PROLER INTERNATIONAL CORP.
P. O. BOX 286
HOUSTON, TEXAS 77001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996
To the Stockholders:
The 1996 Annual Meeting of Stockholders of Proler International Corp. (the
"Company") will be held in the Board Room on the mezzanine level of the Texas
Commerce Bank Building, 707 Travis Street, Houston, Texas on June 25, 1996 at
9:00 a.m. local time for the purposes of:
(1) electing three directors of the Company; and
(2) transacting such other business as may be properly brought before the
meeting.
Owners of record of the Company's Common Stock at the close of business on
May 8, 1996 will be entitled to vote at the meeting.
If you cannot attend the meeting in person, you are urged to sign the
enclosed proxy and return it in the enclosed envelope as soon as possible in
order that your shares will be represented at the meeting.
By order of the Board of Directors,
/s/ HERMAN PROLER
Herman Proler
Chairman of the Board
May 28, 1996
Houston, Texas
PROLER INTERNATIONAL CORP.
P. O. BOX 286
HOUSTON, TEXAS 77001
PROXY STATEMENT
This statement is furnished in connection with the solicitation by Proler
International Corp., a Delaware corporation (the "Company"), of proxies to be
voted at the Annual Meeting of Stockholders of the Company, to be held on June
25, 1996, and at any adjournment thereof (the "Annual Meeting"). Each valid
proxy that is received in time for voting and is not revoked will be voted at
the Annual Meeting in accordance with the specifications thereon. If no contrary
specification is made, all shares represented by an executed proxy will be voted
for the nominees for the Board of Directors named therein. Any stockholder who
has submitted a proxy may revoke it at any time before it is exercised by giving
notice in writing to the Secretary of the Company. The proxy will automatically
be revoked if the stockholder votes in person at the Annual Meeting or provides
a later dated proxy. It is anticipated that this proxy statement will first be
sent or given to stockholders of the Company on or about May 28, 1996.
On May 8, 1996, there were 4,717,356 shares of common stock, $1.00 par
value per share, of the Company (the "Common Stock") outstanding. Holders of
record of the Common Stock on May 8, 1996 will be entitled to one vote per share
on all matters to come before the Annual Meeting. During the ten days prior to
the Annual Meeting, a list of the stockholders entitled to vote at the Annual
Meeting will be available at the principal offices of the Company during
ordinary business hours for examination by any stockholder for any purpose
germane to the Annual Meeting. The holders of 50% of the shares of Common Stock
entitled to vote and represented in person or by proxy will constitute a quorum
for the transaction of business at the Annual Meeting. Directors will be elected
by a plurality of the votes cast at the Annual Meeting. Abstentions and broker
non-votes will be included in determining whether a quorum is represented at the
Annual Meeting. Abstentions from voting on any matter will be included in the
voting tally, but will not have an effect on the election of directors other
than to reduce the total number of votes cast for the various candidates. Broker
non-votes are not considered "shares present" with respect to matters decided by
a plurality or a majority of shares represented at the meeting, and as a result,
broker non-votes will not affect the outcome with respect to the election of
directors.
All costs incurred in the solicitation of proxies will be borne by the
Company. In addition to solicitation by mail, the officers, employees or
stockholders of the Company may solicit proxies personally and by telephone and
telegraph without additional compensation. The Company may also request banks
and brokers who hold shares of stock in their names or custody or in the names
of nominees for others, to forward copies of the proxy material to those persons
for whom they hold such shares and to request authority for the execution of
proxies. The Company will
1
reimburse such banks and brokers for their out-of-pocket expenses incurred in
connection therewith.
The following table sets forth, as of May 8, 1996, the beneficial ownership
in the Company of each stockholder known to the Company who owned more than five
percent of the Common Stock of the Company, and of each director, executive
officer named in the Summary Compensation Table and all officers and directors
of the Company as a group.
