<PAGE> 1
SCHEDULE 14A
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
SALTON/MAXIM HOUSEWARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SALTON/MAXIM HOUSEWARES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
- -------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
SALTON MAXIM LOGO
SALTON/MAXIM HOUSEWARES, INC.
550 BUSINESS CENTER DRIVE
MOUNT PROSPECT, ILLINOIS 60056
To Our Stockholders:
You are invited to attend the 1996 Annual Meeting of Stockholders of
Salton/Maxim Housewares, Inc. to be held at the Four Seasons Hotel, 120 E.
Place, Chicago, Illinois 60611, Wednesday, December 18, 1996 at 2:00 p.m. local
time. We are pleased to enclose the notice of our annual stockholders meeting,
together with a Proxy Statement, a Proxy and an envelope for returning the
Proxy.
Please carefully review the Proxy Statement and then complete and sign your
Proxy and return it promptly. If you plan to attend the meeting, please so
indicate by marking the box on the Proxy. If you attend the meeting and decide
to vote in person, you may withdraw your Proxy at the meeting.
If you have any questions or need assistance on how to vote your shares,
please call our proxy solicitor, McCormick & Pryor Ltd., collect at (212)
968-9090. Your time and attention to this letter and the accompanying Proxy
Statement and Proxy is appreciated.
Sincerely,
Leonhard Dreimann
Leonhard Dreimann
President and Chief Executive Officer
November 14, 1996
<PAGE> 3
SALTON MAXIM LOGO
SALTON/MAXIM HOUSEWARES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Salton/Maxim Housewares, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, December 18,
1996 at 2:00 p.m. local time, at the Four Seasons Hotel, 120 E. Delaware Place,
Chicago, Illinois 60611, for the following purposes:
1. To elect three Class II Directors for a term expiring in 1999;
2. To ratify the appointment of Deloitte & Touche LLP as auditors of the
Company for the 1997 fiscal year; and
3. To transact such other business that is properly brought before the
meeting.
Only holders of Common Stock of record on the books of the Company at the
close of business on October 28, 1996 will be entitled to vote at the Annual
Meeting.
The Board of Directors' nominees for Director are set forth in the
accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT. ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL
MEETING IN PERSON. HOWEVER, TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
PLEASE MARK, DATE AND SIGN YOUR PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. If you plan to attend the Annual Meeting, please so indicate by
marking the box on the Proxy. Any stockholder attending the Annual Meeting may
vote in person even if the stockholder returned a Proxy.
By Order of the Board of Directors
David C. Sabin
David C. Sabin
Secretary
Chicago, Illinois
November 14, 1996
THE ENCLOSED PROXY, WHICH IS BEING SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY,
CAN BE RETURNED IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
SALTON/MAXIM HOUSEWARES, INC.
550 BUSINESS CENTER DRIVE
MOUNT PROSPECT, ILLINOIS 60056
PROXY STATEMENT
Proxies in the accompanying form are being solicited by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders on
Wednesday, December 18, 1996, or at any adjournment thereof. The Annual Meeting
will be held at the Four Seasons Hotel, 120 E. Delaware Place, Chicago,
Illinois, at 2:00 p.m. local time. The Proxy Statement and the form of Proxy are
being mailed to stockholders commencing on or about November 14, 1996.
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
Any stockholder who executes and returns a Proxy may revoke the same at any
time before it is exercised by filing with the Secretary of the Company written
notice of such revocation or a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in and of itself constitute revocation of a Proxy.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on October 28, 1996 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 13,017,144 shares of Common Stock, $.01 par value of the
Company (the "Common Stock"), were issued and outstanding.
VOTING AND SOLICITATION
Holders of Common Stock of record as of the close of business on the Record
Date, or their proxies, are entitled to one vote per share of Common Stock. The
Company's Restated Certificate of Incorporation does not provide for cumulative
voting rights.
A plurality of the votes cast at the Annual Meeting is required to elect
Directors. The affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for the 1997 fiscal year. In accordance with Delaware law
and the Company's Restated Certificate of Incorporation and Bylaws, (i) for the
election of Directors, only proxies and ballots indicating votes "FOR" or
"WITHHELD" are counted to determine the total number of votes cast, and broker
non-votes are not counted, and (ii) for the ratification of the selection of
Deloitte & Touche LLP, only proxies and ballots indicating votes "FOR,"
"AGAINST", or "ABSTAIN" on the proposal or providing the designated proxies with
the right to vote in their judgment and discretion on the proposal are counted
to determine the number of shares present and entitled to vote, and broker
non-votes are not counted.
