<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CORE INDUSTRIES INC
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CORE INDUSTRIES INC
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - --------------------------------------------------------------------------------
/ / 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:
- - - --------------------------------------------------------------------------------
- - - ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
CORE INDUSTRIES INC
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 10, 1995
The Annual Meeting of Stockholders of Core Industries Inc (the "Company")
will be held at the Northfield Hilton, 5500 Crooks Road (near 1-75), Troy,
Michigan, on Tuesday, January 10, 1995, at 10:30 A.M. for the following
purposes:
1. To elect two directors.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All stockholders are cordially invited to attend, although only those
stockholders of record at the close of business on November 14, 1994 will be
entitled to vote at the meeting.
The Annual Report of the Company with financial statements for the fiscal
year ended August 31, 1994 is enclosed.
By Order of the Board of
Directors
LAWRENCE J. MURPHY
Executive Vice President and
Secretary
Dated: November 23, 1994
Bloomfield Hills, Michigan
IN ORDER TO INSURE THE PRESENCE OF A QUORUM, STOCKHOLDERS WHO DO NOT INTEND
TO BE PRESENT IN PERSON ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY WHICH IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
<PAGE> 3
CORE INDUSTRIES INC
500 N. WOODWARD AVENUE, BLOOMFIELD HILLS, MICHIGAN 48304
(810) 642-3400
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD JANUARY 10, 1995
The enclosed proxy is solicited by the Board of Directors of Core
Industries Inc (the "Company") for use at the Annual Meeting of Stockholders to
be held on Tuesday, January 10, 1995. Any proxy received by management may be
revoked by notice in writing to Lawrence J. Murphy, Executive Vice President and
Secretary of the Company, at the Company's executive offices at 500 N. Woodward
Avenue, Bloomfield Hills, Michigan 48304, at any time before it is voted. If any
proxy is not so revoked, it will be voted at the meeting. As of November 14,
1994, the record date for the determination of stockholders entitled to vote at
the Annual Meeting, there were outstanding 9,808,992 shares of Common Stock, par
value $1.00 per share, each of which entitles the holder to one vote. It is
expected that this Proxy Statement and the enclosed proxy will be mailed
commencing Wednesday, November 23, 1994.
ELECTION OF DIRECTORS
The Board of Directors of the Company has designated Harold M. Marko and
Alan E. Schwartz as its nominees for election as directors, to hold office until
the Annual Meeting of Stockholders in 1998; Messrs. Marko and Schwartz were
elected by the stockholders to their present terms as directors which expire at
this meeting.
It is intended that the shares represented by properly executed proxies in
the accompanying form will be voted for such nominees. Although it is
anticipated that the nominees will be able to serve, if at the time of the
meeting any nominee is unable or unwilling to serve, such shares will be voted
at the discretion of the proxies for a substitute nominee. The two individuals
receiving the most votes will be elected for the term indicated. The Company
expects that its officers and directors who are also stockholders will vote for
the nominees set forth below.
1
<PAGE> 4
The names of the nominees for election as directors and the directors
continuing in office and certain information about them are set forth in the
following tabulation:
NOMINEES FOR ELECTION AS DIRECTORS
(TO BE ELECTED FOR THE TERM INDICATED)
<TABLE>
<CAPTION>
PERCENTAGE OF
COMPANY'S
COMMON OUTSTANDING
SHARES COMMON SHARES
NAME AND YEAR POSITION AND OFFICES PROPOSED BENEFICIALLY BENEFICIALLY OWNED
FIRST BECAME WITH COMPANY AND OTHER TERM OWNED AS OF AS OF
A DIRECTOR AGE PRINCIPAL OCCUPATION* EXPIRES NOV. 14, 1994 NOV. 14, 1994**
- - - --------------------- --- ----------------------------------- -------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Harold M. Marko
(1955)............. 69 Chairman Emeritus of the Company... 1998 417,860(1) 4.2
Alan E. Schwartz
(1960)............. 68 Partner, Honigman Miller Schwartz
and Cohn, Detroit, Michigan,
attorneys.......................... 1998 190,300(2) 1.9
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
PERCENTAGE OF
COMPANY'S
COMMON OUTSTANDING
SHARES COMMON SHARES
NAME AND YEAR POSITION AND OFFICES BENEFICIALLY BENEFICIALLY OWNED
FIRST BECAME WITH COMPANY AND OTHER TERM OWNED AS OF AS OF
A DIRECTOR AGE PRINCIPAL OCCUPATION* EXPIRES NOV. 14, 1994 NOV. 14, 1994**
- - - --------------------- --- ------------------------------------- -------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Jay A. Alix
(1992)............. 39 President, Jay Alix & Associates,
Southfield, Michigan, restructuring
and turn-around advisory firm........ 1996 24,105 --
Richard P. Kughn
(1988)............. 65 Chairman and Chief Executive Officer,
Lionel Trains, Inc., Mount Clemens,
Michigan, a manufacturer of electric
toy trains and accessories........... 1996 47,756 --
David R. Zimmer
(1992)............. 48 President and Chief Executive Officer
of the Company....................... 1996 81,541 --
Lawrence J. Murphy
(1992)............. 52 Executive Vice President and
Secretary of the Company............. 1997 37,735 --
Robert G. Stone, Jr.
