SL INDUSTRIES INC, DEF 14A, 1998-10-16

SL INDUSTRIES INC
DEF 14A, 1998-10-16
ELECTRIC LIGHTING & WIRING EQUIPMENT

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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:

/ / 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

SL Industries, Inc.
(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:

(4) Date Filed:

<PAGE>

[LOGO]

October 16, 1998

DEAR SHAREHOLDER:

You are cordially invited to attend the Annual Meeting of Shareholders of
SL INDUSTRIES, INC., on Friday, November 20, 1998, at 9:00 in the morning.

The meeting will be held at the Doubletree Guest Suites, Fellowship Road,
Mt. Laurel, New Jersey. Prior to the meeting, an 8:00 a.m. breakfast will be
held in the Aspen Room.

Your Board of Directors and Management look forward to meeting those
shareholders able to attend.

YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE BE SURE THAT THE
ENCLOSED PROXY CARD IS PROPERLY COMPLETED, DATED, SIGNED AND RETURNED WITHOUT
DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.

Thank you for your continued support.

Sincerely yours,

/s/ OWEN FARREN
--------------------------------------
OWEN FARREN
President and Chief Executive Officer
<PAGE>

SL INDUSTRIES, INC.

Corporate Office: SUITE A-114, 520 FELLOWSHIP ROAD,
MT. LAUREL, NJ 08054

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE is hereby given that the Annual Meeting of Shareholders of SL
INDUSTRIES, INC., will be held at the Doubletree Guest Suites, Fellowship Road,
Mt. Laurel, New Jersey, on Friday, November 20, 1998, at 9:00 in the morning for
the following purposes:

1. To elect five directors for the ensuing year;

2. To ratify the appointment of Arthur Andersen LLP, to serve as the
Company's independent auditors for the fiscal year 1999;

3. To consider an amendment to the Company's 1991 Long Term Incentive
Plan;

4. To consider a shareholder proposal as described in the accompanying
Proxy Statement; and

5. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on September 21,
1998, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting.

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.

By Order of the Board of Directors

/s/ David R. Nuzzo
--------------------------------
David R. Nuzzo
Secretary

October 16, 1998
Mount Laurel, New Jersey

<PAGE>
SL INDUSTRIES, INC.
SUITE A-114
520 FELLOWSHIP ROAD
MOUNT LAUREL, NJ 08054

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies, by and on behalf of the Board of Directors of SL Industries, Inc. (the
"Company"), to be voted at the Annual Meeting of Shareholders on November 20,
1998, at 9:00 a.m., and at any adjournment or postponement thereof (the "Annual
Meeting"). The Annual Meeting has been called to consider and vote upon the
election of five Directors, the ratification of the appointment of Arthur
Andersen LLP as the Company's auditors for the fiscal year 1999, an amendment to
the Company's 1991 Long Term Incentive Plan, a shareholder proposal as described
in this Proxy Statement, and such other business as may properly come before the
meeting. This Proxy Statement and the enclosed form of proxy are first being
mailed to shareholders on or about October 16, 1998.

VOTING BY SHAREHOLDERS

Only holders of record of the Company's Common Stock, par value $.20 per
share (the "Common Stock"), at the close of business on September 21, 1998, are
entitled to receive notice of and to vote at the Annual Meeting.

Shares cannot be voted at the Annual Meeting unless the owner thereof is
present in person or represented by proxy. When a proxy in the accompanying form
is returned, properly dated and executed, the shares represented thereby will be
voted at the Annual Meeting and, if a shareholder specifies a choice with
respect to any matter to be acted upon, such shares will be voted in accordance
with the specifications so made. A proxy may be revoked at any time prior to
being voted by filing a written notice of revocation with the Secretary of the
meeting or by voting the shares subject to the proxy by written ballot at the
meeting.

The proxy tabulation will be done by our transfer agent and proxies should
be returned in the enclosed business reply envelope. The cost of soliciting
proxies will be borne by the Company. In addition to solicitations by mail, a
number of directors, officers and other employees of the Company and of its
subsidiaries may (without additional compensation) solicit proxies in person or
by telephone, telex, facsimile or other electronic means. The Company has also
retained MacKenzie Partners, Inc., for a fee not-to-exceed $7,500, and
reimbursement of out-of-pocket expenses, to aid in the solicitation of proxies.

On the record date, September 21, 1998, there were 5,626,509 shares of
Common Stock of the Company outstanding. All outstanding shares are of one
class. Shareholders have the right to cast one vote for each share held on the
record date as to each matter presented at the meeting.

All shares represented by each properly executed unrevoked proxy received
prior to the Annual Meeting will be voted in accordance with the instructions
specified therein, or in the absence of appropriate instructions, for the
election of all of the nominees for director listed in Proposal 1, for Proposals
2 and 3, AND AGAINST PROPOSAL 4.

Under the By-Laws of the Company, the presence of a quorum is required for
each matter to be acted upon at the Annual Meeting. The holder of a majority of
the shares entitled to vote at the meeting must be present in person or
represented by proxy in order to constitute a quorum for all matters to come
before the meeting. Broker non-votes and abstentions will be counted only for
the purpose of determining whether a quorum is present at the meeting. Except
for the election of directors, all matters to be voted upon at the Annual
Meeting must receive the approval of a majority of votes cast at the duly
convened Annual Meeting in order to be binding on the Company. Directors shall
be elected by a plurality of the votes cast. For purposes of determining the
number of votes cast with respect to any voting matter, only votes cast "for" or
"against," in accordance with and subject to Section 402.08 of the rules of the
New York Stock Exchange (or any successor provision), are included.

<PAGE>

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.

The Board of Directors does not know of any business to properly come
before the Annual Meeting, other than that set forth in the Notice of Annual
Meeting of Shareholders. Should any matters properly come before the Annual
Meeting or any adjournment or postponement thereof, for which specific authority
has not been solicited from the shareholders, then, to the extent permissible by
law, the persons voting the proxies will use their discretionary authority to
vote thereon in accordance with their best judgment.

The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the Annual Meeting:
(i) approval of the minutes of a prior meeting of shareholders if such approval
does not amount to ratification of the action taken at that meeting; (ii) the
election of any person to any office for which a bona fide nominee is named in
this Proxy Statement and such nominee is unable to serve or, for good cause,
will not serve; (iii) any proposal omitted from this Proxy Statement and proxy
pursuant to Rule 14a-8 or Rule 14a-9 promulgated under the Securities Exchange
Act of 1934; and (iv) matters incident to the conduct of the Annual Meeting. In
connection with such matters, the persons named in the enclosed proxy card will
vote in accordance with their best judgment.

2
<PAGE>

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth certain information regarding ownership of
the Company's Common Stock, as of September 21, 1998 (except as otherwise
noted), by: (i) each person or entity (including such person's or entity's
address) who is known by the Company to own beneficially more than five percent
of the Company's Common Stock, (ii) each of the Company's Directors and nominees
for Director who beneficially owns shares, (iii) each Named Executive Officer
(as defined under Executive Compensation) who beneficially owns shares, and (iv)
all executive officers and Directors as a group. The information presented in
the table is based upon the most recent filings with the Securities and Exchange
Commission by such persons or upon information otherwise provided by such
persons to the Company.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENTAGE OWNED
------------------------ --------------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 425,800(2) 7.57%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Steel Partners II, L.P. 329,300(3) 5.85%
750 Lexington Avenue
27th Floor
New York, NY 10022
J. Dwane Baumgardner 43,242(4) *
Owen Farren 208,960(5) 3.60%
George R. Hornig 8,353(6) *
James E. Morris 35,156(7)
David R. Nuzzo 11,271(8) *
Walter I. Rickard 4,515(9) *
Robert J. Sanator 5,000 *
All Directors and Executive Officers as a Group 316,497(10) 5.37%
</TABLE>

- ------------------

* Less than one percent (1%).

