<PAGE>
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 Part other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ELJER INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
ELJER INDUSTRIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each part 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:
(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:/1/
(4) Proposed maximum aggregate value of transaction:
- ----------
/1/Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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 No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
17120 Dallas Parkway
Dallas, Texas 75248
Tel: (214) 407-2600
[COMPANY LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 20, 1995
Dallas, Texas
May 5, 1995
To the Shareholders of ELJER INDUSTRIES, INC.:
Notice is hereby given that the annual meeting of shareholders of Eljer
Industries, Inc., a Delaware corporation (the "Company"), will be held at The
Addison Conference & Theatre Centre at 15650 Addison Road, Addison, Texas, on
Tuesday, June 20, 1995, at 8:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for a term of three years;
2. To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company;
and
3. To transact any other business which may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 28, 1995 are
entitled to notice of and to vote at the annual meeting or any adjournment
thereof. A complete list of such shareholders will be available for examination
at the offices of the Company in Dallas, Texas, during normal business hours for
a period of 10 days prior to the meeting.
A record of the Company's activities during 1994 and financial statements
for the fiscal year ended January 1, 1995 are contained in the Company's 1994
Annual Report. The Annual Report, which has previously been delivered to
shareholders, does not form any part of the material for solicitation of
proxies.
By Order of the Board of Directors
George W. Hanthorn
Vice President - General Counsel
and Secretary
<PAGE>
[MAP OF MEETING LOCATION]
o Place of Annual Meeting
The Addison Conference & Theatre Centre is located at 15650 Addison
Road, Addison, Texas, approximately 18 miles northeast of Dallas/Ft. Worth
International Airport.
Shareholders attending the meeting who will be using LBJ Freeway
(I-635) should exit north onto the Dallas North Tollway, travel north to the
Beltline Road exit. Turn west (left) on Beltline to Addison Road, turn north
(right) on Addison Road. The Addison Conference & Theatre Centre is located on
the right.
<PAGE>
17120 Dallas Parkway
Dallas, Texas 75248
Tel: (214) 407-2600
[COMPANY LOGO]
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 20, 1995
This proxy statement is furnished to shareholders of Eljer Industries,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors of the Company of proxies for use at the annual meeting of
shareholders to be held at the time and place and for the purposes set forth in
the accompanying notice. The approximate date of mailing of this proxy statement
and the accompanying proxy is May 5, 1995.
The Company will bear the cost of soliciting proxies. In addition to
solicitations by mail, certain officers, directors or employees of the Company
or its subsidiaries may solicit proxies in person or by mail, telephone,
facsimile telecommunication or telegraph without special compensation for their
services. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the Company's common stock, par value $1.00 per share
("Common Stock") held of record by such brokerage firms and other custodians,
nominees and fiduciaries and the Company will reimburse such firms and persons
for reasonable out-of-pocket expenses incurred by them in connection therewith.
The Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies at a fee of $3,500 plus certain expenses.
Proxy Cards. The enclosed proxy card serves to appoint proxies for record
holders of Common Stock of the Company. Shares represented by a proxy in such
form, duly executed and returned to the Company and not revoked, will be voted
at the meeting in accordance with the directions given. IF NO INSTRUCTIONS ARE
INDICATED, THE PROXY WILL BE VOTED FOR ELECTION OF THE DIRECTORS NAMED IN THE
PROXY AND FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS. Any shareholder giving a proxy may revoke it at any time
before it is exercised by giving written or oral notice of such revocation to
the Secretary of the Company.
Voting Procedures and Tabulation. The Company will appoint two inspectors
of election to act at the meeting and to make a written report thereof. Prior to
the meeting, the inspectors will sign an oath to perform their duties in an
impartial manner and according to the best of their ability. The inspectors will
ascertain the number of shares outstanding and the voting power of each,
determine the shares represented at the meeting and the validity of proxies and
ballots, count all votes and ballots and perform certain other duties as
required by law.
The inspectors will tabulate (i) the number of votes cast for or withheld
as to the vote on each nominee for director and (ii) the number of votes cast
for, against or abstaining, as well as the number of broker abstentions and
non-votes, as to the ratification of the appointment of independent auditors.
The treatment and effect of abstentions and broker non-votes under Delaware law
and the Company's Certificate of Incorporation and By-laws are described below.
An abstention or broker non-vote with respect to the election of directors will
have no effect on the outcome of the voting on such matter, provided a quorum is
present, because directors are elected by a plurality of the shares of Common
Stock present in person or by proxy at the meeting and entitled to vote. An
abstention with respect to the proposal on ratification of the appointment of
auditors will effectively count as a vote against the proposal. The shares
represented by a broker non-vote (or other limited proxy) as to such proposal
will be counted toward the meeting quorum but will not be entitled to be voted
on the proposal at the meeting and therefore will not be considered a part of
the voting power present with respect thereto. This will have the effect of
reducing the number of shares required to be voted in favor of the proposal in
order to approve it.
<PAGE>
YOUR VOTE IS IMPORTANT TO THE COMPANY. EVEN IF YOU EXPECT TO ATTEND THE
1995 ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. COMPLETING THE ENCLOSED PROXY
WILL NOT PREVENT YOU FROM VOTING YOUR SHARES IN PERSON IF YOU DO ATTEND THE
MEETING.
VOTING SECURITIES
The only voting security of the Company outstanding is its Common Stock.
Only holders of record of Common Stock at the close of business on April 28,
1995, the record date for the meeting, are entitled to notice of and to vote at
the meeting. On the record date for the meeting, there were 7,129,626 shares of
Common Stock outstanding and entitled to be voted at the meeting. A majority of
such shares, present in person or represented by proxy, is necessary to
constitute a quorum. Each share of Common Stock is entitled to one vote.
ELECTION OF DIRECTORS
The Company's by-laws provide that the directors are to be divided into
three classes with respect to the time for which they hold office. At each
annual meeting of shareholders of the Company, successors of the class whose
term of office expires in that year are to be elected for a three-year term or
until their successors have been duly elected and qualified. The terms of three
directors, Scott G. Arbuckle, Walter C. Minnick and Paul E. Price, will expire
at the 1995 Annual Meeting. Messrs. Arbuckle, Minnick and Price have each been
nominated for re-election. If re-elected, Messrs. Arbuckle, Minnick and Price
will each serve until the 1998 annual meeting of shareholders of the Company or
until his successor has been duly elected and qualified.
The Company's by-laws establish certain procedures for shareholder
nominations of candidates for directors. Those procedures are set forth below in
the section entitled "Notice Provisions for Shareholder Proposals and
Shareholder Nominations of Directors."
The parties named in the enclosed proxy intend to vote the shares
represented thereby FOR the election of Messrs. Arbuckle, Minnick and Price
unless the proxy is marked otherwise. Messrs. Arbuckle, Minnick and Price have
each agreed to serve as a director if elected and the Company has no reason to
believe that a nominee will be unable to serve. In the event a nominee becomes
unwilling or unable to serve, however, the persons named in the enclosed proxy
will vote such proxy for such other person as the Board of Directors may
nominate for director.