AMOUNT AND
NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER OWNERSHIP (1) SHARES
------------------- ------------- -------------
Herman Proler .................................... 451,367(2) 9.46%
4265 San Felipe, Suite 900
Houston, Texas 77027
Steven F. Gilliland .............................. 58,333(3) 1.23%
4265 San Felipe, Suite 900
Houston, Texas 77027
Harvey Alter ..................................... 4,000(4) *
1615 H Street Northwest
Washington, D.C. 20062
Richard B. Mayor ................................. 5,500(5) *
700 Louisiana, Suite 1900
Houston, Texas 77002
John J. McKenna .................................. 6,000(6) *
909 Fannin, Suite 1600
Houston, Texas 77010
Roman E. Boruta .................................. -- --
4265 San Felipe, Suite 900
Houston, Texas 77027
2
Bruce W. Wilkinson ............................... -- --
4265 San Felipe, Suite 900
Houston, Texas 77027
Dennis Caputo .................................... 19,694(7) *
4265 San Felipe, Suite 900
Houston, Texas 77027
David Juengel .................................... 7,316(8) *
4265 San Felipe, Suite 900
Houston, Texas 77027
Ian Linton ....................................... 10,039(9) *
4265 San Felipe, Suite 900
Houston, Texas 77027
Michael Loy ...................................... 32,640(10) *
4265 San Felipe, Suite 900
Houston, Texas 77027
Pioneering Management Corporation ................ 468,000(11) 9.92%
60 State Street
Boston, Massachusetts 02114
Tweedy, Browne Company L.P. ...................... 458,923(12) 9.73%
52 Vanderbilt Avenue
New York, New York 10017
Billie Fay Proler ................................ 257,409(13) 5.46%
2929 Buffalo Speedway
Houston, Texas 77098
David S. Lurie ................................... 256,779(14) 5.44%
5847 San Felipe, Ste. 600
Houston, Texas 77057
Dimensional Fund Advisors ........................ 241,000(15) 5.11%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
3
All officers and directors as a group
(15 persons) ................................... 612,431(16) 12.58%
- ------------
* Less than one percent.
(1) The persons listed above have the sole power to vote and to dispose of
the shares beneficially owned by them except as otherwise indicated.
(2) Includes 395,919 shares held of record by Mr. Proler, 3,181 shares
allocated to Mr. Proler pursuant to the Company's 401(k) Plan as to
which Mr. Proler does not have voting power, and 52,267 shares subject
to currently exercisable options. Excluded are 300 shares held by the
wife of Herman Proler, the beneficial ownership of which he disclaims.
(3) Includes 15,000 shares held of record by Mr. Gilliland and 43,333
shares subject to currently exercisable options.
(4) Includes 1,000 shares held of record by Dr. Alter and 3,000 shares
subject to currently exercisable options.
(5) Includes 2,500 shares held of record by Mr. Mayor and 3,000 shares
subject to currently exercisable options.
(6) Includes 3,000 shares held of record by Mr. McKenna and 3,000 shares
subject to currently exercisable options.
(7) Includes 4,312 shares held of record by Mr. Caputo, 1,340 shares
allocated to Mr. Caputo pursuant to the Company's 401(k) Plan, as to
which Mr. Caputo does not have voting power, and 14,042 shares subject
to currently exercisable options. Does not include 655 shares of
restricted stock awarded to Mr. Caputo pursuant to the Company's 1993
Incentive Compensation Plan and subject to vesting as described below.
(8) Includes 758 shares held of record by Mr. Juengel, 808 shares allocated
to Mr. Juengel pursuant to the Company's 401(k) Plan, as to which Mr.
Juengel does not have voting power, and 5,750 shares subject to
currently exercisable options. Does not include 278 shares of
restricted stock awarded to Mr. Juengel pursuant to the Company's 1993
Incentive Compensation Plan and subject to vesting as described below.
(9) Includes 1,612 shares held of record by Mr. Linton, 427 shares
allocated to Mr. Linton pursuant to the Company's 401(k) Plan, as to
which Mr. Linton does not have voting power, and 8,000 shares subject
to currently exercisable options. Does not include 655 shares of
4
restricted stock awarded to Mr. Linton pursuant to the Company's 1993
Incentive Compensation Plan and subject to vesting as described below.
(10) Includes 16,640 shares held of record by Mr. Loy, and 16,000 shares
subject to currently exercisable options. Does not include 819 shares
of restricted stock awarded to Mr. Loy pursuant to the Company's 1993
Incentive Compensation Plan and subject to vesting as described below.
(11) This information is derived from a Schedule 13G dated January 26, 1996
filed by Pioneering Management Corporation ("Pioneering"). Pioneering
has sole dispositive and shared voting power with respect to these
shares.
(12) This information is derived from an Amendment Number 3 to a Schedule
13D dated February 6, 1996 filed by Tweedy, Browne Company L.P. ("TBC")
and Amendment No. 2 to a Schedule 13D filed by Vanderbilt Partners,
L.P. ("Vanderbilt") also dated February 6, 1996. The general partners
of TBC are Christopher H. Browne, William H. Browne and John D. Spears
who are also general partners in Vanderbilt. Of the 458,923 shares
shown, 453,923 shares (the "TBC Shares") are held in the accounts of
various customers of TBC as to which TBC has shared dispositive power.
TBC has sole power to vote 415,897 of the TBC Shares and no power to
vote 38,026 of the TBC Shares. 5,000 shares are held by Vanderbilt,
which has sole voting and dispositive power with respect to such
shares. Each of TBC and Vanderbilt disclaim beneficial ownership of
shares held by the other and of shares held in TBC's customer accounts.
