<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
HASKEL INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 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> 2
[HASKEL INTERNATIONAL LOGO]
September 19, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Haskel International, Inc. which will be held at the Holiday Inn, 150 East
Angeleno Street, Burbank, California 91502, on Monday, October 21, 1996 at 10:00
a.m. local time.
The Notice of Annual Meeting and Proxy Statement are included with this
letter. The matters listed in the Notice of Annual Meeting are more fully
described in the Proxy Statement.
It is important that your shares be represented at the Annual Meeting
whether or not you are personally able to attend. YOU ARE THEREFORE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY, OF COURSE,
WITHDRAW YOUR PROXY SHOULD YOU WISH TO VOTE IN PERSON.
Thank you for your cooperation.
Sincerely,
/s/ Edward Malkowicz
Edward Malkowicz
Chairman of the Board
<PAGE> 3
HASKEL INTERNATIONAL, INC.
100 EAST GRAHAM PLACE
BURBANK, CALIFORNIA 91502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 19, 1996
The Annual Meeting of Shareholders of Haskel International, Inc. will
be held on October 21, 1996 at 10:00 A.M. at the Holiday Inn, 150 East Angeleno
Street, Burbank, California 91502, for the following purposes:
1. Election of seven directors, consisting of three
Class A directors and four Class B directors, to
serve on the Company's Board of Directors until the
next Annual Meeting of Shareholders and until their
successors are duly elected and qualified;
2. Approval of amendments to the 1995 Formula Stock
Option Plan;
3. Ratification of the selection of Deloitte & Touche
LLP as the Company's independent auditors; and
4. Such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed September 16, 1996 as the record date
for determining the shareholders entitled to receive notice of and to vote at
the meeting.
All shareholders are cordially invited to attend the meeting. Whether
or not you expect to attend the meeting, please mark, sign, date and return
promptly the enclosed proxy card in the stamped return envelope provided.
By Order of the Board of Directors,
/s/ Lonnie D. Schnell
Lonnie D. Schnell
Secretary
<PAGE> 4
HASKEL INTERNATIONAL, INC.
100 EAST GRAHAM PLACE
BURBANK, CALIFORNIA 91502
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 1996
GENERAL INFORMATION
This proxy statement (the "Proxy Statement") and the enclosed proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors of Haskel International, Inc., a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held at the Holiday Inn, 150 East Angeleno Street, Burbank, California,
91502, on October 21, 1996 at 10:00 a.m. local time and any adjournments or
postponements thereof. The Company's Annual Report to Shareholders for the
fiscal year ended May 31, 1996, including financial statements and other
information concerning the Company, is also enclosed for your information. The
Company anticipates that the Proxy Statement and the enclosed proxy will first
be mailed or given to its shareholders on or about September 19, 1996.
A proxy may be revoked by filing with the Secretary of the Company a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. Attendance in person at
the Annual Meeting does not itself revoke an otherwise valid proxy; however, any
shareholder who attends the Annual Meeting may orally revoke his or her proxy at
the Annual Meeting and vote in person. All properly executed proxies received
prior to or at the Annual Meeting, and not revoked, will be voted at the Annual
Meeting with the instructions indicated on such proxies. If no instructions are
indicated, such proxies will be voted for the election of the three Class A and
four Class B nominees, as the case may be, as directors, and for Proposals 2 and
3. Management is not aware at the date hereof of any other matters to be
presented at the Annual Meeting; however, if any other matter is properly
presented, the proxyholders will vote in their sole discretion upon such other
matter.
The cost of this solicitation of proxies will be borne by the Company.
Proxies will be solicited by the Company principally through use of the mail,
but directors, officers and regular employees of the Company may solicit proxies
in person, by telephone, or by other means of communication. Such persons will
not be specially compensated for such services. The Company may reimburse
brokers, banks, custodians, nominees and other fiduciaries for their reasonable
charges and expenses in forwarding proxy materials to beneficial owners.
VOTING SECURITIES
Only shareholders of record at the close of business on September 16,
1996 will be entitled to vote at the Annual Meeting. On that date, there were
4,688,230 shares of the Company's Class A and 40,000 shares of Class B Common
Stock outstanding. Each share of Common Stock is entitled to one vote. The
holders of a majority of the outstanding shares of Common Stock present in
person or by proxy and entitled to vote will constitute a quorum at the Annual
Meeting. Abstentions and shares held by brokers that are present but not voted
because the brokers had no discretionary authority with respect to such shares
("broker non-votes") will be counted as being present for purposes of
determining a quorum.
1
<PAGE> 5
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to each person
who, as of July 31, 1996 is known by the Company to be the beneficial owner of
more than five percent (5%) of the Company's Common Stock:
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock
-------------------- --------------------
Amount and Amount and Percent of
Nature of Percent Nature of Percent Combined
Name and Address of Beneficial of Beneficial of Voting
Beneficial Owner Ownership Class(1) Ownership Class(1) Power(2)
- ---------------- --------- ------ --------- ------ ------
<S> <C> <C> <C> <C> <C>
Hayman Family Trusts 1,584,477(3) 33.8% 40,0003 100.0% 34.4%
c/o The Boston Company
300 S. Grand Avenue Suite 1200
Los Angeles, CA 90071
Maury S. Friedman 447,000(4) 9.5% -- -- 9.5%
29480 Bertrand Street
Agoura Hills, CA 91301
Haskel, Inc. Profit Sharing Plan 259,607 5.5% -- -- 5.5%
Citizens Bank, Trustee
225 East Colorado Blvd.
Pasadena, CA 91101
</TABLE>
- -------------------------
(1) Included as outstanding for purposes of these calculations with
respect to the Class A Common Stock were 4,688,230 shares of Class A Common
Stock outstanding as of May 31, 1996 plus, in the case of a particular person,
the shares of Class A Common Stock subject to currently exercisable options
(which are deemed to include options exercisable within 60 days after August 16,
1996) held by that person, which options are specified by footnote. Other than
as described in the preceding sentence, shares upon exercise of outstanding
options are not deemed to be outstanding for purposes of these calculations.
Included as outstanding for purposes of these calculations with respect to the
Class B Common Stock were 40,000 shares of Class B Common Stock outstanding as
of May 31, 1996.
(2) Represents the combined voting power of the shares of Class A
Common Stock and Class B Common Stock beneficially owned by the persons named
as a percent of the aggregate combined voting power of all outstanding shares of
Common Stock.
(3) All of the shares shown are owned beneficially and of record by
eight irrevocable trusts. Sandra Nelson is the beneficiary of three of the
trusts, Sheryl L. Everett the beneficiary of three of the trusts, and Rick
Meeker Hayman the beneficiary of two of the trusts. The trustees of two of the
trusts of which Sandra Nelson is the beneficiary, two of the trusts of which
Sheryl L. Everett is the beneficiary and the two of the trusts of which Rick
Meeker Hayman is the beneficiary are The Boston Safe Deposit and Trust Company
of California ("The Boston Company"), Sandra Nelson and Sheryl L. Everett. The
Boston Company has two votes and each of the other trustees has one vote in
determining action to be taken by each of these six trusts with respect to the
shares held by each such trust. The Boston Company is sole trustee for each of
the other two trusts, one of which Sandra Nelson is the beneficiary and one of
which Sheryl L. Everett is the beneficiary. Excludes 25,450 and 41,145 shares as
to which Sandra Nelson and Sheryl L. Everett, respectively, have sole voting and
dispositive power; and 41,145 shares which are held in trust by another trustee,
and with respect to which Rick Meeker Hayman is the beneficiary, and has sole
voting and dispositive power.
