<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
SNAP-ON INCORPORATED
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
CHAIRMAN'S LETTER
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
<PAGE>
[LOGO]
CHAIRMAN'S LETTER
March 12, 1999
Dear Snap-on Shareholder,
I invite you to attend our Annual Meeting of Shareholders at 10:00 a.m. on
Friday, April 23, 1999. Please notice a change in venue this year from the past
few years. The meeting will be held at the Radisson Hotel & Conference Center
Kenosha, 11800 - 108th Street, Kenosha, Wisconsin. Directions are shown on the
last page of this Proxy Statement. We will be reviewing Snap-on's performance in
1998, as well as discussing how we are positioning your investment in Snap-on
for the future.
Your vote is important and, whether or not you plan to attend the meeting, we
encourage you to return your Proxy Card early or vote your shares electronically
through the Internet or by telephone. Voting instructions are provided on the
enclosed Proxy Card.
The proxy materials are enclosed, along with the 1998 Annual Report. We welcome
your comments.
We hope to see you at the meeting and look forward to renewing old acquaintances
and meeting those of you attending for the first time.
Cordially,
[SIG]
Robert A. Cornog
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SNAP-ON INCORPORATED
<PAGE>
[LOGO]
NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
The 1999 Annual Meeting of Shareholders of Snap-on Incorporated will be held:
Friday, April 23, 1999
10:00 a.m.
The Radisson Hotel & Conference Center Kenosha
11800 - 108th Street
Kenosha, Wisconsin
DIRECTIONS TO THE ANNUAL MEETING ARE ON PAGE 20.
We anticipate first mailing this Proxy Statement on March 12, 1999.
MEETING PURPOSES
1. To elect four Directors:
- The following Directors will stand for election for three-year terms to
expire at the 2002 Annual Meeting: Branko M. Beronja, Donald W. Brinckman,
George W. Mead and Richard F. Teerlink.
2. To transact any other business appropriate to the Annual Meeting.
RECORD DATE
Shareholders of record at the close of business on February 23, 1999 (the
"Record Date"), will be able to vote at the Annual Meeting in person, by proxy,
electronically through the Internet or by telephone.
IMPORTANT: COMPLETE AND RETURN YOUR PROXY CARD EARLY
We encourage you--even if you are planning to attend the Annual Meeting--to
return your Proxy Card well in advance of the Annual Meeting so that the vote
count will not be delayed. To ensure your representation at the Annual Meeting,
please complete and sign the Proxy Card and return it promptly in the enclosed
envelope. Alternatively, you may vote your shares electronically through the
Internet or by telephone. Voting instructions are provided on the Proxy Card,
including specific instructions for shareholders of record who wish to use the
Internet or telephone voting procedures. If you attend the Annual Meeting, you
may revoke your proxy, whether previously delivered in the form of an executed
Proxy Card or through the Internet or by telephone, and vote your shares in
person.
Sincerely,
Susan F. Marrinan
VICE PRESIDENT,
SECRETARY AND
GENERAL COUNSEL
March 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF PROXY INFORMATION......................................................... 2
Proposal to be Voted on: Election of Directors..................................... 4
BOARD OF DIRECTORS................................................................... 5
Directors Not Standing for Election................................................ 5
Board Committees................................................................... 6
Board Compensation................................................................. 7
Security Ownership of Management and Certain Beneficial Owners..................... 8
TABLE 1 -- SECURITY OWNERSHIP OF MANAGEMENT...................................... 8
STOCK PERFORMANCE GRAPHS............................................................. 10
Five-Year Performance.............................................................. 10
Return on Net Assets Employed Before Interest and Taxes............................ 11
EXECUTIVE COMPENSATION............................................................... 12
Report of the Organization and Executive Compensation Committee.................... 12
TABLE 2 -- SUMMARY COMPENSATION.................................................. 15
TABLE 3 -- OPTION GRANTS IN LAST FISCAL YEAR..................................... 16
TABLE 4 -- AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES................................. 17
Administrative and Field Employee Pension Plan..................................... 17
TABLE 5 -- PENSION PLAN.......................................................... 17
OTHER INFORMATION.................................................................... 19
Directions to the Annual Meeting................................................... 20
</TABLE>
<PAGE>
SUMMARY OF PROXY INFORMATION
BACKGROUND ON THE BOARD OF DIRECTORS
The Directors set the size of the Board at any number between five and 15
members. The current Board consists of 11 members. The Directors are divided
into three classes. At the Annual Meeting each year, one class is nominated for
election to a three-year term.
ELECTION OF DIRECTORS
The primary business of the Annual Meeting will be to elect four Directors. The
Board's nominees are:
- Branko M. Beronja
- Donald W. Brinckman
- George W. Mead
- Richard F. Teerlink
See page 4 for more information on the nominees. The four nominees who receive
the largest number of votes will be elected.
You may vote your shares by returning the enclosed Proxy Card by mail, through
the Internet, by telephone (see the Proxy Card for instructions) or by voting in
person at the Annual Meeting. We recommend that you complete and return the
Proxy Card or vote through the Internet or by telephone even if you are planning
to attend the Annual Meeting so that the vote count will not be delayed.
HOW TO VOTE
Shareholders of record as of the close of business on February 23, 1999, are
entitled to vote at the Annual Meeting. Each share of Common Stock outstanding
is entitled to one vote. As of the Record Date, Snap-on had 65,591,328 shares of
Common Stock outstanding. This includes 6,871,828 shares that the Grantor Stock
Trust (the "GST") holds. These shares are considered outstanding for voting
purposes but not for earnings per share calculations.
To vote, complete, sign and return the enclosed Proxy Card as soon as possible.
Messrs. Cornog, Hadley and Rensi, three of our current Directors, are listed as
the proxies on the enclosed Proxy Card. You may also vote electronically through
the Internet or by telephone. Both the Internet and the telephone provide
convenient, cost-effective alternatives to returning your Proxy Card by mail. If
you hold your shares through a broker or custodian, please check the voting form
that firm uses to see if it offers Internet or telephone voting procedures.
All shareholders are also invited to attend the Annual Meeting, although space
is limited. If you complete a Proxy Card, or vote through the Internet or by
telephone, you may still vote in person at the Annual Meeting. To do so, please
give written notice that you would like to revoke your original proxy to one of
the following:
- the Corporate Secretary, in advance of the Annual Meeting; or
- the authorized representatives at the Annual Meeting.
