<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SNAP-ON INCORPORATED
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
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>
SNAP-ON INCORPORATED
CHAIRMAN'S LETTER
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
PRELIMINARY PROXY STATEMENT
<PAGE>
CHAIRMAN'S LETTER
March 17, 1995
Dear Snap-on Shareholder:
[LETTER TO BE FILED BY DEF 14A]
CORDIALLY,
Robert A. Cornog
Chairman of the Board of Directors,
President and Chief Executive Officer
<PAGE>
SNAP-ON INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Snap-on Incorporated will be held at the
Racine on the Lake Civic Centre, 5 Fifth Street, Racine, Wisconsin on Friday,
April 28, 1995 at 10:00 a.m.
MEETING PURPOSES:
1. TO ELECT THREE DIRECTORS TO SERVE UNTIL THE 1998 ANNUAL MEETING.
2. TO AMEND THE EMPLOYEE STOCK OWNERSHIP PLAN TO INCREASE THE NUMBER OF
AUTHORIZED SHARES.
3. TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITOR
FOR 1995.
4. TO CONSIDER AND TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF. The only business the Board of Directors
intends to present is set forth herein, and the Board knows of no other matters
which will be brought before the Annual Meeting by any person or group; however,
if any other matters shall properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote in accordance with
their judgment on such matters.
The Board of Directors has fixed the close of business on February 28, 1995 as
the record date for the determination of shareholders entitled to receive notice
of, and vote at, the Annual Meeting.
The Annual Report for the fiscal year ended December 31, 1994 is enclosed.
IMPORTANT: To ensure your representation at the Annual Meeting, you should fill
in and sign the proxy card found inside the address window pocket on the front
of the envelope enclosing this material and return it in the enclosed envelope.
All shareholders, even those planning to attend the Annual Meeting, are
encouraged to return their proxy cards well in advance of the meeting so the
vote count will not be delayed. Shareholders may revoke their proxies and vote
their shares in person at the Annual Meeting.
By Order of the Board of Directors.
March 17, 1995 Susan F. Marrinan
VICE PRESIDENT,
SECRETARY AND
GENERAL COUNSEL
<PAGE>
PRELIMINARY PROXY STATEMENT
INTRODUCTION
This proxy statement is supplied in connection with the proxy solicitation by
the Board of Directors of Snap-on Incorporated for use at the Annual Meeting of
Shareholders to be held on April 28, 1995, or any adjournment thereof. Messrs.
Chelberg and Kelly and Ms. Decyk, listed as proxies on the enclosed proxy card,
are Directors of the Corporation. This proxy statement and the proxy card were
first mailed to shareholders on or about March 17, 1995.
The Corporation had shares of common stock outstanding on February 28,
1995, and no other voting securities. Each share of record as of the February
28, 1995 record date will be entitled to one vote.
The affirmative vote of the holders of a plurality of the shares present in
person or by proxy at the meeting is required to elect the Director candidates.
The affirmative vote of the holders of the majority of the shares present in
person or by proxy at the meeting and entitled to vote is required to amend the
Employee Stock Ownership Plan and to ratify the appointment of Arthur Andersen
LLP as auditor.
An automated system administered by the Corporation's transfer agent tabulates
the votes. Abstentions and broker non-votes (which arise from proxies delivered
by brokers and others where the broker has not received authority to vote on one
or more matters) are each included in the determination of the number of shares
present and voting and are tabulated separately. Abstentions are counted in
tabulations of the votes cast on proposals presented to shareholders and have
the effect of a vote against the proposal, except in Director elections, where
they have no effect. Broker non-votes have no effect on the vote concerning the
election of Directors, the Employee Stock Ownership Plan Amendment and the
appointment of the auditor.
The expense of this solicitation of proxies will be paid by the Corporation.
Initial solicitation will be by mail; however, Officers and other employees of
the Corporation may make solicitations by mail, telephone or in person.
Brokerage houses, depositories, custodians, nominees and fiduciaries will be
requested to forward the proxy soliciting material to the beneficial owners of
the stock held of record by them, and the Corporation will reimburse them for
their expenses. Morrow & Co., Inc. will aid in the solicitation of proxies for a
fee of $6,000 plus expenses, which will be paid by the Corporation.
PROXY STATEMENT ITEM I
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation as Amended and the Bylaws of the
Corporation give the Directors the authority to set the size of the Board of
Directors at any number between five and fifteen members. The Board is currently
composed of nine members divided into three classes, with one class elected each
year to serve for a three-year term.
SHARES REPRESENTED BY PROXIES WILL BE VOTED ACCORDING TO INSTRUCTIONS ON THE
PROXY CARD. UNLESS THE PROXY CARD CLEARLY REFLECTS THAT A VOTE HAS BEEN
WITHHELD, SHARES WILL BE VOTED TO ELECT MESSRS. CORNOG, FARLEY AND RENSI. IF ANY
NOMINEE SHOULD BE UNABLE TO SERVE, THE PROXIES WILL BE VOTED FOR SUCH PERSON
DESIGNATED AS A REPLACEMENT BY THE BOARD.
NOMINEES FOR ELECTION TO SERVE UNTIL THE 1998 ANNUAL MEETING
Robert A. Cornog - age 54. Mr. Cornog has been a Director since 1982. He was
elected President, Chief Executive Officer, and Chairman of the Board of
Directors of the Corporation in 1991. He was President of Macwhyte Company, a
maker of wire rope and a subsidiary of Amsted Industries, from 1981 to 1991. Mr.
Cornog is also a Director of Johnson Controls, Inc. and Wisconsin Energy
Corporation.
Raymond F. Farley - age 70. Mr. Farley has been a Director since 1988. He was
Chief Executive Officer from 1988 and President from 1980 of S. C. Johnson &
Son, Inc., a maker of home, personal-care, insecticide and specialty chemical
products, until his retirement in January of 1990. Mr. Farley is also a Director
of Hartmarx Corporation, Johnson Worldwide Associates, Inc. and Kemper
Corporation.
Edward H. Rensi - age 50. Mr. Rensi has been a Director since 1992. He has been
President and Chief Executive Officer of McDonald's U.S.A., a food service
organization, since 1991 and served as President and Chief Operating Officer
from 1984 to 1991. He is a Director of McDonald's Corp.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
THESE DIRECTORS.
DIRECTORS CONTINUING TO SERVE UNTIL THE 1996 ANNUAL MEETING
Donald W. Brinckman - age 64. Mr. Brinckman has been a Director since 1992. He
has been Chairman of the Board of Directors of Safety-Kleen Corp. since 1990. He
served as Chief Executive Officer from 1968 through 1994. He served as President
of Safety-Kleen from 1968 to 1990 and from December, 1991 to May, 1993.