(13) Of the shares shown above as beneficially owned by Mrs. Billie Fay
Proler, 630 shares are held of record by Mrs. Proler, 84,420 shares are
held by Mrs. Proler and David S. Lurie as trustees for the benefit of
Mrs. Proler, and 172,359 shares are held by Mrs. Proler and Mr. Lurie
as trustees of the Trust under the Will of Israel Proler, Deceased (the
"Trust"). Mrs. Proler and Mr. Lurie share the power to vote and dispose
of shares held in trust for the benefit of Mrs. Proler and as trustees
of the Trust.
(14) As described in note 13 above, the shares held by Mr. Lurie are held
in his capacity as a Trustee for the benefit of Mrs. Proler and as a
Trustee of the Trust.
(15) This information is derived from a Schedule 13G dated February 7, 1996
filed by Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advisor. Dimensional is deemed to have beneficial ownership
of 241,000 shares of Company stock as of December 31, 1995, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional
5
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(16) Includes 152,679 shares subject to immediately exercisable options, and
9,255 shares allocated to officers under the Company's 401(k) Plan,
including those shares discussed in notes 4 through 12 above. Does not
include a total of 2,735 shares of restricted stock awarded to officers
under the Company's 1993 Incentive Compensation Plan and subject to
vesting, including those discussed in notes 9 through 11 above.
ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven directors
elected for staggered three-year terms and until their successors are elected
and have qualified or until their earlier death, resignation or removal. Two new
directors, Roman E. Boruta and Bruce W. Wilkinson, were appointed to the Board
of Directors in May, 1996. Mr. Wilkinson was appointed as a Class A director of
the Company. The terms of Class A directors, which include Herman Proler and
Harvey Alter in addition to Mr. Wilkinson, expire in 1996, and the stockholders
will elect three directors to fill these positions at the Annual Meeting. Mr.
Boruta was appointed as a Class B director of the Company with a term of office
to expire at the Company's 1997 annual meeting.
Bruce W. Wilkinson is the former Chairman and Chief Executive Officer of
CRSS Inc., a Houston-based, independent power and industrial energy company and
had been with CRSS since 1978. He served as President and CEO from 1982 through
1989 and as Chairman and CEO from 1989 through 1995. Mr. Wilkinson is also a
director of NorAm Energy Corp.
Roman E. Boruta has served in a number of chief executive and other
executive operations management positions. He was Chairman of the Board,
President and Chief Executive Officer of Purolator Products Company from 1990 to
1994 and President and Chief Executive Officer of Donlee Technologies, Inc. from
1988 to 1990. Mr. Boruta also served as President of the Applied Systems
Division of York International from 1987 to 1988. He was President of Reed Tool
Company, a subsidiary of Baker International Corp., from 1979 to 1987 where he
had previously served as Vice President of Manufacturing from 1977 to 1979. Mr.
Boruta was also Vice President and General Manager of Clark Equipment Company
from 1973 to 1977 and had previously been its Vice President of Manufacturing
from 1967 to 1973. Mr. Boruta is currently an independent management consultant
in Houston, Texas. Mr. Boruta is also a director of American Central Gas
Company.
Herman Proler is Chairman of the Board of the Company. Prior to
October 1995, Mr. Proler had also served as Chief Executive Officer of the
Company.
6
Harvey Alter has been Association Manager, Resources Policy Department of
the U.S. Chamber of Commerce since 1979. He is an Adjunct Professor, University
of Maryland University College Graduate School of Management and Technology. Dr.
Alter is a director of the National Institute for Urban Wildlife and of wTe
Corporation. He also is a member of the Solid Waste Committee of Keep America
Beautiful. Dr. Alter has served on the State of Maryland's Task Force on Solid
Waste and in 1989 was appointed Chairman of the Governor's Advisory Council on
Recycling. He has been a member of two federal advisory committees on aspects of
solid waste regulation.
John J. McKenna has been Chairman and Chief Executive Officer of McKenna &
Company, a Houston-based investment banking firm, since its formation in October
1989. From June 1986 to September 1989, Mr. McKenna was managing director and
head of the Houston investment banking office of Lehman Brothers.
Steven F. Gilliland joined the Company in February, 1995 as a Director,
President and Chief Operating Officer and became Chief Executive Officer in
October, 1995. Mr. Gilliland was employed by CRSS Inc. and its predecessors in
various executive positions from 1980 to 1990 and again from 1992 to 1995 when
he served as Senior Vice President. From 1990 to 1992, he served as Senior Vice
President and Chief Operating Officer of Transco Power Company.
Richard B. Mayor has been a partner in the Houston law firm of Mayor, Day,
Caldwell & Keeton, L.L.P. since its formation in 1982. Mayor, Day, Caldwell &
Keeton, L.L.P. is retained by the Company.
Mr. Proler, Dr. Alter and Mr. Wilkinson have been nominated for election at
the Annual Meeting, and shares represented by each properly signed and submitted
proxy (unless otherwise indicated on such proxy) will be voted for their
election. Management has been advised that Mr. Proler, Dr. Alter and Mr.
Wilkinson will serve if elected. If elected, their terms will expire in 1999.