The cost of soliciting proxies will be borne by the Company. The Company
has retained the services of McCormick & Pryor Ltd. to aid in the solicitation
of Proxies. The Company estimates that it will pay McCormick & Pryor Ltd. a fee
of approximately $3,500 for its services, plus out-of-pocket expenses. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
1
<PAGE> 5
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's next annual meeting of stockholders to be held in
1997 must be received by the Company no later than July 9, 1997 in order that
they may be included in the proxy statement and form of proxy relating to that
meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 23, 1996, by (i) each
person known to the Company to beneficially own 5% or more of the Company's
Common Stock, (ii) each of the Directors and executive officers of the Company
and (iii) all executive officers and Directors of the Company as a group. The
number of shares of Common Stock shown as owned by the persons and group named
below assumes the exercise of all currently exercisable options held by such
persons and group, and the percentage shown assumes the exercise of such options
and assumes that no options held by others are exercised. Unless otherwise
indicated below, the persons named below have sole voting and investment power
with respect to the number of shares set forth opposite their names. For
purposes of the following table, each person's beneficial "ownership" of the
Company's Common Stock has been determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 13d-3
promulgated thereunder.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL HOLDER OWNED OWNED
- ---------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Windmere-Durable Holdings, Inc.(1).................................... 6,508,572 50.0%
Dominator Investors Group(2).......................................... 463,580 3.5
Financo Investors Fund, L.P.(3)....................................... 1,061,566 8.1
Mr. Leonhard Dreimann(4).............................................. 830,233 6.3
Mr. William B. Rue(4)................................................. 623,902 4.8
Mr. David C. Sabin (5)................................................ 506,419 3.9
Mr. Frank Devine(6)................................................... 25,000 *
Mr. Bert Doornmalen(6)................................................ 20,000 *
Mr. David M. Friedson(1).............................................. 0 *
Mr. Harry D. Schulman(1).............................................. 0 *
Mr. Laurence S. Chud, M.D............................................. 0 *
Mr. James Connolly.................................................... 0 *
All Directors and executive officers as a group (5 persons)(6)........ 1,541,974 11.2%
</TABLE>
- ---------------
* Less than 1%.
(1) Windmere-Durable Holdings, Inc. ("Windmere-Durable") is a Florida
corporation which is engaged principally in manufacturing and distributing a
wide variety of personal care products and household appliances. Mr.
Friedson is the Chairman of the Board, President and Chief Executive officer
of Windmere-Durable. Mr. Schulman is a Senior Vice President of
Windmere-Durable. Each of Mr. Friedson and Mr. Schulman disclaims beneficial
ownership of the shares of Common Stock owned by Windmere-Durable.
(2) Dominator Investors Group is a Hong Kong corporation owned equally by
Messrs. Dreimann and Rue.
(3) Financo Investors Fund, L.P. ("Financo Fund") is a Delaware limited
partnership of which Financo Investors Management Partnership, L.P. is the
sole general partner.
(4) Includes, with respect to Mr. Dreimann and Mr. Rue, 140,000 shares and
120,000 shares, respectively, of Common Stock which may be acquired upon the
exercise of immediately exercisable options. Except for the shares which may
be acquired upon the exercise of such immediately exercisable options,
Messrs. Dreimann and Rue do not own any shares individually; however, by
reason of their respective positions
2
<PAGE> 6
with Dominator and ownership interests in Dominator, each may be deemed to
beneficially own the shares owned by Dominator, with shared voting and
investment power over these shares.
(5) Includes 70,000 shares of Common Stock which may be acquired upon the
exercise of immediately exercisable stock options. Also includes (i) 347,319
shares owned by Duquesne Financial Corporation ("Duquesne"), an Illinois
corporation which is owned by Susan Sabin, and (ii) 89,100 shares owned by
Susan Sabin. Susan Sabin is David Sabin's wife. Mr. Sabin disclaims
beneficial ownership of all shares owned by Duquesne and Susan Sabin.
(6) Includes, with respect to each of Messrs. Doornmalen and Devine, 10,000
shares of Common Stock which may be acquired upon the exercise of
immediately exercisable options.
(7) Includes an aggregate of 350,000 shares which may be acquired by Directors
and officers of the Company upon the exercise of immediately exercisable
options. See footnotes 2 through 6 above.
The addresses of the persons shown in the table above who are beneficial
owners of more than five percent of the Company's Common Stock are as follows:
Windmere-Durable Holdings, Inc., 5980 Miami Lakes Drive, Miami Lakes, Florida
33014-2467; Dominator Investors Group and Messrs. Dreimann, Sabin and Rue c/o
550 Business Center Drive, The Kensington Center, Mount Prospect, Illinois
60056; and Financo Investors Fund, L.P., c/o Victor J. Barnett, 895 Park Avenue,
New York, New York 10021.