You may also make a change to your proxy by returning a later-dated proxy.
If you return your signed Proxy Card but do not indicate your voting preference,
your shares will be voted FOR the Director nominees on your behalf and in the
best judgment of the proxies listed on your Proxy Card on any other matters that
may properly come before the Annual Meeting.
2
<PAGE>
HOW THE VOTES ARE TABULATED
First Chicago Trust Company of New York, our transfer agent, will use an
automated system to tabulate the votes. Abstentions and broker nonvotes are
included in the totals, although they have no effect on the election of
Directors. (Broker nonvotes are proxies delivered by brokers for which the
broker has not received authority to vote from the shareholder.)
MORE ABOUT THE PROXY SOLICITATION
Our officers and employees may make solicitations by mail, telephone, facsimile
or in person. We also retained Morrow & Co., Inc. for $7,500 plus expenses to
assist us in the solicitation of proxies. This will include requesting brokerage
houses, depositories, custodians, nominees and fiduciaries to forward proxy
soliciting material to the beneficial owners of the stock they hold. Morrow &
Co., Inc. will be reimbursed for the forwarding expenses.
INDEPENDENT AUDITOR
Arthur Andersen LLP has been our independent auditor for the past 17 years and
will serve as our independent auditor again in 1999. Representatives will be at
the Annual Meeting to answer your questions and to make a statement if they so
desire.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE BOARD
If you wish to suggest an individual for consideration as a nominee for election
to the Board at the 2000 Annual Meeting, please submit a written recommendation
to the Corporate Secretary for forwarding to the Board Affairs and Nominating
Committee before October 1, 1999. A shareholder proposal must be received by the
Corporate Secretary no later than November 12, 1999, in order for the proposal
to be considered for inclusion in our proxy materials for that meeting. To
otherwise bring business before the 2000 Annual Meeting, you must comply with
our Bylaws which, as now in effect, require written notice to the Corporate
Secretary between January 23, 2000 and February 22, 2000. If we receive your
notice after February 22, 2000, your proposal would be untimely. Should the
Board nevertheless choose to present your proposal, the proxies will be able to
vote on the proposal using their best judgment.
The address of the Corporate Secretary is:
Corporate Secretary
Snap-on Incorporated
2801 - 80th Street
P.O. Box 1410
Kenosha, Wisconsin 53141-1410
3
<PAGE>
PROPOSAL TO BE VOTED ON: ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Board has 11 members, who are divided into three classes. One class is
elected each year to a three-year term. Nominees for election to the Board are
Branko M. Beronja, Donald W. Brinckman, George W. Mead and Richard F. Teerlink,
to stand for election for terms expiring at the 2002 Annual Meeting.
NOMINEES FOR ELECTION FOR TERMS EXPIRING AT THE 2002 ANNUAL MEETING
BRANKO M. BERONJA
DIRECTOR SINCE 1997
Mr. Beronja, age 64, has been an employee since 1963. He served as Vice
President-Sales, North America from 1989 to 1994, President-North American
Operations from 1994 to 1996 and Senior Vice President-Diagnostics, North
America from 1996 to 1998. From February, 1998 to October, 1998, he was Senior
Vice President-Diagnostics. He is currently Executive Vice President.
DONALD W. BRINCKMAN
DIRECTOR SINCE 1992
Mr. Brinckman, age 68, is the founder and former Chairman and Chief Executive
Officer of Safety-Kleen Corporation. He served as Chief Executive Officer of
Safety-Kleen from 1968 to 1994 and again from August, 1997 to April, 1998. He
also served as President of Safety-Kleen from 1991 to 1993. Safety-Kleen is a
recycler of automotive and industrial hazardous and nonhazardous fluids.
GEORGE W. MEAD
DIRECTOR SINCE 1985
Mr. Mead, age 71, 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.
RICHARD F. TEERLINK
DIRECTOR SINCE 1997
Mr. Teerlink, age 62, retired as Chairman of Harley-Davidson, Inc., a
manufacturer of motorcycles, in 1998. He served as its Chief Executive Officer
from 1989 to 1997, President from 1987 to 1997 and Chairman from 1996 to 1998.
He also serves as a Director of Harley-Davidson, Inc. and Johnson Controls, Inc.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE NOMINEES.
Shares represented by proxies will be voted according to instructions on the
Proxy Card. Only cards clearly indicating a vote withheld will be considered as
a vote against the nominees. If any nominee is unable to serve, the Board will
name a replacement, and the shares represented by proxies will be voted for the
substitute Director.
4
<PAGE>
BOARD OF DIRECTORS
DIRECTORS NOT STANDING FOR ELECTION
DIRECTORS CONTINUING TO SERVE UNTIL THE 2000 ANNUAL MEETING
BRUCE S. CHELBERG
DIRECTOR SINCE 1993
Mr. Chelberg, age 64, has been Chairman of the Board and Chief Executive Officer
of Whitman Corporation, a consumer goods company, since 1992. He has served on
Whitman's Board since 1988. Mr. Chelberg also serves as a Director of First
Midwest Bancorp, Inc. and Northfield Laboratories, Inc.
ROXANNE J. DECYK
DIRECTOR SINCE 1993
Ms. Decyk, age 46, will serve as Vice President of Corporate Strategy of Shell
International, based in London, a major oil, gas, chemical and refined petroleum
products company, effective April, 1999. She was a managing partner of Batlivala
& Decyk, a private merchant banking and strategic business development
consulting firm, from 1997 to 1999. From 1994 to 1997, she served as Vice
President-Corporate Planning for Amoco Corporation, a petroleum products
company. She was Vice President-Marketing and Sales-Polymers of Amoco Chemical
Company from 1993 to 1994. Ms. Decyk also serves as a Director of Material
Sciences Corporation.
ARTHUR L. KELLY
DIRECTOR SINCE 1978
Mr. Kelly, age 61, has been the managing partner of KEL Enterprises L.P., a
holding and investment company, since 1982. He also is a Director of Bayerische
Motoren Werke (BMW) A.G., Deere & Company, Nalco Chemical Company, The Northern
Trust Corporation and Thyssen Industrie A.G.