If, however, any of Mr. Proler, Dr. Alter or Mr. Wilkinson is unable to serve,
proxies will be voted for another nominee(s) selected by management.
7
The following table provides certain information with respect to the
nominees and all current directors whose terms do not expire in 1996.
<TABLE>
<CAPTION>
DIRECTOR OF
COMPANY OR POSITION AND OFFICES PRESENTLY HELD
TERM WILL PREDECESSOR WITH COMPANY (AND PRESENT
NAME AGE EXPIRE SINCE* PRINCIPAL OCCUPATION IF DIFFERENT)
---- --- ------ ------ ----------------------------------
<S> <C> <C> <C> <C>
Nominee:
Herman Proler..................... 68 1996 1948 Director, Chairman of the Board
Harvey Alter...................... 63 1996 1993 Director (Association Manager,
Resources Policy Department of
the U.S. Chamber of Commerce)
Bruce W. Wilkinson................ 52 1996 1996 Director (former Chairman and
Chief Executive Officer of CRSS
Inc.)
Directors whose terms do not expire:
John J. McKenna................... 47 1997 1992 Director (Chairman and Chief
Executive Officer of McKenna &
Company)
Roman E. Boruta................... 66 1997 1996 Director (Management
Consultant)
Steven F. Gilliland............... 44 1998 1995 Director, President, Chief
Executive Officer
Richard B. Mayor.................. 62 1998 1985 Director (Partner, Mayor, Day,
Caldwell & Keeton, L.L.P.)
</TABLE>
- ------------
* The Company is the successor to Proler International Corp., a Delaware
corporation (the "Predecessor") as a result of a restructuring of the
predecessor into a "holding company" structure effective February 28, 1996.
Each of the directors, other than Messrs. Boruta and Wilkinson, served as a
director of the Predecessor from the date indicated.
Each director has been principally employed as indicated above for more
than five years except as otherwise noted.
The Board of Directors has established and maintains an Audit Committee and
a Compensation Committee. The Audit Committee reviews with the Company's
independent auditors the plan, scope and results of the annual audit and the
procedures for and results of internal controls. The Audit Committee met once
during the year ended January 31, 1996. The members of the Audit Committee are
Mr. McKenna (Chairman), Dr. Alter, Mr. Wilkinson and Mr. Boruta. The
Compensation Committee reviews and recommends compensation arrangements for key
management personnel,
8
including the Chairman and the President and Chief Executive Officer of the
Company. The Compensation Committee met twice during the year ended January 31,
1996. The members of the Compensation Committee are Dr. Alter (Chairman), Mr.
McKenna, Mr. Wilkinson and Mr. Boruta. The members of the Compensation Committee
also administer the 1988 Stock Option Plan and the 1993 Incentive Compensation
Plan. Mr. Wilkinson and Mr. Boruta joined the Audit Committee and Compensation
Committee in May, 1996. The Board of Directors does not have a nominating
committee.
During the Company's fiscal year ended January 31, 1996, the Board of
Directors held six meetings. During such fiscal year each director attended all
of the meetings of the Board of Directors and all of the meetings of the
committees of which he was a member.
Directors who are not employees of the Company receive a quarterly payment
of $3,750, plus $1,000 for each Board of Directors meeting attended. In
addition, committee chairmen receive $1,500 and other committee members receive
$1,000 for each committee meeting attended.
Each of Messrs. McKenna, Alter and Mayor was granted options to purchase
1,000 shares of Common Stock at an exercise price of $7.875 per share under the
1994 Non-Employee Director Stock Option Plan on June 20, 1995. In addition, each
person who is non-employee director of the Company on the date of each annual
meeting of stockholders through 1998 will receive options to purchase an
additional 1,000 shares of Common Stock on each such date, for an exercise price
equal to the market value of Common Stock on such date.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports with the
Securities and Exchange Commission and the New York Stock Exchange relating to
transactions and holdings in the Company's common stock. The Company believes
that during the fiscal year ended January 31, 1996 all such filing requirements
were satisfied.
REMUNERATION OF DIRECTORS AND OFFICERS
The following tables set forth (i) the aggregate amount of remuneration
paid by the Company for the three fiscal years ended January 31, 1994, 1995 and
1996 to the Chief Executive Officer, the Company's four most highly compensated
officers in addition to the Chief Executive Officer, and (ii) the fiscal
year-end value of all stock options held by such individuals. No stock options
were exercised by any of such individuals during the fiscal year ended January
31, 1996.
