<PAGE> 1
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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
(AMENDMENT NO. )
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)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: ...........................................................
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<PAGE> 2
PROXY STATEMENT
DECEMBER 23, 1998
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 its
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Thursday,
February 4, 1999 at the offices of the Company, 220 Park Drive, Chardon, Ohio
44024 at 10:00 a.m. EST, or any adjournments thereof, (i) to elect three
directors and (ii) to conduct such other business as may properly be brought
before the Annual Meeting. This proxy statement was first mailed on December 23,
1998, to shareholders of record on December 4, 1998.
On December 4, 1998, 11,966,827 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 accordance with the best judgment of the persons
appointed thereon as to any 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> 3
NOMINATION AND ELECTION OF DIRECTORS
The number of Directors of the Company is currently set at 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 2002. The Board currently has one
vacancy which may be filled when a suitable candidate is identified.
The Board of Directors has nominated Messrs. Humphrey and Waldin and Ms.
Jorgenson to succeed themselves as incumbents. They have all agreed to serve if
elected.
The regulations of the Company 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 as 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 nominees and incumbents 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 56
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 Committee, of which he is Chairman, the Compensation
Committee, and the Committee on Directors. The term of office as a director for
which he is nominated will expire with the annual meeting of shareholders in
2002.
2
<PAGE> 4
MARY ANN JORGENSON
AGE 57
Ms. Jorgenson is a partner and head of the corporate practice in the law firm of
Squire, Sanders & Dempsey L.L.P., 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
five regional amusement parks. 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 Chairman 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 2002.
THOMAS B. WALDIN
AGE 56
Mr. Waldin was appointed President and Chief Executive Officer of the Company in
1990. 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 nominated will expire with the annual meeting of shareholders in
2002.
INCUMBENT DIRECTORS
JAMES M. BIGGAR
AGE 69
Mr. Biggar is currently Chairman and Chief Executive Officer of Glencairn
Corporation, a real estate development firm. Prior to assuming that position in
July, 1991, he served as Chairman of Nestle USA, Inc., a food products,
restaurant and hotel concern. From January, 1984 to January 1991, Mr. Biggar
served as Chairman and Chief Executive Officer of Nestle Enterprises, Inc. Mr.
Biggar is a director of The Sherwin-Williams Company, Bridgestreet
Accomodations, and Donley's, Inc.
Mr. Biggar has served as a director since January, 1997 and is a member of the
Audit and Compensation Committees. His current term of office as a director will
expire with the annual meeting of shareholders in 2000.
3
<PAGE> 5
GORDON D. HARNETT
AGE 56
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 is a Director of Lubrizol Corporation, National City
Bank, and M. A. Hanna Company.
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 2000.
RALPH T. KING
AGE 69
Mr. King is Chairman of the Board of Essef Corporation and was formerly Chairman
of the Board of Creative Label Company, a label printing company, a post he held
from 1969 to 1998.
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 2000.
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.
Humphrey, Chairman, Mr. Biggar, 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 two times in fiscal
1998.
4
<PAGE> 6
THE COMPENSATION COMMITTEE consists of four directors, none of whom is an
officer or employee of the Company or its subsidiaries. The committee consists
of Mr. Harnett, Chairman, Mr. Biggar, Mr. Humphrey, and Mr. King. 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
once in fiscal 1998.
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. Harnett, and Mr. King. 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 four times
in fiscal 1998.
THE COMMITTEE ON DIRECTORS consists of three directors, Ms. Jorgenson, its
Chairman, Mr. Harnett and Mr. Humphrey. 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 met informally once in fiscal 1998.
THE BOARD OF DIRECTORS of the Company and its four committees held a total of
thirteen meetings during fiscal 1998 of which five were meetings of the Board of
Directors. All of the directors attended at least 75% of the 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 $20,000 without regard to attendance. Mr. King was paid $12,000 in the
last fiscal year for his services as Chairman of the Board, in addition to fees
paid him as director.
Pursuant to the Essef Corporation Deferred Compensation Plan for Directors, each
director has the option to defer receipt, and therefore the recognition of
income for federal income tax purposes, of all or a portion of his or her annual
retainer and meeting fees payable by the Company to the director for his or her
services as a director.
