<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
------
(Amendment No. ___)
[X] Filed by the Registrant
[ ] 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 Rule 14a-11(c) or Rule 14a-12
HEARTLAND TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined.):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
================================================================================
<PAGE>
HEARTLAND TECHNOLOGY, INC.
547 WEST JACKSON BOULEVARD
CHICAGO, ILLINOIS 60661
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 23, 1999
TO THE HOLDERS OF COMMON STOCK OF HEARTLAND TECHNOLOGY, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Heartland Technology, Inc. (the "Company") will be held at 10:00 A.M., local
time, on June 23,1999, at The LaSalle National Bank, 135 South LaSalle Street,
Suite 600, Chicago, Illinois 60603, for the following purposes:
1. To elect two directors of the Company to hold office until
the 2002 Annual Meeting of Stockholders and until such
directors' successor shall be elected and qualified.
2. To vote upon the ratification of the appointment of Ernst &
Young LLP as the Company's independent accountants for the
fiscal year 1999.
3. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only holders of record of the Company's common stock at the close of
business on April 26, 1999, are entitled to receive notice of, and to vote at,
the Annual Meeting of Stockholders and any adjournment(s) thereof. Such
stockholders may vote in person or by proxy.
Stockholders who find it convenient are cordially invited to attend the
meeting in person. Whether or not you intend to be present in person or to be
otherwise represented at the meeting, you are requested to complete, sign and
date the enclosed proxy card and return it in the enclosed envelope. This action
will not limit your right to revoke your proxy in the manner described in the
accompanying Proxy Statement or to vote in person if you wish to attend the
Annual Meeting and vote personally.
By Order of the Board of Directors,
/s/ Richard P. Brandstatter
Richard P. Brandstatter
Vice President-Finance,
Secretary and Treasurer
Dated: April 29, 1999
<PAGE>
HEARTLAND TECHNOLOGY, INC.
-------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 23, 1999
-------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Heartland Technology, Inc. (the "Company") of
proxies to be used at the Annual Meeting of Stockholders of the Company to be
held at 10:00 A.M., local time, on June 23, 1999, at The LaSalle National Bank,
135 South LaSalle Street, Suite 600, Chicago, Illinois 60603, and at any
adjournment(s) thereof (the "Annual Meeting").
If the proxy card accompanying this Proxy Statement is properly
executed and returned, the shares of common stock, $.30 par value per share, of
the Company (the "Common Stock"), represented thereby will be voted as
instructed on the proxy card, but if no instructions are given, such shares of
Common Stock will be voted (1) for the election as directors of the nominees of
the Board of Directors named below, (2) in favor of the ratification of the
appointment of Ernst & Young LLP as the Company's independent accountants for
the 1999 fiscal year and (3) in the discretion of the proxies named on the proxy
card on any other proposals to properly come before the meeting or any
adjournment(s) thereof.
Any proxy may be revoked prior to its exercise, but the attendance at
the meeting by any stockholder who has previously given a proxy will not have
the effect of revoking his or her proxy as the case may be, unless such
stockholder delivers written notice of revocation to the Secretary of the Annual
Meeting of Stockholders prior to the exercise of the rights specified by the
proxy. The approximate date of mailing of this Proxy Statement and the
accompanying proxy is April 29, 1999. The Annual Report of the Company for the
year ended December 31, 1998, including audited financial statements for the
Company, accompanies this proxy statement.
VOTING
The close of business on April 26, 1999, is the date fixed by the Board
of Directors for the determination of stockholders of record entitled to notice
of, and to vote at, the Annual Meeting. On the record date there were issued and
outstanding 1,671,238 shares of Common Stock. Each share of Common Stock is
entitled to vote with respect to each matter to be voted upon. At all meetings
at which a quorum is present, a plurality of the votes cast shall elect
directors. Consequently, only shares that are voted in favor of the nominees for
election as Class III directors will be counted toward such nominees' attaining
a plurality. Shares present at the meeting that are not voted for a particular
nominee or shares present by proxy where the stockholder properly withholds
authority to vote for such nominees (including broker non-votes) will not be
counted toward such nominees' attainment of a plurality.
