<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HOLOPHANE CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
HOLOPHANE CORPORATION
250 EAST BROAD STREET, SUITE 1400
COLUMBUS, OHIO 43215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 29, 1999
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Holophane Corporation (the "Company") will be held at the Concourse Hotel, 4300
International Gateway, Columbus, Ohio, on Thursday, April 29, 1999, at 11:00
a.m. Eastern Daylight Time, for the following purposes:
1. to elect two directors, each for a term to expire at the 2002 Annual
Meeting of Stockholders;
2. to consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent accountants for the 1999
fiscal year; and
3. to act upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof. A complete list of the
stockholders entitled to vote at the Annual Meeting will be available for
examination by any stockholder at the executive offices of the Company for any
purpose germane to the Annual Meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting.
The Board of Directors has fixed the close of business on March 10,
1999 as the record date for the determination of the stockholders entitled to
notice of and to vote at the meeting and at any adjournment or postponement
thereof.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, you may ensure your representation by
completing, signing, dating and promptly returning the enclosed proxy card. A
return envelope, which requires no postage if mailed in the United States, has
been provided for your use. If you attend the Annual Meeting and inform the
Secretary of the Company in writing that you wish to vote your shares in person,
your proxy will not be used.
If your shares are held of record by a broker, bank or other nominee
and you wish to attend the meeting, you must obtain a letter from the broker,
bank or other nominee confirming your beneficial ownership of the shares and
bring it to the meeting. In order to vote your shares at the meeting, you must
obtain from the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important.
Please SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By order of the Board of Directors,
Bruce A. Philp
Secretary
Columbus, Ohio
March 25, 1999
<PAGE> 3
HOLOPHANE CORPORATION
250 EAST BROAD STREET, SUITE 1400
COLUMBUS, OHIO 43215
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors and management of Holophane Corporation, a Delaware
corporation (the "Company"), of proxies for use at the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Concourse
Hotel, 4300 International Gateway, Columbus, Ohio, on Thursday, April 29, 1999,
at 11:00 a.m., and at any and all postponements or adjournments thereof, for the
purposes set forth in the accompanying Notice of Meeting.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about March 25, 1999.
The principal executive offices of the Company are located at 250 East
Broad Street, Suite 1400, Columbus, Ohio 43215.
GENERAL
Only stockholders of record at the close of business on March 10, 1999
are entitled to notice of and to vote the shares of common stock, par value $.01
per share, of the Company (the "Common Stock") held by them on that date at the
Annual Meeting or any postponements or adjournments thereof.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders on the proxy card will vote for the slate of
nominees proposed by the Board of Directors and ratification of the appointment
of Deloitte & Touche LLP as the Company's independent accountants for the fiscal
year ending December 31, 1999 and as recommended by the Board of Directors with
regard to all other matters or, if no such recommendation is given, in their own
discretion. Abstentions, broker non-votes or, in the case of the proposal to
elect the slate of nominees proposed by the Board of Directors only,
instructions on the accompanying proxy card to withhold authority to vote for
the nominated director will result in a proposal's receiving fewer votes. Under
the Delaware General Corporation Law and the Company's Second Amended and
Restated Certificate of Incorporation (the "Charter"), (i) a plurality of the
votes of the outstanding shares of Common Stock entitled to vote and present, in
person or by properly executed proxy, will be required to elect a nominated
director and (ii) the affirmative vote of the holders of at least a majority of
the outstanding shares of Common Stock entitled to vote and present, in person
or by properly executed proxy, will be required to ratify the appointment of
Deloitte & Touche LLP as the Company's independent accountants for the fiscal
year ending December 31, 1999. Each stockholder may revoke a previously granted
proxy at any time before it is exercised by filing with the Secretary of the
Company a revoking instrument or a duly executed proxy bearing a later date. The
powers of the proxy holders will be suspended if the person executing the proxy
attends the Annual Meeting in person and so requests in writing. Attendance at
the Annual Meeting will not, in itself, constitute revocation of a previously
granted proxy.
1
<PAGE> 4
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding on March 10,
1999 will constitute a quorum. Each outstanding share entitles its holder to
cast one vote on each matter to be voted upon at the Annual Meeting. As of March
10, 1999, the record date for the 1999 Annual Meeting, 10,586,541 shares of
Common Stock were outstanding and entitled to vote. Stockholders will not be
entitled to appraisal rights in connection with any of the matters to be voted
on at the Annual Meeting.
