<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
Thermadyne Holdings Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
THERMADYNE HOLDINGS CORPORATION
101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 2000
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of
Thermadyne Holdings Corporation, a Delaware corporation (the "Company"), will be
held on Tuesday, April 25, 2000, at 10:00 a.m., local time, at the offices of
DLJ Merchant Banking Partners, 277 Park Avenue, New York, New York, 10172, for
the following purposes:
1. To elect seven directors; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 2, 2000, as
the record date for determining the stockholders entitled to notice of, and to
vote at, the meeting or any adjournment thereof. A list of such stockholders
will be maintained at the offices of DLJ Merchant Banking Partners, 277 Park
Avenue, New York, New York, 10172, during the ten-day period prior to the date
of the meeting and will be available for inspection by stockholders, for any
purpose germane to the meeting, during ordinary business hours.
We hope you will be represented at the meeting by signing, dating and
returning the enclosed proxy card in the accompanying envelope as promptly as
possible, whether or not you expect to be present in person. Your vote is
important and the Board of Directors appreciates the cooperation of stockholders
in directing proxies to vote at the meeting.
By Order of the Board of Directors,
STEPHANIE N. JOSEPHSON
Corporate Secretary
March 30, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE PROMPTLY SIGNED, DATED AND
RETURNED IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 3
THERMADYNE HOLDINGS CORPORATION
101 SOUTH HANLEY ROAD, SUITE 300
ST. LOUIS, MISSOURI 63105
(314) 721-5573
---------------------
PROXY STATEMENT
MARCH 30, 2000
---------------------
GENERAL INFORMATION
This Proxy Statement is being sent by the Board of Directors of Thermadyne
Holdings Corporation, a Delaware corporation (the "Company"), to the holders of
common stock, par value $.01 per share of the Company (the "Common Stock"), in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., local time, on
Tuesday, April 25, 2000, at the offices of DLJ Merchant Banking Partners, 277
Park Avenue, New York, New York, 10172, and at any and all adjournments thereof.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later dated proxy
card, by delivering written notice of the revocation of the proxy to the
Corporate Secretary of the Company prior to the Annual Meeting, or by attending
and voting at the Annual Meeting. Attendance at the Annual Meeting, in and of
itself, will not constitute a revocation of a proxy. Unless previously revoked,
the shares represented by the enclosed proxy will be voted in accordance with
the stockholder's directions if the proxy is duly executed by the stockholder
and received by the Company prior to the Annual Meeting. If no directions are
specified in any duly signed and dated proxy received by the Company, the shares
will be voted FOR the election of the seven director nominees recommended by the
Board of Directors and in accordance with the discretion of the named
attorneys-in-fact on other matters, if any, properly brought before the Annual
Meeting.
The expense of preparing, printing and mailing this Proxy Statement and of
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mails, proxies may be solicited in person, or by telephone,
facsimile transmission or otherwise by officers, directors and regular employees
of the Company and its subsidiaries, none of whom will receive additional
compensation for those services. The Company also will request brokerage firms,
banks, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of the record date and will
provide reimbursement for the cost of forwarding those materials in accordance
with customary practice. Your cooperation in promptly signing, dating and
returning the enclosed proxy card will help to avoid additional expense.
As of March 2, 2000, the Company had 3,590,326 shares of Common Stock
issued and outstanding. Each share of Common Stock entitles the holder to one
vote. Only stockholders of record at the close of business on March 2, 2000,
will be entitled to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders of the Company on or about March 30, 2000.
<PAGE> 4
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of March 2, 2000, certain information
regarding the ownership of Common Stock (i) by each person known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock, (ii)
by each director or director nominee of the Company, (iii) by each executive
officer named in the Summary Compensation Table (see "Executive and Director
Compensation -- Summary Compensation Table") and (iv) by all current directors
and executive officers of the Company as a group. Other than as set forth below,
no director, director nominee or executive officer of the Company is the
beneficial owner of any shares of Common Stock. The Company believes that,
unless otherwise noted, each person shown in the following table has sole voting
and sole investment power with respect to the shares indicated.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
----------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES CLASS(1)
- ------------------------------------ --------- ----------
<S> <C> <C>
DLJ Merchant Banking Partners II, L.P. and related
investors(2).............................................. 3,399,089 84.4%
Magten Asset Management Corp.
35 East 21st Street New York, NY 10010(3)................. 267,339 7.4%
Randall E. Curran(4)........................................ 75,117 2.1%
James H. Tate(5)............................................ 27,930 *
Peter T. Grauer(6).......................................... -- *
William F. Dawson, Jr.(6)................................... -- *
John F. Fort III(7)......................................... 8,500 *
Harold A. Poling(8)......................................... 55,400 1.5%
Lawrence M.v.D Schloss(6)................................... -- *
Stephanie N. Josephson(9)................................... 14,126 *
Thomas C. Drury(10)......................................... 11,556 *
Robert D. Maddox(11)........................................ 12,124 *
All directors and executive officers as a group (10
persons)(6)(12)........................................... 204,753 5.6%
</TABLE>
- ---------------
* Represents less than 1 percent.