9
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
-----------------------
(#) OF
ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL ---------------------------------------- STOCK UNDERLYING COMPENSATION
POSITION YEAR SALARY BONUS OTHER AWARD(1) OPTIONS (2)
- ------------------ ------ ------- -------- ------------ ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Herman Proler 1996 $318,718(3) $ 0 $ 275,937(4) $ 0 0 $ 22,127(5)
Chairman 1995 388,636 0 280,882(4) 0 0 25,016(5)
1994 300,000 0 277,888(4) 0 10,000 26,248(5)
Steven F. Gilliland 1996 $197,728(6) $ 0 $ 0 $ 0 65,000 $ 0
President and Chief 1995 -- -- -- -- -- --
Executive Officer 1994 -- -- -- -- -- --
Michael Loy 1996 $150,000 $ 0 $ 1,380(7) $ 0 0 $ 1,474
Vice President - Finance 1995 150,000 45,000 1,633(7) 0 0 1,450
1994 131,251 56,250 1,415(7) 29,815 6,000 1,449
Dennis Caputo 1996 $125,000 $ 0 $ 3,641(7) $ 0 2,000 $ 1,474
Vice President - 1995 125,000 40,000 3,509(7) 0 0 1,474
Environmental and 1994 125,001 45,000 1,904(7) 23,850 6,000 1,449
Safety Compliance
Ian Linton - 1996 $115,000 $ 0 $ 341(7) $ 0 3,000 $ 5,382(8)
Vice President 1995 115,000 40,000 2,366(7) 0 0 9,829(8)
Western Operations 1994 92,500 45,000 276(7) 23,850 6,000 784
David Juengel - 1996 $ 85,000 $ 0 $ 3,271(7) $ 0 0 $ 1,315
Vice President 1995 85,000 25,500 2,249(7) 0 0 1,474
and Treasurer 1994 82,702 19,125 975(7) 10,137 3,000 1,449
</TABLE>
- ------------
(1) Represents the value as of March 11, 1994 of shares of restricted stock
awarded on that date as a portion of the participant's bonus for fiscal
1994 pursuant to the Company's Incentive Compensation Plan. The number of
shares awarded to Messrs. Loy, Caputo, Linton and Juengel were 2,459,
1,967, 1,967 and 836, respectively. Each share award vests one-third each
year over the three-year period beginning January 31, 1995. As of January
31, 1996, the value of the aggregate restricted stock held by Messrs. Loy,
Caputo, Linton and Juengel (exclusive of shares that vested on such date)
was $6,962, $5,568, $5,568 and $2,363, respectively, based on the $8.50 per
share closing price of the Common Stock on the New York Stock Exchange on
such date. No dividends will be paid on the unvested shares of restricted
stock. No other shares of restricted stock are held by such individuals.
10
(2) Except as otherwise noted, represents the Company's matching 401(k)
contribution for such officer.
(3) Mr. Proler served as the Company's Chief Executive Officer until
October 5, 1995, when Mr. Gilliland assumed this position. Mr. Proler
continues to serve as Chairman of the Board at a salary of $100,000 per
year.
(4) Represents payments to Mr. Proler of $937, $5,882, and $2,884, for fiscal
1996, 1995, and 1994, respectively, under the Company's medical
reimbursement arrangement for executive officers and $275,000, $275,000 and
$275,004 for fiscal 1996, 1995 and 1994, respectively, in payments under
Mr. Proler's deferred compensation arrangement described below.
(5) The spouse of Mr. Proler is a party to a split dollar insurance agreement
with the Company pursuant to which she has obtained an insurance policy on
his life in the amount of $1,000,000. The Company paid annual premiums on
this policy in the amount of $34,182 for each of fiscal 1996, 1995 and
1994. Mrs. Proler paid the economic benefit to the Company on this policy
in the amounts of $12,055, $10,640, and $9,383 for fiscal 1996, 1995 and
1994, respectively. The amounts shown represent the net cost to the
Company. Upon the death of Mr. Proler, the beneficiary named by his spouse
is entitled to receive a portion of the benefits under the policy, and the
Company will receive the cash surrender value of the policy. The balance of
the amounts shown represent the Company's matching 401(k) contributions for
Mr. Proler of none, $1,474, and $1,449 for fiscal 1996, 1995 and 1994,
respectively.
(6) Mr. Gilliland joined the Company on February 8, 1995 as President and Chief
Operating Officer, and became Chief Executive Officer on October 5, 1995 at
a per annum compensation level of $200,000.
(7) Represents payments under the Company's medical reimbursement arrangement
for executive officers. This plan was terminated effective January 31,
1996.
(8) Includes payments in fiscal 1995 by the Company of $8,895 for legal fees
regarding Mr. Linton's permanent residency in the United States and in
fiscal 1996 $4,400 for tax equalization of these legal fees. The balance of
the amount represents Company matching on 401(k) contributions of $982 and
$934 for fiscal 1996 and 1995.
