SCHEDULE 14A
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 Section 240.14a-11(c) or
Section 240.14a-12
Toastmaster 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)(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:
_____________________________________________________
<PAGE>
March 27, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Toastmaster Inc., to be held at the principal
executive offices of the Company, located at 1801 North Stadium
Boulevard, Columbia, Missouri, on Tuesday, May 12, 1998,
commencing at 10:00 a.m., local time. The business to be
conducted at the meeting is described in the attached Notice of
Annual Meeting and Proxy Statement. In addition, there will be
an opportunity to meet with members of senior management and
review the business and operations of the Company.
Your Board of Directors joins with me in urging you to
attend the meeting. Whether or not you plan to attend the
meeting, however, please sign, date and return the enclosed proxy
card promptly. A prepaid return envelope is provided for this
purpose. You may revoke your proxy at any time before it is
exercised and it will not be used if you attend the meeting and
prefer to vote in person.
Sincerely yours,
Robert H. Deming
Chairman of the Board
<PAGE>
TOASTMASTER INC.
1801 North Stadium Boulevard
Columbia, Missouri 65202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Shareholders of Toastmaster Inc., a Missouri corporation
("Toastmaster"), will be held at the principal executive offices
of Toastmaster, located at 1801 North Stadium Boulevard,
Columbia, Missouri, on Tuesday, May 12, 1998, commencing at 10:00
a.m., local time, and thereafter as it may from time to time be
adjourned, for the following purposes:
1. To elect two Class I directors to hold office for a
term expiring at the 2001 Annual Meeting of the
Shareholders of Toastmaster and until their respective
successors are duly elected and qualified or until
their respective earlier resignation or removal;
2. To consider and act upon ratification and approval of
the selection of the accounting firm of KPMG Peat
Marwick LLP as the independent auditors of Toastmaster
for the year ending December 31, 1998; and
3. To transact such other business as properly may come
before the meeting and any adjournment or adjournments
thereof.
The Board of Directors of Toastmaster has fixed the close of
business on March 17, 1998 as the record date for determination
of the shareholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment or adjournments thereof.
All shareholders are cordially invited to attend the
meeting. Whether or not you intend to be present at the meeting,
the Board of Directors of Toastmaster solicits you to sign, date
and return the enclosed proxy card promptly. A prepaid return
envelope is provided for this purpose. You may revoke your proxy
at any time before it is exercised and it will not be used if you
attend the meeting and prefer to vote in person. Your vote is
important and all shareholders are urged to be present in person
or by proxy.
By Order of the Board of Directors
Linda G. Arnold
Secretary
March 27, 1998
Columbia, Missouri
<PAGE>
TOASTMASTER INC.
1801 North Stadium Boulevard
Columbia, Missouri 65202
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1998
__________________
INTRODUCTION
This Proxy Statement is being furnished to the shareholders
of Toastmaster Inc., a Missouri corporation ("Toastmaster" or the
"Company"), in connection with the solicitation of proxies by the
Board of Directors of Toastmaster for use at the Annual Meeting
of Shareholders to be held on Tuesday, May 12, 1998, and at any
adjournment or adjournments thereof (the "Annual Meeting"). The
Annual Meeting will commence at 10:00 a.m., local time, and will
be held at the principal executive offices of the Company,
located at 1801 North Stadium Boulevard, Columbia, Missouri
65202.
This Proxy Statement and the enclosed form of proxy were
first mailed to the Company's shareholders on or about March 27,
1998.
PROXIES
You are requested to complete, date and sign the enclosed
form of proxy and return it promptly to the Company in the
enclosed postage prepaid envelope. Shares represented by
properly executed proxies will, unless such proxies previously
have been revoked, be voted in accordance with the shareholders'
instructions indicated in the proxies. If no instructions are
indicated, such shares will be voted in favor of the election of
the nominees for director named in this Proxy Statement, in favor
of ratifying the selection of the accounting firm of KPMG Peat
Marwick LLP as Toastmaster's independent auditors for the current
year, and, as to any other matter that properly may be brought
before the Annual Meeting, in accordance with the discretion and
judgment of the appointed proxies. A shareholder who has given a
proxy may revoke it at any time before it is exercised at the
Annual Meeting by filing written notice of revocation with the
Secretary of the Company, by executing and delivering to the
Secretary of the Company a proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person.
VOTING AT THE MEETING
For purposes of voting on the proposals described herein,
the presence in person or by proxy of shareholders holding a
majority of the total outstanding shares of the Company's common
stock, $0.10 par value, shall constitute a quorum at the Annual
Meeting. Only holders of record of shares of the Company's
common stock as of the close of business on March 17, 1998 (the
"Record Date"), are entitled to notice of, and to vote at, the
Annual Meeting or any adjournment or adjournments thereof. As of
the Record Date, 7,539,450 shares of the Company's common stock
were outstanding and entitled to be voted at the Annual Meeting.
Each share of common stock is entitled to one vote on each matter
properly to come before the Annual Meeting. Shares of common
stock represented by a proxy which directs that the shares be
voted to abstain or to withhold a vote on any matter will be
counted in determining whether a quorum is present. Shares of
common stock as to which there is a broker non-vote (i.e., when a
broker holding shares for clients in street name is not permitted
to vote on certain matters without instruction) also will be
counted for quorum purposes.
<PAGE>
Directors are elected by a plurality (a number greater than
those cast for any other candidates) of the votes cast, in person
or by proxy, of shareholders entitled to vote at the Annual
Meeting for that purpose. The affirmative vote of a majority of
the shares of the Company's common stock, represented in person
or by proxy and entitled to vote at the Annual Meeting, is
required for (i) the ratification of the selection of KPMG Peat
Marwick LLP as the Company's independent auditors, and (ii) the
approval of such other matters as properly may come before the
Annual Meeting or any adjournment thereof.
A shareholder entitled to vote in the election of directors
can withhold authority to vote for all nominees for directors or
can withhold authority to vote for certain nominees for
directors. In addition, a shareholder entitled to vote with
respect to any other matters at the Annual Meeting may abstain
from voting on such matters. With respect to the election of
directors, votes withheld from one or more nominees will be
excluded from the vote and will have no effect. Abstentions from
the proposal to approve the ratification of the selection of the
Company's independent auditors or any other proposal are treated
as votes against the particular proposal. Broker non-votes on
any proposal to be voted on at the Annual Meeting are treated as
shares of Toastmaster common stock as to which voting power has
been withheld by the respective beneficial holders and,
therefore, as shares not entitled to vote on the proposal as to
which there is the broker non-vote.
SOLICITATION OF PROXIES
This solicitation of proxies for the Annual Meeting is being
made by the Company's Board of Directors. The Company will bear
all costs of such solicitation, including the cost of preparing
and mailing this Proxy Statement and the enclosed form of proxy.
After the initial mailing of this Proxy Statement, proxies may be
solicited by mail, telephone, telegram, facsimile transmission or
personally by directors, officers, employees or agents of the
Company. Brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward soliciting materials to
beneficial owners of shares held of record by them, and their
reasonable out-of-pocket expenses, together with those of
Toastmaster's transfer agent, will be paid by Toastmaster.
A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at least ten days prior
to the date of the Annual Meeting during normal business hours at
the principal executive offices of Toastmaster located at 1801
North Stadium Boulevard, Columbia, Missouri. The list also will
be available at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six
directors. The Articles of Incorporation of Toastmaster divide
the Board of Directors into three classes of directors, with the
directors serving staggered terms of three years and until their
respective successors are duly elected and qualified or until
their respective earlier resignation or removal. The present
terms of Edward J. Williams and James L. Hesburgh, the two
directors in Class I, expire at this Annual Meeting. Directors
in Class II (John E. Thompson and S B. Rymer, Jr.) and Class III
(Robert H. Deming and Daniel J. Stubler) have been elected to
terms expiring at the time of the annual meetings of shareholders
in 1999 and 2000, respectively.
