<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCOTSMAN INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
N/A
- --------------------------------------------------------------------------------
/ / 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:
N/A
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
- --------------------------------------------------------------------------------
(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE> 2
[SCOTSMAN INDUSTRIES LOGO]
March 29, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Scotsman Industries, Inc. which will be held on Thursday, May 16, 1996, at 9:00
a.m., local time, at our headquarters in Vernon Hills, Illinois. Please refer to
the attached map for directions to the premises.
At the Annual Meeting, shareholders are being asked to elect three
directors to serve terms which expire in 1999. The Board of Directors recommends
a vote "FOR" each nominee.
Your vote is important. Whether or not you plan to attend the Annual
Meeting and regardless of the size of your holdings, you are encouraged to sign,
date, and mail the enclosed Proxy in the envelope provided. Your right to vote
in person at the meeting is not affected by returning the Proxy.
A copy of Scotsman Industries' Annual Report for the fiscal year ended
December 31, 1995 accompanies this Notice of Meeting and Proxy Statement. On
behalf of the Board of Directors, officers and employees of Scotsman, I would
like to thank you for your continued interest and support.
Sincerely,
/s/ RICHARD C. OSBORNE
------------------
RICHARD C. OSBORNE
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
[Map of Location of Scotsman's Headquarters]
Place of Annual Meeting
Scotsman's headquarters is located at 775 Corporate Woods Parkway in Vernon
Hills, Illinois, approximately 40 miles northwest of downtown Chicago.
Shareholders attending the meeting who will be using the Tri-State Tollway
(Interstate Route 94-294) should exit at Half Day Road (Route 22) and travel
west to reach Milwaukee Avenue (Route 21). Turn right onto Milwaukee Avenue
and travel north aproximately 1 mile to reach Corporate Woods Parkway (the
second or northern Corporate Woods entrance).
Parking facilities will be available and refreshments will be served beginning
at 8:30 p.m.
<PAGE> 4
[SCOTSMAN INDUSTRIES LOGO]
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
847-215-4500
March 29, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 1996
------------------------
To the Shareholders of SCOTSMAN INDUSTRIES, INC.
Notice is hereby given that the annual meeting of shareholders of Scotsman
Industries, Inc. (the "Company") will be held at the Company's headquarters at
775 Corporate Woods Parkway, Vernon Hills, Illinois 60061 on Thursday, May 16,
1996, at 9:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for a term of three years; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 22, 1996, are
entitled to notice of and to vote at the meeting and any adjournment thereof.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO
THE COMPANY IN THE ENVELOPE PROVIDED. THE GIVING OF SUCH PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
/s/ DONALD D. HOLMES,
----------------
DONALD D. HOLMES,
Vice President -- Finance and
Secretary
<PAGE> 5
775 Corporate Woods Parkway
Vernon Hills, Illinois 60061
[SCOTSMAN INDUSTRIES LOGO]
March 29, 1996
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Scotsman Industries, Inc., a Delaware
corporation (the "Company"), for use at the annual meeting of shareholders of
the Company to be held at the Company's principal executive offices at 775
Corporate Woods Parkway, Vernon Hills, Illinois 60061 on Thursday, May 16, 1996,
at 9:00 a.m., local time (the "1996 Annual Meeting"), and at any adjournments
thereof. The 1996 Annual Meeting is being held to consider and vote upon the
election of three directors to serve until the 1999 annual meeting of
shareholders of the Company or until the successors of such directors have been
duly elected and qualified. The Company's Board of Directors knows of no other
business that will be presented for consideration at the 1996 Annual Meeting
other than the matters described in this Proxy Statement.
The close of business on March 22, 1996 has been fixed by the Board of
Directors as the record date (the "Record Date") for determination of
shareholders entitled to vote at the 1996 Annual Meeting. Accordingly, only
holders of record of shares of the Company's common stock, par value $.10 per
share (the "Common Stock"), and the Company's Series A $0.62 Cumulative
Convertible Preferred Stock, par value $1.00 per share (the "Series A
Convertible Preferred Stock"), at the close of business on such date will be
entitled to vote at the 1996 Annual Meeting. As of the close of business on that
date, there were outstanding (i) 8,966,735 shares of Common Stock (not including
188,040 shares of Common Stock held in treasury) and (ii) 1,997,683 shares of
Series A Convertible Preferred Stock. Each share of Common Stock outstanding as
of the Record Date, excluding the treasury shares, is entitled to one vote, and
each share of Series A Convertible Preferred Stock outstanding as of the Record
Date is entitled to one-tenth ( 1/10) of a vote. The Common Stock and the Series
A Convertible Preferred Stock will vote together and not as separate classes on
each of the matters to be voted on at the 1996 Annual Meeting. A combined total
of 9,166,503 votes may therefore be cast by the holders of the Common Stock and
the Series A Convertible Preferred Stock on each of the matters brought before
the 1996 Annual Meeting.
This proxy Statement is first being mailed to the Company's shareholders on
or about March 29, 1996. The Company's 1995 Annual Report to Shareholders,
including financial statements for the fiscal year ended December 31, 1995,
accompanies this Proxy Statement.
Any shareholder who has given a proxy may revoke it at any time prior to
its exercise at the 1996 Annual Meeting by (1) giving written notice of such
revocation to the Secretary of the Company, (2) properly submitting to the
Company a duly executed proxy bearing a later date or (3) appearing in person at
the 1996 Annual Meeting and voting in person. All written notices of revocation
or other communications with respect to the revocation of proxies should be
addressed as follows: Scotsman Industries, Inc., 775 Corporate Woods Parkway,
Vernon Hills, Illinois 60061, Attention: Donald D. Holmes, Secretary. Duly
executed proxies received prior to the meeting will be voted in accordance with
the instructions indicated in the proxy. IF NO
1
<PAGE> 6
INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED "FOR" THE ELECTION
OF THE NOMINEES FOR DIRECTOR NAMED IN THE PROXY.
The presence, in person or by proxy, of the holders of record of shares of
Common Stock and Series A Convertible Preferred Stock entitling the holders
thereof to cast a majority of the votes eligible to be cast at the 1996 Annual
Meeting will constitute a quorum. Votes cast by proxy or in person at the 1996
Annual Meeting will be tabulated by the inspectors of election appointed for the
meeting to determine whether or not a quorum is present. The inspectors will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum.
The Company will bear the cost of soliciting proxies. In addition to
solicitations by mail, officers, directors, or employees of the Company or its
subsidiaries may make solicitations in person or by telephone without
compensation, other than the compensation such persons otherwise receive for
their services as officers, directors or employees. Arrangements will also be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of Common
Stock held of record by such persons, and the Company will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses in connection with forwarding such materials.
YOUR VOTE IS IMPORTANT TO THE COMPANY. IF YOU DO NOT EXPECT TO VOTE IN
PERSON AT THE 1996 ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
ELECTION OF DIRECTORS
The Company's by-laws provide for a Board of Directors, the number of which
shall be fixed from time to time by a resolution adopted by a majority of the
whole Board of Directors. The number of members of the Board of Directors has
been fixed at eight.
The Company's by-laws also 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
terms of office expire in that year are to be elected for three-year terms or
until their successors have been duly elected and qualified. The terms of three
directors, Matthew O. Diggs, Jr., James J. O'Connor and Robert G. Rettig, will
expire at the 1996 Annual Meeting, and the Company's Board of Directors has
renominated all three for re-election to the Board of Directors. If re-elected,
all three will serve until the 1999 annual meeting of shareholders of the
Company or until their successors have 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."
Under the Company's by-laws, directors are elected by a plurality of the
votes cast. Since three positions are to be filled on the Board of Directors,
the three nominees receiving the highest number of votes cast will be elected as
directors. The inspectors of election will not count abstentions in determining
the number of votes received by any nominee.
It is the intention of the parties named in the enclosed proxy to vote the
shares represented thereby for the election of the nominees listed below unless
the proxy is marked otherwise. Each of the nominees has agreed to serve as a
director if elected, and the Company has no reason to believe that any nominee
will be
2
<PAGE> 7
unable to serve. In the event that one or more nominees should become unwilling
or unable to accept nomination for election, however, the persons named in the
enclosed proxy will vote such proxy for such other person or persons as may be
nominated for director by the Board of Directors of the Company.
INFORMATION REGARDING NOMINEES AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION AT THE 1996
ANNUAL MEETING TO SERVE UNTIL 1999
- ---------------------------------------------------------------------------------------------
<S> <C>
Matthew O. Diggs, Jr. (63) Mr. Diggs is the Chief Executive Officer of The Diggs Group, a
New York general partnership that provides investment banking
services, and has held that position since 1990. From 1987 to
1990, Mr. Diggs was Vice Chairman of Copeland Corporation, a
refrigerator compressor manufacturer, having served as
President and Chief Executive Officer of Copeland Corporation
from 1975 to 1987. Mr. Diggs is a director of Bank One Dayton
NA and Tower Automotive Inc. and serves as a trustee of
Wright State University and the Miami Valley School. He has
been a director of the Company since April, 1994.
