- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------
TRIMAS CORPORATION
(Exact name of Subject Company)
TRIMAS CORPORATION
(Name of Person Filing Statement)
-----------------------
Common Stock, $.01 Par Value
(Title of Class of Securities)
-----------------------
896215100
(CUSIP Number of Class of Securities)
-----------------------
Brian P. Campbell
President
TriMas Corporation
315 East Eisenhower Parkway
Ann Arbor, Michigan 48108
(313) 747-7025
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
-----------------------
With copy to:
Jerome M. Schwartz, Esq.
Dickinson, Wright, Moon, Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
(313) 223-3628
- --------------------------------------------------------------------------------
<PAGE>
Item 1. Security and Subject Company
The name of the subject company is TriMas Corporation, a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 315 East Eisenhower Parkway, Ann Arbor, Michigan 48108. The
title of the class of equity securities to which this statement relates is the
common stock, par value $0.01 per share, of the Company (the "Common Stock").
Item 2. Tender Offer of the Bidder
This statement relates to the tender offer by MascoTech Acquisition, Inc.,
a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of MascoTech,
Inc., a Delaware corporation ("Parent"), disclosed in a Tender Offer Statement
on Schedule 14D-1 (the "Schedule 14D-1"), dated December 17, 1997, to purchase
any and all issued and outstanding shares (the "Shares") of common stock of the
Company at $34.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 17,
1997, of Purchaser (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer"). All cross-references
herein, except as otherwise noted, are to the Offer to Purchase. Capitalized
terms used and not otherwise defined herein have the meanings set forth in the
Offer to Purchase. Copies of the Offer to Purchase and the Letter of Transmittal
are filed as Exhibits (a)(1) and (a)(2) to this Schedule 14D-9, respectively,
and are incorporated herein by reference. The address of the principal executive
offices of Purchaser and Parent is 21001 Van Born Road, Taylor, Michigan 48180.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger, dated as of December 10, 1997, as amended by Amendment No. 1 dated as of
December 15, 1997, among Purchaser, Parent and the Company (as so amended, the
"Merger Agreement"). A copy of the Merger Agreement is filed as Exhibit (c)(1)
to this Schedule 14D-9 and is incorporated herein by reference. Among other
things, the Merger Agreement provides that as promptly as practicable following
the purchase of Shares pursuant to the Offer and the satisfaction (or waiver, to
the extent permissible under the Merger Agreement) of the other conditions set
forth in the Merger Agreement, in accordance with the Delaware General
Corporation Law, Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation. At the
effective time of the Merger (the "Effective Time"), subject to the terms and
conditions of the Merger Agreement, each Share outstanding immediately prior to
the Effective Time (other than Shares held in the treasury of the Company,
Shares owned by Parent or its subsidiaries or Shares as to which appraisal
rights have been exercised) shall be converted into the right to receive the per
Share price paid in the Offer in cash, without interest (the "Merger
Consideration").
Concurrently with the filing of this Schedule 14D-9, Purchaser, Parent and
the Company are jointly filing with the Securities and Exchange Commission a
Transaction Statement on Schedule 13E-3, dated December 17, 1997.
Item 3. Identity and Background
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above. All information contained in this
Schedule 14D-9 or incorporated herein by reference concerning Purchaser, Parent
or their respective officers, directors, representatives or affiliates, or
actions or events with respect to any of them, was provided by Purchaser or
Parent, respectively, and the Company takes no responsibility for such
information.
(b) The information contained under the captions "Introduction", "Special
Factors--Background of the Offer", "Special Factors--Purpose and Structure of
the Offer and the Merger; Reasons of Parent for the Offer and the Merger",
"Special Factors--The Merger Agreement", "Special Factors--Interest of Certain
Persons in the Offer and the Merger", "The Tender Offer--Certain Information
Concerning the Company", "The Tender Offer--Certain Information Concerning
Parent and Purchaser", and "The Tender Offer--Certain Information Concerning
Masco Corporation" of the Offer to Purchase is incorporated herein by reference.