Set forth below is information regarding each of the directors and the
nominees for director of the Company. Directors in each class are elected at the
annual meeting of shareholders held in the year in which the term for such class
expires and will serve thereafter for three years.
-2-
<PAGE>
Class Whose Term Expires In 1995
<TABLE>
<S> <C>
Scott G. Arbuckle,
age 63, director since February 1990 ......... Mr. Arbuckle has served as President and Chief Executive
Officer of the Company since February 1990. Mr. Arbuckle
previously served as Executive Vice President of the
Company and President of the HVAC Group from April 1989
to February 1990. From 1982 to 1989, Mr. Arbuckle served
as an Executive Vice President of Household Manufacturing,
Inc., a wholly-owned subsidiary of Household International,
Inc.
Walter C. Minnick,
age 52, director since April 1993 ............ Mr. Minnick served until February 1995 as President and
Chief Operating Officer, Chief Executive Officer and a director
of TJ International Inc., a manufacturer and distributor of
specialty building products. From 1974 to 1979, Mr. Minnick
was employed by TJ International in various other capacities,
including Corporate Secretary, National Manufacturing
Manager and Vice President, Division Operations. He is also
a director of MacMillan Bloedel, Ltd.
Paul E. Price,
age 60, director since February 1993 ............Mr. Price served in various capacities with The Quaker Oats
Company from 1972 until his retirement in June 1991 and
most recently, served as its Senior Vice-President, Finance
and Chief Financial Officer from 1988 until his retirement. He
also served as President of the Fisher Price Toys division
during 1990 and in 1987 and 1988 as Executive Vice-
President of the International Grocery Products division of
Quaker Oats. Mr. Price is also a director of DeSoto, Inc. and
Xytronyx, Inc.
Class Whose Term Expires In 1996
Frank J. Morgan,
age 69, director since April 1989 ...............Mr. Morgan has served as Chairman of the Board of the
Company since December 1990. Mr. Morgan served as
President and Chief Operating Officer of The Quaker Oats
Company, an international marketer of foods, pet foods and
toys, from 1983 to 1990. Prior thereto, he held various
positions with Quaker Oats since 1964. He is also a director
of The Molson Companies Limited.
-3-
<PAGE>
John H. Deininger,
age 63, director since April 1989................Mr. Deininger is currently involved as a consultant and
investor. He served as President, Chief Executive Officer and
a director of Union City Body Co., L.P., a manufacturer of
custom delivery van bodies from October 1993 to October
1994. He has also served as Senior Advisor for Mancuso &
Co., an investment banking firm, from 1990 to present. He
served as Executive Vice President of Illinois Tool Works,
Inc., a manufacturer of industrial products and components
from 1986 through 1990. Mr. Deininger is also a director of
Joslyn Corp.
Class Whose Term Expires In 1997
C. A. Rundell, Jr.,
age 63, director since October 1992..............Mr. Rundell serves as a consultant to and/or as a member of
the boards of directors of a number of companies. His
business is conducted under the name Rundell Enterprises,
a sole proprietorship. Mr. Rundell is also a director of
Bollinger Industries, Inc., Inter-Regional Financial Group, Inc.,
NCI Building Systems, Inc., Redman Industries, Inc., Tandy
Brands Accessories, Inc. and Tyler Corporation.
</TABLE>
Board Meetings and Committees
During 1994, the Board of Directors of the Company held 7 meetings and
twice took action by unanimous written consent in lieu of a meeting. Each of the
directors of the Company attended at least 75 percent of the aggregate total
number of meetings of the Board of Directors and meetings of any committee of
the Board on which that director served and which took place subsequent to his
election as a director. The Board of Directors has standing Audit, Compensation
and Executive Committees. It does not have a standing Nominating Committee.
The Audit Committee reviews the scope and results of the audit by the
Company's independent auditors, makes recommendations to the Board as to the
selection of independent auditors and has approval authority with respect to
services provided by the independent auditors. In addition, it reviews systems
of internal control, reviews accounting policies and procedures and directs and
supervises investigations into matters within the scope of its duties. The
members of this committee are Messrs. Deininger (chairperson), Morgan, Rundell,
Minnick and Price. The Audit Committee met 2 times in 1994.
The Compensation Committee reviews the cash compensation of management
personnel and takes action on all salary changes for certain management
personnel. In addition, it administers all aspects of the various management
stock incentive plans and awards stock-based compensation to executive officers
and employees of the Company. The members of this committee are Messrs. Minnick
(chairperson), Morgan, Deininger, Rundell and Price. The Compensation Committee
met 3 times in 1994.
The Executive Committee has, and may exercise, when the Board of Directors
is not in session, the powers of the Board of Directors in the management of the
business and affairs of the Company. The Executive Committee does not have the
power to change the membership or fill vacancies in the Board of Directors or in
the Executive Committee. The members of the Committee are Messrs. Morgan
(Chairperson), Rundell and Arbuckle. The Executive Committee met 2 times in
1994.
-4-
<PAGE>
Directors' Fees and Compensation
Directors who are not employees of the Company or any of its subsidiaries
receive for their services a retainer fee of $16,000 per annum payable in cash
or in shares of the Company's Common Stock and a fee of $800 in cash for each
Board or committee meeting attended. In addition, each chairperson of a
committee of the Board who is not an employee of the Company or any subsidiary
receives for his services as chairperson a retainer fee of $2,000 per annum
payable in cash or in shares of the Company's Common Stock. If a director elects
to receive the retainer fee in shares of Common Stock, the Company transfers
shares of treasury stock to the directors in payment of such fees at the time
of, or shortly after, the first meeting of the Board of Directors following the
annual meeting of shareholders of the Company based on the market value of the
Company's Common Stock at that time. Cash payments, if elected, are also made at
that time. Non-employee directors who are elected to the Board between annual
shareholder meeting dates are entitled to receive a pro rata portion of the
retainer fees for their services based on the number of days from the date of
their election until the next annual meeting of shareholders. Directors who are
employees of the Company or any subsidiary do not receive any fees for Board or
committee service. The Company reimburses all directors for travel, lodging and
related expenses they may incur in attending Board and Committee meetings.
In 1992, the Company adopted a retirement plan for directors of the
Company who are not employees of the Company or any of its subsidiaries. Under
the plan, an eligible director who has three or more years of credited service
as a director is entitled to receive upon his or her retirement from the Board
of Directors an annual payment in cash equal to the amount of the per annum
director retainer fee in effect for the year in which he or she retired. The
annual retirement entitlement is payable for a period of years equal to the
number of years he or she served as a Board member but not to exceed 10 years.
