postpone valuation and taxation of the stock received upon exercise of
the Director option so long as the sale of stock received could subject the
optionee to suit under Section 16(b) of the Exchange Act, but no longer than
six months.
Tax Consequences to the Corporation. To the extent that an optionee recognizes
ordinary income in the circumstance described above, the Corporation will be
entitled to a corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and necessary business
expense and is not an "excess parachute payment" within the meaning of Section
280G of the Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
DIRECTOR STOCK OPTION PLAN.
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<PAGE> 24
RATIFICATION
OF THE
APPOINTMENT
OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed KPMG Peat Marwick LLP as independent auditors to examine the books of
account and other corporate records of the Corporation for the fiscal year
ending May 31, 1996. KPMG Peat Marwick LLP has performed this function for the
Corporation continually since 1954 and is considered by the Directors to be
well qualified.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP.
During the fiscal year ended May 31, 1995, KPMG Peat Marwick LLP was engaged by
the Corporation to perform audit services, which included the examination of
annual reports and registration statements with the Securities and Exchange
Commission, consultation on financial accounting and reporting matters, and
meetings with the Audit Committee.
A representative of KPMG Peat Marwick LLP will be present at the meeting and
will have the opportunity to make a statement if he desires to do so and to
answer appropriate questions.
GENERAL PROXY
INFORMATION
VOTING PROCEDURES
Votes will be tabulated by or under the direction of Inspectors of Election
appointed by the Board of Directors, who will determine the presence of a
quorum and certify the results of shareholder voting at the Annual Meeting. As
provided by Ohio law and the Corporation's Regulations, the holders of shares
of Common Stock entitling them to exercise a majority of the voting power of
the Corporation will constitute a quorum for the Annual Meeting. For purposes
of determining the existence of a quorum, the Inspectors of Election will treat
as "present" all properly executed proxies, including those marked "abstain"
and those for which authority to vote for Director nominees is withheld, as
well as properly executed proxies for shares held by brokers in "street name"
that are not voted on all proposals to come before the Annual Meeting ("broker
non-votes").
In accordance with Ohio law and the Corporation's Regulations, if a quorum is
present at the Annual Meeting, the ten Director nominees receiving the greatest
number of votes will be elected Directors. Votes withheld in respect of the
election of Directors, including broker non-votes, will not be counted in
determining which nominees receive the greatest number of votes and therefore
are elected as Directors.
Adoption of the other proposals to come before the Annual Meeting will require
the affirmative vote of the holders of a majority of the shares present, in
person or by proxy, and entitled to vote at the meeting. Abstentions and broker
non-votes are required to be counted under the Corporation's Regulations in
determining the number of shares present at the Annual Meeting, but will not
represent a vote in favor of such proposals. Therefore, abstentions and broker
non-votes will have the same effect as votes against such proposals.
VOTING OF PROXIES
Unless authority is withheld, shares represented by properly executed proxies
will be voted at the meeting, and if a shareholder has specified how the shares
represented thereby are to be voted, they will be voted in accordance with such
specification. It is intended that shares represented by properly executed
proxies on which no
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<PAGE> 25
specification has been made will be voted for fixing the number of and electing
the ten nominees named under "Election of Directors," in favor of the Amended
Employee Option Plan, the Director Option Plan and the proposal to ratify the
appointment of independent auditors.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation may be accomplished by the execution
of a later proxy with regard to the same shares, or by giving notice in writing
or in open meeting.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the accompanying form will be borne by the
Corporation. The Corporation will not pay any compensation for the solicitation
of proxies, but may pay brokers, nominees, fiduciaries, and other custodians
their reasonable expenses for sending proxy material to principals and
obtaining their instructions. In addition to solicitation by mail, proxies may
be solicited in person, or by telephone or telegraph, by Directors, officers
and regular employees of the Corporation.
SUBMISSION OF
SHAREHOLDER
PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders must be
received by the Corporation no later than April 26, 1996, in order to be
included in the Corporation's Proxy Statement and proxy relating to that
meeting.