James J. O'Connor (59) Mr. O'Connor is Chairman, Chief Executive Officer and a
director of Commonwealth Edison Company, an electric utility
company, and has held those positions since 1980. Mr.
O'Connor has also been the Chairman, Chief Executive Officer
and a director of Unicom Corporation, a holding company for
Commonwealth Edison Company, since 1994. Mr. O'Connor is a
director of Corning Incorporated, First Chicago NBD
Corporation, The First National Bank of Chicago, Tribune
Company, UAL Inc., and American National Can Company. He has
been a director of the Company since April, 1989.
Robert G. Rettig (66) Mr. Rettig is a consultant to Illinois Tool Works, Inc., a
manufacturer of industrial products and components, and a
consultant to, and a director of, The Tech Group, a custom
molding company. He was an Executive Vice President of
Illinois Tool Works, Inc. from 1983 to January, 1990. Mr.
Rettig is also a director of Lawson Products, Inc. and serves
as a trustee of the Illinois Institute of Technology. He has
been a director of the Company since April, 1989.
</TABLE>
3
<PAGE> 8
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------
<S> <C>
DIRECTORS CONTINUING TO SERVE UNTIL 1997
---------------------------------------------------------------
Frank W. Considine (74) Mr. Considine is Honorary Chairman of the Board, Chairman of
the Executive Committee and a director of American National
Can Company, a packaging manufacturer. He was Chairman of the
Board of American National Can Company from 1983 to 1990,
President from 1969 to 1988, and Chief Executive Officer from
1973 to 1988. Mr. Considine is a director of Helene Curtis
Industries, Inc., IMC Global, Inc. and Pechiney
International, S.A. Mr. Considine is also Chairman of the
Board of Trustees of Loyola University, Chicago, and serves
on the Board of Trustees of the Field Museum of Natural
History, Chicago. Mr. Considine has been a director of the
Company since April, 1989.
George D. Kennedy (69) Mr. Kennedy was Chairman and a director of the Mallinckrodt
Group Inc., a producer of medical products and chemicals,
from 1991 until his retirement in October, 1994. He was
Chairman and Chief Executive Officer of Mallinckrodt Group
Inc. from 1986 to 1991. Mr. Kennedy is also a director of
Brunswick Corporation, Illinois Tool Works, Inc., American
National Can Company, Kemper National Insurance Company and
Stone Container Corporation. He has been a director of the
Company since April, 1989.
DIRECTORS CONTINUING TO SERVE UNTIL 1998
---------------------------------------------------------------
Richard C. Osborne (52) Mr. Osborne is Chairman of the Board, President and Chief
Executive Officer of the Company. Mr. Osborne has been
Chairman of the Board since May, 1991 and President and Chief
Executive Officer since April, 1989. He was an Executive Vice
President of Household Manufacturing, Inc. from 1982 to
April, 1989. He has been a director of the Company since
April, 1989.
Donald C. Clark (64) Mr. Clark is Chairman of the Board and a director of Household
International, Inc. ("Household"), a financial services
business. Mr. Clark has been Chairman of the Board of
Household since 1984 and was Chief Executive Officer of
Household from 1982 to September, 1994. Mr. Clark is also a
director of Ameritech Corporation and Warner-Lambert Co. He
has been a director of the Company since April, 1989 and
served as Chairman of the Board of the Company from April,
1989, to May, 1991.
</TABLE>
4
<PAGE> 9
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------
<S> <C>
Timothy C. Collins (39) Mr. Collins is Chief Executive Officer and Senior Managing
Director of Ripplewood Holdings L.L.C., an investment
management company, and has held that position since October
1995. Mr. Collins was Senior Managing Director of Onex
Investment Corp. (New York), a management company for the
U.S. investments of Onex Corporation, an Ontario corporation
("Onex"), from 1990 to October 1995. He also serves on the
board of directors of the Metropolitan New York YMCA. He has
been a director of the Company since April, 1994.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held six meetings during 1995. The
standing committees of the Board of Directors held a total of eight meetings.
The average attendance at the aggregate of the total number of meetings of the
Board of Directors and the total number of committee meetings was 89%. Each of
the directors of the Company attended at least 75% of the aggregate total number
of meetings of the Board of Directors and meetings of any committee of the Board
of Directors on which that director served. The Board of Directors has standing
Audit, Compensation, Governance and Executive Committees. The Governance
Committee performs many of the functions of a standing nominating committee.
The Audit Committee is composed of Frank W. Considine, Timothy C. Collins
and Robert G. Rettig. Mr. Considine is the Chairman of the Committee. The Audit
Committee's duties and functions include reviewing the internal accounting
controls and audit functions of the Company and its subsidiaries, the Company's
accounting principles, policies and practices, and financial reporting, the
scope of the audits conducted by the Company's independent public accountants
and internal auditors, and the annual financial statements of the Company and
its subsidiaries. The Audit Committee is responsible for informing the Chief
Executive Officer of the Company and the Board of Directors of any material
concerns that may arise in connection with its review. The Audit Committee also
recommends to the Board of Directors the selection of the Company's principal
independent public accountants and reviews their professional services to
determine if their independence may have been impaired by the performance of any
non-audit services. The Audit Committee met twice during 1995.
The Compensation Committee is composed of George D. Kennedy, Donald C.
Clark, Matthew O. Diggs, Jr., and James J. O'Connor. Mr. Kennedy is the Chairman
of the Committee. The Compensation Committee is responsible for determining the
salaries, salary ranges and bonuses of the five highest paid executive officers
of the Company and its subsidiaries. It also recommends to the Board of
Directors the adoption of, or any substantive amendments to, any pension,
profit-sharing, employee benefit or long-term executive compensation plan or
program in which senior management participates. The Compensation Committee is
also responsible for the granting of stock options, stock appreciation rights
and other awards under any long-term executive incentive compensation plan or
program of the Company. The Compensation Committee met four times during 1995.
The Governance Committee is composed of George D. Kennedy, Frank W.
Considine, James J. O'Connor and Matthew O. Diggs, Jr. Mr. O'Connor is the
Chairman of the Committee. The Governance Committee is responsible for, among
other things, recommending to the Board of Directors possible
5
<PAGE> 10
candidates for election to the Board of Directors (with the final determination
to be made by action of the Board of Directors), considering any recommendations
made by shareholders of the Company of proposed candidates for election to the
Board of Directors, periodically reviewing each director's continuation on the
Board of Directors, in consultation with such director and the Chief Executive
Officer and the Chairman of the Board, assigning individual members of the Board
of Directors to one or more committees of the Board of Directors, and reviewing,
from time to time, the compensation of the Board of Directors and recommending
to the Board of Directors such changes as the Governance Committee deems
appropriate. The Governance Committee met twice in 1995.
DIRECTORS' FEES AND COMPENSATION
Non-employee directors of the Company receive for their services (i) an
annual retainer fee paid in shares of Common Stock with a total market value of
approximately $16,000, determined as of the day immediately preceding the date
of the annual meeting of the shareholders of the Company, and (ii) a fee of $900
for each Board of Directors and committee meeting attended. In addition, any
non-employee director who serves as chairman of the Audit, Compensation,
Executive or Governance Committees of the Board of Directors receives, as
compensation for those services, additional shares of Common Stock with a total
market value of approximately $2,000, determined as of the same valuation date
used in determining the number of shares to be granted to the directors as
annual retainer fees. 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 the
shareholders of the Company.
Under the Non-Employee Directors' Stock Option Plan (the "Non-Employee
Directors' Plan"), effective August 11, 1994, each director of the Company who
is not otherwise an employee of the Company or any of its subsidiaries (a
"Non-Employee Director") also received, as of the effective date of the Non-
Employee Directors' Plan, or will receive, on the next business day following
his or her appointment to the Board of Directors, an option to purchase 2,000
shares of Common Stock. An option to purchase an additional 1,000 shares of
Common Stock is automatically granted to each Non-Employee Director on the next
business day following the date of each annual meeting of shareholders. The
exercise price per share of each option granted is equal to the fair market
value of a share of Common Stock on the date of grant. In 1995, under the
Non-Employee Directors' Plan, each of the Company's seven Non-Employee Directors
received an option to acquire 1,000 shares of Common Stock at an exercise price
of $19.4375 per share.
Each option granted under the Non-Employee Directors' Plan vests 100% and
thus becomes exercisable on the earliest of (i) the date immediately preceding
the first annual meeting following the date of the grant of the option, (ii) the
death or disability of such Non-Employee Director during his service as a
director, or (iii) a "change of control." The term "change of control" has the
same meaning given such term in the Severance Agreement, described below. See
"Executive Compensation and Severance Agreements, Including Change of Control
Provisions." Options generally expire 10 years and one day from the date of
grant, subject to earlier termination under certain circumstances if the
director's service on the Board of Directors terminates prior to the expiration
of such ten-year period.