(4) Includes 440,000 shares owned beneficially and of record by the
Friedman Family Trust, of which Maury S. Friedman and Lisa E. Friedman are
co-trustees, and 7,000 shares owned by Mr. Friedman as custodian for his minor
children.
2
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of July 31, 1996, by (i)
each director and nominee for director, (ii) each of the executive officers
named in the Summary Compensation Table, and (iii) all directors and executive
officers as a group. Except as otherwise noted, and subject to applicable
community property and similar laws, each person named has sole voting and
investment power with respect to the Common Stock shown as beneficially owned.
<TABLE>
<CAPTION>
Class A Shares Percent
Beneficially of
Name and Address Title Owned Class
- ---------------- ----- -------------- -------
<S> <C> <C> <C>
R. Malcolm Greaves President, Chief Executive 117,600(1) 2.5%
100 East Graham Place Officer and Director
Burbank, CA 91502
Robert A. Smith Executive Vice President and 10,000(2) *
100 East Graham Place President - Industrial Products
Burbank, CA 91502 Group
James C. Minyard Formerly President - Electronic 10,400(3) *
1874 Dunnigan Street Products Group and President of
Camarillo, CA 93010 MGE
Maury S. Friedman Formerly Executive Vice 447,000(4) 9.5%
29480 Bertrand Street President, President - Electronic
Agoura Hills, CA 91301 Products Group and Director
Lonnie D. Schnell Chief Financial Officer and 7,500(5) *
100 East Graham Place Secretary
Burbank, CA 91502
Edward Malkowicz Chairman of the Board and 21,400(6) *
100 East Graham Place Director
Burbank, CA 91502
Marvin L. Goldberger Director 50,155(7) 1.1%
100 East Graham Place
Burbank, CA 91502
Marvin Goodson Director 178,910(8) 3.8%
100 East Graham Place
Burbank, CA 91502
Stanley T. Myers Director 3,400(9) *
100 East Graham Place
Burbank, CA 91502
Terrence A. Noonan Director 1,000 *
100 East Graham Place
Burbank, CA 91502
William L. Slover Director 32,000(10) *
100 East Graham Place
Burbank, CA 91502
All directors and executive
officers as a group (11 persons) 879,365(11) 18.8%
</TABLE>
* Denotes beneficial ownership of less than 1%.
[Footnotes on next page]
3
<PAGE> 7
- --------------------------
(1) Includes 114,600 shares issuable upon exercise of options exercisable
within 60 days of August 16, 1996.
(2) Includes 10,000 shares issuable upon exercise of options exercisable
within 60 days of August 16, 1996.
(3) Includes 10,000 shares issuable upon exercise of options exercisable
within 60 days of August 16, 1996. Mr. Minyard was terminated as an employee of
the Company and MGE on July 1, 1996.
(4) Includes 440,000 shares owned beneficially and of record by the
Friedman Family Trust, of which Mr. Friedman is a co-trustee; and 7,000 shares
owned by Mr. Friedman as custodian for his minor children. Mr. Friedman resigned
as a director of the Company in January 1996 and as President - Electronic
Products Group in April 1996. He currently serves as a consultant to MGE.
(5) Includes 6,000 shares issuable upon exercise of options exercisable
within 60 days of August 16, 1996.
(6) Includes 10,400 shares issuable upon exercise of options exercisable
within 60 days of August 16, 1996.
(7) Includes 11,155 shares owned beneficially and of record by the Marvin
and Mildred Goldberger Family Trust, of which Dr. Goldberger is a co-trustee;
and 39,000 shares issuable upon exercise of options exercisable within 60 days
of August 16, 1996.
(8) Includes 26,800 shares owned beneficially and of record by the
Goodson and Wachtel Professional Corporation Profit Sharing Plan, of which Mr.
Goodson is a co-trustee; 81,110 shares owned beneficially and of record by the
Marvin and Mae Goodson Family Trust, of which Mr. Goodson is a co-trustee; and
71,000 shares issuable upon exercise of options exercisable within 60 days of
August 16, 1996.
(9) Includes 2,400 shares issuable upon exercise of options exercisable
within 60 days of August 16,1996.
(10) Includes 5,000 shares owned beneficially and of record by the Slover
Family Trust, of which Mr. Slover is a trustee; and 27,000 shares issuable upon
exercise of options exercisable within 60 days of August 16, 1996. Mr. Slover is
not standing for re-election as a director at the 1996 Annual Meeting of
Shareholders.
(11) Includes 290,400 shares issuable upon exercise of options
exercisable within 60 days of August 16, 1996.
4
<PAGE> 8
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, at the Annual Meeting seven
directors are to be elected to serve until the next Annual Meeting of
Shareholders and until the election and qualification of their successors. Three
directors are elected by the holders of Class A Common Stock voting as a class
and four directors are elected by the holders of Class B Common Stock voting as
a class. Holders of Class A Common Stock may vote only for Class A nominees and
holders of Class B Common Stock may vote only for Class B nominees. The three
Class A nominees and the four Class B nominees receiving the highest number of
affirmative votes of the shares entitled to vote for the respective class of
nominees shall be elected directors. Abstentions and broker non-votes will have
no effect on the outcome of the vote. Unless otherwise instructed, the
proxyholders will vote the proxies received by them for the nominees of the
respective class named below, all of whom are currently directors of the
Company. If any of the listed nominees is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for such
person or persons as the proxyholders may designate. The Board of Directors has
no reason to believe that any of the nominees will be unable or decline to serve
as a director.
NOMINEES FOR ELECTION AS DIRECTOR
Set forth below is certain information with respect to each director as
of July 31, 1996 and each person nominated for election as a director.
<TABLE>
<CAPTION>
Name Age Position with Company
- ---- --- ---------------------
<S> <C> <C>
R. Malcolm Greaves * 57 President, Chief Executive Officer and Director
Edward Malkowicz * 56 Chairman of the Board and Director
Dr. Marvin L. Goldberger * 74 Director
Marvin Goodson ** 77 Director
Stanley T. Myers ** 59 Director
Terrence A. Noonan ** 58 Director
</TABLE>
* Nominee as Class A director
** Nominee as Class B director
R. Malcolm Greaves was appointed President and Chief Executive Officer
of the Company on February 14, 1996. He joined HESL as General Manager in
January 1989 and was appointed Managing Director of HESL in June 1990. Mr.
Greaves has served as a director of the Company since September 1990. Between
January 1994 and February 1995, he served as Executive Vice President in charge
of worldwide pump operations, after serving as Vice President, Chief Operating
Officer for Europe, the Middle East, India and Africa from April 1993.
