<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ESSEF CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ESSEF
CORPORATION
December 22, 1995
To Our Shareholders:
We are enclosing the NOTICE OF ANNUAL MEETING OF SHAREHOLDERS and PROXY
STATEMENT, together with the Essef Corporation 1995 Annual Report. A form of
proxy and a postage paid envelope for return of the proxy are also enclosed.
The shareholders' meeting will be held at 10:00 a.m. EST, Tuesday,
January 23, 1996, at the offices of the Company in Chardon, Ohio. For your
convenience, directions are enclosed. Regardless of whether you expect to
attend the meeting, please return the enclosed proxy, appropriately filled in
and signed, to make certain that your shares will be represented at the meeting
and voted as you wish. If you do attend, you may, of course, revoke the proxy
which you mailed and vote in person.
We look forward to your participation at the Annual Meeting.
/s/ Mary Ann Jorgenson
Mary Ann Jorgenson
Secretary
Enclosures
220 PARK DRIVE, CHARDON, OHIO 44024 TELE 216-286-2200 FAX 216-286-2206
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 23, 1996
The Annual Meeting of Shareholders of Essef Corporation will be held at
the offices of the Company, 220 Park Drive, Chardon, Ohio on Tuesday, January
23, 1996 at 10:00 a.m., Eastern Standard Time, for the following purposes:
1) To elect three directors.
2) To transact such other business as may properly be brought before
the meeting or any adjournments thereof.
Shareholders of record at the close of business on Friday, November 17,
1995, are entitled to notice of and to vote at the Annual Meeting.
This notice is given pursuant to order of the Board of Directors.
/s/ Mary Ann Jorgenson
----------------------
Mary Ann Jorgenson
Secretary
December 22, 1995
220 Park Drive, Chardon, Ohio 44024 Tele 216-286-2200 Fax 216-286-2206
<PAGE> 4
PROXY STATEMENT
DECEMBER 22, 1995
GENERAL INFORMATION
This proxy statement is furnished to shareholders of Essef Corporation (the
"Company") on its behalf, by its Board of Directors, in connection with the
solicitation of proxies for use at its Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Tuesday, January 23, 1996, at the offices of
the Company, 220 Park Drive, Chardon, Ohio 44024 at 10:00 a.m. EST, or any
adjournments thereof, to elect three directors, and to conduct such other
business as may properly be brought before the Annual Meeting. This proxy
statement was first mailed on December 22, 1995, to shareholders of record on
November 17, 1995.
On November 17, 1995, 5 ,289,436 common shares were outstanding. Each
shareholder of record as of that date is entitled to notice of the meeting and
to cast one vote per share held on all matters to come before the Annual
Meeting. The holders of a majority of the votes entitled to be cast present in
person or by proxy shall constitute a quorum for the purposes of the Annual
Meeting.
A form of proxy accompanies this statement which shareholders are urged to fill
in and return. The persons appointed by validly executed proxies will vote the
shares covered thereby according to the instructions endorsed thereon, on each
issue or matter as to which an instruction is given. Shares covered by signed
proxies otherwise unmarked or on which contradictory or unclear instructions
are given will be voted in favor of the nominees listed and in accordance with
the best judgment of the persons appointed thereon as to any other matters
properly brought before the Annual Meeting.
The appointment of a proxy may be revoked at any time by providing notice to
the Company prior to the Annual Meeting or by appearing at the Annual Meeting
to vote in person.
1
<PAGE> 5
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members divided into
two classes. Class A has three members and Class B has four members.
Directors in each class are elected for three year terms expiring on the date
of the third annual meeting following their election. Three Class A directors
are to be elected at the Annual Meeting with their terms expiring with the
Company's annual meeting of shareholders to be held in January, 1999.
The Board of Directors has nominated Messrs. Humphrey and Waldin, and Ms.
Jorgenson to succeed themselves as incumbents. They have agreed to serve if
elected.
The regulations of the Company also provide for the nomination of directors by
shareholders pursuant to a notice satisfying specified requirements, timely
given to the Secretary of the Company. No such notice has been received as
of the date hereof. The Company's Committee on Directors will also consider
recommendations by shareholders for nomination of directors. Directors are
elected by a plurality of the votes represented at the meeting, either in
person or by proxy, and entitled to vote.