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<PAGE> 11
AGREEMENTS GOVERNING THE APPOINTMENT AND FUTURE NOMINATION
OF CERTAIN DIRECTORS; VOTING AGREEMENTS
Timothy C. Collins and Matthew O. Diggs, Jr. were appointed directors of
the Company, effective April 29, 1994, pursuant to the terms and conditions of
an Agreement and Plan of Merger, dated January 11, 1994, as amended (the "DFC
Merger Agreement"), and a Share Acquisition Agreement, dated January 11, 1994,
as amended (the "WAL Acquisition Agreement"), governing the acquisition by the
Company of DFC Holding Corporation ("DFC") and its wholly-owned subsidiary, The
Delfield Company ("Delfield"), and Whitlenge Acquisition Limited ("WAL") and its
wholly-owned subsidiary, Whitlenge Drink Equipment Limited ("Whitlenge").
Pursuant to the DFC Merger Agreement and WAL Acquisition Agreement, the Company
also agreed that, (i) so long as the former shareholders of DFC and WAL,
together in each case, with certain permitted transferees (collectively, the
"New Scotsman Shareholders") own, on a fully diluted basis, at least 1,688,578
shares of Common Stock (appropriately adjusted for any subsequent
recapitalization, stock dividend, split or other change in the capital stock),
they will be entitled to designate the persons nominated by the Board of
Directors to fill the directorships currently held by Mr. Collins and Mr. Diggs,
and (ii) so long as the New Scotsman Shareholders own, on a fully diluted basis,
at least 1,114,462 shares of Common Stock (appropriately adjusted for any
subsequent recapitalization, stock dividend, split or other change in the
capital stock), they will be entitled to designate one such nominee.
So long as the New Scotsman Shareholders are entitled to designate at least
one nominee to the Board of Directors, (i) the Company has agreed that, subject
to the right of the holders of its preferred stock to elect directors under
certain circumstances, it will not increase the number of directors to more than
eight directors, and (ii) the New Scotsman Shareholders have agreed to vote, to
cause any affiliates or associates controlled by them to vote, and to use
reasonable efforts to cause any other affiliates or associates to vote, all
shares of capital stock of the Company owned by them in favor of all of the
nominees to the Board of Directors recommended by the Board of Directors.
The right of the New Scotsman Shareholders to designate one or more
nominees to the Company's Board of Directors will terminate on January 11, 2004
unless such obligation is extended by written agreement among the Company and
the New Scotsman Shareholders after January 11, 2002 but before the termination
date. Upon termination of the right of the New Scotsman Shareholders to
designate one or more nominees to the Board of Directors at a time when any
designee of the New Scotsman Shareholders is currently on the Board and upon the
request of the Company, (i) any such designee who is a New Scotsman Shareholder
shall promptly resign as a director, and (ii) the New Scotsman Shareholders will
use their best efforts to cause any such designee or designees who are not New
Scotsman Shareholders to promptly resign.
Certain former shareholders of DFC and WAL have entered into a
Stockholders' Agreement, dated as of January 11, 1994 (the "Stockholders'
Agreement"), under which they have, among other things, allocated among
themselves the power to designate the person or persons to be nominated as
directors. The Stockholders' Agreement provides that, so long as Onex and its
affiliates, Onex DHC LLC and Onex U.S. Investments (the "Onex Affiliates") hold
Common Stock or Series A Convertible Preferred Stock, Onex and the Onex
affiliates will have the right to designate (and remove) one such director, and
EJJM, an Ohio general partnership of which Mr. Diggs is the sole managing
general partner ("EJJM"), will have the right to designate (and remove) the
other such director. If the New Scotsman Shareholders are entitled to designate
only one nominee to the Board of Directors, whichever of Onex and the Onex
Affiliates or EJJM owns the higher percentage of Common Stock (on a fully
diluted basis) at the time of such designation will be entitled
7
<PAGE> 12
to designate the nominee. In all other cases, the holders of a majority of the
Common Stock held by the New Scotsman Shareholders at the time that they are
entitled to designate one or more nominees to the Board of Directors shall make
such designation. Scotsman is not a party to the Stockholders' Agreement.
Under the Stockholders' Agreement, Onex and the Onex Affiliates have also
been granted an irrevocable proxy (the "Onex Proxy") to vote all of the shares
of Common Stock and Series A Convertible Preferred Stock held by the New
Scotsman Shareholders. The Onex Proxy includes the right to vote for the
transaction of any and all business that may come before an annual, general or
special meeting of the Company's shareholders, including the right to vote for
the sale of all or any part of the assets, the liquidation, or the dissolution
of the Company. The Onex Proxy will automatically terminate on January 10, 1999
or at such time that Onex, together with the Onex Affiliates, holds less than
30% of the number of shares of Common Stock (on a fully diluted basis) initially
acquired by it pursuant to the merger provided for in the DFC Merger Agreement.
The Onex Proxy will also terminate with respect to specific shares of Common
Stock upon the transfer of such shares to any person other than certain
specified types of affiliates or associates of the former DFC shareholders and
WAL shareholders that have granted Onex and the Onex Affiliates the Onex Proxy.
For additional information regarding the parties to, and terms of, the
Stockholders' Agreement, see Note 6 under "Security Ownership of Certain
Beneficial Owners."
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<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of Common Stock and
Series A Convertible Preferred Stock for each director and nominee for director,
each executive officer named in the Summary Compensation Table elsewhere in this
Proxy Statement and all directors and executive officers of the Company as a
group. Information is provided as of February 15, 1996, unless otherwise
indicated.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NO. OF SHARES NO. OF SHARES OF
OF COMMON STOCK SERIES A CONVERTIBLE
BENEFICIALLY PERCENT OF PREFERRED STOCK PERCENT OF
OWNED(1) CLASS(2) BENEFICIALLY OWNED CLASS(3)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DIRECTORS AND
DIRECTOR NOMINEES
Donald C. Clark..................... 43,704(4) * 0 0%
Timothy C. Collins.................. 103,702(4)(5) 1.15% 65,787(6) 3.29%
Frank W. Considine.................. 13,023(4) * 0 0%
Matthew O. Diggs, Jr................ 711,363(4)(7) 7.66% 418,308(8) 20.92%
George D. Kennedy................... 13,313(4) * 0 0%
James J. O'Connor................... 11,888(4) * 0 0%
Richard C. Osborne.................. 223,947(4) 2.45% 0 0%
Robert G. Rettig.................... 12,784(4) * 0 0%
CERTAIN EXECUTIVE OFFICERS
Emanuele Lanzani.................... 72,347(4) * 0 0%
Donald D. Holmes.................... 89,406(4) * 0 0%
Kevin E. McCrone.................... 98,863(4)(9) 1.10% 60,512(10) 3.03%
Paolo Faenza........................ 34,732(4) * 0 0%
Directors and Officers as a Group
(19 individuals, including all
those listed above)............... 1,511,056(4)(11) 15.45% 544,607(12) 27.23%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent of the outstanding Common Stock.
(1) Information relating to the number of shares of Common Stock beneficially
owned by directors, nominees for directors and executive officers is based
upon information (i) furnished by, or on behalf of, each person to the
Company, (ii) reflected in the records of the Tax Reduction Investment Plan
("TRIP") of the Company's wholly-owned subsidiary, Scotsman Group Inc.
("SGI"), the Company's Long-Term Executive Incentive Compensation Plan or
the Company's Non-Employee Directors' Plan, or (iii) reflected in a
Schedule 13D, as amended by Amendment No. 2, dated October 24, 1995 (the
"New Scotsman Shareholders 13D"), filed by certain New Scotsman
Shareholders (including Mr. Diggs, Mr. McCrone and one other executive
officer of the Company), as more fully described in Note 6 under "Security
Ownership of Certain Beneficial Owners," who, according to such filing, may
be deemed to constitute a "group" for purposes of Section 13(d)(3) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Information relating to shares held in the TRIP has been furnished as of
December 31, 1995, the latest date for which such information is available.
Except as indicated otherwise in the notes to this table, each person named
in the table has sole voting and
9
<PAGE> 14
investment power over the number of shares of Common Stock and Series A
Convertible Preferred Stock listed opposite his name.
(2) Based upon a total of 8,964,974 issued and outstanding shares of Common
Stock as of February 15, 1996.
(3) Based upon a total of 1,999,992 shares of Series A Convertible Preferred
Stock issued and outstanding as of February 15, 1996.
(4) Includes shares that could be acquired within 60 days after February 15,
1996 pursuant to the exercise of stock options as follows: Mr. Clark, Mr.
Collins, Mr. Considine, Mr. Diggs, Mr. Kennedy, Mr. O'Connor and Mr.
Rettig, each 2,000; Mr. Osborne, 162,751; Mr. Holmes, 64,670; Mr. Faenza,
34,732; Mr. Lanzani, 72,347; and Mr. McCrone, 1,125; all directors and
officers as a group, 400,312. Also includes shares held for the account of
executive officers under the TRIP with respect to which each such officer
has sole voting but no investment power as follows: Mr. Osborne, 6,134; Mr.
Holmes, 8,614; all executive officers as a group, 22,945.