Reference also is made to the information contained under the captions
"Compensation Committee Report on Executive Compensation" and "Compensation
of Executive Officers" at pages 4 through 8 of the Company's proxy
2
<PAGE>
statement relating to the annual meeting of the Company's stockholders held on
May 14, 1997, a copy of which pages is included as Exhibit (c)(6) to this
Schedule 14D-9 and incorporated herein by reference.
Item 4. The Solicitation or Recommendation
(a) - (b) On December 10, 1997, the Board of Directors of the Company,
based upon, among other things, the unanimous recommendation of the Special
Committee of the Board of Directors, unanimously (i) determined that the terms
of the Offer and the Merger are fair to and in the best interests of the
Company's stockholders (other than Parent, its Chief Executive Officer and Masco
Corporation), (ii) approved the Merger Agreement and authorized the execution
and delivery thereof, and (iii) recommended that the stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer. The information
contained under the captions "Introduction", "Special Factors--Background of the
Offer", "Special Factors--Recommendations of the Special Committee and the
Company Board; Fairness of the Offer and the Merger" and "Special
Factors--Opinion of Financial Advisor to the Special Committee" of the Offer to
Purchase, describing the nature and the reasons for the recommendation of the
Special Committee and the Board with respect to the Offer, is incorporated
herein by reference.
Item 5. Persons Retained, Employed or to be Compensated
The information contained under the captions "Special Factors--Background
of the Offer" and "Special Factors--Opinion of Financial Advisor to the Special
Committee" of the Offer to Purchase, to the extent describing the retention of
BT Wolfensohn as financial advisor to the Special Committee and the compensation
to be paid to BT Wolfensohn in such capacity, is incorporated herein by
reference.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any person to make solicitations or recommendations to
stockholders with respect to the Offer or the Merger.
Item 6. Recent Transactions and Intent with Respect to Securities
(a) Except as set forth under the captions "Special Factors--Interests of
Certain Persons in the Offer and the Merger", "The Tender Offer--Certain
Information Concerning the Company", "The Tender Offer--Certain Information
Concerning the Parent and Purchaser", and "The Tender Offer--Certain Information
Concerning Masco Corporation" of the Offer to Purchase, which is incorporated
herein by reference, no transactions in Shares have been effected during the
past 60 days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b) The information set forth under the captions "Introduction" and
"Special Factors--Interests of Certain Persons in the Offer and the Merger" of
the Offer to Purchase describing the present intent, to the extent known by the
Company, of the executive officers, directors, affiliates or subsidiaries of the
Company to tender pursuant to the Offer any Shares which are held of record or
beneficially owned by such persons, is incorporated herein by reference.
Item 7. Certain Negotiations and Transactions by the Subject Company
(a) - (b) Except as set forth under the captions "Special
Factors--Background of the Offer", "Special Factors--The Merger Agreement",
"Special Factors--Interests of Certain Persons in the Offer and the Merger" and
"The Tender Offer--Financing of the Offer and Merger" of the Offer to Purchase,
which are incorporated herein by reference, to the best of the Company's
knowledge, no negotiation is being undertaken or is underway by the Company in
response to the Offer which relates to or would result in: (i) an extraordinary
transaction such as a merger or reorganization, involving the Company or any
subsidiary of the Company, (ii) a purchase, sale or transfer of a material
amount of assets by the Company or any subsidiary of the Company, (iii) a tender
offer or other acquisition of securities by or of the Company, or (iv) any
material change in the present capitalization or dividend policy of the Company.
3
<PAGE>
Item 8. Additional Information to Be Furnished
The information contained under the caption "The Tender Offer--Certain
Litigation" of the Offer to Purchase is incorporated herein by reference.