2
<PAGE> 5
STOCK OWNERSHIP
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 10, 1999, by each
of the Company's directors and nominees, each of the Company's named executive
officers, all directors and executive officers as a group and each person who is
known by the Company to beneficially own five percent or more of any class of
the Company's voting securities.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
DIRECTORS, NOMINEES AND NUMBER EXERCISABLE
OTHER NAMED EXECUTIVE OFFICERS (a) OF SHARES OPTIONS TOTAL PERCENT
- ---------------------------------- --------- ------- ----- -------
<S> <C> <C> <C> <C>
John R. DallePezze (b) 337,613 333,167 670,780 6.1%
William R. Michaels 70,818 14,000 84,818 *
Robert L. Purdum 4,000 26,000 30,000 *
Anthony P. Scotto 48,533 14,000 62,533 *
Tadd C. Seitz 9,000 26,000 35,000 *
Jeffrey M. Wilkins 2,000 14,000 14,200 *
John W. Harvey 57,879 88,850 146,729 1.4
S. Lee Keller (b) 122,999 80,850 203,849 1.9
Bruce A. Philp (b) 149,415 78,850 228,265 2.1
William T. Weisert (b) 31,945 59,750 91,695 *
All directors and executive officers as a group 851,107 763,467 1,614,574 14.2
(12 persons)
OTHER 5% STOCKHOLDERS
- ---------------------
The Capital Group Companies, Inc. (c) 903,500 8.5
333 South Hope Street
Los Angeles, CA 90071
First Pacific Advisors, Inc. (d) 603,100 5.7
11400 West Olympic Boulevard
Los Angeles, CA 90064
T. Rowe Price Associates, Inc. (e) 1,543,800 14.6
100 East Pratt Street
Baltimore, MD 21202
</TABLE>
- ------------------
* Less than 1%.
3
<PAGE> 6
(a) The business address of each of the directors, nominees and named
executive officers is: c/o Holophane Corporation, 250 East Broad
Street, Suite 1400, Columbus, Ohio 43215.
(b) Also includes shares of Common Stock held by the respective spouses of
executive officers of the Company and by their children that reside
with them.
(c) Information is based on the Amendment No. 2 to Schedule 13G dated
February 8, 1999, filed jointly by Capital Guardian Trust Company
("Capital Trust"), a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended, and Capital International,
Inc. ("Capital International"), an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, which reflects the
beneficial ownership of and sole dispositive power over 903,500 shares
of Common Stock by Capital Trust. Capital Trust has sole voting power
over 732,900 shares. Capital International has sole voting power over
188,000 shares.
(d) Information is based on the Amendment No. 2 to Schedule 13G dated
February 12, 1999, filed jointly by First Pacific Advisors, Inc.,
("First Pacific"), a Massachusetts corporation, and Source Capital,
Inc. ("Source Capital"), a Delaware corporation, which reflects the
beneficial ownership of and shared dispositive power over 603,100
shares of Common Stock by First Pacific. First Pacific has sole voting
power over no shares. Source Capital has sole voting power over 535,500
shares.
(e) Information is based on the Schedule 13G dated February 12, 1999, filed
jointly by T. Rowe Price Associates, Inc. ("Price Associates"), an
investment advisor registered under the Investment Advisors Act of
1940, and T. Rowe Price Small Cap Value Fund, Inc. ("Value Fund"), a
Maryland corporation, which reflects the beneficial ownership of and
sole dispositive power over 1,543,800 shares of Common Stock by Price
Associates. Price Associates has sole voting power over 274,200 shares.
Value Fund has sole voting power over 800,000 shares and sole
dispositive power over no shares.
ITEM 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes
with regular three year staggered terms. The term of office of directors in
Class III expires at the Annual Meeting. The Board of Directors proposes that
the nominees described below be elected to Class III for a new term to expire at
the 2002 Annual Meeting of Stockholders and until their successors are duly
elected and qualified. The Board of Directors has no reason to believe that any
of the nominees will not serve if elected, but if any of them should become
unavailable to serve as a director, and if the Board designates a substitute
nominee, the persons named as proxies will vote for the substitute nominee
designated by the Board.