(5) Includes 51,527 shares of Common Stock and 50,175 shares of Common Stock
issuable upon the conversion of 65,787 shares of Series A Convertible
Preferred Stock held of record by Ripplewood Holdings L.L.C., as to which
Mr. Collins has shared voting power and shared investment power. Mr.
Collins is the Chief Executive Officer and Senior Managing Director of
Ripplewood Holdings L.L.C. and has, through his ownership interest, the
right to elect a majority of the Board of Directors of Ripplewood Holdings
L.L.C.
(6) Consists of shares held of record by Ripplewood Holdings L.L.C., as to
which Mr. Collins has shared voting power and shared investment power. Mr.
Collins is the Chief Executive Officer and Senior Managing Director of
Ripplewood Holdings L.L.C. and has, through his ownership interest, the
right to elect a majority of the Board of Directors of Ripplewood Holdings
L.L.C.
(7) Includes 326,331 shares of Common Stock held of record by EJJM, 319,043
shares of Common Stock issuable upon the conversion of 418,308 shares of
Series A Convertible Preferred Stock held of record by EJJM, and 62,000
shares of Common Stock held of record by The Diggs Family Foundation, a
charitable foundation for which Mr. Diggs serves as one of six trustees.
Mr. Diggs has shared investment power and shared voting power with respect
to all of the shares reported pursuant to the Stockholders' Agreement and
the Onex Proxy and also shares investment power and voting power with his
co-trustees with respect to the shares held by The Diggs Family Foundation.
The shares reported for Mr. Diggs do not include (i) 30 shares held by Mr.
Diggs' son as to which Mr. Diggs disclaims beneficial ownership, or (ii)
any shares of Common Stock held of record, or issuable upon the conversion
of shares of Series A Convertible Preferred Stock held of record, by New
Scotsman Shareholders (other than Mr. Diggs, EJJM or The Diggs Family
Foundation) who, according to the New Scotsman Shareholders 13D, may be
deemed to constitute a "group" for purposes of Section 13(d)(3) under the
Exchange Act and with respect to which Mr. Diggs, EJJM and The Diggs Family
Foundation and its trustees share investment power and voting power as part
of such group. See Note 6 under "Security Ownership of Certain Beneficial
Owners."
(8) Consists solely of shares of Series A Convertible Preferred Stock held of
record by EJJM, with respect to which Mr. Diggs has shared investment power
and shared voting power pursuant to the Stockholders' Agreement and the
Onex Proxy. Does not include shares of Series A Convertible Preferred Stock
held of record by New Scotsman Shareholders (other than EJJM) who,
according to the New Scotsman Shareholders 13D, may be deemed to constitute
a "group" for purposes of Section 13(d)(3) under the Exchange Act and with
respect to which Mr. Diggs, EJJM and The Diggs Family Foundation and its
trustees share investment power and voting power as part of such group. See
Note 6 under "Security Ownership of Certain Beneficial Owners."
(9) Includes 51,586 shares of Common Stock held of record by Mr. McCrone and
46,152 shares of Common Stock issuable upon the conversion of 60,512 shares
of Series A Convertible Preferred Stock held of record by Mr. McCrone. Mr.
McCrone has shared investment power and shared voting power with respect to
all of the shares reported pursuant to the Stockholder's Agreement and the
Onex Proxy. The shares reported for Mr. McCrone do not include any shares
of Common Stock held of record, or
10
<PAGE> 15
issuable upon the conversion of shares of Series A Convertible Preferred
Stock held of record, by New Scotsman Shareholders (other than
Mr. McCrone) who, according to the New Scotsman Shareholders 13D, may be
deemed to constitute a "group" for purposes of Section 13(d)(3) under the
Exchange Act and with respect to which Mr. McCrone shares investment power
and voting power as part of such group. See Note 6 under "Security
Ownership of Certain Beneficial Owners."
(10) Consists solely of shares of Series A Convertible Preferred Stock held of
record by Mr. McCrone with respect to which Mr. McCrone has shared
investment power and shared voting power, pursuant to the Stockholders'
Agreement and the Onex Proxy. Does not include shares of Series A
Convertible Preferred Stock held of record by New Scotsman Shareholders
(other than Mr. McCrone) who, according to the New Scotsman Shareholders
13D, may be deemed to constitute a "group" for purposes of Section 13(d)(3)
of the Exchange Act and with respect to which Mr. McCrone shares investment
power and voting power as part of such group. See Note 6 under "Security
Ownership of Certain Beneficial Owners."
(11) Includes 415,370 shares of Common Stock issuable upon the conversion of
544,607 shares of Series A Convertible Preferred Stock held of record by
Ripplewood Holdings, L.L.C., EJJM and Mr. McCrone. See Notes 5 through 10
above. Does not include shares of Common Stock held of record or issuable
upon the conversion of shares of Series A Convertible Preferred Stock held
of record by New Scotsman Shareholders (other than Mr. Diggs, EJJM, The
Diggs Family Foundation, Mr. McCrone and one other executive officer of the
Company) who, according to the New Scotsman Shareholders 13D, may be deemed
to constitute a "group" for purposes of Section 13(d)(3) of the Exchange
Act and with respect to which Mr. Diggs, EJJM, The Diggs Family Foundation,
Mr. McCrone and one other executive officer of the Company share investment
power and voting power as part of such group. See Note 6 under "Security
Ownership of Certain Beneficial Owners." Also does not include 1,497 shares
of Common Stock held of record by adult family members of officers and
directors of the Company as to which such officers and directors disclaim
beneficial ownership.
(12) Consists solely of shares of Series A Convertible Preferred Stock held of
record by Ripplewood Holdings, L.L.C., EJJM and Mr. McCrone. See Notes 6, 8
and 10 above. Does not include any additional shares of Series A
Convertible Preferred Stock held of record by New Scotsman Shareholders
(other than EJJM and Mr. McCrone) who, according to a the New Scotsman
Shareholders 13D, may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Exchange Act and with respect to which Mr. Diggs
and Mr. McCrone share investment power and voting power as part of such
group. See Note 6 under "Security Ownership of Certain Beneficial Owners."
11
<PAGE> 16
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(2) LONG-TERM COMPENSATION
----------------------------- -----------------------------------
OTHER ALL
PRINCIPAL ANNUAL OTHER
NAME POSITION(1) YEAR SALARY BONUS COMP. AWARDS PAYOUTS COMP.(3)
---- ----------- ---- ------ ----- ------ ------------------------ ------- --------
SECURITIES
RESTRICTED UNDERLYING
STOCK STOCK LTIP
AWARDS OPTIONS(#) PAYOUTS
---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R. Osborne Chairman of the 1995 $343,750 $200,000 -- $0 17,900 $0 $16,313
Board, CEO & 1994 $320,000 $200,000 -- $0 18,100 $0 $15,075
President 1993 $301,250 $182,500 -- $0 25,800 $0 $13,387
E. Lanzani Exec.VP; Mgng. 1995 $167,458 $85,995 -- $0 4,400 $0 $ 0
Dir., Frimont 1994 $158,763 $63,431 -- $0 8,900 $0 $ 0
S.p.A.
& Castel MAC 1993 $150,236 $47,688 -- $0 12,700 $0 $ 0
S.p.A.
D. Holmes VP Finance & 1995 $167,083 $64,000 -- $0 6,800 $0 $ 6,994
Secretary 1994 $154,708 $66,060 -- $0 6,200 $0 $ 6,459
1993 $145,667 $60,597 -- $0 8,900 $0 $ 5,626
K. McCrone VP; President, 1995 $187,000 $25,000 -- $0 4,500 $0 $ 5,422
Delfield 1994(4) $127,058 $78,914 -- $0 0 $0 $ 9,280
P. Faenza General Manager, 1995 $118,709 $57,645 -- $0 3,200 $0 $ 0
Castel MAC 1994 $113,936 $54,900 -- $0 3,400 $0 $ 0
S.p.A. 1993 $109,496 $24,581 -- $0 4,900 $0 $ 0
</TABLE>
(1) Each executive officer held the same position with the Company in each of
the years indicated.
(2) Includes amounts earned in the fiscal year, whether or not deferred.
(3) Amounts in this column consist of Company-matching contributions to the
TRIP, the Supplemental Tax Reduction Plan and, in the case of Mr. McCrone,
to The Delfield Company 401(k) Savings and Profit Sharing Retirement Plan.
Also included in 1994 for Mr. McCrone is a payment in the amount of $2,605
under an agreement between Mr. McCrone and DFC pursuant to which DFC agreed
to reimburse Mr. McCrone for the after-tax amount of the annual interest
paid on a bank loan taken by Mr. McCrone to purchase 120,000 shares of
common stock of DFC in 1991.
(4) The compensation reported is for a partial year, beginning on April 29,
1994, the date on which the Company acquired Delfield and Mr. McCrone
became an executive officer of the Company.