The Company and Windmere-Durable are parties to a Stockholder Agreement
dated July 11, 1996 (the "Stockholder Agreement"). Pursuant to the Stockholder
Agreement, except after a period of 30 consecutive days during which
Windmere-Durable's interest in the Company is less that 15%, Windmere-Durable
has the right to designate that number of directors that will result in the
total number of directors designated by Windmere-Durable being equal to the
product (rounded up to the nearest whole number) of (i) the total number of
directors then on the Board, and (ii) Windmere/Durable's percentage ownership
interest in the Company at that time; provided that the number of directors
designated by Windmere-Durable will in no event exceed 50% of the total number
of directors. On July 11, 1996, the following persons designated by
Windmere-Durable were elected as Directors of the Company: David M. Friedson,
Harry D. Schulman, Laurence S. Chud, M.D. and James Connolly.
Financo Fund, Dominator and the Company are parties to a Stockholders'
Agreement pursuant to which the Company has agreed to nominate at least one
Director selected by each of Dominator and Financo Fund so long as each such
stockholder owns at least 5% of the then outstanding shares of Common Stock, and
such stockholders agreed to vote their shares to elect such Director. There is
currently no representative of Financo Fund serving on the Board.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's outstanding Common
Stock, to file reports of ownership and changes in ownership of such securities
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
greater-than-10% beneficial owners are required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon a review of the
copies of the forms furnished to the Company, and/or written representations
from certain reporting persons that no other reports were required, the Company
believes that, all Section 16(a) filing requirements applicable to its officers,
directors and 10% beneficial owners during or with respect to the year ended
June 29, 1996 were met.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of whose members
serve for a staggered three-year term. The Board is comprised of three Class I
Directors (David C. Sabin, Laurence S. Chud M.D. and one vacancy), three Class
II Directors (Bert Doornmalen, David M. Friedson, and Harry D. Schulman) and
three Class III Directors (Leonhard Dreimann, Frank Devine and James Connolly).
The current term of the Class II Directors ends upon the election of Class II
Directors at this Annual Meeting. The term of the Class III Directors ends upon
the election of Class III Directors at the 1997 annual meeting of stockholders,
3
<PAGE> 7
and the term of the Class I Directors ends upon the election of Class I
Directors at the 1998 annual meeting of stockholders.
The Board of Directors has nominated Messrs. Doornmalen, Friedson and
Schulman to stand for reelection as the Class II Directors for a three-year
term. The three-year term ends upon the election of Class II Directors at the
1999 annual meeting of stockholders.
At the Annual Meeting, the Common Stock represented by Proxies in the form
accompanying this Proxy Statement, unless otherwise specified, will be voted to
reelect Messrs. Doornmalen, Friedson and Schulman as the Class II Directors.
Each of Messrs. Doornmalen, Friedson and Schulman have agreed to serve if
elected. However, if any of such Board of Directors' nominees becomes unable or
unwilling to serve if elected, the Proxies will be voted for the election of the
person, if any, recommended by the Board of Directors of the Company or, in the
alternative, for holding a vacancy to be filled by the Board of Directors. The
Board of Directors has no reason to believe that any of Messrs. Doornmalen,
Friedson or Schulman will be unable or unwilling to serve.
The Board of Directors recommends that each stockholder vote "FOR" the
Board of Directors' nominees, being Messrs. Doornmalen, Friedson and Schulman.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
BERT DOORNMALEN, 51, has been a Director of the Company since July, 1994.
Mr. Doornmalen has been the Managing Director of Markpeak Ltd., a Hong Kong
company which represents the Company in the purchase and inspection of products
in the Far East, since 1981.
DAVID M. FRIEDSON, 40, has been a Director of the Company since July 1996.
Mr. Friedson has served as Chairman of the Board of Windmere-Durable since April
1996, Chief Executive Officer of Windmere-Durable since January 1987 and as
President of Windmere-Durable since January 1985. From June 1976 to January
1985, Mr. Friedson held various other management positions with
Windmere-Durable.
HARRY D. SCHULMAN, 44, has been a Director of the Company since July 1996.
Mr. Schulman has served as Senior Vice President of Windmere-Durable since
February 1996 and Executive Vice President-Finance and Administration of
Windmere-Durable since February 1993. From March 1990 to January 1993, he served
as Senior Vice President-Finance and Administration of Windmere-Durable. From
January 1989 to March 1990, he was Vice President-Financial Analysis and
Administration of Windmere-Durable. Mr. Schulman has served as Chief Financial
Officer of Windmere-Durable since March 1990.