OTHER
MATTERS
The Board of Directors knows of no matter to be presented at the meeting other
than those described in this Proxy Statement. If any other matter should be
presented upon which a vote may properly be taken, it is the intention of the
persons named in the enclosed form of proxy to vote all proxies (unless
otherwise directed by shareholders) in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Howard P. Frank
Secretary
Cleveland, Ohio
August 23, 1995
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<PAGE> 26
EXHIBIT A
PREMIER INDUSTRIAL CORPORATION
1973 STOCK OPTION PLAN FOR MANAGEMENT EMPLOYEES,
AS AMENDED AND RESTATED AS OF JUNE 6, 1995
1. PURPOSE
The purpose of the 1973 Stock Option Plan for Management Employees, as Amended
and Restated as of June 6, 1995 ("this Plan"), is to provide, through the
granting of options to purchase Common Stock of Premier, incentives to superior
performance on the part of Eligible Employees. The options granted under this
Plan may be options which are intended to qualify under particular provisions
of the Internal Revenue Code, as in effect from time to time, or options which
are not intended so to qualify, as the Board of Directors may determine in
connection with particular option grants.
2. NUMBER OF SHARES
The total number of shares of Common Stock which may be issued and sold under
options granted pursuant to this Plan shall not exceed 21,187,000, except to
the extent of adjustments authorized by Section 9 below. Such shares may be
treasury shares or shares of original issue or a combination of the foregoing,
as the Board may determine. Shares of Common Stock related to the unexercised
or undistributed portion of any terminated, expired, surrendered or forfeited
option granted hereunder shall be available in connection with future option
grants hereunder.
3. ELIGIBLE EMPLOYEES
Any officer (including any officer who is a director of Premier, but excluding
Jack N., Joseph C. and Morton L. Mandel) or other management employee of
Premier or of any Premier subsidiary designated by the Board of Directors as a
participating subsidiary shall be an "Eligible Employee" for purposes of this
Plan. The Board of Directors shall have the power from time to time to select
the particular Eligible Employees, or groups of Eligible Employees, to whom
grants of options shall be made pursuant to this Plan.
4. OPTION PRICE
The option price applicable to each option granted pursuant to this Plan shall
be fixed by the Board of Directors (or in a manner and within limits prescribed
by the Board), but shall not be less than the fair market value of the shares
covered by the option at the Date of Grant.
5. GRANTING OF OPTIONS
The Board of Directors may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Eligible Employees of
options to buy Common Stock and shall fix the number of shares to be covered by
each such option. Successive options may be granted to an Eligible Employee
whether or not earlier options granted to such person remain unexercised. At
the time of grant of each option, the Board shall specify the date (not earlier
than the date on which the Board acts) on which such option grant shall become
effective (herein referred to as the "Date of Grant"), and shall specify either
(a) that such option is granted subject to the payroll accumulation
arrangements described in Section 6 below, or (b) that such option shall be
evidenced by a stock option agreement in a form then or theretofore approved by
the Board of Directors pursuant to Section 7 below.
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<PAGE> 27
6. PAYROLL ACCUMULATION ARRANGEMENTS
(a) This Section 6 will apply only to options that at the time of granting are
specified by the Board of Directors as being subject to this Section 6.
(b) Promptly after each grant of an option to an Eligible Employee, Premier
will notify such Eligible Employee of the grant and will specify a period of
time (not exceeding 30 days) during which the Eligible Employee may deliver to
Premier a written acceptance of such grant, in whole or in part, together with
the payroll deduction authorization described below. If acceptable in part,
such acceptance must cover a number of whole shares evenly divisible by five.
If and to the extent that such acceptance and authorization are received by
Premier within the specified period, the grant shall become effective as of the
Date of Grant; any portion of the grant as to which such acceptance and
authorization are not received within the specified period shall be non-
effective and cancelled.