(1976)............. 71 Chairman of the Board, Kirby
Corporation, New York, N.Y., inland
and off-shore marine transportation
and diesel repair.................... 1997 3,375 --
</TABLE>
- - - -------------------------
* The indicated occupations have been held by each director for the past five
years, except that: Mr. Marko served as Chairman and Chief Executive Officer
of the Company from January, 1986 until April, 1991; Mr. Zimmer served as
President and Chief Executive Officer of New Venture Gear, Inc. from January,
1990 until March, 1992 (when he became President of Core Industries Inc), and
as Vice President and General Manager-Electronic Products for Acustar, Inc.,
a subsidiary of Chrysler Corporation, from December, 1988 until January,
1990; and Mr. Murphy served as Vice President-Finance and Secretary of the
Company from September, 1986 until October, 1990 (when he became Executive
Vice President and Secretary of the Company).
** Ownership percentages not shown if less than 1%.
2
<PAGE> 5
(1) In addition, 73,700 shares are owned by Mr. Marko's wife, as to which shares
Mr. Marko disclaims any beneficial interest.
(2) In addition, 15,471 shares are owned by Mr. Schwartz's wife, as to which
shares Mr. Schwartz disclaims any beneficial interest.
The shares and percentages indicated above include the following number of
shares that directors would have the right to acquire within 60 days of November
14, 1994 pursuant to the Company's stock option plans if the options were
exercised by them within such period: Mr. Marko -- 26,360 shares; Mr. Schwartz
- - - -- 45,027 shares; Mr. Alix -- 14,105 shares; Mr. Kughn -- 46,756 shares; Mr.
Zimmer -- 67,667 shares; and Mr. Murphy -- 27,833 shares.
All directors named herein have sole voting power and sole investment power
with respect to shares of Common Stock beneficially owned.
All executive officers and directors of the Company as a group beneficially
owned 850,850 shares (8.5%) of Common Stock as of November 14, 1994, including
256,082 shares which they have the right to acquire within 60 days of November
14, 1994 pursuant to the Company's stock option plans if the options were
exercised by them within such period.
OTHER INFORMATION RELATING TO DIRECTORS
Mr. Schwartz is a director of the following corporations: Comerica
Incorporated; The Detroit Edison Company; Handleman Company; Howell Industries,
Inc.; Pulte Corporation; and Unisys Corporation.
Mr. Kughn is the Chairman of the Board of Directors and Chief Executive
Officer of Lionel Trains, Inc. and a director of AAA Michigan.
Mr. Murphy is a director of Jabil Circuit, Inc.
Mr. Stone is a director of the following corporations: BHP Petroleum
Corporation; The Chubb Corporation; Corning Incorporated; First Boston
Investment Funds, Inc.; The Japan Fund, Inc.; The Pittston Company; Russell
Reynolds Associates, Inc.; various funds managed by Scudder, Stevens & Clark,
Inc.; Tandem Computers; and Tejas Gas Corporation. Mr. Stone is also a Fellow of
Harvard College.
During the fiscal year ended August 31, 1994, the Board of Directors held
six meetings. All of the directors attended at least 75 percent of their
respective board and committee meetings.
The Company has a standing Audit Committee. The members of the Audit
Committee are Jay A. Alix and Richard P. Kughn. During fiscal 1994, the Audit
Committee held three meetings. The duties of the Audit Committee include
recommending to the Board of Directors annually the appointment of the
independent auditors; reviewing with the independent auditors the scope and
results of the audit; reviewing the independent auditors' fees, including fees
for professional services unrelated to the audit; and reviewing with the
independent auditors and management the adequacy of the Company's accounting and
financial controls.
The Company has a standing Compensation Committee. The members of the
Compensation Committee are Alan E. Schwartz and Robert G. Stone, Jr. During
fiscal 1994, the members of the Compensation Committee held three meetings as
well as informal discussions in lieu of formal
3
<PAGE> 6
committee meetings. The duties of the Compensation Committee are: recommending
to the Board of Directors the compensation arrangements for senior management
and directors; and recommending to the Board compensation plans in which
officers or directors are eligible to participate.