12
<PAGE> 17
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants to and exercises by the
executive officers named in the Summary Compensation Table above during the 1995
fiscal year and the value of the options held by such persons at the end of the
1995 fiscal year. No stock appreciation rights have been granted to date by the
Company.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS IN 1995 POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR 10-YEAR OPTION TERM(1)
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE EXPIRATION
NAME GRANTED EMPLOYEES(2) PRICE(3) DATE 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Osborne 17,900 24.72% $18.0625 02/17/05 $0 $ 203,333 $ 515,289
E. Lanzani 4,400 6.08% $18.0625 02/17/05 $0 $ 49,981 $ 126,663
D. Holmes 6,800 9.39% $18.0625 02/17/05 $0 $ 77,244 $ 195,752
K. McCrone 4,500 6.22% $18.0625 02/17/05 $0 $ 51,117 $ 129,542
P. Faenza 3,200 4.42% $18.0625 02/17/05 $0 $ 36,350 $ 92,119
All Shareholders(4) $0 $101,836,815 $258,075,693
Named Executive Officers' Gains as a % of all Shareholder Gains 0.410% 0.410%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company is unaware of any formula which provides an accurate depiction
of the value of a stock option as of the date of grant.
(2) Based on 72,400 options granted to all employees.
(3) Fair market value (the average of the high and low prices for the Common
Stock as reported on the New York Stock Exchange) on February 16, 1995, the
date of grant.
(4) Total dollar gains based on the assumed annual rates of appreciation shown
here and calculated on 8,964,974 outstanding shares of Common Stock -- the
number of shares outstanding on December 29, 1995.
13
<PAGE> 18
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF SECURITIES TOTAL VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS HELD
OPTIONS HELD AT FISCAL YEAR END AT FISCAL YEAR END(1)
- -------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Osborne 2,492 $18,426 140,376 51,300 $1,156,936 $ 151,348
E. Lanzani 0 $ 0 62,472 20,800 $ 484,112 $ 74,211
D. Holmes 1,993 $15,733 56,820 18,275 $ 455,922 $ 52,063
K. McCrone 0 $ 0 0 4,500 $ 0 $ 0
P. Faenza 0 $ 0 30,582 9,475 $ 243,284 $ 28,381
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the fair market value of the Common Stock on December 29, 1995 of
$17.4375 (the average of the high and low prices for the Common Stock as
reported on the New York Stock Exchange).
PENSION PLAN
The Salaried Pension Plan of Scotsman Group Inc. ("SGI") is a
non-contributory, defined benefit plan for certain salaried employees of SGI and
its subsidiaries. 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 years out of the employee's last ten years of
employment, adjusted for wages subject to Social Security taxes. Participants
become fully vested in their accrued pension benefits after five years of
service. Payment of vested pension benefits normally begins at age 65, but an
early retirement benefit at reduced levels may be paid if a participant is at
least 55 years of age with 10 years of service. Effective January 1, 1994, SGI
adopted the Supplemental Executive Retirement Plan (the "Supplemental Plan")
which provides each participant in the Supplemental Plan with the benefits such
participant would have received under the Salaried Pension Plan except for
certain limitations on compensation and benefits imposed under the Internal
Revenue Code of 1986, as amended (the "Code").
14
<PAGE> 19
The following table illustrates the amount of annual pension benefits
payable under the Salaried Pension Plan (including amounts payable under the
Supplemental Plan, where applicable) for eligible employees retiring at age 65
with the following remuneration and numbers of credited years of service.
PENSION PLAN
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
YEARS OF SERVICE
- -----------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 18,428 $ 24,570 $ 30,713 $ 36,856 $ 42,998
$175,000 $ 33,970 $ 45,294 $ 56,617 $ 67,941 $ 79,264
$250,000 $ 49,513 $ 66,017 $ 82,522 $ 99,026 $115,530
$325,000 $ 65,056 $ 86,741 $108,426 $130,111 $151,797
$400,000 $ 80,598 $107,464 $134,331 $161,197 $188,063
$475,000 $ 96,141 $128,188 $160,235 $192,282 $224,329
$550,000 $111,684 $148,911 $186,139 $223,367 $260,595
$625,000 $127,226 $169,635 $212,044 $254,452 $296,861
$700,000 $142,769 $190,358 $237,948 $285,538 $333,127
- -----------------------------------------------------------------------------
</TABLE>
The benefits set forth in the above table are computed on a straight-line
annuity basis. Offsets for Social Security payments and other offsets provided
for in the plan are not reflected in the table. For purposes of determining the
benefit under the Salaried Pension Plan for Mr. Osborne and Mr. Holmes, credited
years of service and the amount of covered compensation (salary plus bonuses
paid in cash or stock) for 1995 are as follows: Mr. Osborne, 17 years and
$543,750; Mr. Holmes, 21 years and $233,143. Covered compensation, in each case,
is equal to the salary reported for such officer in the Summary Compensation
Table for 1995 plus the bonus reported for 1994 since bonuses earned in a given
fiscal year are paid the following fiscal year. In calculating credited years of
service under the Salaried Pension Plan, years of service with Household or its
former subsidiaries prior to the spin-off of the Company by Household in 1989
have been taken into account.
Mr. Lanzani, Mr. McCrone and Mr. Faenza are not covered by SGI's Salaried
Pension Plan. Mr. Lanzani does, however, have an agreement with the Company's
Italian subsidiary, Frimont S.p.A. ("Frimont"), which provides that he will
receive monthly payments beginning at the later of July 1, 1999 or termination
of his employment and ending at his death. These monthly payments will be equal
to .0133 times his average monthly compensation times his credited service. For
purposes of the agreement, "average monthly compensation" means his regular
salary plus short-term bonuses received during the five-year period prior to
termination of employment divided by 60 and "credited service" means the number
of years of continuous service from November 7, 1967 to the date of termination
of employment. For purposes of this plan, Mr. Lanzani is currently credited with
28 years of service, and he received a total of $230,889 in salary and bonuses
in 1995. If Mr. Lanzani's employment is terminated before he reaches age 65,
then at age 65 he will begin receiving such monthly payments.
Mr. Faenza is covered by a pension plan of the Company's Italian
subsidiary, Castel MAC S.p.A., ("Castel MAC"). Under the terms of that plan and
as required by Italian law, Castel MAC accrues each year, on Mr. Faenza's
behalf, an amount equal to (i) his compensation for such year (salary plus cash
bonuses), divided by 13.5, plus (ii) an amount equal to 75% of an Italian
consumer price index for that year
15
<PAGE> 20
times the amount of such compensation, less (iii) the amount of certain
contributions made by Castel MAC, on Mr. Faenza's behalf, to an Italian
government-sponsored social security plan. Upon his retirement, Mr. Faenza is
entitled to receive a lump sum payment equal to the sum of the amounts accrued,
on his behalf, in accordance with the formula set forth above, for each year of
employment with Castel MAC in which he was covered by the plan. An accrual in
the amount of 23,103,653 Lire (approximately $14,137 as of December 31, 1995),
determined in accordance with the formula set forth above, was established for
Mr. Faenza under the plan for 1995. As of December 31, 1995, Mr. Faenza had been
covered by the plan for a total of ten years.
EXECUTIVE COMPENSATION AND SEVERANCE AGREEMENTS, INCLUDING CHANGE OF CONTROL
PROVISIONS
Mr. Osborne has entered into an employment agreement with SGI under which
he is currently entitled to an annual base salary of $350,000, subject to annual
review, and to benefits under SGI's benefit plans. The agreement also
establishes an annual target bonus under the Company's Executive Incentive
Compensation Program (the "Program") equal to 50% of his annual salary. The
agreement provides for certain continued compensation in the event of (i)
termination of employment by SGI or its subsidiaries prior to age 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) Mr. Osborne's resignation from his position prior to age 65 because of a
reassignment to a position of 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. Osborne's employment is terminated or he resigns for any
of the reasons described in the preceding paragraph, he will be entitled for the
next 18 months to (i) continued salary at the rate at which last received, (ii)
continued target 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, with respect
to the benefits described in clause (iii), the economic equivalent thereof.
Benefit plan accruals described in clause (iii) that would be payable to Mr.
Osborne on a deferred basis, were he to continue his employment, may be deferred
or paid in an actuarially equivalent lump sum at the end of the 18-month period.
Mr. Osborne's employment agreement further provides that SGI will reimburse Mr.
Osborne for any excise tax due upon any of the benefits described in this
paragraph and for any additional federal income and excise taxes due as the
result of such reimbursement.
Mr. Osborne and SGI have also entered into a separate, executive severance
agreement (the "Severance Agreement") under which Mr. Osborne will be entitled
to receive a single cash payment equal to the sum of (i) three times the amount
of his highest annual base salary in effect during the immediately preceding
12-month period and (ii) three times the amount of the greater of his then
current target bonus under the Program or the average target bonus paid or
payable to him under the Program in the last five fiscal years, if at any time
before he reaches age 65, Mr. Osborne's employment with SGI is terminated or he
resigns for "good reason" following a "change of control" of the Company. Under
such circumstances, Mr. Osborne will also become fully vested in any accrued
benefits in which he is not then fully vested under SGI's Salaried Pension Plan
and in any employer matching contributions in which he is not then fully vested
under SGI's Tax Reduction Investment Plan ("TRIP") or Supplemental Tax Reduction
Plan. SGI will be obligated to pay Mr. Osborne, within 30 days of his
termination or resignation, a lump sum equal to the actuarial equivalent of such
accrued benefits under the Salaried Pension Plan and the amount of such employer
matching
16
<PAGE> 21
contributions. SGI will also be obligated to keep in full force and effect, for
a period of three years, all medical and insurance policies provided to Mr.