NOMINEES STANDING FOR ELECTION TO THE BOARD OF DIRECTORS
CLASS III - TERM TO EXPIRE AT THE 2002 ANNUAL MEETING
Directors will be elected by a plurality of the votes of the
outstanding shares of Common Stock entitled to vote and present, in person or by
properly executed proxy. The accompanying proxy will be voted for the election
of the Board's nominees unless contrary instructions are given. If elected, all
nominees are expected to serve until the 2002 Annual Meeting or until their
successors are duly elected and qualified. If the Board's nominee is unable to
serve, the
4
<PAGE> 7
persons named as proxies intend to vote, unless the number of nominees is
reduced by the Board of Directors, for such other person as the Board of
Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF ITS NOMINEES FOR DIRECTORS, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON
THE ENCLOSED PROXY CARD.
TADD C. SEITZ DIRECTOR SINCE 1993
Mr. Seitz, 57, is the retired Chairman and Chief Executive Officer of
The Scotts Company, a manufacturer of lawn and garden care products. Mr. Seitz
serves on several private company boards. Mr. Seitz is Chairman of the
Compensation Committee.
JEFFREY M. WILKINS DIRECTOR SINCE 1996
Mr. Wilkins, 54, has been Chairman and Chief Executive Officer of
Metatec Corporation, an information services company, since August 1989. Mr.
Wilkins founded and served as Chief Executive Officer of CompuServe from its
beginning in 1969 until mid-1985. Mr. Wilkins serves as a director of Checkfree
Corporation. Mr. Wilkins is a member of the Compensation Committee.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS I - TERM TO EXPIRE AT THE 2000 ANNUAL MEETING
WILLIAM R. MICHAELS DIRECTOR SINCE 1989
Mr. Michaels, 64, was the Chairman of the Board of the Company from
June 1989 through February 1992. From September 1988 to June 1997, Mr. Michaels
was Chairman of the Board, President and Chief Executive Officer and since June
1997 Chairman of the Board of Pinnacle Automation, Inc., a manufacturer of
specialized material handling systems. Mr. Michaels is a member of the
Compensation Committee.
ROBERT L. PURDUM DIRECTOR SINCE 1994
Mr. Purdum, 63, retired as Chairman of Armco Inc., a major steel
manufacturer, in 1994. Mr. Purdum joined Armco in 1962 following service in the
U.S. Navy. He was elected President of Armco in 1986 and served as Chief
Executive Officer from November 1990 to December 1993. Mr. Purdum is a director
of Berlitz International, Inc., a language services firm, and Chairman of
Bucyrus International, a mining equipment manufacturer. Mr. Purdum is also a
partner in American Industrial Partners and is Chairman of Steel Heddle, a
textile products company. Mr. Purdum is a member of the Audit Committee.
CLASS II - TERM TO EXPIRE AT THE 2001 ANNUAL MEETING
JOHN R. DALLEPEZZE, CHAIRMAN DIRECTOR SINCE 1989
Mr. DallePezze, 55, has been a Director, President and Chief Executive
Officer of the Company since he joined the Company in October 1989 and Chairman
of the Board since February 1992. Prior to joining the Company, Mr.
5
<PAGE> 8
DallePezze served from 1983 to 1989 as President of the McCullough Division of
N.L. Industries Inc. and Western Atlas International Inc. Prior to 1983, Mr.
DallePezze served as General Manager of the Lighting Products Division of
Corning Inc. Mr. DallePezze serves as a director of Belden, Inc., a wire and
cable manufacturer.
ANTHONY P. SCOTTO DIRECTOR SINCE 1991
Mr. Scotto, 52, has been a consultant to Oak Hill Capital Management
since November 1998 and has served as a Managing Director of Oak Hill Partners,
Inc. since 1992. Mr. Scotto serves as a director of Ivex Packaging Corporation,
Specialty Foods Corporation and Grove Worldwide, LLC. Mr. Scotto is Chairman of
the Audit Committee.
DIRECTORS' REMUNERATION; ATTENDANCE
Directors of the Company who are not employees receive an annual
retainer fee of $25,000. Employees who serve as directors receive no additional
remuneration. All directors are reimbursed for out-of-pocket expenses.