Safety-Kleen is a recycler of automotive and industrial hazardous and
non-hazardous fluids. Mr. Brinckman is also a Director of Johnson Worldwide
Associates, Inc. and Paychex, Inc.
George W. Mead - age 67. Mr. Mead has been a Director since 1985. He has been
Chairman of the Board of Consolidated Papers, Inc., a maker of paper products,
since 1971. He was Chief Executive Officer of Consolidated Papers from 1971
through 1993. Mr. Mead is also a Director of Firstar Corporation.
Jay H. Schnabel - age 52. Mr. Schnabel has been a Director since 1989 and has
been an employee of the Corporation since 1965. He has served as Senior Vice
President - Diagnostics since April 1994, and was Senior Vice President -
Administration from 1990 to April, 1994. He was Senior Vice President -
Manufacturing and Research & Engineering from 1988 to 1990. Mr. Schnabel has
also been President of Sun Electric Corporation, a subsidiary of the
Corporation, since 1992.
DIRECTORS CONTINUING TO SERVE UNTIL THE 1997 ANNUAL MEETING
Bruce S. Chelberg - age 60. Mr. Chelberg has been a Director since 1993. He
served as Executive Vice President of Whitman Corporation, a consumer goods
company, from 1985 to 1992 and was elected Chairman of the Board and Chief
Executive Officer in 1992. He has served on Whitman's Board since 1988. Mr.
Chelberg is also a Director of First Midwest Bancorp, Inc. and Northfield
Laboratories, Inc.
Roxanne J. Decyk - age 42. Ms. Decyk has been a Director since 1993. She has
been Vice President-Corporate Planning for Amoco Chemical Co. in Chicago since
1994. She was Vice President - Marketing and Sales - Polymers from 1993 to 1994,
and Vice President - Commercial and Industrial Sales from 1991 to 1993. Ms.
Decyk served as Senior Vice President - Distribution from 1989 to 1991 at
Navistar International Transportation Corporation. Ms. Decyk is also a Director
of Material Sciences Corporation.
Arthur L. Kelly - age 57. Mr. Kelly has been a Director since 1978. He has been
the managing partner of KEL Enterprises L.P., a holding and investment company,
since 1982. He is a Director of Bayerische Motoren Werke A.G., The Northern
Trust Corporation, Deere & Company and Nalco Chemical Company.
BOARD COMMITTEES
The AUDIT COMMITTEE reviews the scope of the independent audit of the
Corporation's books and records to determine the adequacy of the Corporation's
accounting, financial and operating controls, recommends an independent auditor
to the Board and considers whether proposals made by the Corporation's auditors
to perform consulting services beyond the ordinary audit function might result
in a loss of independence. This Committee also reviews Company policies
concerning environmental issues, health and safety matters and the Company's
participation in government contracts including training, compliance and
reporting. This Committee met twice in 1994. In addition, the Chairman of the
Audit Committee, through powers delegated by the Board of Directors, reviewed
certain financial information with the Corporation's management. The members of
this Committee are Messrs. Rensi - Chair, Chelberg, Kelly and Mead.
The BOARD AFFAIRS AND NOMINATING COMMITTEE makes recommendations to the Board
regarding the size and composition of the Board, number and responsibilities of
Board Committees, the Board's tenure policy, qualifications of potential Board
nominees, Director compensation and matters relating to corporate governance.
This Committee considers nominees recommended by shareholders. This Committee
met three times in 1994. The members of this Committee are Messrs. Brinckman -
Chair, Cornog, Kelly and Ms. Decyk.
Any shareholder wishing to suggest a nominee for election to the Board of
Directors at the 1996 Annual Meeting should submit a written recommendation to
the Board Affairs and Nominating Committee, c/o Corporate Secretary, Snap-on
Incorporated, 2801-80th Street, P.O. Box 1410, Kenosha, Wisconsin 53141-1410 by
October 1, 1995. Additional requirements relating to shareholder nominations are
contained in the Bylaws of the Corporation.
The EXECUTIVE COMMITTEE of the Board of Directors may exercise all of the powers
of the Board in the management of the business and the affairs of the
Corporation, subject to limitations found in the Restated Certificate of
Incorporation as Amended and Bylaws and applicable state laws. The Executive
Committee acts in the interim between Board meetings. This Committee met once in
1994. The members of this Committee are Messrs. Cornog - Chair, Farley and
Schnabel.
3
<PAGE>
The FINANCE COMMITTEE discusses, analyzes and recommends to the Board
appropriate actions regarding the Corporation's long-term financial objectives;
capital structure; issuance of additional shares and the repurchase of currently
issued and outstanding shares; type, amount and timing of long-term financing;
dividend policy and the declaration of dividends; shareholder rights plan and
other financial matters that it may deem appropriate to analyze and submit to
the Board for consideration. This Committee met four times in 1994. The members
of this Committee are Messrs. Kelly - Chair, Farley, Mead and Ms. Decyk. Mr.
Cornog is an EX OFFICIO member of this Committee.
The ORGANIZATION AND EXECUTIVE COMPENSATION COMMITTEE makes recommendations to
the Board regarding names, titles and authorities of the Corporation's elected
Officers, as well as compensation and incentive plans for the Chairman of the
Board, President, Chief Executive Officer and Chief Operating Officer. This
Committee also consults with the Chief Executive Officer on matters such as
corporate organization and executive succession and has administrative authority
for matters relating to incentive compensation, stock option, stock purchase and
profit-sharing plans. This Committee met four times in 1994. The members of this
Committee are Messrs. Farley - Chair, Brinckman, Chelberg and Rensi.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors met seven times in 1994.
Currently, Directors who are not employees of the Corporation receive an annual
retainer fee of $24,000. These Directors also receive an attendance fee of
$1,250 for each regular or special Board meeting, $1,000 for each committee
meeting and $750 for each Board or Committee meeting by telephone. Committee
chairs also receive an annual chairmanship fee of $4,000. Directors may elect to
defer the receipt of all or a part of these fees through the Directors' 1993 Fee
Plan. Amounts so deferred earn interest based upon the average 30-day commercial
paper rate. Under the terms of the Directors' 1993 Fee Plan, non-employee
Directors receive a mandatory minimum of 25% and an elective maximum of up to
100% of their fees and retainer in shares of the Corporation's stock based upon
the Fair Market Value of a share of the common stock on the last business day of
each calendar quarter. Directors may elect to defer receipt of all or a part of
these shares, and such shares are maintained in a deferral account with the
Corporation. Dividends on these deferred shares are automatically reinvested.