One of the purposes of this Annual Meeting is to elect two
directors in Class I to serve for a three-year term expiring at
the annual meeting of shareholders in 2001 and until their
respective successors are duly elected and qualified or until
their respective earlier resignation or removal. The Board of
Directors has designated Edward J. Williams and James L. Hesburgh
as the two nominees proposed for election at the Annual Meeting.
Unless authority to vote for the nominees or a particular nominee
is withheld, it is intended that the shares represented by
properly executed proxies in the form enclosed will be voted for
the election as directors of both nominees. In the event that
one or both of the nominees should become unavailable for
election, it is intended that the shares represented by the
proxies will be voted for the election of such substitute nominee
or nominees as may be designated by the Board of <PAGE> Directors,
unless the authority to vote for both nominees or for the
particular nominee who has ceased to be a candidate has been
withheld. Each of the nominees has indicated his willingness to
serve as a director if elected, and the Board of Directors has no
reason to believe that either nominee will be unavailable for
election.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EDWARD J. WILLIAMS AND JAMES L. HESBURGH AS DIRECTORS
OF CLASS I.
Toastmaster's Articles of Incorporation and Bylaws provide
that advance notice of shareholder nominations for the election
of directors must be given. With respect to this Annual Meeting,
written notice of a shareholder's intent to make a nomination at
the meeting must be received by Toastmaster's Secretary at the
Company's principal executive offices not later than the close of
business on April 13, 1998. At future meetings of shareholders,
notice of nominations or other business to be brought before the
meeting must be delivered to Toastmaster's Secretary at the
Company's principal executive offices not less than 60 days (30
days in the case of nominations for the election of directors)
prior to the first anniversary of the previous year's annual
meeting. In the event that the date of the annual meeting of
shareholders is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, however, notice by the
shareholder to be timely must be so delivered not later than the
close of business on the later of (i) the 60th day (in the case
of nominations, the 30th day) prior to such annual meeting or
(ii) the tenth day following the date on which public
announcement of the date of such meeting is first made.
The shareholder's notice of nomination must contain (i) the
name and address of the nominating shareholder, of each person to
be nominated and of the beneficial owner (as defined in the
Articles of Incorporation), if any, on whose behalf the
nomination is made, (ii) a representation that the nominating
shareholder is the holder of record of Toastmaster common stock
entitled to vote in the election of directors at the meeting and
intends to appear at the meeting in person or by proxy to
nominate the person or persons specified in the notice, (iii) the
number of shares of Toastmaster common stock owned beneficially
and of record by the nominating shareholder and by each person to
be nominated, (iv) a description of all arrangements or
understandings between the nominating shareholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to
be made by the shareholder, (v) the consent of each nominee to
serve as a director if so elected, and (vi) such other
information regarding each nominee proposed by the nominating
shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission if Toastmaster were soliciting proxies for
the election of such nominees. If no such notice has been
received, the chairman of the Annual Meeting is entitled to
refuse to acknowledge the nomination of any person which is not
made in compliance with the foregoing procedure. The Board of
Directors does not know if, and has no reason to believe that,
anyone will attempt to nominate another candidate for director at
this Annual Meeting.
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The following table sets forth certain information with
respect to each person nominated by the Board of Directors for
election as a Class I director at the Annual Meeting and each
director whose term of office will continue after the Annual
Meeting.
<PAGE>
PRESENT
POSITION
WITH DIRECTOR
NAME AGE TOASTMASTER SINCE
NOMINEES
CLASS I: TERM TO EXPIRE IN 2001
Edward J. Williams 75 Director 1991
James L. Hesburgh 64 Director 1992
DIRECTORS CONTINUING IN OFFICE
CLASS II: TERM TO EXPIRE IN 1999
John E. Thompson 50 Executive Vice
President--Chief 1987
Financial Officer,
Treasurer
and Director
S B. Rymer, Jr. 82 Director 1991
CLASS III: TERM TO EXPIRE IN 2000
Robert H. Deming 63 Chairman, Chief
Executive Officer 1987
and Director
Daniel J. Stubler 54 President, Chief 1987
Operating Officer
and Director
The business experience of each of the directors of the
Company during the last five years is as follows:
Edward J. Williams has served as a Director of the Company
since November 1991. He served the McGraw-Edison Company as
Chairman of the Board of Directors and Chief Executive Officer
from 1974 through 1984 and as President from 1972 through 1983.
From May 1985 through December 1985 he served as Vice Chairman of
the Board of Directors of Cooper Industries. He has served as a
consultant and a director of various other organizations since
January 1986. He currently is a director of Amsted Industries
Incorporated. The Company's senior executive officers operated
the consumer products group of the McGraw-Edison Company
beginning in 1976 and formed a privately-held company named
Toastmaster Inc. in 1980 to acquire the kitchen counter-top
appliance, environmental and time products businesses of this
group from McGraw-Edison.
James L. Hesburgh has served as a Director of the Company
since January 1992. He has served as a director and president of
James L. Hesburgh International, Inc., an international
consulting and export management company, since 1977. He
currently serves as a director and president of Battley USA,
Inc., a holding company for a specialty coatings producer, as a
director and senior vice president of Fremont Funding, Inc., an
asset based lending company, and as a director of Sinto America,
Inc., a holding company for a tool and die manufacturing company
and a machinery manufacturing company, of FirstFed Corporation
and its wholly-owned subsidiary First Federal Bank of California,
of Roberts Sinto Corporation, a machinery manufacturing company,
and of USCS International, Inc., a computer software and billing
systems company. Mr. Hesburgh holds a Bachelor of Business
Administration degree from the University of Notre Dame and a
Masters of Business Administration degree from The Harvard
University Graduate School of Business Administration.
John E. Thompson has served as Executive Vice President -
Chief Financial Officer, Treasurer and Director of the Company
since January 1987. Between 1970 and January 1987, he served in
several capacities, the last of which was as Senior Vice
President of the Company. He currently serves as a director of
First National Bank & Trust Company, Columbia, Missouri. Mr.
Thompson holds a Bachelor of Science degree in Accounting from
Northern Illinois University.
S B. Rymer, Jr. has served as a Director of the Company
since November 1991. He has been engaged in the management of
personal investments since his retirement in 1987 from Magic
Chef, Inc. Mr. Rymer served as Chief <PAGE> Executive Officer of Magic
Chef from 1950 to 1987. The Company was a wholly-owned
subsidiary of Magic Chef from October 1983 until the acquisition
of the Company by the Company's current senior executive officers
(Messrs. Deming, Stubler and Thompson) effective as of January 1,
1987.
Robert H. Deming has served as Chairman of the Board of
Directors, Chief Executive Officer and Director of the Company
since January 1987. Since joining the Company in 1976, he has
served as President from 1976 through January 1987 and as
Chairman of the Board of Directors and Chief Executive Officer
from 1980 through 1983. Mr. Deming holds a Bachelor of Science
degree in Accounting and a Master of Science degree in Business
Administration from the University of Colorado, as well as a
Doctorate in Business Administration from The Harvard University
Graduate School of Business Administration. Mr. Deming is not
engaged in the day-to-day operations of the Company, but rather
spends his business-related time on monitoring the performance of
the Company, strategic and long-range planning, and identifying
and evaluating acquisition opportunities. In addition, he spends
a portion of his business-related time in the furtherance of the
interests of the Company, which interests include activities
intended either to fulfill the Company's social responsibility or
to keep Mr. Deming abreast of developments or opportunities in
the Company's industry or related fields of knowledge or
management.