Non-employee directors receive no fringe benefits other than elective deferral
of directors' fees through the Supplemental Executive Retirement Plan.
All independent directors will receive an annual grant of options to
purchase 4,000 shares of Common Stock pursuant to the Company's 1996 Incentive
Stock Plan.
The Company's Charter and Bylaws provide for the elimination of
liability of directors and the indemnification of directors and officers to the
fullest extent permitted by Delaware law.
The Board of Directors met four times during 1998. All of the directors
attended at least 75% of the total number of meetings of the Board and of the
committees on which they served during 1998.
COMMITTEES OF THE BOARD
The Board has standing Compensation and Audit Committees. The Board
does not have a nominating committee. The full Board selects the nominees for
directors.
Compensation Committee. The Compensation Committee met four times
during 1998. The purpose of the Compensation Committee of the Board of Directors
(the "Committee") is to establish and administer executive compensation policies
which are aligned with the Company's business objectives. A detailed report
follows.
Audit Committee. The Audit Committee met four times during 1998. Its
functions are to recommend the appointment of independent accountants; review
the arrangements for and scope of the audit by the independent accountants;
review the independence of the independent accountants; consider the adequacy of
the system of internal accounting controls and review any proposed corrective
actions; review and monitor the Company's policies regarding business ethics and
conflicts of interests; discuss with management and the independent accountants
the Company's draft annual financial statements and key accounting and/or
reporting matters; and other related functions.
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth information concerning total
compensation earned or paid to the Chief Executive Officer and the four most
highly compensated executive officers of the Company who served in such
capacities on December 31, 1998 (the "named executive officers") for services
rendered to the Company.
SUMMARY COMPENSATION TABLE
The following table discloses compensation paid or to be paid to the
named executive officers for each of the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(a) COMPENSATION
------------------------------------- --------------------------
SECURITIES
UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(b) OPTIONS/SARS PAYOUTS(b) COMPENSATION(c)
--------------------------- ---- ------ -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John R. DallePezze............. 1998 $352,385 $182,500 56,000 $ 79,364 $42,997
Chairman, President & 1997 346,192 193,868 62,500 203,767 49,573
Chief Executive Officer 1996 305,597 122,575 55,000 203,767 44,233
John W. Harvey (d)............. 1998 $168,769 $73,700 12,400 $ 28,344 $18,957
Vice President, 1997 167,173 78,700 14,000 72,775 21,270
Manufacturing 1996 152,800 49,100 13,000 72,775 19,224
S. Lee Keller (e).............. 1998 $172,669 $42,600 12,400 $ 28,344 $17,053
Vice President, 1997 171,404 68,600 14,000 72,775 20,957
Sales 1996 152,800 41,800 13,000 72,775 18,713
Bruce A. Philp (f)............. 1998 $170,885 $63,200 12,400 $ 28,344 $18,370
Vice President, Finance, 1997 167,173 79,400 14,000 72,775 21,203
Chief Financial Officer 1996 152,800 46,500 13,000 72,775 19,042
William T. Weisert (g)......... 1998 $145,239 $49,600 7,600 $ 22,570 $15,219
Vice President, 1997 145,519 48,300 11,000 57,933 16,244
Research & Development 1996 135,190 28,600 8,800 57,933 15,518
</TABLE>
- --------
(a) Other Annual Compensation, which consists solely of perquisites or
other personal benefits, was less than the lesser of $50,000 or 10% of
such named executive officer's annual salary and bonus for such year.
(b) Amounts include deferred portions under the Company's Supplemental
Executive Retirement Plan.
(c) All Other Compensation for the 1998 fiscal year reflects amounts
contributed by the Company to Messrs. DallePezze, Harvey, Keller, Philp
and Weisert of $11,200 each under the Company's Thrift Plan and
$31,797, $7,757, $5,853, $7,170 and $4,019, respectively, as
supplemental retirement benefits under the Company's Supplemental
Executive Retirement Plan.
(d) Mr. Harvey, 54, was elected Vice President, Manufacturing on June 28,
1989.
(e) Mr. Keller, 51, was elected Vice President, Sales on June 28, 1989.
(f) Mr. Philp, 47, was elected Vice President, Finance, Chief Financial
Officer and Secretary on June 28, 1989.