JACK D. MICHAELS
DIRECTOR SINCE 1998
Mr. Michaels, age 61, has been the Chairman, President and Chief Executive
Officer of HON INDUSTRIES, a manufacturer and marketer of office furniture and
hearth products, since 1996. He served as President and Chief Executive Officer
from 1991 to 1996. Mr. Michaels is also a Director of Huffy Corporation.
DIRECTORS CONTINUING TO SERVE UNTIL THE 2001 ANNUAL MEETING
ROBERT A. CORNOG
DIRECTOR SINCE 1982
Mr. Cornog, age 58, has been Chairman, President and Chief Executive Officer
since 1991. He is also a Director of Johnson Controls, Inc., Wisconsin Electric
Power Company and Wisconsin Energy Corporation.
LEONARD A. HADLEY
DIRECTOR SINCE 1997
Mr. Hadley, age 64, has been Chairman and Chief Executive Officer of Maytag
Corporation, a manufacturer of appliances, since 1993. He also serves as a
Director of Deere & Company.
EDWARD H. RENSI
DIRECTOR SINCE 1992
Mr. Rensi, age 54, has been the Owner and Chief Executive Officer of Team 83
Motorsports since October, 1998. From July, 1997 through October, 1998, he was a
consultant to McDonald's U.S.A., a food service organization. He was President
and Chief Executive Officer of McDonald's U.S.A. from 1991 to 1997. He also
serves as a Director of International Speedway Corporation and Jafra Cosmetics
International, Inc.
5
<PAGE>
BOARD COMMITTEES
BOARD COMMITTEE MEMBERSHIP AND 1998 ACTIVITY
<TABLE>
<CAPTION>
BOARD AFFAIRS &
NAME AUDIT NOMINATING EXECUTIVE FINANCE
----------------------- ----------- ------------------- --------------- -------------
<S> <C> <C> <C> <C>
B. M. Beronja................................ X
D. W. Brinckman.............................. X*
B. S. Chelberg............................... X
R. A. Cornog................................. X X* X
R. J. Decyk.................................. X X
L. A. Hadley................................. X
A. L. Kelly.................................. X X X*
G. W. Mead................................... X X
J. D. Michaels...............................
E. H. Rensi.................................. X*
R. F. Teerlink............................... X X
NO. OF MEETINGS IN 1998...................... 4 3 0 6
<CAPTION>
ORGANIZATION &
EXECUTIVE
NAME COMPENSATION
----------------------- ---------------------
<S> <C>
B. M. Beronja................................
D. W. Brinckman.............................. X
B. S. Chelberg............................... X*
R. A. Cornog.................................
R. J. Decyk..................................
L. A. Hadley................................. X
A. L. Kelly..................................
G. W. Mead...................................
J. D. Michaels...............................
E. H. Rensi.................................. X
R. F. Teerlink...............................
NO. OF MEETINGS IN 1998...................... 4
</TABLE>
*Committee Chair
The Board met seven times in 1998. All Directors attended at least 75% of the
total meetings of the Board and Committees of which they were members in 1998.
AUDIT COMMITTEE
The Audit Committee oversees the independent audit of our operations and
financial statements. This includes recommending an independent auditor to the
Board and reviewing the audit for adequate accounting, financial and operating
controls.
BOARD AFFAIRS AND NOMINATING COMMITTEE
This Committee makes recommendations to the Board regarding Board policies and
structure including size and composition of the Board, corporate governance,
number and responsibilities of Committees, tenure policy and qualifications of
potential Board nominees, including nominees recommended by shareholders.
EXECUTIVE COMMITTEE
The Executive Committee may convene in the interim between Board meetings to
fulfill tasks as delegated by the Board.
FINANCE COMMITTEE
The Finance Committee analyzes and makes recommendations concerning our
long-term financial objectives. This includes issues of capital structure,
issuance and repurchase of shares, long-term financing and dividend policy.
ORGANIZATION AND EXECUTIVE COMPENSATION COMMITTEE
This Committee oversees our corporate organization, executive succession and
executive compensation programs. It recommends to the Board the appropriate
level of compensation for our Chief Executive Officer and, after consulting with
the Chief Executive Officer, approves the compensation of other officers. This
Committee also administers our incentive compensation plans, the incentive stock
program, the employee stock ownership and franchised dealer stock ownership
plans, and Director compensation.
6
<PAGE>
BOARD COMPENSATION
EMPLOYEE DIRECTORS
Directors who are employees, currently Messrs. Beronja and Cornog, receive no
additional compensation for serving on the Board or its Committees.
NONEMPLOYEE DIRECTORS
Directors who are not employees receive an annual retainer fee of $30,000. They
also receive $1,250 for every Board and Committee meeting they attend, including
meetings conducted by phone. Committee chairs also receive an annual
chairmanship fee of $4,000. We reimburse Directors for all Board-related
expenses.
DIRECTORS' FEE PLAN
Directors receive at least 50% and, at their election, up to 100% of their fees
in Common Stock through the Directors' 1993 Fee Plan (the "Fee Plan"). Under the
terms of the Fee Plan, nonemployee Directors receive shares based on the fair
market value of a share of Common Stock on the last day of the month in which
the fees are paid. Directors may choose to defer the receipt of all or part of
these shares and fees to a deferral account with us. The Fee Plan credits
deferred cash amounts with earnings based on market rates of return. Dividends
on deferred share units are automatically reinvested.
STOCK OPTIONS
Nonemployee Directors currently receive an annual grant of an option to purchase
3,000 shares of Common Stock. The exercise price of the option shares is equal
to the closing price on the New York Stock Exchange on the date of the grant,
which coincides with the Annual Meeting.
INSURANCE
We maintain life insurance and accidental death and dismemberment policies for
all nonemployee Directors. In addition, Directors who are not eligible to
participate in another group health plan may participate at their own expense in
the medical and prescription drug plans we maintain for our employees.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following Table 1 shows the number of shares of Common Stock beneficially
owned by each Director and by Messrs. Cornog, Beronja, Hay, Huml and Montemurro
(the "Named Executive Officers"), as well as the total number of shares held by
all current Directors and Executive Officers as a group, as of February 23,
1999. Beneficial owners include the Directors and Executive Officers, their
spouses, minor children and family trusts. Unless we have indicated otherwise in
the footnotes, the individuals listed below have sole voting and investment
power over their shares.