Edward Malkowicz has been a director of the Company since November
1994. He was elected Chairman of the Board in April 1995. Between 1992 and May
1995, Mr. Malkowicz taught business courses at Riverside College in Riverside,
California.
Marvin L. Goldberger, Ph.D., has been a director of the Company since
1982. Since January 1993, Dr. Goldberger has been a professor of physics at the
University of California, San Diego. From September
5
<PAGE> 9
1991 through December 1992 he was a professor of physics at the University of
California, Los Angeles, and from 1987 through July 1991 he served as the
Director of the Institute for Advanced Studies at Princeton, New Jersey. Dr.
Goldberger served as a director of General Motors from January 1981 through June
1993 and is currently a member of the General Motors Corporate Advisory Council.
He is currently Dean of Natural Sciences, University of California, San Diego
and President Emeritus of the California Institute of Technology. Dr. Goldberger
is presently serving as a Class B director and has been nominated as a Class A
director.
Marvin Goodson has been a director of the Company since 1971. Mr.
Goodson is a founder and has been a member of the law firm of Goodson and
Wachtel A Professional Corporation and its predecessors since 1952 and has been
counsel to the Company and its predecessors since 1952.
Stanley T. Myers has been a director of the Company since November
1994. Mr. Myers has served as President and Chief Executive Officer of Siltec
Corporation, a manufacturer of strategic silicon and epitaxial materials for the
semiconductor industry, since November 1985.
Terrence A. Noonan has been a director of the Company since May 10,
1996. Since June 1991, Mr. Noonan has also served as President of Furon Company,
a manufacturing company specializing in polymer components. He is also a member
of the Board of Directors of Furon Company.
Of the four Class B members of the Board to be elected by the holders
of Class B Common Stock, only three nominees have been proposed at this time.
The holders of Class B Common Stock shall be entitled to vote for a fourth Class
B director at the Annual Meeting of Shareholders. If no such person is elected
by the holders of Class B Common Stock at the Annual Meeting of Shareholders,
the vacancy may be filled by the newly-elected directors pursuant to California
law and the Bylaws of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE CLASS A
NOMINEES BY THE HOLDERS OF CLASS A COMMON STOCK AND EACH OF THE CLASS B
NOMINEES BY THE HOLDERS OF CLASS B COMMON STOCK.
COMPENSATION OF DIRECTORS
Each of the Company's directors who is not an employee of the Company
(Messrs. Goldberger, Goodson, Malkowicz, Myers, Noonan, and Slover) receives an
annual fee of $24,000, payable in monthly installments. The Company does not pay
its employee directors any fee for their services as directors, except that Mr.
Malkowicz was an employee director through March 1996 and received directors
fees of $2,000 per month during that period. Subsequent to March 1996, Mr.
Malkowicz's status changed to a non-employee director. Each non-employee
director, including Mr. Malkowicz for the period he was an employee director,
receives reimbursement for out-of-pocket expenses, and $500 for each committee
meeting in which he otherwise participates. Directors who chair a Board
committee receive $750 per meeting. During fiscal 1995 and 1996, Mr. Slover
received fees of $26,600 and $27,800, respectively, for special consulting
services provided to the Company, on an "as requested" basis, in connection with
financial matters and inventory controls. Mr. Slover is not standing for
re-election as a director at the 1996 Annual Meeting of Shareholders. During
fiscal 1996, Mr. Goodson received fees of $9,500 for special consulting services
provided to the Company, on an "as requested" basis, in connection with business
matters not involving legal advice.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held eight meetings during fiscal
1996. All of the incumbent directors attended at least 75% of the aggregate of
the total meetings of the Board of Directors and each committee of the Board on
which they served during fiscal 1996.
6
<PAGE> 10
During fiscal 1996, the Board of Directors of the Company had four
standing committees: the Audit Committee (currently comprised of Messrs.
Goodson, Greaves, Malkowicz and Slover), the Compensation Committee (currently
comprised of Messrs. Goldberger, Greaves, Myers and Noonan), the Stock Option
Committee (currently comprised of Messrs. Goldberger, Goodson, Myers and
Slover), and the Environmental Committee (currently comprised of Messrs.
Goodson, Greaves and Slover). The Audit Committee held five meetings, the
Compensation Committee held four meetings, the Stock Option Committee held three
meetings and the Environmental Committee held three meetings during fiscal 1996.
The Audit Committee reviews the independence, professional services,
fees, plans and results of the independent auditors' engagement and recommends
their retention or discharge to the Board of Directors. The Compensation
Committee reviews and makes recommendations to the Board of Directors regarding
salaries, compensation, bonuses, benefits and option grants for executive
officers and key employees. The Stock Option Committee administers the 1995
Incentive Stock Option Plan, including the granting of options thereunder. The
Environmental Committee is responsible for establishing the Company's
environmental policies and programs and for monitoring, with the assistance of
environmental engineers, consultants and counsel, the Company's compliance with
such policies and applicable laws and regulations. Each committee makes
recommendations to the Board of Directors for further action by it. Except for
the Stock Option Committee, which acts independently, each of the committees
performs such other duties as may be assigned to it by the Board of Directors,
but is not delegated any authority to act on behalf of the Board of Directors.
The Board of Directors does not maintain a standing Nominating Committee, and
the Board of Directors as a whole acts upon matters that would otherwise be the
responsibility of such a committee.
EXECUTIVE OFFICERS
As of July 31, 1996, the executive officers of the Company were as
follows:
R. Malcolm Greaves, Executive Vice President. Biographical information
regarding Mr. Greaves is set forth above under "Nominees for Election as
Director."
Edward Malkowicz, Chairman of the Board. Biographical information
regarding Mr. Malkowicz is set forth above under "Nominees for Election as
Director."
Robert A. Smith, 55, joined the Company as President - Industrial
Products Group in February 1995 and has also served as an Executive Vice
President of the Company since November 1995. From February 1991 through
February 1995, Mr. Smith was employed by Puroflow, Inc. and its affiliates,
including Puroflow Corp. (where he served as President and a director from
February 1991 to October 1992), and Engineered Filtration Company (where he
served as President from October 1992 to January 1994). Mr. Smith has also
served as a director of Industrial Tools Inc. since 1978 and served as its
President from January 1994 to February 1995. These companies are manufacturers
of filtration and machining systems used, among other things, in airbags. Mr.
Smith is currently Vice Chairman of the Board of Puroflow, Inc.
Doranda Frison, 44, joined the Company on July 8, 1996 as President -
Electronic Products Group and President of MGE. Ms. Frison had previously served
as Vice President Sales/Marketing of MGE from January 1989 to August 1994. From
October 1994 through July 1996, she served as a sales and marketing consultant
to various telecommunications and technology companies, primarily AT&T's Western
Region operations.
Lonnie D. Schnell, 47, joined the Company as Chief Financial Officer and
Secretary in November 1994. From August 1990 through October 1994, Mr. Schnell
was Vice President and Controller of Teleflex Control Systems, Inc., an
electromechanical actuator and cargo handling business.