(1) Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission. Under such
rules, shares are deemed to be beneficially owned by a
person or entity if such person or entity has or shares the
power to vote or dispose of the shares, whether or not such
person or entity has any economic interest in such shares.
Except as otherwise indicated, and subject to community
property laws where applicable, the persons and entities
named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as
beneficially owned by them. Shares of Common Stock subject
to options or warrants currently exercisable or exercisable
within 60 days are deemed outstanding for purposes of
computing the percentage ownership of the person or entity
holding such option or warrant but are not deemed
outstanding for purposes of computing the percentage
ownership of any other person or entity.

(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership
of 425,800 shares, as of June 30, 1997, all of which shares
are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series
of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all
such shares.

3
<PAGE>

(3) Steel Partners II, L.P., ("Steel Partners II"), is a
Delaware Limited Partnership. Steel Partners II is deemed to
have beneficial ownership of 329,300 shares as of June 24,
1997. The principal business of Steel Partners II is
investing in the securities of microcap companies. Steel
Partners II's General Partner is Steel Partners L.L.C., a
Delaware Limited Liability Company.

(4) Includes 41,242 shares which Mr. Baumgardner has the right
to acquire at any time upon exercise of stock options.

(5) Includes 69 shares owned jointly by Mr. Farren and his wife,
who share voting and investment power, 6,200 shares held in
an IRA for Mr. Farren, 18,941 shares beneficially owned as a
participant in the Company's Savings and Pension Plan, and
183,750 shares which Mr. Farren has the right to acquire at
any time upon the exercise of stock options.

(6) Includes 7,053 shares which Mr. Hornig has the right to
acquire at any time upon exercise of stock options.

(7) Includes 4,316 shares owned jointly by Mr. Morris and his
wife, who share voting and investment power, 2,715 shares
beneficially owned as a participant in the Company's Savings
and Pension Plan, and 28,125 shares which Mr. Morris has the
right to acquire at any time upon exercise of stock options.

(8) Includes 521 shares beneficially owned by Mr. Nuzzo as a
participant in the Company's Savings and Pension plan and
6,250 shares which Mr. Nuzzo has the right to acquire at any
time upon exercise of stock options.

(9) Includes 4,515 shares which Mr. Rickard has the right to
acquire at any time upon exercise of stock options.

(10) Includes 270,935 shares which directors and executive
officers have the right to acquire, at any time, upon the
exercise of nonqualified and incentive stock options granted
by the Company. Except for 4,385 shares, as to which certain
directors and executive officers share voting and investment
power, the directors and executive officers have sole voting
and investment power as to the shares beneficially owned by
them.

4
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)

At the Annual Meeting, five persons will be elected to serve as the
Company's Board of Directors until the next Annual Meeting of Shareholders and
until their successors shall have been elected and qualified. Unless otherwise
directed, it is intended that shares represented by proxy will be voted by the
proxy holders in favor of the election of all the following persons. Each of the
nominees has consented to be named as a nominee in this Proxy Statement and to
serve as a director, if elected. Each of the nominees is at present a member of
the Board of Directors of the Company. In the event that any of the nominees for
director should become unavailable to serve as such, the proxies may be voted
for such substitute or substitutes as may be nominated by the Board of the
Company.

The following table sets forth the name of each nominee for election to the
Board of Directors, his age, principal occupation and the name and principal
business of any corporation or organization in which such occupation is carried
on, and the period during which he has served as director.

<TABLE>
<CAPTION>
SERVED
CONTINUOUSLY
NAME OF PRINCIPAL OCCUPATION FOR FIVE AS DIRECTOR
NOMINEE AGE YEARS AND DIRECTORSHIPS SINCE
------- --- ----------------------------- ------------
<S> <C> <C> <C>
J. Dwane Baumgardner(1)(3)(4) (58) Chairman of Donnelly Corporation, Inc., 1990
a manufacturing company in Holland,
Michigan, since 1986 and Chief Executive
Officer since 1982. Director of Walbro
Corporation since 1997; Director of
Westcast Industries, Inc. since 1997.

Owen Farren(1) (47) Chairman of the Company since June 1998 1991
and President and Chief Executive
Officer of the Company since April 1991;
from May 1990 to April 1991, Executive
Vice President of the Company.

George R. Hornig(3)(4)(5) (44) Executive Vice President Deutsche Bank 1992
North America Holding Corp. since July,
1998; Managing Director of Deutsche
Morgan Grenfell, Inc. (investment
bankers) from 1993 to 1998; from 1991 to
1993, President and COO of Dubin &
Swieca Holdings, Inc. (money managers).
Director of Forrester Research, Inc.
since 1996; Director of U.S. Timberlands
Company since 1996.

Walter I. Rickard(1)(2)(4) (57) President and CEO of Listing Services 1997
Solutions, Inc. from October 1996 to
present; President and CEO, NYNEX,
Entertainment and Information Services
Group, 1994 to 1996, and Corporate Vice
President, 1992 to 1994.

Robert J. Sanator(2)(3)(5) (68) Dean, College of Management Long Island 1993
University, from April 1991 to present.
</TABLE>

- ------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Nominating Committee.
(5) Member of the Finance Committee.

5
<PAGE>
THE BOARD OF DIRECTORS

The Company's Board of Directors has established the following standing
committees: the Executive Committee, the Audit Committee, the Finance Committee,
the Nominating Committee and the Compensation Committee. The Executive
Committee, which did not meet during the fiscal year 1998, has and may exercise
all the authority of the Board, except that the committee cannot make, alter or
repeal any By-law of the Corporation, elect or appoint any director or remove
any officer or director, submit to shareholders any action that requires
shareholder approval, or amend or repeal any resolution previously adopted by
the Board which by its terms is amendable or repealable only by the Board. The
Audit Committee, which met five times during the fiscal year 1998, recommends
the selection of independent auditors, reviews the scope and results of the
annual audit, is advised of and reviews nonaudit services to be provided by the
independent auditors, and reviews reports of the independent auditors and of
quarterly financial results. The Finance Committee, which did not meet during
the fiscal year 1998, reviews the Company's financing alternatives, investing
activities, and analyses, and makes recommendations with respect to the
Company's capital structures. The Nominating Committee, which met one time
during the fiscal year 1998, recommends the number and name of persons to be
elected by the shareholders as directors of the Company. At the present time
there is no procedure by which shareholders can recommend nominees to be
considered by the Nominating Committee. The Compensation Committee, which met
three times during the fiscal year 1998, recommends the compensation to be paid
to executive officers and the stock options to be granted to key employees under
the Company's 1991 Long Term Incentive Plan (see Compensation Committee Report),
as well as the amendments to be adopted for the Company's defined contribution
pension plans. The Board of Directors of the Company met seven times during the
fiscal year 1998. Each member of the Board attended at least seventy-five
percent of the meetings of the Board of Directors and Committees thereof.

Non-employee directors are paid quarterly retainer fees of $4,375 ($3,500
prior to May 28, 1998), $1,000 for each Board meeting attended, and $750 ($500
prior to May 28, 1998) for each Committee meeting attended. Mr. Farren does not
receive director's retainer, Board meeting or Committee meeting fees.

In fiscal year 1993, the Board of Directors adopted a Non-Employee Director
Non-Qualified Stock Option Plan (the "Directors' Plan"), which was approved by
the shareholders at the Company's 1993 Annual Meeting. Under the Directors'
Plan, non-employee Directors have the right annually to elect to receive
non-qualified stock options in lieu of all or a stated percentage of retainer
and/or regular quarterly Board meeting attendance fees payable for the upcoming
fiscal year. The number of shares covered by such options is determined at the
time such fees would otherwise be payable, based upon the fair market value of
the Company's Common Stock at such times, except, with respect to an election to
defer all such fees, such determination shall be based upon 133% of fair market
value at such times. Elections are irrevocable. Under the Directors' Plan, Mr.
Baumgardner, Mr. Hornig and Mr. Salvatore J. Nuzzo, who retired from the Board
on June 1, 1998, elected for fiscal year 1998 to receive non-qualified stock
options in lieu of all such fees. In accordance with such elections, Messrs.
Baumgardner, Hornig and Nuzzo were granted options to acquire 5,576 shares,
5,576 shares and 7,744 shares, respectively, during fiscal year 1998. Mr.
Rickard received retainer and attendance fees until February 1, 1998, at which
point, based on his election, he began receiving non-qualified stock options in
lieu of all such fees, and was granted options to acquire 3,038 shares during
fiscal year 1998. Messrs. Baumgardner, Hornig, and Rickard have made the same
elections for fiscal year 1999.