(1) Based on 3,590,326 shares of Common Stock outstanding and calculated in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(2) Consists of shares held directly by DLJ Merchant Banking Partners II L.P.
("DLJMB") and the following investors related to DLJMB: DLJ Offshore
Partners II, C.V. ("Offshore"), a Netherlands Antilles limited partnership,
DLJ Diversified Partners, L.P. ("Diversified"), a Delaware limited
partnership, DLJMB Funding II, Inc. ("Funding"), a Delaware corporation,
DLJ Merchant Banking Partners II-A, L.P. ("DLJMBPIIA"), a Delaware limited
partnership, DLJ Diversified Partners-A, L.P. ("Diversified A"), a Delaware
limited partnership, DLJ Millennium Partners, L.P. ("Millennium"), a
Delaware limited partnership, DLJ Millennium Partners-A, L.P. ("Millennium
A"), a Delaware limited partnership, DLJ EAB Partners, L.P. ("EAB"), a
Delaware limited partnership, UK Investment Plan 1997 Partners ("UK
Partners"), a Delaware partnership, DLJ First ESC L.P. ("DLJ First ESC"), a
Delaware limited partnership, and DLJ ESC II, L.P. ("DLJ ESC II"), a
Delaware limited partnership. DLJMB, Offshore, Diversified, Funding,
DLJMBPIIA, Diversified A, Millennium, Millennium A, EAB, DLJ First ESC and
DLJ ESC II are herein referred to as the "DLJ Funds." The address of each
of DLJMB, Diversified, Funding, DLJMBPIIA, Diversified A, Millennium,
Millennium A, EAB, DLJ First ESC and DLJ ESC II is 277 Park Avenue, New
York, New York 10172. The address of Offshore is John B. Gorsiraweg, 14
Willemstad, Curacao, Netherlands Antilles. The address of UK Partners is
2121 Avenue of the Stars, Fox Plaza, Suite 3000, Los Angeles, California
90067. Includes 436,965 shares of Common Stock issuable upon exercise of
warrants that are currently exercisable.
2
<PAGE> 5
(3) The following information is based on a Schedule 13D, dated July 25, 1996,
as amended on September 25, 1996, on February 12, 1998, on March 9, 1998,
and on June 10, 1998, filed with the Securities and Exchange Commission
(the "Commission") by Magten Asset Management Corp. ("Magten"), an
investment adviser registered under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"). Magten has (i) shared voting power
over 227,897 of the shares and no voting power over 39,442 of the shares
and (ii) shared investment power over all 267,339 shares.
(4) Includes 25,843 shares of Common Stock issuable to Mr. Curran upon the
exercise of vested stock options or stock options that will vest within 60
days.
(5) Includes 13,438 shares of Common Stock issuable to Mr. Tate upon the
exercise of vested stock options or stock options that will vest within 60
days.
(6) Messrs. Grauer, Dawson and Schloss are officers of DLJ Merchant Banking II,
Inc. ("DLJMB II Inc."), the general partner of DLJMB. Share data shown for
such individuals excludes shares shown as held by DLJMB and affiliated
funds and entities (the "DLJMB Funds"), as to which such individuals
disclaim beneficial ownership.
(7) Includes 3,500 shares of Common Stock issuable to Mr. Fort upon the
exercise of vested stock options or stock options that will vest within 60
days.
(8) Includes 3,500 shares of Common Stock issuable to Mr. Poling upon the
exercise of vested stock options or stock options that will vest within 60
days.
(9) Includes 2,756 shares of Common Stock issuable to Ms. Josephson upon the
exercise of vested stock options or stock options that will vest within 60
days.
(10) Includes 2,756 shares of Common Stock issuable to Mr. Drury upon the
exercise of vested stock options or stock options that will vest within 60
days.
(11) Includes 2,756 shares of Common Stock issuable to Mr. Maddox upon the
exercise of vested stock options or stock options that will vest within 60
days.
(12) Includes 54,549 shares of Common Stock issuable upon the exercise of vested
stock options or stock options that will vest within 60 days.
PROPOSAL FOR THE ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of seven
directors for terms expiring at the 2001 annual meeting of stockholders. The
persons named below, each of whom currently serves as a director of the Company,
have been nominated for election as directors. It is intended that the
attorneys-in-fact named in the proxy card will vote FOR the election of the
seven nominees listed below, unless instructions to the contrary are given
therein. These nominees have indicated that they are able and willing to serve
as directors. However, if some unexpected occurrence should require the
substitution of some other person or persons for any or all of the nominees, it
is intended that the attorneys-in-fact will vote FOR such substitute nominee(s)
as the Board of Directors may designate. All directors elected at the Annual
Meeting will hold office until their respective successors are elected and
qualified.
DIRECTOR NOMINEES
Randall E. Curran, Age 45
Chairman of the Board, President
and Chief Executive Officer
Mr. Curran has been a Director of the Company since February 1994 and was
elected Chairman of the Board and Chief Executive Officer of the Company in
February 1995, having previously served as President of the Company from August
1994 and as Executive Vice President and Chief Operating Officer of the Company
from February 1994. From 1992 to 1994, Mr. Curran was President of the cutting
and welding division of the Company. From 1986 to 1992, Mr. Curran was Chief
Financial Officer of the Company and/or its
3
<PAGE> 6
predecessors. Prior to 1986, Mr. Curran held various executive positions with
Cooper Industries, Inc. Mr. Curran presently serves on the boards of directors
of Insilco Holding Co. and the Whitfield School.