Item 9. Material to Be Filed as Exhibits
The following exhibits are filed herewith:
(a)(1) Offer to Purchase, dated December 17, 1997 (incorporated by reference
to Exhibit (a)(1) to Purchaser's Tender Offer Statement on Schedule
14D-1, dated December 17, 1997).*
(a)(2) Letter of Transmittal, dated December 17, 1997 (incorporated by
reference to Exhibit (a)(2) to Purchaser's Tender Offer Statement on
Schedule 14D-1, dated December 17, 1997).*
(a)(3) Letter to Company stockholders, dated December 17, 1997.*+
(a)(4) Opinion of BT Wolfensohn, dated December 10, 1997 (incorporated by
reference to Annex B to the Offer to Purchase, dated December 17,
1997).*
(a)(5) Summary Advertisement as published in The Wall Street Journal on
December 17, 1997 (incorporated by reference to Exhibit (a)(7) to
Purchaser's Tender Offer Statement on Schedule 14D-1, dated December
17, 1997).
(a)(6) Text of Press Release issued by Parent and the Company on December 11,
1997 (incorporated by reference to Exhibit (a)(8) to Purchaser's Tender
Offer Statement on Schedule 14D-1, dated December 17, 1997).
(a)(7) Text of Press Release issued by Parent on December 17,
1997 (incorporated by reference to Exhibit (a)(9) to
Purchaser's Tender Offer Statement on Schedule 14D-1, dated
December 17, 1997).
(c)(1) Agreement and Plan of Merger dated as of December 10, 1997, as amended
by Amendment No. 1 dated as of December 15, 1997, among the Company,
Parent and Purchaser (incorporated by reference to Annex A to the Offer
to Purchase, dated December 17, 1997).*
(c)(2) Confidentiality Agreement, dated December 2, 1997, between the Company
and Parent (incorporated by reference to Exhibit (c)(10) to Purchaser's
Tender Offer Statement on Schedule 14D-1, dated December 17, 1997).
(c)(3) Form of President's Agreement (incorporated by reference to Exhibit
(c)(4) to Purchaser's Tender Offer Statement on Schedule 14D-1, dated
December 17, 1997).
(c)(4) Form of Executive Agreement (incorporated by reference to Exhibit (c)(5)
to Purchaser's Tender Offer Statement on Schedule 14D-1, dated December
17, 1997).
(c)(5) Form of Management Agreement (incorporated by reference to Exhibit
(c)(6) to Purchaser's Tender Offer Statement on Schedule 14D-1, dated
December 17, 1997).
(c)(6) Pages 4-8 of the Company's Proxy Statement dated April 15, 1997,
relating to the Company's 1997 Annual Meeting of Shareholders.+
4
<PAGE>
(c)(7) Corporate Services Agreement, dated as of December 27, 1988, between
Masco Corporation and the Company (incorporated by reference to Exhibit
10(b) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992).
(c)(8) Corporate Opportunities Agreement, dated as of December 27, 1988, among
Masco Corporation, Parent and the Company (incorporated by reference to
Exhibit 10(c) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992).
(c)(9) Stock Repurchase Agreement, dated as of December 27, 1988, among Masco
Corporation, Parent and the Company (incorporated by reference to
Exhibit 10(d) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992).
(c)(10) Assumption and Indemnification Agreement, dated as of December 27, 1988,
between Parent and the Company (incorporated by reference to Exhibit
10(a) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992).
(c)(11) Registration Agreement, dated as of December 27, 1988, among the
Company, Masco Corporation and Parent (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31,
1992). Amendment dated as of April 21, 1992 (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended December
31, 1996). Amendment dated as of January 5, 1993 (incorporated by
reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992). Amendment dated as of May 26, 1994
(incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994). Amendment dated as of May 15,
1996 (incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996).
- -------------------
* Included in documents mailed to stockholders.
+ Filed herewith.
5
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TRIMAS CORPORATION
Dated: December 17, 1997
By: /s/ Brian P. Campbell
---------------------------------------
Name: Brian P. Campbell
Title: President
6
<PAGE>
Exhibit Index
Exhibit No.
- ------------
(a)(3) Letter to Company stockholders, dated December 17, 1997.
(c)(6) Pages 4-8 of the Company's Proxy Statement dated April 15, 1997,
relating to the Company's 1997 Annual Meeting of Shareholders.