TABLE 1: SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARES OPTION
BENEFICIAL OWNER OWNED(1)(2) SHARES(3)
- - ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Robert A. Cornog................................................................... 74,590 486,926
Branko M. Beronja.................................................................. 27,387 135,569
Donald W. Brinckman................................................................ 13,438 13,500
Bruce S. Chelberg.................................................................. 5,985 12,000
Roxanne J. Decyk................................................................... 5,096 9,000
Leonard A. Hadley.................................................................. 3,270 6,000
Frederick D. Hay................................................................... 28,203(4) 90,500
Donald S. Huml..................................................................... 20,020 125,500
Arthur L. Kelly.................................................................... 28,571(5) 19,500
George W. Mead..................................................................... 14,059 19,500
Jack D. Michaels................................................................... 1,041 0
Michael F. Montemurro.............................................................. 25,816 138,728
Edward H. Rensi.................................................................... 10,247 11,601
Richard F. Teerlink................................................................ 2,672 3,000
All current Directors and Executive Officers as a group (20 Persons)............... 267,326 1,209,982
</TABLE>
None of these individuals beneficially owns more than 1% of the outstanding
Common Stock. As a group, the Directors and Executive Officers beneficially own
approximately 2.3% of the outstanding Common Stock, including option shares.
- - ------------------------
(1)Shares owned includes deferred share units payable in shares of Common Stock
on a one-for-one basis.
(2)Under the provisions of the Grantor Stock Trust, as of the record date, the
following individuals also have the right to vote the additional number of
shares indicated: Mr. Hay, 90,500; Mr. Huml, 125,500; Mr. Montemurro, 138,728
and all current Executive Officers as a group, 493,386.
(3)This column represents shares which may be acquired by the exercise of
options now or within 60 days.
(4)This figure includes 3,000 share units deferred under the Deferred
Compensation Plan which are scheduled to vest on January 27, 2000.
(5)This figure includes shares held by trusts for the benefit of Mr. Kelly and
his family.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following information represents each person or entity known to us to be the
beneficial owner of more than 5% of our Common Stock:
AMVESCAP, PLC, AVZ, INC., A I M MANAGEMENT GROUP, INC., AMVESCAP GROUP SERVICES,
INC., INVESCO, INC., INVESCO NORTH AMERICAN HOLDINGS, INC., INVESCO CAPITAL
MANAGEMENT, INC., INVESCO FUNDS GROUP, INC., INVESCO MANAGEMENT & RESEARCH,
INC., INVESCO REALTY ADVISORS, INC., AND INVESCO (NY) ASSET MANAGEMENT, INC., 11
Devonshire Square, London, England EC2M 4YR, together have reported on Schedule
13G filed on February 11, 1999, that they are the beneficial owners of 4,007,444
shares of Common Stock, representing 6.8% of the shares outstanding, excluding
the shares held by the GST, as of December 31, 1998.
FIDELITY MANAGEMENT & RESEARCH COMPANY AND FIDELITY MANAGEMENT TRUST COMPANY, 82
Devonshire Street, Boston, MA, together have reported on Schedule 13G filed on
February 12, 1999, the beneficial ownership of 4,086,334 shares of Common Stock
representing 6.9% of the shares outstanding, excluding the shares held by the
GST, as of December 31, 1998.
FIRST MANHATTAN CO., 437 Madison Avenue, New York, NY has reported on Schedule
13G filed on February 11, 1999, the beneficial ownership of 4,027,846 shares of
Common Stock, including 79,475 shares of Common Stock owned by family members of
the General Partners of First Manhattan Co., representing 6.8% of the shares
outstanding, excluding the shares held by the GST, as of December 31, 1998.
SNAP-ON INCORPORATED GRANTOR STOCK TRUST, 2801--80th Street, Kenosha, WI has
reported on Schedule 13G filed on February 11, 1999 for fiscal year 1998, the
beneficial ownership of 6,938,440 shares of Common Stock representing 10.6% of
the shares outstanding as of December 31, 1998. The GST was established to hold
Common Stock to ensure the funding of certain obligations we have to certain of
our employees under various employee benefit plans. The Trustee of the GST does
not decide how to vote the Common Stock the GST holds. The trust agreement for
the GST provides that (i) non-Director employees who hold vested, unexercised
options as of the Record Date and (ii) employees and franchised dealers who have
purchased Common Stock under our Employee and Dealer Stock Ownership Plans
during the past 12 months will in effect be able to decide how to vote the
shares of Common Stock that the GST holds.
9
<PAGE>
STOCK PERFORMANCE GRAPHS
FIVE-YEAR PERFORMANCE
The graph below illustrates the cumulative total shareholder return on our
Common Stock since 1993, assuming that dividends are reinvested. The graph
compares our performance to that of the Standard & Poor's 500 Stock Index and
the Standard & Poor's Hardware and Tools Index.
TOTAL SHAREHOLDER RETURN(1) SNAP-ON INCORPORATED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
<S> <C> <C> <C>
Snap-on Incorporated S&P 500 S&P Hardware & Tools
1993 $100.00 $100.00 $100.00
1994 $93.43 $101.36 $97.92
1995 $126.48 $139.32 $143.51
1996 $152.88 $171.23 $134.88
1997 $190.91 $228.27 $206.84
1998 $156.01 $293.38 $205.89
</TABLE>
<TABLE>
<CAPTION>
SNAP-ON S&P HARDWARE
FISCAL YEAR ENDING(2) INCORPORATED S&P 500 & TOOLS
- - ----------------------------------- -------------- --------- ----------------
<S> <C> <C> <C>
December 31, 1993 $ 100.00 $ 100.00 $ 100.00
December 31, 1994 $ 93.43 $ 101.36 $ 97.92
December 31, 1995 $ 126.48 $ 139.32 $ 143.51
December 31, 1996 $ 152.88 $ 171.23 $ 134.88
December 31, 1997 $ 190.91 $ 228.27 $ 206.84
December 31, 1998 $ 156.01 $ 293.38 $ 205.89
</TABLE>
- - ------------------------
(1)Assumes that $100 was invested on December 31, 1993 and that dividends were
reinvested quarterly.
(2)Although our fiscal year ends on the Saturday closest to December 31 of each
year, we use December 31 for ease of calculation.
10
<PAGE>
RETURN ON NET ASSETS EMPLOYED BEFORE INTEREST AND TAXES
In addition to cumulative total shareholder return, we also use the return on
net assets employed before interest and taxes, illustrated below, to judge our
performance. This return measures pre-tax and pre-interest expense return on net
assets (total assets minus all noninterest-bearing liabilities). We use this
performance measure as a component of the incentive compensation plan for our
Executive Officers, as discussed in the Organization and Executive Compensation
Committee Report on Executive Compensation.