James H. Tate, Age 52
Director; Senior Vice President and Chief Financial Officer
Mr. Tate has been a Director of the Company since October 1995. He was
elected Senior Vice President and Chief Financial Officer of the Company in
February 1995, having previously served as Vice President of the Company and
Vice President and Chief Financial Officer of the Company's subsidiaries since
April 1993. Prior to joining the Company, Mr. Tate was employed by the
accounting firm of Ernst & Young LLP for eighteen years, the last six of which
he was a partner. Mr. Tate currently serves on the board of directors of Rowe
International, Inc.
Peter T. Grauer, Age 54
Director
Mr. Grauer has been a Director of the Company since May 1998. Mr. Grauer
has been a Managing Director of DLJMB II Inc. (and its predecessor) since
September 1992. Mr. Grauer is a director of Doane Pet Care Enterprises, Inc.,
Total Renal Care Holdings, Inc., Formica Corporation and Bloomberg, Inc.
William F. Dawson, Jr., Age 35
Director
Mr. Dawson has been a Director of the Company since May 1998. Mr. Dawson
has been a Principal of DLJMB II Inc. since August 1997. From December 1995 to
August 1997, he was a Senior Vice President in DLJSC's High Yield Capital
Markets Group. Prior thereto Mr. Dawson was a Vice President in the Leveraged
Finance Group within DLJSC's Investment Banking Group. Mr. Dawson serves as a
director of Von Hoffmann Corporation and Insilco Holding Co.
John F. Fort III, Age 58
Director
Mr. Fort has been a Director of the Company since May 1998. Mr. Fort is
currently Chairman of the Board of Mueller-Grinnel Corp. and Insilco Corp. Mr.
Fort retired as Chairman of the Board of Tyco International Ltd. in January of
1993. In 1964, after receiving degrees in Aeronautical Engineering and
Industrial Management from Princeton and the MIT Sloan School, respectively, he
joined the Simplex Wire & Cable Company (now a subsidiary of Tyco). Mr. Fort
held a broad range of positions throughout his thirty years at Tyco. He
currently holds directorships at Tyco International Ltd., Roper Industries,
Manufacturers Services, Ltd. and DeCrane Aircraft Holding Co. He is in active
participant on advisory boards at MIT, Princeton University, Full Circle
Investments and the Appalachian Mountain Club.
Harold A. Poling, Age 74
Director
Mr. Poling has been a Director of the Company since May 1998. Mr. Poling
retired as Chairman of the Board and Chief Executive Officer of Ford Motor
Company on January l, 1994, a position he held since 1990. Mr. Poling is a
director of Shell Oil Company, Flint Ink Corporation, the Kellogg Company and
Meritor Automotive, Inc. He is a board consultant for the LTV Corporation, a
member of the DLJ Executive Advisory Board and a member of the board of
directors and trustee of William Beaumont Hospital. Mr. Poling is a director of
the Monmouth (Ill.) College Senate and a member of the Dean's Advisory Council
for the Indiana University School of Business. He was national chairman of
Indiana University's Annual Fund campaigns from 1986-88.
4
<PAGE> 7
Lawrence M.v.D. Schloss, Age 45
Director
Mr. Schloss has been a Director of the Company since May 1998. Mr. Schloss
has been the Managing Partner of DLJMB II Inc. since November 1995. Prior to
November 1995, he was the Chief Operating Officer and a Managing Director of DLJ
Merchant Banking, Inc. Mr. Schloss currently serves as Chairman of the Board of
McCulloch Corporation and as a director of Merrill Corporation.
ARRANGEMENTS RELATING TO THE ELECTION OF DIRECTORS
Pursuant to an Investors' Agreement (the "Investors' Agreement") dated May
22, 1998, entered into by and among the Company, the DLJMB Funds and the senior
executive officers of the Company (including Messrs. Curran and Tate), each
stockholder party thereto has agreed to vote shares of Common Stock owned by
such stockholder in order to ensure that the Board of Directors of the Company
will consist of Messrs. Curran and Tate, so long as they are employed by the
Company, and at least five directors designated by DLJMB.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS DIRECTORS.
GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
The Board of Directors of the Company met on four occasions during 1999.
The Delaware General Corporation Law provides that the Board of Directors, by
resolution adopted by a majority of the entire Board, may designate one or more
committees, each of which shall consist of one or more directors. The Board of
Directors has established an Audit Committee and a Compensation Committee. No
incumbent director attended fewer than 75% of the meetings of the Board of
Directors held during the period for which he was a director during 1999 and the
meetings of the committee or committees on which he served during such period.
Audit Committee. The Audit Committee is responsible for providing general
oversight with respect to the accounting principles employed in the Company's
financial reporting. The Audit Committee meets periodically with the Company's
principal financial and accounting officers and independent public accountants
to review the scope of auditing procedures and the Company's policies relating
to internal auditing and accounting procedures and controls. The Audit Committee
met two times last year. The current members of the Audit Committee are Messrs.
