SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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
A. P. GREEN INDUSTRIES, INC.
----------------------------
(Name of Registrant as Specified in its Charter)
THE BOARD OF DIRECTORS OF A. P. GREEN INDUSTRIES, INC.
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
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to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined): N/A
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[ ] 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.
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4) Date Filed: N/A
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A.P. GREEN INDUSTRIES, INC.
GREEN BOULEVARD
MEXICO, MISSOURI 65265
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1997
Dear Stockholder:
The Annual Meeting of Stockholders of A.P. Green Industries, Inc.
("A.P. Green") will be held at The Empire Club located off of Teal Lake Road in
Mexico, Missouri on May 8, 1997, at 10:00 a.m., local time, for the following
purposes:
1. To elect one Class II director to hold office for a term of two
years.
2. To elect two Class III directors to hold office for a term of three
years.
3. To ratify the appointment of KPMG Peat Marwick LLP as A.P. Green's
auditors for the year ending December 31, 1997.
4. To transact any and all other business that may properly come
before the meeting or any adjournment thereof.
Only stockholders of record of A.P. Green at the close of business on
March 21, 1997 are entitled to notice of, and to vote at, the meeting or any
adjournment thereof.
WE CORDIALLY INVITE YOU TO ATTEND THE ANNUAL MEETING. EVEN IF YOU PLAN
TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED SO THAT YOUR SHARES WILL BE
REPRESENTED. THE MAILING OF AN EXECUTED PROXY CARD WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE ANNUAL MEETING.
Paul F. Hummer II
Chairman of the Board, President and
Chief Executive Officer
April 7, 1997
<PAGE>
A.P. GREEN INDUSTRIES, INC.
GREEN BOULEVARD
MEXICO, MISSOURI 65265
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1997
-----------------
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of A.P. GREEN
INDUSTRIES, INC. ("A.P. Green"), in connection with the solicitation of proxies
for use at the Annual Meeting of Stockholders to be held on Thursday, May 8,
1997, and at all adjournments thereof (the "Annual Meeting"), for the purposes
set forth in the preceding Notice of Annual Meeting of Stockholders.
This Proxy Statement, the Notice of Annual Meeting and the accompanying
Proxy Card were first mailed to the stockholders of A.P. Green on or about April
7, 1997.
The proxy reflected on the accompanying Proxy Card is being solicited
by the Board of Directors of A.P. Green. A proxy may be revoked at any time
before it is voted by filing a written notice of revocation or a later-dated
Proxy Card with the Secretary of A.P. Green at the principal offices of A.P.
Green or by attending the Annual Meeting and voting the shares in person.
Attendance alone at the Annual Meeting will not of itself revoke a proxy. Proxy
Cards that are properly executed, timely received and not revoked will be voted
in the manner indicated thereon at the Annual Meeting and any adjournment
thereof.
A.P. Green will bear the entire expense of soliciting proxies. Proxies
will be solicited by mail initially. The directors, executive officers and
employees of A.P. Green may also solicit proxies personally or by telephone or
other means but such persons will not be specially compensated for such
services. A.P. Green has retained the services of Georgeson & Company Inc. to
assist in the solicitation of proxies for a fee of $5,500, plus out-of-pocket
expenses.
Only stockholders of record at the close of business on March 21, 1997
are entitled to notice of, and to vote at, the Annual Meeting. On such date,
there were 8,024,858 shares of A.P. Green Common Stock issued and outstanding.
Each outstanding share of A.P. Green Common Stock is entitled to one
vote on each matter to be acted upon at the Annual Meeting. Shares subject to
abstentions will be treated as shares that are present at the Annual Meeting for
purposes of determining the presence of a quorum and as voted for purposes of
determining the base number of shares voting on a particular proposal. If a
broker or other nominee holder indicates on the Proxy Card that it does not have
discretionary authority to vote the shares it holds of record on a proposal,
those shares will not be considered as voted for purposes of determining the
approval of the stockholders on a particular proposal. Stockholders do not have
the right to cumulate votes in the election of directors.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following persons were known to management of A.P. Green to be the
beneficial owners of five percent or more of A.P. Green's Common Stock:
NUMBER OF SHARES PERCENT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK (1)
- ------------------------------------ ------------------ ----------------------
Dimensional Fund Advisors Inc. 513,494 (2) 6.40%
1299 Ocean View, 11th Floor
Santa Monica, California 90401
Franklin Resources, Inc. 550,900 (3) 6.87%
777 Mariners Island Blvd.
San Mateo, California 94404
LaSalle National Trust, N.A. 480,060 (4) 5.98%
135 South LaSalle Street
Chicago, Illinois 60603
Mercantile Bancorporation Inc. 1,012,546 (5) 12.62%
One Mercantile Center
St. Louis, Missouri 63101
SoGen International Fund, Inc. 603,000 (6) 7.51%
Societe Generale Asset
Management Corp.