The graphs and tables below illustrate our performance for our combined
operations compared to the companies in the Standard & Poor's Hardware & Tools
Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
<S> <C> <C> <C>
Snap-on Actual Snap-on Adjusted Hardware & Tools
1993 18.6% 17.1% 15.6%
1994 18.7% 18.7% 17.0%
1995 21.1% 21.3% 15.1%
1996 24.4% 22.4% 14.6%
1997 25.1% 24.6% 12.2%
1998 16.5% 16.2% Information Currently Unavailable
</TABLE>
<TABLE>
<CAPTION>
SNAP-ON SNAP-ON S&P HARDWARE
FISCAL YEAR ENDING(1) ACTUAL(2) ADJUSTED(3) & TOOLS(4)
- - --------------------------------------------------------------------- ----------- ------------- ----------------
<S> <C> <C> <C>
December 31, 1993.................................................... 18.6% 17.1% 15.6%
December 31, 1994.................................................... 18.7% 18.7% 17.0%
December 31, 1995.................................................... 21.1% 21.3% 15.1%
December 31, 1996.................................................... 24.4% 22.4% 14.6%
December 31, 1997.................................................... 25.1% 24.6% 12.2%
December 31, 1998.................................................... 16.5%(5) 16.2%(5) Not Available
</TABLE>
- - ------------------------
(1)Although our fiscal year ends on the Saturday closest to December 31 of each
year, we use December 31 for ease of calculation.
(2)Amounts are calculated using a 13-month average of net assets employed.
(3)Amounts are calculated using a method comparable to that of the Standard &
Poor's Hardware & Tools Index.
(4)The Standard & Poor's Hardware & Tools return on net assets employed before
interest and taxes percentages are an average of the companies that comprise,
for each respective year, the Standard & Poor's Hardware & Tools Index.
(5)Excludes costs for restructuring, other nonrecurring and inventory charges.
11
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE ORGANIZATION AND EXECUTIVE COMPENSATION COMMITTEE
The Organization and Executive Compensation Committee of the Board of Directors
oversees our executive compensation programs to further our compensation goals
and philosophy. Only independent, nonemployee directors serve on the Committee.
Two of our main responsibilities are to recommend to the Board the appropriate
compensation for our Chief Executive Officer and to approve, after consulting
with the Chief Executive Officer, the compensation of all other Executive
Officers.
COMMITTEE APPROACH
We assign compensation ranges for our Executive Officers based on their roles
and how important their positions are to our operations. We try to structure the
total compensation of our Executive Officers so that it is comparable to the
total compensation of executives who perform similar duties at other companies
like ours. We also try to design compensation to give officers an incentive to
increase corporate and individual performance.
COMPENSATION-RELATED COMMITTEE ACTIVITIES
For 1998, we used W. T. Haigh & Company, Inc. ("Haigh") to conduct a study to
determine market pay levels of comparable positions. Haigh is an independent
consulting firm specializing in executive compensation. The Haigh study compared
the compensation levels of Executive Officers with those in a group of companies
that:
- have a business profile similar to ours;
- have revenues similar to ours;
- have global operations;
- are recognized as industry leaders; and
- are well-managed professional organizations.
More companies were included in the study than are reflected in the performance
graphs in this Proxy Statement because we believe we compete for quality
executives with all types of companies. The results of this study and a review
of national compensation surveys gave us information about performance and
market practices. We used that information to establish and monitor our
executives' total compensation levels.
ELEMENTS OF COMPENSATION
We have three elements of compensation for our executives:
- base salary;
- annual incentives; and
- long-term compensation awards under our 1986 Incentive Stock Program.
BASE SALARY
We target base salaries of our executives at about the median of similar
executives in the Haigh study. We also consider other factors such as individual
experience, leadership and performance. We do not rank or weight these factors
in any particular way.
In early 1998, we raised Mr. Cornog's base salary from $620,000 to $675,000. We
considered his strategic vision and strong leadership, as well as our corporate
results, in determining his base salary. The new salary level continues to be at
about the median of the base salaries of similar executives in the Haigh study.
12
<PAGE>
ANNUAL INCENTIVE PLAN
We also maintain an Annual Incentive Plan for our Executive Officers. Snap-on's
performance under three corporate performance measures determines the amounts of
payments under the Plan. These three components are:
- sales growth;
- return on net assets employed before interest and taxes (which we refer to
as "RONAEBIT"); and
- earnings per share growth.
We weight each component equally. We also set targets for threshold, target and
maximum performance for each component. We apply percentages for each component
to each executive's base compensation based on actual performance. Our Chief
Executive Officer can earn a maximum of 150% of his base salary under the plan.
Our senior/executive officers can earn a maximum of 120% of their base salaries
under the plan. We intend that payments at the maximum levels would provide
incentive compensation at about the 75th percentile of the companies in the
Haigh study.
For 1998, we paid the following percentages of base salary:
<TABLE>
<CAPTION>
SALES GROWTH RONAEBIT EPS GROWTH
--------------- ------------- ---------------
<S> <C> <C> <C>
Chief Executive Officer............................................ 26.2% 0% 0%
Other Named Senior/Executive Officers.............................. 21.0% 0% 0%
</TABLE>
For 1998, Mr. Cornog received the target payment under the sales growth
component, and no payments under the RONAEBIT and earnings per share growth
components, resulting in a bonus of $172,309.
INCENTIVE STOCK PROGRAM AND STOCK OWNERSHIP
We provide long-term incentive compensation to our executives through our
Incentive Stock Program. The program allows us to grant to our executives
options to purchase shares of our Common Stock. Since options are valuable only
if our stock price goes up, we believe stock option grants help make the
financial interests of our management the same as yours. The options have an
exercise price equal to the value of our Common Stock on the date of grant. We
recommend to the Board of Directors the number of options to grant to the Chief
Executive Officer. We also approve the number of options to grant to the other
Executive Officers.
In granting options, we take into account:
- each executive's level of responsibility;
- each executive's contributions to our financial results;
- the practices of the Haigh study companies; and
- the executive's progress toward meeting the standards set for the Company
in our stock ownership guideline program.