7
<PAGE> 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company incurred attorneys' fees in the amounts of approximately
$358,000 in fiscal 1996 in connection with services provided by the firm of
Goodson and Wachtel A Professional Corporation. That firm continues to provide
legal services to the Company. Marvin Goodson, a director and shareholder of the
Company, is a principal with that law firm. In addition, that firm represents
the Hayman Family Trusts and the Haskel, Inc. Profit Sharing Plan. (See
"Principal Shareholders".)
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than ten percent
of the Company's Common Stock are required to report their initial ownership of
the Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific filing deadlines of these reports
have been established and the Company is required to disclose in this Proxy
Statement any failure to file by these dates during the fiscal year ended May
31, 1996. Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during the fiscal year ended May 31, 1996 and Forms 5
and amendments thereto furnished to the Company with respect to the fiscal year
ended May 31, 1996, and written representations, all of these filing
requirements have been satisfied, except that Maury S. Friedman, formerly a
director, President Electronic Products Group, and Executive Vice President,
made two late filings on Form 4, each relating to one transaction. All such
filings have been made as of the date hereof.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid by the
Company, together with long term and other compensation, for each of the last
three fiscal years to its Chief Executive Officer and to each of its executive
officers whose total salary and bonus from the Company exceeded or equaled
$100,000 in fiscal 1996 (the "Named Executive Officers"):
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------- ----------------------
Awards
------
Other All
Annual Securities Other
Compen- Underlying Compen-
Name and Principal Position Year Salary ($) Bonus ($) sation ($) Options (#) sation ($)
- --------------------------- ---- ---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Malcolm Greaves(1) 1996 $165,200(2) $110,000 -- 43,000(3) $29,500(4)
President and Chief Executive 1995 151,680(2) 20,000 -- --
Officer 1994 123,333(2) 50,000 -- 60,000(5) 34,878(4)
23,508(4)
Robert A. Smith 1996 157,390 75,000 50,000(3) --
Executive Vice President and 1995 34,038 -- $ 731(6) -- --
President - Industrial 1994 -- -- -- -- --
Products Group --
James C. Minyard(7) 1996 104,700 25,000 7,800(6) 30,000(8) --
Formerly President - 1995 -- -- -- -- --
Electronic Products Group 1994 -- -- -- -- --
Maury S. Friedman(9) 1996 240,500 35,000 -- -- 45,4001(0)
Formerly Executive Vice 1995 240,000 60,000 -- 60,000(5) --
President and President - 1994 124,000 60,000 -- -- --
Electronic Products Group
Edward Malkowicz(11) 1996 135,000 -- 12,000(6) 24,000(12)
Chairman of the Board 1995 13,270 -- 12,000(5) 34,000(13)
1994 -- -- 1,9261(4) -- 16,000(13)
-- --
Lonnie D. Schnell 1996 106,000 40,000 1,5376 30,000(3) --
Chief Financial Officer and 1995 49,900 6,000 -- -- --
Secretary 1994 -- -- -- -- --
</TABLE>
- --------------------------
(1) Mr. Greaves was appointed President and Chief Executive Officer on
February 14, 1996.
(2) A portion of Mr. Greaves' salary in the amount of $108,000 in fiscal
1994, $114,480 in fiscal 1995, and $111,600 in fiscal 1996 was paid in English
Pounds, and has been converted at the estimated average exchange rate of
(pound)1 to $1.50 in effect during fiscal 1994, $1.59 in effect during fiscal
1995, and $1.55 in effect during 1996.
(3) Options granted under the Company's 1995 Incentive Stock Option
Plan.
(4) Company's contribution to HESL Pension Plan.
(5) Options granted under the Company's Nonqualified Stock Option Plan.
(6) Automobile allowance.
(7) Mr. Minyard served as President - Electronic Products Group from
April 1, 1996 to July 1, 1996, on which date his employment was terminated. Mr.
Minyard also served as President of MGE from August 1, 1994 to July 1, 1996.
(8) Options granted under the Company's 1989 Incentive Stock Option
Plan.
[Footnotes continue on next page]
9
<PAGE> 13
(9) Mr. Friedman served as Chairman of the Board and Chief Executive
Officer from November 22, 1994 to April 11, 1995, President-Electronic Products
Group from April 12, 1995 to March 31, 1996 and Executive Vice President of the
Company from November 22, 1995 to March 31, 1996, on which date he resigned.
(10) Represents consulting fees paid to Mr. Friedman subsequent to his
resignation as an officer of the Company on March 31, 1996.
(11) Mr. Malkowicz also served as an executive officer from April 12,
1995 to February 14, 1996.
(12) Options granted under the Company's 1995 Incentive Stock Option
Plan, net of forfeitures pursuant to the terms of the related stock option
agreement.
(13) Consisting of $12,000 in director's fees and $4,000 in aggregate
committee fees in fiscal year 1995 and $24,000 in director's fees and $10,000 in
aggregate committee fees in fiscal year 1996.
(14) Consisting of automobile allowance of $1,061 and medical insurance
allowance of $865.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Maury S.
Friedman, effective November 19, 1993 and expiring in November 1996. The
employment agreement provided for an annual base salary of $240,000 and a
performance bonus at the discretion of the Board of Directors. Upon Mr.
Friedman's resignation as an officer of the Company on March 31, 1996, the
agreement was terminated. Effective April 1, 1996, Mr. Friedman serves as a
consultant to MGE pursuant to the terms of a consulting agreement dated March
21, 1996. The consulting agreement requires Mr. Friedman to provide consulting
services to MGE at the rate of $200 per hour and will continue on a year-to-year
basis for a term not to exceed December 31, 1998.
Pursuant to an employment agreement dated December 22, 1995 with MGE,
Mr. Minyard was entitled to receive a monthly base salary of $9,000 and a
monthly bonus equal to one percent of pre-tax operating income before corporate
charges, commencing January 1996. This agreement also provided for a
Company-provided automobile, health insurance, Board-determined discretionary
bonus of up to 40% of annual base salary and three-month severance pay upon
termination. Mr. Minyard's employment at the Company and MGE was terminated on
July 1, 1996 and the agreement is no longer in effect.
The Company established, effective March 1, 1996, an Executive
Separation Pay Plan (the "Separation Pay Plan"), to establish a uniform basis
for providing separation allowances to certain executives when their positions
are eliminated or when they are terminated for reasons other than for cause. The
Separation Pay Plan is administered by the Compensation Committee. The Board of
Directors or the Compensation Committee has absolute discretion to designate
those executives who are covered by the Separation Pay Plan (a "Covered
Employee"). The amount of separation allowance which a Covered Employee is
entitled to receive is determined by the Board of Directors and specified as a
number of months of the Covered Employee's base salary as of the date of
termination of employment. Presently, the following Named Executive Officers are
the only executives designated as Covered Employees under the Separation Pay
Plan (specified period for separation allowance indicated in parentheses): R.
Malcolm Greaves, President and Chief Executive Officer (12 months); Robert A.
Smith, Executive Vice President and President-Industrial Products Group (10
months); and Lonnie D. Schnell, Chief Financial Officer and Secretary (8
months).
With the exception of the employment agreements as described above, the
Company has no employment agreements with any of the Named Executive Officers.