A brief biography of each of the three nominees, including their principal
occupations, ages at the date of this statement, a brief account of their
business experience, and the identity of certain companies of which they are or
were directors or with which they are or were associated appear in the
following section. Their beneficial ownership of common shares of the Company
is contained in the section headed "Beneficial Ownership Of Shares."
NOMINEES AND DIRECTORS
NOMINEES
GEORGE M. HUMPHREY, II
AGE 53
Mr. Humphrey is President and a principal of Extrudex, L.P., a privately held
thermo-plastic custom extruder. Prior to joining Extrudex, Mr. Humphrey was
Chairman and a principal owner of Philips Container Co., a privately held
plastic injection molder of pails used as containers for industrial and
consumer products.
Mr. Humphrey has served the Company as a director since January, 1989 and is a
member of the Audit and Compensation Committees, and the Committee on
Directors, of which he is Chairman. The term of office as a director for
which he is nominated will expire with the annual meeting of shareholders in
1999.
MARY ANN JORGENSON
AGE 54
Ms. Jorgenson is a partner and head of the corporate practice in the law firm
of Squire, Sanders & Dempsey and has been associated with that firm since 1975.
She is a director of the general partner of Cedar Fair, L.P., the owner of four
amusement parks in Ohio, Minnesota, Missouri and Pennsylvania. She is also a
director of S 2 Golf Inc., a manufacturer and distributor of golf clubs and
bags, and a director of Continental Business Enterprises, Inc., an Ohio-based
metal stamping company.
Ms. Jorgenson has served as Secretary of the Company since 1989, as a director
since January, 1993, and is a member of the Committee on Directors. The term
of office as a director for which she is nominated will expire with the annual
meeting of shareholders in 1999.
2
<PAGE> 6
THOMAS B. WALDIN
AGE 53
Mr. Waldin was appointed Chief Executive Officer of the Company in October,
1990 and was elected President of the Company in January, 1991. Since 1977 he
has been active as an investor in and a director of a number of small
businesses. He retired in 1987 as Chief Operating Officer of USG Interiors,
Inc. and Chief Executive Officer of Donn, Inc. The former is a unit of USG
Corporation, a worldwide manufacturer and distributor of building products,
created in connection with the acquisition of Donn, Inc. in 1986.
Mr. Waldin has served as a director since January, 1991 and is a member of the
Executive Committee, of which he is Chairman. The term of office as a
director for which he is elected will expire with the annual meeting of
shareholders in 1999.
INCUMBENT DIRECTORS
GORDON D. HARNETT
AGE 53
Mr. Harnett is Chairman, President, and Chief Executive Officer of
Brush-Wellman Corporation, an international supplier of high-performance
engineered materials. Prior to assuming that post in January, 1991 he served
as Senior Vice President (1987-1991) of The B.F. Goodrich Co., a diversified
manufacturer of aerospace and specialty chemical products and as President
(1982-1985) and Chief Executive Officer (1985-1987) of Tremco, Inc. a wholly
owned subsidiary of The B.F. Goodrich Co..
Mr. Harnett has served the Company as a director since July, 1987 and is a
member of the Compensation Committee, of which he is Chairman, the Committee on
Directors, and the Executive Committee. His current term of office as a
director will expire with the annual meeting of shareholders in 1997.
CHARLES W. W. HORNER
AGE 70
From 1973 until his retirement in 1987, Mr. Horner held the office of Assistant
Controller of Reliance Electric Company, a manufacturer of industrial motors
and telecommunications products.
Mr. Horner has served the Company as a director since 1977 and is a member of
the Audit Committee, of which he is Chairman. His current term of office as a
director will expire with the annual meeting of shareholders in 1997.
RALPH T. KING
AGE 65
Mr. King is Chairman of the Board of Creative Label Company, a label printing
company, a post he has held since 1969.
Mr. King has served the Company as a director since 1959 and as its Chairman
since November of 1990. He is a member of the Audit, Compensation, and
Executive Committees. His current term of office as a director will expire
with the annual meeting of shareholders in 1997.