Frank J. Morgan, a director of the Company since April 1989, became
Chairman of the Board and an employee of the Company in December 1990. In 1992,
Mr. Morgan received cash compensation of $200,000 for his services as Chairman
and participated in the Executive Incentive Compensation Program and the
Long-Term Executive Incentive Compensation Plan. In 1993, the Board of Directors
restructured the Chairman's office from that of a salaried executive officer
position to one occupied by an independent non-employee director. Mr. Morgan has
continued to serve as Chairman of the Board as a non-employee director and is
compensated, effective January 1, 1993, at the rate of $100,000 annually for his
services. Mr. Morgan also receives the retainer fee and cash payments for
meetings as a non-employee director of the Company. As a non-employee director,
Mr. Morgan participates in the retirement plan for directors of the Company.
-5-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the only
persons known to the Company to be the beneficial owners of more than five
percent of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
------------------
Name and Address of Number Percent
Beneficial Owner of Shares of Class(1)
- ---------------------- ---------- -----------
<S> <C> <C>
Gabelli Funds, Inc ..................... 776,800(2) 10.9%
655 Third Avenue
New York, New York 10017
James P. Lennane ....................... 641,100(3) 9.0%
4820 Bayshore Drive
Suite D
Naples, Florida 33962
FMR Corp ............................... 577,000(4) 8.1%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
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(1) As of April 28, 1995, there were outstanding 7,129,626 shares of Common
Stock, the only class of voting stock of the Company outstanding.
(2) The number of shares is based on information contained in a Schedule 13D,
as amended through Amendment No. 12 thereto, filed with the SEC by Gabelli
Funds, Inc. and certain of its affiliates, which reflects their beneficial
ownership of shares of Common Stock as of February 15, 1995. According to
the filing, Gabelli Funds and such affiliates reported that they may be
deemed to have sole voting power with respect to 741,800 shares and sole
dispositive power over 776,800 shares.
(3) The number of shares is based on information contained in a Schedule 13D,
as amended through Amendment No. 4 thereto, filed with the SEC by James P.
Lennane, Bette M. Byouk and Susan Kahl Lennane which reflects their
beneficial ownership of shares of Common Stock as of March 23, 1995.
According to the filing, Mr. Lennane reported that he may be deemed to
have sole voting and dispositive power over 637,100 shares and Ms. Byouk
and Ms. Lennane each reported that they may be deemed to have sole voting
and dispositive power over 2,000 shares each.
(4) The number of shares is based on information contained in a Schedule 13G,
filed with the SEC by FMR Corp. which reflects their beneficial ownership
of shares of Common Stock as of December 31, 1994. According to the
filing, FMR Corp. reported that it may be deemed to have sole dispositive
power but no voting power, over 577,000 shares.
-6-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 18, 1995 the beneficial
ownership of Common Stock (the only equity security of the Company) by each
director of the Company, each named executive officer listed in the Summary
Compensation Table appearing in this Proxy Statement and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
------------------------
Number Percent
of Shares of Class(1)
----------- ------------
<S> <C> <C>
Directors
Scott G. Arbuckle ................................ 136,920(2) 1.7%
John H. Deininger ................................ 21,553(1) *
Walter C. Minnick ................................ 6,048(1) *
Frank J. Morgan .................................. 31,292(3) *
Paul E. Price .................................... 2,804(1) *
C. A. Rundell, Jr ................................ 8,469(1) *
Named Executive Officers (excluding
any director named above) and Group
James A. Harris .................................. 39,845(4) *
Henry W. Lehnerer ................................ 14,659(5) *
James F. Thomason ................................ 38,561(6) *
Charles R. Wackenhuth ............................ 42,822(7) *
All directors and executive
officers as a group (12 persons) ............... 371,196(8) 5.2%
</TABLE>
- ------------
* Beneficial ownership represents less than one percent of the outstanding
Common Stock.
(1) The beneficial owner has sole voting and investment power with respect
to all shares listed.
(2) Includes 106,046 shares Mr. Arbuckle currently has the right to acquire
pursuant to stock options; 8,624 shares held for the account of Mr.
Arbuckle under the Eljer Tax Reduction Investment Plan ("TRIP"), with
respect to which Mr. Arbuckle has sole voting power and dispositive power,
subject to the terms of the TRIP; 16,600 shares held jointly by Mr.
Arbuckle and his wife with respect to which they share voting and
dispositive power; and 5,650 shares with respect to which Mr. Arbuckle has
sole voting and dispositive power.
(3) Includes 760 shares held for the account of Mr. Morgan under the TRIP,
with respect to which Mr. Morgan has sole voting power and dispositive
power, subject to the terms of the TRIP; and 30,532 shares held with
respect to which he has sole voting and dispositive power.
(4) Includes 27,725 shares Mr. Harris currently has the right to acquire
pursuant to stock options; 1,970 shares held for the account of Mr. Harris
under the TRIP with respect to which Mr. Harris has sole voting power and
dispositive power, subject to the terms of the TRIP; 150 shares with
respect to which Mr. Harris has sole voting and dispositive power; and
10,000 shares of restricted stock, with respect to which Mr. Harris has
sole voting power, but no dispositive power. The restricted period for
5,000 shares of the restricted stock, which were granted in 1993,
terminates on February 16, 1996
-7-
<PAGE>
and the restricted period for the remaining restricted shares, which were
granted in 1994, terminates on February 15, 1997.
(5) Includes 11,250 shares Mr. Lehnerer currently has the right to acquire
pursuant to stock options; 409 shares held for the account of Mr. Lehnerer
under TRIP with respect to which Mr. Lehnerer has sole voting power and
dispositive power, subject to the terms of the TRIP; and 3,000 shares held
jointly by Mr. Lehnerer and his wife with respect to which they share
voting and dispositive power.
(6) Includes 31,300 shares Mr. Thomason currently has the right to acquire
pursuant to stock options and 2,266 shares held for the account of Mr.
Thomason under the TRIP, with respect to which Mr. Thomason has sole
voting power and dispositive power, subject to the terms of the TRIP;
3,695 shares with respect to which Mr. Thomason has sole voting and
dispositive power; and 1,300 shares held by Mr. Thomason's wife with
respect to which she has sole voting and dispositive power.
(7) Includes 32,496 shares Mr. Wackenhuth currently has the right to acquire
pursuant to stock options; 6,006 shares held for the account of Mr.
Wackenhuth under the TRIP with respect to which Mr. Wackenhuth has sole
voting power and dispositive power, subject to the terms of the TRIP;
3,200 shares held jointly by Mr. Wackenhuth and his wife with respect to
which they share voting and dispositive power; and 1,120 shares held by
Mr. Wackenhuth's wife with respect to which she has sole voting and
dispositive power.
(8) Includes 225,117 shares with respect to which executive officers and
directors have the right to acquire pursuant to exercisable stock options;
21,958 shares held for the account of such persons under the TRIP; and
20,000 shares of restricted stock.