11
The foregoing table does not include fringe benefits which in the aggregate
do not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
for the named executive officer.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR ENDED JANUARY 31, 1996
POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES OR BASE EXPIRATION ----------------------
NAME GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
----- -------- -------------- ----- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Steven Gilliland............... 65,000 75.58% $ 7.00 02/07/05 $ 286,147 $ 725,153
Dennis Caputo.................. 2,000 2.33% 7.88 04/25/05 9,911 25,117
Ian Linton..................... 3,000 3.49% 7.88 04/25/05 14,867 37,676
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31, 1996 FISCAL YEAR-END OPTION VALUE TABLE
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
NUMBER OF UNEXERCISED AT FISCAL YEAR END *
OPTIONS AT FISCAL YEAR END ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- ------------ ------------- ----------- --------------
<S> <C> <C> <C> <C>
Herman Proler............................... 52,267 3,333 $ 3,334 $ 1,666
Steven Gilliland............................ 43,333 21,667 65,000 32,500
Michael Loy................................. 16,000 2,000 39,500 1,000
Dennis Caputo............................... 14,042 3,333 2,417 1,833
Ian Linton.................................. 8,000 4,000 2,625 2,250
David Juengel............................... 5,750 1,000 1,000 500
- ------------
</TABLE>
* Based on the $8.50 per share closing price of the Common Stock on the New
York Stock Exchange on January 31, 1996.
12
REMUNERATION AGREEMENTS AND OTHER ARRANGEMENTS
The Company has entered into a deferred compensation agreement with
Herman Proler, amended as of December 31, 1989, under which he is entitled to
receive monthly payments of $22,917 for a ten-year period commencing with the
month following his attainment of age 65, regardless of whether he is actively
employed by the Company. Pursuant to this agreement such monthly payments began
in January 1993. In the event of Mr. Proler's death, his designated beneficiary
or, in the absence of a designated beneficiary, his spouse or the executor or
administrator of his estate, would be entitled to receive such monthly payments.
The Company has entered into a deferred compensation agreement with
Steven Gilliland effective February 6, 1995, under which Mr. Gilliland will
receive a monthly payment beginning on the later of the date he attains age 65
or the first day of the month following his retirement from the Company, and
continuing for ten years. Such monthly payments will be $833 if he is
continuously employed by the Company through February 1, 2000, $1,667 if he is
so employed through February 1, 2001, $2,500 if he is so employed through
February 1, 2002, $3,333 if he is so employed through February 1, 2003 and
$4,167 if he is so employed February 1, 2004. In the event of Mr. Gilliland's
death, his designated beneficiary, or in the absence of a designated
beneficiary, the executor or administrator of his estate would be entitled to
receive such monthly payments.
In no event may benefits otherwise payable to Mr. Proler and Mr.
Gilliland under their deferred compensation agreements described above exceed
the lesser of (i) 299% of their respective "base amounts" as defined and used in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) the maximum amount of additional compensation respectively payable to them
without resulting in the denial of any Federal income tax deduction by the
Company for such payments under Section 280G or Section 4999 of the Code.
The Company has also entered into a deferred compensation agreement
with Norman Bishop effective April 16, 1993 under which Mr. Bishop will receive
a monthly payment beginning on the later of the May 1, 1998 or the first day of
the month following his retirement from the Company, and continuing for ten
years. Such monthly payments will be $1,181 if Mr. Bishop is continuously
employed by the Company through April 16, 1996, $2,361 if he is so employed
through April 16, 1997, and $3,542 if he is so employed through April 16, 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors presents the
following report on executive compensation. This report describes the components
of the Company's compensation to its executive officers and the basis on which
compensation was determined for
13
the Chief Executive Officer and other executive officers of the Company for the
fiscal year ended January 31, 1996.
The members of the Compensation Committee for the fiscal year ended January
31, 1996 were Dr. Alter (Chairman) and Mr. McKenna. The Compensation Committee's
duties include recommending compensation for the Chairman of the Board and for
the President and Chief Executive Officer of the Company and reviewing and
approving recommendations made by management regarding compensation for other
executive officers. Recommendations of the Compensation Committee are subject to
the approval of the Board of Directors of the Company. Members of the
Compensation Committee also administer the Company's 1988 Stock Option Plan and
the Company's 1993 Incentive Compensation Plan.
The executive officers of the Company for the fiscal year ended January 31,
1996, consisted of Herman Proler, Chief Executive Officer until October, 1995;
Steven F. Gilliland, President and Chief Executive Officer since February, 1995
and October, 1995, respectively; Norman Bishop, Vice President-Technical; Harold
Burnham, Vice President; Dennis Caputo, Vice President-Environmental and Safety
Compliance; David A. Juengel, Vice President and Treasurer; Ian Linton, Vice
President-Western Operations; Michael F. Loy, Vice President-Finance, Chief
Financial Officer and Secretary; Kurt Smalberg, Vice President - Scrap
Operations; and Joy S. Thakur, Vice President.
In conducting its review and recommendations with respect to executive
compensation, the Compensation Committee considers the following general
objectives:
o Attracting and retaining key executives for the Company.
o Basing incentive compensation opportunities on the Company's
performance.
o Coordinating its recommendations with the Company's annual and
long-term objectives and strategies.