The Corporation maintains life insurance and accidental death and dismemberment
policies for all non-employee Directors. It also reimburses all expenses
incurred by Directors in connection with the conduct of the business of the
Board. In addition, non-employee Directors receive an annual automatic grant of
an option to purchase 1,000 shares of the Corporation's common stock pursuant to
the terms of the 1986 Incentive Stock Option Program. The exercise price of the
option shares is equal to the closing price on the New York Stock Exchange on
the date of grant. The date of grant is the date of the Annual Meeting of
Shareholders.
All Directors attended at least 75% of the aggregate number of the meetings of
the Board and the Board Committees of which they were members.
DIRECTOR INDEMNIFICATION AGREEMENT
To encourage highly competent members of the business community to serve as
Directors for the Corporation, the Board of Directors adopted and the
shareholders ratified an Indemnification Agreement at the 1990 Annual Meeting.
The Agreement provides for full indemnification against liabilities incurred by
Directors while acting in good faith and serving the best interests of the
Corporation.
Under the Agreement, the Corporation must promptly advance the Director all
reasonable costs to defend litigation; however, no indemnification will be made
if the Director is found liable for willful misconduct, unless a court finds
that despite the nature of the conduct the Director is fairly and reasonably
entitled to indemnification. This advancement is subject to repayment if any of
a quorum of disinterested Directors, the shareholders as a group, legal counsel,
or a panel of three arbitrators finds that the indemnitee has not met the
required standard of conduct.
The Indemnification Agreement will continue for the later of (a) six years after
the Director ceases to serve the Corporation or (b) final termination of legal
proceedings initiated during the Director's Board tenure or during the six-year
period following retirement from the Board, during which time the right to
indemnification is raised.
INFORMATION CONCERNING SECURITY OWNERSHIP
FMR Corp., 82 Devonshire Street, Boston, MA, a parent holding company in
accordance with Section 240.13d-1(b)(ii)(G) , has reported on Schedule 13G filed
on January 6, 1995 for fiscal year 1994, the beneficial ownership of 4,364,580
shares of common stock, representing 10.18% of the total shares outstanding.
INVESCO Capital Management, Inc. and INVESCO PLC, 11 Devonshire Square, London,
England, its parent holding company, together in accordance with Section
240.13d-1(b)(ii)(G), have reported on Schedule 13G filed on February , 1995
for fiscal year 1994, that they are the beneficial owners of shares of
common stock, representing % of the total shares outstanding.
Southeastern Asset Management, Inc., 860 Ridgelake Blvd., Memphis, TN, an
investment advisor registered under Section 203 of the Investment Advisors Act
of
4
<PAGE>
1940, has reported on Schedule 13G filed on February , 1995 for fiscal year
1994, that it is the beneficial owner of shares of common stock,
representing % of the total shares outstanding.
Goldman Sachs Asset Management.
The Corporation knows of no other person or group who is the beneficial owner of
more than 5% of its common stock.
Table 1 shows the number of shares of the Corporation's common stock held by
each Director and by each of the Executive Officers shown in Table 2, as well as
the total number of shares held by all current Directors and Executive Officers
as a group as of February 28, 1995.
TABLE 1: SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
Deferred Option
Beneficial Owner Shares Owned Shares(1) Shares(2)
<S> <C> <C> <C>
Robert A. Cornog
Branko M. Beronja
Donald W. Brinckman
Bruce S. Chelberg
Roxanne J. Decyk
Raymond F. Farley
Arthur L. Kelly
George W. Mead
Michael F.
Montemurro
Edward H. Rensi
Jay H. Schnabel
James L. Somers
All current
Directors and
Executive Officers
as a group (15
persons)
The above amounts include shares owned by spouses and minor
children. None of the named individuals beneficially own more
than 1% of the outstanding common stock. As a group, the
Directors and Executive Officers beneficially own % of the
class.
<FN>
(1) Receipt of these shares of stock has been deferred under the Directors'
1993 Fee Plan.
(2) Represents shares that the individual has the right to acquire pursuant to
options that are currently exercisable or exercisable within 60 days.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During the 1994 fiscal year, the Organization and Executive Compensation
Committee of the Board of Directors (the "Committee"), a body composed entirely
of independent non-employee Directors, provided oversight regarding the
Corporation's executive compensation programs in order to further the
Corporation's compensation objectives and philosophy. In accordance with its
charter, one of the principal responsibilities of the Committee is to provide
recommendations to the Board concerning the appropriate level of executive
compensation.
COMMITTEE APPROACH. The Committee's overall approach to executive compensation
is designed to establish levels which, when corporate performance merits
payment, will result in an executive officer's combined base salary and
incentive compensation being between the 50th and 75th percentiles of
compensation levels for comparable positions in industrial organizations on a
national basis. For 1994, the base compensation was targeted at the median for
industrial organizations in the HayGroup survey (discussed below) and up to the
75th percentile for annual incentive and for long-term compensation.
COMPENSATION-RELATED COMMITTEE ACTIVITIES. The Corporation's executive
compensation program consists of three elements: Base Salary, Incentive Pay and
Stock Options. For 1994, the Committee determined the appropriate level of
executive compensation by evaluating these three elements in conjunction with a
review of the results of a compensation survey prepared by the HayGroup. The
HayGroup is an internationally recognized expert in the area of compensation,
and has provided outside consulting services for the Corporation since 1984.
Hay's compensation survey for the 1994 fiscal year compared the Corporation's
compensation programs with those of approximately 500 of Hay's other industrial
clients, and was based on a comparison of jobs by assigning a numerical value to
each job. These values were then compared to Hay's industrial database in
calculating the target amount of compensation to be awarded, consistent with the
Corporation's compensation philosophy. Because the Corporation believes that its
competitors for executive talent include all types of industrial companies, the
compensation data used for the comparison group in the Hay survey was not
limited to the companies currently in the Standard & Poor's Auto Parts -
Aftermarket Industry Index used in the performance graphs in this proxy
statement. The results of this survey provided the Committee with a competitive
salary range within which the Committee monitored compensation based on
performance.
The Committee believes that none of the Named Executive Officers will be
affected by the provisions of Section 162(m) of the Internal Revenue Code which
limits the deductibility of certain executive compensation during 1995;
therefore, the Committee has not adopted any policy concerning this limitation,
but will continue to evaluate the regulations in future years.
5
<PAGE>
ELEMENTS OF COMPENSATION. As stated above, the Corporation's executive
compensation program consists of three elements: Base Salary, Incentive Plans
and Incentive Stock Options.
BASE SALARY. In determining the appropriate 1994 base salary for the Chief
Executive Officer, the Committee targeted base compensation at the median within
a range for industrial organizations. This range information was provided by the
HayGroup, based upon the assigned Hay values under the comparison of jobs
discussed above. While no established corporate or unit performance measures
were used to determine base salaries, the Committee also considered such
qualitative factors as experience, responsibilities and individual performance.