Daniel J. Stubler has served as President, Chief Operating
Officer and Director since January 1987. Between 1976 and
January 1987, he served the Company in several capacities, the
last of which was as Senior Vice President with responsibility
for marketing and administration of the Company. He currently
serves as a director of First Missouri Bancorporation. Mr.
Stubler holds a Bachelor of Science degree in Accounting from
Gannon University and a Masters of Science degree in Industrial
Relations from the University of Massachusetts at Amherst.
THE STOCKHOLDERS' AGREEMENT
The Company, Robert H. Deming, Daniel J. Stubler, John E.
Thompson, Ralph J. Ronalter, Jr., and certain other shareholders
of the Company are each party to a stockholders' agreement (the
"Stockholders' Agreement"). In the Stockholders' Agreement, each
of the shareholders who is a party to the Stockholders' Agreement
has agreed that such shareholder will vote those of their
respective shares of Toastmaster common stock that are subject to
the Stockholders' Agreement (representing 3,718,379 shares of
Toastmaster common stock as of January 31, 1998 and constituting
approximately 49.3% of the shares outstanding) in favor of the
election of directors approved by Mr. Deming but, at each
election of directors at which Mr. Deming, Mr. Stubler or Mr.
Thompson is eligible to stand for reelection to the Company's
Board of Directors, Mr. Deming is required to vote to elect Mr.
Deming, Mr. Stubler or Mr. Thompson, as the case may be, as a
director. To this end, each of such shareholders has given Mr.
Deming his proxy (which is irrevocable until May 16, 1999) to
vote such shareholder's shares in the election of all of the
Company's directors at any and all meetings of the Company's
shareholders in accordance with the preceding sentence. This
proxy automatically terminates upon Mr. Deming's death, mental
incapacity or voluntary termination of employment with the
Company, at such time as Mr. Deming, together with his family,
ceases to beneficially own at least 500,000 shares of Toastmaster
common stock (as adjusted for any stock dividend, stock split,
combination or reclassification of shares, recapitalization or
similar transaction) and upon the occurrence of certain other
events specified in the Stockholders' Agreement (and, in the case
of Mr. Stubler and Mr. Thompson, their voting agreement and
related proxy to Mr. Deming also terminate in the event that they
are involuntarily terminated from their respective offices or
removed as directors). In addition, each such shareholder has
granted to the Company an option to purchase such shareholder's
shares of Toastmaster common stock in the event of a proposed
sale or certain other transfers (other than a transfer to a
family member, a voluntary sale or gift of not more than 10,000
shares (as adjusted for any stock dividend, stock split,
combination or reclassification of shares, recapitalization or
similar transaction) which is not part of a series of
transactions with the purpose or effect of changing control of
the Company, or a pledge for collateral purposes not involving a
change in voting rights and certain other exempted dispositions,
some of which require the share transfers so exempted to remain
subject to the Stockholders' Agreement). In the event that the
Company does not exercise its right to purchase such
shareholder's shares, the other shareholders who are party to the
Stockholders' Agreement are also granted an option to purchase
such shares on a pro rata basis.
There is no arrangement or understanding between any
director and any other person pursuant to which such director was
selected as a director except as contemplated by the
Stockholders' Agreement described above.
<PAGE>
COMPENSATION OF DIRECTORS
During 1997, each of the Company's three outside directors
received $2,500 for each meeting of the Board attended and $1,250
for each committee meeting attended, plus reimbursement of
reasonable out-of-pocket expenses.
Meetings of the Board and Committees
During 1997 the Board of Directors of Toastmaster held four
meetings. All directors attended 100% of the meetings of the
Board of Directors, except for Mr. Rymer, who attended 75% of
the meetings. All directors attended 100% of the committees of
the Board of Directors on which they served which were held
during 1997. It should be noted that the Company's directors
discharge their responsibilities throughout the year, not only at
such Board of Directors and committee meetings, but through
personal meetings and other communications with members of
management and others regarding matters of interest and concern
to the Company.
Pursuant to Toastmaster's Bylaws, the Board of Directors has
established Audit and Compensation Committees of the Board of
Directors. There currently is not a Nominating Committee or
committees performing similar functions of the Board of
Directors.
The Audit Committee assists the Board of Directors in
fulfilling its responsibilities with respect to Toastmaster's
accounting and financial reporting practices and in addressing
the scope and expense of audit and related services provided by
Toastmaster's independent auditors. The Audit Committee is
responsible for recommending the appointment of Toastmaster's
independent auditors and reviewing the terms of their engagement,
reviewing Toastmaster's policies and procedures with respect to
internal auditing, accounting and financial controls and
reviewing the scope and results of audits and any auditor
recommendations. The current members of the Audit Committee are
Edward J. Williams, Chairman, and James L. Hesburgh. The Audit
Committee met two times in 1997.
The Compensation Committee makes recommendations to the
Board of Directors regarding the compensation and benefits of
Toastmaster's executive officers, the members of the Board of
Directors and the members of the Audit Committee. The
Compensation Committee also administers the Company's Incentive
Stock Option Plan and Non-Statutory Stock Option Plan. The
current members of the Compensation Committee are James L.
Hesburgh, Chairman, Edward J. Williams and S B. Rymer, Jr. The
Compensation Committee met two times in 1997.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December
31, 1995, 1996 and 1997, respectively, the compensation of the
Company's chief executive officer and of each of the Company's
four other most highly compensated executive officers whose
remuneration for 1997 was in excess of $100,000 for services to
the Company in all capacities:
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities
Name Other Under-
and Annual Restricted lying All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus/1/ sation/2/ Award(s) SARs Payouts sation/3/
Robert H. Deming 1997 $329,684 $0 $60,322 -- -- -- $92,656
Chairman,
Chief
Executive 1996 290,698 0 56,899 -- -- -- 91,480
Officer and
Director 1995 291,849 0 53,207 -- -- -- 99,726
Daniel J. Stubler 1997 233,955 0 42,753 -- -- -- 66,740
President,
Chief
Operating 1996 215,505 0 40,998 -- -- -- 66,432
Officer and
Director 1995 215,142 0 34,969 -- -- -- 65,183
John E. Thompson 1997 183,403 0 19,594 -- -- -- 31,413
Executive Vice
President -- 1996 167,793 0 18,802 -- -- -- 31,212
Chief Financial
Officer, 1995 168,240 0 15,990 -- -- -- 30,577
Treasurer
and Director
Scott R. Thrasher 1997 113,973 0 4,575 -- -- -- 8,138
Senior Vice
President -- 1996 108,371 0 4,661 -- -- -- 8,614
Sales and
Marketing 1995 105,930 0 0 -- -- -- 1,279
Ralph J.
Ronalter, Jr. 1997 113,242 0 3,362 -- -- -- 6,212
Vice President
and General 1996 99,557 0 3,364 -- -- -- 6,410
Manager--
Time
Products 1995 95,046 0 0 -- -- -- 1,130
________________________
(1) Reflects bonus earned for the years ended December 31, 1995, 1996 and 1997, respectively.
(2) Excludes perquisites and other benefits, unless the aggregate amount of such compensation is the
lesser of either $50,000 or 10% of the total of annual salary and bonus reported for the named
executive officer.
(3) All Other Compensation for the years ended December 31, 1995, 1996 and 1997 includes Toastmaster
matching contributions which accrued for the accounts of Messrs. Deming, Stubler, Thompson, Thrasher
and Ronalter, Jr. under the Company's 401(k) Savings and Investment Plan, and the cost of life
insurance paid by the Company for the benefit of such persons. All Other Compensation for Messrs.