10
<PAGE> 14
STOCK OPTION PLANS
1989 Incentive Stock Option Plan
The Haskel International, Inc. 1989 Incentive Stock Option Plan, as
amended (the "1989 ISO Plan") is administered by the Compensation Committee.
Subject to the terms of the 1989 ISO Plan, the Compensation Committee
establishes the terms and conditions applicable to option grants under said
Plan. The 1989 ISO Plan has a term of ten years and provides for the sale by the
Company of a maximum of 450,000 shares of Class A Common Stock, subject to
adjustments to reflect any future change in capitalization of the Company. As of
May 31, 1996, there were options granted and outstanding for 70,065 shares at an
exercise price of $9.46 per share, 38,086 shares at an exercise price of $7.18
per share, and 110,000 shares at an exercise price of $8.03 per share. There are
no further grants being made under this Plan, its having been replaced by the
1995 Incentive Stock Option Plan.
Nonqualified Stock Option Plan
The Haskel International, Inc. Stock Option Plan, as amended (the
"Nonqualified Plan"), is also administered by the Compensation Committee. The
Nonqualified Plan differs from the 1989 ISO Plan in that the 1989 ISO Plan is
qualified under the Internal Revenue Code as an Incentive Stock Option plan
entitling the optionee to certain income tax benefits, to which the optionee
under the Nonqualified Plan is not entitled. Subject to the terms of the
Nonqualified Plan, the Compensation Committee establishes the terms and
conditions applicable to option grants under said Plan. The Nonqualified Plan
has a term of ten years and provides for the sale by the Company of a maximum of
650,000 shares of Class A Common Stock, subject to adjustments to reflect any
future change in capitalization of the Company. As of May 31, 1996, there were
options granted and outstanding under the Nonqualified Plan for 87,500 shares at
an exercise price of $9.46 per share, 215,247 shares at an exercise price of
$7.18 per share, 127,667 shares at an exercise price of $7.00 per share, and
24,000 shares at an exercise price of $10.00 per share. There are no further
grants being made under this Plan, its having been replaced by the 1995
Incentive Stock Option Plan.
1995 Incentive Stock Option Plan
The Haskel International, Inc. 1995 Incentive Stock Option Plan (the
"1995 ISO Plan"), which replaced both the 1989 ISO Plan and the Nonqualified
Plan, was approved by the shareholders at the 1995 Annual Shareholders Meeting
on October 5, 1995. The 1995 ISO Plan permits certain employees of the Company
and its subsidiaries who are responsible for the management, growth and
protection of the business of the Company or its subsidiaries to be granted the
right to purchase shares of Class A Common Stock at the fair market value per
share at the date of grant. The 1995 ISO Plan is designed to assist the Company
in securing and retaining employees of outstanding ability and to motivate such
individuals to exert their best efforts on behalf of the Company. The 1995 ISO
Plan is administered by the Stock Option Committee of the Board of Directors,
consisting of disinterested directors as that term is defined by Rule 16b-3
under the Securities Exchange Act of 1934, as amended. The Committee selects
employees who may purchase shares under the 1995 ISO Plan and establishes,
subject to the terms of the 1995 ISO Plan, the terms and conditions applicable
to such purchase. In order to purchase shares, an employee is required to enter
into a purchase agreement with the Company. The 1995 ISO Plan has a term of ten
years and provides for the grant of options to purchase an aggregate of 240,000
shares of Class A Common Stock, plus the number of shares available as a result
of presently outstanding options which lapse because of nonexercise under the
1989 ISO Plan and the Nonqualified Plan. That additional number of shares cannot
be determined at this time, but cannot exceed the total number of 773,885 shares
subject to options which are currently outstanding and unexercised. The number
of shares is also subject to adjustments to reflect any future changes in the
capitalization of the Company. As of May 31, 1996, there were options granted
and outstanding for 104,000 shares at an exercise price of $5.375 per share,
43,000 shares at an exercise price of $6.50 per share, and 5,000 shares at an
exercise price of $7.25 per share.
11
<PAGE> 15
1995 Formula Stock Option Plan
The Haskel International, Inc. 1995 Formula Stock Option Plan (the
"1995 Formula Plan") was approved by the shareholders at the 1995 Annual
Shareholders Meeting on October 5, 1995. The 1995 Formula Plan permits
directors, who are not employees of the Company or its subsidiaries ("Outside
Directors"), and who have been granted options under said Plan, the right to
purchase shares of Class A Common Stock at the fair market value per share at
the date of the grant. Because the 1995 Formula Plan operates by its own terms,
and there are no discretionary decisions, there is no committee needed to
administer the 1995 Formula Plan. The 1995 Formula Plan is designed to assist
the Company in attracting and retaining high quality Outside Directors. At
present, that group consists of Messrs. Goldberger, Goodson, Malkowicz, Myers,
Noonan and Slover. Every new Outside Director, upon becoming a director of the
Company, is granted an option to purchase 10,000 shares of Class A Common Stock.
Such options vest in equal amounts over five years, with the first installment
vesting on the first anniversary of the Outside Director's appointment as
director. Additional options are granted to each Outside Director if the
Company's performance exceeds certain benchmarks. All options granted under the
1995 Formula Plan become 100% vested in the event of a change in control of the
Company. The 1995 Formula Plan provides for the grants of options to purchase an
aggregate of 40,000 shares of Class A Common Stock. The number of shares is also
subject to adjustments to reflect any future changes in the capitalization of
the Company. As of May 31, 1996, there were options granted and outstanding for
10,000 at an exercise price of $6.625 per share. See "PROPOSAL 3 - APPROVAL OF
AMENDMENTS TO 1995 FORMULA STOCK OPTION PLAN."
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock
options granted to the Named Executive Officers during fiscal 1996:
Option Grants in Last Fiscal Year
---------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual
Rates of Stock Price
Individual Grants Appreciation For Option Term
------------------------------------------------------ ----------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 0%($) 5%($) 10%($)
- ---- ----------- ------------ ----------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Malcolm Greaves 43,000 18.9% $ 6.50 2/27/06 $ 0 $455,275 $724,950
Robert A. Smith 50,000 21.9% $5.375 2/21/05 $ 0 $437,765 $697,068
James C. Minyard -- -- -- -- -- -- --
Maury S. Friedman -- -- -- -- -- -- --
Edward Malkowicz 100,000(1) 43.9% $5.375 4/12/05 $ 0 $210,127(1) $334,593(1)
Lonnie D. Schnell 30,000 13.2% $5.375 11/7/04 $ 0 $262,659 $418,240
</TABLE>
(1) Pursuant to the terms of the stock option agreement entered into
between the Company and Mr. Malkowicz, the option lapsed with respect to 76,000
shares during fiscal 1996. Potential Realizable Values were calculated based on
the net 24,000 shares relating to such option.