These factors were not ranked or weighted in any particular way.
Base salaries for all other Executive Officers were also based upon the criteria
set forth above.
INCENTIVE PLANS. The Corporation has two Incentive Plans for its Executive
Officers: Plan 1, for Officers, and Plan 2, for Senior Officers and the Chief
Executive Officer. Based on Committee recommendations, the Board of Directors
approves percentage targets for Minimum, Goal and Maximum annual achievement
levels under each Plan to recognize increases in sales, returns on net assets
employed before interest and taxes ("RONAEBIT"), and earnings per share growth.
These percentages, if earned, are applied to participants' base compensation.
Plan 1 includes the following components: Sales Growth and RONAEBIT.
Plan 2 includes the following components: Sales Growth, RONAEBIT and Earnings
Per Share Growth.
- Sales Growth measures the reported net sales in the current year against
the reported net sales figure from the prior year, and rewards based on
the growth.
- RONAEBIT calculates the return on net assets employed before interest and
taxes, and rewards based on the achievement of certain levels of return.
- Earnings Per Share Growth measures the earnings per share for the current
year against the earnings per share from the prior year, and rewards based
on the growth.
The two components in Plan 1 are equally weighted, with a maximum potential
payout of 75% of base salary. The three components in Plan 2 for Senior Officers
have a maximum potential payout of 100%, with components weighted at 35% Sales
Growth, 35% RONAEBIT, and 30% Earnings Per Share Growth. Plan 2, for the Chief
Executive Officer, has a maximum payout of 120% of base salary, with the
components weighted at 42% Sales Growth, 42% RONAEBIT, and 36% Earnings Per
Share Growth.
For 1994, the following weighted percentages were paid: Officers were paid at
20.01% of their base salaries under the Sales Growth component and 13.34% under
the RONAEBIT component. Senior Officers were paid at 18.7% of their base
salaries under the Sales Growth component, 12.47% under the RONAEBIT component,
and 30.0% under the Earnings Per Share Growth component. The Chief Executive
Officer was paid at 22.44% of his base salary under the Sales Growth component,
which represents payment at slightly below the goal level, 14.96% under the
RONAEBIT component, which represents payment at slightly above the minimum
level, and 36.0% under the Earnings Per Share Growth component, which represents
payment at the maximum level.
INCENTIVE STOCK OPTION PROGRAM. The 1986 Incentive Stock Option Program
("ISOP") is a long-term incentive plan designed to link the contributions of key
employees to shareholder value. In recognition of the contributions and services
provided by individual employees, the ISOP authorizes the grants of incentive
and non-qualified options to Executive Officers and other key employees, to
purchase shares of the Corporation's common stock at 100% of market value on the
date of grant. The Committee determines the number of options to be granted to
the Chief Executive Officer, as well as all other Executive Officers and key
employees as a group.
During the 1994 fiscal year, no options were granted to the Chief Executive
Officer or any of the Named Executive Officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
Factors recognized by the Committee relating to the Chief Executive Officer's
1994 compensation package include: the performance of the Corporation, the
repositioning of the Corporation for the future and the implementation of the
Corporation's strategic objectives. In addition, the Committee reviewed the
direction provided by the Chief Executive Officer in the overall conduct of the
Corporation's affairs and the morale, productivity and ability of the employees
to adapt to change.
As described above, the Corporation's executive compensation programs are
performance-based, particularly with regard to the Incentive Plans. The
Committee believes that these types of programs provide motivation for
executives by placing a portion of their compensation at risk, thereby making it
dependent upon Corporate performance. The Committee feels that these programs
provide the Chief Executive Officer a strong incentive to grow the Corporation's
share price.
The total dollar values for the 1994 compensation paid to the five most highly
compensated Executive Officers, including the Chief Executive Officer, are found
in the Summary Compensation Table.
6
<PAGE>
EXECUTIVE OFFICER STOCK OWNERSHIP
During the 1994 fiscal year the Committee retained the services of Timothy Haigh
of W. T. Haigh & Company, Inc. to provide independent consultation directly to
the Committee regarding 1995 executive compensation. Based upon the
recommendation of Mr. Haigh, and in accordance with the Corporation's belief in
aligning executive officer interests with those of shareholders, the Committee
has established guidelines for target levels of stock ownership, effective for
the 1995 fiscal year. These guidelines will apply to a group of key executives,
including the Chief Executive Officer and the Named Executive Officers,
encouraging them to acquire over time shares of the Corporation's common stock
with the number of shares (based upon the average stock price over the past
twelve months) equivalent to one half to three times their base salary. While
compliance with these guidelines will be voluntary, the Committee believes that
encouraging ownership will significantly benefit the Corporation.
RAYMOND F. FARLEY, CHAIRMAN
DONALD W. BRINCKMAN
BRUCE S. CHELBERG
EDWARD H. RENSI
Table 2 shows the total cash compensation paid, payable and/or accrued for
services rendered during the 1994, 1993 and 1992 fiscal years to each of the
five most highly compensated Executive Officers.
TABLE 2: SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation Securities All Other
Other Annual Underlying Compensaation
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options(#) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert A. Cornog 1994 466,667 342,534 0 0 0
Chairman, President and 1993 416,583 386,880 0 103,674 0
Chief Executive Officer 1992 375,000 208,725 0 35,000 0
Snap-on Incorporated
Branko M. Beronja 1994 188,219 115,134 0 0 0
President-North American 1993 177,175 89,934 0 20,970 0
Operations 1992 173,917 86,402 0 4,388 0
Snap-on Tools
Michael F. Montemurro 1994 200,685 122,760 0 0 0
Senior Vice President- 1993 185,208 143,332 0 32,475 0
Financial Services and 1992 170,620 79,151 0 7,281 0
Administration
Snap-on Incorporated
Jay H. Schnabel 1994 190,000 116,223 0 0 0
Senior Vice President- 1993 170,817 132,195 0 28,599 0
Diagnostics 1992 156,324 72,519 0 6,412 0
Snap-on Incorporated
James L. Somers 1994 218,267 133,514 0 0 0
Senior Vice President- 1993 188,226 145,668 0 34,023 0
Manufacturing and 1992 178,760 82,927 0 7,628 0
Technology
Snap-on Incorporated
</TABLE>
7
<PAGE>
TABLE 3: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Value FY-End (#) FY-End ($)+
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Cornog 3,149 $31,096 138,064/34,558 102,326/51,837
Beronja 0 $0 22,722/6,990 35,643/10,485
Montemurro 2,000 $22,130 33,739/10,825 59,862/16,238
Schnabel 0 $0 32,449/9,533 43,666/14,300
Somers 0 $0 11,341/11,341 17,012/17,012
<FN>
+The closing price on December 30, 1994, the Friday prior to the fiscal
year-end, was $33.25. This amount was used to calculate the value of unexercised
options with an exercise price of less than $33.25.