(c) Each acceptance of an option grant shall be accompanied by a written
authorization by the Eligible Employee for approximately equal monthly payroll
deductions to be made over a 60-month period commencing with the first day of
the month following the month in which the Date of Grant occurs in a total
amount equal to the total option price of the shares for which the option grant
has been accepted. The purpose of such payroll deductions will be to accumulate
funds for the exercise of accepted option grants, and the funds so accumulated
shall be the property of the Eligible Employee and shall not bear interest. If
so directed by any Eligible Employee, such payroll deductions may be satisfied
by a transfer to such Eligible Employee's account under this Plan of any other
funds of such Eligible Employee then being held by Premier which such Eligible
Employee would then be entitled to receive upon demand. Any Eligible Employees
may instruct Premier at any time to discontinue payroll deductions authorized
under this paragraph and to pay to the Eligible Employee the funds accumulated
to date and not applied to the exercise of options, but upon such instruction
any remaining unexercised portion of the stock option to which such payroll
deductions related shall be cancelled.
(d) Within 30 days after the end of the 12th, 24th, 36th, 48th and 60th months
after the month in which the Date of Grant occurs as to any option, such option
granted to the Eligible Employee on such Date of Grant shall become exercisable
to the extent of one-fifth of the shares covered by the Eligible Employee's
acceptance of such grant. The Eligible Employee shall be entitled to exercise,
by appropriate notice to Premier, the applicable one-fifth portion so
exercisable within such 30-day period after the end of the 12th, 24th, 36th,
48th or 60th month, respectively, following the month in which the Date of
Grant of such option occurred. The Eligible Employee also shall be entitled to
exercise, at any time during the period from the last such 30-day exercise
period (after the end of such 60th month) up to and including the date which is
the last day of the month preceding the sixth anniversary of the Date of Grant
of such option, any previously unexercised portion as to which such a carryover
is permitted in accordance with the terms and conditions herein set forth. In
each case, such exercise is to be made solely through the application of funds
accumulated by the Eligible Employee pursuant to the payroll deductions
authorized pursuant to the preceding paragraph. Such right may be exercised in
respect to the entire one-fifth of the shares or any portion thereof consisting
of whole shares. The exercise or non-exercise of any one-fifth part of an
option will have no effect upon any subsequent part or parts of such option or
upon the continuance of authorized payroll deductions. To the extent any
one-fifth part of an option is not exercised within the applicable 30-day
exercise period when such one-fifth portion first becomes exercisable, (i) the
Eligible Employee may elect that any accumulated funds not applied to such
exercise be paid to him in cash, or (ii) Premier may elect (provided that such
election is made with respect to all options granted
27
<PAGE> 28
subject to this Section 6 on the same Date of Grant) that such accumulated
funds be paid to such Eligible Employee in cash, in either of which cases such
one-fifth, to the extent not exercised within such 30-day period, will expire
and be cancelled and such accumulated funds shall be paid to the Eligible
Employee within 5 days after the expiration of such 30-day period. In the
absence of either such election, such accumulated funds shall continue to be
held by Premier and the unexercised portion of such one-fifth shall again be
exercisable through the application of such funds during any subsequent
exercise period pertaining to the same option until such one-fifth has been
exercised in full but, to the extent such one-fifth is not exercised within any
subsequent exercise period, the preceding sentence shall again be applicable.
These provisions shall not in any circumstances permit the exercise of any
option after the date which is the last day of the month preceding the sixth
anniversary of the Date of the Grant.
(e) For the purpose of facilitating an Eligible Employee's decision whether or
not to exercise his option, Premier shall deliver to him not later than 5 days
after the end of each 12-month payroll accumulation period a notice advising
him of his rights as described in the preceding paragraph and setting forth,
(i) the total funds accumulated during such 12-month period, (ii) the option
price (per share and total) applicable to the one-fifth of optioned shares as
to which the option is then exercisable, and (iii) the average of the closing
sales prices of the Common Stock of Premier on the New York Stock Exchange over
a period of 20 trading days ending not earlier than 10 days before the end of
such 12-month period.
(f) An Eligible Employee shall become a shareholder of record with respect to
shares purchased upon the exercise of a stock option as of the close of
business on the date of exercise, and certificates for such shares shall be
issued to him (registered in such name or names as he may request) as promptly
as practicable thereafter.