Dawson, Poling and Schloss. Messrs. Curran and Tate are entitled to attend
meetings of the Audit Committee in an ex officio capacity.
Compensation Committee. The Compensation Committee (i) determines the
annual salary and bonus and reviews the amount of remuneration and stock options
of the Company's senior executives, (ii) reviews the operation of the Company's
executive compensation programs, and (iii) establishes and periodically reviews
policies in the area of management benefits. None of the members of the
Compensation Committee may be officers or employees of the Company. The
Compensation Committee met one time last year. The current members of the
Compensation Committee are Messrs. Grauer, Fort and Dawson, Messrs. Curran and
Tate are entitled to attend meetings of the Compensation Committee in an
ex-officio capacity.
5
<PAGE> 8
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information in respect of the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") for services in all capacities to the Company and its
subsidiaries for the years ended December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS (#) ($)(1)
- ------------------------------ ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Randall E. Curran...................... 1999 564,724 134,600 -- 37,289
Chairman of the Board, President 1998 538,400 506,634 99,397 36,282
and Chief Executive Officer 1997 517,847 538,400 30,600 33,807
James H. Tate.......................... 1999 316,962 58,313 -- 19,590
Director, Senior Vice President 1998 294,741 219,488 51,686 19,230
and Chief Financial Officer 1997 275,093 188,614 27,000 18,039
Stephanie N. Josephson................. 1999 208,962 28,188 -- 10,833
Vice President, General Counsel 1998 181,577 94,935 10,603 10,248
and Corporate Secretary 1997 168,719 84,625 10,000 10,210
Thomas C. Drury........................ 1999 173,269 23,375 -- 8,275
Vice President -- Human Resources 1998 150,481 78,279 10,603 7,292
1997 132,206 66,479 10,000 7,444
Robert D. Maddox....................... 1999 173,269 23,375 -- 6,955
Vice President -- Controller 1998 150,481 78,279 10,603 6,854
1997 134,254 67,417 10,000 7,749
</TABLE>
- ---------------
(1) All other compensation includes group life insurance premiums paid by the
Company and contributions made on behalf of the Named Executive Officers to
the Company's 401(k) retirement and profit sharing plan. The amounts of
insurance premiums paid and 401(k) contributions made on behalf of the Named
Executive Officers for 1999 are as follows: Mr. Curran, $5,148 and $32,141,
respectively; Mr. Tate, $3,497 and $16,093, respectively; Ms. Josephson,
$1,716 and $9,117, respectively; Mr. Drury, $859 and $7,416, respectively;
and Mr. Maddox, $389 and $6,566, respectively.
No stock options were granted to the Named Executive Officers in 1999.
6
<PAGE> 9
The following table provides information related to the number and value of
options held by the Named Executive Officers at the end of 1999. On December 31,
1999, the closing sale price of Common Stock on NASDAQ was $19.50.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
--------------------------------- ---------------------------------
NAME EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Randall E. Curran.................. 17,891 81,506 -- --
James H. Tate...................... 9,303 42,383 -- --
Stephanie N. Josephson............. 1,908 8,695 -- --
Thomas C. Drury.................... 1,908 8,695 -- --
Robert D. Maddox................... 1,908 8,695 -- --
</TABLE>
All options currently outstanding were granted under the Management
Incentive Plan. For a discussion of the Management Incentive Plan, see
"Employment Arrangements -- Management Incentive Plan."
EMPLOYMENT ARRANGEMENTS
Employment Contracts. The employment agreements with Messrs. Curran, Tate,
Drury and Maddox and Ms. Josephson have an original termination date of May 22,
2001; however, such agreements automatically renew for an additional year on
each May 22 beginning in 1999 so that a new three-year term begins upon each
extension (unless the agreements are earlier terminated as provided therein).
Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson serve in their current
executive capacities with the Company as a requirement of their respective
employment agreements.
Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson are entitled to
annual base salaries (subject to increase at the Board of Directors' discretion)
of $575,000, $326,500, $178,500, $178,500 and $215,300, respectively. In
addition, Messrs. Curran, Tate, Drury and Maddox and Ms. Josephson are eligible
to participate in an annual bonus plan providing for an annual bonus opportunity
of not less than 100%, 75%, 55%, 55% and 55%, respectively, of such executive's
base salary. Each executive is also entitled to such benefits as are customarily
provided to the executives of the Company and its subsidiaries. All five
executives are required to devote all of their business time and attention to
the business of the Company and its subsidiaries.
Each employment agreement provides that if the executive's employment
ceases as a result of disability or death, the executive or the executive's
estate, heirs or beneficiaries, as the case may be, will continue to receive the
executive's then current salary for a period of 24 months from the date of his
or her disability or death. If the executive's employment is terminated by the
Company for Cause (as defined in each employment agreement) or voluntarily by
the executive for any reason other than death, disability or upon a constructive
termination (which includes, among other things, reduction of compensation,
title, position or duties) the executive will not be entitled to receive
compensation or any accrued benefits after the date of termination. If the
executive's employment is terminated by the Company without Cause or is
terminated by the executive upon a constructive termination, the executive will
continue to receive his or her then current salary and other benefits provided
by the agreement during the unexpired term of the agreement.
