SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 ss. 240.14a-11(c) or ss. 240.14
Ladish Co., Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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>
Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Stockholders:
An Annual Meeting of Stockholders of Ladish Co., Inc., a Wisconsin
corporation (the "Company"), will be held in the Creole Meeting Room of the Four
Points Hotel Sheraton Milwaukee Airport located at 4747 South Howell Avenue,
Milwaukee, Wisconsin on Friday, May 21, 1999 at 10:00 a.m. Central Daylight
Time, for the following purposes:
(1) To elect five (5) Directors, to serve for the term of one year
or until their successors have been elected and have duly qualified.
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only Stockholders of record at the close of business on April 8, 1999
will be entitled to notice of and to vote at the 1999 Annual Meeting or any
adjournment thereof, notwithstanding the transfer of any stock on the books of
the Company after such record date.
A Proxy Statement and proxy card accompany this Notice of Annual
Meeting of Stockholders.
Wayne E. Larsen
Secretary
Cudahy, Wisconsin
April 8, 1999
<PAGE>
Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 21, 1999
This Proxy Statement is furnished to the stockholders of Ladish Co.,
Inc. (the "Company") in connection with the solicitation of proxies by the Board
of Directors of the Company to be voted at the Annual Meeting of Stockholders of
the Company to be held at the Four Points Hotel Sheraton Milwaukee Airport,
Creole Meeting Room, 4747 South Howell Avenue, Milwaukee, Wisconsin on Friday,
May 21, 1999 at 10:00 a.m., Central Daylight Time (the "1999 Annual Meeting"),
or at any adjournment thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders.
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about April 21, 1999.
RIGHT TO REVOKE PROXY
Any stockholder giving the proxy enclosed with this Proxy Statement has
the power to revoke such proxy at any time prior to the exercise thereof by
filing with the Company a written revocation at or prior to the 1999 Annual
Meeting, by executing a proxy bearing a later date or by attending the 1999
Annual Meeting and voting in person the shares of stock that such stockholder is
entitled to vote. Unless the persons named in the proxy are prevented from
acting by circumstances beyond their control, the proxy will be voted at the
1999 Annual Meeting and at any adjournment thereof in the manner specified
therein, or if not specified, the proxy will be voted:
(1) FOR the election of the five (5) nominees listed under "Election of
Directors" as nominees of the Company for election as directors to hold office
until the next Annual Meeting of Stockholders or until their successors are
elected and qualified;
(2) At the discretion of the persons named in the enclosed form of
proxy, on any other matter that may properly come before the 1999 Annual Meeting
or any adjournment thereof.
BY WHOM AND THE MANNER IN WHICH PROXY IS BEING SOLICITED
The enclosed proxy is solicited by and on behalf of the Board of
Directors of the Company. The expense of the solicitation of proxies for the
1999 Annual Meeting, including the cost of mailing, will be borne by the
Company. To the extent necessary to assure sufficient representation at the 1999
Annual Meeting, officers and regular employees of the Company, at no additional
compensation, may request the return of proxies personally, by telephone,
facsimile, mail, or other method. The extent to which this will be necessary
depends entirely upon how promptly proxies are received. Stockholders are urged
to send in their proxies without delay. The Company will supply brokers,
nominees, fiduciaries and other custodians with proxy materials to forward to
beneficial owners of shares in connection with the request from the beneficial
owners of authority to execute such proxies, and the Company will reimburse such
brokers, nominees, fiduciaries and other custodians for their expenses in making
such distribution. Management has no knowledge or information that any other
person will specially engage any persons to solicit proxies.
<PAGE>
VOTING SECURITIES AND STOCKHOLDERS
The outstanding voting securities of the Company consist entirely of
shares of Common Stock, $0.01 par value per share, each share of which entitles
the holder thereof to one vote. The record date for the determination of the
stockholders entitled to notice of and to vote at the 1999 Annual Meeting, or
any adjournment thereof, has been established by the Board of Directors as the
close of business on April 8, 1999. At that date, there were outstanding and
entitled to vote 13,916,049 shares of Common Stock.
The presence, in person or by proxy, of the holders of record of a
majority of the outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum for the transaction of business at the 1999 Annual
Meeting, but if a quorum should not be present, the meeting may be adjourned
from time to time until a quorum is obtained. A holder of Common Stock will be
entitled to one vote per share on each matter properly brought before the
meeting. Cumulative voting is not permitted in the election of directors.
The proxy card provides space for a stockholder to withhold voting for
any or all nominees for the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so. Under Wisconsin law, directors are
elected by a plurality of the votes cast at the meeting. Each other matter to be
submitted to the stockholders requires the affirmative vote of a majority of the
votes cast at the meeting. For purposes of determining the number of votes cast
with respect to any voting matter, only those cast "for" or "against" are
included. Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting.