(g) All outstanding options held by an Eligible Employee, to the extent not
theretofore exercised, shall terminate on the date when the Eligible Employee
shall no longer be employed by Premier or any Premier subsidiary, whether by
reason of retirement, death, resignation, dismissal or otherwise, except in the
following specified circumstances only. In cases where the Eligible Employee's
employment with Premier terminates by reason of: (i) his retirement at normal
retirement age under any retirement plan of Premier or any Premier subsidiary,
or his retirement at an earlier age with the consent of the Board of Directors,
(ii) his Qualifying Disability (as hereinafter defined), or (iii) his death,
the Eligible Employee or his duly authorized legal representative may exercise
the entire unexercised balance of such Eligible Employee's option then
outstanding during a period of one year from the date of such termination of
employment, but in no event after the scheduled expiration of the option as
provided in Section 6(d). In the circumstances in which an Eligible Employee is
permitted to exercise the unexercised balance of his option in accordance with
the preceding sentence, such Eligible Employee may use for such exercise funds
accumulated by him pursuant to this Section 6 or other funds. For purposes of
this Plan, a "Qualifying Disability" shall mean (i) a condition constituting a
Disability, as defined in Premier Master Pension Plan B or C, for which an
Eligible Employee participating in such pension plan has been determined to be
entitled to receive a Disability Retirement Pension thereunder, or (ii) such
other total and permanent disability as the Board of Directors hereafter may
determine to include as a Qualifying Disability under this Plan, subject to
receipt of satisfactory medical evidence and governmental disability
determinations or to such other terms and conditions as the Board may deem
appropriate.
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<PAGE> 29
(h) To the extent necessary to comply with any provision of the Internal
Revenue Code under which particular options are intended to qualify, the Board
of Directors may shorten the period during which options may be exercised and
adjust the accumulation periods accordingly. If the Board of Directors shall so
determine, options may be granted subject to this Section 6 which (i) provide
that the commencement of monthly payroll deductions will be deferred until
completion of already scheduled monthly payroll deductions pertaining to
options previously granted subject to this Section 6, or (ii) become
exercisable over a period of 120 months instead of the 60 months contemplated
by paragraphs (c) and (d), and in such cases the Board shall prescribe
appropriate adjustments in the exercise periods, the accumulation periods, and
the portion of the options becoming exercisable in each exercise period. The
Board of Directors in its discretion may also grant options pursuant to this
Section 6 which permit the option price to be paid, in whole or in part, by the
transfer to Premier by an Eligible Employee of shares of Common Stock already
owned by such Eligible Employee valued for this purpose at their fair market
value at the time of exercise of such options. The notice by Premier pursuant
to paragraph (b) of this Section 6 shall describe changes made pursuant to this
paragraph (h).
7. STOCK OPTION AGREEMENT
The Board of Directors is authorized from time to time to approve forms of
stock option agreements to evidence options granted hereunder that are not
subject to Section 6, such stock option agreements to contain such terms and
conditions not inconsistent with the other Sections of this Plan (not including
Section 6) as the Board in its discretion may determine.
8. TRANSFERABILITY
Rights of any Eligible Employee arising under this Plan may be transferred by
the Eligible Employee only by will or the laws of descent and distribution and
shall be exercisable during his lifetime only by him.
9. ADJUSTMENTS
The Board of Directors shall make or provide for such adjustments in the option
price and in the number or kind of shares of Premier's Common Stock or other
securities covered by outstanding options as the Board in its sole discretion,
exercised in good faith, may determine is equitably required to prevent
dilution or enlargement of the rights of optionees that otherwise would result
from (a) any stock dividend, stock split, reverse stock split, combination of
shares, recapitalization, stock rights offering or other change in the capital
structure of Premier, or (b) any merger, consolidation, separation,
reorganization or partial or complete liquidation, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing. The
Board of Directors shall also make or provide for such adjustments in the
number or kind of shares of Premier's Common Stock or other securities which
may be sold under this Plan as the Board in its sole discretion, exercised in
good faith, may determine is appropriate to reflect any event of the type
described in the preceding sentence. No adjustment provided for in this Section
9 shall require Premier to sell any fractional share, and the Board of
Directors may provide in its discretion, exercised in good faith, either for
the elimination of fractional shares (by rounding up or down to the next whole
number) or settlement thereof in cash.