Management Incentive Plan. The Management Incentive Plan provides for the
granting of options to acquire up to 500,000 shares of Common Stock to certain
officers and employees of the Company. All options are non-qualified stock
options granted at 100% of the fair market value on the grant date. In fiscal
1999, options to purchase approximately 19,700 shares of Common Stock were
granted under the Management Incentive Plan to certain officers and employees of
the Company at an exercise price of $34.50 per option share. These options vest
pro rata over five years. Pursuant to the terms of the Management Incentive
Plan, options granted to certain members of senior management provide for both a
"Time Vesting Option" and a "Cliff Vesting Option." Under the Time Vesting
Option, the option vests and is exercisable with respect to
7
<PAGE> 10
20% of the shares subject to the option on the day it was granted. Then, on each
of the first five anniversaries from that date the Time Vesting Option was
granted, an additional 16% of the shares subject to the option vests and becomes
exercisable as long as the option recipient is still employed by the Company or
its subsidiaries. The Cliff Vesting Option becomes vested and exercisable with
respect to 20% of the shares on the thirtieth day after the availability of the
audited financial statements for each of the fiscal years ended December 31,
1998 through December 31, 2002, provided that the option recipient is still
employed by the Company or its subsidiaries on such date of determination, and
further provided, that the targeted implied common equity value of the Company
was met for such fiscal year. If the targeted implied common equity value of the
Company is not attained for any fiscal year ending on or before December 31,
2002, the Cliff Vesting Option will be treated as vested and exercisable if the
target is attained for any subsequent year as long as the option recipient is
still employed by the Company or its subsidiaries on such date of determination.
If, after eight years from receipt of the Cliff Vesting Option, all shares
subject to such option have not vested, such shares shall become fully vested
and exercisable as long as the option recipient is still employed by the Company
or its subsidiaries on such date.
The following table sets forth the number of shares of Common Stock
issuable upon the exercise of options granted to each Named Executive Officer
under the Management Incentive Plan.
MANAGEMENT INCENTIVE PLAN OPTION GRANTS
<TABLE>
<CAPTION>
TIME VESTING CLIFF VESTING
NAME SHARES SHARES
- ---- -------------- --------------
<S> <C> <C>
Randall E. Curran........................................... 49,699 49,698
James H. Tate............................................... 25,843 25,843
Stephanie N. Josephson...................................... 5,302 5,301
Thomas C. Drury............................................. 5,302 5,301
Robert D. Maddox............................................ 5,302 5,301
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors served as
an officer or employee of the Company or any of its subsidiaries during 1999.
COMPENSATION OF DIRECTORS
Compensation Arrangements. Other than Messrs. Curran, Tate, Dawson, Schloss
and Grauer, each director of the Company is entitled to receive a $12,000 annual
retainer plus a $1,000 fee for each regular meeting of the Board of Directors
attended and a $500 fee for each meeting of a board committee attended.
Additionally, certain non-employee directors (as described in the Thermadyne
Holdings Corporation 1998 Non-Employee Directors Stock Option Plan (the
"Directors Plan")) are eligible to receive options under the Directors Plan. The
Directors Plan provides that certain non-employee directors shall receive
options to purchase 3,000 shares of Common Stock upon becoming a director and
options to purchase 500 shares of Common Stock each year thereafter. All options
are non-qualified stock options granted at 100% of fair market value on the
grant date. During 1999, the Board of Directors awarded each of Messrs. Fort and
Poling options to purchase 500 shares of Common Stock at $34.50 per share
pursuant to the Directors Plan. Directors also are reimbursed for all reasonable
travel and other expenses of attending meetings of the Board of Directors or
committees of the Board of Directors.
8
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for reviewing the Company's compensation arrangements
with the Company's senior executive officers (including the Named Executive
Officers). The current members of the Compensation Committee are Messrs. Grauer,
Fort and Dawson. Messrs. Curran and Tate are entitled to attend meetings of the
Compensation Committee in an ex officio capacity. The principal elements of the
Company's 1999 executive compensation program consisted of base salaries, the
opportunity for annual cash bonuses based on the Company's financial
performance, equity-based compensation in the form of stock options and other
customary fringe benefits.
Philosophy
The Compensation Committee believes that all executive officers of the
Company, including the Chief Executive Officer, should be compensated on a
competitive basis with other manufacturing companies of comparable size in sales
and earnings. The Compensation Committee's primary objectives with respect to
executive compensation are to establish a total compensation program that
provides base salaries in a competitive range, bonus opportunities that reward
above-average performance with above-average pay, and equity-based incentives
designed to enhance the profitable growth of the Company and the value of its
Common Stock and align management and stockholder interests.
Base Salaries
For 1999, the Company's executive officers received base salaries in
accordance with recommendations of the Compensation Committee. The Company has
entered into Executive Employment Agreements with each of the Named Executive
Officers. Mr. Curran's Employment Agreement provides for an annual base salary
of $575,000, reviewable no less frequently than annually.