DIRECTORS CONTINUING IN OFFICE UNTIL 1997 ANNUAL MEETING
LEONHARD DREIMANN, 47, has served as President, Chief Executive Officer and
a Director of the Company since its inception in August 1988 and is a founder of
the Company. From 1987 to 1988, Mr. Dreimann served as president of the
Company's predecessor Salton, Inc., a wholly-owned subsidiary of SEVKO, Inc.
Prior to 1987, Mr. Dreimann served as managing director of Salton Australia Pty.
Ltd., a distributor of Salton brand kitchen appliances. From 1988 to December
1993, Mr. Dreimann served as an officer and a director of Glacier Holdings, and
as a director of its wholly-owned subsidiary Glacier Water Systems, Inc.
("Glacier") from 1987 to December 1993. Glacier developed, manufactured and
marketed an in-home water filtration system. From 1989 to December 1993, Mr.
Dreimann served as an officer and a director of Salton Time. During 1994,
Glacier Holdings and its subsidiaries ceased operations and were liquidated.
FRANK DEVINE, 52, has been a Director of the Company since December, 1994.
Mr. Devine serves as a business consultant for various entities. He has founded
or co-founded Bachmann-Devine, Incorporated, a venture capital firm, American
Home, Inc., an importer of hand-loomed rugs and decorative accessories, World
Wide Digital Vaulting, Inc., an on-line digital data storage company and
Shapiro, Devine & Craparo, Inc., a household goods manufacturers representation
company serving the retail industry. Mr. Devine also serves on the board of
directors of these companies.
JAMES CONNOLLY, 44, has been a Director of the Company since July, 1996.
Mr. Connolly is President and Publisher of KQED Books & Video, which publishes
companion books and videos for PBS and the Public Television Network.
4
<PAGE> 8
DIRECTORS CONTINUING IN OFFICE UNTIL 1998 ANNUAL MEETING
DAVID C. SABIN, 45, has served as Chairman of the Company since September
1991 and has served as Secretary and a Director of the Company since its
inception in August 1988 and is a founder of the Company. Mr. Sabin served as
the president and a director of Glacier Holdings, Inc., a publicly held company
("Glacier Holdings"), from December 1988 through May 1994 and as a director of
Salton Time Inc., a wholly-owned subsidiary of Glacier Holdings, since 1989.
Salton Time was an importer and distributor of quartz wall and alarm clocks.
From 1991 through May 1994, Mr. Sabin was an officer and a director of
Stylemaster, Inc., a wholly-owned subsidiary of Glacier Holdings, which was
engaged in the manufacture and distribution of plastic housewares articles.
Stylemaster, Inc. filed for protection under Chapter 11 of the United States
Bankruptcy Code in March 1994. During 1994, Glacier Holdings and its
subsidiaries ceased operations and were liquidated.
LAURENCE S. CHUD, M.D., 46, has been a Director of the Company since July,
1996. Dr. Chud has been a practicing psychiatrist and member of the faculty of
Harvard Medical School and Tufts University School of Medicine for more than the
past ten years. Since January 1995 he has been Vice President, Investment
Banking at C.P. Baker & Co. Ltd., an investment banking firm in Boston,
Massachusetts.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held eight meetings during the fiscal
year ended June 29, 1996.
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee held two meetings and the Compensation Committee held one
meeting during 1996. The Committees received their authority and assignments
from the Board of Directors and report to the Board of Directors. No Director
attended fewer than 75% of the aggregate number of meetings of the Board of
Directors and the Committees on which he served during the period for which he
was a member of the Board.
Mr. Doornmalen and Mr. Devine served as members of the Audit Committee
during 1996. The Audit Committee recommends the engagement of the Company's
independent auditors and is primarily responsible for approving the services
performed by the Company's independent auditors. The Committee also reviews and
evaluates the Company's accounting principles and its system of internal
accounting controls.
Mr. Doornmalen and Mr. Devine served as members of the Compensation
Committee during 1996. The Compensation Committee reviews and approves the
Company's executive compensation policy, makes recommendations concerning the
Company's employee benefit policies for executives, and has authority to
administer the Company's stock option plans.
COMPENSATION OF DIRECTORS
Each Director who is not an employee of the Company receives a Director's
fee in the amount of $7,500 per annum, along with reimbursement for
out-of-pocket expenses incurred in connection with attending such meetings. In
addition, each Director who is not an employee of the Company receives $1,000
per meeting for each meeting he or she attends and is granted options to
purchase 2,000 shares of Common Stock under the Company's Non-Employee Directors
Stock Option Plan on the date of each annual meeting of stockholders.