(g) Mr. Weisert, 53, was elected Vice President, Research & Development on
June 28, 1989.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal
1998 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (b)
------------------------------------------------------------- -----------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES
OPTIONS IN FISCAL EXERCISE EXPIRATION
NAME GRANTED YEAR PRICE (c) DATE 5% 10%
---- ----------- ---- --------- ------------- -------- ----------
($/SHARE)
<S> <C> <C> <C> <C> <C> <C>
John R. DallePezze....... 56,000(a) 26.9 $24.4375 Feb. 24, 2008 $860,642 $2,181,037
John W. Harvey........... 12,400(a) 6.0 $24.4375 Feb. 24, 2008 $190,571 $482,944
S. Lee Keller............ 12,400(a) 6.0 $24.4375 Feb. 24, 2008 $190,571 $482,944
Bruce A. Philp........... 12,400(a) 6.0 $24.4375 Feb. 24, 2008 $190,571 $482,944
William T. Weisert....... 7,600(a) 3.7 $24.4375 Feb. 24, 2008 $116,801 $295,998
</TABLE>
- ---------------
(a) Twenty-five percent of such options vest on February 24, 1999, with the
remaining 75% vesting 25% per year until fully vested on February 24,
2002. Such options have stock-for-stock exercise and tax withholding
features, which allow the holders, in lieu of paying cash for the
exercise price and any tax withholding, to have the Company
commensurately reduce the number of shares of Common Stock to which
they would otherwise be entitled upon exercise of such options.
(b) The dollar amounts under these columns are the result of calculations
at the 5% and 10% annualized rates of stock price appreciation set by
the Securities and Exchange Commission and therefore are not intended
to forecast future appreciation, if any, of the Company's stock price.
(c) The exercise price of the options is the per share fair market value of
the underlying Common Stock on the date of the grant.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table provides information on option exercises in fiscal
1998 by the named executive officers and the values of such officers'
unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE END EXERCISABLE/ FISCAL YEAR-END
NAME ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------- -------------------------
<S> <C> <C> <C> <C>
John R. DallePezze.............. 5,000 $74,530 275,375/150,625 $3,613,773/$749,039
John W. Harvey.................. 0 $ 0 73,750/34,650 $ 984,953/$179,422
S. Lee Keller................... 0 $ 0 65,750/34,650 $ 859,453/$179,422
Bruce A. Philp.................. 0 $ 0 63,750/34,650 $ 828,078/$179,422
William T. Weisert.............. 0 $ 0 49,713/23,438 $ 661,746/$121,395
</TABLE>
EMPLOYMENT AGREEMENT
On August 30, 1993, the Company entered into an amended employment
agreement (the "Employment Agreement") with Mr. DallePezze which sets forth the
terms and conditions of Mr. DallePezze's employment as President, Chairman and
Chief Executive Officer. Mr. DallePezze's current compensation includes a base
salary of $369,000 and a targeted bonus of 70% of his base salary.
If Mr. DallePezze's employment is terminated by the Company without
Cause or if he resigns for Good Reason, other than within two years following a
Change of Control (in each case, as defined in the Employment Agreement), Mr.
DallePezze would be entitled to receive severance payments and other benefits.
These payments and benefits would include (a) a single lump sum payment of any
accrued base salary, benefits and bonus under the Bonus Plan; (b) continuation
of base salary, bonus payments and fringe benefits generally for a period of 36
months following termination of employment, provided that such amounts shall be
reduced if Mr. DallePezze accepts third-party employment; and (c) full vesting
of all outstanding stock options.
Within two years following a Change of Control, if Mr. DallePezze's
employment is terminated by the Company without Cause or if he resigns for Good
Reason, he would be entitled to receive certain lump sum payments and other
benefits, including (a) a single lump sum payment of any accrued base salary,
benefits and bonus under the Bonus Plan; (b) a single lump sum payment equal to
the sum of (i) two times Mr. DallePezze's applicable base salary and targeted
Annual Bonus and (ii) the maximum Long-Term bonus payment possible under the
Bonus Plan; and (c) reimbursement of any excise tax incurred under Section 4999
of the Internal Revenue Code of 1986 (the "Code") plus any resulting income
taxes as a result of such reimbursement. In addition, upon the occurrence of a
Change in Control, Mr. DallePezze will become fully vested in all employee
benefit plans in which he is a participant, including all stock options granted
to him.