EXHIBIT (a)(3)
[TriMas Corporation Letterhead]
December 17, 1997
Dear Stockholder:
On December 10, 1997, TriMas Corporation entered into a merger agreement
with its largest stockholder, MascoTech, Inc., and with MascoTech's wholly-owned
subsidiary MascoTech Acquisition, Inc.
Under the merger agreement, MascoTech Acquisition has commenced a tender
offer to purchase all outstanding shares of TriMas's common stock for $34.50 per
share in cash. After completion of the tender offer, subject to the terms and
conditions of the merger agreement, MascoTech Acquisition will merge into
TriMas, and any TriMas shares not then owned by MascoTech (other than Shares
held in TriMas's treasury or Shares as to which appraisal rights have been
exercised) will be converted into the right to receive $34.50 per share in cash,
without interest.
One condition to the tender offer is the tender of a majority of the TriMas
shares that could be tendered, other than shares owned by MascoTech, its
subsidiaries, Masco Corporation, or Richard A. Manoogian (the Chairman of Masco
Corporation, MascoTech and TriMas).
Your Board of Directors, based on the unanimous recommendation of a Special
Committee of independent directors, has unanimously determined that the terms of
the merger agreement and the transactions contemplated thereby (including the
offer and the merger) are fair to and in the best interests of TriMas's
stockholders (other than MascoTech, Masco Corporation and Mr. Manoogian), and
unanimously recommends that stockholders accept the offer and tender their
shares pursuant to the offer.
Attached is a Schedule 14D-9 filed with the Securities and Exchange
Commission relating to TriMas's recommendation as to the tender offer. Also
enclosed are the offer and related materials to be used for tendering shares.
These documents contain the terms and conditions of the offer and the merger, as
well as instructions on how to tender shares. The offer also summarizes the
reasons for the Special Committee's recommendation and includes the opinion of
BT Wolfensohn, the Special Committee's financial adviser, that the consideration
being offered in the tender offer and the merger is fair from a financial point
of view to TriMas stockholders other than MascoTech, Masco Corporation and Mr.
Manoogian.
We encourage you to read these materials carefully.
Sincerely,
/s/ Brian P. Campbell
---------------------------------------
Brian P. Campbell
President
EXHIBIT (c)(6)
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy. The overall focus of TriMas Corporation's
compensation program is to enhance shareholder value through attainment of the
Company's strategic goals. The executive compensation program is intended to
motivate executives by rewarding them for achieving results and, therefore, a
significant portion of the total compensation to Company executives is "at
risk."
The Compensation Committee of the Board of Directors is composed entirely
of outside directors and is responsible for establishing and monitoring
executive compensation. The Committee has a subjective approach to compensation
and consequently uses its discretion to set executive compensation at levels
warranted in its judgment by both external and internal circumstances.
Although the Committee considers a variety of factors when it establishes
compensation, it does not weigh them or utilize them in formulas. In general,
the relevant factors considered by the Committee are the Company's operating and
financial performance (both relative to internal criteria and to the performance
of comparable companies); the performance, responsibilities and tenure of
individual executives; the competitive environment for skilled executive talent;
and general economic conditions and outlook.
The objectives of the Company's executive compensation program are to:
o Support the achievement of desired Company performance by ensuring
that an appropriate relationship exists between executive
compensation and the creation of long-term shareholder value.
o Provide compensation that will motivate, attract and retain superior
management talent and reward performance.
o Align the executive officers' interests with the success of the
Company by placing a significant portion of their compensation "at
risk."
Executive Officer Compensation Program. The Company's executive officer
compensation program is comprised of base salary, annual cash incentive
compensation, and long-term incentive compensation in the form of stock options
and restricted stock awards. The Compensation Committee reviews the Company's
annual and long-term goals when considering compensation of executive officers,
but compensation decisions are a function of the Compensation Committee's
discretionary judgment rather than the application of plan formulas.
The Committee is familiar with Internal Revenue Code Section 162(m), which
limits the deductibility of annual executive compensation in excess of
$1,000,000 for the highest paid executives. The Committee does not anticipate
that compensation will exceed such amount for the foreseeable future and
therefore has not taken specific action with respect to this issue. The
Committee will continue to review the compensation of the Company's executives
and to evaluate the impact of Section 162(m) and regulations issued thereunder.