As of April 8, 1999, no person was known by the Company to own
beneficially more than five percent (5%) of the outstanding shares of Common
Stock of the Company, except as shown in the following table:
Number of Shares
Name and Address Beneficially Owned Percent
Of Beneficial Owner At April 8, 1999 Of Class
Grace Brothers Ltd. 1 3,446,573 24.8%
1650 Sherman Avenue, Suite 900
Evanston, Illinois 60201
Franklin Principal Maturity Trust 2 1,952,900 13.3%
777 Mariners Island Boulevard
San Mateo, California 94404
TCW Group, Inc. 1 1,473,425 10.6%
11100 Santa Monica Blvd, Suite 2000
Los Angeles, California 90025
Prudential Insurance Company of America1 931,600 6.7%
751 Broad Street
Newark, New Jersey 07102
Wellington Management Company, LLP 1 751,000 5.4%
75 State Street
Boston, Massachusetts 02109
- --------
1 Information regarding Grace Brothers Ltd., TCW Group, Inc., Prudential
Insurance Company of America and Wellington Management Company, LLP and their
beneficial ownership of the Company's shares was obtained from the Schedule 13G
of Grace Brothers Ltd. dated February 12, 1999, the Schedule 13G of TCW Group,
Inc. dated February 12, 1999, the Schedule 13G of Prudential Insurance Company
of America dated February 1, 1999 and the Schedule 13G of Wellington Management
Company, LLP dated February 8, 1999.
2 Information regarding Franklin Principal Maturity Trust and their beneficial
ownership of the Company's shares was obtained from Schedule 13G dated January
28, 1999. Consists of 1,206,804 shares of Common Stock of the Company and
746,096 warrants which are convertible into Common Stock of the Company on a
one-for-one basis with an exercise price of $1.20 per share.
2
<PAGE>
The following table shows the number of shares of Common Stock
beneficially owned by each director or nominee, by the executive officers named
below in the Summary Compensation Table and by all directors, nominees and
executive officers as a group, based upon information supplied by them:
Number of Shares
Beneficially Owned Percent
Name At April 8, 1999 1 Of Class
Lawrence W. Bianchi 3,000 *
Charles W. Finkl 51,000 *
Lawrence C. Hammond 18,124 *
Wayne E. Larsen 55,000 *
Robert J. Noel 28,936 *
Robert W. Sullivan 83 *
Gary J. Vroman 35,000 *
Kerry L. Woody 104,167 *
Directors and Executive Officers
as a Group (12 persons) 333,642 2.4%
* Less than one percent (1%)
- --------
1 Unless otherwise noted, all shares are owned directly and the owner has the
right to vote the shares, except for shares that officers and directors have the
right to acquire under the Company's stock option plans as of the record date or
within sixty (60) days thereafter, which for Messrs. Woody, Larsen, Noel, Vroman
and Hammond are 108,334, 55,000, 25,000, 25,000 and 16,667 shares, respectively.
Kerry L. Woody, 47. Director since 1997. Mr. Woody has been President
since 1995 and was appointed Chief Executive Officer of the Company in 1998.
Prior to that time he was Vice President-Operations, Vice
President-Manufacturing Services and Production Manager. He joined the Company
in 1975. Mr. Woody is also a director and President of Stowe Machine Co., Inc.
In addition, Mr. Woody serves as a Director of Vilter Manufacturing Co. and
Milwaukee Lutheran College. Mr. Woody has a B.S. in Engineering from Milliken
University.
Wayne E. Larsen, 44. Director since 1997. Since 1995 Mr. Larsen has been
Vice President Law/Finance and Secretary of the Company. He served as General
Counsel and Secretary from 1989 after joining the Company as corporate counsel
in 1981. He is also a director and Vice President and Secretary of Stowe Machine
Co., Inc. Mr. Larsen is a Trustee of the Ladish Co. Foundation. Mr. Larsen has a
B.A. from Marquette University and a J.D. from Marquette Law School.
Gene E. Bunge, 53. Mr. Bunge has served as Vice President, Engineering
since November 1991. From 1985 until that time he was General Manager of
Engineering. Mr. Bunge has been with the Company since 1973. He has a B.S.E.E.
from the Milwaukee School of Engineering.
Robert J. Noel. 58. Mr. Noel has been Vice President, Quality and
Technology since March 1991. He has been Manager of Metallurgy since 1985 and
prior to that period was a Product Metallurgist for jet engine components. Mr.
Noel has been with the Company since 1963. He has a B.S. in Mechanical
Engineering from Marquette University.
James K. Sorenson, 61. Mr. Sorenson has served as Vice President,
Materials Management since March 1991. Prior to that time he had been Purchasing
Manager, Production Manager, and Head Buyer. Mr. Sorenson has been with the
Company since 1963. He has a B.S. in Mechanical Engineering from the University
of Wisconsin.