Approval of the proposal to ratify the appointment of Ernst & Young LLP
as the Company's independent accountants for the 1999 fiscal year requires the
affirmative vote of holders of a majority of the shares of Common Stock
represented in person or by proxy at a meeting at which a quorum is present.
Abstentions will have the same effect as votes against the proposal because the
shares are considered present at the meeting, but are not affirmative votes, and
broker non-votes will not be counted in respect of the proposal.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 15, 1999, certain
information concerning ownership of shares of the Common Stock: (i) by persons
who are known by the Company to be beneficial owners of more than 5% of the
outstanding shares of the Common Stock; (ii) by each director and nominee of the
Company; (iii) by each Named Executive Officer (as defined under the heading
"Executive Compensation"); and (iv) by all directors and executive officers of
the Company as a group. As of April 15, 1999, there were 1,671,238 shares of
Common Stock outstanding.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
- ------------------------ ------------------------ --------
<S> <C> <C>
Ezra K. Zilkha 102,500 (2) 6.1%
767 Fifth Avenue
New York, NY 10153
KeyCorp 152,430 (3) 9.1%
127 Public Square
Cleveland, OH 44114
MSR Capital Partners 113,500 (4) 6.3%
One Embarcadero Center
San Francisco, CA 94111
Jerold S. Solovy 125,000 (5) 7.5%
c/o Jenner & Block
One IBM Plaza
Chicago, IL 60611
S.G. Cowen Securities Corp.
Financial Square 92,900 (6) 5.6%
New York, NY 10005
Gordon H. Newman 1,000 *
Robert S. Davis 2,000 *
Edwin Jacobson 83,000 (7) (8) 4.8%
John R. Torell III 15,000 *
All directors and executive 203,500 (7) 11.8%
officers as a group (consisting
of 8 persons)
</TABLE>
- --------------------------------
* Constitutes less than one percent.
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to such securities.
(2) Based on a Schedule 13D, dated January 17, 1996, and to the Company's
knowledge, Mr. Zilkha is a member of a "group" consisting of himself,
The Zilkha Foundation, Inc. and Zilkha & Sons, Inc. Mr. Zilkha directly
owns and has sole voting and investment power over all shares except
for: 1,500 shares owned by his wife, as to which he shares voting and
investment power; 15,000 shares owned by The Zilkha Foundation, Inc., as
to which Mr. Zilkha may be deemed to share voting and disposition power
with the
2
<PAGE>
other directors and officers of the foundation; and 24,500 shares owned
by Zilkha & Sons, Inc., as to which Mr. Zilkha may be deemed to be the
beneficial owner.
(3) Based on a Schedule 13G, dated February 12, 1999, KeyCorp is the parent
holding company for the two subsidiaries -- Key Trust Company-Ohio (a
bank) and Spears, Benzak, Salomon & Farrell (a registered investment
advisor) -- that own the securities. Voting and investment power over
all of the securities is shared.
(4) Based on a Schedule 13D, dated January 16, 1996.
(5) Based on a Schedule 13G, dated February 26, 1998.
(6) Based on Schedule 13G, dated February 8, 1999. As a broker-dealer holds
a portion of the securities on behalf of its clients, none of whose
individual interests exceeds five percent
(7) Includes 50,000 shares which Mr. Jacobson has the right to acquire
through the exercise of stock options. The number of shares that all
directors and officers as a group have the right to acquire within 60
days is 50,000. In each case the percent of the class is calculated on
the basis that such shares are deemed outstanding. No voting or
investment power exists with respect to such shares prior to
acquisition.
(8) Includes 3,000 shares owned by Mr. Jacobson's spouse, as to which Mr.
Jacobson shares voting and investment power.
3
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Certificate of Incorporation and By-laws provide for a
Board of Directors elected by the holders of Common Stock, which is divided into
three classes of directors serving staggered three-year terms. The Board of
Directors is currently comprised of five members, with Class I and Class III
consisting of two directors each and Class II consisting of one director.