5
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth information relating to the annual and long term
compensation for the fiscal years ended September 30, 1998, 1997 and 1996
respectively, for the named executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------------------- ----------------------------------------
ALL
OTHER RESTRICTED OTHER(2)
NAME AND FISCAL COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) AWARDS($) (#)(1) SATION($)
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas B. Waldin 1998 237,372 155,081 -0- -0- -0- 4,800
President and Chief 1997 220,480 193,220 -0- -0- -0- 4,500
Executive Officer 1996 220,480 44,540 -0- -0- -0- 6,615
Douglas J. Brittelle 1998 215,384 165,408 -0- -0- -0- 9,600
Executive Vice 1997 200,000 66,500 -0- -0- -0- 9,000
President 1996 200,000 26,290 -0- -0- 3,108 13,620
Gerald C. Hornick 1998 191,923 209,617 -0- -0- -0- 9,600
Executive Vice 1997 139,000 68,630 -0- -0- -0- 9,000
President 1996 139,000 54,700 -0- -0- 3,108 8,680
Stuart D. Neidus 1998 215,384 129,000 -0- -0- -0- 9,600
Executive Vice 1997 200,000 146,061 -0- -0- -0- 6,090
President and Chief 1996 16,315 -0- -0- -0- 302,500 -0-
Financial Officer
Kevan K. Langner(3) 1998 124,500 144,202 -0- -0- -0- 9,600
Assistant Secretary 1997 50,000 32,000 -0- -0- -0- 4,920
and General Counsel
</TABLE>
(1) The number of options has been restated to give effect to the 10%
stock dividend distributed March 3, 1998.
(2) Includes for each named executive officer: (a) matching contributions
for fiscal year 1998 under the Company's 401(k) Profit Sharing Plan,
(b) amounts paid or payable by the Company on the Executive's behalf
into the Company's defined contribution Retirement Plan and Trust.
(3) Mr. Langner was hired by the Company on May 1, 1997 in conjunction
with the acquisition of General Aquatics.
6
<PAGE> 8
OPTION GRANTS
There were no grants of stock options during the fiscal year ended September
30, 1998 to the named executive officers pursuant to the Company's 1987
Employees Stock Option Plan.
Except as otherwise indicated, 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- 2,372,074 -0- $39,420,769 $ -0-
Douglas J. Brittelle -0- $ -0- 24,887 75,020 $ 266,143 $ 806,806
Gerald C. Hornick -0- $ -0- 30,612 -0- $ 414,332 $ -0-
Kevan K. Langner -0- $ -0- -0- -0- $ -0- $ -0-
Stuart D. Neidus -0- $ -0- 48,400 254,100 $ 497,068 $ 2,609,607
</TABLE>
- ----------
FOOTNOTE:
(1) Based on the closing price of the common stock on the NASDAQ National
Market System on September 30, 1998 of $17.50.
7
<PAGE> 9
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 expired on September 30, 1996 and was subsequently
extended according to its terms for three additional one year periods. 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 2,351,756 Common Shares of the
Company. The exercise price of the options, determined pursuant to a formula, is
$0.83 per share. 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.
Douglas J. Brittelle and the Company are parties to an employment agreement
which initially covered a two year period expiring on January 3, 1997. The
agreement was subsequently extended for two additional one year periods
according to its terms. As compensation for his service as Executive Vice
President, Mr. Brittelle receives an annual base salary of at least $220,000,
subject to adjustment by the Board of Directors, and performance based bonuses
targeted at 55% 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 36,300 shares of the Company's common stock at $6.74
per share. Performance options to purchase an additional 60,500 shares were also
granted with vesting and exercise terms based on target earnings per share, all
of which have vested, but will only be exercisable based on completing specified
periods of service from the date of the grant.
Stuart D. Neidus and the Company are parties to an employment agreement which
initially covered a two year period expiring on September 3, 1998. The agreement
was subsequently extended according to its terms for an additional one year
period. As compensation for his service as Executive Vice President and Chief
Financial Officer, Mr. Neidus receives an annual base salary of at least
$220,000, subject to adjustment by the Board of Directors, and performance based
bonuses targeted at 55% of Mr. Neidus' annual base salary. Mr. Neidus' base
salary and bonus will be allocated between Essef and Anthony & Sylvan if and
when Anthony & Sylvan becomes a public company. In addition, Mr. Neidus was
granted initial options, vesting as of the commencement date of the agreement,
to purchase 121,000 shares of the Company's common stock at $7.23 per share.
Performance options to purchase an additional 181,500 shares were also granted
with vesting terms based on target share prices, all of which have vested, but
will only be exercisable on completion of 5 years of service from the date of
the grant.
8
<PAGE> 10
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 the performance share plan.
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 comparable firms 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 and the
Executive Vice Presidents, whose bonuses are based on a formula relating to the
earnings per share of the Company, among other things.