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee. The Board designates the members and the Chairman of the
committee. At the present time, the Compensation Committee consists of all of
the directors who are not employees of the Company. The Compensation Committee
establishes the general compensation policies of the Company, establishes the
compensation plans and specific compensation levels for executive officers and
administers the Company's Executive Incentive Compensation Program, 1991
Long-Term Performance Plan and the Long-Term Executive Incentive Compensation
Plan and awards stock-based compensation to executive officers and employees of
the Company.
The following is a report submitted by members of the Compensation
Committee addressing the Company's compensation policy as it related to the
executive officers for fiscal 1994. The report and the information herein under
"Executive Compensation - Performance Graph" shall not be deemed to be
"soliciting material" or to be "filed" with the SEC or subject to the SEC's
proxy rules, except for the required disclosure herein, or to the liabilities
established under Section 18 of the Securities Exchange Act of 1934 (the
"Exchange Act") and such information shall not be deemed to be incorporated by
reference into any filing made by the Company under the Securities Act of 1933
or the Exchange Act.
-8-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
To the Shareholders of Eljer Industries, Inc.:
As members of the Compensation Committee of the Board of Directors (the
"Committee") it is our responsibility to review and set compensation levels of
the executive officers of the Company, evaluate the performance of management
and consider management succession and related matters.
The Committee retains the services of Hewitt Associates LLC, a
compensation and benefits consulting firm ("Hewitt Associates"), to provide
information to the Committee to assist it in connection with the performance of
its duties. Hewitt Associates provides advice to the Committee with respect to
the compensation of executive officers of the Company. The Committee takes into
account the performance of the Company and how compensation paid by the Company
compares to compensation paid by a comparator group of companies. Members of the
Committee also review various compensation surveys provided during the year by
Hewitt Associates. In 1994, these surveys included a report of 110 middle market
manufacturing and service companies, and the market data of general industry
companies of similar size. Salaries for the executives are reviewed by the
Committee on an annual basis and may be increased at that time on the basis of
salary increase guidelines established each year by the Company, the individual
performance, and changes in pay levels at the comparator companies and in
industry in general. This group is referenced for establishing all components of
pay. The Committee believes that this group is the most representative
comparator group of companies for establishing competitive levels of executive
pay. Competitors chosen for comparison purposes in the compensation area
generally are not the same companies which comprise the peer group index in the
performance graph included in this Proxy Statement. The Committee believes that
the Company's most direct competitors for executive talent are not necessarily
those companies that would be included in the peer group established for
comparing shareholder returns.
In establishing executive compensation, the Committee neither bases its
decisions entirely on quantitative relative weights of various factors, nor does
it follow a mathematical formula. Rather, the Committee exercises discretion and
makes judgments after considering all factors that are deemed relevant,
including the achievement of certain objective targets set by the Committee
relating to the Company's financial performance. In establishing each component
of pay, the Committee considers the entire pay package.
Executive compensation policies are designed to use executive pay as
incentive to promote the Company's overall business strategies, values and
management initiatives. The policies are intended to (i) attract and retain
those kinds of executives who are considered essential to the long-term success
of the Company through the salaried administration program; (ii) support a
performance-based environment that rewards achievement of established Company
goals and corporate performance through the payment of cash awards annually; and
(iii) reward executives for long-term strategic management and the enhancement
of shareholder value through stock-based and long-term incentive awards. The
total compensation program emphasizes variable compensation opportunities over
time and encourages long-term stock ownership. In addition, the Committee has
attempted to preserve the deductibility to the Company of compensation paid to
executive officers, but has not yet adopted a formal policy in response to
recent changes in federal tax laws regarding the deductibility of compensation.
For 1994, no executive's pay reached the nondeductibility limit and therefore,
the Committee has chosen to further consider its response in coming years.
For 1994, as in years past, the Company's executive compensation program
consisted of three elements of a total compensation program: base salary, annual
incentive bonus and stock-based, long-term incentive compensation. This approach
emphasizes the management of total compensation rather than the administration
of separate components of pay. In its compensation decisions with respect to
1994,
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<PAGE>
the Committee took particular note of the management skills, abilities and
dedication needed in order for the Company to continue to make progress in
resolving financial, legal and operating difficulties facing the Company. The
Committee attempts to structure executive compensation packages so that the
compensation paid to the Company's executive officers, both individually and
collectively, will rank in the median range of the compensation reported by the
comparator companies, and actual pay in 1994 fell within this range.
Base Salaries
In establishing the base salaries for executive officers, the Committee
considers the individual executive's level of responsibility. That
responsibility is compared to compensation surveys provided in large part by
Hewitt Associates. The Committee feels that a larger portion of executive
compensation opportunity should consist of performance-based incentives.
Consequently, the Company's salaries continue to rank in the low to mid-point
range of base salaries reported by comparator companies for the year 1994.
On February 15, 1994, the salary of Scott G. Arbuckle, the Company's chief
executive officer ("CEO"), was raised, by the Committee, from $350,000 to
$371,000 -- an increase of approximately 6%. In fixing the CEO's salary, the
Committee took into account the Company's continued financial and operational
progress and determined that a merit base salary increase was in order. The
Committee based the amount of the increase partly on industry averages for pay
increases for chief executive officers, which indicated a median percentage pay
increase of 4-1/2% to 5-1/2% per annum.
Annual Incentives
Bonuses awarded under the Executive Compensation Program consist of a
discretionary portion and a non-discretionary portion that is based on the
achievement of objectives established each year by the Committee. Bonus
opportunities are established to approximate median practices among the
comparator companies. Under the annual incentive plans, financial targets are
set at levels approved by the Board of Directors and include specific accounting
measures of success. In February 1994, the Committee established 1994
performance goals for the Company's executive officers. The Committee determined
that 30% of each officer's bonus would be based on whether an earnings per share
target was met; 30% on whether a return on net assets target was met; 20% on
whether a net operating income (excluding unusual items) target was met; and,
20% would be discretionary with consideration given to the achievement of
certain individual performance objectives established for each officer. This
discretionary portion of annual earned awards was based on discretionary factors
that reflected differences in individual contributions to the Company's success
for the year.
In February 1995, the Committee met, reviewed the continued improved
operating performance of the Company in fiscal 1994, but determined that the
earnings per share target established by the Committee under the bonus program
had not been met due to a $21.9 million unusual charge recorded by the Company's
indirect, wholly-owned subsidiary, United States Brass Corporation ("U.S.
Brass"). The unusual charge resulted from the uncertainties related to the
availability of insurance coverage for polybutylene systems litigation and the
ultimate outcome of the U.S. Brass bankruptcy proceeding. Partial awards were
given for achievement toward return on net assets and net operating income
objectives. The Committee also reviewed the CEO's and the other executive
officers' success in meeting individual performance objectives. Based on its
evaluation of all factors, the Committee concluded that the CEO and other
executive officers achieved improvements in long-term financial performance and
continued to position the Company for stability and future growth, and awarded
commensurate bonuses. The bonus payments either met or slightly exceeded target
levels because the operating performance of the Company, and the executives'
performance, exceeded target performance levels. The Committee believes that the
bonuses paid to the CEO and other executives for services in 1994, as a
percentage of base salary, are in keeping with the improvements made to
operations.