During the year, Alan Andreini retired from the Board of Directors, and
Gordon H. Newman was appointed to serve in his place until the expiration of the
term for the Class I directors on the date of the 2000 Annual Meeting of
Stockholders. At the Annual Meeting, two Class III directors will be elected for
terms expiring at the 2002 Annual Meeting of Stockholders. The Board of
Directors has recommended John R. Torell III and Edwin Jacobson as the nominees
for election as the Class III directors. The continuing Class I directors,
Robert S. Davis and Gordon H. Newman, are serving a term that expires on the
date of the 2000 Annual Meeting of Stockholders. The continuing Class II
director, Ezra Zilkha, is serving a term that expires on the date of the 2001
Annual Meeting of Stockholders.
Unless otherwise specified on the accompanying proxy, the shares of
Common Stock voted pursuant thereto will be cast for Edwin Jacobson and John R.
Torell III as the Class III directors to hold office until the 2002 Annual
Meeting of Stockholders and until their successors have been duly elected and
shall have qualified. If, for any reason, at the time of election, John R.
Torell III or Edwin Jacobson should be unable or unwilling to accept nomination
or election, it is intended that such proxy will be voted for the election, in
their place, of a substitute nominee or nominees recommended by the Board of
Directors. However, the Board of Directors has no reason to believe that either
John R. Torell III or Edwin Jacobson will be unable or unwilling to serve as
directors.
Information with respect to the Company's nominees for directors and
continuing directors is set forth below. The Board of Directors recommends that
the stockholders vote FOR the election of Edwin Jacobson and John R. Torell III
as the Company's Class III Directors.
Principal Occupation, Business
Name and Age Experience and Directorships
- ------------ ------------------------------
Nominees for Class III Directors
Edwin Jacobson, 69......................... President and Chief Executive
Officer (since September 1990);
Director of the Company (Class III)
(since November 1985); Chairman of
the executive committee of the Board
of the Company; President and Chief
Executive Officer of CMC Heartland
Partners (since September 1990),
Chicago, Illinois (real estate) (a
general partnership of which the
Company is the managing general
partner); Chairman of the Executive
Committee (since June 1992) and
President and Chief Executive
Officer (1994-1997), Avatar Holdings
Inc. (real estate, water and
wastewater utilities operations),
Coral Gables, Florida. Mr. Jacobson
also serves as a director of Avatar
Holdings Inc.
4
<PAGE>
Principal Occupation, Business
Name and Age Experience and Directorships
- ------------ ------------------------------
John R. Torell III, 59..................... Director of the Company (Class III)
(since September 1997); Member of
the executive committee of the Board
of the Company, Chairman (since
1990), Torell Management Inc.
(financial advisory), New York, New
York; Special Director (since 1994),
the Zilkha & Company Group of
Companies (merchant banking), New
York, New York; Chairman and Chief
Executive Officer (1990-1994),
Fortune Bancorp (banking), Tampa,
Florida; Chairman, President and
Chief Executive Officer (1988-1989),
CalFed, Inc. (banking), Los Angeles,
California; President (1982-1988),
Manufacturers Hanover Corporation
(banking), New York, New York. Mr.
Torell also serves as a director of
American Home Products Corporation,
Claremont Technology Group, Inc.,
Paine Webber Group Inc., and Volt
Information Sciences, Inc.
Continuing Class I Directors
Gordon H. Newman, 66....................... Director of the Company (Class I)
(since February 1999); Member of the
audit committee of the Board of the
Company; Private Investor and
Trustee for various non-profit
entities (since 1995); Senior Vice
President, General Counsel
(1975-1995) and Vice President,
Assistant General Counsel and
Assistant Secretary (1967-1975),
Sara Lee Corporation (formerly
Consolidated Foods Corporation).
Robert S. Davis, 84........................ Director of the Company (Class I)
(since October 1988); Member of the
compensation committee and chairman
of the audit committee of the Board
of the Company; Self-employed
consultant (for more than the past
five years); Senior Vice President
(1978-79), St. Paul Companies
(insurance), St. Paul, Minnesota.