12
<PAGE> 16
STOCK OPTION EXERCISES AND OPTIONS OUTSTANDING
The following table provides certain information regarding outstanding
options by the Named Executive Officers at May 31, 1996:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
-----------------------------------------------
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money
Name Exercise (#) Realized ($) Options at May 31, 1996 (#) Options at May 31, 1996 ($)
- ---- ----------- ------------- --------------------------- --------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Malcolm Greaves -- -- 104,267 44,733 $ 4,300 $17,200
Robert A. Smith -- -- 10,000 40,000 $16,250 $65,000
James C. Minyard -- -- 10,000 20,000 -- --
Maury S. Friedman -- -- 40,000 -- -- --
Edward Malkowicz -- -- 10,400 25,600 $13,000 $26,000
Lonnie D. Schnell -- -- 6,000 24,000 $ 9,750 $39,000
</TABLE>
REPRICING OF OPTIONS
The following table shows all repricings of options held by any
executive officer during the last ten completed fiscal years:
<TABLE>
<CAPTION>
Ten-Year Option Repricings
--------------------------
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Remaining
Options Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- ---- ---- ----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Maury S. Friedman 1/19/95 60,000(1) $10.13 $7.18(2) $8.03 6/9/04
</TABLE>
- --------------------------
(1) Pursuant to the terms of the stock option agreement entered into
between the Company and Mr. Friedman, the option lapsed with respect to 20,000
shares on March 31, 1996, upon Mr. Friedman's resignation as an officer of the
Company, and lapsed with respect to the remaining 40,000 shares on June 3, 1996.
(2) This option, and all other options granted on June 9, 1994, was at an
exercise price of $7.18, subject to adjustment based on the independent
appraisal report of the shares owned by the Company's Profit Sharing Plan for
the fiscal year ended May 31, 1994. Based on that appraisal, the exercise price
of all options granted on June 9, 1994, including Mr. Friedman's option, was
adjusted to $8.03.
13
<PAGE> 17
RETIREMENT PLANS
Haskel International, Inc. Profit Sharing Plan
The Haskel International, Inc. Profit Sharing Plan, as amended (the
"PSP"), covers all of Haskel International, Inc.'s employees and includes MGE's
employees, but not HESL's or its subsidiaries' employees. The purpose of the PSP
is to enable participating employees of the Company to share in a portion of the
profits and in the growth and prosperity of the Company and to provide them with
the opportunity to accumulate capital for their future economic security.
Employees are entitled to 100% of their account balances upon death or
retirement. Generally, employees whose employment terminates for any reason
other than death or retirement are vested after five years of service. However,
if the percentage interest in the PSP and other similar plans of certain
high-level employees of the Company falls below a prescribed level, employees
who commenced participating in the PSP prior to June 1, 1989 become vested
according to a schedule that provides for full vesting after fifteen years of
service. The PSP is funded solely by the Company; individual contributions
through payroll deduction or otherwise are not permitted. The Company
contribution is determined annually by the Board of Directors of the Company.
The PSP is administered by a four-member administrative committee of employees
(the "Administrative Committee") appointed by the Board of Directors. The Board
of Directors retains an independent corporate trustee who holds all funds in
trust and votes the Company shares held by the PSP as directed by the
Administrative Committee.
HESL Pension Plan
All of HESL's employees who work at least 16 hours per week, who are at
least 21 years of age, and have been with HESL for one year or more are covered
by the Haskel Retirement Benefits Plan, a contributory pension plan (the "HESL
Pension Plan"). Mr. Greaves is the only executive officer who is currently
participating in the HESL Pension Plan. Currently, the pension costs are
equivalent to 15% of the individual's pensionable salary (basic annual salary or
wages at the HESL Pension Plan anniversary, which is June 1 of each year) and
are borne 80% by HESL and 20% by the individual. The pension benefits payable
are on a final salary basis, ie. pension benefits accrue at the rate of 1/60th
of final pensionable salary for each complete year of service with HESL less
deductions to take into account the lower-level earnings and upper-level
earnings limits originally set down in SERPS (State Earnings Related Pension
Scheme). Pension benefits are subject to an annual cost-of-living increase of
not less than 3% nor more than 5%. Three directors of HESL have an enhancement
to their pension plan (the "Haskel Discretionary Benefits Scheme"), whereby
pension benefits accrue at the rate of 1/40th of pensionable salary but, again,
subject to the deductions described in the preceding sentence. The normal
retirement age for both men and women is 65 years. The HESL Pension Plan
additionally provides for a death-in-service lump sum payment of twice salary
(in the case of the three directors' pension enhancement scheme, four times
salary) and a spouse's pension of two-thirds the prospective pension at date of
death of the employee. The funds are held and invested by Norwich Union on
behalf of the trustees of the HESL Pension Plan, and HESL is assisted in its
management of the HESL Pension Plan by Sedgwick Noble Lowndes, who are pension
advisers. The trustees responsible for the HESL Pension Plan are HESL's
secretary, a retired director of HESL, an employee of HESL and a representative
of HESL's legal counsel, Dickinson Dees. See Note 8 of Notes to Consolidated
Financial Statements.
The following table sets forth annual pension benefits under the HESL
Pension Plan on a straight-life annuity basis for representative years of
service as defined in the HESL Pension Plan at an accrual rate of 1/60th of
final pensionable salary. Amounts shown assume retirement at age 65 on January
1, 1996. Other than the adjustment described in footnote 2 below, such benefits
are not subject to reduction for benefits and other offset amounts. As of May
31, 1996, Mr. Greaves had approximately 7 years of service credited under the
HESL Pension Plan.
14
<PAGE> 18
HESL Pension Plan Table
-----------------------
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefit at Age 65 for Indicated Years of Credited Service(2)
--------------------------------------------------------------------------------------
Final Pensionable Salary(1) 5 10 15 20 25 30 35
- ------------------------- ------- ------- ------- ------- ------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 4,167 $ 8,333 $12,500 $16,667 $20,833 $ 25,000 $ 29,167
75,000 6,250 12,500 18,750 25,000 31,250 37,500 43,750
100,000 8,333 16,667 25,000 33,333 41,667 50,000 58,333
125,000 10,417 20,833 31,250 41,667 52,083 62,500 72,917
150,000 12,500 25,000 37,500 50,000 62,500 75,000 87,500
200,000 16,667 33,333 50,000 66,667 83,333 100,000 116,667
</TABLE>
- --------------------------
(1) Calculated based on highest average of three consecutive years'
pensionable salaries at June 1 during the 13-year or shorter period prior to
retirement.
(2) Benefits under the HESL Pension Plan are reduced in an amount of
1/100th of the employee's earnings in excess of a lower earnings limit (as of
April 6, 1996, such limit was (pound)3,172, subject to annual adjustment), not
to exceed an upper earnings limit (as of April 6, 1996, such limit was
(pound)23,660, subject to annual increase) times the number of years in service
after April 6, 1978.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding salaries, bonuses, benefits, and other compensation
for executive officers and key employees of the Company. This Compensation
Committee report discusses the components of the Company's executive officer
compensation policies and programs and describes the bases upon which
compensation is determined by the Compensation Committee with respect to the
executive officers of the Company, including the Named Executive Officers.
Compensation Philosophy. The compensation philosophy of the Company is
to link directly executive compensation to individual and team contributions,
continuous improvements in corporate performance and shareholder value. The
Compensation Committee has adopted the following objectives as guidelines for
compensation decisions:
- Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
- Be willing to compensate executive officers in recognition
of superior individual performance, new responsibilities or new positions within
the Company.