1221 Avenue of the Americas
New York, New York 10020
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(1) The percentage calculations are based upon 8,024,858 shares of A.P.
Green Common Stock that were issued and outstanding as of March 21,
1997.
(2) The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated February 5, 1997, which has been
filed with the Securities and Exchange Commission. Dimensional Fund
Investment Advisors Inc., an investment advisor registered under the
Investment Advisors Act of 1940, reported sole voting power with
respect to 332,100 shares and sole investment power with regard to all
shares beneficially owned. In addition, Dimensional Fund Advisors Inc.
reported that certain of its officers are also officers of DFA
Investment Dimensions Group, Inc. and The DFA Investment Trust Company,
each an open-end investment company registered under the Investment
Company Act of 1940, and in such capacities have shared voting power
with respect to 191,394 shares reported above.
(3) The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated February 13, 1997, which has been
filed with the Securities and Exchange Commission by a group consisting
of Franklin Resources Inc., Charles B. Johnson, Rupert H. Johnson, Jr.
and Franklin Advisory Services, Inc. The Schedule 13G states that the
550,900 shares reported as beneficially owned by Franklin Resources,
Inc. are owned by one or more open or closed-end investment companies
or other managed accounts which are advised by investment advisory
subsidiaries of Franklin Resources, Inc., including Franklin Advisory
Services, Inc. Franklin Advisory Services, Inc. reported sole voting
and investment power with regard to all 550,900 shares reported. In
addition, Charles B. Johnson and Rupert H. Johnson, Jr. each own in
excess of 10% of the outstanding common stock of Franklin Resources,
Inc. and may be deemed to be the beneficial owners of securities held
by persons advised by Franklin Resources, Inc. or its subsidiaries.
Each of Franklin Resources, Inc., its advisory subsidiaries, Charles B.
Johnson and Rupert H. Johnson, Jr. have specifically disclaimed
beneficial ownership of all shares reported in the Schedule 13G.
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<PAGE>
(4) The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated February 12, 1997, which has been
filed with the Securities and Exchange Commission. The Schedule 13G
states that the beneficial ownership attributed to LaSalle National
Trust, N.A. is solely in a fiduciary capacity as trustee of the trust
established pursuant to the A.P. Green Employee Stock Ownership Plan.
LaSalle National Trust, N.A. reported shared voting and investment
power (subject to the participants' right to direct the Trustee) with
regard to all shares beneficially owned. The amount reported in the
table does not include 341,010 additional shares held by the trust but
allocated to the accounts of participants. LaSalle National Trust, N.A.
has specifically disclaimed beneficial ownership of all shares reported
in the Schedule 13G.
(5) The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated February 12, 1997, which has been
filed with the Securities and Exchange Commission. The Schedule 13G
states that 1,012,546 shares reported as beneficially owned by
Mercantile Bancorporation Inc. are held by its subsidiary, Mercantile
Bank of St. Louis National Association, solely in a fiduciary capacity
as trustee of the trusts established pursuant to the A.P. Green 401(k)
Plan and the A.P. Green Hourly Investment Plan. Mercantile
Bancorporation Inc. reported shared voting and investment power
(subject to the participants' right to direct the Trustee) with regard
to all shares held in such trusts. In addition, subsidiaries of
Mercantile Bancorporation Inc. hold an additional 74 shares in a
fiduciary capacity as trustees of certain other trusts and have sole
voting and investment power with respect to all of such shares.
Mercantile Bancorporation Inc., Mercantile Bank of St. Louis National
Association, the A.P. Green 401(k) Plan and the A.P. Green Hourly
Investment Plan have specifically disclaimed beneficial ownership of
all shares reported in the Schedule 13G.
(6) The shares reported as beneficially owned are based upon information
contained in a Schedule 13G dated January 31, 1995, which has been
filed with the Securities and Exchange Commission. SoGen International
Fund, Inc., an investment company registered under the Investment
Company Act of 1940, and Societe Generale Asset Management Corp., an
investment advisor registered under the Investment Advisors Act of 1940
which acts as investment advisor to SoGen International Fund, Inc.,
reported shared voting power and investment power with respect to all
603,000 shares reported.
ELECTION OF DIRECTORS
At the Annual Meeting, one Class II director will be elected for a term
of two years or until his successor is duly elected and qualified, and two Class
III directors will be elected for a term of three years or until their
respective successors are duly elected and qualified. Except as otherwise
directed by the stockholder on the Proxy Card, the persons named as proxies on
the accompanying Proxy Card intend to vote all duly executed proxies received by
the Board of Directors for the election of Mack G. Nichols as a Class II
director and William F. Morrison and James M. Stolze as Class III directors. In
the election of the Class II director and the Class III directors, respectively,
the nominee receiving the highest number of votes will be elected as a Class II
director, and the two nominees receiving the highest number of votes will be
elected as Class III directors. Mr. Morrison is currently a director of A.P.