3
<PAGE>
Gary J. Vroman, 39. Mr. Vroman has served as Vice President, Sales and
Marketing since December 1995. From January 1994 to December 1995 he was General
Manager of Sales. Prior to that period he had been the Product Manager for jet
engine components. Mr. Vroman has been with the Company since 1982. He has a
B.S. in Engineering from the University of Illinois and a M.S. in Engineering
Management from the Milwaukee School of Engineering.
Lawrence C. Hammond, 51. Mr. Hammond has served as Vice President, Human
Resources since January 1994. Prior to that time he had served as Director of
Industrial Relations at the Company and he had been Labor Counsel at the
Company. Mr. Hammond has been with the Company since 1980. He has a B.A. and a
Masters in Industrial Relations from Michigan State University and a J.D. from
the Detroit College of Law.
Ronald O. Wiese, 65. Mr. Wiese has served as Treasurer since May 1989. He
was Assistant Treasurer of the Company since 1986 and was its Tax Manager from
1982 to 1986. Mr. Wiese has been with the Company since 1955. He holds a B.S. in
Accounting from Marquette University.
Thomas S. Plichta, 56. Mr. Plichta has served as Corporate Controller
since May 1989. He served as Assistant Corporate Controller for more than five
years prior to that time. Mr. Plichta has been with the Company since 1965. He
has a B.S. in Accounting from Marquette University.
ITEM 1 - ELECTION OF DIRECTORS
At the 1999 Annual Meeting, five (5) directors are to be elected who
shall hold office until the next Annual Meeting of Stockholders or until their
respective successors are duly elected and qualified. It is the intention of the
persons named in the Company's proxy to vote for the election of each of the
five (5) nominees listed below, unless authority is withheld. All nominees have
indicated a willingness to serve as directors, but if any of them should decline
or be unable to serve as a director, the persons named in the proxy will vote
for the election of another person recommended by the Board of Directors.
The Board of Directors recommends you vote FOR the election of each of
the five (5) nominees to the Board of Directors set forth below.
Nominees
- --------------------------------------------------------------------------------
Lawrence W. Bianchi, 58. Director since 1998. Mr. Bianchi in 1993 retired as the
Managing Partner of the Milwaukee, Wisconsin office of KPMG Peat Marwick. From
1994 to 1998 Mr. Bianchi served as CFO of the law firm of Foley & Lardner. Mr.
Bianchi's principal occupation is investments.
- --------------------------------------------------------------------------------
Charles W. Finkl, 78. Director since 1998. Mr. Finkl is a director and the
Chairman and Chief Executive Officer of A. Finkl & Sons, Co., a Chicago,
Illinois based metals processor, a position he has held for more than ten years.
- --------------------------------------------------------------------------------
Wayne E. Larsen, 44. Director since 1997. Since 1995 Mr. Larsen has been Vice
President Law/Finance and Secretary of the Company. He served as General Counsel
and Secretary from 1989 after joining the Company as corporate counsel in 1981.
He is also a director and Vice President and Secretary of Stowe Machine Co.,
Inc. Mr. Larsen is a Trustee of the Ladish Co. Foundation.
- --------------------------------------------------------------------------------
Robert W. Sullivan, 40. Director since 1993. Mr. Sullivan is President of The
Plitt Company, a seafood distribution concern. Mr. Sullivan had been President
of The Martec Group, a sales and marketing consulting group for more than five
years.
- --------------------------------------------------------------------------------
Kerry L. Woody, 47. Director since 1997. Mr. Woody has been President since 1995
and was appointed Chief Executive Officer of the Company in 1998. Prior to that
time he was Vice President-Operations, Vice President-Manufacturing Services and
Production Manager. He joined the Company in 1975. Mr. Woody is also a director
and President of Stowe Machine Co., Inc., a director of Vilter Manufacturing Co.
and a director of Wisconsin Lutheran College.
- --------------------------------------------------------------------------------
4
<PAGE>
BOARD MEETINGS AND COMMITTEES
The directors hold regular quarterly meetings, in addition to the meeting
immediately following the Annual Meeting of Stockholders, attend special
meetings, as required, and spend such time on the affairs of the Company as
their duties require. During the fiscal year ended December 31, 1998, the Board
of Directors held ten (10) meetings. All directors of the Company attended at
least seventy-five percent (75%) of the meetings of the Board of Directors and
the committees on which they served during the fiscal year ended December 31,
1998. During most of the fiscal year ended December 31, 1998, there were only
two committees, those being an Audit Committee and a Compensation and Stock
Option Committee
The members of the Audit Committee were Lawrence W. Bianchi, Wayne E.