</TABLE>
EXECUTIVE AGREEMENTS
On January 4, 1991, the Corporation entered into agreements with its Officers,
including each of the five Named Executive Officers, which provide for continued
compensation and benefits in the event of a change in control of the Corporation
as defined in the agreements. The agreements are for two-year terms and
thereafter are automatically extended annually for an additional year unless
notice is given; PROVIDED, HOWEVER, that upon a change in control, the
agreements continue for a twenty-four month period. These agreements were
amended and restated on January 28, 1994.
In the event of a change in control, upon termination without cause or
constructive termination within two years following such change in control or
voluntary termination between twelve and eighteen months following the change in
control, each of Messrs. Cornog, Montemurro, Schnabel and Dr. Somers will
receive a lump-sum payment equal to the product of three times, and Mr. Beronja
will receive two times, the sum of his highest base salary rate in effect and
his highest annual incentive pay earned during the three-year period immediately
prior to termination of employment.
In addition, the agreements provide for the Executives to receive health and
life insurance benefits substantially similar to those received immediately
prior to the change in control (or termination of employment if benefits have
increased) for a three-year period subsequent to termination of employment,
subject to a reduction upon receipt of comparable benefits from subsequent
employment.
In the event that payments under the agreements are subject to an excise tax
under Section 4999 of the Internal Revenue Code of 1986 as amended, the
Executives will receive a gross-up payment equal to the amount of the excise
tax.
* * * * * *
Table 4 shows estimated covered compensation for representative Average Pay and
Years of Credited Service before reductions for early retirement.
TABLE 4: PENSION PLAN TABLE
<TABLE>
<CAPTION>
Annual compensation based on the pension plan formula with the years of
service indicated, including amounts which would be payable under the
Administrative and Field Employee Pension Plan based upon limitations
imposed by Internal Revenue Code Section 415 for amounts payable in 1994
for participants age 65, and also based upon the Supplemental Retirement
Plan. Years of Service
Average ---------------------------------------------------------------------------
Annual 5 10 15 20 25 30 35
Earnings Years Years Years Years Years Years Years
<S> <C> <C> <C> <C> <C> <C> <C>
150,000 11,835 23,670 35,505 47,340 59,175 71,010 82,845
200,000 15,960 31,920 47,880 63,840 79,800 95,760 111,720
250,000 20,085 40,170 60,255 80,340 100,425 120,510 140,595
300,000 24,210 48,420 72,630 96,840 121,050 145,260 169,470
350,000 28,335 56,670 85,005 113,340 141,675 170,010 198,345
400,000 32,460 64,920 97,380 129,840 162,300 194,760 227,220
450,000 26,585 73,170 109,755 146,340 182,925 219,510 256,095
500,000 40,710 81,420 122,130 162,840 203,550 244,260 284,970
</TABLE>
ADMINISTRATIVE AND FIELD EMPLOYEE PENSION PLAN
The Corporation's Administrative and Field Employee Pension Plan is a qualified
noncontributory defined benefit plan for which costs are calculated on an
aggregate basis and are unallocated. For this reason, no contribution by the
Corporation can be calculated for a specific person or group.
The Administrative and Field Employee Pension Plan covers administrative and
field employees and provides, at the normal retirement age of 65, that the
retirement benefits will be calculated using the following benefit formula: (a)
1.2% times Average Pay times Years of Credited Service plus (b) 0.45% times
[Average Pay minus Social Security Covered Compensation] times Years of Credited
Service. "Average Pay" is the average annual earnings during the five highest
consecutive calendar years. "Social Security Covered Compensation" is the
average of the Social Security Maximum Taxable Wage Base (according to federal
regulations) for each calendar year to age 65. "Years of Credited Service" is
the number of years and fractional number of years of continuous employment up
to 35 years. The most commonly chosen
8
<PAGE>
payout provision is a 100% pension payout with a five-year certain period in the
event of death, and thereafter a 50% yearly payout to the surviving spouse. Two
other optional forms of payout with reduced benefits exist.
As of February 28, 1995, the years of credited service for the Officers in Table
2 are: Mr. Cornog, 7 years; Mr. Beronja, 31 years; Mr. Montemurro, 24 years; Mr.
Schnabel, 29 years and Dr. Somers, 22 years.
SUPPLEMENTAL RETIREMENT PLAN
Elected Officers of Snap-on Incorporated, as well as appointed officers who are
members of the Administrative and Field Employee Pension Plan, currently
participate in a Supplemental Retirement Plan. The Supplemental Retirement Plan
is an unqualified excess benefit and supplemental retirement plan as defined by
Sections 3(36) and 201(2) of the Employee Retirement Income Security Act
(ERISA).
Under the Supplemental Retirement Plan the difference, if any, between the full
amount of retirement income due under the Administrative and Field Employee
Pension Plan formula and the amount of retirement income payable under
applicable I.R.S. or ERISA limitations is paid to Plan participants. Qualified
retirement plan compensation is currently limited to $150,000 per annum per
retiree by Section 401(a)(17) of the Internal Revenue Code.
The Corporation has entered into an agreement with Mr. Cornog to credit him two
years of service for every year worked, rather than the one-year arrangement
under the Administrative and Field Employee Pension Plan. Additionally, Mrs.
Cornog will receive a minimum annual retirement benefit of $50,000 for her
lifetime in the event Mr. Cornog dies prior to accruing an annual retirement
benefit of $100,000 under the terms of the Plan.
PERFORMANCE GRAPHS
Pursuant to the requirements of the Securities and Exchange Commission, the
Corporation has included below a graph of the Corporation's cumulative total
shareholder return, which measures the returns on stock with dividends
reinvested. While cumulative total shareholder return is one measure of
corporate performance, the Corporation has also included another graph of a
financial measure used by the Corporation: return on net assets employed before
interest and taxes. This return measures pre-tax return on total assets, less
each and all non-interest bearing liabilities. This performance measure is also
used as a component of the Incentive Compensation Plan for the Corporation's
Executive Officers, as discussed in the Organization and Executive Compensation
Committee Report on Executive Compensation on pages and . The graphs and
tables below illustrate the Corporation's performance compared to the companies
currently in the Standard & Poor's Auto Parts-- Aftermarket Industry Index.