We attempt to grant stock options at about the 90th percentile of the companies
in the Haigh study. To make this comparison, we consider the relationship
between the value of the Common Stock that options would allow an executive to
buy and each executive's base salary. We also consider how often we grant
options and the vesting schedule of those grants. Using these criteria, we
granted Mr. Cornog options to purchase 125,000 shares in 1998.
13
<PAGE>
To align the financial interests of our management with yours, we have
encouraged our executives to increase their ownership of our stock. As
previously noted, we have established voluntary guidelines for levels of stock
ownership we would like executives to achieve over a five-year period, which
began in 1995. For our Chief Executive Officer, the minimum stock ownership
guideline is three times his base salary, which he has met. The guideline is one
and one-half times base salary for our other senior/ executive officers, and one
time for all other officers.
We believe Internal Revenue Code Section 162(m) will not adversely affect
Snap-on based upon the compensation we paid to our Executive Officers in 1998.
Section 162(m) could limit the Company's tax deduction for some executive
compensation. Therefore, we have not adopted any policy concerning this
limitation, but we will continue to evaluate Section 162(m) in future years.
Bruce S. Chelberg, Chair
Donald W. Brinckman
Leonard A. Hadley
Edward H. Rensi
14
<PAGE>
TABLE 2: SUMMARY COMPENSATION
Table 2 shows the total compensation paid, payable and/or accrued for services
rendered during the 1998, 1997 and 1996 fiscal years to each of the Named
Executive Officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL --------------------------------------
COMPENSATION RESTRICTED SECURITIES
---------------------- OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($ VALUE) OPTIONS(#)
- - ---------------------------------- --------- ----------- ----------- ------------------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ROBERT A. CORNOG.................. 1998 656,667 172,309 0 0 125,000
Chairman, President and 1997 606,666 698,819 0 0 100,000
Chief Executive Officer 1996 563,333 666,198 0 0 0
BRANKO M. BERONJA................. 1998 292,000 61,320 0 0 35,000
Executive Vice President 1997 269,500 248,317 0 0 28,000
1996 242,667 229,611 0 0 0
FREDERICK D. HAY.................. 1998 375,000 78,750 0 0 35,000
Senior Vice President- 1997 360,000 331,704 0 0 28,000
Operations 1996 320,833 303,572 0 438,750(2) 45,000
DONALD S. HUML.................... 1998 308,333 64,750 0 0 35,000
Senior Vice President- 1997 290,500 267,666 0 0 28,000
Finance and Chief 1996 277,000 262,097 0 0 0
Financial Officer
MICHAEL F. MONTEMURRO............. 1998 239,667 50,330 0 0 18,000
Senior Vice President- 1997 229,667 211,615 0 0 24,000
Transportation 1996 219,667 207,849 0 0 0
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION($)
- - ---------------------------------- -------------------
<S> <C>
ROBERT A. CORNOG.................. 0
Chairman, President and 0
Chief Executive Officer 0
BRANKO M. BERONJA................. 0
Executive Vice President 0
0
FREDERICK D. HAY.................. 14,914(1)
Senior Vice President- 14,914(1)
Operations 14,914(1)
DONALD S. HUML.................... 0
Senior Vice President- 0
Finance and Chief 0
Financial Officer
MICHAEL F. MONTEMURRO............. 0
Senior Vice President- 0
Transportation 0
</TABLE>
- - ------------------------------
(1)Consists of premiums paid on a universal life insurance policy.
(2)Effective February 15, 1996, we awarded Mr. Hay 15,000 restricted Common
Stock units under a deferred compensation plan with a grant date value of
$29.25 per share. Six thousand units were not vested as of December 31, 1998.
Those units had a value of $208,872 (based on a price of $34.812 per share)
as of the fiscal year-end. Such units vest in equal amounts on January 27 of
1999 and 2000.
15
<PAGE>
TABLE 3: OPTION GRANTS IN LAST FISCAL YEAR
Table 3 shows information about the stock options granted to the five Named
Executive Officers in 1998. One-half of these options vested on January 23,
1999, and the remaining one-half will vest on January 23, 2000.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE OR BASE PRESENT
NAME GRANTED FISCAL YEAR PRICE ($/SH) EXPIRATION DATE VALUE(1)
- - ------------------ ------------ ------------------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
Cornog............ 125,000 20.35% $ 39.71 1/23/08 $ 1,155,000
Beronja........... 35,000 5.70% $ 39.71 1/23/08 $ 323,400
Hay............... 35,000 5.70% $ 39.71 1/23/08 $ 323,400
Huml.............. 35,000 5.70% $ 39.71 1/23/08 $ 323,400
Montemurro........ 18,000 2.93% $ 39.71 1/23/08 $ 166,320
</TABLE>
- - ------------------------
(1)The estimated grant date present value per share under the Black-Scholes
Option Pricing Model is $9.24. The material assumptions and adjustments we
used to estimate the value of the options reflected above include:
- an exercise price on the option ($39.71) equal to the fair market value of
the underlying stock on the date of grant;
- an option term of ten years;
- an interest rate (5.5%) which represents the interest rate on a U. S.
Treasury security with a maturity date corresponding to that of the option
term;
- volatility (21.1%) calculated using our daily stock prices for the
one-year period before the grant date;
- dividends at the rate of $.84 per share, representing the annualized
dividends paid with respect to a share of Common Stock as of the date of
grant; and
- a 13.3% reduction to reflect the probability of forfeiture due to
termination prior to vesting and a 14.1% reduction to reflect the
probability of a shortened option term due to termination of employment
prior to the option expiration date.
The actual value, if any, an officer realizes upon exercise of an option will
depend on the excess of the market value of Common Stock (which we cannot
forecast with reasonable accuracy) over the exercise price on the date the
option is exercised.