Larsen and Robert W. Sullivan. The Audit Committee is responsible for
recommending annually a firm of independent certified public accountants to
serve as the Company's auditors, to meet with and review reports of the
Company's auditors and the fees payable to them. In addition, the Audit
Committee provides oversight to the total financial status of the Company as
well as assisting the Company with assessments of pension-asset performance and
investment criteria. The Audit Committee met once in 1998 for these purposes.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
The members of the Compensation and Stock Option Committee were Lawrence
W. Bianchi, Kerry L. Woody and Charles W. Finkl. The Compensation and Stock
Option Committee is responsible for (i) setting the overall policy of the
Company's executive compensation program; (ii) establishing the base salary
level for the executive officers; (iii) reviewing and approving the annual
incentive program for the Company executives; and (iv) functions as the
administrator of the Company's 1996 Long Term Incentive Plan. The Compensation
and Stock Option Committee met once in 1998. The Company's executive
compensation program is designed to be closely linked to corporate performance
and returns to stockholders. To this end, the Company has developed an overall
compensation strategy and specific compensation plan that tie a very significant
portion of executive compensation to the Company's success in meeting specified
performance goals. The primary criteria used by the Compensation and Stock
Option Committee in assessing the performance of the Company's Chief Executive
Officer are the results of the Company as measured by its earnings before
interest, taxes, depreciation and amortization ("EBITDA"). By monitoring the
EBITDA of the Company, both as an overall result and as a percentage of net
sales, the Compensation and Stock Option Committee determines whether the Chief
Executive Officer is achieving their expectations. In 1998, EBITDA at the
Company was up 5.7% over 1997. However EBITDA as a percentage of net sales
declined to 15.7% from 16% in 1997. Therefore, the Chief Executive Officer had
his incentive compensation for 1998 reduced to 38% of base salary from the 1997
incentive compensation level of 68% of base. The other executive officers
experienced similar reductions in incentive compensation in 1998 as compared to
1997 due to the decline in EBITDA as a percentage of net sales.
In addition, through the use of stock options, the Company ensures that a
part of the executives' compensation is closely tied to appreciation in the
Company's stock price. The overall objectives of this strategy are to attract
and retain the best possible executive talent, to motivate these executives to
achieve the goals inherent in the Company's business strategy, to link executive
and stockholder interests through equity based plans and, finally, to provide a
compensation package that recognizes individual contributions as well as overall
business results.
The Compensation and Stock Option Committee regularly reports their
actions and recommendations to the full Board of Directors. In 1998, none of the
actions or recommendations of the Compensation and Stock Option Committee were
modified or rejected by the Board of Directors.
By the Compensation and Stock Option Committee
Lawrence W. Bianchi
Kerry L. Woody
Charles W. Finkl
5
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual fee of twenty thousand dollars
($20,000.00) which is payable quarterly. In addition, directors who are not
officers or employees of the Company receive a fee of one thousand dollars
($1,000.00) for each Board meeting personally attended.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information for the Company's fiscal years
ended December 31, 1998, 1997 and 1996, with regard to the compensation for
their services to the Company of the Chief Executive Officer and each of the
other four (4) most highly compensated executive officers serving the Company at
the close of the Company's most recently completed fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
---------------------------------- -------------------
Name and
Principal Position Year Other Restricted Stock All Other
Annual Stock Option Compen-
Salary Bonus 1 Compen- Awards Awards sation 3
sation 2 (Shares) (Shares)
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Kerry L. Woody 1998 $274,179 $103,455 $2,280 -- 100,000 $5,738
President & Chief Executive Officer 1997 $200,000 $136,000 $1,776 -- -- $4,799
1996 $200,000 $64,000 $1,608 -- 100,000 $4,799
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Wayne E. Larsen 1998 $171,556 $49,158 $2,280 -- 60,000 $3,993
Vice President Law/Finance & Secretary 1997 $155,000 $54,000 $1,776 -- -- $3,464
1996 $120,000 $30,000 $1,608 -- 50,000 $3,464
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Robert J. Noel 1998 $145,927 $23,800 $2,280 -- 40,000 $4,508
Vice President - Quality & Technology 1997 $140,000 $35,000 $1,800 -- -- $1,633
1996 $140,000 $26,000 $1,800 -- 50,000 $1,633
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Gary J. Vroman 1998 $135,500 $26,100 $2,280 -- 40,000 $4,788
Vice President - Sales & Marketing 1997 $130,000 $39,000 $1,776 -- -- $2,460
1996 $130,000 $26,000 $1,608 -- 50,000 $2,460
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Lawrence C. Hammond 1998 $130,290 $21,250 $2,280 -- 40,000 $4,118
Vice President - Human Resources 1997 $125,000 $37,500 $1,776 -- -- $3,426
1996 $125,000 $26,000 $1,608 -- 33,333 $3,426
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
- ------------
1 An incentive bonus is paid only upon the achievement of a predetermined
financial objective set each year by the Board of Directors' Compensation
Committee at the beginning of the fiscal year.