3
<PAGE> 7
ELLIOT B. ROSS
AGE 49
Prior to joining the Company as its Executive Vice President and Chief
Operating Officer in 1994, Mr. Ross was the co-chairman of Inverness Partners,
a venture capital investment firm founded in 1988 to acquire and improve
operations of mid-sized manufacturing and distribution businesses. He was also
co-chairman of Inverness Casting Group, a die casting supplier to the
automotive, furniture and appliance industries. Prior to founding Inverness,
Mr. Ross spent 14 years as a member and partner in the Cleveland office of
McKinsey & Company. He was the leader of McKinsey's worldwide Marketing
Practice from 1984 to 1987.
Mr. Ross has served as a director since January, 1995. His current term of
office will expire with the annual meeting of shareholders in 1997.
4
<PAGE> 8
DIRECTORS' COMMITTEES, MEETINGS AND FEES
At its meeting following the Annual Meeting of shareholders, the Board of
Directors has customarily appointed from among its membership an Audit
Committee, a Compensation Committee, an Executive Committee, and a Committee on
Directors which serve until the next annual meeting.
THE AUDIT COMMITTEE consists of three directors, none of whom is an officer or
employee of the Company or its subsidiaries. The committee consists of Mr.
Horner, Chairman, Mr. Humphrey, and Mr. King. The Audit Committee receives the
report of the Company's independent auditors, and provides the link between the
Chief Financial Officer and the controllers of the Company's subsidiaries, the
auditors and the Board of Directors. The Audit Committee met four times in
fiscal 1995.
THE COMPENSATION COMMITTEE consists of three directors, none of whom is an
officer or employee of the Company or its subsidiaries. The committee consists
of Mr. Harnett, Chairman, Mr. King, and Mr. Humphrey. The Compensation
Committee has authority to recommend, approve and, pursuant to specific mandate
from the Board of Directors, implement its recommendations on all matters
relating to direct and indirect compensation of officers and employees of the
Company and its subsidiaries. The Compensation Committee met four times in
fiscal 1995.
THE EXECUTIVE COMMITTEE consists of three directors, one of whom, its Chairman,
is an officer of the Company. The committee consists of Mr. Waldin, Chairman,
Mr. King, and Mr. Harnett. The Executive Committee is empowered to exercise
all authority of the Board of Directors between meetings of that body, subject
to report, with the exception of the declaration of dividends, appointment or
election of officers and determination of their compensation, and the filling
of vacancies on the Board or any Committee. The Executive Committee met one
time in fiscal 1995.
THE COMMITTEE ON DIRECTORS consists of three directors, Mr. Humphrey,
Chairman, Mr. Harnett, and Ms. Jorgenson, Secretary of the Company. The
Committee on Directors has authority to recommend director nominees to the
Board and to recommend director policies including terms of office, retirement
and compensation. The Committee on Directors did not meet in fiscal 1995.
THE BOARD OF DIRECTORS of the Company and its four committees held a total of
fifteen meetings during fiscal 1995 of which six were meetings of the Board of
Directors. All of the directors attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors and committees of which they
were members.
Directors who are not employees of the Company or its subsidiaries have been
paid a fee of $750 for each meeting of the Board or Committee attended, plus
out of pocket expenses. Chairmen are paid $1,000 for attendance at meetings of
their Committees. In addition, such non-employee directors are paid an annual
retainer fee of $15,000 without regard to attendance. Mr. King was paid
$12,000 in the last fiscal year for his services as Chairman of the Board, in
addition to fees paid him as director.
Pursuant to the Essef Corporation Deferred Compensation Plan for Directors,
each director has the option to defer receipt, and therefore the recognition of
income for federal income tax purposes, of all or a portion of his or her
annual retainer and meeting fees payable by the Company to the director for his
or her services as a director.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth information relating to the annual and long term
compensation for the fiscal years ended September 30, 1995, 1994, 1993,
respectively, for the named executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------- -------------------------------------
ALL
OTHER RESTRICTED OTHER(1)
NAME AND FISCAL COMPEN- STOCK COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) AWARDS($) OPTIONS(#) SATION($)
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas B. Waldin 1995 218,500 -0- -0- -0- -0- 4,500
President and Chief 1994 201,500 73,385 -0- -0- 8,396 6,339
Executive Officer 1993 170,000 -0- -0- -0- -0- 5,100
Elliot B. Ross 1995 257,690 -0- -0- -0- -0- 10,947
Executive Vice 1994 168,260 84,000 -0- -0- 250,000 -0-
President and Chief
Operating Officer
Gerald C. Hornick 1995 132,000 9,340 -0- -0- -0- 9,684
Vice President and 1994 119,300 69,200 -0- -0- 4,198 8,622
Assistant Treasurer 1993 109,000 30,150 -0- -0- -0- 6,946
Douglas J. Brittelle 1995 146,150 42,400 -0- -0- 40,000 -0-
President,
PacFab, Inc.