16
<PAGE>
TABLE 4: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
This table shows (i) the number of shares that our Named Executive Officers
acquired by exercising stock options in fiscal 1998 and the value they realized
as a result of those exercises and (ii) the number and value of exercisable and
unexercisable stock options held by our Named Executive Officers at the end of
fiscal 1998. The closing price of Common Stock on December 31, 1998, the last
trading day before the fiscal year-end, was $34.812. We used this amount to
calculate the value of unexercised options with an exercise price of less than
$34.812.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
(#) FISCAL YEAR-END ($)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- - ------------------------- ------------------ ------------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Cornog................... 114,108 1,826,504 374,426/175,000 4,299,547/ 0
Beronja.................. 1,500 190,151 103,569/49,000 1,231,105/ 0
Hay...................... 0 0 59,000/49,000 223,763/ 0
Huml..................... 1,000 31,033 94,000/49,000 987,890/ 0
Montemurro............... 5,819 325,552 117,728/30,000 1,441,048/ 0
</TABLE>
ADMINISTRATIVE AND FIELD EMPLOYEE PENSION PLAN
TABLE 5: PENSION PLAN
The following table shows the estimated annual pension benefits payable to
covered participants at normal retirement age under the plans discussed on page
18.
YEARS OF SERVICE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
EARNINGS 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - ------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 150,000 11,633 23,265 34,898 46,530 58,163 69,795 81,428
$ 200,000 15,758 31,515 47,273 63,030 78,788 94,545 110,303
$ 250,000 19,883 39,765 59,648 79,530 99,413 119,295 139,178
$ 300,000 24,008 48,015 72,023 96,030 120,038 144,045 168,053
$ 400,000 32,258 64,515 96,773 129,030 161,288 193,545 225,803
$ 500,000 40,508 81,015 121,523 162,030 202,538 243,045 283,553
$ 600,000 48,758 97,515 146,273 195,030 243,788 292,545 341,303
$ 700,000 57,008 114,015 171,023 228,030 285,038 342,045 399,053
$ 800,000 65,258 130,515 195,773 261,030 326,288 391,545 456,803
$ 900,000 73,508 147,015 220,523 294,030 367,538 441,045 514,553
$ 1,000,000 81,758 163,515 245,273 327,030 408,788 490,545 572,303
$ 1,100,000 90,008 180,015 270,023 360,030 450,038 540,045 630,053
$ 1,200,000 98,258 196,515 294,773 393,030 491,288 589,545 687,803
$ 1,300,000 106,508 213,015 319,523 426,030 532,538 639,045 745,553
$ 1,400,000 114,758 229,515 344,273 459,030 573,788 688,545 803,303
$ 1,500,000 123,008 246,015 369,023 492,030 615,038 738,045 861,053
</TABLE>
Annual compensation is based on the pension plan formula detailed on page 18
using the years of service indicated above, including amounts which would be
payable under the Administrative and Field Employee Pension Plan (the "Pension
Plan"), and taking into account limitations imposed by Internal Revenue Code
Section 415 for amounts payable in 1998 for participants age 65, and also based
on the Supplemental Retirement Plan. There is no offset in benefits under the
Pension Plan for Social Security benefits other than for disability retirement
benefits.
17
<PAGE>
CALCULATING THE PENSION BENEFIT
The Pension Plan is a qualified noncontributory defined benefit plan. We do not
make any specific contribution for the Named Executive Officers. The Pension
Plan covers eligible salaried employees and provides, at the normal retirement
age of 65, that retirement benefits will be calculated using the following
benefit formula:
[1.2% X Average Pay X Years of Credited Service]
plus
[0.45% X {Average Pay - Social Security Covered Compensation} X Years of
Credited Service]
"Average Pay" is an individual's average annual earnings during the five highest
completed consecutive calendar years of employment and generally includes base
salary and bonus amounts paid in a given year.
"Social Security Covered Compensation" is a 35-year 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 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 actuarial-equivalent optional forms of
payout are also available.
SUPPLEMENTAL RETIREMENT PLAN
Certain officers who participate in the Pension Plan also participate in a
Supplemental Retirement Plan. The Supplemental Retirement Plan is a nonqualified
excess benefit and supplement 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 participants will receive the
difference, if any, between the full amount of retirement income due under the
Pension Plan formula and the amount of retirement income payable under
applicable IRS or ERISA limitations. Qualified retirement plan compensation is
currently limited to $160,000 per annum per retiree by Section 401(a)(17) of the
Internal Revenue Code.
As of February 23, 1999, the full years of credited service for the Named
Executive Officers are: Mr. Cornog, 15 years; Mr. Beronja, 35 years; Mr. Hay, 3
years; Mr. Huml, 4 years and Mr. Montemurro, 28 years. Under an agreement with
Mr. Cornog, Snap-on credits him two years of service for every year worked.
18
<PAGE>
OTHER INFORMATION
EXECUTIVE AGREEMENTS
We have agreements with our Executive Officers, including the five Named
Executive Officers, to provide continued compensation and benefits in the event
of a change of control as defined in the agreements. The agreements are for
one-year terms and are automatically extended from year to year, unless notice
is given. The agreements also provide that if there is a change of control, the
terms will continue for 24 months.
In the event of such change of control, if one of the Named Executive Officers
is terminated and is entitled to termination benefits, then he will receive
lump-sum payments equal to three times the sum of his highest base salary and
the higher of the annual bonus target opportunity or the payment during the
three years before the change of control. The Named Executive Officer will also
receive an additional payment to cover any excise taxes (and related income
taxes) that may result from the lump-sum payments and may continue to receive
health and life insurance benefits, if desired, for three years. A Named
Executive Officer will be entitled to the termination benefits if his employment
is constructively terminated without cause in anticipation of or within two
years following the change of control, or if he voluntarily terminates
employment between 12 and 18 months following the change of control.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that during 1998 our Executive Officers and Directors complied with
all filing requirements under Section 16(a) of the Securities Exchange Act of
1934. We file the required reports on behalf of our Executive Officers and
Directors.
DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
The Dividend Reinvestment and Direct Stock Purchase Plan, established in 1997,
provides for automatic dividend reinvestment in shares of Common Stock and
allows shareholders and investors the opportunity to purchase shares of Common
Stock directly from us without using a broker through a variety of methods
including:
- investments of cash dividends on all or a portion of Common Stock which
the person already owns; and
- periodic cash investments of more than $100 per investment, up to an
annual maximum of $150,000.
Shares acquired under these methods will be purchased at 100% of the average
high and low price of the Common Stock on the day of purchase. For purchasers,
there are no participation, commission or administrative fees.
More information is available from First Chicago Trust Company of New York at
1-800-446-2617.