The Company has a standing Executive Committee. The members of the
Executive Committee are Harold M. Marko, Alan E. Schwartz and David R. Zimmer.
During fiscal 1994, the Executive Committee held twelve meetings. The Executive
Committee has and may exercise the authority of the Board of Directors in the
management of the business of the Company between the meetings of the Board of
Directors.
The Company has a standing Nominating Committee. All of the members of the
Board of Directors serve as the Nominating Committee. The Nominating Committee
considers the performance of incumbent directors and recommends to the
stockholders nominees for election as directors. During fiscal 1994, the members
of the Nominating Committee held informal discussions in lieu of formal
committee meetings. The Nominating Committee will consider nominees for
directors recommended by stockholders, which recommendations should be submitted
to the Chairman of the Nominating Committee at the Company's executive office at
500 North Woodward Avenue, Bloomfield Hills, Michigan 48304, no later than July
26, 1995.
During the fiscal year ended August 31, 1994, the Company engaged Jay Alix
& Associates, of which Jay A. Alix, a director of the Company, is President, to
provide professional services to the Company. Management of the Company believes
that all such services were provided by Jay Alix & Associates on an arms-length
basis.
PRINCIPAL BENEFICIAL OWNERS
The only person known by the Company to be the beneficial owner of more
than 5% of the Company's outstanding Common Stock is as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------------
PERCENT
NAME AND ADDRESS NUMBER OF CLASS
- - - ---------------------------------------------------------------------- -------- ---------
<S> <C> <C>
State of Wisconsin Investment Board................................... 511,600 5.2%
P.O. Box 7842
Madison, Wisconsin 53707
</TABLE>
- - - -------------------------
(1) Based upon information as of August 31, 1994 obtained from the stockholder.
The stockholder has sole voting power and sole investment power over such
shares.
4
<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth information for each of the fiscal years
ending August 31, 1994, 1993 and 1992 concerning the compensation of the
Company's President and Chief Executive Officer and of the next four most highly
compensated executive officers whose total annual salary and bonus exceeded
$100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
NAME AND PRINCIPAL FISCAL --------------------- RESTRICTED STOCK
POSITION YEAR SALARY($) BONUS($)(2) AWARDS($)(3) OPTIONS(#) OTHER
- - - -------------------------- ------ --------- -------- ---------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David R. Zimmer........... 1994 $ 291,667 $152,015 $ 98,471 83,000 --
President and Chief 1993 275,000 105,000 -- -- --
Executive Officer(4) 1992 132,564 -- 100,000 --
Lawrence J. Murphy........ 1994 190,000 84,311 -- 46,000 --
Executive Vice President 1993 180,000 51,000 64,449 -- --
and Secretary 1992 165,673 -- -- -- --
Raymond H. Steben, Jr..... 1994 145,000 53,740 -- 30,000 --
Vice 1993 30,301 6,042 10,823 -- --
President -- Finance and 1992 -- -- -- -- --
Chief Financial
Officer(5)
James P. Dixon............ 1994 137,000 43,517 -- 14,000 $62,888(6)
Vice President -- 1993 134,667 37,400 49,048 -- --
Marketing 1992 130,000 -- -- -- --
Thomas G. Hooper.......... 1994 108,333 34,936 -- 12,000 --
Treasurer and Controller 1993 105,000 21,000 37,601 -- --
1992 98,817 -- -- -- --
</TABLE>
- - - -------------------------
(1) Other annual compensation, which was less than the lesser of $50,000 or 10%
of the individual's bonus and salary, is not shown.
(2) Inclusive of $81,215, $36,536, $23,290, $18,854 and $15,136 awarded to the
five named individuals, respectively, in 1994 in unrestricted common stock
of the Company as part of the earned annual bonus.
(3) Restricted stock awarded in fiscal year 1993, with restrictions that lapse
on September 1, 1996.
(4) Mr. Zimmer was employed by the Company and appointed President and Chief
Executive Officer on March 31, 1992.
(5) Mr. Steben was employed by the Company and appointed Vice
President -- Finance and Chief Financial Officer on June 16, 1993.
(6) Mr. Dixon relocated his household during the fiscal year. Of the amount
shown, $58,382 is relocation reimbursement agreed to in fiscal year 1990.