Continuing Class II Director
Ezra K. Zilkha, 73......................... Director of the Company (Class II)
(since October 1988); Chairman of
the Board of the Company; Member of
the executive committee and chairman
of the compensation committee of the
Board of the Company; President
(since 1956), Zilkha & Sons, Inc.
(private investments), New York, New
York; President (since March 1991),
3555 Intermediate Corp. (investment
holding company); Chairman (December
1984 - May 1990; March 1991 -
September 1993), Union Holdings Inc.
(industrial holding company), New
York, New York. Mr. Zilkha also
serves as a director of The Newhall
Land and Farming Company.
Meetings and Committees of the Board of Directors
During the fiscal year ended December 31, 1998, the Board of Directors
held seven meetings. During such period, each of the incumbent directors of the
Company attended 75% or more of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees of the Board of Directors on which such director served. The
Board of Directors has standing executive, audit and compensation committees.
The members of the executive committee are Edwin Jacobson, John R.
Torell III and Ezra K. Zilkha. The executive committee, subject to certain
exceptions, has the authority to act in place of the Board of Directors, when
5
<PAGE>
it is not in session, on all matters which would otherwise come before the Board
of Directors, including the functions of board nominations. The executive
committee held no meetings during the fiscal year ended December 31, 1998.
The members of the audit committee currently are Robert S. Davis and
Gordon H. Newman. The audit committee's primary responsibilities are to select
the Company's independent auditors, to approve the overall scope of the audit,
to review the results of operations of the Company and to review the Company's
system of internal controls. The audit committee held one meeting during the
fiscal year ended December 31, 1998.
The members of the compensation committee are Ezra K. Zilkha and Robert
S. Davis. The compensation committee's primary responsibilities are to review
the compensation arrangements relating to executive officers and key employees
of the Company, to make recommendations to the Board of Directors concerning
executive compensation and benefits policies for the Company, and to administer
the Company's 1997 Incentive and Capital Accumulation Plan. The compensation
committee held one meetings during the fiscal year ended December 31, 1998.
Executive Officers
The following table sets forth certain information with regard to the
executive officers of the Company (other than Edwin Jacobson, who also serves as
a director of the Company).
Principal Occupation, Business
Name and Age Experience and Directorships
- ------------ ------------------------------
Lawrence S. Adelson, 49.................... Vice President and General Counsel
(since October 1988) of the Company;
General Counsel (since June 1990),
CMC Heartland Partners (real estate)
(a general partnership of which the
Company is the managing general
partner); Vice President and General
Counsel (1988-1995), Chicago
Milwaukee Corporation (investment
company); General Counsel
(1985-1989), CMC Real Estate
Corporation.
Richard P. Brandstatter, 43 . ............. Vice President - Finance, Treasurer
and Secretary of the Company (since
February 1999); Vice President -
Finance, Treasurer and Secretary
(since August 1995); Controller
(November 1994-August 1995) CMC
Heartland Partners; Controller
(1987-1994), Montalbano Builders
(land development and homebuilding).
6
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
consists entirely of nonemployee directors, and its primary function is to make
recommendations to the Board of Directors concerning executive compensation and
benefits policies for the Company. The overall compensation policy which the
Committee pursues for the executive officers and key employees of the Company is
to provide a reward structure that motivates such individuals toward achieving
the Company's strategic and financial goals, while concurrently providing
compensation sufficient to attract and retain highly competent management
personnel. The Committee is also responsible for administering the Company's
1997 Incentive and Capital Accumulation Plan (the "Plan").
The Company's compensation structure consists of base salary, annual
cash bonuses and stock-based awards under the Plan. The combination of these
three components of an individuals' compensation coordinates the goals of
providing compensation that attracts and retains highly competent managers, and
aligning the interests of such managers with the interests of stockholders in
appreciation of the value of the Common Stock.