Bonus Plans
The Thermadyne Holdings Corporation Bonus Plan (the "Bonus Plan") provides
bonus opportunities based on the Company's achievement of certain financial
goals. Participants are eligible to receive a bonus, expressed as a percentage
of base salary, with the amount of the bonus being dependent upon the Company
meeting certain performance-related goals. The performance goals may be
comprised of one or more measures, including, among others, EBITDA, cash flow,
net sales, division, group or corporate financial goals and/or market share. A
percentage of each participant's bonus opportunity may be tied to one or more of
the performance measures. Payment of the bonuses is made in a lump sum payment
as soon as administratively practicable after the end of the Company's fiscal
year (normally no later than March) or, if applicable, another relevant
performance period. In 1999, the Company attained certain of its performance
goals. The Compensation Committee recommended and the Board of Directors
approved an award to plan participants of bonuses totaling $1,500,000 in
accordance with the terms of the Bonus Plan.
Stock Option Programs
The Management Incentive Plan provides for the granting of options to
purchase up to 500,000 shares of Common Stock to certain officers and employees
of the Company. For 1999, the Compensation Committee awarded options to purchase
19,700 shares of Common Stock pursuant to the Management Incentive Plan. For a
more complete description of the Management Incentive Plan, see "Employment
Arrangements -- Management Incentive Plan."
CEO Compensation
The Executive Employment Agreement with Mr. Curran provides for an annual
base salary of $575,000 and provides for his participation in an annual bonus
opportunity of not less than 100% of his base salary. For
9
<PAGE> 12
1999, Mr. Curran received a bonus of $134,600. In 1999, Mr. Curran was not
granted options to purchase any shares of Common Stock pursuant to the
Management Incentive Plan.
Tax Considerations
In formulating its compensation policies, the Compensation Committee
considers the relevant provisions, including Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), that limit the deductibility of
certain executive compensation and the consequences to the Company if the
compensation paid to the Company's executive officers is not deductible.
COMPENSATION COMMITTEE
PETER T. GRAUER
JOHN F. FORT III
WILLIAM F. DAWSON, JR.
10
<PAGE> 13
CORPORATE PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Stock Market Index and the Standard & Poor's Midcap 400
Manufacturing (Specialized Industries) Index (the "S&P Midcap 400 Mfg Index")
for the period from December 31, 1994 to December 31, 1999. The comparison
assumes $100 was invested on December 31, 1994 in each of the Common Stock, the
Nasdaq Stock Market Index, and the S&P Midcap 400 Mfg Index, and assumes
compounded daily returns with reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG THERMADYNE
HOLDINGS CORPORATION, THE NASDAQ STOCK MARKET INDEX (U.S. COMPANIES),
AND THE S&P MIDCAP MFG (SPECIALIZED) INDEX
DECEMBER 31, 1994-DECEMBER 31, 1999 (ANNUAL BASIS)
[PERFORMANCE GRAPH]
VALUE OF $100 INVESTED
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market Index......... $100.00 $141.30 $173.90 $213.10 $300.20 $545.70
S&P Midcap 400 Mfg Index.......... $100.00 $121.40 $153.73 $171.23 $149.28 $166.53
Thermadyne Holdings Corporation... $100.00 $151.04 $237.50 $245.83 $166.67 $162.50
</TABLE>
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance of the Common Stock.
11
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 22, 1999, the DLJ Funds purchased, for an aggregate purchase
price of $25,000,000, pursuant to a Subscription Agreement ("Subscription
Agreement") among the Company, Thermadyne Mfg. LLC (the "Subsidiary") and the
DLJ Funds, dated December 22, 1999, a principal amount of $25,000,000 Junior
Subordinated Notes due 2009 (the "Notes") of the Subsidiary and warrants to
purchase 436,965 shares of Common Stock ("Warrants"). Each Warrant is
exercisable at a price of $0.01 per Warrant Share (as defined below), subject to
adjustment. The investment of additional capital in the Company and the
Subsidiary was used for general corporate purposes.
The Company, the Subsidiary and the DLJ Funds have entered into a
Registration Rights Agreement which grants the holders of 50% or more of the
Notes or Warrants the right to demand the Company or the Subsidiary, as the case
may be, to effect a registration of the Notes or Warrants under the Securities
Act of 1933, as amended (the "Act"). The Company is obliged to effect one demand
registration for the Warrants, and the Subsidiary is obliged to effect up to two
demand registrations for the Notes. If any Warrants are included in a demand
registration, the Company must prepare a shelf registration statement under Rule
415 of the Act permitting the resale of Warrants and the shares issuable upon
exercise of the warrants ("Warrant Shares") and must use its best efforts to
cause the warrant shelf registration statement to be declared effective within
90 days of the time the demand registration is effected. The Company must keep
the warrant shelf registration statement effective until the earlier of (i) two
years following the date as of which no Warrants remain outstanding and (ii) if
all of the Warrants expire unexercised, December 15, 2009.