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<PAGE> 30
10. ADMINISTRATION OF THE PLAN
(a) This Plan shall be administered by the Board of Directors of Premier. All
decisions by the Board concerning interpretation and application of this Plan
and by way of settlement of any and all disputes that may arise under this Plan
shall be final and binding upon Premier, its shareholders and Eligible
Employees.
(b) The Board of Directors may from time to time delegate all or any part of
its authority under this Plan to a committee, appointed by it, of not less than
three members of the Board of Directors (the "Stock Option Committee"). A
majority of the Stock Option Committee shall constitute a quorum, and the
action of a majority of the members at a meeting at which a quorum is present,
or acts approved unanimously in writing without a meeting, shall be the acts of
such committee. No option shall be granted by the Stock Option Committee to any
member of such committee except to the extent specifically authorized by the
Board of Directors.
11. WITHHOLDING OF TAXES
If Premier shall be required to withhold federal, state or local income, social
security or other taxes in respect of the granting or exercise of any option
granted hereunder, Premier shall make appropriate and lawful arrangements for
such withholdings or for payments by or on behalf of Eligible Employees in lieu
of such withholdings, and may retain the share certificates to which Eligible
Employees would otherwise be entitled upon exercise of their options until
required withholdings or payments in lieu thereof have been made.
12. DEFINITIONS
As used in this Plan, the terms "parent" and "subsidiary" shall have the
meanings ascribed to such terms in Section 425 of the Internal Revenue Code.
13. AMENDMENTS AND TERMINATION
This Plan may be amended from time to time or terminated at any time by the
Board of Directors but (a) no such amendment or termination shall, without the
consent of an Eligible Employee, adversely affect his rights or obligations in
respect of any outstanding option held by such Eligible Employee without his
consent, and (b) without further approval of the shareholders of Premier, no
such amendment shall increase the aggregate number of shares of Common Stock
that may be issued and sold under this Plan (except that adjustments authorized
by the last sentence of Section 9 shall not be limited by this provision),
change Section 3 of this Plan or effect any other change that would cause
grants under this Plan to cease to be qualified under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
14. EFFECTIVE DATE
This Plan and the amendments refiected herein shall become effective as of June
6, 1995 (the "Effective Date"), if and when approved by Premier shareholders at
the 1995 Annual Meeting of Shareholders or any adjournment thereof. Options
granted before the Effective Date that remain outstanding thereafter shall
continue to be governed by the terms of the 1973 Stock Option Plan for
Management Employees as in effect at the time of grant of such options, without
giving effect to the amendments effected in this Plan as of the Effective Date.
30
<PAGE> 31
15. MISCELLANEOUS
(a) It is the intention that this Plan at all times fully satisfy the
provisions and conditions of Rule 16b-3 under the Exchange Act applicable to a
plan of this type ("Rule 16b-3"). Accordingly, anything herein to the contrary
notwithstanding, to the extent that Rule 16b-3 at any time would require that
decisions concerning the selection of Eligible Employees for option grants
hereunder who are or become subject to reporting requirements of Section 16 of
the Exchange Act, the timing, amounts, and other terms of such grants and the
form of settlement thereof be made only by the Stock Option Committee, all such
decisions by the Stock Option Committee shall be final and conclusive and not
subject to reversal or modification by the Board of Directors.
(b) This Plan is intended to comply with and be subject to Rule 16b-3 as in
effect prior to May 1, 1991. The Stock Option Committee may at any time elect
that this Plan shall be subject to Rule 16b-3 as in effect on or after May 1,
1991.
31
<PAGE> 32
EXHIBIT B
DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this Director Stock Option Plan (the "Plan") is to enhance the
long-term success of Premier Industrial Corporation (the "Company") by
providing an additional means to attract and retain able persons who are not
employees to serve on the Board of Directors of the Company (the "Board") and
by promoting the mutuality of interests between such directors and shareholders
through ownership of the Common Stock of the Company, without par value
("Common Stock").
2. ELIGIBILITY
Each person who, as of any applicable date, is a member of the Board and is not
an officer or employee of the Company or any of its subsidiaries and has not
received any stock option grant under the 1973 Stock Option Plan for Management
Employees, as amended, for at least one year preceding such date (each such
person, but now and hereafter excluding Jack N., Joseph C. and Morton L.