- Take into account historical levels of executive
compensation and the overall competitiveness of the market for high quality
executive talent.
- Implement a balance between short and long-term compensation
to complement the Company's annual and long-term business objectives and
strategy and encourage executive performance in furtherance of the fulfillment
of those objectives.
- Provide variable compensation opportunities based on the
performance of the Company, encourage stock ownership by executives and align
executive remuneration with the interests of shareholders.
The Compensation Committee is aware of the Internal Revenue Code
$1,000,000 cap on deductions for compensation. While that cap does not have an
impact on the Company at present, the Compensation Committee will take
appropriate steps to make the Company's compensation policy comply should
circumstances warrant in the future.
15
<PAGE> 19
Compensation Program Components. The Compensation Committee regularly
reviews the Company's compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the
performance of the Company. The particular elements of the compensation program
for executive officers are further explained below.
Base Salary. The Company's base pay levels for executive officers are
determined by the particular responsibilities of the position held and the
experience of the individual and by comparing the salary scale with companies of
similar size and complexity. Actual base salaries are kept within a competitive
salary range for each position that is established through job evaluation and
market comparisons.
Chief Executive Officer's Compensation. The Chief Executive Officer
("CEO") of the Company heads a group of senior management officers who
participate in a common set of compensation criteria linked to the performance
of the Company. The compensation of the CEO is determined by the Compensation
Committee and approved by the Board of Directors based upon its assessment of
the Company's financial performance and non-financial performance measured
against a background of factors which are critical to the success of the
business. The Compensation Committee exercises its judgment in weighting the
factors and evaluating performance. The CEO, who currently sits on the
Compensation Committee, does not participate in deliberations regarding his own
compensation.
Annual Bonus. The executive bonus program provides for the granting of
cash bonuses to the senior managers (including the Named Executive Officers) of
the Company. The objective of the bonus is to enhance management's contribution
to shareholder value by providing competitive levels of compensation for the
attainment of financial objectives. In particular, the executive bonus program
focuses corporate behavior on consistent and steady earnings growth by basing
performance on a comparison of actual results to the Company's annual budget.
Actual bonuses are subject to decrease or increase on the basis of the Company's
performance and range up to 55% of base salary for attaining goals. Based on the
Company's performance during fiscal year 1996, bonuses were paid to the Named
Executive Officers and the majority of the senior management.
Summary. After its review of all existing programs, the Compensation
Committee continues to believe that the total compensation program for
executives of the Company is focused on increasing values for shareholders and
enhancing corporate performance. The Compensation Committee believes that
executive compensation levels of the Company are competitive with the
compensation programs provided by other corporations with which the Company
competes. The foregoing report has been approved by all members of the
Compensation Committee.
COMPENSATION COMMITTEE
Stanley T. Myers, Chairman
Marvin L. Goldberger
Terrence A. Noonan
R. Malcolm Greaves
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1996, Marvin Goodson, Edward Malkowicz, Stanley T. Myers,
Dr. Marvin Goldberger and R. Malcolm Greaves served as members of the
Compensation Committee of the Board of Directors, which determines salaries of
the Company's employees. Mr. Goodson served on the Compensation Committee until
February 26, 1996, when Mr. Greaves was appointed by the Board of Directors as
Mr. Goodson's replacement. Mr. Greaves, President and Chief Executive Officer of
the Company, did not participate in deliberations regarding his own
compensation. The Company incurred attorneys' fees in the
16
<PAGE> 20
amount of approximately $358,000 in fiscal 1996 in connection with services
provided by the firm of Goodson and Wachtel A Professional Corporation. Mr.
Goodson is a principal with that law firm.
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total
shareholders return since the Class A Common Stock became publicly traded on
November 1, 1994, with the Nasdaq Stock Market (National Market) Index, the
Standard & Poor's 500 Index and with a peer group comprised of companies which
manufacture high-pressure equipment and with which the Company generally
competes. The peer group is comprised of the following companies: Duriron Co.
Inc., Flow International Corp., IDEX Corp., Oilgear Co. and Watts Industries
Inc. The graph and table assume that $100 was invested on November 1, 1994 in
the Company's Class A Common Stock, at the initial public offering price of
$10.00 per share, and in each of the indexes mentioned above, and that all
dividends were reinvested.
[TOTAL SHAREHOLDER RETURN GRAPH]
17
<PAGE> 21
PROPOSAL 2
APPROVAL OF AMENDMENTS TO 1995 FORMULA STOCK OPTION PLAN
On October 5, 1995, at the 1995 Annual Meeting of Shareholders, the
shareholders approved the 1995 Formula Stock Option Plan (the "1995 Formula
Plan"), for options to be granted to the Company's outside directors.
The Board of Directors has determined that certain amendments to the
1995 Formula Plan are advisable and in the best interest of the Company and its
directors. The Board of Directors unanimously approved these amendments on
September 12, 1996 and directed that they be submitted for shareholder
consideration and approval at the Annual Meeting.
The following discussion summarizes the principal features of the 1995
Formula Plan and the proposed amendments thereto. This discussion does not
purport to be complete and is qualified in its entirety by reference to the 1995
Formula Plan, a copy of which is available to any shareholder upon request of
the Company, addressed to the attention of the Corporate Secretary.
The 1995 Formula Plan provides for the grants of options to purchase an
aggregate of 40,000 shares of Class A Common Stock. The 1995 Formula Plan
provides for appropriate adjustment of shares available under the 1995 Formula
Plan in the event of any change in the number of outstanding shares of Common
Stock of the Company resulting from reorganizations, recapitalizations,
reclassifications, stock dividends, stock splits or other similar events. Only
directors who are not employees of the Company or its subsidiaries ("Outside
Directors") are eligible to be granted options under the 1995 Formula Plan. At
present, that group consists of six persons, Messrs. Goldberger, Goodson,
Malkowicz, Myers, Noonan and Slover.
Because the 1995 Formula Plan operates by its own terms, as described
below, and there are no discretionary decisions, there is no committee which
administers the 1995 Formula Plan. The 1995 Formula Plan became effective on
October 5, 1996, following approval by the shareholders of the Company (the
"Effective Date"). Options will be granted at any time on or after the Effective
Date, and prior to termination of the 1995 Formula Plan.
Every new Outside Director, upon becoming a director of the Company, is
granted an option for 10,000 shares of Class A Common Stock. Such option vests
in equal amounts over five years, with the first installment vesting on the
first anniversary of the Outside Director's becoming a director of the Company.
Additional options will be granted to each Outside Director if the
Company's performance exceeds certain benchmarks. At the end of each fiscal year
following the fiscal year in which an Outside Director becomes a director of the
Company (and including the current fiscal year for all presently serving Outside
Directors), options shall be granted to each Outside Director on the following
terms and conditions:
(i) if the Company's return on investment for the fiscal year is less
than 10%, no options shall be granted;
(ii) if the Company's return on investment for the fiscal year is at
least 10% but less than 13%, options for 1,000 shares of Class A Common
Stock shall be granted; or
(iii) if the Company's return on investment for the fiscal year is 13%
or greater, options for 3,000 shares of Class A Common Stock shall be
granted.