Osborne by SGI at the same level of coverage and upon the same terms and
conditions in effect as of the date of termination of his employment. Any
payments made and benefits provided to Mr. Osborne under the Severance Agreement
will be in lieu of those payments and benefits to which Mr. Osborne would
otherwise be entitled under his employment agreement. The Severance Agreement
further provides that SGI will reimburse Mr. Osborne for any excise tax due upon
any payment made as a result of a change of control and for any additional
federal income and excise taxes due as the result of such reimbursement.
For purposes of the Severance Agreement, a "change of control" will be
deemed to have occurred if any of the following events occurs:
(i) subject to certain specified exceptions, any individual, entity,
or group, including any "person" (as defined in Section 13(d) (3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) acquires beneficial ownership of 20% or more of the Common Stock or
of the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Voting Securities");
(ii) persons who were directors of the Company as of the effective
date of the amendment or persons nominated by those directors to succeed to
their positions or their successors (the "Incumbent Board") shall cease to
constitute a majority of the board of directors of the Company;
(iii) the shareholders shall approve a reorganization, merger or
consolidation of the Company, unless, following such reorganization, merger
or consolidation, (A) at least 60% of the Common Stock and 60% of the
Voting Securities are owned by all or substantially all of the same persons
who were beneficial owners of such securities immediately prior to such
reorganization, consolidation or merger, in substantially the same
proportions relative to one another, (B) no person beneficially owns 20% or
more of the common stock or voting securities of the surviving corporation,
other than specified entities controlled by the Company or a person who had
beneficial ownership of 20% or more of the Common Stock or the Voting
Securities immediately prior to the reorganization, consolidation or
merger, and (C) at least a majority of the members of the board of
directors of the surviving corporation were members of the Incumbent Board;
or
(iv) the shareholders approve a plan of liquidation or dissolution of
the Company or the sale or disposition of all or substantially all of the
assets of the Company to another corporation other than a corporation which
meets the following requirements: (A) at least 60% of the common stock and
60% of the voting securities of the corporation are owned by all or
substantially all of the same persons who were beneficial owners of the
Common Stock and the Voting Securities immediately prior to such sale or
disposition, in substantially the same proportions relative to one another,
(B) no person beneficially owns 20% or more of the common stock or voting
securities of the corporation, other than specified entities controlled by
the Company or a person who had beneficial ownership of 20% or more of the
Common Stock or the Voting Securities immediately prior to such sale or
disposition, and (C) at least a majority of the members of the board of
directors of the corporation were members of the Incumbent Board.
Mr. Osborne will be deemed to have had "good reason" to terminate his
employment with SGI following a change of control if, among other things,
without his written consent, he is assigned to duties inconsistent
17
<PAGE> 22
with his duties or responsibilities with SGI immediately prior to the change of
control, his salary or benefits are reduced, he is reassigned to any location
other than the facility where he is located at the time of the change of control
or, following a merger or consolidation in which the Company is not the
surviving corporation or the transfer of all or substantially all of the assets
of the Company to another corporation, SGI fails to obtain from such corporation
an agreement to assume all of SGI's obligations under the Severance Agreement.
In addition to Mr. Osborne, Mr. Holmes and Mr. Lanzani each have employment
agreements with SGI. Under their employment agreements with SGI, Mr. Holmes and
Mr. Lanzani are currently entitled to annual base salaries of $175,000, and
305,000,000 Lire (approximately $187,000 as of December 31, 1995) subject to
annual review. The employment agreements of Mr. Holmes and Mr. Lanzani also
establish for each an annual target bonus equal to 30% of his annual salary. The
remaining provisions of Mr. Holmes' and Mr. Lanzani's employment agreements are
identical to those of Mr. Osborne's employment agreement except that (i) the
provisions relating to continuation of compensation apply for a period of 12,
rather than 18 months, (ii) there is no provision in the agreements for
reimbursement of excise taxes, and (iii) each agreement will remain in effect,
not until the executive officer who is a party to the agreement reaches age 65,
but only until June 20, 1996. Thereafter, the term of each agreement will be
automatically extended each year for one additional year, unless the
Compensation Committee delivers written notice of termination three months prior
to the end of such term or extended term.
Mr. Holmes and Mr. Lanzani have also entered into executive severance
agreements with SGI. The provisions of those agreements are identical to the
provisions of Mr. Osborne's Severance Agreement with SGI except that each of
these officers will be entitled to receive a single cash payment equal to the
sum of (i) two (rather than three) times the amount of his highest annual base
salary in effect during the immediately preceding 12-month period and (ii) two
(rather than three) times the amount of the greater of his then current target
bonus or the average target bonus paid or payable to him under the Program in
the preceding five fiscal years, if at any time before he reaches age 65, such
officer's employment is terminated or he resigns for "good reason" following a
"change of control" of the Company. Unlike Mr. Osborne's Severance Agreement,
such agreements may be terminated prior to the occurrence of a change of control
by SGI upon six months' prior notice to the executive who is a party to the
agreement, provided that, to the knowledge of the board of directors of SGI, no
person has taken, at the time of such notice, steps reasonably calculated to
effect a change of control.
OTHER AGREEMENTS
Mr. Lanzani has an agreement with Frimont which provides that, so long as
he is employed in his present position at Frimont, he will receive 2.4% of the
annual net operating income of Frimont. This agreement replaced his prior
ownership of 10% of the shares of Frimont. The agreement provides that if Mr.
Lanzani resigns from his position or is terminated without cause before May 31,
1996, he thereafter may elect to receive a lump sum payment, in lieu of payments
under the agreement, equal to the present value of the projected annual payments
under the agreement which he would have received had he remained employed by
Frimont until June 30, 1996. The projection will be based on the average net
operating income growth of Frimont for the prior five years. Since the payments
made to Mr. Lanzani pursuant to this agreement replaced his prior ownership of
shares of Frimont stock, the Company does not consider these payments to be cash
18
<PAGE> 23
compensation for services rendered and, accordingly, such payments have not been
included in the summary compensation table set forth above.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing executive compensation philosophies, determining the executive
compensation program components and assuring that the program is administered in
a manner consistent with the program's philosophies and objectives. All
Committee members are outside directors of the Company.
The Committee believes that since executive officers are in positions to
make substantial contributions to the long-term success of the Company, the
executive compensation program should be structured to provide meaningful
incentives to increase shareholder value. On an annual basis, the Committee
reviews the actual results of each executive officer's performance against the
objectives established by, and for, such executive for the preceding year. The
Committee also reviews the compensation program components and plan for each
executive officer for the upcoming year and relies upon the advice of
independent compensation consultants regarding the competitiveness of the
compensation programs. The Committee approves each compensation plan with such
modifications as it deems appropriate. During the year, the Committee reviews
individual salaries in conjunction with the criteria for base salaries set forth
below, taking into account any significant event that could affect program
objectives and design.
The Company's executive officer compensation program is comprised of a base
salary, an annual cash incentive compensation program and a long-term incentive
compensation plan in the form of stock options, stock appreciation rights,
restricted stock and restricted stock rights. In addition, executives are
eligible for other benefits that are generally available to employees of the
Company, including insurance protection, retirement plans and vacations and
holidays.
Base Salary
Base salary ranges for executives are set at the 50th percentile of the
national marketplace for manufacturing companies with sales in the range of $300
to $500 million. In determining salaries, the Committee takes into account
salary rates compared with the marketplace, the performance of individuals and
other factors deemed relevant by the Committee.
Mr. Osborne's 1995 base salary increase of 7.7% was slightly higher than
increases reported in marketplace surveys which indicated that the average
expected increase in chief executive officers' base salaries was in the range of
5% in 1995. The resultant base salary for Mr. Osborne is nevertheless somewhat
below the median of chief executive officers of comparably sized manufacturing
companies.
Executive Incentive Compensation Program
The Executive Incentive Compensation Program is a cash bonus program
designed to provide increased incentives to key executives to meet or exceed
aggressive financial targets and to accomplish significant projects contributing
to the Company's success.
The targets for awards under this plan are set at the 50th percentile of
the national marketplace. Incentives earned are based primarily on performance
compared with financial targets established for the
19
<PAGE> 24
Company and/or a subsidiary or division of the Company at levels approved by the
Committee. The financial targets include targets for earnings and return on
investment or return on equity. A portion of earned awards are based on
discretionary factors to reflect individual contributions to the Company's
success each year.
In a given fiscal year, Mr. Osborne may earn incentive compensation which
ranges from 0% to 100% of his annual base salary, with a target payout of 50% of
his annual base salary. For 1995, Mr. Osborne received a bonus of 58% of his
annual base salary. In reviewing Mr. Osborne's incentive amount, the Committee
considered the Company's operating performance in 1995 and other accomplishments
affecting the Company's long-term growth. During 1995, the Company increased its
sales in key markets, and earnings per share were higher than the prior year.