TOTAL SHAREHOLDER RETURN*
SNAP-ON INCORPORATED
GRAPH
<TABLE>
<CAPTION>
Auto Parts-
After Market
Fiscal Year Ending Snap-on S&P 500 Industry Group
<S> <C> <C> <C>
December 31, 1989 $ 100.00 $ 100.00 $ 100.00
December 31, 1990 101.05 96.89 73.74
December 31, 1991 106.64 126.28 135.26
December 31, 1992 106.77 135.88 170.13
December 31, 1993 132.68 149.52 197.69
December 31, 1994 119.99 151.55 172.47
<FN>
*ASSUMES $100 INVESTED ON THE LAST DAY OF DECEMBER, 1989 AND DIVIDENDS ARE
REINVESTED QUARTERLY.
</TABLE>
RETURN ON NET ASSETS EMPLOYED BEFORE INTEREST AND TAXES
Pursuant to the requirements of Regulation S-K, the Corporation has included a
graph of the Corporation's cumulative total shareholder return, which measures
the returns on stock with dividends reinvested. Additionally, while cumulative
total shareholder return is one measure of corporate performance, the
Corporation has also included another graph of a financial measure used by the
Corporation: return on net asset employed before interest and taxes. This return
measures pre-tax and pre-interest expense return on net assets (total assets
minus each and all non-interest bearing liabilities). This performance measure
is also used as a component of the Incentive Compensation Plan for the
Corporation's Executive Officers, as is discussed in the Organization and
Executive Compensation Committee Report on Executive Compensation. The graphs
and tables illustrate the Corporation's performance compared to the companies
currently in the Standard & Poor's Auto Parts--Aftermarket Industry Index.
9
<PAGE>
GRAPH
<TABLE>
<CAPTION>
Snap-on Auto Parts--
Fiscal Year Ending Incorporated Aftermarket*
<S> <C> <C>
December 31, 1989 27.6% 22.1%
December 31, 1990 23.3% 17.9%
December 31, 1991 19.1% 16.8%
December 31, 1992 15.1% 24.6%
December 31, 1993 17.1% 24.8%
December 31, 1994 18.7% --
<FN>
*THE AUTO PARTS--AFTERMARKET RETURN ON NET ASSETS EMPLOYED BEFORE INTEREST AND
TAXES PERCENTAGES ARE AN AVERAGE OF THE COMPANIES CURRENTLY COMPRISING THE
STANDARD & POOR'S 1994 AUTO PARTS-- AFTERMARKET INDUSTRY INDEX.
</TABLE>
PROXY STATEMENT ITEM II
APPROVAL OF AMENDMENTS TO EMPLOYEE STOCK OWNERSHIP PLAN
General - The Employee Stock Ownership Plan (the "Plan"), formerly the Employee
Stock Purchase Plan, was implemented by the Company in 1970. Under the terms of
the Plan, eligible employees may annually purchase shares of common stock of the
Corporation by means of payroll deductions. The purchase price for the stock is
100% of the lower market price on either (a) May 15, the first day of the Plan
year, or (b) the following May 14, the last day of the Plan year. Subject to
shareholder approval, the Board of Directors has unanimously adopted an
amendment to the Plan to increase the aggregate number of shares of common stock
issuable under the Plan from 2,600,000 to 3,250,000. A copy of the Plan, as
amended, is attached as Exhibit A. The Plan and the rights of participants to
make purchases thereunder are intended to qualify under the provisions of
Section 423 of the Internal Revenue Code and Rule 16b-3 under the Exchange Act
of 1934.
Previous Amendments to Increase the Number of Issuable Shares - In 1975, 1979,
1982 and 1987, shareholders approved amendments to the Plan to increase the
number of issuable shares. Initially, 50,000 shares were reserved for issuance
under the Plan. In 1972, the number of issuable shares was adjusted for a
three-for-one stock split. The number of issuable shares was increased by
100,000 shares in 1975, 150,000 shares in 1979 and 250,000 shares in 1982. In
1986, the number of shares was adjusted for a 100% stock split, and in 1987, the
shareholders approved a 500,000 share increase.
Proposed Amendment to Increase the Number of Issuable Shares -Approximately
90,000 shares remain available for issuance under the current Plan year which
ends May 14, 1995. Approximately 50,000 shares are expected to be issued at that
time. On January 27, 1995, the Board of Directors amended the Plan to authorize
the issuance of an additional 650,000 shares of common stock to permit the
continuation of the Plan, subject to shareholder approval.
Plan Summary - Under the Plan, the Board of Directors is authorized to offer all
eligible employees (defined as all employees of the Company or its subsidiaries
except for part-time employees excludable under Section 423(b)(4) of the
Internal Revenue Code) the right to elect annually to purchase shares of Snap-on
common stock in the amounts and at the prices set forth below through adjustable
payroll deductions. As of January 31, 1994, approximately 7,450 employees were
eligible to participate in the Plan. The value of stock which may be purchased
may not exceed $25,000 in a calendar year and participants may not purchase more
than two thousand shares annually under the Plan. The length of the purchase
period is twelve months. As of February 28, 1995, the price per share of common
stock as quoted on the New York Stock Exchange was $ .
The price for shares purchased under each offering will be 100% of the lower
market price on (1) May 15 of each Plan year, or (2) the succeeding May 14 of
each Plan year. Elections to participate must be made between May 15 and June 1
of each Plan year. For the 1993-1994 Plan year, the purchase price of the common
stock was $35.63 per share. Rights under the Plan are not transferrable by any
person for any purpose. Participants may withdraw their payroll deductions from
the Plan account by providing written notice to the Company. Participants who
withdraw from the Plan may not become eligible to participate until the
beginning of the next Plan year. Upon termination of employment or death, the
entire amount credited to the participant's account will be paid in cash to the
employee or the employee's estate. No interest will be paid on any money in a
participant's account under any circumstances.
All fees and expenses incurred in connection with the Plan will be paid by the
Company. Shares available under the Plan and pending purchase rights may be
adjusted by the Company in the event of a stock split, merger or consolidation.
The Plan may be amended, suspended or terminated at any time by the Board of
Directors, with the exception that shareholder approval is required for any
amendment which will materially modify the Plan or otherwise materially increase
the benefits accruing to participants.
New Plan Benefits - Because participation in the Plan is voluntary and benefits
of participation depend upon an increase in the market price of the common stock
of the Company over the course of a Plan year, the Company cannot determine the
benefits that will
10
<PAGE>
accrue under the amended Plan to the Named Executive Officers, other executive
officers or other employees. Directors of the Company who are not employees are
not eligible to participate in the Plan.
Federal Income Tax Considerations - It is intended that the Plan qualify as an
"employee stock ownership plan" pursuant to Section 423 of the Internal Revenue
Code. Accordingly, participants in the Plan will not recognize taxable income on
the receipt or exercise of rights to purchase stock pursuant to the Plan.