Green. If for any reason any of the nominees become unavailable for election,
which is not now anticipated, the persons named in the accompanying Proxy Card
will vote for such substitute nominee as designated by the Board of Directors.
The Board of Directors recommends a vote "FOR" the election of Mack G. Nichols
as a Class II director and William F. Morrison and James M. Stolze as Class III
directors.
The name, age, principal occupation or position and other directorships
with respect to each nominee and the directors whose terms of office will
continue after the Annual Meeting are set forth below. Except as otherwise
indicated, each of the directors has held the position or another executive
position with the same entity shown or an affiliated entity for in excess of
five years.
CLASS II - TO BE ELECTED FOR A TERM OF TWO YEARS EXPIRING IN 1999
MACK G. NICHOLS, 58 - Nominee for Director; Director, The Boatmen's National
Bank of St. Louis; President and Chief Operating Officer, Mallinckrodt Inc.
since 1995; Senior Vice President, Mallinckrodt
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<PAGE>
Group, Inc. from 1993 to 1995; President and Chief Executive Officer,
Mallinckrodt Chemical, Inc. from 1989 to 1995.
CLASS III - TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 2000
JAMES M. STOLZE, 53 - Nominee for Director; Vice President and Chief Financial
Officer of MEMC Electronic Materials, Inc. since June 1995; Partner, KPMG Peat
Marwick LLP from June 1977 to June 1995.
WILLIAM F. MORRISON, 59 - Director since 1993; Investor and Former Executive
Vice President of the Essex Wire Division of United Technologies Corporation and
former member of the Senior Management Council of United Technologies
Corporation.
CLASS II - TO CONTINUE IN OFFICE UNTIL 1999
DANIEL R. TOLL, 69 - Director since 1988; Corporate and Civic Director; Director
of Brown Group, Inc., Mallinckrodt, Inc., Kemper National Insurance Companies,
NICOR, Inc., Lincoln National Convertible Securities Fund, Inc., and Lincoln
National Income Fund, Inc.
CLASS I - TO CONTINUE IN OFFICE UNTIL 1998
PAUL F. HUMMER II, 55 - Director since 1988; Chairman of the Board, Chief
Executive Officer and President of A.P. Green.
P. JACK O'BRYAN, 61 - Director since 1995; President and Chief Executive
Officer, United States Gypsum Company; Executive Vice President, Operations, USG
Corporation (a building materials manufacturer which filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code in March 1993); and
President and Chief Executive Officer of USG Interiors, Inc.
BOARD OF DIRECTORS AND COMMITTEES
During 1996, the Board of Directors of A.P. Green met five times and
each of the directors whose term of office will continue after the Annual
Meeting attended not less than 75% of the meetings of the Board of Directors and
committees of which such director was a member during 1996.
The Board of Directors has a standing Executive Committee, Audit
Committee, and Compensation and Organization Committee.
During 1996, the Executive Committee consisted of Paul F. Hummer II
(Chairman), Donald E. Lasater, Daniel R. Toll, William F. Morrison and P. Jack
O'Bryan. The Executive Committee exercises the authority of the Board of
Directors in the management of A.P. Green in the intervals between meetings of
the full Board of Directors subject to the restrictions imposed by law. The
Executive Committee did not meet during 1996.
The members of the Audit Committee during 1996 were Daniel R. Toll
(Chairman), Donald E. Lasater, William F. Morrison and P. Jack O'Bryan. The
Audit Committee is empowered to select and employ, subject to ratification by
the stockholders, the independent auditors of A.P. Green; to confer with such
independent auditors with regard to the scope and cost of the audit and other
services rendered by such auditors; and to review with the auditors, the
internal audit staff and management the work and the
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<PAGE>
findings of each to ensure that A.P. Green has adequate audit policies and
internal controls and complies with such policies and controls. The Audit
Committee met three times in 1996.
During 1996, the Compensation and Organization Committee was composed
of Donald E. Lasater (Chairman), Daniel R. Toll, William F. Morrison and P. Jack
O'Bryan. The Compensation and Organization Committee is authorized to review and
make recommendations to the Board of Directors regarding the salaries, incentive
compensation and bonus awards to be given corporate officers; to administer A.P.
Green's stock option and other employee benefit plans; and to review and make
recommendations to the Board of Directors regarding the management organization,
succession and development. The Compensation and Organization Committee met
three times during 1996.
DIRECTOR'S FEES
During fiscal 1996, directors who were not also employees of A.P. Green
received an annual retainer of $16,000 and 375 shares (on a pre-split basis) of
A.P. Green Common Stock in lieu of fees for meetings of the Board of Directors
or committees. Directors were also reimbursed for expenses incurred in attending
Board or committee meetings.