If Mr. DallePezze's employment is terminated by the Company for Cause
or if he resigns without Good Reason, he would not be entitled to any severance
pay or any other additional compensation.
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<PAGE> 12
TERMINATION BENEFITS AGREEMENTS
In September and October 1993, the Company entered into certain
Termination Benefits Agreements (the "Termination Agreements") with each of the
Company's executive officers other than Mr. DallePezze. Under the terms of the
Termination Agreements, the executive officers are entitled to receive certain
benefits upon the termination of their employment within two years following a
Change in Control if termination is without Cause or for Good Reason (all terms
as defined in the Termination Agreements). Benefits payable upon termination
would include (a) a single lump sum payment of any accrued base salary, benefits
and bonus under the Bonus Plan; (b) continuation of fringe benefits for a period
of 18 months following termination of employment; (c) a single lump sum payment
equal to the sum of (i) 1 1/2 times the executive's applicable base salary and
targeted Annual bonus and (ii) the maximum Long-Term bonus payment possible
under the Bonus Plan; and (d) reimbursement of any excise tax incurred under
Section 4999 of the Code, plus any resulting income taxes. In addition, upon the
occurrence of a Change in Control, the executive will become fully vested in all
employee benefit plans in which he is a participant, including all stock options
granted to him.
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF
EXECUTIVE OFFICERS OF THE COMPANY
The purpose of the Compensation Committee of the Board of Directors is
to establish and administer executive compensation policies which are aligned
with the Company's business objectives. The Committee recommends compensation
actions for all corporate officers to the Board of Directors for approval. All
Committee members are non-employee directors.
Compensation Philosophy
There are certain guiding principles utilized by the Committee in structuring
the compensation packages of key executives. They are:
Pay for Performance - To align the executives' interest with the
interests of stockholders, a high percentage of executives' total
compensation is composed of leveraged short-term and long-term
incentives directly linked to the performance of the Company.
Competitiveness - Executives are provided with an opportunity to earn
total compensation at a level above the median for comparable companies
when Company performance exceeds industry norms and that of its
competitors. This opportunity enables the Company to significantly
challenge its management team.
Executive Ownership - A major component of total compensation is equity
based. This links management's interests with stockholders' interests
and provides rewards for long-term results.
Management Development - Total compensation programs are designed to
attract and retain individuals with the leadership and technical skills
required to ensure the Company's future. The Committee believes that
the Company's human resources can provide a competitive advantage.
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<PAGE> 13
Components of Executive Compensation
The components of total compensation for all executives are base salary, a bonus
plan, fringe benefits and stock options. The Committee annually reviews total
compensation for the Company's executives as well as each component of
compensation. Compensation consultants are utilized by the Committee to assist
in structuring the compensation program and to supply appropriate competitive
compensation information. The Committee has utilized data from a group of
publicly held companies in similar lines of business as the Company as well as
data for general industrial companies of similar size as the Company. For stock
performance comparisons, the Company utilizes the Dow Jones Industrial Index for
the Electrical Components and Equipment Group which includes companies engaged
in similar lines of business as the Company. While some of these companies were
also used for competitive compensation information, those with substantially
larger market capitalization were excluded.
Base Salary - Base salary for all executive officers is targeted to be
in the second quartile (below the median but above the 25th percentile) of
comparable companies. Salaries are reviewed annually and may be adjusted based
subjectively on individual and corporate performance, as measured by sales,
EBITDA and net income, as well as industry comparisons. No specific weight was
assigned to these factors in determining 1998 base salaries for the executive
officers.
Bonus Plan - The Company's management employees, including the
executive officers, participate in the Holophane Bonus Plan, consisting of both
an Annual and Long-Term Bonus. The Plan is targeted to provide total cash
compensation (salary plus bonuses) in the third quartile of comparable companies
if Company performance objectives are met. Depending on actual performance,
total cash compensation may range from the lowest to the highest quartile of
comparable companies.
Each Bonus Plan participant has a target bonus ranging from 10% to 70%
of base salary. Annual Bonuses, ranging from 0% to 150% of target, are paid
based upon performance against Company financial objectives, including goals for
increases in sales and EBITDA. The Chief Executive Officer's Annual Bonus is
based solely upon performance versus these objectives. The Annual Bonus for
other Plan participants, including the executive officers, is based on
performance versus both (in order of importance) Company objectives and
individual objectives. While sales and net income improved in 1998, overall
Company performance fell short of the Company's financial objectives resulting
in bonuses which were lower than target.