Base Salary. In determining base salaries, the Committee takes into account
individual experience and contributions to the Company's performance, as well as
specific issues particular to the Company.
Annual Incentive Compensation. The purpose of the Company's annual
incentive compensation program is to provide a direct financial incentive in the
form of an annual cash bonus to executive officers to achieve the Company's
annual goals and long-term growth and performance.
Long-Term Stock Incentive Program. The Company's 1995 Long Term Stock
Incentive Plan provides for the grant of stock options, restricted stock awards
and other types of awards in connection with the Company's long-term incentive
program for executive officers and key managers. The objectives of the program
are to align executive and shareholder long-term interests by creating a strong
and direct relationship between executive compensation and shareholder
<PAGE>
returns. The Committee strongly believes that by providing those individuals who
have substantial responsibility for the management and growth of the Company,
and the maximizing of shareholder returns, with an opportunity to increase their
ownership of Company Common Stock, the best interests of shareholders and
executives will be more closely aligned. The Company's stock options and
restricted stock awards generally vest over periods of eight and ten years which
increases the long-term aspect of these awards. The Committee considers the
history of awards previously granted in determining new grants. As a result of
the Company's extended vesting schedule, the dollar value of these stock-based
incentives can appreciate to substantial amounts since there is a longer time
period for the Company stock price to appreciate. Many other companies have a
shorter vesting schedule which enables individuals to receive their incentives
in a shorter time period.
Discussion of 1996 Executive Officer Compensation. In considering changes
in compensation of executive officers for 1996, the Committee has reviewed
compensation levels and both Company and individual performance within the
framework of the Company's compensation philosophy, as well as the Company's
financial performance during the year, as described above.
At Mr. Campbell's request, his base salary has not been adjusted since
mid-year 1995 and his annual cash incentive compensation has not been adjusted
since 1994.
Mr. Manoogian, who serves as the Chairman of the Board and is active in
Company affairs, is not a full-time employee of the Company. This is reflected
in the level of Mr. Manoogian's cash compensation, as well as in the
responsibilities and compensation of Mr. Campbell. Mr. Manoogian has not
participated in the stock option and restricted stock award program or the
Company's retirement or other benefit programs.
Eugene A. Gargaro, Jr., Chairman
John A. Morgan
Helmut F. Stern
2
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes the annual and long-term compensation of the
Company's executive officers for 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Awards
----------------------
All Other
Annual Compensation Restricted Securities Compensa-
Name and Principal ----------------------- Stock Underlying tion
Position Year Salary Bonus Awards(1) Options (2)
- -------------------- ---- ------ ------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian
Chairman of the
Board ................1996 $100,000 0 0 0 0
1995 100,000 0 0 0 0
1994 100,000 0 0 0 0
Brian P. Campbell
President ............1996 502,000 $265,000 $152,000 0 $ 35,000
1995 488,000 265,000 466,000 0 34,000
1994 460,000 265,000 260,000 0 32,000
William E. Meyers
Vice President,
Controller ...........1996 182,000 83,000 55,000 7,189(3) 12,000
1995 174,000 83,000 188,000 0 12,000
1994 162,000 80,000 92,000 0 11,000
Peter C. DeChants
Vice President,
Treasurer ............1996 174,000 65,000 53,000 0 12,000
1995 168,000 65,000 171,000 0 11,000
1994 157,000 63,000 81,000 0 10,000
Douglas P. Roosa
Vice President,
Administration(4)..1996 113,000 25,000 124,000 0 0
</TABLE>
- -------------------
(1) This column sets forth the dollar value, as of the date of grant, of
awards of restricted stock made in 1996, 1995 and 1994 under the Company's
1995 Long Term Stock Incentive Plan and the Company's 1988 Restricted
Stock Incentive Plan. Restricted stock awards granted to executive
officers to date vest over a period of ten years from the date of grant
with ten percent of each award vesting annually. In general, vesting is
contingent on a continuing employment or consulting relationship with the
Company. The plans provide that all shares vest immediately upon death or
permanent and total disability of a participant or the occurrence of
certain events constituting a change in control of the Company. Mr.