6
<PAGE>

A $50,000 life insurance policy is maintained on each director's life for
which the director designates the beneficiary. On May 28, 1998, the Board
terminated its retirement plan. The plan provided that, upon the retirement of a
nonemployee director who had attained the age of sixty and had completed ten
years of service with the Board, the Company would pay $10,000 per year to the
retired director for life with a term certain of 10 years. Mr. Farren was
ineligible for these benefits. If the retired director died after becoming
eligible for retirement benefits and before the guaranteed retirement payments
had been made, the unpaid balance of the benefits guaranteed would continue to
be paid by the Company to the beneficiary designated by him. In consideration of
the termination of the plan, the Board agreed to pay each director a benefit
based on years of service and a retirement age of either 65, 70 or 80, dependent
upon the age of the director on the termination date. Each director's benefit
was based on 10 years certain or life expectancy, whichever was greater, and
discounted at 8%. Mr. Baumgardner, Mr. Gaugler, Mr. Hornig, Mr. Rickard and Mr.
Sanator received a benefit of $32,991, $23,575, $6,548, $4,094 and $26,204,
respectively. Upon his retirement, Mr. Nuzzo received payment for his benefit in
the amount of $83,851.

EXECUTIVE OFFICER COMPENSATION

The following table sets forth certain information regarding compensation
awarded to, earned by or paid to the Chief Executive Officer, the Company's
other executive officers and one former executive officer whose total annual
salary and bonus exceeded $100,000 during fiscal 1998 (the "Named Executive
Officers") for services in all capacities during fiscal 1998, 1997, and 1996.
Mr. Klemashevich's employment with the Company terminated on May 28, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND -------------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS(#) ($)(1)(2)
- ------------------ ---- ---------- --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Owen Farren................ 1998 237,289 163,000 20,000 28,276
President & CEO 1997 218,810 100,000 17,000 26,530
1996 187,100 81,250 16,000 26,721
James D. Klemashevich...... 1998 149,327(3) -0- 4,000 157,188(4)
Vice President -- 1997 37,500 25,000 25,000 81
Operational
Development
James E. Morris............ 1998 100,567 54,000 5,500 7,017
Vice President/ 1997 91,350 35,500 4,500 4,656
Corporate Controller 1996 85,307 31,200 4,000 4,504
& Treasurer
David R. Nuzzo............. 1998 98,077 65,000 25,000 2,450
Vice President --
Finance and
Administration &
Secretary
</TABLE>

7
<PAGE>
- ------------------
(1) Includes Company matching contributions and profit sharing contributions
made to the SL Industries, Inc., Savings and Pension Plan for Messrs. Farren
and Morris in fiscal year 1996, in the amounts of $5,461 and $3,801,
respectively, in fiscal year 1997 in the amounts of $5,558 and $4,057,
respectively, and in fiscal year 1998, for Messrs. Farren, Klemashevich,
Morris and Nuzzo in the amounts of $7,353, $6,414, $6,448, and $2000,
respectively. The Company's contribution to the plan is based on a
percentage of the participant's elective contributions up to the maximum
defined under the plan and a fixed percentage, determined annually by the
Board of Directors, of the participant's total calendar year earnings. Under
the plan, benefits are payable at retirement as a lump sum or as an annuity.

(2) Includes premiums paid for group term life insurance for Messrs. Farren,
Klemashevich, Morris, and Nuzzo and premiums paid for an ordinary whole life
insurance policy on Mr. Farren's life in the face amount of $1,000,000 of
which he is the owner with the right to designate beneficiaries.

(3) Mr. Klemashevich elected to defer $5,385 of his fiscal 1998 salary. The
amount earns interest at the rate of 8%, compounded annually, and is payable
at termination or retirement, whichever is earlier. The deferred amount is
funded by a life insurance policy where the Company is both owner and
beneficiary of the policy.

(4) During fiscal year 1998, the Company accrued a $150,000 severance payment
for Mr. Klemashevich, of which $28,846 was paid as of July 31, 1998, with
the balance to be paid during the following 10 months thereafter consistent
with the terms of his Severance Agreement.

Mr. Morris is scheduled to receive a $30,000 per year annuity, $27,000 of
which is fully vested, payable at age 65 for life with a term certain of 10
years. This agreement is funded by the purchase of a life insurance policy and
provides both a death and retirement benefit, and the Company is both owner and
beneficiary of the policy. If the participant dies after becoming eligible for
retirement benefits and before the guaranteed retirement benefits have been
paid, the unpaid balance of the benefits guaranteed will continue to be paid by
the Company to the designated beneficiary.

Pursuant to a standing resolution of the Board of Directors, upon the death
of any executive officer, having more than five (5) years of service, the
Company will pay his spouse, over a 36-month period, an amount equal to the
officer's salary at his death.

SENIOR EXECUTIVE SEVERANCE AGREEMENTS

On May 1, 1991, the Company entered into a Severance Pay Agreement with Mr.
Farren, providing for payment equal to his annual base salary or $135,000,
whichever is greater, and to continue for a limited time certain fringe benefits
in the event of involuntary termination of his employment, or voluntary
termination for "good reason." Good reason is defined to include (i) a demotion
in position, authority or similar action which would substantially alter the
officer's standing in the Company, (ii) a reduction in salary or failure to
increase compensation commensurate with other executive officers, (iii) a
relocation of the officer's place of employment, (iv) a change of control of the
Company, (v) incurring any serious illness or disability, or (vi) any other
circumstance as determined by the Board of Directors in good faith.

On April 28, 1997, the Company entered into a Severance Pay Agreement with
Mr. Klemashevich providing for payment of a severance benefit equivalent to his
annual base salary in the event of termination of his employment without cause.
The benefit is payable for a period of 12 months at the same time and in the
same manner as his salary was paid prior to such termination.

On December 1, 1997, the Company entered into a Severance Pay Agreement
with Mr. Nuzzo providing for payment of his annual base salary for a period not
greater than 24 months, or until he secures new employment, whichever comes
first, but, in any event, not less than 12 months in the event of involuntary
termination of his employment within six months of a change in control of the
Company.

8
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR

STOCK OPTIONS

The following table sets forth information concerning options to purchase
Common Stock granted under the Company's 1991 Long Term Incentive Plan in fiscal
year 1998 to the Named Executive Officers. Twenty five percent of the options
granted were exercisable on the date of grant with the balance exercisable in
twenty five percent increments, one, two, and three years after the date of
grant. The material terms of such options appear in the following table.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- ------------------------------------------------------------------------------------ -----------------------
NUMBER OF % OF TOTAL
SECURITIES STOCK OPTIONS
UNDERLYING GRANTED TO
STOCK OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- ------------- ------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Owen Farren.............. 20,000 10.55% 11.0000 9/08/07 138,357 350,623
James D. Klemashevich.... 4,000 2.11% 11.0000 9/08/07 27,761 70,124
James E. Morris.......... 5,500 2.90% 11.0000 9/08/07 38,048 96,421
David R. Nuzzo........... 25,000 13.19% 13.0625 12/01/07 205,372 520,456
</TABLE>

- ------------------
(1) The Potential Realizable Value, determined in accordance with SEC rules,
assumes annualized market appreciation rates of 5% and 10%, respectively,
from a market value of $11.00/share on September 8, 1997 (the date of the
grant) to September 8, 2007 (the date of expiration of such options) for all
optionees other than Mr. Nuzzo and from a market value of $13.0625/share on
December 1, 1997 (the date of the grant) to December 1, 2007 (the date of
expiration of such options) for Mr. Nuzzo. These assumptions are not
intended to forecast future price appreciation of the Company's stock price.
The real value of the options in this table depends on the actual
performance of the Company's Common Stock during the applicable period,
which may increase or decrease in value over the time period set forth
above. The Potential Realizable Value does not assume future dividends,
stock or cash. The option grant does not accrue cash dividends unless the
options are exercised, should dividends be declared.