The Long-Term Bonus is paid if certain long-term goals are met. The
Long-Term Bonus Plan is a rolling three year plan. Awards are based solely on
achievement of earnings per share objectives. The maximum Long-Term Bonus award
for each participant equals the target bonus in the first year of each plan
period was paid below maximum level, but reflects the three year 25% growth of
earnings per share. During this time frame, the market price of Holophane stock
increased 18%.
Fringe Benefits - The executive officers participate in the same fringe
benefit plans offered to all salaried employees, including the 5% defined
contribution Thrift Plan. Additionally, they participate in the Supplemental
Executive Retirement Plan, a non-qualified plan intended to "restore" retirement
benefits which would have accrued under the Thrift Plan were it not for various
limitations under the Code. In addition, participants may be entitled to defer a
portion of their bonuses.
Stock Options - The Company's Incentive Stock Plans foster executive
stock ownership and align the executives' interests with stockholders'
interests. Grants are targeted to be at the 75th percentile of grants for
similarly
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<PAGE> 14
compensated executives at comparable companies. Consistent with the intent of
the Incentive Stock Plans, the Compensation Committee has established stock
ownership expectations for all participants.
The maximum number of shares of Common Stock with respect to which
awards may be granted under the 1996 Incentive Stock Plan is 800,000. Last year,
207,800 stock options were granted to directors and key employees, including the
named executives as set forth in the Summary Compensation Table.
Section 162(m) Compliance
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") places certain
restrictions on the amount of compensation in excess of $1,000,000 which may be
deducted for each executive. The Company intends to satisfy the requirements of
Section 162(m) should the need arise.
Chief Executive Officer Compensation
Mr. DallePezze is compensated pursuant to the terms of his Employment Agreement.
Based on competitive data from the Company's compensation consultant, the
Committee believes that, relative to CEO compensation in comparable companies,
Mr. DallePezze's base salary for 1998 was in the second quartile, his annual
cash compensation was in the second quartile and his total cash compensation was
in the third quartile. Mr. DallePezze was granted 56,000 stock options pursuant
to the 1996 Incentive Stock Plan described above under Stock Options. This grant
was established at the 75th percentile of grants for similarly compensated
executives at comparable companies. The grant also reflects Mr. DallePezze's
leadership in achieving the Company's past performance as well as expectations
for his future contribution.
Members of the Compensation Committee
William R. Michaels
Tadd C. Seitz, Chairman
Jeffrey M. Wilkins
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<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Common Stock of the Company since becoming a public company on October 28,
1993 with the cumulative total return of (i) the Standard & Poor's 500 Composite
Stock Price Index and (ii) the Dow Jones Industrial Index for the Electrical
Components and Equipment Group. The graph assumes the investment of $100 in the
Common Stock of the Company, the Standard & Poor's 500 Index and the Dow Jones
Industrial Index for the Electrical Components and Equipment Group. The initial
public offering price of the Company's Common Stock was $10 per share, adjusted
for the 3:2 stock split on December 15, 1995. [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Holophane Electrical Components Standard & Poor's
Corporation & Equipment Index 500 Index
----------- ----------------- ---------
<S> <C> <C> <C>
10/28/93 100.00 100.00 100.00
12/31/93 113.33 102.97 100.24
12/31/94 125.00 107.22 100.24
12/31/95 217.50 140.20 139.73
12/31/96 190.00 170.75 171.81
12/31/97 247.50 209.62 229.11
12/31/98 256.88 245.87 294.59
</TABLE>
ITEM 2-RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999. Deloitte &
Touche LLP has served as the Company's independent accountants since 1989.
Services provided to the Company and its subsidiaries by Deloitte & Touche LLP
with respect to 1998 included the examination of the Company's consolidated
financial statements, limited reviews of quarterly reports, services related to
filings with the Securities and Exchange Commission and consultations on various
tax and information services matters. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting to respond to appropriate questions and to
make such statements as they may desire.