The Company's registration obligations in respect of the Warrants shall
expire on the earlier of (i) the date on which each Warrant or Warrant Share has
been disposed of in accordance with a warrant registration statement or when
such Warrant Share is issued upon exercise of a Warrant in accordance with a
registration statement and (ii) the date on which each Warrant or Warrant Share
is distributed to the public pursuant to Rule 144 under the Act. The
Subsidiary's registration obligations in respect of the Notes shall expire on
the earlier of (i) the date on which each Note has been disposed in accordance
with a note registration statement and (ii) the date on which each Note is
distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement also grants "piggy-back" rights to the
DLJ Funds to participate in certain registration statements filed by the Company
in respect of any equity securities of the Company. The Registration Rights
Agreement also contains a "lock-up" provision pursuant to which the DLJ Funds
may be restricted from transferring Notes or Warrants in public sales during an
underwriter's public offering of Notes or Warrants.
Pursuant to a letter agreement dated January 16, 1998 (the "Engagement
Letter"), DLJMB engaged DLJSC to act as DLJMB's exclusive financial advisor for
a period of five years (the "Engagement Period") with respect to the review and
analysis of financial and structural alternatives available to the Company.
DLJMB's obligations under the Engagement Letter have since been assumed by the
Company.
As compensation for the services to be provided by DLJSC under the
Engagement Letter, DLJSC is entitled to receive an annual advisory fee of
$300,000, payable quarterly in equal installments of $75,000. DLJSC is also
entitled to reimbursement for all of its out-of-pocket expenses incurred in
connection with its engagement.
During the Engagement Period, DLJSC is also entitled to act as the
Company's exclusive financial advisor, sole placement agent, sole initial
purchaser, sole managing underwriter or sole dealer-manager, as the case may be,
with respect to any Transaction (as hereinafter defined) the Company determines
to pursue. The term "Transaction" includes the following: (i) the sale, merger,
consolidation or any other business combination, in one or a series of
transactions, involving any portion of the business, securities or assets of the
Company; (ii) the acquisition (and any related matters such as financings,
divestitures, etc.) in one or a series of transactions, of all or a portion of
the business, securities or assets of another entity or person; (iii) any
recapitalization, refinancing, repurchase or restructuring of the Company's
equity or debt securities or indebtedness or any amendments or modifications to
the Company's debt securities or indentures whether or not in connection
therewith, involving, by or on behalf of the Company, an offer to purchase or
exchange for
12
<PAGE> 15
cash, property, securities, indebtedness or other consideration, or a
solicitation of consents, waivers of authorizations with respect thereto; (iv)
any spin-off, split-off or other extraordinary dividend of cash, securities or
other assets to stockholders of the Company; or (v) any sale of securities of
the Company effected pursuant to a private sale or an underwritten public
offering.
The Company has agreed to indemnify and hold harmless DLJSC and its
affiliates, and the respective directors, officers, agents and employees of
DLJSC and its affiliates (each, an "Indemnified Person") from and against any
losses, claims, damages, judgments, assessments, costs and other liabilities and
will reimburse such Indemnified Persons for all fees and expenses (including the
reasonable fees and expenses of counsel) as they are incurred in investigating,
preparing, pursuing or defending any claim, action, proceeding or investigation
arising out of or in connection with advice or services rendered or to be
rendered by an Indemnified Person pursuant to the Engagement Letter, the
transactions contemplated by the Engagement Letter or any Indemnified Person's
action or inactions in connection with any such advice, services or
transactions, other than liabilities or expenses that are determined by a
judgment of a court of competent jurisdiction to have resulted solely from such
Indemnified Person's gross negligence or willful misconduct.
The Engagement Letter makes available the resources of DLJSC concerning a
variety of financial and operational matters. The services that have been and
will continue to be provided by DLJSC could not otherwise be obtained by the
Company without the addition of personnel or the engagement of outside
professional advisors. In the opinion of management, the fees provided for under
the Engagement Letter reasonably reflect the benefits received and to be
received by the Company.
Messrs. Grauer, Dawson and Schloss, directors of the Company, are officers
of DLJMB II Inc., which is an affiliate of each of DLJMB, DLJSC, DLJ Capital
Funding, Inc. and DLJ Bridge Finance, Inc.
The Company has entered into the Investors' Agreement with the DLJMB Funds
and the senior executive officers of the Company. The Investors' Agreement,
among other things, contains provisions regarding the composition of the Board
of Directors of the Company, grants the parties thereto certain registration
rights and contains provisions requiring the senior executive officers parties
thereto to sell their shares of Common Stock in connection with certain sales of
Common Stock by the DLJMB Funds and granting the senior executive officers
parties thereto the right to include a portion of their shares of Common Stock
in certain sales of Common Stock by the DLJMB Funds.
In 1998, Messrs. Curran, Tate, Maddox and Drury and Ms. Josephson received
secured, non-recourse loans from the Company in the amount of $1,249,890,
$367,606, $237,630, $223,222 and $288,413, respectively, to purchase shares of
the Company. The current principal balances of the loans are $1,284,957,
$377,920, $244,297, $229,485 and $296,505, respectively. The loans bear interest
at the rate of 5.69% per annum and are due in full on May 22, 2006. Upon the
termination of a participant's employment with the Company, other than as a
result of the participant's death, any outstanding loan will become due and
payable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Common Stock, to
file with the Commission initial reports of beneficial ownership and reports of
changes in beneficial ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than 10% beneficial owners are
required by the Commission to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company, all Section 16(a) filing
requirements applicable to its officers and directors were complied with for the
year ended December 31, 1999, except a Form 4 due December 10, 1999 filed on
behalf of Mr. Poling was late.