Pursuant to the Retirement Plan for Directors, A.P. Green provides
retirement benefits to any non-employee director who retires as a director of
A.P. Green or who terminates his directorship with A.P. Green due to a
disability, after serving as a director of A.P. Green for a minimum of five
years. The benefits that are payable to each director are determined by
multiplying the annual retainer paid to directors of A.P. Green on the date of
such director's retirement or termination of service due to disability by 10%
for each year of service as an A.P. Green director, with the maximum annual
benefit for any director being 100% of the then-applicable annual retainer.
Benefits will commence upon the later of the date that the former director
attains the age of 65 or the date that such former director ceases to be a
director of A.P. Green due to retirement or disability. An eligible director
will continue to receive benefits under the plan during his lifetime on a
quarterly basis for a maximum of ten years.
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<PAGE>
SECURITY OWNERSHIP BY MANAGEMENT
The following table indicates, as of March 21, 1997, the beneficial
ownership of A.P. Green Common Stock by each nominee for director, each director
whose term of office will continue after the Annual Meeting and each executive
officer named in the Summary Compensation Table, individually, and all directors
and executive officers as a group:
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS (1)
- ------------------------ ------------------ --------------------
Jurgen H. Abels 64,757(2) (3)
Max C. Aiken 125,088(2) 1.54%
Michael B. Cooney 100,096(2) 1.23%
Paul F. Hummer II 263,614(2) 3.20%
William F. Morrison 5,050 (3)
Mack G. Nichols -- (3)
P. Jack O'Bryan 3,850 (3)
Gary L. Roberts 84,550(2) 1.04%
James M. Stolze -- (3)
Daniel R. Toll 6,250 (3)
All directors and
executive officers
as a group (16 persons) 883,707(2) 10.15%
(1) Based upon 8,024,858 shares of A.P. Green Common Stock issued and
outstanding as of March 21, 1997 and, for each executive officer or the
group, the number of shares subject to options that may be acquired
within 60 days upon exercise of the option.
(2) Totals include 51,000, 105,000, 84,000, 213,000, 75,000 and 679,500
shares subject to stock options which are presently exercisable by
Messrs. Abels, Aiken, Cooney, Hummer and Roberts, and all directors and
executive officers as a group, respectively, under the A.P. Green
Long-Term Performance Plans. Under applicable regulations of the
Securities and Exchange Commission, the shares subject to options are
deemed to be beneficially owned because such shares may be acquired
within 60 days upon exercise of the option.
(3) Less than one percent.
REPORT OF COMPENSATION AND ORGANIZATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
GENERAL
A.P. Green's executive compensation program is administered by the
Compensation and Organization Committee of the Board of Directors. During 1996,
the Committee was composed of four non-employee directors, Donald E. Lasater
(Chairman), William F. Morrison, Daniel R. Toll and P. Jack O'Bryan.
A.P. Green's executive compensation policy is designed and administered
to provide a competitive compensation program that will enable A.P. Green to
attract, motivate, reward and retain executives who have the skills, education,
experience and capabilities required to discharge their duties in a competent
and efficient manner. The compensation policy is based on the principle that the
financial rewards to the executives are aligned with the financial interests of
the stockholders of A.P. Green. In this manner, A.P. Green will meet its
ultimate responsibility to its stockholders by striving to give a suitable
long-term return on their investment through earnings from operations and
prudent management of A.P. Green's assets.
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A.P. Green's executive compensation has three separate elements,
consisting of base salary, annual incentive compensation and long-term incentive
compensation. The following is a summary of the policies underlying each
element.
BASE SALARY
The Committee has determined the salary ranges for each of the
executive officer positions of A.P. Green based upon the level and scope of the
responsibilities of the office, the pay levels of similarly positioned executive
officers in manufacturing companies of comparable size to A.P. Green and a
consideration of the equities relating the salary for a particular executive
officer to the salaries of other executive officers within A.P. Green at the
same level of responsibility. The Committee's recent practice has been to
establish a range of base salaries for particular offices at or near the
fiftieth percentile of the comparison group of companies. The data utilized in
determining such ranges is compiled from various salary surveys that are made
available to the public by trade and industry associations, accounting firms,
compensation consultants and professional groups.
Prior to the Committee meeting in February of each year, the Chief
Executive Officer, after consultation with the Human Resources Department of
A.P. Green, submits to the Committee a list of recommended salary changes for
all executive officers except himself. At such February meeting, the Committee
considers the Chief Executive Officer's recommendations with respect to a
particular officer in light of such officer's then-current salary within the
applicable range of salaries for such position, the officer's individual
performance and, where appropriate, significant changes in the officer's level
of responsibility.