<FN>
(1) Includes for each named executive officer: (a) matching contributions
for fiscal year 1995 under the Company's 401(k) Profit Sharing Plan (b)amounts
paid by the Company on the Executive's behalf into the Company's
defined contribution Retirement Plan and Trust.
</TABLE>
6
<PAGE> 10
OPTION GRANTS
Shown below is information on grants of stock options pursuant to the Company's
1987 Employees' Stock Option Plan during the fiscal year ended September 30,
1995 to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OPTIONS EXERCISE ANNUAL RATES OF STOCK PRICE
OPTION GRANTED TO OR BASE APPRECIATION FOR OPTION TERM
SHARES EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR (PER SHARE) DATE 5% 10%
- ---- ------- ------------ ----------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Thomas B. Waldin -0- -- -- -- $ -- $ --
President and Chief
Executive Officer
Elliot B. Ross -0- -- -- -- $ -- $ --
Executive Vice President
and Chief Operating Officer
Gerald C. Hornick -0- -- -- -- $ -- $ --
Vice President and
Assistant Treasurer
Douglas J. Brittelle 40,000 100% $16.325 01/06/05 $ 410,680 $1,040,720
President - PacFab, Inc.
</TABLE>
7
<PAGE> 11
The following table provides information relating to aggregate stock option
exercises during the last fiscal year and fiscal year-end stock option values
for the named executive officers:
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ACQUIRED ON VALUE OPTIONS AT FY END THE-MONEY OPTIONS AT FY END(1)
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas B. Waldin -0- $ -0- 975,998 4,198 $15,067,098 $ 4,198
Elliot B. Ross -0- $ -0- 20,000 230,000 $ 23,500 $ 270,250
Gerald C. Hornick -0- $ -0- 8,936 2,430 $ 93,583 $ 5,078
Douglas J. Brittelle -0- $ -0- -0- 40,000 $ -0- $ 47,000
________
FOOTNOTE:
<FN>
(1) Based on the closing price of the common stock on the NASDAQ National
Market System on September 30, 1995.
</TABLE>
8
<PAGE> 12
EMPLOYMENT AGREEMENTS
The Company is party to employment agreements with three of the named executive
officers. Set forth below is a brief description of each agreement.
Thomas B. Waldin and the Company are parties to an employment agreement which
initially covered a two year period expiring on October 26, 1992 and was
subsequently extended for additional one year periods until its amendment in
1994. The amended agreement will expire on September 30, 1996 unless
terminated or extended according to its terms. For a description of the
compensation terms of the employment agreement see "Report of Compensation
Committee on Executive Compensation."
Under the employment agreement, the Company granted Thomas B. Waldin
nonstatutory stock options to purchase up to 971,800 Common Shares of the
Company. The exercise price of the options, determined pursuant to a formula,
is $2.00 per share. At the date of the grant of the options, the closing bid
for the shares as quoted by NASDAQ was $2.25. All of the options are vested
and exercisable.
In connection with shares acquired by Mr. Waldin pursuant to the options, Mr.
Waldin may request under certain circumstances that such shares be registered
under the Securities Act of 1933 for the purpose of public distribution. If the
Company elects not to proceed with such a registration, Mr. Waldin may require
the Company to purchase either his shares at a price equal to 95% of the market
value or his options at a purchase price equal to 90% of the price of the
shares underlying the options less the exercise price.