Base salary levels are set to reflect an individuals' position,
responsibilities, experience, leadership and contribution to the success of the
Company. Cash bonuses further reward eligible executives for superior individual
performance and overall performance of the Company. Stock based compensation
pursuant to the Plan creates an incentive to eligible executives to enhance the
performance of the Company and the Common Stock in the future. Determination of
the amount of cash bonuses and stock based compensation depends upon factors
specific to each individual, and is made by the subjective determination of the
Compensation Committee.
In 1997, the stockholders of the Company approved the Plan in order to
provide incentives which will attract and retain highly competent persons as key
employees of the Company and its subsidiaries, and to assist in aligning the
interest of the Company's key employees with those of its stockholders. The Plan
makes available, subject to certain adjustments, 175,000 shares of Common Stock
to be reserved for awards under the Plan. The Committee has the authority to
select officers and other key employees of the Company and its subsidiaries who
are to receive benefits pursuant to the Plan. The Committee also has the power
to modify or waive restrictions, amend benefits and to grant extensions and
accelerations of benefits under the Plan. The Plan provides for the grant of any
or all of the following types of benefits: (i) stock options, including
incentive stock options and non-qualified stock options; (ii) stock appreciation
rights; (iii) stock awards, including restricted stock; (iv) performance awards;
and (v) stock units. During 1998, the Committee granted benefits in respect of
an aggregate of 175,000 shares of Common Stock.
During 1998, Mr. Jacobson received compensation from the Company for
acting in his capacity as President and Chief Executive Officer of the Company.
Mr. Jacobson's compensation is paid pursuant to an employment agreement, dated
as of June 29, 1993, as amended. No cash bonus was paid to him for 1998.
On January 2, 1998, the Committee granted Mr. Jacobson options to
purchase 50,000 shares of Common Stock and stock appreciation rights (payable in
cash) with respect to 25,000 shares, pursuant to the Plan. The options and
rights have an exercise price of $16.625 per share (the closing stock price on
the date of grant), became fully vested on May 30, 1998, and expire not later
than January 2, 2008. The Committee granted Mr. Jacobson these options and
rights primarily on account of his role in directing the Company's successful
acquisition of PG Design in 1997, as well as the Company's de-registration from
the Investment Company Act of 1940.
Members of the Compensation Committee:
Ezra K. Zilkha, Chairman
Robert S. Davis
7
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total returns on an assumed
investment of $100 in the Common Stock at the closing price of the Common Stock
on the last trading day of the calendar year ending December 31, 1993, as of the
last trading day of each of the calendar years indicated below with the returns
of a similar investment in the American Stock Exchange Market Value Index (a
market value weighted broad market index maintained by Media General Financial
Services, Inc. covering stocks listed on the American Stock Exchange) and a
market value weighted index of all publicly traded companies in the Printed
Circuit Board industry (SIC Code 3672) that have a market capitalization of less
than $500 million (the "Peer Index"). The calculation of total returns herein
assumes full reinvestment of dividends and no payment of brokerage or other
commissions or fees. Past performance is not necessarily indicative of future
performance. As a result of an acquisition on May 30, 1997, the Company began
operating in the Printed Circuit Board industry. Prior to that time, the Company
invested in securities.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Heartland Technology, Inc...................... 100.00 123.88 113.46 95.19 253.85 84.62
Amex Market Index............................. 100.00 88.33 113.86 120.15 144.57 142.61
Peer Index .................................... 100.00 91.95 129.72 155.84 152.45 154.83
</TABLE>
Source: Media General Financial Services, Inc.