Performance share unit awards have been used primarily as a means for building
shareholder value over the long term. The number of unit awards are generally
contingent on the Company's achievement of certain levels of earnings while the
value is tied to the Company's stock price. The intent is to align the interests
of executive officers with the interests of shareholders.
In fiscal 1995, the Committee undertook 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 that was applied beginning in 1996 to 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. The Committee has also considered long-term incentive programs and
implemented the performance share plan in 1997 for senior management which was
measured over fiscal 1997 and fiscal 1998.
9
<PAGE> 11
CHIEF EXECUTIVE OFFICER'S COMPENSATION
For fiscal 1998, Mr. Waldin's compensation package was based on a review of his
compensation package in connection with an amendment and extension of his
employment agreement in 1994. 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 is expected to devote to the Company's
business during the ensuing year.
Mr. Waldin's total cash compensation consisted of his base annual salary and
performance based bonuses targeted at 60% of Mr. Waldin's annual salary based on
the Company's annual earnings per share. For fiscal 1998, the base compensation
was $237,372 and a bonus of $155,081 was earned.
THE COMPENSATION COMMITTEE
Gordon D. Harnett, Chairman
James M. Biggar
George M. Humphrey, II
Ralph T. King
10
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
cumulative shareholder return with the cumulative total return of the Nasdaq
Stock Market (US Companies) Composite Index and the Standard & Poors Smallcap
600 Index:
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
Prepared by Zacks Investment Research, Inc.
Produced on 12/1/98 including data to 09/30/98
[Graph]
LEGEND
<TABLE>
<CAPTION>
Index Description 09/28/93 09/30/94 09/30/95 09/30/96 09/30/97 09/30/98
- ----------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Essef Corporation 100.0 121.3 148.9 148.9 323.0 360.5
CRSP Index for Nasdaq Stock Market (US Companies) 100.0 100.8 139.3 164.9 226.4 231.4
S&P Smallcap 600 100.0 99.4 125.5 144.7 198.1 167.7
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to 100.0 on 09/28/93.
11
<PAGE> 13
BENEFICIAL OWNERSHIP OF SHARES
The following tables display, as of December 4, 1998, 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 named executive
officer, and the directors, and named executive officers of the Company as a
group.
FIVE PERCENT BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
Common Shares Beneficially Owned
--------------------------------
Name Number Percent
---- ------ -------
<S> <C> <C>
Keybank National Association, Trustee (1)(2)(3)(8) 2,428,291 20.29%
127 Public Square
Cleveland, Ohio 44114
The Jane B. King Irrevocable (4) 1,125,300 9.40%
Trust dated July 19, 1979,
Ralph T. King and Alexander
S. Taylor, Trustees
30050 Chagrin Boulevard, Suite 150
Pepper Pike, Ohio 44124
Thomas B. Waldin (5) 2,514,576 17.18%
220 Park Drive
Chardon, Ohio 44024
Fenimore Asset Management 1,378,649 11.52%
118 North Grand Street
Cobleskill, New York 12043
James A. Horner Trust (6)(7)(8) 697,356 5.83%
James A. Horner, Jr., Douglas M. Horner
and Mary Ann Jorgenson, Trustees
4900 Key Tower
Cleveland, Ohio 44114
</TABLE>
(1) Keybank National Association exercises (a) sole voting and shared
dispositive power over 2,215,844 shares; and (b) shared voting and
dispositive power over 131,609 shares held by
12
<PAGE> 14
a trust of which Keybank National Association is one of three trustees and
noted in 2(a) and 8(b) below.
(2) James H. Dempsey, Jr. shares dispositive power of 2,215,844 shares as one
of three trust advisors noted in 1(a) above, (3) and (8)(d) below, and is
also beneficial owner of: (a) 131,609 shares held by a trust of which he is
one of three trustees with shared voting and dispositive power and noted in
1(b) above and 8(b) below; and (b) 80,828 shares held by a trust of which
he is a co-trustee with shared voting and dispositive power and noted in
note 8(c) below. 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 L.L.P., which the Company retains as its outside
general counsel.
(3) James P. Oliver shares dispositive power of 2,215,844 shares as one of
three trust advisors noted in 1(a) and (2) above and note 8(d) below. Mr
Oliver disclaims the benefits of ownership of any of the aforementioned
shares. Mr. Oliver is a partner in the law firm of Squire, Sanders &
Dempsey L.L.P., which the Company retains as its outside general counsel.
(4) Ralph T. King shares voting and dispositive power as a co-trustee and is
also beneficial owner of: (a) 149,958 shares owned by him directly; (b)
27,055 shares held by a foundation of which he is a trustee with shared
dispositive power.