Manoogian has not participated in either of these plans. The following
number of shares were awarded to the participating executive officers in
1996: Mr. Campbell-- 8,260 shares; Mr. Meyers -- 2,990 shares; Mr.
DeChants-- 2,860 shares; and Mr. Roosa-- 5,000 shares. As of December 31,
1996, the aggregate number and market value of restricted shares of
Company Common Stock held by the participating executive officers were:
Mr. Campbell-- 105,934 shares valued at $2,529,000; Mr. Meyers-- 27,536
shares valued at $657,000; Mr. DeChants 23,575 shares valued at $563,000;
and Mr. Roosa-- 5,000 shares valued at $119,000. Recipients of restricted
stock awards receive dividends on unvested shares.
(2) This column includes Company contributions and allocations under the
Company's defined contribution retirement plans for each year for the
accounts of each of the executive officers other than Mr. Manoogian, who
does not participate in these plans.
(3) No original option grants were made in 1996, 1995 or 1994. The sole option
granted in those years is a restoration option granted on account of the
surrender of previously owned shares as payment upon the exercise of a
previously held stock option. The restoration option does not increase the
number of shares covered by the original option or extend the term of the
original option.
(4) Mr. Roosa became an employee in March 1996. Consequently, the table does
not set forth information for prior years, but information for 1996
includes all compensation paid to him since he joined the Company.
3
<PAGE>
OPTION GRANT TABLE
No original options were granted in 1996. A restoration option was granted
to Mr. Meyers as a result of the exercise in 1996 of an option granted in a
prior year. A restoration option is a feature associated with a previously
granted option but does not constitute an increase in the aggregate number of
shares covered by the original option, extend the term of the original option or
increase the potential realizable value of the original option. An option holder
may exercise an original option by delivering previously owned shares instead of
cash. The option holder then receives a restoration option that gives the right
to purchase shares equal in number to the shares delivered with an exercise
price equal to the price of the shares at the time delivered, in order to
continue the long-term incentive effect of the original option. Restoration
options cannot be exercised until six months after their grant date. The
following table sets forth information concerning the restoration option granted
to Mr. Meyers during 1996.
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual
Rates of Stock
Price Appreciation
for Option
Individual Grants Term(1)
-------------------------------------------- --------------
Number of % of Total Exercise
Securities Options Granted Price
Underlying to Employees Per Expiration
Name Options Granted in 1996 Share Date 5% 10%
- ----- --------------- ------------ ------ -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
William E. Meyers.....7,189 45% $19.75 4/3/01 $39,000 $87,000
</TABLE>
- -------------------
(1) These amounts are based on assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Company Common Stock holdings
will depend on overall market conditions and the future performance of the
Company and its Common Stock. There can be no assurance that the amounts
reflected in this table will be realized.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning each exercise of
stock options during 1996 by each of the executive officers and the value at
December 31, 1996, of unexercised options held by such individuals. Options vest
over a period of eight years from the date of grant and expire ten years from
the date of grant. In general, vesting is contingent on a continuing employment
or consulting relationship with the Company. Upon the occurrence of certain
events constituting a change in control of the Company, all options previously
granted immediately become fully exercisable. If a participant incurs an excise
tax under Section 4999 of the Internal Revenue Code in connection with such
vesting, the participant will receive an additional payment as reimbursement for
such excise tax. The value of unexercised options reflects the increase in
market value of Company Common Stock from the date of grant through December 31,
1996 (the closing price of Company Common Stock on December 31, 1996, was $23
7/8 per share). Value actually realized upon exercise by the executive officers
will depend on the value of Company Common Stock at the time of exercise.