2 Other annual compensation includes supplemental life insurance provided to the
above listed executives.
3 All other compensation consists principally of automobile allowances.
</TABLE>
INCENTIVE STOCK OPTION PLAN
The Ladish Co., Inc. 1996 Long-Term Incentive Plan (the "Incentive
Plan") has been established by the Company to promote the long-term financial
interest of the Company by providing for the award of equity-based incentives to
key employees and other persons providing material services to the Company. The
Incentive Plan provides a means whereby such individuals may acquire shares of
Common Stock through the grant of stock options and stock appreciation rights.
The Incentive Plan is not subject to any provision of ERISA or qualified under
Section 401(a) of the Internal Revenue Code.
The number of shares of Common Stock subject to awards under the
incentive Plan may not exceed 833,333, of which 753,333 have been issued as of
December 31, 1998, or are subject to outstanding options and 80,000 have been
reserved for issuance under future grants. The number of shares underlying
awards made to any one individual in any one-year period may not exceed 166,667
shares. The Common Stock issued under the
6
<PAGE>
Incentive Plan may be shares currently authorized but unissued or currently held
or subsequently acquired by the Company as treasury shares.
The number of shares subject to the Incentive Plan and the terms of any
outstanding award may be adjusted as described in the Incentive Plan to reflect
certain changes in the capitalization of the Company.
The authority to manage and control the operation and administration of
the Incentive Plan is vested in a committee selected by the Board of Directors
of the Company (the "Committee") which shall consist of two or more members of
the Board. The Committee has the authority and discretion to determine the
individuals who will receive awards under the Incentive Plan and to determine
the time of receipt, type of award, the number of shares covered by such award
and the terms, conditions, performance criteria, restrictions and other
provisions applicable to such award. The Committee also has the authority and
discretion to interpret the Incentive Plan and to establish, amend and rescind
any rules and regulations relating to the Incentive Plan. Any interpretation of
the Incentive Plan by the Committee and any decision made by it under the
Incentive Plan is final and binding on all persons.
Subject to the terms and provisions of the Incentive Plan, a
participant to whom a stock option is granted will have the right to purchase
the number of shares of Common Stock covered by the option. Subject to the
conditions and limitations of the Incentive Plan, the Committee shall determine
all of the terms and conditions of such grant, including without limitation, the
option price, any vesting schedule and the period of exercisability.
No option may be exercised after its expiration date. The expiration
date shall be determined by the Committee at the time of grant, but may not be
later than the earliest to occur of: (i) the ten-year anniversary of the grant
date; (ii) if the participant's termination of employment with Company and its
affiliates occurs by reason of death or disability (as defined in the Incentive
Plan), the one-year anniversary of such termination of employment; (iii) if the
participant's termination of employment with the Company and its affiliates
occurs by reason of retirement, the three-month anniversary of such termination
of employment; or (iv) if the participant's termination with the Company and its
affiliates occurs for any other reason, the date of such termination.
The full purchase price of each share of Common Stock purchased upon
the exercise of an option shall be paid at the time of such exercise in cash or
in shares of Common Stock (valued at fair market value as of the date of
exercise) that have been held by the participant at least six months, or in any
combination thereof, as determined by the Committee. To the extent provided by
the Committee, a participant may elect to pay the purchase price upon the
exercise of an option through a cashless exercise arrangement.
Options awarded under the Incentive Plan may be nonqualified options or
incentive stock options, as determined in the discretion of the Committee. Under
the terms of the Incentive Plan, the Committee may also issue stock appreciation
rights ("SARs"). Upon exercise, an SAR entitles the holder thereof to a payment
equal to the excess of the fair market value of a share of stock on the exercise
date over the fair market value of a share of stock on the grant date. If the
Committee so determines, SARs may be issued in tandem with stock options.
Generally, options and SARs are not transferable prior to the
participant's death. However, the Committee may provide that an option or SAR
award may be transferred to an immediate family member or to a trust for the
benefit of an immediate family member.
Upon a change in control of the Company (as defined in the Incentive
Plan), all options and SARs shall become immediately exercisable.
The Board of Directors of the Company may amend or terminate the
Incentive Plan at any time, provided that no such amendment or termination may
materially adversely affect the rights of any participant or beneficiary under
any award made under the plan prior to the date such amendment is adopted by the
Board.
During 1998, stock options for 100,000, 60,000, 40,000, 40,000 and
40,000 shares were granted to Messrs. Woody, Larsen, Noel, Vroman and Hammond,
respectively.