-10-
<PAGE>
Long-Term Incentives
Long-term incentives provide a significant portion of total compensation
for executives and encourage long-term stock ownership. Stock-based awards under
the Long-Term Executive Incentive Compensation Plan strengthen the ability of
the Company to attract, motivate and retain capable executives and more closely
align the interests of management with those of shareholders. Long-term awards
granted in 1993 under this plan consisted of non-qualified stock options and
restricted stock. Unlike cash, the value of stock options, and to a lesser
extent restricted stock, will not be immediately realized by the executive.
Stock options are granted with exercise prices equal to the prevailing market
value of the underlying stock on the date of grant, and will only have value if
the Company's stock price increases, resulting in a commensurate benefit for the
Company's shareholders. Options granted in 1994 vest in equal amounts over four
years and executives must be employed by the Company or an affiliate at the time
of vesting in order to exercise the options. Restricted stock is subject to a
restricted period during which the stock will be forfeited if the executive's
employment is terminated and during which the stock cannot be transferred. The
restricted period for awards granted is three years. Restricted stock awards are
made to enhance the retention of key executives. In establishing relative levels
of stock options and restricted stock grants the Committee references
marketplace practices in this regard.
The Committee considers the grant of stock-based compensation to executive
officers and key managers on an annual basis. The amount of stock-based
compensation awarded is based upon the position held by an executive, his
expected contribution to the Company's future growth and profitability and his
current equity holdings. In granting stock-based compensation, the Committee
considers awards reflected in compensation surveys and attempts to base awards
at the mid-level indicated by the practices among the comparator companies. The
Committee did not reprice any options in 1994, and has not considered it
necessary to establish target stock ownership levels for its executive officers.
In accordance with the foregoing guidelines, the CEO was granted options
to purchase 35,000 shares of Common Stock in 1994. The Committee believes that
top executives are best motivated by the opportunity for equity ownership and
that fact, coupled with practices at the comparator companies, suggested these
shares as an appropriate size of the option grant to the CEO.
No awards previously granted under the Company's 1991 Long-Term
Performance Plan were earned during the three-year performance period ended
March 31, 1993 because performance targets were not achieved. In 1993, the
Committee established new long-term incentive awards under the Company's 1991
Long-Term Performance Plan for the performance period ending December 31, 1995,
and established the cumulative earnings per share targets relating to those
awards.
Summary
The Committee believes that executive compensation levels during fiscal
1994 adequately reflect the Company's compensation goals and policies.
Compensation Committee
Walter C. Minnick, Chairman
Frank J. Morgan
John H. Deininger
C.A. Rundell, Jr.
Paul E. Price
-11-
<PAGE>
Compensation Summary
The following table sets forth certain summary information concerning
the compensation awarded to, earned by, or paid to the CEO and the other four
most highly compensated executive officers of the Company whose combined salary
and bonus for 1994 exceeded $100,000 (collectively, the "named executive
officers") for the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
--------------------------------- ----------------------- ----------
Other
Annual Restricted Securities
Name and Compen- Stock Underlying LTIP All Other
Principal Bonus($) sation($) Award Options/ Payouts Compen-
Position Year Salary($) (2) (3) ($)(4) SARs (#) ($) sation($)(5)
- ------------------ ---- --------- ------- ---------- --------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Scott G. Arbuckle, 1994 371,000 194,775 35,115 -- 35,000 -- 153,963(6)
President and CEO 1993 350,000 250,000 41,970 -- 50,000 -- 392,216(6)
1992 325,000 130,000 12,056 -- 35,000 -- 442,745(6)
James F 1994 189,740 79,691 15,522 -- 15,000 -- 8,914
Thomason, V. P 1993 179,000 107,400 15,149 -- 8,000 -- 7,512
Manufacturing 1992 170,000 71,400 11,843 -- 9,000 -- 5,426
Henry W. Lehnerer 1994 179,350 71,740 12,790 -- 15,000 -- 7,288
V.P. Finance & 1993 112,134 63,580 7,895 -- 15,000 -- --
CFO(1) 1992 -- -- -- -- -- -- --
James A. Harris, 1994 144,095 60,520 13,629 44,688 15,000 -- 6,578
V.P. Sales/Marke- 1993 125,300 75,180 13,359 38,438 8,000 -- 5,049
ting 1992 118,200 43,000 12,447 -- 8,500 -- 3,998
Charles R 1994 125,633 50,253 13,646 -- 15,000 -- 35,302(6)
Wackenhuth, V.P 1993 119,650 62,220 13,273 -- 8,000 -- 4,998
Human Resources 1992 113,950 46,947 13,026 -- 8,500 -- 3,902
Edward W. Fordyce, 1994 116,157 54,950(7) 12,790 -- 15,000(8) -- 144,378(9)
Jr., Former V.P 1993 131,460 65,730 12,500 -- 8,000(8) -- 329
General Counsel 1992 75,175 30,070 7,380 -- -- -- --
</TABLE>
- ----------------
(1) Mr. Lehnerer became an employee of the Company in May 1993.
(2) Annual bonus amounts are earned and accrued during the fiscal years
indicated and paid in the following year.
(3) Amounts consist of automobile allowances made by the Company and also
include tax planning services for the executives.
(4) As of January 1, 1995, the only shares of restricted stock outstanding
that were granted to the named executive officers were the 5,000 shares
granted in 1993 and the 5,000 shares granted in 1994 to James A. Harris.
The aggregate value of these shares of restricted stock is based on the
closing sales price of the Company's Common Stock on the date of the
grant. The restricted period with respect to such shares will terminate on
February 16, 1996 for those granted in 1993, and February 15, 1997, for
those granted in 1994.
-12-
<PAGE>
During these periods that Mr. Harris holds the restricted stock, he is
entitled to receive dividends, if any, thereon at the same time and rate
as holders of Common Stock.
(5) Except as noted in footnotes 6 and 9 below, these amounts represent
matching contributions by the Company to the TRIP on behalf of the named
individuals.
(6) With respect to Mr. Arbuckle, these amounts include lump sum retirement
payments of $135,333 in 1994, $377,816 in 1993 and $430,574 in 1992 earned
pursuant to pension benefits accrued under the Eljer Supplemental Benefit
Plan. The payments reflect benefits as of December 31, 1994, December 31,
1993 and December 31, 1991, respectively, a significant amount of which
Mr. Arbuckle earned prior to becoming President and Chief Executive
Officer of the Company. With respect to Mr. Wackenhuth, this amount
includes a lump sum retirement payment of $29,666 earned pursuant to
pension benefits accrued as of December 31, 1994, under the Eljer
Supplemental Benefit Plan.