The Company also acquired Hartek Beverage Handling GmbH and began producing ice
machines in Shenyang, China through its joint venture with Shenyang Xinle
Precision Machinery Company. In the light of such accomplishments, the Committee
believes that the incentive award granted to Mr. Osborne was appropriate.
Long-Term Executive Incentive Compensation Plan
The Committee believes that long-term incentives should provide significant
portions of total compensation for executives while encouraging long-term stock
ownership. The objectives of the Scotsman Long-Term Executive Incentive
Compensation Plan (the "Long-Term Plan") are to align executive and shareholder
long-term interests by creating a strong and direct link between executive pay
and shareholder return. The Committee endorses the value of stock ownership as
an incentive for Company executives to increase shareholder value through
improved executive performance.
The Committee has established programs for each executive officer under the
Long-Term Plan which provide for stock option grants as a portion of each
participant's salary grade midpoint. The option exercise price is equal to the
fair market value of the Common Stock on the date of the grant. Value to the
executive is dependent upon an increase in the share price above the option
exercise price. The program established for Mr. Osborne under the Long-Term Plan
has a target equal to 100% of his salary grade midpoint. In 1995, the Committee
approved a stock option grant equal to 100% of his salary grade midpoint. The
Committee believes that an appropriate portion of Mr. Osborne's total
compensation is tied directly to shareholder value.
Benefit Programs
The Company provides its executive officers with insurance protection
plans, including medical, dental, life, accidental death and dismemberment,
travel and accident, and disability insurance plans, retirement programs and
vacation and holiday plans. These plans are generally available to the Company's
employees.
George D. Kennedy, Committee Chairman
Donald C. Clark, Committee Member
Matthew O. Diggs, Jr., Committee Member
James J. O'Connor, Committee Member
20
<PAGE> 25
COMMON STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return of
the Russell 2000 Index and the S&P Diversified Manufacturing Index over the same
period. Most of the Company's direct competitors are private companies or small
segments of larger companies and do not permit construction of a realistic peer
group. Therefore, the S&P Diversified Manufacturing Index has been used in lieu
of a peer group for this comparison.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
SCOTSMAN INDUSTRIES, INC., RUSSELL 2000,
AND S&P DIVERSIFIED MANUFACTURING
<TABLE>
<CAPTION>
S&P DIVERSI-
MEASUREMENT PERIOD SCOTSMAN IN- FIED MANU-
(FISCAL YEAR COVERED) DUSTRIES RUSSELL 2000 FACTURING
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 119.76 146.05 122.56
12/31/92 139.75 172.96 132.83
12/31/93 212.24 205.64 161.22
12/31/94 259.03 201.89 166.91
12/31/95 268.10 259.31 234.96
</TABLE>
Assumes $100 invested on December 31, 1990 in the Common Stock, Russell 2000,
and S&P Diversified Manufacturing Group.
* Total return assumes reinvestment of dividends on a quarterly basis.
21
<PAGE> 26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons are known to the Company to be the beneficial owners
of more than 5% of (i) the outstanding Common Stock and (ii) the outstanding
Series A Convertible Preferred Stock as of the most recent date prior to the
preparation of this Proxy Statement for which information is available to the
Company.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NUMBER OF
SHARES OF PERCENT OF
SERIES A SERIES A
NUMBER OF CONVERTIBLE CONVERTIBLE
SHARES OF PERCENT OF PREFERRED PREFERRED
COMMON STOCK CLASS STOCK STOCK
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY OF COMMON BENEFICIALLY BENEFICIALLY
OWNER OWNED STOCK(1) OWNED OWNED(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brinson Partners, Inc.
Brinson Trust Company
Brinson Holdings, Inc.
SBC Holding (USA), Inc.
Swiss Bank Corporation............. 520,900(3) 5.81% 0 0%
209 South LaSalle Street
Chicago, Illinois 60604-1295
- -------------------------------------------------------------------------------------------------
First Chicago NBD Corporation...... 665,810(4) 7.43% 0 0%
One First National Plaza
Chicago, Illinois 60670
- -------------------------------------------------------------------------------------------------
Neuberger & Berman, L.P............ 461,990(5) 5.15% 0 0%
605 Third Avenue
New York, New York 10058-3698
- -------------------------------------------------------------------------------------------------
Onex Corporation
EJJM
Pacific Mutual Life Insurance
Company et al. ................. 3,110,019(6) 29.78%(7) 1,934,205 96.71%
c/o Robert F. Quaintance, Jr., Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
- -------------------------------------------------------------------------------------------------
Sanford C. Bernstein & Co., Inc.... 525,950(8) 5.87% 0 0%
One State Street Plaza
New York, New York 10004
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon a total of 8,964,974 shares of Common Stock issued and
outstanding on February 15, 1996.
(2) Based upon a total of 1,999,992 shares of Series A Convertible Preferred
Stock issued and outstanding on February 15, 1996.
(3) Based on information provided in a Schedule 13G, as amended through
Amendment No. 3 thereto, dated February 9, 1996, filed with the Securities
and Exchange Commission (the "SEC") by Brinson Partners, Inc. ("BPI"), on
behalf of itself, Brinson Trust Company ("BTC"), Brinson Holdings, Inc.
("BHI"), SBC Holding (USA), Inc. ("SBCUSA") and Swiss Bank Corporation
("SBC"). According to the filing, BTC is a wholly-owned subsidiary of BPI,
BPI is a wholly-owned subsidiary of BHI, BHI is
22
<PAGE> 27
a wholly-owned subsidiary of SBCUSA, and SBCUSA is a wholly-owned
subsidiary of SBC. The filing states that BTC has shared voting power and
shared investment power with respect to 138,370 shares of Common Stock,
and, by virtue of their corporate relationships, BPI, BHI, SBCUSA and SBC
have shared voting and shared investment power with respect to 520,900
shares of Common Stock held by BTC and BPI.
(4) Based on information provided in a Schedule 13G, dated February 9, 1996,
filed with the SEC by First Chicago NBD Corporation. According to the
filing, First Chicago NBD Corporation has sole voting power with respect to
653,618 shares, sole dispositive power with respect to 571,598 shares and
shared dispositive power with respect to 16,023 shares.
(5) Based on information provided in a Schedule 13G, as amended by Amendment No.
2, dated February 12, 1996, filed with the SEC by Neuberger & Berman L.P.
According to the filing, Neuberger & Berman L.P. has shared investment power
with respect to all 461,900 shares, sole voting power with respect to 63,200
shares and no voting power with respect to the remaining shares. According
to the filing, the shares do not include 101,400 shares of Common Stock
owned by partners of Neuberger & Berman L.P. in their personal securities
accounts as to which Neuberger & Berman L.P. disclaims beneficial ownership
and 106,600 shares held in the name of the Neuberger & Berman Profit Sharing
Retirement Plan as to which Neuberger & Berman L.P. disclaims beneficial
ownership.
(6) Based on information provided in a Schedule 13D, as amended by Amendment No.
2, dated October 24, 1995, filed with the SEC by Onex Corporation, Onex DHC
LLC, OMI Quebec Inc., Onex Capital Corporation, Oncap Holding Corporation,
Gerald W. Schwartz, EJJM, Matthew O. Diggs, Jr., Nancy B. Diggs, The Diggs
Family Foundation, Pacific Mutual Life Insurance Company, PM Group Life
Insurance Company, Pacific Mutual Charitable Foundation, W. Joseph Manifold,
Charles R. McCollom, Anita J. Moffatt Trust dated July 23, 1993, Anita J.
Moffatt, Remo Panella, Teddy F. Reed, Robert L. Schafer, Graham E.
Tillotson, John A. Tilmann Trust dated July 23, 1993, John A. Tilmann,
Ronald A. Anderson, Kevin E. McCrone, Michael P. McCrone, Michael J. de St.
Paer, Paul L. de St. Paer, Wendy M. de St. Paer, M. Anne de St. Paer, Graham
F. Cook, Jane E. Cook, Catherine J. Cook, G.F. Cook and J.E. Cook (A/c AJC)
Trust, G.F. and J.E. Cook (A/c SEC) Trust, Christopher R.L. Wheeler, Maureen
J. Wheeler, Jonathan R. Wheeler, Josephine V. Wheeler, John Rushton, and
Margaret L. Rushton (the "Reporting Persons"). The shares include 1,475,218
shares of Common Stock issuable upon the conversion of shares of Series A
Convertible Preferred Stock held by the Reporting Persons and 2,000 shares
that may be acquired within 60 days of the date of the filing through the
exercise of options held by the Reporting Persons. According to the filing,
the Reporting Persons may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Exchange Act, and each of the Reporting Persons has
shared voting power and shared investment power with respect to all
3,110,019 shares reported as beneficially owned by the group. The filing
states that, pursuant to the Stockholders' Agreement, (i) the Reporting
Persons may not transfer any shares of Common Stock, except for transfers
pursuant to an underwritten public offering or sale in the public market
through a broker, unless the transferee agrees to become a party to, and to
be bound by, the Stockholders' Agreement, and (ii) the Reporting Persons
have granted Onex the Onex Proxy to vote all shares of Common Stock held by
such Reporting Persons. For additional information relating to the
Stockholders' Agreement and the Onex Proxy, see "Agreements Governing the
Appointment and Future Nomination of Certain Directors." According to the
records of the Company's Long-Term Executive Incentive Compensation Plan,
certain Reporting Persons who are employees of the Company or its
subsidiaries also have the right to acquire an
23
<PAGE> 28
additional 3,300 shares of Common Stock of the Company within 60 days of
February 15, 1996 pursuant to options that have become exercisable more than
60 days after the date of the filing of the 13D described in this footnote.