7
<PAGE>
<TABLE>
<CAPTION>
Option Grants In 1998
- ----------------------------------------------------------------------------------------------------------------------
Percentage of
Shares Total Options
Underlying Granted to All
Options Employees in Exercise Price Grant Date Present
Name Granted 1 1998 (per share) 2 Expiration Date Value 3
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Kerry L. Woody 100,000 31.3% $13.50/$15.50 March 9, 2008 $506,000/$492,500
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Wayne E. Larsen 60,000 18.8% $13.50/$15.50 March 9, 2008 $303,600/$295,500
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Robert J. Noel 40,000 12.5% $13.50/$15.50 December 28, 2008 $115,600/$111,600
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Gary J. Vroman 40,000 12.5% $13.50/$15.50 December 28, 2008 $115,600/$111,600
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Lawrence C. Hammond 40,000 12.5% $13.50/$15.50 December 28, 2008 $115,600/$111,600
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
- --------
1 The options reflected in the table are nonqualified stock options under the
Internal Revenue Code and were granted on March 9 and December 28, 1998. The
exercise price of each option granted was equal to at least 100% of the fair
market value of the Common Stock on the date of grant, as determined by the
Compensation and Stock Option Committee. The options become exercisable in
increments of one-half on each of the first and second anniversaries of the
grant date; provided, however, that no options may be exercised more than ten
years after the date of grant. The options are subject to early vesting in the
event of a change in ownership or control.
2 The exercise price of options may be paid in cash, by delivering previously
issued shares of Common Stock or any combination thereof. One-half of each of
the grants are at the lower price and the remaining half are at the higher
price.
3 The option values presented are based on the Black-Scholes option pricing
model, adapted for use in valuing stock options. The actual value, if any, that
an optionee may realize upon exercise will depend on the excess of the market
price of the Common Stock over the option exercise price on the date the option
is exercised. There is no assurance that the actual value realized by an
optionee upon the exercise of an option will be at or near the value estimated
under the Black-Scholes model. The estimated values under the Black-Scholes
model are based on arbitrary assumptions as to variables such as interest rates,
stock price volatility and future dividend yield, including the following: (a) a
weighted average risk-free interest rate of 5.32%; (b) stock price volatility of
60.79%; and (c) weighted average remaining lives of 10 years.
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1998 and Fiscal Year-End Option Values
- ---------------------------------------------------------------------------------------------------------------------
Number of Number of Shares Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money
Acquired on Value Fiscal Year-End Options at Fiscal Year-End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Kerry L. Woody -- -- 54,167 125,000 $128,647 $59,375
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Wayne E. Larsen -- -- 25,000 72,500 $59,375 $29,688
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Robert J. Noel -- -- 25,000 52,500 $59,375 $29,688
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Gary J. Vroman -- -- 25,000 52,500 $59,375 $29,688
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Lawrence C. Hammond -- -- 16,667 48,333 $39,584 $19,791
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
</TABLE>
PENSION BENEFITS
Defined Benefit Plan. The Ladish Co., Inc. Salaried Pension Plan (the
"Pension Plan") is a "defined benefit" pension plan generally covering salaried,
non-union employees of the Company who are not covered by any other defined
benefit plan to which the Company makes contributions pursuant to a collective
bargaining agreement.
Upon reaching normal retirement at or after age 65, a participant is
generally entitled to receive an annual retirement benefit for life. The Pension
Plan provides alternative actuarially equivalent forms of benefit payment.
Vesting under the Pension Plan occurs after five years of continued service.
The monthly retirement benefit at the normal retirement age of at least
65 is determined pursuant to a formula as follows: 1.1% of the average base
salary (exclusive of bonuses or other incentive or special compensation) of the
individual during the consecutive five year period of service within the ten
years preceding termination of employment (or after age 45, if longer) that
his/her earnings were highest is multiplied by the number of years of Benefit
Service (as defined). Monthly normal retirement benefits are payable on a
straight life annuity basis and such amounts are not subject to any deduction
for Social Security or other offset amounts.
8
<PAGE>
The following table sets forth the annual benefits payable to a
participant who qualified for normal retirement in 1998, with the specified
highest average earnings during the consecutive five year period of service
within the ten years prior to retirement and the specified years of Benefit
Service:
<TABLE>
<CAPTION>
Average Annual Earnings for Years of Benefit Service
Highest 5-Year Period Within ----------------------------------------------------------------------------------
the 10-Years Preceding
Retirement 10 15 20 25 30 35
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$50,000 $5,500 $8,250 $11,000 $13,750 $16,500 $19,250
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$95,000 $10,450 $15,675 $20,900 $26,125 $31,350 $36,575
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$100,000 $11,000 $16,500 $22,000 $27,500 $33,000 $38,500
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$150,000 $16,500 $24,750 $33,000 $41,250 $49,500 $57,750
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$200,000 $22,000 $33,000 $44,000 $55,000 $66,000 $77,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$250,000 $27,500 $41,250 $55,000 $68,750 $82,500 $96,250
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The years of Benefit Service for Messrs. Woody, Larsen, Noel, Vroman
and Hammond as of January 1, 1999 were 24, 18, 36, 17 and 19, respectively.