The Committee acts upon the recommendations of the Chief Executive
Officer in any manner it deems appropriate and authorizes the salary changes of
specified officers. The Committee also gives the Chief Executive Officer the
discretion to implement the salary increases so authorized within a general
timeframe approved by the Committee. Actual salary increases have typically been
implemented by the Chief Executive Officer from 12 to 14 months after the prior
increase depending on A.P. Green's financial performance during such time.
Annually, the committee decides on several near-term objectives for the
Chief Executive Officer. Annually, the Chief Executive's performance is based,
in part, upon his success in achieving those objectives. The Committee considers
and acts upon increases to the base salary of the Chief Executive Officer
separately in executive session.
ANNUAL INCENTIVE COMPENSATION
The Committee believes that a significant portion of the executive
officers' potential compensation should be at risk and contingent upon the
Company and its operating groups achieving financial performance objectives. To
this end, each of A.P. Green's executive officers (as well as other management
employees) participate in A.P. Green's Management Incentive Plan pursuant to
which such participants are eligible to receive annual cash bonus awards. At the
beginning of each year, the Committee establishes certain minimum financial
performance objectives for the corporate, lime, international and refractories
groups. In 1996, these financial performance objectives were based upon
operating earnings. In 1997, these financial performance objectives are based
upon return on capital employed. Additionally, a number of participants in the
Management Incentive Plan have been given two personal goals designed to support
the Company's return on capital employed target. These performance objectives
are intended to provide incentives to the participating officers to meet and
exceed the financial goals for A.P. Green or the particular operating group. The
attainment of performance objectives above the minimum levels are assigned
specified percentage values from 1% to 200%.
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<PAGE>
In addition, a par or target bonus (expressed as a percentage of base
salary) is established by the Committee for each of the participants in the plan
based upon the executive's responsibility and ability to impact A.P. Green's or
the operating group's financial results. For executive officers other than the
Chief Executive Officer, such percentages range from 30% to 45% of base salary.
The percentage determined by the actual performance level of the relevant group
to which the participant is assigned is then factored with the par or target
bonus percentage attributable to each participant's position to determine the
percentage of the participant's base salary that will be paid as a cash bonus
under the Plan.
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that long-term incentive compensation is the
most direct way of tying executive compensation to increases in stockholder
value. A.P. Green's long-term incentive programs are all stock-based, thereby
providing a means through which executive officers can build a meaningful equity
ownership in A.P. Green Common Stock.
With the assistance of an outside compensation consultant, the
Committee reevaluated its long-term incentive programs during the latter part of
1992 and first part of 1993. In the course of that review, the Committee
determined that: (i) each individual executive officer's long-term incentive
compensation should approximate the fiftieth percentile of long-term incentive
compensation for manufacturing companies of similar size to A.P. Green and (ii)
long-term compensation tied directly to increases in share price were
appropriate for A.P. Green.
Accordingly, the Committee adopted the 1993 Performance Plan, which was
approved by the stockholders at the Annual Meeting in May 1993 and the 1996
Performance Plan, which was approved by the stockholders at the Annual Meeting
in May 1996. In February 1993, the Committee also approved a grant of stock
options to executive officers. These stock options differed from typical stock
options in that the exercisability of such options is dependent upon the
attainment of certain share price levels for A.P. Green Common Stock within a
five-year period after the grant of such options. Specifically, 20% of the
options become exercisable when the share price of A.P. Green Common Stock
reaches each of the following levels: $7.67; $8.50; $9.33; $10.00 and $11.00. To
the extent that all or a portion of such options become so exercisable prior to
the expiration of five years from the date of the grant, such options remain
exercisable for ten years from the date of the grant. To the extent that all or
a portion of such options do not become so exercisable, such options are
exercisable only for one day at the expiration of five years from the date of
the grant. As of December 31, 1996, 80% of the options were exercisable and will
remain exercisable for ten years from the date of the grant. Achievement of a
trading price of $10.00 per share represented an increase of 63% in the trading
price of the Company's stock from the date the Plan was adopted.
The Committee believes that the options granted in 1993 provided the
executive officers greater incentives throughout the term of the options to
strive to operate A.P. Green in a manner that directly benefits the financial
interests of the stockholders. The options are designed to give the executive
officers a continuous incentive to meet the performance objectives necessary to
assure the appreciation of the stock price both on a long-term, as well as a
shorter term, basis. In this manner, the Committee believes that it has aligned
the interests of the executives who are participating in the option grant in a
more direct and continuous manner to the financial return to the stockholders.
Since the 1993 grants were designed to cover a three to four year
period, no long-term compensation grants or awards have been provided to
executive officers generally from the 1993 stock option grants through 1996. The
Committee has recently requested that a compensation consultant review the
Company's long-term compensation program. The Committee expects that this review
will be completed by the time of its November 1997 meeting.