5
<PAGE> 9
EXECUTIVE OFFICERS' COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the total compensation received by the Company's
Chief Executive Officer and its most highly compensated officers for the fiscal
years ending June 29, 1996, July 1, 1995 and, July 2, 1994, respectively.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS
--------------------------------------- --------------------- PAYOUTS
OTHER RESTRICTED -------
ANNUAL STOCK OPTIONS/ LTPP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR $ $ ($)(1)(2) ($) (#) ($) ($)
- --------------------- ---- ------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonhard Dreimann.... 1996 200,000 15,000 55,000 -- 70,000(4) -- --
(President and CEO 1995 200,000 -- 55,000 -- -- -- --
of the Company) 1994 200,000 -- 38,000 -- -- -- --
David C. Sabin....... 1996 150,000 15,000 20,000 -- 70,000(4) -- --
(Chairman and 1995 150,000 -- 20,000 -- -- -- --
Secretary) 1994 150,000 -- 16,000 -- -- -- --
William B. Rue....... 1996 150,000 15,000 25,000 -- 70,000(4) -- --
(Chief Operating 1995 124,000 -- 23,000 -- -- -- --
Officer and Senior 1994 124,000 -- 12,000 -- 30,000(3) -- --
Vice President)
</TABLE>
- ---------------
(1) Other annual compensation did not exceed the lesser of $50,000 or 10% of the
total salary and bonus for any of the named executive officers except as
noted.
(2) Consists primarily of reimbursement for costs associated with use and
maintenance of an automobile.
(3) Options were awarded on December 23, 1993 under the Company's 1992 Stock
Option Plan and vested six months and one day from the date of grant.
(4) Options were awarded on October 26, 1995 under the Company's 1995 Employee
Stock Option Plan at an exercise price equal to the fair market value of the
Common Stock on the date of grant ($2.50).
The following table sets forth certain information concerning options
granted to the named executive officers during the fiscal year ended June 29,
1996.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
-------------------------------------------------- ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK
SECURITIES TOTAL OPTIONS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- -------------------------------- --------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Leonhard Dreimann............... 70,000 33 1/3% $2.50 10/04/05 $110,057 $278,905
David C. Sabin.................. 70,000 33 1/3% $2.50 10/04/05 $110,057 $278,905
William B. Rue.................. 70,000 33 1/3% $2.50 10/04/05 $110,057 $278,905
</TABLE>
- ---------------
(1) All options were granted at an exercise price equal to the fair market value
of the Common Stock on the date of grant.
6
<PAGE> 10
The following table sets forth certain information with respect to the
unexercised options to purchase the Company's Common Stock held by the named
executive officers at June 29, 1996. None of the named executive officers
exercised any stock options during the fiscal year ended June 29, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT FY-END(#) AT FY-END($)(1)
----------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Leonhard Dreimann.......................... 140,000 -- $ 157,500 --
David C. Sabin............................. 70,000 -- $ 157,500 --
William B. Rue............................. 120,000 -- $ 273,000 --
</TABLE>
- ---------------
(1) Based on the fair market value of the Common Stock on June 29, 1996 ($4.75
per share) less the option exercise price.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Leonhard Dreimann, David C.
Sabin and William B. Rue which expire on December 15, 1997. The agreements
provide for the following base salaries during the term of the agreements: Mr.
Dreimann -- $200,000; Mr. Sabin -- $150,000; and Mr. Rue -- $150,000, all
subject to adjustments for inflation. Each agreement provides that if the
executive is terminated without Cause (as defined), he will be entitled to
receive an amount equal to one year's salary plus the executive's pro rata bonus
for the year of termination and the continuation of certain health benefits. The
employment agreements provide that so long as any of the executives are employed
by the Company pursuant to the employment agreements, the Company must provide
such executive with a bonus program on terms which are substantially similar, in
terms of the potential amount of compensation, as those provided under the
incentive bonus plan described below.
INCENTIVE BONUS PLAN
The Annual Incentive Bonus Plan of the Company provides financial cash
awards to officers and other key employees of the Company, including Messrs.
Dreimann, Sabin and Rue. With respect to each fiscal year of the Company, the
Compensation Committee of the Board of Directors establishes a bonus pool equal
to 10% of the excess of pre-tax earnings of the Company for such fiscal year
over a target figure for such fiscal year based upon the operating performance
of the Company. Pursuant to the Incentive Bonus Plan, 75% of the amount
deposited in the bonus pool is allocated to a mandatory bonus fund and the
remaining 25% is allocated to a discretionary bonus fund. Each of Messrs.