Elliot B. Ross and the Company are parties to a two year employment agreement
which expires on January 31, 1996 unless terminated or extended according to
its terms. As compensation for his service as Executive Vice President and
Chief Operating Officer, Mr. Ross receives an annual base salary of $250,000, a
first year guaranteed bonus of $50,000 and performance based bonuses targeted
at $50,000 in the first year and $100,000 in each subsequent year. In
addition, Mr. Ross was granted initial options, vesting as of commencement of
the agreement, to purchase 100,000 shares of the Company's common stock at
$16.325 per share. Performance options to purchase an additional 150,000
shares were also granted with vesting and exercise terms based on target
earnings per share.
Douglas J. Brittelle and the Company are parties to an employment agreement
which expires on January 3, 1997 unless terminated or extended according to its
terms. As compensation for his service as President of Pac-Fab, Inc., a wholly
owned subsidiary of the Company, Mr. Brittelle receives an annual base salary
of $200,000, a first year guaranteed bonus of $40,000 and performance based
bonuses targeted at 40% of Mr. Brittelle's annual base salary. In addition,
Mr. Brittelle was granted initial options, vesting as of the commencement
date of the agreement, to purchase 15,000 shares of the Company's common stock
at $16.325 per share. Performance options to purchase an additional 25,000
shares were also granted with vesting and exercise terms based on target
earnings per share.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee establishes compensation for the executive officers
of the Company and its subsidiaries. In discharging its function, the
Committee seeks to harmonize three objectives. First, compensation levels are
designed to be sufficiently competitive to attract and retain highly qualified
management personnel. Second, recognition is given to the achievement of
annual financial, operational and strategic objectives. Finally, it is the
Company's objective to continue to align pay and performance for the Company's
executives with the longer-term goal of enhancing shareholder value. To
implement these objectives, the compensation program for executive officers
consists of base salary, annual cash incentives and stock option awards.
9
<PAGE> 13
Base salaries are determined in the first instance by the evaluation of the
executive officer's responsibility and by comparison to similarly situated
executives at other firms (not necessarily all of the companies included in the
peer group established for the purpose of comparing shareholder returns) to
ensure that the Company's salaries are competitive.
Annual cash incentives are used to recognize the achievement of annual
objectives in line with the Company's long-term goals. The annual objectives
are based on specific and quantifiable financial and operational performance
criteria which are set at the beginning of each fiscal year by the Committee.
Bonuses are primarily based on the performance of specific business units in
which the executive works, except those of the Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer, whose bonuses are
based on a formula relating to the earnings per share of the Company.
Stock option awards are used primarily as a means for building shareholder
value over the long term. Option awards are generally contingent on the
Company's achievement of certain levels of annual pre-tax profits. No options
were granted to any executive officer in fiscal 1995 except for 40,000 options
which were granted to the new President of Pac-Fab, Inc. as an inducement to
accept employment with that subsidiary of the Company and as an incentive to
meet certain performance targets.
During fiscal 1995 the Committee also initiated a review of the Company's
executive salary structure and incentive programs. The objective of the review
was to ensure that the compensation structure was in alignment with the
Company's goal of enhancing shareholder value. A multidiscipline task force,
guided by senior operating executives, with the assistance of an independent
management consulting firm engaged by the Committee, conducted the review under
the Committee's overall direction. Based on the findings of the review, the
Committee adopted a salary structure for coming years which would peg executive
salaries at the median (50th percentile) for peer companies. The Committee
also authorized an annual cash incentives plan rewarding key employees for
achieving specific objectives in line with the Company's long-term goals.
Based on targeted annual improvements to earnings, the resulting bonuses would
bring the total cash compensation of executives to the 75th percentile of peer
firms.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
For fiscal 1995, Mr. Waldin's compensation package was based on a review,
carried out in 1994, of his compensation package in connection with an
amendment and extension of his employment agreement. The Committee determined
then that his total cash compensation should be at the 75th percentile for
compensation received by chief executive officers of similarly situated
companies, adjusted annually to reflect the percentage of time Mr. Waldin
expected to devote to the Company's business during the ensuing year.
Mr. Waldin's total cash compensation consisted of base compensation and an
opportunity for a cash bonus based on the Company's annual earnings per share.
For fiscal 1995, the base compensation was adjusted upwards for inflation by 4
percent to $220,480 and no bonus was earned.