AGGREGATED STOCK OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END STOCK OPTION VALUES

The following table sets forth the number of shares received upon exercise
of stock options by each of the Named Executive Officers during the last
completed fiscal year and the aggregate options to purchase shares of Common
Stock of the Company held by the Named Executive Officers at July 31, 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS AT FISCAL YEAR END
AT FISCAL YEAR END (#) ($)(2)
---------------------- --------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME UPON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Owen Farren.............. N/A N/A 174,500/23,500 1,726,875/99,000
James D. Klemashevich.... 13,500 77,250 N/A N/A
James E. Morris.......... N/A N/A 25,625/ 6,375 247,547/26,766
David R. Nuzzo........... N/A N/A 6,250/18,750 9,766/29,297
</TABLE>

- ------------------
(1) Computed by multiplying the number of shares of Common Stock acquired upon
exercise of options by the difference between (i) the per share market value
of the Common Stock on the date of exercise and (ii) the exercise price per
share.

(2) Computed by multiplying the number of options by the difference between (i)
the per share closing price of $14.625 at fiscal year end and (ii) the
exercise price per share.

9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee members are J. Dwane Baumgardner (Chairman),
George R. Hornig and Robert J. Sanator, all of whom are non-employee directors
of the Company.

The following report and performance graph shall not be deemed incorporated
by reference into any existing or future filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.

BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for the establishment of the level and manner of
compensation of the Company's executive officers (including its Named Executive
Officers). In addition, the Compensation Committee seeks to ensure that sound
compensation policies and practices exist and are being followed. The members of
the Compensation Committee are J. Dwane Baumgardner (Chairman), George R. Hornig
and Robert J. Sanator, all of whom are non-employee directors of the Company.

The following describes the Compensation Committee's compensation policies
applicable to its executive officers (including its Named Executive Officers),
including the relationship of corporate performance to executive compensation,
with respect to compensation reported for the last fiscal year.

The Compensation Committee believes that executive compensation should be
linked to value delivered to shareholders. The Company's compensation programs
have been designed to provide a correlation between the financial success of the
executive and the shareholders. Both long and short-term incentives are intended
to align the interests of executives and shareholders and to reward the
executive for building value within the Company.

The functions of the Compensation Committee are to oversee general
compensation policies for the Company's employees, to review and approve
compensation packages annually for the Company's executive officers and
subsidiary presidents, to approve cash incentive programs for all subsidiaries,
and to grant stock options to officers of the Company and other key employees as
appropriate. The Company seeks to provide executive compensation that will
support the achievement of the Company's financial goals, while attracting and
retaining talented executives and rewarding superior performance. In performing
this function, the Compensation Committee reviews executive compensation
surveys, the compensation levels of executive officers of companies in competing
businesses, and recommendations by management. The Compensation Committee may
also from time to time consult with independent compensation consultants and
others.

The Committee's current philosophy is to balance short-term performance of
executives with achievement of long-range strategic goals resulting in
continuously improving shareholder value, and to engender and preserve a sense
of fairness and equity among employees, shareholders, and customers. In keeping
with that philosophy, it has set the following objectives: (1) to link a
significant portion of annual compensation directly to operating performance;
(2) to promote achievement of the Company's long-term strategic goals and
objectives; (3) to align the interest of Company executives with long-term
shareholder interest; (4) to see that management aligns the interest of Company
employees with long-term shareholder interest; and (5) to attract, retain, and
motivate executives critical to the Company's long-term success.

The Company's executive compensation program consists of base salary,
annual cash bonus incentive, and stock options. (Along with all other employees,
executives also participate in one of the Company's defined contribution pension
plans.) Salary levels of executive officers are reviewed annually by the
Compensation Committee. Bonus payments are based on the achievement of the
Company performance targets and the achievement of individual performance goals.
Bonus amounts are calculated after fiscal year-end financial results become
available to the Compensation Committee

10
<PAGE>

and are determined in accordance with guidelines established by the Compensation
Committee. The Company seeks to provide an overall level of compensation that is
competitive with other companies in competing businesses and in the Company's
geographic markets. Compensation in any particular case will vary on the basis
of the Company's annual and long-term performance as well as individual
performance.

The Compensation Committee believes stock options and stock ownership
contribute to the aligning of the executive's interests with those of the
shareholders. The Company's 1991 Long Term Incentive Plan encourages stock
ownership by authorizing the grant of stock options to officers and key
employees of the Company. From time to time, the Compensation Committee provides
long term incentive compensation in the form of stock options where appropriate
as compensation for its executive officers. In determining whether individual
stock option grants will be made, the Compensation Committee evaluates each
participant's job responsibilities and performance during the last completed
fiscal year, as well as the perceived potential that the individual has in
contributing to the success of the Company.

The salary for the Company's chief executive officer, Owen Farren, for
fiscal year 1998 was established by the Compensation Committee based, in large
part, on the performance of the Company during fiscal year 1997. Based on the
above considerations, effective October 1, 1997, the Compensation Committee
increased Mr. Farren's annual base salary by approximately 7%, from $225,000 to
$240,000. The increase was reviewed and ratified by the Board of Directors.
Under the Company's executive compensation program, applicable in fiscal 1998,
the Compensation Committee awarded Mr. Farren an incentive cash bonus of
$163,000. The Compensation Committee based the award on the performance of the
Company and the achievement of individual goals during fiscal 1998. The bonus
was reviewed and ratified by the Board of Directors. Options were granted to Mr.
Farren in September 1997 in large part to recognize his efforts in making
significant progress toward the Board's directives to him of controlling
corporate overhead expenses, developing an overall plan for reassessing the
Company's strategic direction, and achieving financial and other targets during
fiscal year 1997.

Respectfully submitted,

Compensation Committee:
J. Dwane Baumgardner, Chairman
George R. Hornig
Robert J. Sanator

11
<PAGE>
PERFORMANCE GRAPH

The following Performance Graph summarizes the cumulative total shareholder
return on an investment of $100 on July 31, 1993 in the Company's Common Stock
for the period from that date to September 30, 1998, as compared to the
cumulative total return on a similar investment of $100 on that date in stocks
comprising the Russell 3000 Stock Index ("RUA") and the S&P Electrical Equipment
Group ("S215"). The graph assumes the reinvestment of all dividends. The
Performance Graph is not necessarily indicative of future performance.

[GRAPHIC]

In the printed version of the document, a line graph appears which depicts
the following plot points.

SL Industries Russell 3000 S&P Electrical Equipment Group
------------- ------------ ------------------------------
1993 100 100 100
110.34 104.7 102.373

1994 107.72 107.67 118.53
107.72 100.97 110.19
122.56 101.65 106.97
115.56 104.8 133.15

1995 144.53 104.04 135.44
133.95 113.19 177.5
163.1 124.76 193.64
226.93 128.86 220.39

1996 199.33 139.98 224.07
220.69 145.44 231.49
242.84 140.14 214.11
243.7 154.21 217.62

1997 200.69 171.23 279.62
204.28 170.9 284.91
295.08 204.03 320.09
353.81 199.02 275.44

1998 346.59 211.1 281.56
418.8 238.85 316.81
423.63 235.71 249.57
296.9 212.44 238.11

12
<PAGE>
CERTAIN TRANSACTIONS

As previously reported, a wholly-owned subsidiary of the Company, SL
Industries Vertrieb GmbH, acquired all of the stock of Elektro-Metall Export
GmbH ("EME"), a wholly-owned subsidiary of Datron Inc., on July 10, 1998. The
purchase price paid for the stock was $9,500,000, and was determined by
arms-length negotiation between the parties. Salvatore J. Nuzzo, who retired as
the Chairman of the Board of the Company on June 1, 1998, is the Chairman and
CEO of Datron Inc. Mr. Nuzzo did not participate in any deliberations by the
Company regarding the acquisition of EME. Under certain circumstances, Mr. Nuzzo
may be entitled to receive certain incentive compensation from Datron Inc.
related, in part, to the sale of EME. It is not possible to determine at this
time what, if any, such compensation Mr. Nuzzo might receive. Salvatore J. Nuzzo
is the father of David R. Nuzzo, the Vice President - Finance and Administration
and Secretary of the Company.

APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 2)

The Board of Directors of the Company has appointed Arthur Andersen LLP,
certified public accountants, as the Company's independent auditors for the
fiscal year ending July 31, 1999, subject to ratification of such appointment by
shareholders. The submission of the appointment of Arthur Andersen LLP for
ratification by the shareholders is not required by law or by the Company's By-
Laws and is being done for the sole purpose of ascertaining the views of the
shareholders of the Company with respect to such appointment. If such
appointment is not ratified, the Board of Directors may appoint another firm as
the Company's independent auditors for the year ending July 31, 1999.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting, will be given an opportunity to make a statement if they desire to do
so, and will be available to answer appropriate questions from shareholders.

APPROVAL OF AMENDMENTS TO THE 1991
LONG TERM INCENTIVE PLAN OF SL INDUSTRIES, INC.
(Proposal 3)

On May 28, 1998, the Board of Directors, acting on the recommendation of
the Compensation Committee, voted to amend the 1991 Long Term Incentive Plan of
SL Industries, Inc. (the "Plan"), by increasing the total number of shares
subject to options under the Plan from 922,650 to 1,522,650. At the same time,
in accordance with the terms of the Plan, the Board directed that the amendment
be submitted to the shareholders for their approval.

The Plan was approved by the shareholders at the 1991 Annual Meeting and
amended by the shareholders at the 1995 Annual Meeting by increasing the total
number of shares subject to options under the Plan from 500,000 to 922,650. It
was designed to benefit the Company and its shareholders by encouraging high
levels of performance by key employees of the Company and its subsidiaries by
increasing their proprietary interest in the Company's growth and success. It is
widely recognized that stock options enable public companies to attract, retain,
and provide motivation to, key personnel. The Board of Directors believes that
the Plan has been effective in helping the Company attract and retain
outstanding individuals as officers and key employees and to furnish motivation
for the achievement of long-term objectives for the Company.

Under the Plan, as it now exists, options can be granted to purchase up to
922,650 shares of the Company's Common Stock. If options are granted and
subsequently expire or are terminated, cancelled, or surrendered prior to
exercise, the shares subject to those options become again available for the
grant of options under the Plan.

The Board of Directors believes that the Plan should be amended to increase
the number of shares for which options can be issued in the future, thereby
making shares available to replace those for which options have thus far been
granted. Accordingly, the Board of Directors has approved a resolution to
increase the number of shares subject to options under the Plan from 922,650 to

13
<PAGE>

1,522,650. Taking into account the 705,529 shares subject to options previously
granted, the remaining shares available for future option grants would be
817,121, if the amendment is approved by the shareholders, which should enable
the Plan to continue effectively, with the benefits to the Company outlined
above, for several more years. Otherwise the provisions of the Plan would be
unaffected.

The importance of granting stock options, as presently viewed by the
Compensation Committee, is set forth at page 11 of this Proxy Statement. The
complete text of the Plan, as it would be amended pursuant to this proposal,
appears as an Appendix to this Proxy Statement. Some of the principal features
of the Plan, as amended, are outlined below, but the following outline is
qualified in its entirety by reference to the complete text of the Plan.

DESCRIPTION OF THE PLAN

The Company has sponsored stock option plans for many years. The Plan is a
successor to the Company's 1981 Incentive Stock Option Plan, which was approved
by the shareholders at the 1981 Annual Meeting. That plan, in turn, was a
successor to a similar plan adopted by the shareholders at the 1972 Annual
Meeting.

The Plan provides that options may be granted to purchase up to 922,650
shares of the Company's Common Stock, to be drawn from authorized but unissued
shares or from treasury shares. Although the number and kind of shares subject
to the Plan would be appropriately adjusted in the event of any change in the
capital structure of the Company, no such adjustment has occurred because there
has been no such capital-structure change since adoption of the Plan.

ADMINISTRATION OF THE PLAN

The Plan is administered by the Company's Compensation Committee (the
"Committee") composed of three directors of the Company who are not eligible to
participate in the Plan while on the Committee. Participants are selected by the
Committee from key employees who are full-time salaried employees (including
officers, whether or not they are also directors) of the Company, or any
subsidiary of the Company, who in the judgment of the Committee will be in a
position to contribute significantly to the attainment of the Company's
long-term growth and prosperity.

Currently, the Company estimates that approximately 52 individuals are
eligible to participate in the Plan. As in the past, the Committee will
determine both the number of optionees and the number of shares to be optioned
to any individual under the Plan. The Board of Directors is able to amend the
Plan without further approval by the shareholders, except insofar as such
approval is required by law or the terms of the Plan.

The Plan enables the Company to grant either "nonqualified options" or
"incentive stock options." No options can be granted under the Plan later than
September 25, 2001. Each option granted under the Plan will expire no later than
ten years from the date the option is granted.

The Plan allows the Committee to establish in its discretion the time or
times within the period of the option when the option can be exercised and the
percentage of the option that can be exercised at such times. The options are
not transferable except in the event of death.

The Plan provides that upon termination of employment of the optionee for
any reason whatsoever, including death or disability, the rights to exercise the
options which have accrued at the date of termination may be exercised within
three months following the date of termination, and that, thereafter, all
further rights to exercise the option cease, whether or not accrued at the date
of termination. In no event, however, can an option be exercised after ten years
following the date of grant, or such earlier date as may be specified in the
option.

The exercise price per share for each incentive stock option cannot be less
than the fair market value on the date of grant, determined as described in the
Internal Revenue Code and Regulations. The exercise price per share for each
nonqualified stock option will be as determined by the Committee and set forth
in the Option Agreement for the optioned shares. Payment must be made in cash at
the time of

14
<PAGE>

exercise. Proceeds received from option sales will be used for general corporate
purposes.

Since the Plan became effective, the current executive officers of the
Company have been awarded an aggregate of 145,000 options, and all other
employees, excluding current executive officers, have received an aggregate of
560,529 options, under the Plan. For information on the aggregate option grants
under the Plan to the Named Executive Officers, see "Stock Option Grants in Last
Fiscal Year" on page 9 of the Proxy Statement. Those employees other than the
current Named Executive Officers, who have received 5% or more of the options
granted under the Plan are: Mr. Arthur H. Blumenthal, the former President of SL
Waber, Inc., Mr. James C. Folk, President of SL Montevideo Technology, Inc. and
Mr. Thomas M. Ingman, the former President of Condor D.C. Power Supplies, Inc.,
who were granted 47,450 options, 51,250 options and 40,250 options respectively,
or 6.73%, 7.26% and 5.70% of the total number of options granted, respectively.
All calculations regarding the number of options granted (as stated in this
paragraph) are net of cancellations. No options have been granted under the Plan
to (i) any current directors who are not executive officers, (ii) any nominee
for election as a director except Owen Farren, or (iii) any associate of a
current director, current executive officer or nominee.

No determination has been made with respect to future recipients of options
under the Plan. It is not possible to specify the names or positions of the key
employees to whom options may be granted, or the number of shares, within the
limitations of the Plan, to be covered by such options.

FEDERAL INCOME TAX CONSEQUENCES

Under currently applicable provisions of the Internal Revenue Code of 1986,
as amended, an optionee will not be deemed to receive any income for federal tax
purposes upon the grant of an option under the Plan, nor will the Company be
entitled to a tax deduction at that time. However, the optionee may be subject
to an alternative minimum tax when he or she exercises an incentive stock option
on the amount by which the fair market value of the stock exceeds the option
price at the date of exercise.

Upon the exercise of an option, the tax consequences are as follows:

1. Upon the exercise of a nonqualified option, unless sale is
restricted, the optionee will be deemed to have received ordinary
income in an amount equal to the difference between the option
price and the market value of the shares on the exercise date, and
the Company will be allowed an income tax deduction equal to the
excess of market value of the shares on the date of exercise over
the cost of such shares to the optionee.