Dreimann, Sabin and Rue are entitled to receive 30%, 20% and 12.5%,
respectively, of the mandatory bonus fund for each fiscal year of the Company
during the term of his employment agreement. The discretionary bonus fund may be
used by the Compensation Committee of the Board to pay additional bonuses to the
Company's key employees, including Messrs. Dreimann, Sabin and Rue.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In connection with its initial public offering of Common Stock completed in
October 1991, the Company established a Compensation Committee of the Board of
Directors. The Compensation Committee consists entirely of independent outside
Directors and has responsibility for administering the compensation program for
the executive officers of the Company.
Set forth below is a discussion of the Company's compensation philosophy,
together with a discussion of the factors considered by the Committee in
determining the compensation of the Company's Chief Executive Officer and other
executive officers for the fiscal year ended June 29, 1996.
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OBJECTIVES AND POLICIES
The Company's executive compensation program is designed to enable the
Company to recruit, retain and motivate the high quality employees it needs. As
a result, the Committee has determined that executive compensation
opportunities, including those for Mr. Dreimann, should create incentives for
superior performance and consequences for below target performance.
The Company's executive compensation mix includes a base salary, annual
cash bonus awards and long-term compensation in the form of stock options. The
Committee's policy is that a significant portion of the executive's compensation
opportunities must be tied to achievement of annual objectives of the Company.
The base salary for Mr. Dreimann and the other executive officers have been
established by employment agreements entered into by these executives in
October, 1991 (see above). The Compensation Committee may in its discretion make
salary increases based on an assessment of each executive's performance against
the underlying accountabilities of each executive's position.
Payments to executives under the Company's Annual Incentive Bonus Plan (see
above) are tied to the Company's level of achievement of annual pretax earnings
targets, establishing a direct link between executive pay and Company
profitability. Annual pretax earnings targets are based upon the earnings budget
for the Company as reviewed by the Board of Directors. As described above, each
executive officer is entitled to a specified percentage of a bonus fund
established when budgeted earnings are achieved. Annual incentive payments are
paid only when earnings exceed those set forth in the budget. For the fiscal
year ended June 29, 1996, each of Messrs. Dreimann, Sabin and Rue were awarded
$15,000 under the Incentive Bonus Plan.
The Company's long-term incentives are in the form of stock option awards.
The objective of these awards is to advance the longer term interests of the
Company and its stockholders and complement incentives tied to annual
performance. These awards provide rewards to executives upon the creation of
incremental stockholder value and the attainment of long-term earnings goals.
Stock options only produce value to executives if the price of the Company's
stock appreciates, thereby directly linking the interests of executives with
those of stockholders. The number of stock options granted is based on the grade
level of an executive's position and the executive's performance in the prior
year. The size of previous option grants and the number of options currently
held by an executive are not taken into account in determining the number of
stock options granted. The executive's right to the stock options generally vest
over a period and each option is exercisable, but only to the extent it has
vested, over a ten-year period following its grant. During the fiscal year ended
June 29, 1996, each of Messrs. Dreimann, Sabin and Rue were granted options to
purchase 70,000 shares of Common Stock at an exercise price ($2.50) equal to the
fair market value of the Common Stock on the date of grant.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Dreimann's base salary for the fiscal year ended June 29, 1996 was
based principally on his rights under his employment agreement with the Company
dated October 8, 1991 (the "Employment Agreement"), which is described above.
The Employment Agreement established Mr. Dreimann's salary at $200,000. This
salary may be increased at the discretion of the Committee annually by the
percentage rate of inflation during the calendar year as measured by the
consumer price index for urban wage earners published by the United States
Department of Labor, Bureau of Labor Statistics, for the Chicago metropolitan
area. The Committee did not exercise its authority under the Employment
Agreement to increase Mr. Dreimann's salary in fiscal 1996. The perquisites and
other benefits received by Mr. Dreimann that are reported in the Summary
Compensation Table are provided pursuant to his Employment Agreement.
The Employment Agreement also provides that Mr. Dreimann is entitled to
receive a bonus under the Company's Annual Incentive Bonus Plan discussed above.
Mr. Dreimann was awarded $15,000 under the Plan with respect to the fiscal year
ended June 29, 1996. In October 1995, the Compensation Committee granted to Mr.