The Compensation Committee Report and Performance Graph contained in
this Proxy Statement are not incorporated by reference into any filings by the
Company under the Securities Act of 1933 or the Securities Exchange Act of 1934
that incorporate filings or portions thereof without specific reference to the
incorporation of these captions of the Proxy Statement.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table*
The following table sets forth information in respect of the
compensation for 1998, 1997 and 1996 of the Company's Chief Executive Officer
and the other executive officers of the Company whose total salary and bonus in
1998 exceeded $100,000 (sometimes collectively referred to herein as the "Named
Executive Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
-------------
Securities
Annual Compensation Underlying All Other
------------------- Options/SARs Compensation
Year Salary ($) Bonus ($) (#) ($) (1)
---- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Edwin Jacobson 1998 175,000 0 75,000 5,000
President and 1997 139,583 0 0 1,599
Chief Executive Officer 1996 90,000 0 0 0
Leon F. Fiorentino 1998 189,892 0 0 5,000
Former Vice President- 1997 150,000 25,000 0 4,750
Finance, 1996 126,500 0 0 4,246
Secretary and Treasurer
</TABLE>
* The Named Executive Officers also provide services to CMC Heartland
Partners (the general partnership of which the Company and Heartland
Partners L.P. ("Heartland Partners") are general partners) ("CMC
Heartland"). Since 1997, CMC Heartland has paid the full compensation of
such Named Executive Officers for services rendered by such person to
the Company and CMC Heartland. CMC Heartland has been reimbursed by the
Company pursuant to a certain Facilities Agreement for the cost
allocated to the Company with respect to the services such persons have
rendered to the Company. Therefore, the table sets forth compensation
awarded to, earned by or paid to the Named Executive Officers that has
been allocated to the Company.
(1) "All Other Compensation" for 1998 consists of contributions for Mr.
Jacobson and Mr. Fiorentino made by CMC Heartland under CMC Heartland's
Group Savings Plan, a salary reduction plan qualified under Sections
401(a) and (k) of the Internal Revenue Code of 1986, as amended, to
match 1998 pre-tax elective deferrals contributions (included under
"Salary") made to such plan.
9
<PAGE>
Option/SAR Grants in 1998
The following table shows all grants of options and stock appreciation
rights to the Named Executive Officers in 1998:
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Appreciation
Individual Grants for Option/SAR Term(2)
------------------------------------------------------------- --------------------------
Number of
Securities
Underlying Percent of Total Exercise
Options/SARs Options/SARs or Base
Granted Granted to Price Expiration
Name (# of shares) (1) Employees in 1998 ($/Sh) Date 5% ($) 10% ($)
---- ----------------- ----------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Edwin Jacobson 75,000 43% 16.625 1/2/08 784,153 1,987,198
Leon F. Fiorentino 0 0% -- -- -- --
</TABLE>
(1) On January 2, 1998, the Company granted Edwin Jacobson an option to
purchase 50,000 shares of Common Stock and 25,000 stock appreciation
rights pursuant to the terms of the Company's 1997 Incentive and
Capital Accumulation Plan. All options and SARs granted by the Company
to Edwin Jacobson in 1998 became exercisable on May 30, 1998.
(2) The potential realizable value is the product of (a) the difference
between: (i) the product of the per-share market price at the time of
the grant and the sum of 1 plus the adjusted stock price appreciation
rate (i.e., the assumed rate of appreciation compounded annually over
the term of the option/SAR) and (ii) the per-share exercise price of
the option/SAR; and (b) the number of securities underlying the grant
at fiscal year-end. The dollar amounts under these columns are the
result of calculations at the 5% and 10% assumed rates of appreciation
prescribed by the Securities and Exchange Commission, and therefore are
not intended to forecast possible future appreciation, if any, of the
market price of the Company's Common Stock. The actual value that any
Named Executive Officer may realize, if any, will depend on the amount
by which the market price of the Common Stock at the time of exercise
exceeds the exercise price.
10
<PAGE>
Aggregated Option/SAR Exercises in 1998 and
Option/SAR Values at December 31, 1998
No options or stock appreciation rights were exercised by any of the
Named Executive Officers in 1998. The following table provides information
regarding the total number of securities underlying unexercised options and
stock appreciation rights as of December 31, 1998.
Number of Securities Underlying
Unexercised Options/SARs at
December 31, 1998 (#)
--------------------------------
Exercisable Unexercisable
----------- -------------
Edwin Jacobson 75,000 0
Leon F. Fiorentino 0 0
Employment Agreement
Edwin Jacobson, the Company's President and Chief Executive Officer,
provides services to the Company in such capacities pursuant to an employment
agreement, dated June 29, 1993, as amended, for a term ending on May 30, 2002.