2. Upon the exercise of an incentive stock option, there is no income
recognized by the optionee at the time of exercise. If the stock is
held at least one year following the exercise date and at least two
years from the date of grant of the option, the optionee will
realize a long-term capital income gain or loss upon the sale,
measured as the difference between the option exercise price and
the sale price. If either one of these holding period requirements
is not satisfied, ordinary income tax treatment will apply to the
amount of gain at sale or exercise, whichever is less. If the
actual gain exceeds the amount of the ordinary income, the excess
will be considered short-term or long-term capital gain depending
on how long the shares are actually held. No income tax deduction
will be allowed to the Company with respect to the shares purchased
by the optionee upon the exercise of an incentive stock option,
provided such shares are held for the required periods described
above.

15
<PAGE>

EFFECT ON EARNINGS

Currently, neither the grant nor the exercise of an incentive stock option
or nonqualified stock option under the Plan will result in any change to the
Company's pretax earnings.

PRICE OF COMMON STOCK

The closing price of the Common Stock of the Company on September 21, 1998,
based on published quotations, was $11.3125 per share.

VOTES REQUIRED

Under a provision of the Plan, shareholder approval is required for any
increase in the number of shares of Common Stock subject to the Plan. The
affirmative vote of the majority of shares represented at the meeting and
entitled to vote thereon will be required for adoption of the proposed amendment
to the Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
1991 LONG TERM INCENTIVE PLAN OF SL INDUSTRIES, INC.

SHAREHOLDER PROPOSAL
(Proposal 4)

Ted D. Taubeneck, 3602 Chadbury Road, Mount Laurel, NJ 08054, who currently
owns 14,300 shares of the Company's Common Stock, has advised the Company that
it is his intention to present the following resolution for consideration and
action by the shareholders at the 1998 Annual Meeting:

PROPOSAL: "RESOLVED, that the shareholders recommend and request that
the Directors of the Corporation immediately consider, with appropriate
independent advice, the Corporation's strategic options, including selling,
or spinning off to the shareholders, all of its businesses, and report to
the shareholders well before the next annual meeting the facts, factors and
options they have considered, their analysis, their conclusions and
recommendations, and an indication of how those recommendations can be
accomplished."

SUPPORTING STATEMENT:

"The principal functions of a Board of Directors are to consider
strategic options, decide which one or ones to pursue, and inform the
shareholders. SL's Board last reviewed its strategic options with
investment bankers over five years ago, and on that occasion did not inform
the shareholders what options it considered, nor why it chose as it did.

There are a host of reasons why I believe it should do so now, but the
two most important were expressed by the stock market last year:

1. A similar proposal then garnered so many votes from shareholders
that, under SEC rules, it must be submitted again in this year's
Proxy Statement; and

2. While that proposal was being considered by the Board -- that is,
beginning right after it was submitted -- the market price of the
stock began to rise, and climbed to heights never before reached,
OVER $16 PER SHARE, only to sag again in October right after the
Board belatedly announced its opposition to the proposal. At this
writing -- June 1998 when the Board insisted this be submitted --
SL's stock price still hasn't recovered, although all of the
averages have soared.

I was an executive of SL for many years, and believe that SL is now
made up of five quite distinct, dissimilar businesses. In my opinion, and
that of others (including investment bankers) SL is a "mini-conglomerate"
which thereby suffers a discount, that suppresses its stock price. There is
a "way out" that is classical and that hundreds of corporations in the U.S.
have used in the past decade -- spin off all the dissimilar businesses.
Standing alone, which each could do

16
<PAGE>

well, each would be more understandable to investors, brokers and analysts
and so be worth far more in the aggregate than they are bundled as
unrelated "power and data quality," which is not a recognizable stock
market segment, and not even a standard industrial classification.

I own outright 17,671.95 shares of SL (more than most of the current
directors, but that is another story). Accordingly, I am keenly interested
in seeing the underlying value of the stock realized, in the near future. I
urge all other shareholders with a similar interest to join with me in
voting for this Resolution."

STATEMENT OF THE COMPANY IN OPPOSITION TO SHAREHOLDER PROPOSAL

The Board of Directors continues its unqualified commitment to maximizing
shareholder value and regularly re-evaluates and refines its corporate strategy.
SL Industries' goal is to become a world leader in the design and manufacture of
value-added power and data quality products and systems. The Board believes that
the highest value for the Company's shares will be realized by accomplishing
this goal.

In considering its corporate strategy, the Board has identified several
coinciding trends in customer demand and the capital markets. Some of these
trends include: the desire of original equipment manufacturers to rely on a
small number of vendors to provide comprehensive solutions, the globalization of
sourcing and sales, the blending of technology and production with respect to
power systems and electrical components, and the preference of shareholders to
invest in corporations with mid-sized or large market capitalizations. These
developments indicate that to successfully compete today, businesses must build
sufficient scale to offer wide product selection, competitive global pricing and
technological innovation.

Over the past four years, SL Industries' management believes that it has
established an excellent corporate platform and portfolio of technologies to
take advantage of these developments. The Company's corporate structure is
designed to derive the benefits of scale, while promoting the entrepreneurism of
decentralization. During the time period specified in the shareholder proposal,
SL Industries' stock price has outperformed its industry peer group, as
reflected in the Performance Graph on page 12 of this Proxy Statement. The Board
believes that the price multiple of the Company's stock should improve further
as it continues to grow through acquisition and internal development.
Accordingly, any plan to sell or spin-off the Company's operating units would
effectively diminish shareholder value, rather than enhance shareholder value.

Introduction of information regarding a corporation's goals, strategies,
business, financial conditions, and prospects into the marketplace often has
negative repercussions on a corporation's business and the ability to effect its
strategic plans, thereby adversely affecting shareholder value. With this in
mind, the Company's management communicates throughout the year with
shareholders, interested investors, stock market analysts and others, as it
deems appropriate. In addition, management reports to shareholders at the
Company's Annual Meeting and is available throughout the year to answer
questions.

ACCORDINGLY, THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL.

17
<PAGE>

SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's Proxy Statement for its 1999 Annual
Meeting of Shareholders must deliver such proposal in writing to the Secretary
of the Corporation at the Corporation's principal executive offices at Suite
A-114, 520 Fellowship Road, Mount Laurel, New Jersey 08054, on or before June
18, 1999. With respect to shareholder proposals, the Company's By-Laws require
written notice 60 calendar days in advance of the Annual Meeting to raise
business at the Annual Meeting, including the nomination of Directors. The
complete text of such By-Law provision was included as an Exhibit in the
Company's October 31, 1996, Form 10-Q. Any shareholder wishing an additional
copy of such provision should call the Secretary of the Company.

OTHER MATTERS

The Board of Directors does not know of any matters other than those
described in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named as
proxies intend to vote the shares they represent in accordance with their
judgment.

THE ANNUAL REPORT OF THE COMPANY FOR ITS FISCAL YEAR ENDED JULY 31, 1998,
WAS MAILED ON OCTOBER 16, 1998, TO ALL SHAREHOLDERS OF RECORD. COPIES OF THE
COMPANY'S FORM 10-K REPORT FOR THAT YEAR, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WILL BE AVAILABLE WITHOUT CHARGE TO SHAREHOLDERS BY
WRITING: DAVID R. NUZZO, SECRETARY, SL INDUSTRIES, INC., SUITE A-114, 520
FELLOWSHIP ROAD, MOUNT LAUREL, NEW JERSEY 08054.

By Order of the Board of Directors

/s/ David R. Nuzzo
--------------------------------
David R. Nuzzo
Secretary

18
<PAGE>

APPENDIX
1991 LONG TERM INCENTIVE PLAN
OF SL INDUSTRIES, INC.

SL Industries, Inc., a corporation organized and existing under the laws of
the State of New Jersey, hereinafter called the "Company," hereby formulates and
adopts an Incentive (Stock Option) Plan for officers and key employees of the
Company, or any subsidiary of the Company, as follows:

I. PURPOSE -- The purpose of the Plan is to provide a continuing long-term
incentive to selected eligible Key Employees of the Company to enhance
shareholder value; to provide a means of rewarding outstanding performance; and
to enable the Company to attract and retain key personnel necessary for
continued growth and profitability.

II. SHARES SUBJECT TO THE PLAN -- The share of Common Stock subject to Options
shall be either shares of authorized but unissued Common Stock or shares of
Common Stock reacquired by the Company.