Deming, Stubler and Thompson also includes Toastmaster contributions made in 1995, 1996 and 1997 to
fund benefits to be provided under the Supplemental Executive Retirement Plan for the respective
accounts of such persons. All Other Compensation for Messrs. Thrasher and Ronalter, Jr. includes
Toastmaster contributions made in 1996 and 1997 to fund benefits to be provided under the Supplemental
Executive Retirement Plan II for the respective accounts of such persons. Toastmaster matching
contributions which accrued under the Company's 401(k) Savings and Investment Plan for 1995, 1996 and
1997 were $1,500, $1,500 and $1,600, respectively, for Mr. Deming; $1,500, $1,500 and $1,600,
respectively, for Mr. Stubler; $1,500, $1,500 and $1,600, respectively, for Mr. Thompson; $1,059,
$1,194 and $1,239, respectively, for Mr. Thrasher; and $950, $1,073 and $1,202, respectively, for Mr.
Ronalter, Jr. The cost of life insurance paid by the Company for 1995, 1996 and 1997 was $3,861,
$5,304 and $5,304, respectively, for Mr. Deming; $1,555, $2,804 and $3,012, respectively, for Mr.
Stubler; $689, $1,324 and <PAGE> $1,425, respectively, for Mr. Thompson; $220, $438 and $454, respectively,
for Mr. Thrasher; and $180, $386 and $440, respectively, for Mr. Ronalter, Jr. Contributions made in
1995, 1996 and 1997 with respect to the Supplemental Executive Retirement Plan were $94,365, $84,676
and $85,752, respectively, for Mr. Deming, $62,128, $62,128 and $62,128, respectively, for Mr.
Stubler and $28,388, $28,388 and $28,388, respectively, for Mr. Thompson. Contributions made in 1996
and 1997 with respect to the Supplemental Executive Retirement Plan II were $6,982 and $6,445,
respectively, for Mr. Thrasher and $4,951 and $4,570, respectively, for Mr. Ronalter, Jr.
<TABLE\>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Robert H.
Deming, Daniel J. Stubler and John E. Thompson. The agreements expire on
November 12, 1998, subject to automatic renewal for successive one year
periods unless Toastmaster or the employee gives notice that the term will not
be extended, and provide for the following annualized base salaries during the
term of the agreements, which base salaries were increased from the previous
base salaries, effective March 1, 1997, by action of the Compensation
Committee of the Board of Directors as contemplated by the agreements: Mr.
Deming--$317,361; Mr. Stubler--$234,201; Mr. Thompson--$181,335. Each
agreement terminates in the event of death, disability or adjudication of
incompetence (entitling the employee to one year's salary in the case of
disability) and provides that the employee otherwise may be terminated only
for cause (as defined). The employee may terminate his employment, upon ten
days' prior written notice, at any time within one year after a "Change of
Control" and will be entitled to receive two years' salary. A "Change of
Control" generally is defined to take place when disclosure of such a change
would be required by the proxy rules promulgated by the Securities and
Exchange Commission or when either (i) a person (other than a current officer
or director nominated or selected by the Board or officer elected by the
Board) acquires beneficial ownership (as defined in SEC Rule 13d-3) of 25% or
more of the combined voting power of the Company's voting securities, (ii)
less than a majority of the directors are persons who were either nominated or
selected by the Board, (iii) a merger involving the Company occurs in which
the Company's shareholders own less than 80% of the voting stock of the
surviving corporation, or (iv) a plan of liquidation or sale of substantially
all the assets of the Company occurs. In addition, if the employee
involuntarily is terminated by the Company, he also is entitled to receive two
years' salary.
The employment agreements prevent the employees from competing with the
Company, soliciting customers or hiring employees for a competitive business
during the term of the agreement and for a period of one year thereafter. In
addition, the employment agreements require the employees to maintain the
confidentiality of the Company's confidential information prior to its
disclosure by the Company.
INCENTIVE BONUS PLAN
Since 1987, the Company has had an incentive bonus plan for 18 key
employees of the Company, including Messrs. Deming, Stubler, Thompson,
Thrasher and Ronalter, Jr. The plan establishes a bonus pool each year based
on up to 5% of the Company's total profits (before provisions for income taxes
and interest), which is approved by the Company's President, and the maximum
bonus pool for 1998 is equal to approximately $825,772. Pursuant to the
incentive bonus plan, 50% of the amount of the bonus pool is allocated to a
mandatory bonus fund and the remaining 50% is allocated to a discretionary
bonus fund. Each of the employees participating in the incentive bonus plan
is assigned an incentive target based on his or her job category, which
incentive target establishes a bonus of up to 65% of the employee's salary
that may be received. Based on salaries in effect as of December 31, 1997,
Messrs. Deming, Stubler, Thompson, Thrasher and Ronalter, Jr. will be entitled
to receive 25.0%, 17.0%, 13.2%, 6.2% and 6.2%, respectively, of the mandatory
bonus fund for 1998 if the income and return on investment targets established
pursuant to the incentive bonus plan are achieved. The discretionary bonus
fund will be used by the Company to pay additional bonuses to the Company's
key employees, including executive officers.
<PAGE>
401(K) SAVINGS AND INVESTMENT PLAN
Employees of the Company are eligible to participate in the Company's
401(k) Savings and Investment Plan. Participants may make contributions to
the plan by voluntarily reducing their salary from the Company up to a maximum
of 15% of total compensation or $9,500 (or such higher amount as is prescribed
by the Secretary of the Treasury for cost of living adjustments), whichever is
less, and the Company, in its discretion, matches such contributions to the
extent of 50% of the first 2% of a participant's salary reduction. Certain
participant contributions to the plan may qualify for deferred tax treatment
under Section 401(k) of the Internal Revenue Code. The Company's matching
contributions vest 100% immediately. Matching contributions in the amounts of
$1,500, $1,500, $1,500, $1,194 and $1,073 were made by the Company during 1997
with respect to 1996 for the accounts of Messrs. Deming, Stubler, Thompson,
Thrasher and Ronalter, Jr., respectively, and matching contributions accrued
during 1997 for the accounts of such persons in the amounts of $1,600, $1,600,
$1,600, $1,239 and $1,202, respectively. Each participant is entitled to
direct the investment of all participant and discretionary matching
contributions in the various investment options approved by the Company. In
this regard, participants who are not directors or executive officers of the
Company and do not own 10% or more of Toastmaster common stock may invest up
to 10% of their contributions in a Toastmaster common stock fund.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
The Company has adopted a supplemental executive retirement plan
("SERP") for Messrs. Deming, Stubler and Thompson and a supplemental executive
retirement plan ("SERP II") for Messrs. Ronalter and Thrasher. These
executives were unable to participate in the Company's qualified defined
benefit plan beginning January 1, 1989, because of changes in the tax laws
which imposed certain anti-discrimination requirements upon qualified plans.
The SERP provides for a normal retirement benefit for each of the three
executives in the SERP in an amount equal to 50% of such executive's final
average compensation, which amount shall be reduced by the sum of (i) the
pension benefit accrued for such executive under the Company's defined benefit
plan and (ii) such executive's primary Social Security benefit. For these
purposes, "final average compensation" is the average base salary payment made
to the executive during the five consecutive full calendar years immediately
preceding such executive's termination of employment. The SERP II provides
for a normal retirement benefit for each of the two executives in the SERP II
in an amount equal to the pension benefit that such executive would have been
entitled to receive under the Company's defined benefit plan, reduced by the
pension benefit that such executive actually receives under such plan. The
normal retirement benefit commences at age 65. In the event an executive
continues to be employed after age 65, the payment of benefits under the SERP
and SERP II would be delayed until the date of his actual retirement and the
amount of such benefits would be actuarially adjusted to reflect the late
retirement. The SERP and SERP II each provides for early retirement in the
event the executive's employment is terminated, except that SERP benefits are
not payable prior to age 55 and in no event prior to March 1, 1999 and SERP II
benefits are not payable prior to age 55. Early retirement benefits under the
SERP and SERP II would be actuarially adjusted to reflect the earlier
commencement of the benefit. If the executive under the SERP dies before he
retires, one half of the monthly benefit that the executive otherwise would
have received will be paid to the executive's spouse (or designated
beneficiary) for the greater of 180 months or the life of the surviving
spouse. If the executive under the SERP II dies before he retires, the
executive's spouse (or designated beneficiary) shall not be entitled to any
portion of the monthly benefit that the executive otherwise would have
received but shall be entitled to receive payment of a death benefit. The
benefits provided under the SERP and SERP II are available to the executives
without regard to the number of years of service provided by them to the
Company. A five year vesting period is required, however, in order for an
executive to be eligible to receive benefits under the SERP. The estimated
annual benefits under the SERP payable to Messrs. Deming, Stubler and Thompson
as a single life annuity upon reaching normal retirement age are $113,806,
$154,246 and $145,005, respectively. The estimated annual benefits under the
SERP II payable to Messrs. Ronalter and Thrasher as a single life annuity upon
reaching normal retirement age are $24,603 and $27,996, respectively.