Participants do not recognize any taxable income when they receive certificates
for shares; however, participants may recognize ordinary income and/or gain or
loss when the shares acquired under the Plan are sold or exchanged.
If the participant disposes of his or her shares without holding such shares for
one year from the date of exercise, the participant will recognize additional
ordinary compensation income in an amount equal to the difference between the
fair market value of such shares upon exercise and their initial purchase price.
Any remaining gain or loss (after taking into account ordinary income) will
generally be taxed as a capital gain or loss.
Generally, there are no tax consequences to the Company arising out of the sale
of stock to employees under the Plan.
Approval of the Plan requires the affirmative vote of a majority of the holders
of stock present or represented and entitled to vote at the meeting.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION
OF THE EMPLOYEE STOCK OWNERSHIP PLAN AMENDMENTS
EXHIBIT A
SNAP-ON INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to provide a method by which eligible employees may
purchase shares of Common Stock ("Stock") of Snap-on Incorporated (the
"Company"), by payroll deductions. It is the intention of the Company to have
the Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986 and, therefore, the provisions of the Plan shall
be construed in a manner consistent with the requirements of Section 423(b) of
such Code.
2. ELIGIBILITY TO PARTICIPATE
A. Any employee of the Company or any of its subsidiaries (except for
part-time employees excludable under Section 423(b)(4) of the Code) at the
offering date shall be eligible to participate in the Plan.
B. In any event, no employee shall be granted an option:
(i) if, immediately after the grant, such employee would own or hold
outstanding options to purchase Stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company or any
subsidiary of the Company; or
(ii) which permits his rights to purchase Stock under all employee stock
purchase plans of the Company and its subsidiaries to accrue at a rate which
exceeds $25,000 of fair market value of the Stock (determined at the time
such option is granted) for each calendar year in which such stock option is
outstanding at any time.
3. NUMBER OF SHARES TO BE OFFERED
An aggregate of 3,250,000 shares of Stock will be offered for subscription under
this Plan.
4. OFFERING DATES
The date of first offering under this Plan is May 15, 1970. An additional and
separate offering will be made on the 15th day of May in each following year
until the Plan is terminated by the Company, unless all of the shares reserved
hereunder are previously
11
<PAGE>
purchased. Each such year from May 15 to the succeeding May 14 shall hereinafter
be referred to as a "Plan Year."
5. PRICE
The price per share will be the lesser of the market value of the Stock on (i)
May 15 of a Plan Year or (ii) the succeeding May 14 of such Plan Year. Market
value shall be the mean of the high and low prices for the Stock as reported by
the New York Stock Exchange.
6. METHOD OF PAYMENT
For each participant, payment is to be made through payroll deductions on each
payroll date applicable to the participant during the Plan Year commencing with
the first payroll date on or after June 1 of the Plan Year, with no right of
prepayment. Subject to further procedures which may be established by the Board
of Directors for the efficient operation of the Plan, the specified payroll
deduction must be in even dollar amounts.
7. HOW AND WHEN TO ENTER THE PLAN
If an eligible employee wishes to subscribe, an authorization form supplied by
the Company must be signed and delivered to the Company between May 15 and June
1 of the Plan Year. The employee shall indicate on such authorization form the
amount of payroll deduction which he has elected. A separate authorization form
must be filed for each Plan Year during which an employee wishes to participate
in the Plan.
8. USE OF FUNDS
All payroll deductions or other funds received or held by the Company under this
Plan may be used for any corporate purpose and need not be segregated in any
way. No interest will be paid or allowed under any circumstances on any money
paid by the participating employees.
9. EXERCISE OF OPTION
Unless a participant gives written notice to the Company as provided in
paragraph 12, his option to purchase Stock will be exercised automatically for
him at the termination of a Plan Year for the number of full shares of Stock
which the accumulated payroll deductions credited to his account at that time
will purchase at the applicable price; provided, however, that not more than
2,000 shares of the Stock may be purchased in any Plan Year by a participant
employee. Any cash balance remaining in the employee's account after the
termination of a Plan Year will be carried forward to the employee's account for
the purchase of Stock during the next Plan Year if the employee has elected to
continue as a participant in the Plan. Otherwise, the employee will receive a
cash payment equal to the balance of his account.
10. DELIVERY OF STOCK
Certificates for Stock purchased in each Plan Year will be issued and delivered
as soon as practicable after the end of such year. Until stock certificates are
issued, the employee will not have the rights or privileges of a shareholder
with respect to such shares.
11. REGISTRATION AND QUALIFICATION OF SHARES
The President may postpone the issuance of shares under the Plan for such
reasonable period of time as will enable the Company, if it so elects, to cause
a registration statement in respect of such shares to be filed and to become
effective under the Securities Act of 1933, as amended, or to cause compliance
with applicable provisions of any state securities law.
12. WITHDRAWAL FROM THE PLAN
A participant may withdraw the payroll deductions credited to his account under
the Plan by giving written notice to the Company. Such withdrawal will become
effective on the first day of the month following receipt of notice thereof,
provided notice is received at least 10 days before the end of the preceding
month. In any event an employee's right to withdraw terminates at the end of a
Plan Year. A participant who withdraws from the Plan will not become eligible to
again participate in the Plan until the beginning of the next Plan Year.
13. TERMINATION OF EMPLOYMENT
In the event of any termination of a participant's continuous service with the
Company or a subsidiary, including death, the entire amount credited to the
account of such a participant shall be paid to the person entitled thereto.
14. RIGHTS NOT TRANSFERABLE
An employee's rights under the Plan belong to him alone and may not be sold,
assigned, pledged or otherwise transferred in any manner and may not be availed
of for any purpose by any other person.
12
<PAGE>
15. ADJUSTMENT UPON CHANGE IN CAPITALIZATION
If any option under this Plan is exercised subsequent to any stock dividend,
split-up, recapitalization, merger, consolidation, combination, or exchange of
shares, or the like, occurring after such option was granted, as a result of
which shares of any class shall be issued in respect of the outstanding shares
of Stock, or shares of Stock shall be changed into the same or a different
number of the same or another class or classes, the number of shares to which
such option shall be applicable and the option price for such shares shall be
appropriately adjusted by the Company. Upon the occurrence of any event of the
type described in this paragraph 15, the Board of Directors shall also make
appropriate changes in the number of shares of Stock that may be offered under
the Plan and in the maximum number of shares that may be purchased by any
participant.
16. COSTS OF THE PLAN
The Company will assume all fees and expenses incurred in connection with the
Plan, including any original issue or transfer taxes which may be applicable to
shares issued thereunder.