Subject to the provisions of Section VII hereof, the number of shares of
Common Stock purchasable pursuant to Options granted hereunder shall not exceed
One Million Five Hundred Twenty-Two Thousand Six Hundred Fifty (1,522,650)
shares of the presently authorized Common Stock.

In the event that any outstanding Option under the Plan for any reason
expires or is terminated, cancelled or surrendered prior to the expiration date
of the Plan as set forth in Section IX hereof, the shares of Common Stock
allocable to the unexercised portion of such Option shall again be available for
an Option subsequently granted under this Plan.

III. DEFINITIONS

"Board of Directors" means the Board of Directors of the Company acting in
any matter concerning the Plan by a majority of directors whoa re not
participants or eligible to be participants in the Plan.

"Code" means the Internal Revenue Code of 1986, as amended, including the
regulations thereunder. The Code section references set forth in the Plan or in
any Option Agreement refer to the respective Code sections as now in effect and
as such sections may be changed from time to time.

"Committee" means the Committee described in Section IV hereof.

"Common Stock" means share of the Company's presently authorized common
stock, except as this definition may be modified as provided in Sections VII
hereof.

"Company" means SL Industries, Inc.

"Effective Date" means the date the Plan is adopted by the directors of the
Company.

"Incentive Stock Option" means an Option granted pursuant to the Plan,
which is intended as and does constitute an "incentive stock option" within the
meaning of Section 422 of the Code. Incentive Stock Options shall be
specifically designated as such.

"Key Employees" means full-time salaried employees (including officers,
whether or not they are also directors) of the Company, or a subsidiary thereof,
as designated by the Committee, and who, in the judgment of the Committee, will
be in a position to contribute significantly to the attainment of the Company's
strategic goals and long-term growth and prosperity.

"Option" means an option, granted by the Company pursuant to the Plan, to
purchase shares of Common Stock.

"Option Agreement" means a written agreement of agreements as described in
Section IX hereof between the Company and a Participant evidencing an Option.

"Option Period" means the period from the date of the granting of an Option
to the date after which such Option may no longer be exercised.

"Option Price" means the price to paid for shares of Common Stock being
purchased pursuant to an Option.

19
<PAGE>

"Participant" means an eligible Key Employee who accepts an Option, or the
estate, personal

representative or beneficiary of such Key Employee having the right to exercise
an Option, as the case may be.

"Plan" means the "1991 Long Term Incentive Plan of SL Industries, Inc." as
set forth in this instrument.

IV. ADMINISTRATION -- The Plan shall be administered by the Committee appointed
by the Board of Directors which shall consist of not fewer than two directors
who are not eligible to participate in the Plan or any other stock option plan
of the Company.

The interpretation and construction by the Committee of any provision of
the Plan or of any Option Agreement shall be final and conclusive unless
otherwise determined by the Board of Directors, and in any such event such
determination by the board of Directors shall be final and conclusive.

The Board of Directors reserves the right to take, by a majority of the
directors who are not eligible to participate in the Plan, any and all action
hereunder it may deem advisable, including where the Committee may be unable to
act.

V. ELIGIBILITY -- The individuals who shall be eligible to participate in this
Plan shall be (a) such Key Employees who are approved as Participants by the
Committee from time to time, and (b) employees of corporations which are merged
or consolidated with the Company or a subsidiary or whose assets or stock are
acquired by the Company or a subsidiary, who (1) are similarly approved as
Participants by the Committee, (2) hold options for the purchase of stock of
such other corporations, and (3) are granted Options in substitution for the
options so held.

VI. GRANT OF OPTIONS -- Subject to the provisions of Sections II and IX hereof,
participants shall be granted Options for such number of shares of Common Stock
as may be approved by the Committee. The Committee shall designate those Options
which are, or are not, intended to qualify as Incentive Stock Options.

Nothing contained in the Plan shall be construed to preclude the granting
of an Option or Options to a Participant in addition to an Option or Options for
the purchase of Common Stock already held by him and then in existence or the
granting of more than one option to a Participant at the same time, or the
granting of an Option in substitution for, or upon the cancellation or surrender
of, an Option that had previously been granted to the Participant, whether at a
higher or lower exercise price, provided that, if the Option to be granted,
substituted for, cancelled or surrendered is an Incentive Stock Option, such
action shall be permissible under the Code.

Notwithstanding the foregoing, the aggregate fair market value (determined
at the time of the grant of the Option) of stock exercisable for the first time
by a Participant during any calendar year under all Incentive Stock Options held
by a Participant shall not exceed $100,000. Any Options to acquire stock in
excess of such amount shall be treated as Options not described in Section 422
of the Code.

VII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION -- The aggregate number of
shares of Common Stock available for Options and the number of shares of Common
Stock and the Option Price for such shares covered by each outstanding Option
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a merger, consolidation,
reorganization, recapitalization, stock split, stock dividend, or other change
in the equity structure of the Company.

VIII. EFFECTIVE AND EXPIRATION DATES OF THE PLAN -- Options may be granted at
any time on or after the Effective Date, but no Options shall be granted after
the tenth anniversary of the Effective Date; provided that all Options granted
prior to approval of the plan by the shareholders of the Company shall be
granted subject to receipt of approval of the shareholders and provided further
that no Incentive Stock Option shall be exercised within six (6) months from the
date of approval of the Plan.

IX. TERMS AND CONDITIONS OF OPTION AGREEMENTS -- Option Agreements shall be in
such form as the Committee shall, from time to time, approve.

20
<PAGE>

Option Agreements may be amended by the Committee with the consent of the
Participant in any manner not inconsistent with the provisions of the Plan or
the Code.

All Option Agreements shall comply with and be subject to the following
terms and conditions:

Medium and Time of Payment. An Option shall be exercised in the manner set
forth in the Option Agreement relating thereto and payment in full for all
shares being purchased at the time shall be made coincidentally with such
exercise. Such payment shall be in United States dollars.

Number of Shares. The Option Agreement shall state the number of shares of
Common Stock to which it pertains subject to adjustment pursuant to Section VII.

Restrictions on Grants. In no event shall an Incentive Stock Option be
granted to any Participant if, at the time of such grant, such Participant owns
capital stock of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (or of its
subsidiaries) unless the Option Price is not less than one hundred ten percent
(110%) of the fair market value of the shares of Common Stock subject to the
Option on the date of the grant of the Option and the Option Period does not
exceed five (5) years.

Option Price. Subject to the above restrictions, no Incentive Stock Option
Price shall be less than one hundred percent (100%) of the fair market value of
the shares of Common Stock on the date of the grant of the Option, such market
value to be determined in accordance with procedures adopted from time to time
by the Committee and in accordance with the requirements of Section 422 of the
Code respecting such fair market value.

Option Period. Each Option granted under the Plan shall expire no later
than ten (10) years from the date the Option is granted. Option Agreements may
contain provisions for the earlier expiration of the Option.

Date of Exercise. Except as otherwise provided in this Plan, any Option
may be exercised in whole at any time or in part from time to time during the
Option Period or its exercise may be limited or precluded for such period or
periods of time as shall be specified in the Option Agreement.

Compliance with the Laws Relating to the Sale of Securities. The Company
may impose such restrictions on any shares acquired under the Plan as may be
advisable to ensure compliance with applicable federal or state securities laws
and may legend the certificates representing such shares with an appropriate
notice of such restrictions.

Assignability. No Option shall be assignable or transferable except by
will or by the laws of descent and distribution. During the lifetime of a
Participant the Option shall be exercisable only by him. In case of the
judicially declared incompetence or disability of a Participant, the Option may
be exercised by the legally appointed guardian or conservator of his estate.

Agreement to Remain in Employ of Company. Nothing contained herein shall
be deemed to negate, restrict or affect in any manner the right of the Company
to terminate at any time the employment of any Participant.