THE COMPENSATION COMMITTEE
Gordon D. Harnett, Chairman
Ralph T. King
George M. Humphrey II
10
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative shareholder's return with the cumulative total return of the Nasdaq
Stock Market (US Companies) composite and a peer group of companies selected on
a line-of-business basis:
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
Prepared by the Center for Research in Security Prices
Produced on 10/26/95 including data to 09/29/95
LEGEND
<TABLE>
<CAPTION>
Index Description 09/30/90 09/29/91 09/28/92 09/30/93 09/30/94 09/30/95
- ----------------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Essef Corporation 100.0 400.0 480.0 470.0 590.0 715.0
CRSP Index for Nasdaq Stock Market (US Companies) 100.0 157.3 176.3 231.0 232.9 320.7
Self-Determined Peer Group 100.0 135.9 131.4 128.1 137.3 160.4
</TABLE>
Companies in the Self-Determined Peer Group
AMTROL INC ANTHONY INDUSTRIES INC
COMMERCIAL INTERTECH CORP CALGON CARBON CORP
DAVIS WATER & WASTE INDS INC GOULDS PUMPS INC
IONICS INC OSMONICS INC
SYBRON CHEMICALS INC LESLIES POOLMART
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
C. The index level for all series was set to 100.0 on 09/28/90.
11
<PAGE> 15
BENEFICIAL OWNERSHIP OF SHARES
The following tables display, as of November 17, 1995, the name and address of
each person who is known to the Company to own beneficially more than 5% of the
Company's voting securities (a single class of Common Shares) as well as the
number of Common Shares beneficially owned by each director and director
nominee and the directors, director nominee and officers of the Company as a
group.
FIVE PERCENT BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
Common Shares Beneficially Owned
--------------------------------
Name Number Percent
---- -------- -------
<S> <C> <C>
James A. Horner Trust (1)(2)(3) 432,248 8.17%
James A. Horner, Jr., Douglas
M. Horner and Mary Ann
Jorgenson, Trustees
4900 Society Building
Cleveland, Ohio 44114
Society National Bank, Trustee (4)(5) 1,003,890 18.98%
127 Public Square
Cleveland, Ohio 44114
The Jane B. King Irrevocable (6) 465,000 8.79%
Trust dated July 19, 1979,
Ralph T. King and Alexander
S. Taylor, Trustees
30050 Chagrin Boulevard, Suite 150
Pepper Pike, Ohio 441124
Thomas B. Waldin (7) 996,498 15.92%
c/o ESSEF Corporation
220 Park Drive
Chardon, Ohio 44024
Fenimore Asset Management (8) 437,850 8.28%
118 North Grand Street
Cobleskill, New York 12043
Merrill Lynch, Pierce, Fenner & Smith (8) 311,577 5.89%
4 Corporate Place
Corporate Park 287, 2nd Floor
Piscataway, New Jersey 08855
</TABLE>
12
<PAGE> 16
(1) James A. Horner, Jr. shares voting and dispositive power as
co-trustee and is also beneficial owner of: (a) 233,845 shares
owned by or benefitting him or his children directly or
indirectly; and (b) 75,000 shares held by trusts for the
benefit of his children, nieces and nephews, of which he is one
of three trustees sharing voting and dispositive power, and
noted at (2)(b) and (3)(e) below.
(2) Douglas M. Horner shares voting and dispositive power as
co-trustee and is also beneficial owner of: (a) 242,566 shares
owned by or benefitting him or his children directly or
indirectly (1,748 shares consist of options to purchase, of
which 1,417 are exercisable within 60 days of this statement);
and (b) 75,000 shares held by trusts for the benefit of his
children, nieces and nephews, of which he is one of three
trustees sharing voting and dispositive power, and noted at
(1)(b) above and (3)(e) below.