The proposed amendments to the 1995 Formula Plan clarify the formula to
be used to calculate the return on investment and the date on which the grant of
options based on Company performance, if any, will be made.
18
<PAGE> 22
For purposes of such calculation, "return on investment" shall mean
shareholder return on equity on an after-tax basis, expressed as follows:
<TABLE>
<CAPTION>
<S> <C>
Return on Investment = Net Income
---------------------------------------------
Shareholders' Equity at Beginning of the Year
</TABLE>
Under the above formula, for the year ended May 31, 1996, Return on
Investment equalled 8.2% and no options based on Company performance will be
granted to any of the Outside Directors.
Performance-based options vest in equal portions over five years, based
on the number of years the Outside Director has served as a director of the
Company, commencing with the date such person first became a director of the
Company.
All options granted under the 1995 Formula Plan become 100% vested in
the event of a change of control of the Company.
The exercise price of each option granted under the 1995 Formula Plan
is 100% of the fair market value per share of the Class A Common Stock on the
date the option is granted. A proposed amendment to the 1995 Formula Plan
provides that in respect of performance-based option grants, the date such
option is granted shall be deemed to be August 31, or, if that is not a trading
day on The Nasdaq Stock Market, the last trading day preceding August 31. All
options granted pursuant to the 1995 Formula Plan expire ten years from their
grant date.
If a person ceases to serve as a director of the Company or dies while
serving as a director, the options granted under the 1995 Formula Plan must be
exercised within five years of the date such directorship ceases. No option is
transferable by the optionee other than by will or the laws of descent and
distribution, and no option may be granted after ten years from the Effective
Date of the 1995 Formula Plan.
The consideration to be received by the Company upon exercise of
options is to be paid (i) in cash, (ii) in previously owned shares of Class A
Common Stock (which the optionee has held at least six months prior to delivery
of such shares and for which the optionee has good title free and clear of all
liens and encumbrances) having a fair market value determined as of the date of
exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the
optionee has submitted an irrevocable notice of exercise or (iv) a combination
of (i) and (ii), and by executing such documents as the Company may reasonably
request. No shares of Class A Common Stock shall be delivered until the full
purchase price therefor has been paid.
The 1995 Formula Plan may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, or the
rules thereunder, and subject to any requirement of shareholder approval
required by applicable law, including Rule 16b-3 under the Securities Exchange
Act of 1934 (the "Exchange Act"); provided, however, that no amendment shall be
made without shareholder approval if such amendment would (a) increase the
maximum number of shares of Class A Common Stock available under the 1995
Formula Plan, (b) reduce the minimum purchase price per share of Class A Common
Stock subject to an option, or (c) extend the term of the 1995 Formula Plan or
the maximum period during which an option may be exercised; provided, further,
that the 1995 Formula Plan shall not be amended in a manner which fails to
comply with Rule 16b-3(c)(2)(ii)(B) under the Exchange Act. No amendment may
impair the rights of a holder of an outstanding option without the consent of
such holder.
Under current federal income tax law, the granting of a nonqualified
stock option has no tax effect on the Company or the optionee to whom it is
granted. The exercise of a stock option granted under the 1995 Formula Plan will
result in ordinary income to the optionee equal to the excess of the fair market
value of the shares at the time of exercise over the option price. The Company
will, at the time of recognition of ordinary income by the optionee upon
exercise, take a deduction for federal income tax purposes in an amount equal to
such recognized income.
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<PAGE> 23
A majority of the shares entitled to vote represented at the meeting,
shares of Class A and Class B Common Stock voting together, is necessary for
approval of the proposed amendments to the 1995 Formula Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that shareholders vote for the
approval of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year. Deloitte & Touche LLP served
as the Company's independent auditors for the fiscal year ended May 31, 1996.
Representatives of Deloitte & Touche LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
A majority vote of the shares entitled to vote represented at the
meeting, shares of Class A and Class B Common Stock voting together, is
necessary for approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
The Company does not know of any other business to be presented to the
Annual Meeting and does not intend to bring any other matters before such
meeting. If any other matters properly do come before the Annual Meeting,
however, the persons named in the accompanying proxy are empowered, in the
absence of contrary instructions, to vote according to their best judgment.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
If a shareholder wishes to present a proposal at the next Annual
Meeting of Shareholders, such a proposal must be received by the Company at its
principal executive offices prior to May 22, 1997.
20
<PAGE> 24
AVAILABILITY OF REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for fiscal year 1996
as filed with the Securities and Exchange Commission is available upon written
request and without charge to any shareholder by writing to: Haskel
International, Inc., 100 East Graham Place, Burbank, CA 91502, Attn: Lonnie D.
Schnell, Secretary.
By Order of the Board of Directors,
/s/ Lonnie D. Schnell
Lonnie D. Schnell
Secretary
Burbank, California
September 19, 1996
PLEASE VOTE PROMPTLY, DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. AT
ANY TIME BEFORE A VOTE YOU MAY REVOKE YOUR PROXY BY (1) A LATER PROXY OR A
WRITTEN NOTICE OF REVOCATION DELIVERED TO THE INSPECTOR OF ELECTIONS OR (2)
ADVISING THE INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE IN
PERSON. ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF REVOKE A PROXY.
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<PAGE> 25
PROXY
CLASS A COMMON STOCK
HASKEL INTERNATIONAL, INC.
100 East Graham Place
Burbank, California 91502
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Edward Malkowicz, R. Malcolm Greaves and
Marvin Goodson, or any of them, with full power of substitution, as proxies, to
appear and vote, as designated on the reverse side of this proxy card, all
shares of Class A Common Stock of Haskel International, Inc. which the
undersigned would be entitled to vote if then personally present, at the 1996
Annual Meeting of Shareholders to be held on Monday, October 21, 1996, at 10:00
a.m. (local time), upon such business as may properly come before the meeting
and any adjournments thereof.
This proxy may be revoked prior to the exercise of the powers conferred by
the proxy.
(Continued on reverse side)
SEE REVERSE
SIDE
<PAGE> 26
/x/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
The Board of Directors recommends a vote FOR all of the Class A nominees named
below and FOR Proposals 2 and 3.
WITHHOLD AUTHORITY NOMINEES:R. Malcolm Greaves
FOR to vote for all nominees Edward Malkowicz
1.ELECTION OF Marvin L. Goldberger
DIRECTORS / / / /
(INSTRUCTION: To withhold authority to vote FOR any individual nominee, strike a
line through the nominee's name in the list above).
FOR AGAINST ABSTAIN
2. Approval of Amendments to 1995
Formula Stock Option Plan. / / / / / /
3. Ratification of Appointment of
Deloitte & Touche LLP as
Independent Auditors. / / / / / /
This proxy, when properly executed, will be voted in the manner
specified by the undersigned. Except as otherwise specified, this proxy will be
voted FOR the election as directors of all Class A nominees named above, FOR
approval of the amendments to the 1995 Formula Stock Option Plan and FOR the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors.
PLEASE SIGN AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature __________________________ Dated:_________, 1996 Signature, if held
jointly___________________Dated:________, 1996
Please sign name exactly as it appears hereon. If shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such.