Life insurance policies are used for the SERP and SERP II and held in
trust for the executives. To the extent that an executive is subject to
income tax as annual contributions are made by the Company to a trust, the
Company will pay to the executive each year an amount equal to the additional
income tax owed by the executive as a result of <PAGE> the contribution. The
beneficiary of the life insurance policies held in the secular trusts under
the SERP and SERP II will be the beneficiary designated by the executive. The
beneficiary of the life insurance policies held in the rabbi trust under the
SERP will be the Company.
PENSION PLAN
The Toastmaster Inc. Pension Plan for Salaried Employees (the "Plan") is
a defined benefit pension plan established in 1982 by the Company to provide
retirement benefits for eligible salaried employees of the Company. Eligible
employees are salaried employees who either participated in the predecessor
plan or have completed at least 1,000 hours of service in a single year. The
Plan provides for normal retirement benefits upon reaching age 65, provided
that the employee has five years of credited service. The Plan permits early
retirement between ages 55 and 65 upon completion of ten or more years of
credited service. Participants may elect to receive their pension benefits in
the form of a joint and survivor annuity or a single life annuity, or other
optional forms.
The following table shows the estimated annual retirement benefits
payable to a participant as a single life annuity upon reaching normal
retirement age for specified compensation and years of benefit service
classifications.
Five Year Estimated Annual Benefit for Representative
Average Annual Years of Benefit Service*
Compensation* 10 15 20 25 30
$ 70,000 $ 6,686 $10,030 $13,373 $16,716 $20,059
120,000 12,187 18,281 24,374 30,468 36,562
150,000 15,487 23,231 30,974 38,718 46,462
____________
* Under the Plan, annual retirement benefits may not exceed the amounts
payable to a participant having five year average annual compensation in
excess of $235,840 ($150,000 for years beginning January 1, 1994), and
participants are given credit for no more than 30 years of benefit
service.
A participant is entitled to receive annual benefits, payable in monthly
installments, in an amount equal to the product of (i) the sum of (A) .007
times average monthly earnings, plus (B) .004 times average monthly earnings
greater than the Social Security integration level, multiplied by (ii) such
participant's number of years of credited service, up to a maximum of 30
years. Average monthly earnings are determined by dividing compensation for
the participant's highest-paid consecutive five calendar years by 60. For
these purposes the compensation covered by the Plan consists of the salaries
and bonuses paid to the participants, including salaries and bonuses set forth
in columns (c) and (d) of the Summary Compensation Table under "Executive
Compensation and Other Information--Executive Compensation." The Social
Security integration level changes whenever there is a change in the maximum
earnings that are subject to Social Security taxes. The Plan's integration
level is $2,111.11 per month for 1998. As the result of changes in the
Employee Retirement Income Security Act ("ERISA"), Messrs. Deming, Stubler,
Thompson, Ronalter and Thrasher were not eligible to accrue further benefits
under the Plan, effective January 1, 1989. From time to time, because of
certain ERISA requirements, the Company may require that other participants no
longer will be eligible to accrue benefits under the Plan, effective at
various dates.
SUPPLEMENTAL HEALTH INSURANCE PLAN
Toastmaster adopted a Supplemental Insurance Plan ("SIP") in 1988, which
provides benefits in addition to those provided under the Company's basic
group medical benefit plan. Although Toastmaster's basic group medical plan
is provided to all of its employees, the SIP is available only to its salaried
employees and their qualified dependents with tiered benefit limitations of
$500, $1,500 and $3,000 per year, the last of which is applicable to the
Company's executive officers.
<PAGE>
EMPLOYEE STOCK OPTION PLANS
The Company has adopted the Toastmaster Inc. Incentive Stock Option Plan
(the "ISO Plan") to provide for the granting of common stock purchase options
which qualify as "incentive stock options" under Section 422A of the Internal
Revenue Code of 1986, and the Toastmaster Inc. Non-Statutory Stock Option Plan
(the "Non-Statutory Plan") to provide for the granting of common stock
purchase options which do not so qualify. The ISO Plan and the Non-Statutory
Plan are collectively referred to as the "Employee Stock Option Plans." The
purpose of the Employee Stock Option Plans is to secure for the Company and
its shareholders the benefits of the incentive inherent in stock ownership by
officers and other key employees of the Company. The Company has granted
options to purchase a total of 98,500 shares of common stock pursuant to the
ISO Plan, including options to purchase 55,700 shares that were exercisable as
of January 31, 1998. No options have been granted pursuant to the Non-
Statutory Plan.
The Employee Stock Option Plans are administered by the Compensation
Committee of the Board of Directors (the "Compensation Committee"), none of
the members of which are currently eligible to receive options under either of
the Employee Stock Option Plans. The Compensation Committee has the power to
determine in its discretion the persons to whom options are granted under each
Employee Stock Option Plan, the number of shares covered by those options, and
the time at which an option becomes exercisable, subject in each case to the
limitations set forth in the respective Employee Stock Option Plans. Options
can be granted under the Employee Stock Option Plans only to officers and key
employees of the Company or any of its subsidiary corporations. The
eligibility of the persons to whom options may be granted under the Employee
Stock Option Plans is limited to those persons whom the Compensation Committee
determines have made, or are expected to make, material contributions to the
successful performance of the Company. The period during which an option may
be exercised (but not to exceed ten years or, as described above, five years)
and the time at which it becomes exercisable are fixed by the Compensation
Committee at the time the option is granted. Except as otherwise permitted by
the Compensation Committee, no option granted under the Employee Stock Option
Plans is transferable by the holder other than by will or the laws of descent
and distribution.
The number of shares which may be issued and sold pursuant to options
granted under the Employee Stock Option Plans may not exceed an aggregate of
500,000 shares (as adjusted for any stock dividend, stock split, combination
or reclassification of shares, or similar transaction), with the number of
shares that may be issued and sold under one Employee Stock Option Plan being
reduced by the number of shares issued and sold under the other Employee Stock
Option Plan. Shares subject to options granted under either Employee Stock
Option Plan which expire or terminate without being exercised in full become
available, to the extent unexercised, for future grants under either Employee
Stock Option Plan. No consideration is paid to the Company by any optionee in
exchange for the grant of an option. The per share exercise price for an
option granted under either Employee Stock Option Plan is determined by the
Compensation Committee but may not be less than the fair market value of the
Company's common stock as of the date of grant. The exercise price of an
option under the ISO Plan granted to an employee who owns stock possessing
more than 10% of the voting power of the Company's outstanding stock must be
at least equal to 110% of the fair market value of the Company's common stock
on the date of grant, and the maximum term of such option may not exceed five
years. The Employee Stock Option Plans provide for automatic adjustments to
prevent dilution or enlargement of the optionee's rights in the event of a
stock split, stock dividend, reorganization, merger, consolidation,
liquidation, combination or exchange of shares, or other change in the capital
structure of the Company.