(3) Mary Ann Jorgenson shares voting and dispositive power as
co-trustee and is also beneficial owner of: (a) 34,600 shares
held by six trusts of which she is the sole trustee with sole
voting and dispositive power; (b) 54,390 shares held by a trust
of which she is one of three trustees with shared voting and
dispositive power and noted in (5)(a) below; (c) 33,400 shares
held by a trust of which she is a co-trustee with shared voting
and dispositive power and noted in (5)(b) below; (d) 915,640
shares held by two trusts over which she has shared dispositive
power as one of two trust advisors, and noted in (4)(a) and (5)
below; and (e) 75,000 shares held by trusts of which she is one
of three trustees with shared voting and dispositive power, and
noted at (1)(b) and (2)(b) above. Mrs. Jorgenson disclaims the
benefits of ownership of any of the aforementioned shares. Mrs.
Jorgenson serves as Secretary of the Company and is a partner in
the law firm of Squire, Sanders & Dempsey, which the Company
retains as its outside general counsel.
(4) Society National Bank exercises (a) sole voting and shared
dispositive power as trustee over 915,640 shares; (b) sole
voting and sole dispositive power over an additional 43,080
shares; and (c) 54,390 shares held by a trust of which Society
National Bank is one of three trustees with shared voting and
dispositive power and noted in 3(b) and 5(a) above.
(5) James H. Dempsey, Jr. shares dispositive power as one of two
trust advisors of two trusts, noted in (4)(a) and (3)(d) above
and is also beneficial owner of: (a) 54,390 shares held by a
trust of which he is one of three trustees with shared voting
and dispositive power and noted in (3)(b)above; and (b) 33,400
shares held by a trust of which he is a co-trustee with shared
voting and dispositive power and noted in (3)(c) above. Mr.
Dempsey disclaims the benefits of ownership of any of the
aforementioned shares. Mr. Dempsey is a partner in the law firm
of Squire, Sanders & Dempsey which the Company retains as its
outside general counsel.
(6) Ralph T. King shares voting and dispositive power as a
co-trustee and is also beneficial owner of: (a) 57,900 shares
owned by him directly; (b) 11,180 shares held by a foundation
of which he is a trustee with shared dispositive power.
(7) Consists of options to purchase which are exercisable within 60
days of September 30, 1995.
(8) Number of beneficial shares owned was obtained from the November
17, 1995 shareholder listing. At this time, the Company has no
knowledge of the voting and dispositive power that may be
exercised by these shareholders.
13
<PAGE> 17
BENEFICIAL OWNERSHIP OF SHARES
BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Common Shares Beneficially Owned
--------------------------------
Name Number Percent
---- ------ -------
<S> <C> <C>
Gordon D. Harnett (1) 7,708 *
Charles W. W. Horner (1) 12,469 *
George M. Humphrey, II 13,100 *
Mary Ann Jorgenson (2) 1,545,278 29.21%
Ralph T. King (3) 534,080 10.10%
Thomas B. Waldin (5) 996,498 15.92%
Elliot B. Ross (5) 22,000 *
Gerald C. Hornick(4)(5) 19,271 *
Douglas J. Brittelle (5) 0 *
All directors and named executive 3,150,404 50.32%
officers as a group (9 persons) (4)(5)
<FN>
* Less than one percent.
(1) Includes shares held by trustee of the Essef Corporation
Deferred Compensation Plan for Directors as of September 30,
1995.
(2) See Note (3) under Beneficial Ownership of Shares.
(3) See Note (6) under Beneficial Ownership of Shares.
(4) Includes shares held by successor trustee of PAYSOP Plan, as of
September 30, 1995, over which individual beneficiary has sole
voting power.
(5) Includes shares underlying options which are exercisable within
60 days of September 30, 1995 as follows:
Thomas B. Waldin 975,998
Elliot B. Ross 20,000
Gerald C. Hornick 8,936
All directors, director nominees and officers as a group (9 persons) 1,004,934.
</TABLE>
14
<PAGE> 18
INDEPENDENT PUBLIC ACCOUNTANTS
Effective February 2, 1995, the Board of Directors appointed Deloitte & Touche
LLP to act, and Deloitte & Touche LLP has acted, as independent auditors of
the Company for the fiscal year ended September 30, 1995. Representatives of
Deloitte & Touche LLP will be present at the meeting and will be given an
opportunity to make a statement if they desire to do so as well as to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders for the fiscal 1996 Annual Meeting of Shareholders to
be held in January, 1997 must be received by the Secretary of the Company no
later than August 18, 1996 to be included in the proxy statement and form of
proxy for that meeting.