EXECUTIVE OFFICER COMPENSATION.
The three principal components of the Company's compensation for executive
officers and key employees are base salary, annual bonuses and stock option
grants. The Compensation Committee believes it is essential that the Company be
able to attract and retain qualified individuals for positions of substantial
responsibility by offering a total compensation package that is competitive in
the industry. Factors taken into account in determining base salary levels
include the Company's financial performance, competitive market conditions and
individual officer duties, responsibilities, current performance, future
potential and tenure with the Company. To that end,
14
the Compensation Committee has a general policy of targeting base salaries for
key executives at the median level of the competitive market for such
executives. In determining competitive market salaries, comparisons are made to
durable goods manufacturing companies, which include steel and metal
manufacturing companies, supplemented by available information on comparable
companies. In view of the Company's financial results for fiscal 1996, the
Committee did not consider salary increases or bonuses for executive officers
appropriate and none have been awarded for 1996.
The Company's executive officers have historically received cash bonuses
determined near the Company's fiscal year end. Under the Company's 1993
Incentive Compensation Plan key employees of the Company have the opportunity to
earn annual bonus awards based on their achievement of performance goals set by
the Compensation Committee. The Compensation Committee attempts to emphasize
quantitative measures of performance whenever possible and focuses on management
activities intended to lead to greater profitability for the Company.
Performance goals are to be determined for each participant on an individual
basis and consist of specific job assignments or financial or operational
performance objectives for the fiscal year. A participant's overall performance
and contribution to the Company may also be considered in determining a portion
of any award. The Compensation Committee believes that the 1993 Incentive
Compensation Plan should incorporate specific operating profit expectations
where appropriate. For example, based on performance goals and criteria under
the plan for the fiscal year ended January 31, 1996, no incentive award could
have been earned by the Chief Executive Officer unless the Company had positive
pretax income for fiscal 1996, as reflected in the financial statements of the
Company for such year after such award had been expensed. As noted above, no
bonuses have been awarded for fiscal 1996.
Under the 1993 Incentive Compensation Plan, a portion of any bonus may be
payable in restricted shares of Common Stock, valued at the closing price of
Common Stock on the New York Stock Exchange the first day of the fiscal year to
which the award pertains. The percentage of awards to be paid in cash and in
stock may be varied by the Compensation Committee from time to time provided
that the portion payable in stock may not exceed fifty percent of the award.
The 1988 Stock Option Plan is maintained by the Company to provide
executive officers and key employees with additional incentive to promote the
financial success of the Company as reflected by increased value of the
Company's Common Stock. During fiscal 1996, options to purchase an aggregate of
86,000 shares of Common Stock were granted under this plan. The number of shares
granted to Messrs. Gilliland, Smalberg, Burnham and Thakur, the four officers
who joined the Company in fiscal 1996, were 65,000, 10,000, 5,000 and 1,000,
respectively. The options granted to Messrs. Linton and Caputo were 3,000 and
2,000, respectively.
15
The executive officers of the Company, other than Mr. Proler, Mr. Gilliland
and Mr. Bishop, are also entitled to participate in the Company's Executive
Deferred Compensation Plan for key employees. In general, participants under
this plan who are employed continuously by the Company until age 65 (or who
become permanently disabled while employed by the Company) are entitled to
receive a monthly retirement benefit beginning on the later of their retirement
from the Company or age 65. The benefit is based on a percentage of their
monthly salary on entry into the plan plus a percentage of their bonus for the
previously taxable year of the Company. The Chief Executive Officer of the
Company determines the employees who will participate in the Plan and the
effective date of their participation. Mr. Proler, Mr. Gilliland and Mr. Bishop
participate in the separate deferred compensation arrangements discussed above.
The Company had in effect a medical reimbursement arrangement with its
executive officers under which the Company paid medical expenses incurred by
such individuals that were not covered by the regular medical insurance
maintained by the Company. This plan was terminated for expenses incurred by the
executive officers after February 1, 1996.
Executive officers of the Company are also entitled to participate in the
Company's Tax Deferred Savings and Retirement 401(k) Plan on the same basis as
other employees of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION.
Mr. Proler served as Chief Executive Officer of the Company until October
5, 1995, when Mr. Gilliland assumed this position. Mr. Proler continues as
Chairman of the Board of the Company and his annual base salary was adjusted to
$100,000 in view of his change in responsibilities. In determining Mr. Proler's
salary, the Committee considered a study of compensation for executives with
similar responsibilities in comparable companies prepared by a compensation
consultant. In addition to his current salary, Mr. Proler also receives monthly
payments under the deferred compensation arrangement discussed above.
Mr. Gilliland joined the Company as President and Chief Operating Officer
in February, 1995 with an annual base salary of $200,000, which was determined
in accordance with the policy for such base salaries described above. No salary
increase was awarded to Mr. Gilliland on his promotion to Chief Executive
Officer. In 1996, no salary increases or bonuses have been granted to any
executive officer, including Mr. Gilliland, in consideration of the Company's
financial results for fiscal 1996.