Deferred Compensation Agreements. The Company has entered into deferred
compensation agreements (the "Agreements") with nine current officers of the
Company, including Messrs. Woody, Larsen, Noel, Vroman and Hammond. Each
employee covered by the Agreements (an "Employee"), upon full vesting, is
entitled to receive supplemental disability or retirement benefits; provided
that in no event may a person's total retirement benefits under the Agreements
exceed 52.5% of the monthly average base salary (inclusive of bonuses or other
compensation) during the five calendar years immediately preceding retirement.
The retirement benefit at the normal retirement age of at least 65 is
determined pursuant to a formula as follows: 52.5% of the monthly average of the
Employee's base salary plus any incentive compensation which does not exceed
twenty percent of the base salary during the five calendar years of highest
compensation over ten years immediately preceding retirement multiplied by years
of service, up to 35, and divided by 35. If an Employee suffers a disability (as
defined), he is entitled to benefits paid under the same formula as in the
preceding sentence (with his years of service calculated as if he had retired at
age 65), reduced by other disability benefits paid by the Company or through
workers' compensation (unless he is receiving fixed statutory payments for
certain bodily injuries).
Any amount to be paid under the Agreement shall be reduced by any
benefit paid to an Employee or his beneficiary pursuant to the Pension Plan.
Defined Contribution Plan. The Ladish Co., Inc. Savings and Deferral
Investment Plan ("SDIP"), which has been qualified under section 401(k) of the
Internal Revenue Code, provides that salaried, non-union employees with six
months' service may contribute 1% to 18% of their annual base salary to SDIP and
the Company will provide a matching contribution in an amount to be determined
by the Board of Directors of the Company. Employees' contributions of 1% to 18%
can be "before tax" contributions, "after tax" contributions or a combination of
both. The employees' contributions and the matching Company contribution may be
placed by the employee in a fixed income fund, an equity investment fund or
various combinations of each.
9
<PAGE>
Total Shareholder Return
The following graph compares the period percentage change in Ladish's
cumulative total shareholder return on its common stock, assuming dividend
reinvestment, with the cumulative total return of (i) the Russell 2000 Small Cap
Index, and (ii) a peer group from the Company's industry, for the period of
March 9, 1998 to December 31, 1998. Ladish's use of less than a five-year period
reflects the effective date of the registration of its common stock under
Section 12 of the Exchange Act.
[STOCK PERFORMANCE GRAPH]
Mar-9-98 Jun-30-98 Sept-30-98 Dec-31-98
- ----------------- --------------- -------------- --------------- ---------------
Ladish 100 87.7 61.8 58.8
- ----------------- --------------- -------------- --------------- ---------------
Russell 2000 100 99.2 78.8 91.5
- ----------------- --------------- -------------- --------------- ---------------
Industry Peers 100 89.6 54.3 49.2
- ----------------- --------------- -------------- --------------- ---------------
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Woody,
Larsen, Noel, Vroman and Hammond which are substantially similar in all
respects. The basic employment agreement provides for a number of benefits, all
of which vest after ten years of employment, including group term life
insurance, health and dental coverage and long-term disability coverage.
The agreements provide that, upon the involuntary termination of the
employee other than for cause, the Company is required to pay the employee up to
24 months of severance pay, determined by multiplying the employee's years of
service by the employee's base monthly salary at the time of termination. In the
case of Messrs. Woody and Larsen, should they be terminated due to a change of
control or ownership, they are entitled to 24 months of severance pay. Upon
retirement at age 65, the employee will receive his normal retirement benefits.
Such benefits include a monthly payment equal to 52.5% of the employee's average
compensation (i.e., monthly average of compensation for the five years of
highest compensation over the ten years prior to retirement) multiplied by a
fraction, the numerator of which is the length of service of the employee and
the denominator of which is 35. There are also provisions adjusting this
calculation in the event of early retirement. Disabled employees can also be
eligible for certain retirement benefits. All retirement benefits are tolled
during any period of re-employment. Each agreement further provides that any
compensation paid by the Company shall be reduced by any benefit paid under the
Company's salaried employees' retirement plan. In addition to the foregoing,
grants of stock options and SARs under the Incentive Plan become immediately
exercisable upon a change in control of the Company.
10
<PAGE>
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 executive officers, directors and persons who own more than ten
percent (10%) of the Company's Common Stock to file initial reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC").
These reports are also filed with Nasdaq and a copy of each report is furnished
to the Company.