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COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Hummer's base salary, annual incentive compensation and long-term
incentive compensation are determined by the Committee in the same manner as is
used by the Committee for executive officers generally. The total compensation
package for Mr. Hummer is designed to be competitive within the industry while
creating awards for short- and long-term performance in line with the financial
interests of the stockholders. The Committee has established a range of total
compensation for the position of Chief Executive Officer at or near the fiftieth
percentile for chief executive officers at comparable companies.
Because Mr. Hummer's par or target bonus is 55% of his base salary, a
substantial portion of his cash compensation for the year is, therefore,
dependent upon A.P. Green's meeting or exceeding the pre-established performance
objectives. Mr. Hummer's stock option grant under the 1993 Performance Plan was
structured in the same manner as the options for each of the other participating
executive officers and has been, therefore, affected by the stock price
performance of A.P. Green Common Stock over the last three years and will be
affected by the stock price performance over the next several years.
This report shall not be deemed to be incorporated by reference by any
general statement incorporating by reference the Proxy Statement into any filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that A.P. Green specifically incorporates this information by
reference. This report shall not otherwise be deemed to be filed under such
acts.
COMPENSATION AND ORGANIZATION COMMITTEE
Donald E. Lasater, Chairman William F. Morrison
P. Jack O'Bryan Daniel R. Toll
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named executive
of A.P. Green for each of the last three years:
<TABLE>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
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<CAPTION>
All other
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) compensation($)(1)
- --------------------------- ---- --------- -------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Paul F. Hummer II, 1996 $ 334,186 $ -- -0-/-0- $ 3,751
Chairman of the Board, 1995 302,079 75,600 -0-/-0- 4,926
President and Chief Executive 1994 274,600 96,000 -0-/-0- 4,516
Officer
Max C. Aiken, 1996 183,328 -- -0-/-0- 3,810
Executive Vice President 1995 163,992 32,832 -0-/-0- 5,471
1994 146,742 45,760 -0-/-0- 5,678
Michael B. Cooney, 1996 147,081 -- -0-/-0- 3,517
Senior Vice President Law/ 1995 141,496 26,271 -0-/-0- 4,724
Administration and Secretary 1994 135,496 37,240 -0-/-0- 5,474
Gary L. Roberts, 1996 148,678 -- -0-/-0- 3,516
Vice President, Chief Financial 1995 141,132 25,515 -0-/-0- 4,678
Officer and Treasurer 1994 134,000 36,120 -0-/-0- 5,450
Jurgen H. Abels, 1996 118,842 19,541 -0-/-0- 2,981
Vice President, International 1995 113,838 28,680 -0-/-0- 3,676
1994 107,506 25,440 -0-/-0- 3,725
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<FN>
(1) The totals set forth in this column represent the value of shares of
A.P. Green Common Stock allocated under the A.P. Green Employee Stock
Ownership Plan to the account of the named executive officer for the
years ended December 31, 1996, 1995 and 1994.
</FN>
</TABLE>
EMPLOYMENT ARRANGEMENTS
A.P. Green currently has separate agreements with each of Paul F.
Hummer II, Max C. Aiken, Michael B. Cooney and Gary L. Roberts under which each
would be given severance benefits in the event that his employment with A.P.
Green is "terminated" within three years of a change in control of A.P. Green
(except that in all such agreements the rights to severance benefits terminate
upon reaching age 65 if it occurs before the expiration of three years after a
change in control). Each agreement is for a term of three years, subject to
automatic extension each year for an additional year unless A.P. Green gives a
60-day notice that the term will not be so extended, except if there is a change
in control of A.P. Green prior to such notice. Each agreement would require a
lump-sum cash payment generally in an amount equal to 2.99 times the officer's
then-current annual base salary and then-current full year bonus (except that
such multiplier will be subject to a declining pro rata reduction from the date
of such officer's 62nd birthday until his 65th birthday, based upon the number
of months left until such officer's 65th birthday at the effective date of his
termination). If payment of the foregoing amounts and any other benefits
received or receivable subject such officer to payment of federal excise tax,
the total amount payable to such officer shall be increased by an amount
sufficient to satisfy the excise tax and the additional excise and income taxes
thereon.
"Change in control" is generally defined as the type of transaction
which would require disclosure in A.P. Green's proxy statement pursuant to the
rules and regulations of the Securities and Exchange
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<PAGE>
Commission. Specifically, "change in control" includes, but is not limited to:
(i) an acquisition by any person of 20% or more of the combined voting power of
A.P. Green's then-outstanding voting securities; (ii) the replacement of the
majority of the existing directors during a period of two years or less; (iii) a
consolidation or merger in which A.P. Green is not the surviving corporation or
pursuant to which A.P. Green Common Stock would be converted into cash,
securities or other property; (iv) a sale, lease, exchange or other transfer of
all or substantially all of A.P. Green's assets; or (v) approval by A.P. Green's
stockholders of any plan or proposal for the liquidation or dissolution of A.P.