19
<PAGE>
DIRECTIONS TO SNAP-ON ANNUAL MEETING
[MAP]
FROM CHICAGO'S O'HARE INTERNATIONAL AIRPORT TO THE RADISSON HOTEL & CONFERENCE
CENTER KENOSHA
Take I-294 North to I-94 West (Milwaukee, Wisconsin) to Kenosha, Wisconsin. Exit
LakeView Parkway (Hwy. 165) off I-94. Proceed east on Hwy. 165 less than 1/2
mile. Turn right (south) on 108th Street.
FROM MILWAUKEE'S MITCHELL INTERNATIONAL AIRPORT TO THE RADISSON HOTEL &
CONFERENCE CENTER KENOSHA
Take I-94 East to Kenosha, Wisconsin. Exit LakeView Parkway (Hwy. 165) off I-94.
Proceed east on Hwy. 165 less than 1/2 mile. Turn right (south) on 108th Street.
PLANT TOURS
If you would like to take a tour of our General Offices and Plant in Kenosha
following the meeting, please call 1-800-786-6600, extension 5430, before April
19, 1999.
20
<PAGE>
- - -------------------------------------------------------------------------------
PROXY PROXY
SNAP-ON INCORPORATED
2801-80TH STREET
KENOSHA, WI 53141-1410
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Robert A. Cornog, Leonard A. Hadley and Edward H.
Rensi as Proxies, each with power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all shares of
the common stock of Snap-on Incorporated held of record by the undersigned on
February 23, 1999, at the Annual Meeting of Shareholders, such meeting to be
held at the Radisson Hotel & Conference Center Kenosha, 11800-108th Street,
Kenosha, Wisconsin at 10:00 a.m. on Friday, April 23, 1999, or at any
adjournment thereof.
THIS PROXY WILL BE VOTED "FOR" THE DIRECTOR NOMINEES IF NO CHOICE IS SPECIFIED.
IN THE ABSENCE OF AN INSTRUCTION TO THE CONTRARY, THIS PROXY WILL BE VOTED AT
THE DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
NOMINEES FOR THE ELECTION OF DIRECTORS ARE:
1) Branko M. Beronja 3) Donald W. Brinckman
2) George W. Mead 4) Richard F. Teerlink
PLEASE MARK YOUR VOTE ON THE REVERSE SIDE, SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
- - -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
- - -------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR | 2406
VOTES AS IN THIS |____
EXAMPLE.
VOTE WITHHOLD
For all nominees Authority to vote
(except as indicated) for all nominees
1. Election of Directors:
Three-year terms -- / / / /
Branko M. Beronja
Donald W. Brinckman
George W. Mead and
Richard F. Teerlink
____________________________________________
(Except nominees written above)
2. In their discretion, the Proxies are authorized to vote on such other
matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
When properly executed, this Proxy will be voted per your instructions. This
Proxy will be voted "FOR" Director nominees if no choice is specified. In the
absence of an instruction to the contrary, this Proxy will be voted at the
discretion of the Proxies on any other business.
This Proxy is also intended for use by the participants of any eligible
benefit plans of Snap-on Incorporated and the Grantor Stock Trust.
Receipt of Notice of the Annual Meeting and Proxy Statement is hereby
acknowledged.
SIGNATURE_____________________________________________ DATE_________________
NOTE: Please sign exactly as name appears herein, joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title. If a corporation, sign in corporation's name by an
authorized officer. If a partnership, please sign in partnership's name by
an authorized person.
- - -------------------------------------------------------------------------------
Dear Shareholder:
Snap-on Incorporated encourages you to take advantage of a new and convenient
way by which you can vote your shares. You can vote your shares
electronically through the Internet or by telephone. This eliminates the
need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear
in the box above must be used to access the system.
To vote over the Internet:
- Log on to the Internet and go to the Web site http://www.vote-by-net.com
To vote over the telephone:
- On a touch-tone telephone, call 1-800-OK2-VOTE (1-800-652-8683) 24 hours
a day, 7 days a week
Your electronic vote authorizes the named Proxies in the same manner as if
you marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is
no need for you to mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE>
[LOGO]
March 12, 1999
TO: PARTICIPANTS IN THE SNAP-ON INCORPORATED AMENDED AND RESTATED 1986
INCENTIVE STOCK PROGRAM, EMPLOYEE STOCK OWNERSHIP PLAN AND FRANCHISED
DEALER STOCK OWNERSHIP PLAN
The Company has placed 6,871,828 shares of Common Stock into a Grantor Stock
Trust where it is being held to fund benefits under, among other things, the
above stock plans. As a participant in one or more of the stock plans, you have
certain rights to direct the voting of these shares at the upcoming Annual
Meeting. Your voting rights are based upon your participation in one or more of
the above mentioned plans.
To exercise your voting rights, please complete the enclosed Proxy Card. It
directs the Trustee, The Northern Trust Company, how to vote. YOU MUST RETURN
THE PROXY CARD USING THE ENCLOSED RETURN ENVELOPE PRIOR TO THE ANNUAL MEETING,
WHICH WILL BE HELD ON APRIL 23, 1999, IN ORDER TO EXERCISE YOUR VOTING RIGHTS
UNDER THE TRUST. THE TRUSTEE CANNOT GUARANTEE THAT VOTING INSTRUCTIONS RECEIVED
AFTER APRIL 21, 1999 WILL BE COUNTED.
For the reasons stated in the enclosed Proxy Statement for the Annual Meeting,
your Board of Directors recommends a vote "FOR" all of the nominees for director
and the other proposals set forth on the Proxy Card.
You may receive more than one package of materials regarding the upcoming Annual
Meeting. For example, if you are also a shareholder, separate from these stock
plans, you will receive a different mailing containing a separate Proxy Card. If
a portion of the funds held in your 401(k) Plan account is invested in the
Company's Common Stock, you also will receive a separate mailing containing a
Proxy Card for these shares. YOU MUST SEPARATELY VOTE THE SHARES HELD BY YOU AS
A SHAREHOLDER OR 401(k) PLAN PARTICIPANT BY USING THE PROXY CARDS YOU RECEIVE
WITH THOSE PACKAGES. Please return any Proxy Cards you might receive separately
in the return envelopes provided with each package.
As noted above, you may be receiving more than one copy of the Annual Report and
Proxy Statement. The law requires that we mail these informational materials
with each voting card. We regret any inconvenience this may cause. If you wish,
you may return any extra copies to the Company's Public Relations Department
where they will be reused or recycled.
Thank you for your cooperation.
Sincerely,
[SIGNATURE]
Robert A. Cornog
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