Dreimann stock options to purchase 70,000 shares of Common Stock. These options
were granted at an exercise price equal to the fair market value of the Common
Stock on the date of grant ($2.50). The remaining 70,000 stock options held by
Mr. Dreimann currently have no value because the exercise price
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of the stock options, which were granted at fair market value, is higher than
the current fair market value of the Common Stock.
Compensation Committee
Bert Doornmalen
Frank Devine
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bert Doornmalen, a Director of the Company, is the Managing Director of
Markpeak, Ltd., a Hong Kong company. The Company recorded inventory purchases
and commissions with Markpeak, Ltd., a Hong Kong Company, of $10,233,239 and
$739,152, respectively in 1996. At June 29, 1996, the Company owed Markpeak,
Ltd. $557,330 for current charges.
Mr. Frank M. Devine, a Director of the Company, is a co-founder of the firm
Shapiro, Devine and Craparo, Inc. ("SDC"), a manufacturers representation firm.
The firm represents many major manufacturers of household products (including
Salton/Maxim Housewares, Inc.) to the retail industry. During 1996, the Company
recorded commissions with SDC of $160,279. As of June 29, 1996, the Company owed
SDC $32,671 for current charges.
PERFORMANCE GRAPH
The following graph compares the performance of the Company with the
performance of the Standard & Poor's 500 Stock Index (S&P 500) and the average
performance of a group consisting of the Company's peer corporations which are
industry competitors for the period from October 10, 1991, the day when the
Company's Common Stock began publicly trading on the NASDAQ National Market to
June 30, 1996. The corporations making up the peer companies group are Beverly
Hills Fan Co., Black & Decker Corp., Craftmade International Inc., Creative
Technologies Corp., Dynamics Corp. of America, Helen of Troy Corp., National
Presto Industry Inc., Rival Co., Royal Appliance Manufacturing Co., Singer Co.
N.V., Sunbeam-Oster Company Inc., Toastmaster Inc., Whirlpool Corporation and
Windmere-Durable Holdings, Inc. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at October 10,
1991 and that all dividends, if any, were reinvested.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
LOGO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDING ENDING ENDING ENDING ENDING ENDING
10/10/91 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96
<S> <C> <C> <C> <C> <C> <C> <C>
Salton/Maxim Housewares: $ 100 $ 25 $ 19 $ 19 $ 20 $ 40
S&P 500 Index: $ 100 $ 111 $ 126 $ 128 $ 161 $ 201
Peer Group: $ 100 $ 124 $ 147 $ 142 $ 151 $ 158
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</TABLE>
CERTAIN TRANSACTIONS
On July 11, 1996, the Company consummated its previously announced
transaction with Windmere-Durable pursuant to a Stock Purchase Agreement dated
February 27, 1996, as amended (the "Stock Purchase Agreement"), between the
Company and Windmere-Durable. Windmere-Durable is a corporation engaged
principally in manufacturing and distributing a wide variety of personal care
products and household appliances. Pursuant to the Stock Purchase Agreement,
Windmere-Durable purchased from the Company 6,508,572 newly issued shares of
Common Stock (the "Purchase"), which represented 50% of the outstanding shares
of Common Stock of the Company on February 27, 1996 after giving effect to the
Purchase. As consideration for the Purchase, Windmere-Durable paid the Company:
(i) $3,254,286 in cash, as described below; (ii) a subordinated promissory note
in the aggregate principal amount of $10,847,620 (the "Note"), which Note is
secured by certain assets of Windmere-Durable and its domestic subsidiaries and
guaranteed by such domestic subsidiaries; and (iii) 748,112 shares of
Windmere-Durable's common stock. Windmere-Durable's common stock is traded on
the NYSE. The cash portion of the consideration for the Purchase was paid by the
cancellation of the Company's obligation to repay the loan in the principal
amount of $3,254,286 which Windmere-Durable had made to the Company in April
1996. The Note is payable five years from the closing date of the Purchase and
bears interest at 8% per annum payable quarterly. Windmere-Durable was also
granted an option to purchase up to 485,000 shares of Common stock at an
exercise price of $4.83 per share, which option is exercisable only if and to
the extent that options to purchase shares of Common Stock which were
outstanding on February 27, 1996 are exercised.
In connection with the Purchase, Windmere-Durable and the Company also
entered into a Stockholder Agreement (the "Stockholder Agreement") and a
Registration Rights Agreement (the "Registration
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Agreement"). Pursuant to the Stockholder Agreement, Windmere-Durable is entitled
to designate for election, so long as its ownership does not fall below 15%,
that percentage of the Company's directors as is proportionate to its stock
ownership percentage; provided that the number of directors designated by
Windmere-Durable will in no event exceed 50% of the total number of directors.