Green. "Termination" generally includes any event which severs the officer's
employment relationship with A.P. Green, other than termination due to death,
disability or retirement or dismissal for cause. The agreements provide
severance benefits in the event the officer terminates his employment for "good
reason." "Good reason" is generally defined in each such agreement as (i)
assignment of duties inconsistent with the officer's then-current position,
status or responsibilities; (ii) reduction of the officer's then-current base
salary; (iii) elimination of the officer's then-current participation level in
A.P. Green's bonus plans or employee benefit plans; (iv) geographic relocation
of the officer; or (v) failure by A.P. Green to obtain assumption of the
agreement by any successor.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
No stock options were exercised by any of the executive officers named
in the Summary Compensation Table during the fiscal year ended December 31,
1996. The following table sets forth information concerning the unexercised
options of the executive officers named in the Summary Compensation Table:
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR-END($)(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------------ ------------------ --------------------
Paul F. Hummer II............. 213,000/30,000 596,040/107,400
Max C. Aiken.................. 105,000/12,000 279,900/42,960
Michael B. Cooney............. 84,000/9,000 209,224/32,220
Gary L. Roberts............... 75,000/9,000 211,500/32,220
Jurgen H. Abels .............. 51,000/6,000 131,500/21,480
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(1) Based upon a price per share of $9.75, being the last reported trading
price of A.P. Green Common Stock on December 31, 1996.
RETIREMENT PLAN
Officers and employees of A.P. Green participate in a retirement plan
(the "Retirement Plan"). In addition, A.P. Green sponsors supplemental
retirement plans (the "Supplemental Plans") which allow the payment of benefits
exceeding the maximum limits set forth in the Internal Revenue Code of 1986, as
amended (the "Code"). Under the Retirement Plan and the Supplemental Plans, each
eligible participant of A.P. Green will receive an annual retirement benefit
based upon such employee's highest average annualized earnings over any period
of 36 consecutive months during the last 120 consecutive months of employment
immediately preceding retirement ("Final Average Compensation"). The benefits
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<PAGE>
shown in the following table as payable under the Retirement Plan and
Supplemental Plans are not subject to offset for Social Security benefits
received by the participant.
Annual retirement benefits under the Retirement Plan and the
Supplemental Plans, assuming normal retirement at age of 65 during 1996, payment
based under the straight life annuity option, and Final Average Compensation and
credited service are set forth in the following table:
YEARS OF CREDITED SERVICE (2)(3)
FINAL AVERAGE --------------------------------------------------------------
COMPENSATION (1) 5 10 15 20 25 30 35
- ---------------- - -- -- -- -- -- --
$150,000..... 9,648 19,297 28,945 38,593 48,241 57,890 67,538
200,000..... 13,055 26,110 39,165 52,221 65,276 78,331 91,386
250,000..... 16,462 32,924 49,386 65,848 82,310 98,772 115,234
300,000..... 19,869 39,738 59,607 79,476 99,344 119,213 139,082
350,000..... 23,276 46,552 69,827 93,103 116,379 139,655 162,930
450,000..... 30,090 60,179 90,269 120,358 150,448 180,537 210,627
- ---------
(1) Final Average Compensation under the Retirement Plan and the
Supplemental Plans includes the employee's salary and any cash bonus
awards under the Management Incentive Compensation Plan. The amount
shown in the Summary Compensation Table as salary and bonus for each of
the five executive officers named therein is compensation for purposes
of the Retirement Plan and the Supplemental Plans.
(2) The credited years of service for the five executive officers named in
the Summary Compensation Table as of December 31, 1996 are as follows:
Mr. Hummer, 8 years; Mr. Aiken, 22 years; Mr. Cooney, 8 years; Mr.
Roberts, 7 years; and Mr. Abels, 12 years.
(3) The maximum amount payable under the Retirement Plan is limited by the
Code to $125,000 annually, subject to cost-of-living increases and
reduction by reason of contributions under tax-qualified defined
contribution plans maintained by A.P. Green. To the extent benefits
under the Retirement Plan are limited by the Code, they will be paid
under the Supplemental Plans.
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<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the quarterly cumulative stockholder
returns, including the reinvestment of dividends, of A.P. Green for the period
beginning January 1, 1992 and ending December 31, 1996 on an indexed basis with
the S&P 500 Stock Index and an index of peer public companies selected by A.P.
Green because such companies were in one of A.P. Green's lines of business. The
peer companies are: Minerals Technologies Inc. (formerly a subsidiary of Pfizer,
Inc.) and Global Industrial Technologies, Inc. (formerly a subsidiary of
Indresco, Inc.) in the refractories business; United States Lime & Minerals,
Inc. (formerly Scottish Heritable) and Dravo Corp. in the lime business.