Mandel, being referred to herein as an "Eligible Director") shall be eligible
to receive grants under the Plan of options covering shares of Common Stock
("Stock Options"). If an Eligible Director subsequently becomes an employee of
the Company while remaining a member of the Board, then such person's
eligibility for any future grants hereunder shall thereupon cease, but any
Stock Options held under the Plan by such individual at the time of such
commencement of employment shall not be affected thereby.
3. SHARES SUBJECT TO THE PLAN
(a) General. Subject to adjustment as provided in Section 3(b) hereof, the
total number of shares of Common Stock available for grant and reserved for
issuance under the Plan while it is in effect shall not exceed 100,000. Such
shares may be treasury shares or newly issued shares or a combination thereof,
as may be determined from time to time by the Board or the Plan Committee (as
defined in Section 7(a) hereof) or their designee. Shares of Common Stock
related to the unexercised or undistributed portion of any terminated, expired,
surrendered or forfeited Stock Option granted hereunder shall be available in
connection with future Stock Option grants hereunder.
(b) Adjustments. In the event of (i) any stock dividend, stock split, reverse
stock split, combination of shares, recapitalization, stock rights offering or
other Change in the capital structure of the Company, or (ii) any merger,
consolidation, separation, reorganization or partial or complete liquidation,
or (iii) any other corporate transaction or event having an effect similar to
any of the foregoing, the Board or the Plan Committee shall make or provide for
such adjustments in the number and kind of shares of Common Stock or other
securities authorized by and reserved for issuance under the Plan and the
number, kind and option price of shares of Common Stock or other securities
subject to outstanding Stock Options, but not the number of shares subject to
grants to Eligible Directors as provided in Section 4 hereof, as the Board or
Plan Committee, in its discretion exercised in good faith, determines is
equitably required to preserve the economic value of the shares subject to the
Plan and to prevent dilution or enlargement of the rights of Optionees with
respect to unexercised outstanding Stock Options; provided, however, that the
number of shares subject to any Stock Option shall at all times be a whole
number and that, as necessary to achieve that result, share amounts shall be
rounded down to the nearest whole number.
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<PAGE> 33
4. STOCK OPTION GRANTS
(a) Annual Grants. On November 1 of each year following the effective date of
the Plan, each person who then is an Eligible Director (regardless of whether
newly elected, re-elected or retained as a Director at the most recent
preceding Annual Meeting of Shareholders of the Company) shall automatically be
granted a Stock Option to purchase 1,500 shares of Common Stock as of such
date. Each such grant shall be evidenced by a notice thereof by the Company to
each Eligible Director.
(b) Available Shares. In the event that the number of shares of Common Stock
available for future grant under the Plan is insufficient to make all automatic
grants required to be made on a given date, then all Eligible Directors
entitled to a grant on such date shall share ratably in the number of Stock
Options on shares available for grant under the Plan.
5. TERMS OF STOCK OPTIONS
Stock Options granted under the Plan shall be subject to the following
additional terms and conditions:
(a) Option Price. The option price per share of Common Stock covered by a Stock
Option shall be the fair market value of the Common Stock as of the date of
grant, determined based on the closing price of Common Stock on the New York
Stock Exchange on the date of grant or, if no shares of Common Stock were
traded on such date, on the next preceding date on which shares of Common Stock
traded ("Fair Market Value"), subject to adjustment pursuant to Section 3(b)
hereof.
(b) Option Type. All Stock Options granted under the Plan shall be
non-statutory options not intended to qualify under Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) Option Term. Each Stock Option shall expire six years after the date of
grant, subject to earlier termination pursuant to Section 5(e) hereof.
(d) Exercisability. Each Stock Option shall become fully exercisable beginning
on the first anniversary of the date of its grant, subject to Section 5(e)
hereof.