SOLICITATION EXPENSES
The Company will bear the costs of proxy solicitation including the preparation
and mailing of this statement and accompanying material. Proxies will be
solicited principally by mail, by employees and agents of the Company and its
subsidiaries. No employee of the Company who assists in the solicitation will
be paid for doing so beyond his regular compensation.
The Company will request brokers, banks and other custodians or fiduciaries
holding shares in their names or in the names of nominees to forward copies of
proxy solicitation materials to the beneficial owners of the shares held by
them and, upon request, will reimburse them for the reasonable expenses
incurred in forwarding the material to their principals and processing
responses.
VOTE TABULATION POLICIES AND PROCEDURES
Shares voted by proxy on the form provided by management with this statement
will be tabulated according to the tenor thereof. Shares voted by omnibus proxy
or other proxy forms by brokers, nominees or agents will be tabulated according
to instructions and limitations accompanying the form of proxy. All shares for
which valid proxies are returned will be counted as present at the meeting for
determination of a quorum (a majority of shares entitled to vote at the Annual
Meeting), but the votes of shares represented by omnibus or similar proxy will
be tabulated only to the extent the vote is specifically instructed.
OTHER BUSINESS
The Company is not aware of any business which may be presented for action at
the meeting other than that set forth herein. Should any such business be
presented for a vote of the shareholders, the enclosed form of proxy authorizes
the persons appointed to vote thereon in accordance with their best judgment.
By Order of the Board of Directors
/s/ Mary Ann Jorgenson
Mary Ann Jorgenson
Secretary
December 22, 1995
15
<PAGE> 19
ESSEF
CORPORATION
Directions to Essef Corporation
Corporate Office
Approximately 25 miles East of Cleveland:
* I-90 East,
* South on State Route 44, 6 miles,
* Left on 5th Avenue
* Almost an immediate left turn onto Industrial Parkway, to Park Drive.
From a Southerly direction, Essef Corporation is:
* approximately 1/2 mile North of Chardon Square, or;
* approximately 4 miles North of State Route 322.
[MAP OF AREA]
220 Park Drive, Chardon, Ohio 44024 Tele 216-286-2200 Fax 216-286-2206
<PAGE> 20
ESSEF CORPORTATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - JANUARY 23, 1996
The undersigned hereby appoints Theodore A. Havens, Mary Ann Jorgenson, and
Ralph T. King, and each of them, attorneys and proxies to attend and represent
the undersigned at the Annual Meeting of Shareholders of ESSEF Corporation to
be held at the office of the corporation, 220 Park Drive, Chardon, Ohio on
January 23, 1996 at 10:00 o'clock A.M. Eastern Standard Time and at all
adjournments thereof, with full power of substitution and full authority to
vote all Common Shares of ESSEF Corporation which the undersigned, if personally
present, would be entitled to vote:
1. FOR the election of each of the persons named below as a director of
the corporation to serve for a term expiring at the Annual Meeting
of Shareholders in the year shown opposite his name and until his
successor is elected, UNLESS AUTHORITY IS WITHHELD BY X MARKED
OPPOSITE THE NOMINEE'S NAME BELOW:
Goerge M. Humphrey II 1999 [ ] Authority withheld
Mary Ann Jorgenson 1999 [ ] Authority withheld
Thomas B. Waldin 1999 [ ] Authority withheld
2. At their discretion, on the transaction of any other business or
matters that may properly be brought before the meeting or any
adjournments thereof.
THIS PROXY WILL BE VOTED ACCORDING TO THE INSTRUCTIONS AS MARKED. UNLESS A
CONTRARY INSTRUCTION IS MARKED IT WILL BE VOTED FOR ALL NOMINEES AND PROPOSALS.
This proxy revokes and supersedes any earlier proxy covering the same shares.
-------------------------------
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON INDICATING,
WHEN APPROPRIATE, COMPANY AND OFFICIAL POSITION OR REPRESENTATIVE CAPACITY.
IF SHARES ARE HELD IN JOINT NAMES BOTH PARTIES MUST SIGN.
DATE:______________, 199____
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE ENCLOSED.