17. ADMINISTRATION OF THE PLAN
A. Subject to direction of the Board of Directors, the President of the
Company shall administer the Plan and make such interpretations and regulations
as he deems desirable or necessary in connection with its operation.
B. The Board of Directors of the Company at any time may suspend or
terminate the Plan. No option to purchase shares thereunder shall be granted
during any suspension of the Plan or after the Plan has been terminated. The
Board of Directors may amend the Plan from time to time except that, without
approval by the shareholders of the Company, no amendment shall be made which
would increase the aggregate number of shares of Stock which may be subject to
option under the Plan or change the terms for computing the market value at
which options may be exercised. Should the Plan be suspended or terminated, any
option granted prior to such time shall not be canceled nor the terms or
conditions thereof altered as a result of such suspension or termination without
the consent of the participant.
18. SHAREHOLDER APPROVAL; EFFECTIVE DATE
This Plan was amended on January 27, 1995 by the Board of Directors, which
amendments shall be effective as of the Plan Year commencing May 15, 1995.
Section Number 3 regarding the number of shares to be offered for subscription
was amended by the Board of Directors, subject to approval by the holders of
outstanding shares of Stock entitled to vote thereon at the next annual meeting
of the Company's shareholders.
PROXY STATEMENT ITEM III
INDEPENDENT AUDITOR
It is a long-standing practice that the appointment of the Corporation's
independent auditor by the Board of Directors be submitted to the shareholders
for ratification at the Annual Meeting.
The Board of Directors has proposed the appointment of Arthur Andersen LLP as
the Corporation's independent auditor for 1995, pending ratification by the
shareholders at the Annual Meeting. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting to answer questions and to make a
statement if they so desire. In the event of a negative vote on the approval of
Arthur Andersen LLP, the Board of Directors will secure the services of another
independent auditor for 1995. Arthur Andersen LLP has been the Corporation's
independent auditor for the past thirteen fiscal years.
THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS
VOTE FOR APPROVAL OF THIS PROPOSAL
NOTICE PURSUANT TO SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
Officers and Directors, and persons who own more than 10% of a registered class
of the Corporation's equity securities, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, Directors and greater than ten percent beneficial owners are
required by SEC regulations to furnish the Corporation with copies of all
personally filed Section 16(a) forms.
Based solely upon its review of the received written representations from
certain reporting persons that no Forms 5 were required from those persons, the
Corporation believes that during the 1994 fiscal year
13
<PAGE>
all filing requirements applicable to its Officers, Directors and greater than
ten percent beneficial owners were completed.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be included in the 1996 Proxy Statement
must be received by the Secretary of the Corporation by November 19, 1995.
Additional requirements relating to the timeliness and content of proposals to
be submitted at the 1995 Annual Meeting are found in the Bylaws of the
Corporation.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan offers shareholders three voluntary methods of
building their holdings of common stock. Shareholders may elect to reinvest cash
dividends on either (1) all of their common stock of the Corporation or (2) any
portion of their common stock of the Corporation. Shareholders can also make
cash investments of more than $100 per investment and less than $5,000 per
calendar quarter for shares. Shares under all three methods will be purchased at
100 percent of the average high and low price of the Corporation's common stock
on the day of purchase. There are no participation, commission, administrative
or service fees. Further information is available through Harris Trust and
Savings Bank at 1-800-524-0687.
DIRECTIONS TO ANNUAL MEETING
FROM CHICAGO'S O'HARE INTERNATIONAL AIRPORT TO RACINE ON THE LAKE CIVIC CENTRE
- - -- I-294 North to I-94 West (toward Milwaukee, WI) to Racine, Wisconsin, Highway
20 (exit 333-Racine/Waterford). Highway 20 east (right) to Racine, approximately
six miles to 14th Street, which continues east. Continue on 14th Street,
approximately three-quarters of a mile to Main Street. North (left) on Main
Street, approximately three-quarters of a mile to Sixth Street. East (right) to
parking lot.
FROM MILWAUKEE'S MITCHELL INTERNATIONAL AIRPORT TO RACINE ON THE LAKE CIVIC
CENTRE -- I-94 East to Racine, Wisconsin, Highway 20 (exit
333-Racine/Waterford). Highway 20 east (left) to Racine, approximately six miles
to 14th Street, which continues east. Continue on 14th Street, approximately
three-quarters of a mile to Main Street. North (left) on Main Street,
approximately three-quarters of a mile to Sixth Street. East (right) to parking
lot.
TRANSPORTATION RESERVATIONS TO GENERAL OFFICE
If you would like to take advantage of transportation provided by the
Corporation to the General Office following the meeting for a plant tour or to
see old friends, please call 414-656-5406 before April 21, 1995.
* * * *
14
<PAGE>
SNAP-ON INCORPORATED
2801-80TH STREET
KENOSHA, WI 53141-1410
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints B. S. Chelberg, A. L. Kelly and R. J. Decyk as
Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all shares of
the common stock of Snap-on Incorporated held on record by the undersigned on
February 28, 1995, at the Annual Meeting of Shareholders to be held at the
Racine on the Lake Civic Centre, 5 Fifth Street, Racine, Wisconsin, at
10:00 a.m. on Friday, April 28, 1995 or at any adjournment thereof.
THIS PROXY WILL BE VOTED ""FOR'' THE DIRECTOR NOMINEES AND ""FOR'' ITEMS 2
AND 3 IF NO CHOICE IS SPECIFIED.
In the absence of an instruction to the contrary, this Proxy will be voted
for the proposals stated herein and at the discretion of the proxies on any
other business.
Please sign exactly as name appears herein. For joint
accounts, all holders should sign. Executors, administrators,
trustees, and guardians should give full title. If a
corporation, sign in corporation name by authorized officer.
If a partnership, please sign in partnership name by
authorized person.
Dated:_____________________________________, 1995
Receipt of Notice of the Annual Meeting and Proxy
Statement is hereby acknowledged.
__________________________________________________
Signature
__________________________________________________
Please mark your vote on reverse side, sign, date and
return promptly in enclosed envelope.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<C> <S> <C> <C>
1. ELECTION OF DIRECTORS: THREE-YEAR TERMS--R.A. / / VOTE FOR ALL NOMINEES / / WITHHOLD AUTHORITY
CORNOG, R.F. FARLEY AND E.H. RENSI. (EXCEPT AS INDICATED TO VOTE FOR ALL
TO WITHHOLD YOUR VOTE FOR ANY NOMINEE, ABOVE) NOMINEES
STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST ABOVE.
2. Proposal to amend the Employee Stock Ownership Plan to increase the number
of authorized shares. / / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the appointment of Arthur Andersen LLP as the
independent auditor for 1995. / / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other matters
as may properly come before the meeting.
</TABLE>