(e) Termination upon Cessation of Service. If an Eligible Director ceases to be
a member of the Board for any reason whatsoever, whether by reason of death,
Qualifying Disability (as hereinafter defined), retirement, resignation or
otherwise ("Termination of Directorship"), then any unexercised option, whether
or not otherwise then exercisable on the date of such Termination of
Directorship, may be exercised, in whole or in part, at any time within one
year after such Termination of Directorship, but in no event after the
expiration of the term of the Stock Option pursuant to Section 5(c) hereof. In
such circumstances, the Stock Option may be exercised by the Eligible Director
or the Eligible Director's legal representative (in the event of his or her
death or Qualifying Disability). For purposes of the Plan, the term "Qualifying
Disability" shall mean a physical or mental condition that prevents the
Eligible Director from performing his or her duties as a member of the Board,
and which is expected to be permanent or for an indefinite duration exceeding
one year.
(f) Payment. Stock Options may be exercised and shares of Common Stock
delivered only upon payment to the Company in full of the purchase price of the
shares of Common Stock to be purchased by whole or partial exercise of the
Stock Option.
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<PAGE> 34
Payment of the purchase price may, at the election of the Eligible Director, be
made in (i) cash, (ii) previously acquired Common Stock, valued at its Fair
Market Value on the date of exercise, or (iii) a combination thereof.
(g) Non-Transferability of Stock Options. No Stock Option or rights therein
shall be assignable or transferable by any Eligible Director other than by will
or by the laws of descent and distribution. All Stock Options shall be
exercisable during the lifetime of any Eligible Director only by the Eligible
Director or the duly authorized legal representative of such Eligible Director.
6. PLAN EFFECTIVE DATE AND DURATION
(a) Plan Effective Date. The Plan has been adopted by the Board on June 6, 1995
and shall become effective immediately following approval by the shareholders
of the Company at the 1995 Annual Meeting of Shareholders or any adjournment
thereof.
(b) Duration. The Plan will terminate on such date as no shares of
Common Stock remain available for the grant of Stock Options under the Plan or
at such earlier date as the Board may determine, subject to Section 8 hereof.
Termination of the Plan will not affect any Stock Options then outstanding
under the Plan.
7. PLAN ADMINISTRATION
(a) By Board or Plan Committee. The Plan shall be administered by the Board or
by a Plan Committee (which need not consist of directors) duly appointed by the
Board from time to time and having such powers as may be specified by the Board
(the "Plan Committee"). The initial Plan Committee appointed by the Board of
Directors as a part of its approval of the Plan shall consist of the Chairman
of the Board, the Vice Chairman of the Board and the Vice President and General
Counsel of the Company.
(b) Administrative Authority. The Board or the Plan Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it from time to time shall deem advisable, to
interpret the terms and provisions of the Plan and any Stock Option granted
hereunder (and any agreement relating thereto) and to otherwise supervise the
administration of the Plan. The determination of the Board or the Plan
Committee on all matters relating to the Plan or any agreement relating thereto
shall be conclusive and final. No member of the Board or the Plan Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Stock Option.
(C) Limitations. Notwithstanding the foregoing, the selection of Eligible
Directors to whom Stock Options are to be granted, the timing of such grants,
the number of shares subject to any Stock Option, the periods during which any
Stock Option may be exercised and the term of any Stock Option shall be as
provided in the Plan, and neither the Board nor the Plan Committee shall have
any discretion as to such matters. The Plan is intended to allow Eligible
Directors to receive Stock Options without causing them to cease to be
"disinterested persons," within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, or any successor rule, in the form then
applicable to the Company ("Rule 16b-3"), with respect to other stock options
of the Company. To the extent that any provision of the Plan or action by the
Board or the Plan Committee with respect thereto would be inconsistent with
such intent, such provision or action shall be null and void.
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<PAGE> 35
8. PLAN AMENDMENT OR DISCONTINUANCE
The Board may amend or discontinue the Plan, but no amendment or
discontinuation shall be made which would: (a) impair the rights of an Eligible
Director under any outstanding Stock Option without the consent of such
Eligible Director or his or her duly authorized legal representative, except
such an amendment made to cause grants and other transactions under the Plan to
qualify for the exemption provided by Rule 16b-3; or (b) disqualify grants and
other transactions under the Plan from the exemption provided by Rule 16b-3.