The Stockholder Agreement also contains provisions which, subject to
specified time periods and exceptions, restrict the disposition by
Windmere-Durable of shares of Common Stock and restrict purchases by
Windmere-Durable of additional shares of Common Stock that would increase its
percentage ownership interest. Subject to the foregoing restrictions on
disposition of shares, the Registration Agreement gives Windmere-Durable certain
demand and piggyback registration rights with respect to its shares of Common
Stock.
The Company and Windmere-Durable also entered into a Marketing Cooperation
Agreement (the "Marketing Cooperation Agreement"). Pursuant to the Marketing
Cooperation Agreement, until Windmere-Durable's interest in the Company is less
than 30% for at least ten consecutive days, each of the Company and
Windmere-Durable has agreed to participate in a variety of mutually satisfactory
marketing cooperation efforts designed to expand the market penetration of each
party.
During fiscal year 1996, the Company recorded sales to Duquesne Financial
Corporation ("Duquesne") of approximately $919,000. The Chairman of the Company
is an executive officer of Duquesne. As of June 29, 1996, the Company owed
Duquesne approximately $256,000 related to inventory purchases and Duquesne owed
the Company approximately $220,000 with respect to the sales to it.
The Company purchased inventory from Durable Electrical Metal Factory,
Ltd., a wholly owned subsidiary of Windmere-Durable, of $3,199,649 in 1996. The
Company owed Durable $558,443 at June 29, 1996 for current charges.
Reference is made to "Executive Officers Compensation -- Compensation
Committee Interlocks and Insider Participation" for a discussion of the
relationships between the Company and Markpeak, Ltd. and Shapiro, Devine and
Craparo, Inc., respectively.
The Company believes that each of the above transactions were on terms
which were no less favorable to the Company than would have been available in
similar transactions with unaffiliated third parties.
INDEPENDENT AUDITORS
The Board of Directors requests the notification of the appointment of
Deloitte & Touche LLP by the stockholders of the Annual Meeting. The Board of
Directors recommends that each stockholder vote "FOR" ratification of Deloitte &
Touche LLP as independent auditors for fiscal 1997. In the event such selection
is not ratified, the Board of Directors will reconsider its selection.
Deloitte & Touche LLP has audited the Company's financial statements for
each fiscal year since the fiscal year ended July 1, 1989. Representatives of
Deloitte & Touche LLP are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter other
than those listed in the Notice of meeting is to be presented for action at the
Annual Meeting. If the Board's nominee is unavailable for election as a Director
or any other matter should properly come before the meeting, it is intended that
votes will be cast pursuant to the Proxy in respect thereto in accordance with
the best judgment of the person or persons acting as proxies.
November 14, 1996
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I,3
P R O X Y SALTON/MAXIM HOUSEWARES, INC.
ANNUAL MEETING OF STOCKHOLDERS, DECEMBER 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Leonhard Dreimann and William
B. Rue and each of them as Proxy holders and attorneys, with full
power of substitution, to appear and vote all of the shares of Common
Stock of Salton/Maxim Housewares, Inc. which the undersigned shall be
entitled to vote at the Annual Meeting of Stockholders of the Company,
to be held at the Four Seasons Hotel, 120 E. Delaware Place, Chicago,
Illinois 60611, on Wednesday, December 18, 1996 at 2:00 P.M. local
time, and at any adjournments thereof, hereby revoking any and all
proxies heretofore given and (ii) authorizes and directs said Proxy
holders to vote all of the shares of Common Stock of the Company
represented by the Proxy as follows, with the understanding that if no
directions are given below, said shares will be voted "FOR" the
election of the Director's nominated by the Board of Directors and
"FOR" Proposal 2.
<TABLE>
<S> <C>
(1) Election of Directors: Bert Doornmalen, David M. Friedson and Harry D. Schulman
[ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY
TO VOTE FOR THE NOMINEES LISTED
[ ] FOR, EXCEPT VOTE WITHHELD
FROM THE FOLLOWING
NOMINEE(S)
---------------------------
</TABLE>
(2) Ratify appointment of independent auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion to act on any other matters which may
properly come before the Annual Meeting.
Please date, sign and return promptly in the accompanying
envelope.
Dated , 1996
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(Signature)
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(Signature if held jointly)
Your signature to this Proxy form should be exactly the same as the
name imprinted herein. Persons signing as executors, administrators,
trustees or in similar capacities should so indicate. For joint
accounts, the name of each joint owner must be signed.
[ ] Check Box if you plan to attend the meeting.
The Board of Directors Recommends You Vote FOR the Above Proposals.