<TABLE>
<CAPTION>
Aggregate Option Exercises in 1996 and December 31, 1996 Option Value
-----------------------------------------------------------------------------------------
Value of Unexercised
Number of Unexercised Options In-the-Money Options at
at December 31, 1996 December 31, 1996
Shares ----------------------------- --------------------------
Acquired on
Name Exercise Value Realized Unexercisable Exercisable Unexercisable Exercisable
- ---- ----------- -------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian............. 0 0 0 0 0 0
Brian P. Campbell................ 0 0 50,000 210,000 $750,000 $3,370,000
William E. Meyers................ 16,000 $174,000 20,000 11,189 300,000 90,000
Peter C. DeChants................ 0 0 20,000 20,000 300,000 300,000
Douglas P. Roosa................. 0 0 0 0 0 0
</TABLE>
4
<PAGE>
PENSION PLANS
The executive officers other than Mr. Manoogian participate in pension
plans maintained by the Company for certain of its salaried employees. The
following table shows estimated annual retirement benefits payable for life at
age 65 for various levels of compensation and service under these plans.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service(1)
---------------------------------------------------------------
Remuneration 5 10 15 20 21 22
- ------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 5,645 $ 11,290 $ 16,935 $ 22,580 $ 28,225 $ 33,870
200,000 11,290 22,580 33,870 45,161 56,451 67,741
300,000 16,935 33,870 50,806 67,741 84,676 101,611
400,000 22,580 45,161 67,741 90,321 112,902 135,482
500,000 28,225 56,451 84,676 112,902 141,127 169,352
600,000 33,870 67,741 101,611 135,482 169,352 203,223
</TABLE>
- -------------------
.(1) The plans provide for service credit for employment with any of the
Company, Masco Corporation, MascoTech, Inc. and their subsidiaries.
Vesting occurs after five full years of employment. The benefit amounts
set forth in the table above have been converted from the plans'
calculated five-year certain and life benefit and are not subject to
reduction for social security benefits or for other offsets, except to the
extent that pension or equivalent benefits are payable under a Masco
Corporation or MascoTech, Inc. plan. The table does not depict Internal
Revenue Code ("Code") limitations on tax qualified plans because one of
the plans is a non-qualified plan established by the Company to restore
for certain salaried employees (including the participating executive
officers) benefits that are otherwise limited by the Code. Approximate
years of credited service for each of the executive officers participating
in the plans are: Mr. Campbell -- 23; Mr. Meyers -- 9; Mr. DeChants -- 7;
and Mr. Roosa -- 1.
(2) For purposes of determining benefits payable, remuneration is equal to the
average of the highest five consecutive January 1 annual base salary rates
paid by the Company prior to retirement.
Under the Company's Supplemental Executive Retirement and Disability Plan,
certain executive officers and other key executives of the Company, or any
company in which the Company or a subsidiary owns at least 20 percent of the
voting stock, may receive retirement benefits in addition to those provided
under the Company's other retirement plans and supplemental disability benefits.
Each participant is designated by the Compensation Committee or the Chairman of
the Board (and approved by the Compensation Committee in the case of the
executive officers) to receive annually upon retirement on or after the age of
65, an amount which, when combined with benefits from the Company's other
retirement plans and for most participants any retirement benefits payable by
reason of employment by prior employers, equals 60 percent of the average of the
participant's highest three years' cash compensation (limited to base salary and
regular year end cash bonus) up to an annual payment which when combined with
benefits under the Company's non-qualified plan may not exceed a maximum,
currently $386,890. A participant may also receive supplemental medical
benefits. A participant who has been employed at least two years and becomes
disabled prior to retirement will receive annually 60 percent of the
participant's total annualized cash compensation in the year in which the
participant becomes disabled, subject to certain limitations on the maximum
payment and reduced by benefits payable pursuant to the Company's long-term
disability insurance and similar plans. Upon a disabled participant's reaching
age 65, such participant receives the annual cash benefits payable upon
retirement, as determined above. A surviving spouse will receive reduced
benefits upon the participant's death. Participants are required to agree that
they will not engage in competitive activities for at least two years after
termination of employment, and if employment terminates by reason of retirement
or disability, during such longer period as benefits are received under this
Plan. Messrs. Campbell, Meyers and DeChants participate in this Plan.