Notwithstanding the foregoing or any other term of the Plan, no amendment to
the Plan may be made by the Board, without the approval of Company
shareholders, which (i) changes the eligibility criteria for receipt of Stock
Options under the Plan, (ii) changes vesting conditions, terms of
exercisability, timing, amount or exercise price of Stock Options under the
Plan, or (iii) materially increases the aggregate number of shares of Common
Stock which may be issued under the Plan. In addition, no amendment shall be
made without the approval of Company shareholders to the extent such approval
is required by applicable law or agreement. If required to maintain
qualification under Rule 16b-3, the Plan shall not be materially amended more
often than once every six months, other than to comport with changes in the
Code or the rules and regulations thereunder.
9. GENERAL PROVISIONS
(a) Non-Exclusive Benefit. Nothing contained in the Plan shall prevent the
Company or any subsidiary from adopting other or additional compensation
arrangements applicable to members of the Board, including Eligible Directors.
(b) Direct Obligation. Benefits payable under the Plan to any person shall be
satisfied directly by the Company. The Company shall not be required to fund,
or otherwise segregate assets to be used for payment or satisfaction of,
benefits under the Plan.
(c) No Right to Continue as Director. Nothing in the Plan, or any Stock Option
granted under the Plan, shall confer any right on any person to continue as a
director of the Company or affect in any manner the rights of the shareholders
of the Company or the Board to elect and remove directors.
(d) Governing Law. The Plan and all Stock Options awarded and actions taken
with respect thereto shall be governed by and construed in accordance with the
laws of the State of Ohio, except with respect to its choice of law rules.
(e) Governing Exchange Act Rules. The Plan is intended to comply with and be
subject to Rule 16b-3 under the Securities Exchange Act of 1934 as such Rule
was in effect prior to May 1, 1991. The Plan Committee may elect at any time
that the Plan shall be subject to Rule 16b-3 as in effect on or after May 1,
1991.
(f) Securities Law Registration. The Company intends to register shares of
Common Stock issuable pursuant to the Plan under the Securities Act of 1933, as
amended, once shareholder approval has been obtained. Unless and until the
shares have been so registered, each person purchasing or receiving shares of
Common Stock pursuant to a Stock Option shall represent to and agree with the
Company in writing that such person is acquiring the shares of Common Stock
without a view to the distribution thereof. Any certificates for such shares of
Common Stock shall include an appropriate legend to reflect the restrictions on
transfer.
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<PAGE> 36
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name below.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PROXY Edward B. Brandon John C. Colman William M. Hamilton Jack N. Mandel Morton L. Mandel
Hugh Calkins Scott S. Cowen Bruce W. Johnson Joseph C. Mandel Philip S. Sims
</TABLE>
2. APPROVAL OF THE 1973 STOCK OPTION PLAN FOR MANAGEMENT EMPLOYEES, AS
AMENDED AND RESTATED
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF THE DIRECTOR OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK as independent
auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
BE SURE TO SIGN THE REVERSE SIDE OF THIS CARD
<PAGE> 37
PREMIER INDUSTRIAL CORPORATION
4500 Euclid Avenue - Cleveland, Ohio 44103
The undersigned hereby appoints Howard P. Frank and Karen A. Vereb as proxies,
each with the power to appoint his or her substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side of this card,
all of the Common Stock of Premier Industrial Corporation held of record by the
undersigned on August 11, 1995, at the Annual Meeting of Shareholders to be
held at the Sheraton City Centre Hotel, 777 St. Clair Avenue, Cleveland, Ohio
on October 10, 1995, or at any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. WHEN PROPERLY
EXECUTED, IT WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE OF THIS
CARD BY THE UNDERSIGNED SHAREHOLDER; IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR #1, #2, #3 AND #4.
Date:____________________________________, 1995
_______________________________________________
_______________________________________________
Shareholder's Signature
Please sign exactly as your name appears at left. In
signing as attorney, executor, administrator, trustee
or guardian please give full title as such, and if
signing for a corporation please give your title. When
shares are in the name of more than one person, each
should sign.
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| PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY |
| CARD PROMPLTLY, USING THE ENCLOSED ENVELOPE |
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