(7) This amount represents the par bonus amount payable to Mr. Fordyce as part
of his severance agreement with the Company.
(8) The 15,000 stock options awarded Mr. Fordyce in 1994 as well as 6,000 of
the stock options awarded in 1993 were forfeited at his October 6, 1994,
termination date. The remaining 2,000 stock options awarded in 1993, which
were vested but unexercised in 1994, were forfeited on January 6, 1995,
three months after his termination date.
(9) On October 6, 1994, Mr. Fordyce terminated his employment with the
Company. In accordance with his severance agreement, he will receive
continued base pay through October 5, 1995, at his pay rate at the time of
his termination and payment for certain benefits totaling $138,063.
Certain other benefits will also continue through October 5, 1995.
-13-
<PAGE>
Option/SAR Grants
The following table sets forth certain information with respect to options
to purchase Common Stock granted during the year ended January 1, 1995 to each
of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of
Stock Price
Appreciation
Individual Grants for Option Term(1)
- ----------------------------------------------------------------------------- ------------------------
Number of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SARs Employees Price
Granted in Fiscal Per Expiration
Name (#)(2) Year Share Date 5%(3) 10%(4)
- --------------------- ---------- ----------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Scott G. Arbuckle 35,000 25.0% $ 7.69 2/16/04 $169,210 $428,815
James F. Thomason 15,000 10.7% $ 7.69 2/16/04 $ 72,518 $183,778
Henry W. Lehnerer 15,000 10.7% $ 7.69 2/16/04 $ 72,518 $183,778
James A. Harris 15,000 10.7% $ 7.69 2/16/04 $ 72,518 $183,778
Charles R. Wackenhuth 15,000 10.7% $ 7.69 2/16/04 $ 72,518 $183,778
</TABLE>
- ----------
(1) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. Actual gains realized, if any, on stock
option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the values shown in this table will be achieved.
(2) Options granted in 1994 did not include stock appreciation rights ("SARs").
(3) Represents an assumed market price per share of Common Stock of $12.52.
(4) Represents an assumed market price per share of Common Stock of $19.94.
-14-
<PAGE>
Option/SAR Exercises
The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock and SARs during the year ended
January 1, 1995, and the unexercised options held and the value thereof at that
date, by each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAREND OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised
Options/SARs at In-the-Money
Fiscal Yearend Options/SARs at
(#) Fiscal Yearend($)
---------------------------- -----------------------------
Shares
Acquired
on Exercise Value
Name (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott G. Arbuckle -0- -0- 71,796 94,250 -0- -0-
James F. Thomason -0- -0- 20,800 28,000 -0- -0-
Henry W. Lehnerer -0- -0- 3,750 26,250 -0- -0-
James A. Harris -0- -0- 18,100 27,000 -0- -0-
Charles R. Wackenhuth -0- -0- 22,871 27,000 -0- -0-
</TABLE>
- -----------
Long-Term Incentive Plan Awards
No awards previously granted under the Company's 1991 Long-Term
Performance Plan were earned during the three-year performance period ended
March 31, 1993 because performance targets were not achieved. No long-term
incentive awards were paid during 1994.
-15-
<PAGE>
Defined Benefit Plans
The following table illustrates the amount of annual pension benefits on a
straight-life annuity basis for eligible employees retiring at age 65 in the
specified remuneration and years-of-service classifications under the Retirement
Plan, the Excess Plan and Supplemental Plan discussed below. Offsets for Social
Security payments and other offsets provided for in the plans are reflected in
this table.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service at Retirement
----------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
$ 150,000 $ 30,802 $ 41,069 $ 51,337 $ 61,604 $ 71,871
200,000 42,052 56,069 70,087 84,104 98,121
300,000 64,552 86,069 107,587 129,104 150,621
400,000 87,052 116,069 145,087 174,104 203,121
500,000 109,552 146,069 182,587 219,104 255,621
750,000 165,802 221,069 276,337 331,604 386,871
1,500,000 334,552 446,069 557,587 669,104 780,621
</TABLE>
The Retirement Plan for Salaried Employees of Eljer Manufacturing, Inc.
(the "Retirement Plan") is a noncontributory, defined benefit plan for certain
of its salaried employees. The amount of a participant's pension benefits
depends primarily on years of employment, age at retirement and average annual
compensation (salary plus bonus, whether paid in cash or stock) for the five
successive highest-paid employment years out of the employee's last 10 years of
employment. Participants become fully vested in their accrued pension benefits
after five years of service.
The Company maintains two non-qualified, unfunded benefit plans (the
"Excess Plan" and the "Supplemental Plan") pursuant to which benefits of certain
participants under the Retirement Plan and the TRIP are supplemented to account
for limitations imposed on benefits under these plans by the Internal Revenue
Code of 1986, as amended (the "Code"). Benefits under the Excess Plan are
determined by reference to an employee's benefits under the Retirement Plan and
benefits under the Supplemental Plan are determined by reference to an
employee's benefits under the Retirement Plan and TRIP calculated in each case
without regard to the contribution and benefit limitations contained in the
Code. Generally, benefits under the Excess Plan and the Retirement Plan related
portion of the Supplemental Plan are payable at the time and in the form
benefits are payable to an employee under the Retirement Plan and benefits under
the TRIP related portion of the Supplemental Plan are payable in a single sum
payment following an employee's termination of employment with the Company or
its participating subsidiaries, death or disability. The Board has authorized
the Eljer Pension Committee to administer the Excess Plan and the Retirement
Plan portion of the Supplemental Plan and the TRIP Administrative and Investment
Committee to administer the TRIP related portion of the Supplemental Plan;
provided that the Board determines in each case the methods by which benefits
are accumulated and distributed (such as the timing and form of benefit
payments) under the Excess Plan and the Supplemental Plan.
For purposes of determining the benefits under the Retirement Plan, the
Excess Plan and the Supplemental Plan for the named executive officers, credited
years of service and the amount of covered compensation (salary plus bonuses
paid in cash or stock) for 1994 are as follows: Mr Arbuckle, 31 years and
$621,000; Mr. Thomason, four years and $297,139; Mr. Lehnerer, two years and
$242,930; Mr. Harris, eight years and $219,275; and Mr. Wackenhuth, 22 years and
$187,853. In calculating credited years of service, years of service with
Household International, Inc. prior to the spin-off of the Company have been
taken into account.
Executive Compensation (Including Termination of Employment) Agreements
Mr. Arbuckle entered into an agreement with the Company in 1991 that
provides for certain continued in the event of (i) termination of Mr. Arbuckle's
employment by the Company prior to age
-16-
<PAGE>
65 for any reason other than willful and deliberate misconduct or disability for
a specified period that prevents him from reasonably performing his duties or
(ii) resignation of employment prior to age 65 by reason of reassignment to a
lesser rank or status, reduction of salary benefits or target bonus, or
reassignment to a geographic area more than 50 miles from his residence as of
the date the agreement was executed.