Additionally, SEC regulations require that the Company identify any
individuals for whom one of the referenced reports was not filed on a timely
basis during the most recent fiscal year. To the Company's knowledge, based on
review of reports furnished to it, each individual who was required to file such
report following the Company's registration in March 1998 with the SEC did so,
but for one report of an option grant to each of the named executive officers,
and Gene Bunge, were not made on a timely basis.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP, independent auditors, or a predecessor of that
firm, have been the auditors of the accounts of the Company each year since
1993, including the fiscal year ended December 31, 1998. It is anticipated that
representatives of Arthur Andersen LLP will be present at the 1999 Annual
Meeting, will have the opportunity to make a statement if they so desire and
will be available to respond to appropriate questions raised at the 1999 Annual
Meeting or submitted to them in writing before the 1999 Annual Meeting.
Arthur Andersen LLP has informed the Company that it does not have any
direct financial interest in the Company and that it has not had any direct
connection with the Company in the capacity of promoter, underwriter, director,
officer or employee.
As is customary, auditors for the current fiscal year will be appointed
by the Board of Directors at their meeting immediately following the 1999 Annual
Meeting.
OTHER MATTERS
Management of the Company is not aware of other matters to be presented
for action at the 1999 Annual Meeting; however, if other matters are presented
for action, it is the intention of the persons named in the accompanying form of
proxy to vote in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
Stockholders who wish to include a proposal in the proxy statement for
the Company's Annual Meeting of Stockholders for 2000 pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, must forward the proposal to the
Secretary of the Company no later than December 10, 1999. Stockholder proposals
other than pursuant to Rule 14a-8 will be considered untimely under the
Company's By-laws if received less than 45 days in advance of the Annual Meeting
of Stockholders in 2000 and the Company will not be required to present such
proposals at the meeting. If the Board of Directors of the Company chooses to
present such a proposal despite its untimeliness, the people named in the
proxies solicited by the Board of Directors for the 2000 Annual Meeting of
Stockholders will have the right to exercise discretionary voting power with
respect to such proposal.
11
<PAGE>
REPORT ON FORM 10-K
Upon the written request of any stockholder, addressed to the Secretary
of the Company, the Company will provide to such stockholder, without charge, a
copy of the Company's 1998 Annual Report on Form 10-K (without exhibits), as
filed with the Securities and Exchange Commission.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, stockholders are urged, regardless of the number of shares
owned, to date, sign and return the enclosed proxy.
By Order of the Board of Directors
/s/
Wayne E. Larsen
April 8, 1999 Secretary
12
<PAGE>
Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
PROXY
ANNUAL MEETING OF THE STOCKHOLDERS OF LADISH CO., INC.
TO BE HELD ON MAY 21, 1999
This Proxy is being solicited by the Board of Directors of Ladish Co.,
Inc. (the "Company"). The undersigned hereby appoints Wayne E. Larsen and Kerry
L. Woody with full power to act alone and with full power of substitution, as
proxy of the undersigned, to attend the Annual Meeting of the Company, to be
held on Friday, May 21, 1999, in the Creole Meeting Room of the Four Points
Hotel Sheraton, 4747 South Howell Avenue, Milwaukee, Wisconsin, at 10:00 a.m.,
Central Daylight Time, and any adjournment or postponement thereof (the "Annual
Meeting"), and to vote all shares of Common Stock of the Company held of record
by the undersigned on April 8, 1999, upon any and all matters that may properly
come before the Annual Meeting. This Proxy, when properly executed, will be
voted in the manner directed herein by the undersigned stockholder. If no
direction is given, this Proxy will be voted FOR the proposal listed below. This
Proxy, when properly executed, may be voted in the discretion of the proxy upon
any and all other matters that may properly come before the Annual Meeting and
the proxy is hereby authorized to vote the shares of Common Stock represented by
the proxy on matters incidental to the conduct of the Annual Meeting, including
any motion to adjourn or postpone the Annual Meeting (although the proxy does
not intend, and is not aware at this time of any intention of any other person,
to make such a motion).
This Proxy may be revoked at any time before the authority hereby
granted is exercised by (i) delivering a written statement of revocation to the
Secretary of the Company, (ii) submitting a later dated Proxy or (iii) attending
the Annual Meeting and voting in person.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
Ladish Co., Inc. 1999 ANNUAL MEETING
PROPOSAL (1): To elect five (5) Directors, to serve for the term of one year or
until their successors have been elected and have duly qualified.
Lawrence W. Bianchi [ ] FOR [ ] WITHHOLD
Charles W. Finkl [ ] FOR [ ] WITHHOLD
Wayne E. Larsen [ ] FOR [ ] WITHHOLD
Robert W. Sullivan [ ] FOR [ ] WITHHOLD
Kelly L. Woody [ ] FOR [ ] WITHHOLD
Check appropriate box
Indicate changes below: Date _____________
Address Change? [ ] Name Change? [ ]
NO. OF SHARES
------------------------------------
------------------------------------
Signature(s) in Box
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. When shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give your full title as such.
If a corporation, please sign in
full corporate name by the president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