[Performance Graph]
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1991
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
------ ------ ------ ------ ------ ------
A.P. Green Industries, Inc. $100 $117 $202 $213 $228 $232
S&P 500 (Registered Trademark) $100 $108 $118 $120 $165 $203
Custom Composite Index $100 $ 90 $125 $124 $154 $176
The Custom Composite Index consists of Pfizer Inc. (thru 12/31/92), Minerals
Technologies Inc. (beginning 12/31/92), Dresser Industries Inc. (thru 9/30/92),
Global Industrial Technologies Inc. (beginning 9/30/92), United States Lime &
Mineral, and Dravo Corp.
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<PAGE>
ITEM 2. RATIFICATION OF APPOINTMENT OF AUDITORS
At the Annual Meeting, action will be taken with respect to the
ratification of the appointment of auditors for the ensuing year. KPMG Peat
Marwick LLP served as A.P. Green's independent auditors for the year ended
December 31, 1996. The Board of Directors has appointed KPMG Peat Marwick LLP as
auditors for A.P. Green for the current year ending December 31, 1997, subject
to ratification by the stockholders. It is expected that a representative of
KPMG Peat Marwick LLP will be present at the Annual Meeting to respond to
appropriate questions. The Board of Directors recommends a vote "FOR" the
ratification of KPMG Peat Marwick LLP as independent auditors.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires A.P.
Green's directors and executive officers ("Reporting Persons") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of A.P. Green Common Stock. Other than the initial filing
on Form 3 and the annual filing on Form 5 for each of Ronald L. Bramblett, Vice
President, Human Resources, Frank T. Cordie, Vice President, Refractory
Manufacturing and John L. Kelsey, Vice President, Marketing, each of whom was
first elected as an officer of the Company effective March 1, 1996, to the
knowledge of management, based solely on its review of the copies of such
reports furnished to A.P. Green, during the fiscal year ended December 31, 1996,
all Section 16(a) filing requirements were met.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Secretary of A.P. Green by not
later than December 5, 1997 for consideration for inclusion in the Proxy
Statement and Proxy Card for that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of A.P.
Green does not intend to present, nor has it been informed that other persons
intend to present, any matters for action at the Annual Meeting, other than
those specifically referred to herein. If, however, any other matters should
properly come before the Annual Meeting, it is the intention of the persons
named as proxies to vote the shares represented by Proxy Cards granting such
proxies discretionary authority to vote on such other matters in accordance with
their judgment as to the best interest of A.P. Green on such matters.
PAUL F. HUMMER, II
Chairman of the Board, President
and Chief Executive Officer
April 7, 1997
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<PAGE>
A.P. GREEN INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 8, 1997
The undersigned hereby appoints P.F. HUMMER II, D.R. TOLL and
M.B. COONEY, and each of them, with or without the others, proxies with full
power of substitution to vote as designated below, all shares of stock of A.P.
Green Industries, Inc. (the "Corporation") that the undersigned signatory hereof
is entitled to vote at the Annual Meeting of Stockholders of the Corporation to
be held at The Empire Club located off of Teal Lake Road in Mexico, Missouri, on
Thursday, May 8, 1997, at 10:00 a.m., and all adjournments thereof, all in
accordance with and as more fully described in the Notice and accompanying Proxy
Statement for such meeting, receipt of which is hereby acknowledged.
1. Election of one Class II director to hold office for a term of two
years or until his successor is duly elected and qualified.
|_| FOR the nominee listed below |_| WITHHOLD AUTHORITY to vote for
the nominee listed below
MACK G. NICHOLS
2. Election of two Class III directors to hold office for a term of three
years or until their respective successors are duly elected and
qualified.
|_| FOR the nominees listed below |_| WITHHOLD AUTHORITY to vote for
the nominees listed below
WILLIAM F. MORRISON
JAMES M. STOLZE
(INSTRUCTION: To withhold authority to vote for an individual nominee,
write that nominee's name in the space provided below)
3. To ratify the appointment of KPMG Peat Marwick LLP as the Corporation's
auditors for the year ending December 31, 1997.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To transact any and all other business, including adjournment of the
meeting, which may properly come before the meeting or any adjournment
thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
(continued, and to be signed, on the other side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR LISTED IN ITEMS 1
AND 2, "FOR" THE RATIFICATION OF KPMG PEAT MARWICK LLP AS THE CORPORATION'S
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1997 AND "FOR" THE GRANT OF
DISCRETIONARY AUTHORITY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SIGN
HERE
---------------------------------------------------
(Please sign exactly as name appears hereon)
SIGN
HERE---------------------------------------------------
Executors, administrators, trustees, etc. should so
indicate when signing
Dated
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