DIRECTOR STOCK OPTION PLAN
In May 1993, the Company's shareholders approved the Toastmaster Inc.
Non-Employee Directors Stock Option Plan (the "1993 Director Plan") to provide
for an automatic one-time grant of common stock purchase options to the three
non-employee directors of the Company serving as such on the date the 1993
Director Plan was so approved. In addition, the Company has adopted the
Toastmaster Inc. 1997 Non-Employee Directors Stock Option Plan (the "1997
Director Plan") in February 1997 to provide for a one-time grant of common
stock purchase options to the three non-employee directors of the Company
serving as such on the date the 1997 Director Plan was so approved. The 1993
Director Plan and the 1997 Director Plan are collectively referred to as the
"Director Plans." The purpose of the Director Plans is to enable such non-
employee directors to participate in the ownership of the Company, <PAGE> and to
provide additional incentive for them to promote the success of the Company's
business through sharing in the future growth of such business.
Pursuant to the 1993 Director Plan, the Company granted to each
non-employee director of the Company an option to purchase the number of
shares of common stock obtained by multiplying (i) the number of full years
that such non-employee director had served as a director of the Company as of
the date the 1993 Director Plan was approved by the Company's shareholders by
(ii) 5,000. Options to purchase a total of 5,000 shares of common stock were
granted to each of James L. Hesburgh, S B. Rymer, Jr., and Edward J. Williams.
Pursuant to the 1997 Director Plan, the Company granted to these three non-
employee directors of the Company an option to purchase an additional 5,000
shares of common stock. No additional options may be granted under the
Director Plans. The Director Plans provide for automatic adjustments to
prevent dilution or enlargement of the optionee's rights in the event of a
stock dividend, stock split, reorganization, merger, consolidation,
liquidation, combination or exchange of shares, or other change in the capital
structure of the Company.
No consideration was paid to the Company by any optionee in exchange for
the grant of an option. The exercise price at which shares of common stock
may be purchased under an option granted pursuant to the 1993 Director Plan
and the 1997 Director Plan is $7.375 and $3.4375, respectively, the mean of
the high and low sales prices of the common stock on the date the respective
options were granted. Neither the Board of Directors nor any committee
thereof had any discretion to determine the selection of the directors to whom
options were granted, the frequency of option grants, the number of shares of
common stock subject to an option, or the terms and conditions of the options.
Any option granted under the Director Plans may be exercised
immediately, and may be exercised in whole or in part until May 10, 1998, in
the case of options granted under the 1993 Director Plan, and February 25,
2002, in the case of options granted under the 1997 Director Plan. With
certain limited exceptions, no option granted under the Director Plans may be
exercised unless the optionee is at the time of such exercise a non-employee
director of the Company. An option granted pursuant to the Director Plans is
not transferable or assignable by the optionee other than by will or the laws
of descent and distribution, and during the lifetime of the optionee the
option is exercisable only by the optionee.
COMPENSATION COMMITTEE REPORT
This report has been prepared by the Compensation Committee of the Board
of Directors, which has general responsibility for the establishment,
direction and administration of all aspects of the compensation policies and
programs for the Company's executive officers. During 1997, the Compensation
Committee was composed of three independent outside directors, none of whom is
an officer or employee of the Company. Mr. Deming, the Chief Executive
Officer of the Company, and certain other executive officers of the Company,
may attend meetings of the Compensation Committee, but are not present during
discussions or deliberations regarding their own compensation. The
Compensation Committee meets at least annually or more frequently as the
Company's Board of Directors may request.
COMPENSATION POLICY. The Company's executive compensation policy is
premised upon three basic goals: (1) to attract and retain qualified
individuals who provide the skills and leadership necessary to enable the
Company to achieve both its short- and long-term earnings growth and return on
investment objectives; (2) to create incentives to achieve Company and
individual performance objectives through the use of performance-based
compensation programs; and (3) to create a mutuality of interest between the
Company's executive officers and shareholders through compensation structures
that create a direct link between executive compensation and shareholder
return.
In determining the structure and levels of each of the components of
executive compensation needed to achieve these goals, the Compensation
Committee considers all elements of the compensation package in total, as well
as the individual components thereof. As more fully described below, the
determination of such levels of executive compensation is a subjective process
in which the Compensation Committee considers many factors including the
Company's performance (as measured by earnings growth and return on
investment, among other factors) and the <PAGE> individual executive's specific
responsibilities, historical and anticipated personal contribution to the
Company's business, and length of service with the Company. In addition, the
Compensation Committee considers publicly available executive compensation
data for comparable positions in companies believed to be most comparable for
purposes of executive compensation, presently consisting of Sunbeam Corp.,
National Presto Industries, Inc., Rival Co. and Royal Appliance Mfg. Co. (such
companies are referred to hereinafter as "Comparable Companies"). The
Comparable Companies are a small subset of the companies which comprise the
two peer group indices for purposes of comparing shareholder returns (i.e.,
companies with the standard industrial classifications for household
appliances or electric housewares and fans) in the performance graph included
elsewhere in this Proxy Statement because the Compensation Committee believes
they are the Company's most direct and representative competitors for
executive talent. The levels of compensation paid by the Company to its
executive officers were matched to comparable positions of executives at
Comparable Companies and a competitive level for the total compensation
package and relevant individual components was determined.
COMPENSATION COMPONENTS. The Company's compensation program is reviewed
annually to ensure that compensation levels and incentive opportunities are
competitive and reflect the performance of the Company and the individual
executive officer. The principal components of the compensation program for
executive officers are base salary and annual incentive bonuses. The
Compensation Committee also took into account the incentive to achieve
earnings growth and return on investment objectives that is inherent in the
large number of shares of Company common stock owned by the Company's Chief
Executive Officer and each of the other executive officers other than Ms.
Linda Arnold and Mr. Scott Thrasher. It has therefore not been necessary to
date to grant stock options or award other forms of long term incentive
compensation plan ("LTIP") compensation to strengthen the linkage between
executive compensation and shareholder return for those officers, although a
stock option plan is available should further incentive become necessary for
them. Ms. Arnold and Mr. Thrasher each has been granted options to provide
that sort of linkage and to provide incentive to continue their respective
employment with the Company.
The Compensation Committee believes that the total compensation package
previously awarded to those Company executives who have not received options
or LTIP awards is significantly lower than the other Comparable Companies who
have utilized stock options and LTIP awards to reward their executives for
past performance and to create incentives for future performance. Each of the
components in the Company's executive compensation package is addressed
separately below.
Base Salary. The Compensation Committee reviews each executive
officer's base salary from the previous year and, in determining whether to
adjust base salary levels, takes into account management's recommendations and
assessments of each executive's growth and effectiveness in the performance of
his or her duties and the Company's performance. In this regard, the
Compensation Committee's analysis of the Company's performance included a
review of the Company's revenues, earnings, return on investment and new
product development for the prior year. An analysis of the role played by
each individual executive in generating the Company's performance included a
consideration of the executive's specific responsibilities, contributions to
the Company's business, and length of service. The Compensation Committee
also considered publicly available executive compensation data for comparable
positions in Comparable Companies. Mr. Deming's base salary was based on the
same type of subjective analysis and took into account the amount of time he
spends on activities directly and indirectly benefitting the Company. The
factors impacting base salary levels are not independently assigned specific
weights. Rather the Compensation Committee reviews all of these factors, and
makes base pay recommendations which reflect its analysis of the aggregate
impact of these factors. Based upon the foregoing considerations, base salary
levels for Mr. Deming, the Chief Executive Officer, and the other executive
officers were increased effective March 1, 1997 by 10 % from the base salaries
that had been in effect since March 1, 1993 (since March 1, 1994 and September
1, 1996 in the case of Mr. Thrasher and Mr. Ronalter, respectively). These
base pay levels are competitive within a range that is considered in the
Compensation Committee's judgment, to be reasonable and necessary.