Such additional shares are not reflected in the aggregate number of shares
reported in the 13D and have not been included in the table above.
(7) On a partially diluted basis, based upon a total of 10,442,192 shares of
Common Stock deemed to be outstanding, assuming the conversion of all
1,934,205 shares of Series A Convertible Preferred Stock beneficially owned
by the Reporting Persons and the exercise of options to acquire 2,000 shares
of Common Stock held by such Reporting Persons.
(8) Based on information provided in a Schedule 13G, dated February 7, 1996,
filed by Sanford C. Bernstein & Co., Inc. with the SEC. According to the
filing, Sanford C. Bernstein & Co., Inc. has sole investment power with
respect to all 525,950 shares, sole voting power with respect to 424,900
shares, shared voting power with respect to 7,150 shares and no voting power
with respect to the remaining shares. The filing further states that the
7,150 shares for which shared voting power is reported are held on behalf of
clients who have appointed an independent voting agent with instructions to
vote the shares in the same manner as Sanford C. Bernstein & Co., Inc.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors, officers and beneficial owners of more than 10 percent of the
outstanding shares of the Common Stock are required to file with the SEC reports
on Forms 3 and 4 reflecting certain changes in their beneficial ownership of the
Common Stock. Pursuant to regulations adopted by the SEC, the Company is
required to disclose each such person who failed to file any such report on a
timely basis during the Company's most recent fiscal year. Based solely on a
review of the Forms 3 and 4 furnished to the Company and any amendments thereto,
the Company believes that each of the following persons who, according to the
New Scotsman Shareholders 13D, may be deemed to be part of a "group" that
beneficially owns in excess of 10% of the outstanding shares of Common Stock,
failed to file a Form 3 on a timely basis reporting, in each case, a single
transaction in the Common Stock on February 21, 1995: Graham F. Cook, Jane E.
Cook, Catherine J. Cook, G.F. Cook and J.E. Cook (A/c AJC) Trust, G.F. and J.E.
Cook (A/c SEC) Trust, Christopher R.L. Wheeler, Maureen J. Wheeler, Jonathan R.
Wheeler, Josephine V. Wheeler, John Rushton, Margaret L. Rushton, John Rushton &
Margaret L. Rushton (A/c JGR) Trust, Paul L. de St. Paer, Wendy M. de St. Paer,
and M. Anne de St. Paer. Such Form 3's were due 10 days after the transaction
date and were filed on March 20, 1995.
AUDITORS
The independent public accounting firm of Arthur Andersen LLP has audited
the Company's consolidated 1995 financial statements. Arthur Andersen LLP will
serve as the Company's independent auditors in 1996. A representative from
Arthur Andersen LLP will be present at the 1996 Annual Meeting and will have the
opportunity to make a statement and to respond to appropriate questions.
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 (the
24
<PAGE> 29
"Nomination Procedure") and with regard to certain matters to be brought before
an annual meeting of shareholders of the Company (the "Business Procedure").
The Nomination Procedure provides 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 Business Procedure provides 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. In order for business to be properly brought before
an annual meeting, such business must also be a proper matter for shareholder
action. To be timely, notice of a nomination or proposed business must be
received by the Company not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day before the first anniversary
of the preceding year's annual meeting.
Special provisions apply if the date of an annual meeting is more than 30
days before or 60 days after such anniversary date. Under those circumstances,
in order to be timely, notice must be received by the Company not earlier than
the close of business on the 90th day before the date of the annual meeting nor
later than the later of (i) the close of business on the 60th day before the
annual meeting or (ii) the close of business on the 10th day after the date on
which the Company first publicly announces the meeting (either by a press
release reported by the Dow Jones News Service, Associated Press or a comparable
national news service or by a filing with the Securities and Exchange
Commission). Special provisions also apply in the event that the number of
directors to be elected at an annual meeting is increased and there is no such
public announcement naming all of the nominees for directors or specifying the
size of the increased board at least 70 days before the first anniversary of the
preceding year's annual meeting. Under those circumstances, a notice shall be
timely, but only with respect to nominees for any new positions created by the
increase, if the notice is received by the Company not later than the close of
business on the 10th day after the date that the Company first makes such a
public announcement. Any shareholder who gives notice of the nomination of any
person for election as a director or notice of business to be brought before an
annual meeting must be a shareholder of record at the time of the giving of
notice and entitled to vote on the matter with respect to which such notice is
given.
Under the Nomination Procedure, 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 Common 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 (including such person's written consent to being named
as a nominee and to serving as a director if elected). Under the Business
Procedure, notice relating to the conduct of business other than the nomination
of directors at an annual meeting must contain certain information about the
business to be brought, including a brief description of the business, the
reasons for conducting such business at the annual meeting, and any material
interest of such shareholder in the business so proposed. Any notice given under
either the Nomination Procedure or the Business Procedure must also contain
certain information about the shareholder giving such notice and the beneficial
owner, if any, on whose behalf the nomination or proposal has been made,
including the name and address of the shareholder as they appear on the
Company's books, the name and address of such beneficial owner, if any,
25
<PAGE> 30
and the number of shares of Common Stock owned beneficially and of record by
such shareholder and beneficial owner, if any.
If the Chairman or other officer presiding at a meeting determines that a
person was not nominated in accordance with the Nomination Procedure, such
person will not be eligible for election as a director, or if such Chairman or
other officer determines that other business was not properly brought before
such meeting in accordance with the Business Procedure, such business will not
be conducted at such meeting. Nothing in the Nomination Procedure or the
Business Procedure 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.
1997 ANNUAL MEETING OF THE COMPANY'S SHAREHOLDERS
Proposals from shareholders to be presented at the 1997 annual meeting of
the shareholders of the Company must be received by the Company on or before
November 30, 1996 in order to be eligible for inclusion in the Company's proxy
statement and form of proxy for that meeting.
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 1996 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 SHAREHOLDER A COPY OF THE
COMPANY'S REPORT ON FORM 10-K FOR ITS MOST RECENT FISCAL YEAR, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES, WHICH THE COMPANY IS REQUIRED TO FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUESTS FOR THE REPORT SHOULD
BE DIRECTED TO SCOTSMAN INDUSTRIES, INC., 775 CORPORATE WOODS PARKWAY, VERNON
HILLS, ILLINOIS 60061, ATTENTION: DONALD D. HOLMES, SECRETARY.
26
<PAGE> 31
APPENDIX
The following graphic material cannot be transmitted pursuant to EDGAR:
1. A map of the area of Vernon Hills, Illinois, indicating directions to
the site of the annual meeting, including directions from O'Hare airport,
which appears on the page following the cover letter.
2. The stock performance graph captioned "Comparison of Five-Year
Cumulative Total Return, Scotsman Industries, Russell 2000, and S&P
Diversified Manufacturing" which appears on page 21 of the Proxy Statement,
a copy of which is being supplementally filed with Scotsman's branch chief
at the Securities and Exchange Commission.
<PAGE> 32
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF SCOTSMAN INDUSTRIES, INC.
The undersigned hereby appoint(s) Richard C. Osborne and Donald D.
Holmes, or either of them, as proxies for the undersigned, with full power of
substitution, to act and to vote all the shares of capital stock of Scotsman
Industries, Inc. that the undersigned would be entitled to vote if personally
present at the annual meeting of shareholders to be held on Thursday, May 16,
1996, or at any adjournment thereof. Said proxies are directed to vote as
instructed on the matters set forth below and otherwise at their discretion.
Receipt of a copy of the notice of said meeting and proxy statement is hereby
acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTIONS ARE GIVEN, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE
OF THIS CARD.
(PLEASE SIGN AND DATE THE REVERSE SIDE AND MAIL IN THE ENCLOSED RETURN
ENVELOPE.)
<PAGE> 33
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<S><C>
1. Election of Directors Withhold For All
Nominees: Matthew O. Diggs, Jr., James J. O'Connor, For Authority Except the Nominee(s) Written Below
Robert G. Rettig / / / / / /
_____________________________________
__________________________________________
Signature
__________________________________________
Signature (if held jointly)
Dated: ______________________________, 1996
IMPORTANT: Please sign exactly as your name
or names appear on the left. If stock is held
jointly, all joint owners must sign.
Executors, administrators, trustees, guardians,
custodians, corporate officers and others
signing in a representative capacity should
give their full titles.
</TABLE>