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<PAGE> 16
Ratification of the appointment of Deloitte & Touche LLP as the
Company's independent accountants for 1999 will require the affirmative vote of
a majority of the shares of Common Stock entitled to vote and present, in person
or by proxy, at the Annual Meeting. In the event the stockholders do not ratify
the appointment of Deloitte & Touche LLP as the Company's independent
accountants for the forthcoming fiscal year, such appointment will be
reconsidered by the Audit Committee and the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR 1999, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE
ENCLOSED PROXY CARD.
OTHER MATTERS
Under the securities laws of the United States, the Company is required
to report in this proxy statement any known failures by officers, directors or
10% stockholders to file on a timely basis a Form 3, Form 4 or Form 5, relating
to beneficial ownership of the Company's equity securities, during the last
fiscal year. To the best of the Company's knowledge, all required filings have
been made on a timely basis, except that Mr. Harvey failed to file a Form 4 on a
timely basis pertaining to the disposal of 500 shares of Common Stock.
As of the date of this proxy statement, the Company knows of no other
business that will be presented for consideration at the Annual Meeting other
than the items referred to above. Proxies in the enclosed form will be voted in
respect of any other business that is properly brought before the Annual Meeting
in accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
In general, stockholder proposals for the nomination of directors
intended to be presented at an Annual Meeting must be received by the Company at
least 60 and not more than 90 days prior to the Annual Meeting, or by February
26, 1999, for the 1999 Annual Meeting. The requirements for submitting such
proposals and the required contents thereof are set forth in the Company's
Bylaws.
Any proposal of a stockholder intended to be presented at the Company's
2000 Annual Meeting of Stockholders must be received by the Secretary of the
Company, in order to be considered for inclusion in the Company's proxy
statement relating to the 2000 Annual Meeting, by November 24, 1999. If a
stockholder intends to present a proposal at the 2000 Annual Meeting, but has
not sought the inclusion of such proposal in the Company's proxy statement, such
proposal must be received by the Secretary of the Company by February 9, 2000 or
the Company's management proxies will be entitled to use their discretionary
voting authority should such proposal be raised after such date, without any
discussion of the matter in the Company's proxy statement.
SOLICITATION OF PROXIES
The cost of soliciting proxies for the 1999 Annual Meeting will be
borne by the Company. The Company has retained Corporate Investor
Communications, Inc. ("CIC") to aid in the solicitation of proxies. For these
services, the Company will pay a fee of approximately $1,000 and reimburse CIC
for certain out-of-pocket disbursements and expenses. Officers and regular
employees of the Company may, but without compensation other than their regular
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<PAGE> 17
compensation, solicit proxies by further mailing or personal conversations, or
by telephone, telex or facsimile. The Company will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
By Order of the Board of Directors
Bruce A. Philp
Secretary
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<PAGE> 18
HOLOPHANE CORPORATION
250 EAST BROAD STREET, SUITE 1400
COLUMBUS, OHIO 43215
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 29, 1999
The undersigned hereby appoints JOHN R. DALLEPEZZE and BRUCE A. PHILP, or
either of them, my attorneys and proxies, with full power of substitution, to
vote at the annual meeting of stockholders of said corporation to be held on
April 29, 1999, and at any adjournment thereof, with all of the powers I would
have if personally present, for the following purposes:
1. ELECTION OF CLASS III DIRECTORS.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as marked to the [ ] WITHHOLD AUTHORITY to vote for all nominees.
contrary)
(INSTRUCTIONS: Do not check "WITHHOLD AUTHORITY" to vote for only certain individual nominees. To withhold
authority to vote for any individual nominee, strike a line through the nominee's name below and check
"FOR").
Tadd C. Seitz Jeffrey M. Wilkins
</TABLE>
2. RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS AUDITORS FOR THE
CURRENT FISCAL YEAR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on Other Side)
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders dated March 25, 1999, the Proxy Statement furnished therewith
and the Annual Report to Stockholders of the Company for the fiscal year ended
December 31, 1998. Any proxy heretofore given to vote said shares is hereby
revoked.
DATED: , 1999
--------------------
--------------------------------
--------------------------------
Signature(s) shall agree with
the name(s) printed on this
proxy. If shares are registered
in two names, both stockholders
should sign this proxy.
If signing as attorney,
executor, administrator, trustee
or guardian, please give your
full title as such.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Proxy Card