Annual Incentive Bonus. The Company's executive officers and certain
other employees of the Company who, in the discretion of the Compensation
Committee, are considered to be in a position to significantly influence the
Company's results or operations and level of profits are eligible to receive
annual incentive bonus awards under the Company's incentive bonus program.
Annual bonus opportunities allow the Company to communicate specific goals
<PAGE>
that are of primary importance during the coming year and motivate executives
to achieve these goals. The Compensation Committee's selection of the persons
eligible to participate in the incentive bonus program is necessarily
subjective in nature and is made after taking into account management's
assessment of each person's level of responsibility. The incentive program
establishes a bonus pool each year based on up to 5% of the Company's total
profits (before provisions for income taxes and interest), which is approved
by the Company's President in his discretion. Each of the participants in the
incentive program are assigned an incentive target based on their job
category, which incentive target establishes a bonus of up to 65% of the
participant's salary that may be received. Bonuses are awarded to
participants when the Company's targets for earnings growth and return on
investment are achieved in relation to upper quartile performance of
competitors. This dual approach creates incentives to efficiently manage
assets, achieve appropriate financial leverage and produce desired
profitability, all of which are determinants of share price over time. In
addition, discretionary bonus awards may be made to participants in an amount
up to 50% of the participant's maximum bonus payout target to recognize
outstanding individual performance as reflected by the achievement of
personalized goals. The personal goals of the Company's Chief Executive
Officer for purposes of this discretionary bonus are the achievement by the
Company of its annual profit plan, marketing objectives and new product
development goals; the development of strategic and long-range objectives for
the Company; the identification and evaluation of acquisition opportunities
for the Company; and the effective leadership of the Company's management
team. The extent to which these personal goals have been achieved is
subjectively analyzed by the Compensation Committee on the basis of their
aggregate impact on the success of the Company for the preceding year. The
size of the bonus pools, the persons who are eligible to receive bonuses, the
targets established for bonus participants and the amount of bonus payments
can vary from year to year and are subject to the discretion of the
Compensation Committee and management.
Compensation Committee:
James L. Hesburgh
S B. Rymer, Jr.
Edward J. Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above under "Compensation Committee Report," the
Compensation Committee has general responsibility for the establishment,
direction and administration of all aspects of the compensation policies and
programs for the Company's executive officers. During 1997, the members of
the Compensation Committee were Messrs. Hesburgh, Rymer, Jr. and Williams.
None of the members of the Compensation Committee was, during 1997, an officer
or employee of the Company or any of its subsidiaries, or otherwise was
formerly an officer of the Company or any of its subsidiaries. Mr. Rymer
served as Chief Executive Officer of Magic Chef, Inc. from 1950 to 1987. The
Company was a wholly-owned subsidiary of Magic Chef from October 1983 until
the acquisition of the Company by the Company's current senior executive
officers (Messrs. Deming, Stubler and Thompson) effective as of January 1,
1987.
COMPANY PERFORMANCE
The following performance graph shows a comparison of cumulative total
returns with respect to the Company's common stock, the New York Stock
Exchange Market Value index, a peer index of companies (the "New Peer Group")
having a standard industrial classification number of 3634 (the SIC number for
electric housewares and fans) and a peer index of companies (the "Existing
Peer Group") having a standard industrial classification number of 363 (the
SIC number for household appliances) for the period from January 1, 1993
through December 31, 1997.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
(Toastmaster, NYSE Market Value, New and Existing Peer Groups)
Source: Media General Financial Services
The cumulative total return on investment for the Company's common
stock, the New York Stock Exchange Market Value index, an index of the New
Peer Group and an index of the Existing Peer Group is based on the stock price
or index at January 1, 1993. The performance graph assumes that the value of
an investment in the Company's common stock and each index was $100 at January
1, 1993 and that all dividends were reinvested. The information presented in
the performance graph is historical in nature and is not intended to represent
or guarantee future returns.
The performance graph compares the performance of the Company's common
stock with that of the New York Stock Exchange Market Value index, an index of
the New Peer Group and an index of the Existing Peer Group. The Company has
elected to replace the Existing Peer Group with the New Peer Group as the
industry index for purposes of future performance graphs. Companies in the
New Peer Group are Dynamics Corporation of America, Helen of Troy Corp.,
National Presto Industries, Inc., Royal Appliance Mfg. Co., Salton/Maxim
Housewares Inc., Sunbeam Corporation, Toastmaster and Windmere-Durable
Holdings. Companies in the Existing Peer Group are Dynamics Corporation of
America, Electrolux AB ADR, Fantom Technologies, Inc., General Electric Co.,
Helen of Troy Corp., Maytag Corporation, National Presto Industries, Inc.,
Rival Co., Royal Appliance Mfg. Co., Salton/Maxim Housewares Inc., Semi-Tech
Corp. Vtg. A, Singer Co. N.V., Sunbeam Corporation, Toastmaster, Whirlpool
Corporation and Windmere-Durable Holdings. The Company believes that the New
Peer Group is better representative of the companies that compete with the
Company in the electric housewares industry than is the Existing Peer Group,
which includes manufacturers of stoves, ovens, refrigerators, washing
machines, dryers, dishwashers and vacuum cleaners in the broader household
appliances industry.
<PAGE>
The comparison of cumulative total returns presented in the above graph
was plotted using the following index values and common stock price values:
January 1 December 31 December
1993 1993 1994
Toastmaster Inc. $100.00 $71.23 $81.79
New York Stock Exchange
Market Value Index $100.00 $113.54 $111.33
New Peer Group index $100.00 $108.90 $119.93
Existing Peer Group
index $100.00 $125.89 $125.45
December 31 December 31 December
1995 1996 1997
Toastmaster Inc. $45.06 $43.07 $49.11
New York Stock Exchange
Market Value Index $144.36 $173.90 $228.78
New Peer Group index $84.24 $135.84 $217.97
Existing Peer Group
index $175.86 $241.65 $360.66
OWNERSHIP OF TOASTMASTER COMMON STOCK
The following table sets forth certain information as of January 31,
1998 regarding the beneficial ownership of Toastmaster common stock by each
person known to the Board of Directors to own beneficially 5% or more of the
Company's common stock, by each director and nominee for director of the
Company, by each executive officer named in the Summary Compensation Table
under "Executive Compensation and Other Information--Executive Compensation"
and by all directors and officers of the Company as a group. All information
with respect to beneficial ownership has been furnished by the respective
directors, officers or 5% or more shareholders, as the case may be.
Amount and
Nature of Percentage of
Name Beneficial Shares
Ownership/1/ Outstanding/1/
Robert H. Deming /2//3/ 3,718,379 49.3%
Beverly A. Deming /2//3/ 1,354,593 18.0%
Daniel J. Stubler /2//4/ 1,032,271 13.7%
Andrea F. Stubler /2//4/ 1,032,271 13.7%
John E. Thompson /2//5/ 691,865 9.2%
Scott R. Thrasher /6/ 24,650 *
Ralph J. Ronalter, Jr. /2//7/ 162,591 2.2%
Edward J. Williams /8//9/ 10,500 *
S B. Rymer, Jr. /9/ 57,198 *
James L. Hesburgh /9/ 10,500 *
All directors and executive
officers as a group
(9 persons) /10/ 4,016,936 53.0%
___________
* Less than one percent
/1/ Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting
power and/or investment power with respect to those securities. Unless
otherwise indicated, the persons or entities identified in this table
have sole voting and investment power with respect to all shares shown
as beneficially owned by them. Percentage ownership calculations are
based on 7,539,450 shares of common stock outstanding.