In the event Mr. Arbuckle's employment is terminated or he resigns for any
such reason described above, he will be entitled for 18 months thereafter to (i)
continued salary, (ii) continued targeted bonuses (prorated for such 18-month
period) and (iii) continuation of pension accrual, savings plan contributions,
deferred compensation (if any) and medical and life insurance benefits or, in
each case under (iii), the economic equivalent thereof. Benefit plan accruals
under (iii) that would be payable on a deferred basis were he to continue in
employment, may be deferred or payable in an actuarially equivalent lump sum at
the end of the 18-month period.
Messrs. Harris and Wackenhuth each entered into an agreement with the
Company in 1991, identical to Mr. Arbuckle's agreement, except that (i) the
continuation of compensation provisions will apply if the officer's employment
is terminated or he resigns (for the same reasons set forth in Mr. Arbuckle's
agreement) prior to the termination of the agreement (rather than at any time
prior to age 65) and (ii) the period of continued compensation will be 12 months
(rather than 18 months). The agreements with Messrs. Harris and Wackenhuth were
originally scheduled to terminate on May 1, 1995. The term of each of the
agreements is, however, renewed automatically for successive one-year periods
unless the Company notifies the officer at least 90 days prior to the scheduled
termination date of the agreement (as originally fixed or as extended) of the
Company's election not to extend the agreement beyond such date. The term of
each of the agreements has been extended for at least an additional one-year
period.
Mr. Thomason entered into an agreement with the Company in 1990, which
essentially requires continuation of compensation and benefits until the May 30,
1995, termination of that agreement. Mr. Thomason also entered into an agreement
with the Company in 1991 with terms that are substantially the same as those
contained in the agreements with Messrs. Harris and Wackenhuth. However, in the
event of a qualifying employment termination, Mr. Thomason will receive the
greater of the following amounts: (i) his benefits under a 1990 employment
agreement (which essentially requires continuation of compensation and benefits
until the May 30, 1995 termination date of that agreement); or (ii) his benefits
under the 1991 agreement (which requires continuation of compensation and
benefits for 12 months following employment termination). Mr. Thomason's 1991
agreement was scheduled to terminate on May 1, 1995, but has been extended for
at least an additional one-year period.
Mr. Lehnerer entered into an agreement with the Company in 1993 with terms
that are substantially the same as those contained in the agreements with the
1991 contracts of Messrs. Harris, Wackenhuth and Thomason, with one exception.
The terms of the agreement have no expiration date.
The Company's obligations under the employment agreements with Messrs.
Arbuckle, Harris, Lehnerer, Thomason and Wackenhuth and two other officers of
the Company are partially secured by a cash-collateralized letter of credit in
the amount of $2,500,000.
Mr. Edward W. Fordyce, Jr. served as Vice President-General Counsel and
Secretary of the Company his resignation on October 6, 1994. Under the terms of
a severance agreement with the Company, Mr. Fordyce will receive severance
benefits through September 1995. The aggregate cash compensation received by
Mr. Fordyce during fiscal 1994 was $223,297.
Change-in-Control Agreements
The Company has entered into agreements with Messrs. Lehnerer, Harris,
Thomason and Wackenhuth and two other officers of the Company, providing
severance benefits in the event their employment is terminated within two years
following a change-in-control of the Company.
-17-
<PAGE>
Under these agreements, a change-in-control is defined as the occurrence
of any one of the following: (i) the acquisition by a person or entity of shares
of stock of the Company representing 25 percent or more of the combined voting
power of the stock of the Company; (ii) a change in the majority of the Board of
Directors; or (iii) shareholder approval of a liquidation of the Company, a sale
or disposition of all or substantially all of the Company's assets or a merger,
consolidation or reorganization of the Company.
If the employment of an officer who is a party to a change-in-control
agreement is terminated by the Company other than for "cause" within two years
following a change-in-control, or if such an officer voluntarily terminates his
or her employment within such time period for "good reason", then the officer
will be entitled to the following severance benefits: (i) two times the
officer's highest annual base salary while employed by the Company; (ii) two
times the greater of (a) the officer's average annual bonus over the preceding
three years or (b) the officer's target bonus for the year in which the
change-in-control occurs; (iii) the officer's unpaid base salary and accrued
vacation pay through the date of employment termination; and (iv) two years of
continued coverage under welfare benefit plans, pension plans and profit sharing
plans (however, in the event an officer receives substantially similar benefits
from a subsequent employer, the coverage under the officer's change-in-control
agreement will be discontinued).
Mr. Arbuckle also has entered into a change-in-control agreement with
terms similar to those summarized above. However, in addition to the methods of
termination entitling officers to payment under the agreements described above,
Mr. Arbuckle's severance benefits also will be payable upon any voluntary
termination of his employment within the two-year period following a
change-in-control. Mr. Arbuckle's severance benefits will consist of the
following: (i) three times his highest annual base salary while employed by the
Company; (ii) three times the greater of (a) his average annual bonus over the
preceding three years or (b) his target bonus for the year in which the
change-in-control occurs; (iii) his unpaid base salary and accrued vacation pay
through the date of employment termination; and (iv) three years of continued
coverage under welfare benefit plans, pension plans, and profit sharing plans
(however, in the event Mr. Arbuckle receives substantially similar benefits from
a subsequent employer, the continued coverage under his change-in-control
agreement will be discontinued).
Upon a change in control of the Company, all outstanding awards granted
under the Company's Long-Term Executive Incentive Compensation Plan and 1991
Long-Term Performance Plan shall become fully vested, exercisable and/or
payable.
Repricing of Options
In 1994, the Company did not adjust or amend the exercise price of stock
options or SARs previously granted to any of the named executive officers.
Compensation Committee Interlocks and Insider Participation
Frank J. Morgan, who served on the Compensation Committee in 1994, served
in a salaried executive office as Chairman of the Board in 1992. In 1993, the
position of Chairman of the Board became a non-employee position.
-18-
<PAGE>
Performance Graph
The following graph sets forth the cumulative total shareholder return for
the Common Stock, the New York Stock Exchange Market Index and a Competitor
Group Index for the years indicated as prescribed by SEC rules.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1)
AMONG ELJER INDUSTRIES, INC., NYSE MARKET INDEX AND COMPETITOR
GROUP INDEX(2)
[PERFORMANCE GRAPH]
1990 1991 1992 1993 1994
----- ------ ------ ------ ------
Company ........... 37.70 34.40 47.62 35.06 30.43
NYSE Market ....... 95.92 124.12 129.96 147.56 144.69
Competitor Group... 67.34 94.71 127.19 160.08 111.90
- ------------
(1) Total return assuming reinvestment of dividends. Assumes $100 invested
on January 1, 1990, in the Common Stock, the NYSE Market Index and a
Company constructed competitor group index.