13
<PAGE> 16
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to the Proposal for the Election of Directors, votes may be
cast for or votes may be withheld from each nominee. Directors will be elected
by plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under Delaware law, broker non-votes
(as explained below) will have no effect on the outcome of the election of
directors. In general, a broker who holds securities in street name has limited
authority to vote on matters submitted at a stockholders meeting in the absence
of specific instructions from the beneficial owner. In the absence of
instructions from the beneficial owner or authorization from the National
Association of Securities Dealers, Inc. (the "NASD") to vote on specific matters
without the necessity of obtaining instructions from the beneficial owner, a
broker will specify a "non-vote" on particular matters. For purposes of Delaware
law, a broker non-vote is counted as present for quorum purposes, but is
generally excluded entirely from determining whether a particular matter has
been approved. Typically, however, brokers are permitted by the NASD to vote for
the election of directors without instructions from the beneficial owner.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the director nominees
recommended by the Board of Directors and in accordance with the discretion of
the named attorneys-in-fact on other matters, if any, properly brought before
the Annual Meeting.
INDEPENDENT AUDITORS
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1999, and it is expected they will be reappointed
by the Board of Directors to serve in that capacity again for the fiscal year
ending December 31, 2000. No member of Ernst & Young LLP or any of its
associates has any financial interest in the Company or its affiliates. It is
anticipated that a representative of Ernst & Young LLP will be available at the
Annual Meeting to respond to appropriate questions and will be given an
opportunity to make a statement on behalf of Ernst & Young LLP, if desired.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Proxy Statement relating to the
2000 Annual Meeting of Stockholders of the Company must be received by no later
than December 31, 2000 at the Company's principal executive offices, 101 South
Hanley Road, Suite 300, St. Louis, Missouri 63105, Attention: Corporate
Secretary. Stockholders of the Company who intend to nominate candidates for
election as a director or to bring business before the meeting must also comply
with the applicable procedures set forth in the Company's Bylaws. The Company
will furnish copies of such Bylaw provisions upon written request to the
Corporate Secretary of the Company at the aforementioned address. In the case of
other stockholder proposals not included in the Company's proxy materials, the
Company may generally exercise discretionary voting authority, conferred by
proxies, at its 2000 Annual Meeting with respect to any such proposal that is
not timely submitted (i.e., of which the Company did not have notice by December
31, 2000).
14
<PAGE> 17
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, which contains copies of the Company's audited
financial statements, is being sent to stockholders with this Proxy Statement.
The foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.
STEPHANIE N. JOSEPHSON
Corporate Secretary
March 30, 2000
15
<PAGE> 18
SKU# 1785-PS-00
<PAGE> 19
PROXY
DETACH HERE
THERMADYNE HOLDINGS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THERMADYNE HOLDINGS CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 2000
The undersigned, having received the notice and accompanying Proxy
Statement for said meeting, hereby appoints Randall E. Curran, James H. Tate or
Stephanie N. Josephson, and each of them, with full power of substitution, as
the undersigned's proxy and attorney-in-fact to vote at the Annual Meeting of
Stockholders of Thermadyne Holdings Corporation (the "Company") to be held on
April 25, 2000 (the "Annual Meeting"), or at any adjournment thereof, all shares
of voting stock of the Company which the undersigned may be entitled to vote.
The above proxies are hereby instructed to vote as shown on the reverse of this
card and in their discretion upon such other business as may properly come
before the Annual Meeting or at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE DIRECTOR NOMINEES.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE GIVEN, ALL
THE VOTES ATTRIBUTABLE TO YOUR VOTING SHARES WILL BE VOTED FOR THE DIRECTOR
NOMINEES.
- --------------- ---------------
SEE REVERSE SEE REVERSE
SIDE SIDE
- --------------- ---------------
<PAGE> 20
DETACH HERE
[ ] Please mark
votes as in
this example.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS 2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED
TO VOTE WITH RESPECT TO ANY OTHER BUSINESS
Nominees: (01) Randall E. Curran, (02) William F. Dawson, Jr., WHICH MAY PROPERLY COME BEFORE THE ANNUAL
(03) John F. Fort, III, (04) Peter T. Grauer, (05) Harold A. Poling, MEETING OR AT ANY ADJOURNMENT THEREOF.
(06) Lawrence M.v.D. Schloss, (07) James H. Tate
FOR ALL [ ] [ ] WITHHOLD
NOMINEES AUTHORITY
(except as FOR ALL
indicated in NOMINEES
space below)
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
-------------------------------------------------- MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(To withhold authority to vote for any individual
nominee, print the nominee's name above.)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE EVEN IF YOU PLAN TO
ATTEND THE MEETING.
Please sign exactly as your name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
</TABLE>