/2/ Each of these persons, together with certain other shareholders, is a
party to the Stockholders' Agreement described under "Election of
Directors--The Stockholders' Agreement," pursuant to which each such
person has given his or her irrevocable proxy to Robert H. Deming to
vote shares of Toastmaster common stock with respect to the election of
directors. The address for Messrs. Deming, Stubler and Thompson, Mrs.
Deming and Mrs. Stubler is 1801 North Stadium Boulevard, Columbia,
Missouri 65202.
/3/ Includes 127,684 shares owned of record by Mr. Deming, 360,445 shares
owned of record by Mr. Deming's wife, 866,464 shares owned of record by
Mr. Deming's wife as trustee of trusts established for the benefit of
<PAGE>
Deming family members, and 45,000 shares held by a charitable foundation
established by the Deming family. Mr. Deming and his wife share voting
power with respect to such shares pursuant to the Stockholders'
Agreement referred to in Note (2), and otherwise share voting and
investment power with respect thereto. Included for Mr. Deming are
2,318,786 shares owned of record by various other shareholders of the
Company, as to which Mr. Deming has no investment power but has shared
voting power pursuant to the Stockholders' Agreement referred to in Note
(2).
/4/ Includes 906,000 shares owned of record jointly by Mr. and Mrs. Stubler.
Mr. and Mrs. Stubler share investment power with respect to such shares
and they, together with Mr. Deming, share voting power with respect to
such shares pursuant to the Stockholders' Agreement referred to in Note
(2). Also includes 126,271 shares owned of record by Mrs. Stubler as
trustee of trusts established for the benefit of Mr. and Mrs. Stubler's
three adult children. Mr. and Mrs. Stubler share voting and investment
power with respect to such shares.
/5/ Includes 55,300 shares owned of record by Mr. Thompson and 609,685
shares owned of record by Mr. Thompson as trustee of a trust established
for the benefit of Thompson family members. Mr. Thompson has sole
investment power with respect to such 664,985 shares but shares with Mr.
Deming the voting power with respect thereto pursuant to the
Stockholders' Agreement referred to in Note (2). Also includes 26,880
shares owned of record by Mr. Thompson's wife as custodian for their two
children. Mr. Thompson has shared voting and investment power with
respect to such shares.
/6/ Includes 21,298 shares owned of record by Mr. Thrasher, 163 shares held
in the Company's 401(k) Savings and Investment Plan for his account and
389 shares held in the Company's Stock Purchase Plan (which 552 shares
were acquired prior to Mr. Thrasher becoming an executive officer of the
Company), and 2,800 shares issuable pursuant to the exercise of stock
options.
/7/ Mr. Ronalter has sole investment power with respect to these shares but
shares with Mr. Deming the voting power with respect thereto pursuant to
the Stockholders' Agreement referred to in Note (2).
/8/ Includes 500 shares owned of record by Mr. Williams as trustee of a
trust for the benefit of Mr. Williams.
/9/ Includes 10,000 shares issuable to each of these persons pursuant to the
exercise of stock options.
/10/ Includes 39,800 shares issuable pursuant to the exercise of stock
options.
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Board's Audit
Committee, has selected the independent certified public accounting firm of
KPMG Peat Marwick LLP as Toastmaster's independent auditors to audit the
books, records and accounts of the Company for the year ending December 31,
1998. Shareholders will have an opportunity to vote at the Annual Meeting on
whether to ratify the Board's decision in this regard.
KPMG Peat Marwick LLP has served as the Company's independent auditors
since 1987. A representative of KPMG Peat Marwick LLP is expected to be
present at the Annual Meeting. Such representative will have an opportunity
to make a statement if he or she desires to do so and will be available to
respond to appropriate questions.
Submission of the selection of the independent auditors to the
shareholders for ratification will not limit the authority of the Board of
Directors to appoint another independent certified public accounting firm to
serve as independent auditors if the present auditors resign or their
engagement otherwise is terminated. If the shareholders do not ratify the
selection of KPMG Peat Marwick LLP at the Annual Meeting, the Company intends
to call a special <PAGE> meeting of shareholders to be held as soon as practicable
after the Annual Meeting to ratify the selection of another independent
certified public accounting firm as independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
SELECTION OF KPMG PEAT MARWICK LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Toastmaster's directors and executive officers, and
persons who own more than 10% of the Company's outstanding common stock, to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership in Toastmaster common stock and other
equity securities. Securities and Exchange Commission regulations require
directors, executive officers and greater than 10% shareholders to furnish
Toastmaster with copies of all Section 16(a) reports they file.
To Toastmaster's knowledge, based solely on review of the copies of such
reports furnished to Toastmaster and written representations that no other
reports were required, during the year ended December 31, 1997, all Section
16(a) filing requirements applicable to its directors, executive officers and
greater than 10% shareholders were complied with.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend to present,
any matter for action at the Annual Meeting other than those referred to in
this Proxy Statement. If, however, any other matter properly comes before the
Annual Meeting or any adjournment, it is intended that the holders of the
proxies solicited by the Board of Directors will vote on such matters in their
discretion in accordance with their best judgment.
ANNUAL REPORT
Toastmaster's Annual Report to Shareholders, containing financial
statements for the year ended December 31, 1997, is being mailed with this
Proxy Statement to all shareholders entitled to vote at the Annual Meeting.
Such Annual Report is not to be regarded as proxy solicitation material.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
It is presently anticipated that the 1999 Annual Meeting of Shareholders
will be held on May 11, 1999. Shareholder proposals intended for inclusion in
the proxy statement for the 1999 Annual Meeting of Shareholders must be
received at the Company's offices, located at 1801 North Stadium Boulevard,
Columbia, Missouri 65202, within a reasonable time before the solicitation
with respect to the meeting is made, but in no event later than November 27,
1998. Such proposals must also comply with the other requirements of the
proxy solicitation rules of the Securities and Exchange Commission.
Shareholder proposals should be addressed to the attention of the Secretary of
Toastmaster.
By Order of the Board of Directors
Linda G. Arnold
Secretary
March 27, 1998
Columbia, Missouri
<PAGE>
APPENDIX -- PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
1998 ANNUAL MEETING OF SHAREHOLDERS OF TOASTMASTER INC.
The undersigned hereby appoints Robert H. Deming, Daniel J.
Stubler and John E. Thompson, and each of them, each with the
power to act alone and with full power of substitution and
revocation, as attorneys and proxies of the undersigned to attend
the 1998 Annual Meeting of Shareholders of Toastmaster Inc.
("Toastmaster") to be held at the principal executive offices of
Toastmaster, located at 1801 North Stadium Boulevard, Columbia,
Missouri, on Tuesday, May 12, 1998, commencing at 10:00 a.m.,
local time, and at all adjournments thereof, and to vote all
shares of capital stock of Toastmaster which the undersigned is
entitled to vote with respect to the following matters, all as
set forth in the Notice of Annual Meeting of Shareholders and
Proxy Statement, dated March 27, 1998:
THE BOARD OF DIRECTORS OF TOASTMASTER RECOMMENDS
A VOTE "FOR" EACH ITEM.
ITEM 1: Election of two Class I directors to hold office for a
term expiring at the 2001 annual meeting of
shareholders.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the nominees listed below
contrary below)
NOMINEES: Edward J. Williams; James L. Hesburgh
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in this space:
_____________________________________________
ITEM 2: Proposal to ratify the selection of the accounting firm
of KPMG Peat Marwick LLP as Toastmaster's independent
auditors for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon
such other business as properly may come before the Annual
Meeting.
<PAGE>
This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder(s). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
Dated: ____________________, 1998
_________________________________
Signature
___________________________________
Signature (if held jointly)
Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
When signing as an attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PREPAID ENVELOPE
</TABLE>