16
Section 162(m) of the Code limits the deductibility by publicly-held
companies of compensation in excess of $1,000,000 paid to the chief executive
officer and each of the four additional highest-paid executive officers of the
Company. In the past the compensation levels of the Company's executives have
not exceeded this limit and the Company does not anticipate that they will do so
in the foreseeable future.
Harvey Alter, Chairman
John J. McKenna
17
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the S&P 500 Index and to the S&P Steel Index. The graph assumes that the
amount of the investment in the Company's Common Stock and each index was $100
on the last trading day in fiscal 1991. The Company's primary business is the
buying, processing for recycling and selling of ferrous and other scrap metals,
however there is no industry index for this business or group of public
companies engaged in the business that would constitute a peer group for the
Company. The Company is classified with steel companies under the industry group
listings for companies required to file annual reports with the Securities and
Exchange Commission, by the New York Stock Exchange and by other industry
indices, and considers the S&P Steel Index to be an appropriate published index
for purposes of the performance graph comparison.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
[GRAPHIC OMITTED]
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Fiscal Year
------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Proler International Corp. .. 100 82.34 85.92 138.43 65.63 81.15
S&P 500 Index ............... 100 122.69 135.67 153.14 153.96 213.48
S&P Steel Index ............. 100 122.62 172.26 225.72 186.10 201.09
PURSUANT TO SEC RULES, THIS SECTION OF THIS PROXY STATEMENT IS NOT
DEEMED "FILED" WITH THE SEC AND IS NOT INCORPORATED BY
REFERENCE INTO THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
18
PROPOSALS OF SECURITY HOLDERS
Any stockholder desiring to have included in the 1997 proxy statement a
proposal to be considered at the 1997 Annual Meeting of the Stockholders of the
Company must submit such proposal to the Company at its corporate headquarters
no later than January 29, 1997.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the public accounting
firm of Coopers & Lybrand as the Company's independent auditors for the fiscal
year ending January 31, 1997. Coopers & Lybrand has served in that capacity for
a number of years. A representative of Coopers & Lybrand will be present at the
Annual Meeting, will have the opportunity to make a statement if he so desires
and will respond to appropriate questions.
OTHER MATTERS
The Company does not know of any matter which will be brought before the
Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders accompanying this Proxy Statement. If any other matter is properly
brought before the Annual Meeting, it is intended that the persons named in, and
acting under, the enclosed form of proxy, or their substitutes, will vote
thereon in accordance with their best judgment.
By order of the Board of Directors,
/s/ HERMAN PROLER
Herman Proler
Chairman of the Board
A COPY OF THE PROLER INTERNATIONAL CORP. ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES IS AVAILABLE WITHOUT CHARGE TO INTERESTED SECURITY
HOLDERS UPON WRITTEN REQUEST. THE COMPANY WILL FURNISH ANY EXHIBIT DESCRIBED IN
THE LIST ACCOMPANYING SUCH REPORT TO ANY SUCH PERSON ON REQUEST UPON PAYMENT OF
REASONABLE FEES RELATING TO THE COMPANY'S FURNISHING SUCH EXHIBITS. PLEASE
DIRECT REQUESTS TO: CORPORATE AFFAIRS, PROLER INTERNATIONAL CORP., P.O. BOX 286,
HOUSTON, TEXAS 77001-0286.
19
PROLER INTERNATIONAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 25, 1996.
P The undersigned hereby appoints Steven Gilliland and Michael Loy, or either
R of them, as Proxies, each with the power to appoint his substitute, and
O hereby authorizes them to represent and to vote as designated herein, all
X shares of common stock of Proler International Corp. which the undersigned
Y is entitled to vote at the annual meeting of stockholders to be held on
June 25, 1996, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
FOR PROPOSAL 1, WHICH IS BEING PROPOSED BY THE BOARD OF DIRECTORS. PLEASE MARK,
SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE PROMPTLY (PLEASE SIGN ON REVERSE
SIDE)
<TABLE>
<CAPTION>
Please mark your SHARES IN YOUR NAME
[X] votes as in this
example.
<S> <C> <C> <C> <C>
FOR WITHHOLD AUTHORITY
all nominees to vote for all
listed nominees listed
1. Election of [ ] [ ] Nominees HERMAN PROLER 2. In their discretion, the Proxies are
HARVEL ALTER authorized to vote upon such business as may
BRUCE W. WILKINSON properly come before the meeting or any
adjournment thereof
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE HIS (THEIR) NAME(S) ON THE LINE(S) BELOW
_________________________________
_________________________________
SIGNATURE(S)_______________________________ DATE _______________
SIGNATURE(S)_______________________________ DATE _______________
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND
RETURN IN THE ENCLOSED
ENVELOPE PROMPTLY