(2) The Company constructed competitor group consists of the following
companies: Hughes Supply, Inc., Manville Corporation, Masco Corporation,
Morgan Products Ltd., Noland Company, Nortek, Inc., Owens-Corning
Fiberglass Corporation, Ply Gem Industries, Inc. and Waxman Industries,
Inc. Total return calculations were weighted according to the
respective company's market capitalization.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires directors and officers of the
Company and persons who own more than 10 percent of the Common Stock to file
with the SEC initial reports of ownership and reports of changes in ownership of
the Common Stock. Directors, officers and more than 10 percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the year ended January 1, 1995, all filings
applicable to its directors, officers and more than 10 percent beneficial owners
were in compliance with Section 16(a) filing requirements.
-19-
<PAGE>
NOTICE PROVISIONS FOR SHAREHOLDER PROPOSALS AND
SHAREHOLDER NOMINATIONS OF DIRECTORS
The Company's by-laws establish an advance notice procedure with regard
to the nomination, other than by or at the direction of the Board of Directors
of the Company, of candidates for election as directors and with regard to
certain matters to be brought before an annual meeting of shareholders of the
Company.
The by-laws provide that only persons who are nominated by or at the
direction of the Board of Directors or by a shareholder who has given timely
written notice to the Secretary of the Company prior to the meeting at which
directors are to be elected will be eligible for election as directors of the
Company. The by-laws provide further that at an annual meeting, and subject to
any other applicable requirements, only such business may be conducted as has
been brought before the meeting by or at the direction of the Board of Directors
or by a shareholder who has given timely prior written notice to the Secretary
of the Company of such shareholder's intention to bring such business before the
meeting. To be timely, any notice regarding director nominations or other items
of business to be considered at the meeting must be received by the Company not
less than 30 days prior to the meeting (or if fewer than 40 days' notice or
prior public disclosure of the meeting date is given or made to shareholders,
not later than the tenth day following the day on which such notice was mailed
or such public disclosure was made).
Notice to the Company from a shareholder who proposes to nominate a
person at an annual meeting for election as a director must contain certain
information about that person, including age, business and residence addresses,
principal occupation, the class and number of shares of Company stock
beneficially owned and such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee. Furthermore, certain information must be provided about the
shareholder making the nomination. The Company may require any person nominated
by the Board of Directors to furnish the information that would be required to
be set forth in a shareholder's notice of nomination with respect to such
nominee.
Under the by-laws, notice relating to the conduct of business other than
the nomination of directors at an annual meeting must contain certain
information about such business and about the shareholder who proposes to bring
the business before the meeting, including a brief description of the business
the shareholder proposes to bring before the meeting, the reasons for conducting
such business at the meeting, the class and number of shares of Company stock
beneficially owned by such shareholder and any material interest of such
shareholder in the business so proposed.
If the Chairman of the Board of Directors or other officer presiding at
a meeting of shareholders of the Company determines that a person was not
nominated in accordance with the by-laws, such person will not be eligible for
election as a director, or if the Chairman or other presiding officer determines
that the business was not properly brought before such meeting in accordance
with the by-laws, such business will not be conducted at meeting. Nothing in the
by-laws will preclude discussion by any shareholder of any nomination or
business properly made or brought before the annual meeting in accordance with
the above-mentioned procedures.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
Based upon the recommendation of the Audit Committee, the Company's
Board of Directors has voted to appoint, subject to ratification by the
Company's shareholders, Arthur Andersen LLP as the firm of independent certified
public accountants to audit the financial statements of the Company and its
subsidiaries for 1995. Although it is not required to do so, the Board is
submitting the selection of auditors for ratification in order to obtain
shareholders' approval of this appointment. The affirmative vote of the holders
of at least a majority of the outstanding shares of Common Stock present in
person or by proxy at the meeting and entitled to vote is required to ratify the
selection of auditors. If the selection is not ratified, the Board of Directors
will reconsider the appointment. A representative of Arthur Andersen LLP will be
present at the annual meeting with the opportunity to make a statement to
shareholders if he or she so desires and to respond to appropriate questions
from shareholders.
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OTHER BUSINESS
The management of the Company knows of no business other than that
stated in this Proxy Statement which will be presented for action at the 1995
Annual Meeting. If however, other business should properly come before the
meeting, the persons designated in the enclosed proxy will vote or refrain from
voting in respect thereof in accordance with their best judgment.
THE COMPANY WILL PROVIDE WITHOUT COST TO ANY OF ITS SHAREHOLDERS A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR ITS MOST RECENT FISCAL YEAR
WHICH THE COMPANY IS REQUIRED TO FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION. WRITTEN REQUESTS FOR THE REPORT SHOULD BE DIRECTED TO ELJER
INDUSTRIES, INC., 17120 DALLAS PARKWAY, DALLAS, TEXAS 75248, ATTENTION: GEORGE
W. HANTHORN, VICE PRESIDENT - GENERAL COUNSEL AND SECRETARY.
1996 ANNUAL MEETING OF SHAREHOLDERS
Proposals from shareholders to be presented at the 1996 Annual Meeting
of Shareholders of the Company must be received by the Company on or before
January 5, 1996 in order to be eligible for inclusion in the Company's proxy
statement and form of proxy for that meeting.
ELJER INDUSTRIES, INC.
Scott G. Arbuckle
President and
Chief Executive Officer
Dallas, Texas
May 5, 1995
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<PAGE>
PROXY PROXY
[COMPANY LOGO]
17120 Dallas Parkway
Dallas, Texas 75248
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank J. Morgan, Scott G. Arbuckle, and
John H. Deininger, and each or any of them, as Proxies, with power of
substitution to each, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of Eljer Industries, Inc. held
of record by the undersigned on a April 28, 1995, at the Annual Meeting of
Stockholders to be held on June 20, 1995, or any postponement or adjournment
thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
ELJER INDUSTRIES
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.[DARK SLASH
MARK]
FOR ALL
1. ELECTION OF DIRECTORS -- FOR WITHHELD EXCEPT
Scott G. Arbuckle, Walter C. Minnick and [ ] [ ] [ ]
Paul E. Price
2. RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP as the independent FOR AGAINST ABSTAIN
auditors of the Company for the fiscal year [ ] [ ] [ ]
ending December 31, 1995.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy will be voted as you direct above. In the absence of such direction,
it will be voted FOR the Nominee listed above and FOR ratification of the
appointment of Arthur Andersen LLP.
Dated:____________________________________, 1995
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- -------------------------------------------------------------------------------
Please sign above exactly as your name appears on this card. Joint owners should
each sign personally. Corporation proxies should be signed by an authorized
officer. Executors, administrators, trustees, etc., should so indicate when
signing.
<PAGE>