TERMINATION OF EMPLOYMENT.

a. Should the employment of a Participant to whom an outstanding Option has
been granted terminate for any reason whatsoever, including death or disability,
each Option granted under the Plan shall automatically expire as of three (3)
months from the date of termination.

b. Should a Participant die or become disabled while employed by the
Company, the Option theretofore granted to such Participant may be exercised by
such Participant or such Participant's executor, administrator or heirs or
legatees. Notwithstanding any of the foregoing, in no event shall any Option be
exercisable after expiration of the period for which it was granted.

c. "Termination of Employment" shall mean the cessation for any reason of
the relation of employer and employee between the Company and the Participant
and shall not include any subsequent period during which the Participant may
receive accrued vacation or severance pay or similar compensation from the
Company.

Rights as a Shareholder. A Participant shall have no rights as a
shareholder with respect to shares covered by any Option until the date of the
issuance or transfer of shares to such participant

21
<PAGE>

thereunder. Except as provided in Section VII, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such shares are issued or transferred.

Other Provisions. Option Agreements shall contain such other terms and
conditions not inconsistent with the provisions of this Section IX or the other
provisions of the Plan as the Committee shall deem advisable.

X. INCENTIVE STOCK OPTIONS AND RELATED MATTERS -- The Company intends that the
Plan shall comply with those provisions of the Code required to permit, as the
Committee shall determine, Options to qualify as Incentive Stock Options. Should
this Section X or any other provision of the Plan not be necessary for such
qualification, or should any change in the Plan be necessary to permit the grant
or continuing qualification of Incentive Stock Options as such, the Plan may be
amended or interpreted by the Committee or the Board of Directors to add or to
modify the provisions of the Plan accordingly.

To the extent that any provision or amendment of the Plan or of any Option
Agreement shall or may have the effect of disqualification, change in Option
Price or change in grant date of, or shall or may otherwise prejudice the value
of, a Participant's Incentive Stock Option under Section 422 of the Code, such
provision or amendment shall be null and void as to such Incentive Stock Option
unless the Participant shall give express written agreement to such provision or
amendment and to such effect.

XI. MERGER AND DISSOLUTION -- Subject to any required action by the
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, any unexercised portion of an Option shall, in lieu of the number
of shares of Common Stock covered by such unexercised portion, pertain and apply
to the number and class of the securities to which the Participant would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, the Participant had been
the holder of record of a number of shares of Common Stock equal to the number
of shares covered by such unexercised portion his Option.

XII. DISCONTINUANCE AND AMENDMENT OF THE PLAN -- In addition to the provisions
set forth elsewhere in the Plan respecting the amendment of the Plan, the
Committee or the Board of Directors may, from time to time, amend, suspend or
discontinue the Plan, provided that any amendment that would (i) increase the
aggregate number of shares of Common Stock as to which Options may be granted
under the Plan, (ii) materially increase the benefits accruing to Participants
under the Plan, (iii) materially modify the requirements as to eligibility for
participation in the Plan, or (iv) extend the expiration date of the Plan beyond
that set forth in Section VIII hereof, shall be subject to the requisite
approval of the Company's shareholders, except that any Plan amendment resulting
from or implementing any increase or modification that may result from
adjustments authorized by Sections VII or XI shall not require such approval.

The preceding paragraph notwithstanding, no amendment, suspension or
discontinuance of the Plan may adversely affect any Option previously granted
with the consent of the Participant affected thereby.

<PAGE>

SL INDUSTRIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SL INDUSTRIES, INC.

FOR THE ANNUAL MEETING OF SHAREHOLDERS, TO BE HELD NOVEMBER 20, 1998

The undersigned shareholder of SL Industries, Inc., a New Jersey
corporation, does hereby constitute and appoint J. Dwane Baumgardner and Walter
I. Rickard, and each of them, attorneys-in-fact and agents with full powers of
substitution, for and in the name, place and stead of the undersigned, to vote
as specified below all of the common shares of the Company which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Company to be
held at the Doubletree Guest Suites, Fellowship Road, Mount Laurel, New Jersey,
on November 20, 1998, at 9:00 in the morning, and at any adjournment or
postponement thereof. This proxy revokes all prior proxies given by the
undersigned.

This proxy, when properly executed, will be voted in the manner directed
below. With respect to the election of directors, where no vote is specified or
where a vote FOR Proposal (1) is marked, this proxy will be voted for the
election of the five (5) nominees for director listed below. Where no vote is
specified, this proxy will be voted FOR management Proposals (2) and (3), and
AGAINST Proposal (4), as recommended by the Board of Directors. The individuals
named above are authorized to vote in their discretion on any other matters that
properly come before the meeting.

(Continued and to be signed on the other side)
<PAGE>
(Continued from other side)

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.

(1) ELECTION OF DIRECTORS NOMINEES: J. DWANE BAUMGARDNER; OWEN FARREN;
GEORGE R. HORNIG; WALTER I. RICKARD; ROBERT J. SANATOR.

/ / FOR the election as directors for the ensuing year of all nominees listed
above (except as stricken out above) (TO WITHHOLD AUTHORITY TO VOTE FOR
ANY SPECIFIC NOMINEES, CHECK THE FOREGOING BOX AND STRIKE OUT OR LINE
THROUGH SUCH NOMINEE'S NAME ON THE LIST ABOVE.)

/ / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.

(2) RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR THE
FISCAL YEAR 1999. / / FOR / / AGAINST / / ABSTAIN

(3) AMENDMENT TO THE COMPANY'S 1991 LONG TERM
INCENTIVE PLAN. / / FOR / / AGAINST / / ABSTAIN

(4) SHAREHOLDER PROPOSAL.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
PROPOSAL 4. / / FOR / / AGAINST / / ABSTAIN

(5) Upon all other matters properly coming before the meeting and any
adjournment or postponement thereof.

Dated: ____________________ , 1998

Signature: _______________________

Title: ___________________________

Please sign exactly as your name
appears hereon. Executors,
administrators or trustees should
indicate their capacities. If
stock is held in joint names, both
registered holders should sign.
This proxy shall vote all shares
held in all capacities to which
the signatory is entitled.
<PAGE>

SL INDUSTRIES, INC.

This Proxy is Solicited on Behalf of the Board of Directors of SL
Industries, Inc. For the Annual Meeting of Shareholders, to Be Held November 20,
1998 The undersigned shareholder of SL Industries, Inc., a New Jersey
corporation, does hereby constitute and appoint J. Dwane Baumgardner and Walter
I. Rickard, and each of them, attorneys-in-fact and agents with full powers of
substitution, for and in the name, place and stead of the undersigned, to vote
as specified below all of the common shares of the Company which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Company to be
held at the Doubletree Guest Suites, Fellowship Road, Mount Laurel, New Jersey,
on November 20, 1998, at 9:00 in the morning, and at any adjournment or
postponement thereof. This proxy revokes all prior proxies given by the
undersigned.

(Continued and to be signed on the other side)

|X| Please mark your
votes as in this
example.

The Board of Directors recommends a vote FOR Proposals 1 and 2 and 3.

FOR WITHHELD
1. ELECTION OF |_| |_|
DIRECTORS

Nominees: J. Dwane Baumgardner; Owen
Farren; George R. Hornig; Walter I.
Rickard, Robert J. Sanator.

FOR the election as directors for the ensuing year of all nominees listed
above (except as stricken out above) (To withhold authority to vote for any
specific nominees, check the FOR box above and strike out or line through such
nominee's name on the list above.)

WITHHOLD AUTHORITY to vote for all nominees listed above, check the
WITHHELD box above.

2. Ratification of Appointment of FOR AGAINST ABSTAIN
Arthur Andersen LLP as Auditors for |_| |_| |_|
the Fiscal Year 1999.

3. Amendment to the Company's 1991 FOR AGAINST ABSTAIN
Long Term Incentive Plan |_| |_| |_|

4. Shareholder Proposal. The Board of FOR AGAINST ABSTAIN
Directors recommends a vote AGAINST |_| |_| |_|
Proposal 4.

SIGNATURE(S):____________________________

TITLE(S):________________________________

DATED: ___________________________ , 1998

Please sign exactly as your name appears
hereon. Executors, administrators or
trustees should indicate their
capacities. If stock is held in joint
names, both registered holders should
sign. This proxy shall vote all shares
held in all capacities to which the
signatory is entitled.