The employment agreement provides for an annual base salary of $175,000, all or
a portion of which may be deferred at Mr. Jacobson's election. During the term
of the employment agreement, Mr. Jacobson has the right to continue his
employment with CMC Heartland and to pursue other employment and business
activities not in competition with the activities of the Company (after prior
notice of such activities has been delivered to the Chairman of the Executive
Committee of the Board of Directors of the Company), and is not obligated to
devote his full business time to the activities of the Company. Mr. Jacobson is,
however, required to devote an amount of time to the activities of the Company
determined by the Board of Directors to be required of him to accomplish the
business objectives of the Company. On June 1, 1997, the employment agreement
was amended to increase Mr. Jacobson's base salary from $90,000 to the current
$175,000 per year.
Mr. Jacobson's employment agreement provides for certain payments to
be made in the event his employment is terminated prior to the end of its term.
If Mr. Jacobson's employment is terminated by his death, the Company will pay
his designated beneficiary (or if there is none, to his estate) an amount equal
to the amount, if any, by which $150,000 exceeds the proceeds payable to his
designated beneficiary (or estate) pursuant to any life insurance policy
covering his life maintained by the Company. If Mr. Jacobson's employment is
terminated by the Company for "Cause" or by Mr. Jacobson for other than "Good
Reason", the Company will pay him his base salary through the date of
termination. If Mr. Jacobson's employment is terminated either by the Company
other than for "Cause" or other than on account of Mr. Jacobson's "permanent
disability" or by Mr. Jacobson for "Good Reason", then the Company will continue
to pay him base salary through May 30, 2002, will pay him all his other damages
that he may be entitled to receive as a result of such termination, and will
maintain until May 30, 2002, for his benefit, all employee benefit plans and
programs in which he was entitled to participate. The terms "Cause", "Good
Reason" and "permanent disability" are defined in the employment agreement.
Director Compensation
The Company's compensation program for nonemployee directors provides
that each nonemployee director receive an annual retainer of $18,000, payable in
quarterly installments, and receive $1,000 for each Board meeting physically
attended. Nonemployee directors also receive $1,000 for each committee meeting
physically attended. Employees of the Company receive no additional compensation
for serving as a director. The Company also reimburses directors for meeting
expenses.
11
<PAGE>
ADDITIONAL INFORMATION
Certain Relationships and Related Transactions
Edwin Jacobson, a director of the Company and its President and Chief
Executive Officer, also serves as the President and Chief Executive Officer of
Heartland Partners and CMC Heartland. The Company is the general partner of
Heartland Partners and the managing general partner of CMC Heartland (with
Heartland Partners being the other general partner of CMC Heartland). The
Company also owns the Class B limited partnership interest in Heartland
Partners.
The Company has a management agreement with CMC Heartland, pursuant to
which CMC Heartland is required to pay the Company an annual management fee in
the amount of $425,000. The unpaid management fee of $286,000 is included in due
from affiliate at December 31, 1998. The Company has a facilities agreement with
Heartland Partners pursuant to which Heartland Partners makes available to the
Company office space, equipment and personnel. Total expense incurred for 1998
was $323,000. As of December 31, 1998, a portion remained unpaid and is included
in payable to affiliates.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons who own more than ten percent
of Common Stock, to file forms reporting their initial beneficial ownership of
Common Stock and subsequent changes in that ownership with the Securities and
Exchange Commission and the American Stock Exchange. Officers, directors and
greater than ten-percent beneficial owners are also required to furnish the
Company with copies of all such Section 16(a) forms they file. Based solely upon
a review of the copies of the forms furnished to the Company, or written
representations from certain reporting persons that no Forms 5 were required,
the Company believes that during the 1998 fiscal year all Section 16(a) filing
requirements were complied with.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal No. 2)
Upon recommendation of the audit committee, the Board of Directors has
appointed Ernst & Young LLP as the Company's independent accountants for the
fiscal year ending December 31, 1999.