(5) Thomas B. Waldin is the beneficial owner of 2,514,576 shares owned by or
benefitting him, his wife or child directly (2,372,074 shares consist of
options to purchase which are exercisable within 60 days of September 30,
1998).
(6) James A. Horner, Jr. shares voting and dispositive power as co-trustee and
is also beneficial owner of: (a) 757,571 shares owned by or benefitting him
or his children directly or indirectly; and (b) 181,500 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
(7)(b) and (8)(e) below.
(7) Douglas M. Horner shares voting and dispositive power as co-trustee and is
also beneficial owner of: (a) 346,300 shares owned by or benefitting him or
his children directly or indirectly and (b) 181,500 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 (6)(b)
above and (8)(e) below. On July 8, 1998 a corporation controlled by Mr.
Horner acquired substantially all the assets of the Company's subsidiary
Enpac Corporation for approximately $3,500,000. No material gain or loss
was recognized by the Company on this transaction.
(8) Mary Ann Jorgenson shares voting and dispositive power as co-trustee and is
also beneficial owner of: (a) 83,732 shares held by six trusts of which she
is the sole trustee with sole voting and dispositive power; (b) 131,609
shares held by a trust of which she is one of three trustees with shared
voting and dispositive power and noted in notes 1(b) and 2(a) above; (c)
80,828 shares held by a trust of which she is a co-trustee with shared
voting and dispositive power and noted in note 2(b) above; (d) 2,215,844
shares held by two trusts over which she has shared dispositive power as
one of three trust advisors, and noted in notes 1(a),(2) and (3) above; and
(e) 181,500 shares held by trusts of which she is one of three trustees
with shared voting and dispositive power and noted in (6)(b) and (7)(b)
above. Ms. Jorgenson disclaims the benefits of ownership of any of the
aforementioned shares. Ms. Jorgenson serves as Secretary of the Company and
is a partner in the law firm of Squire, Sanders & Dempsey L.L.P., which the
Company retains as its outside general counsel.
13
<PAGE> 15
BENEFICIAL OWNERSHIP OF SHARES BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Common Shares Beneficially Owned
--------------------------------
Name Number Percent
---- ------ -------
<S> <C> <C>
James M. Biggar 5,940 *
Gordon D. Harnett (1) 26,752 .22%
George M. Humphrey, II (1) 35,782 .30%
Mary Ann Jorgenson (2) 3,390,879 28.34%
Ralph T. King (3) 1,302,313 10.88%
Thomas B. Waldin (4)(5) 2,514,576 17.18%
Douglas J. Brittelle (4) 31,297 .21%
Gerald C. Hornick(4)(6) 55,620 .38%
Stuart D. Neidus (4) 62,700 .43%
All directors and named executive 7,425,859 50.75%
officers as a group (9 persons)
</TABLE>
* Less than one-tenth of one percent.
(1) Includes shares held by trustee of the Essef Corporation
Deferred Compensation Plan for Directors as of September 30,
1998.
(2) See Note (8) under Beneficial Ownership of Shares.
(3) See Note (4) under Beneficial Ownership of Shares.
(4) Includes shares underlying options which are exercisable within
60 days of September 30, 1998 as follows:
Thomas B. Waldin 2,372,074
Gerald C. Hornick 30,612
Douglas J. Brittelle 24,887
Stuart D. Neidus 48,400
All directors and named executive officers as a group (9
persons) 2,475,973.
(5) See Note (5) under Beneficial Ownership of Shares.
(6) Includes shares held by successor trustee of PAYSOP Plan, as of
September 30, 1998 over which individual beneficiary has sole
voting power.
14
<PAGE> 16
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has acted as independent auditors of the Company for the
fiscal year ended September 30, 1998. 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 1999 Annual Meeting of Shareholders to
be held in January, 2000 must be received by the Secretary of the Company no
later than August 20, 1999 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 23, 1998
15
<PAGE> 17
ESSEF CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - FEBRUARY 4, 1999
The undersigned hereby appoints Ralph T. King, Stuart D. Neidus and Gordon D.
Harnett, 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
Thursday, February 4, 1999 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 Share 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 or her name and until a
successor is elected, UNLESS AUTHORITY IS WITHHELD BY X MARKED OPPOSITE THE
NOMINEE'S NAME BELOW:
George M, Humprey II 2002 [ ]Authority withheld
Mary Ann Jorgenson 2002 [ ]Authority withheld
Thomas B. Walden 2002 [ ]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 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.