In the event stockholders do not ratify the appointment of Ernst &
Young LLP as the Company's independent accountants for the forthcoming fiscal
year, such appointment will be reconsidered by the audit committee and the Board
of Directors.
A representative of Ernst & Young LLP will be present at the Annual
Meeting of Stockholders to respond to appropriate questions and to make such
statements as he or she may desire.
The Board of Directors recommends that the stockholders vote FOR
ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants.
OTHER INFORMATION
Stockholder Proposals and Director Nominations for 2000 Annual Meeting
Any stockholder who wishes to present a proposal for action at the
next annual meeting of the Company, and who wishes to have it set forth in the
Company's proxy statement for such annual meeting and identified in the form of
proxy proposed by the Company in reliance on Rule 14a-8 under the Securities
Exchange Act of 1934, must notify the Company in such a manner that such notice
is received by the Company not later than December 31, 1999, and in such form as
is required by the rules and regulations promulgated by the Securities and
Exchange Commission.
With respect to a proposal submitted by a stockholder outside of the
process of Rule 14a-8 for which notice is not received by the Company at its
principal executive offices prior to March 15, 2000, the proxy to be solicited
on
12
<PAGE>
behalf of the Company's Board of Directors for the 2000 Annual Meeting may
confer discretionary authority to vote on any such proposal properly coming
before the 2000 Annual Meeting.
Cost of Solicitation
The Board of Directors of the Company is soliciting proxies from
stockholders for use at the Annual Meeting. The expense of this solicitation
will be borne by the Company. Officers and employees of the Company, in the
ordinary course of business and at nominal expense, may supplement this
solicitation by mail, telephone call, telegraph or letter, for which they will
be reimbursed for out-of-pocket expenses but will receive no additional
compensation. The Company has retained D.F. King, Inc. to assist in the
distribution of proxy solicitation materials and with the solicitation of
proxies, at a cost of approximately $4,000. Brokers or other persons holding
Common Stock in their names or in the names of their nominees will, upon
request, be reimbursed for their actual expenses in forwarding proxies and proxy
material to the beneficial owners of such stock.
Other Business
The Board of Directors of the Company knows of no other matters that
may be presented at the Annual Meeting of Stockholders other than as set forth
in the accompanying Notice of Annual Meeting of Stockholders. However, if any
other matters properly come before the meeting, or any adjournment or
adjournments thereof, it is intended that holders of proxies solicited hereby
will vote thereon in their discretion.
It is important that your shares be represented at the meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
By Order of the Board of Directors,
/s/ Richard P. Brandstatter
Richard P. Brandstatter
Vice President - Finance, Secretary and Treasurer
Dated: April 29, 1999
Chicago, Illinois
13
<PAGE>
HEARTLAND TECHNOLOGY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JUNE 23, 1999
The undersigned hereby appoints EDWIN JACOBSON, RICHARD P. BRANDSTATTER
and LAWRENCE S. ADELSON, and each or any of them, as proxies, with full power of
substitution to vote all shares of Common Stock of HEARTLAND TECHNOLOGY, INC.
represented by this proxy which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on June 23, 1999, and at any
adjournments thereof, with all powers the undersigned would possess if
personally present at such meeting, on the following matters:
PLEASE DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
HEARTLAND TECHNOLOGY, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board recommends a vote FOR Proposals 1 and 2. Withhold
1. Election of Directors - For Authority
Nominees: Edwin Jacobson
John R. Torell III
2. Ratification of selection of Ernst & Young, LLP For Against Abstain
as the Company's independent auditors.
3. In their sole discretion on any other matters coming before the meeting or
any adjournment or adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, the proxy will be voted
FOR the nominees listed in Proposal 1, FOR proposal 2, and in the sole
discretion of the proxies upon such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Dated:______________, 1999
Signature(s)_______________________________
IMPORTANT: Please date and sign exactly as
your name appears hereon. When signing as
executor, administrator, trustee, agent,
attorney, guardian, or corporate officer,
please set forth your full title. Joint
owners should each sign.