5
<PAGE> 8
Option Grants in Last Fiscal Year
The Core Industries 1993 Performance Incentive Plan approved by
shareholders provides for the granting of stock options with respect to Common
Stock.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(2)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION --------------------------------
NAME OPTIONS FISCAL YEAR ($/SHARE)(1) DATE 0%($) 5%($) 10%($)
- - - -------------------------- ---------- ------------- ------------ ---------- ----- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Zimmer........... 83,000 36.2% $13.3125 11/08/03 0 $ 694,889 $ 1,760,985
Lawrence J. Murphy........ 46,000 20.1 13.3125 11/08/03 0 385,119 975,968
Raymond H. Steben, Jr..... 30,000 13.1 13.3125 11/08/03 0 251,165 635,501
James P. Dixon............ 14,000 6.1 13.3125 11/08/03 0 117,210 297,034
Thomas G. Hooper.......... 12,000 5.2 13.3125 11/08/03 0 100,466 254,600
Total Stockholders(3)..... -- -- -- -- 0 82,122,448 208,114,406
</TABLE>
- - - -------------------------
(1) Vesting of the options, i.e. the right to exercise, initially depends upon
accelerated growth in the market value of the Company's stock. One-third of
the granted options vested during the fiscal year as the stock averaged
greater than $15.31 for 30 calendar days before November 8, 1996. Another
one-third will vest if the stock averages greater than $17.61 for 30
calendar days before November 8, 1996 and the final one-third will vest if
the stock averages $20.25 for 30 calendar days before the same date. Any
options that fail to become exercisable under these provisions will vest
9 1/2 years from the grant date.
(2) "Potential realizable value" is disclosed in response to SEC rules which
require such disclosure for illustration only. The values disclosed are not
intended to be, and should not be interpreted by stockholders as,
representations or projections of future value of the Company's stock.
(3) To lend perspective to the illustrative "potential realizable value," if the
Company's stock price increased five percent or 10 percent per year from
$13.3125, the exercise price for the options awarded in fiscal year 1994,
for 10 years from November 9, 1993 (disregarding dividends and assuming for
purpose of the calculation a constant number of shares outstanding), the
total increase in the value of all shares outstanding at November 9, 1993,
is shown above as "potential realizable value" for all of the Company's
stockholders ("Total Stockholders").
6
<PAGE> 9
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Value Table
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended August 31, 1994 by each of the
executive officers named in the Summary Compensation Table above and the value
of unexercised options held by such persons as of August 31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY END(#) AT FISCAL YEAR END($)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - --------------------------- ------------ ----------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
David R. Zimmer............ -- -- 67,667 115,333 $172,500 $258,750
Lawrence J. Murphy......... -- -- 27,833 30,667 -- --
Raymond H. Steben, Jr...... -- -- 12,667 25,333 3,333 6,667
James P. Dixon............. -- -- 6,667 9,333 10,500 --
Thomas G. Hooper........... -- -- 9,000 8,000 -- --
</TABLE>
Pension Table
The Company has a tax-qualified Defined Benefit Pension Plan and a
nonqualified Benefit Equalization Plan, both of which cover salaried employees
of corporate headquarters and of certain divisions. The Defined Benefit Pension
Plan provides pension and disability benefits for covered employees. Employees
with five or more years of service are entitled to annual pension benefits
beginning at normal retirement age (65). The annual retirement benefit is equal
to 1.25% of the employee's final average compensation (substantially the same as
Annual Compensation as reported in the above Summary Compensation Table) plus
.65% of the employee's final average compensation in excess of the Social
Security taxable wage base multiplied by the employee's years of service. In no
event may the retirement benefit exceed 65% of the final average compensation.
The unfunded Benefit Equalization Plan provides for the payment of additional
amounts to covered employees so that the total amount paid will equal the
pension benefit which would have been calculated under the Defined Benefit
Pension Plan formula without regard to the limitations added to the Defined
Benefit Pension Plan to conform to Section 415 of the Internal Revenue Code of
1986. The following table shows estimated annual retirement benefits payable
under both plans to an employee at normal retirement
7
<PAGE> 10
age of 65 on a single life annuity basis assuming a Social Security taxable wage
base of an employee currently age 60:
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------
COMPENSATION 15 20 25 30 35
- - - ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.......................... $ 32,876 $ 43,834 $ 54,793 $ 65,751 $ 76,710
150,000.......................... 40,001 53,334 66,668 80,001 93,335
175,000.......................... 47,126 62,834 78,543 94,251 109,960
200,000.......................... 54,251 72,334 90,418 108,501 126,585*
225,000.......................... 61,376 81,834 102,293 122,751* 143,210*
250,000.......................... 68,501 91,334 114,168 137,001* 159,835*
300,000.......................... 82,751 110,334 137,918* 165,501* 193,085*
350,000.......................... 97,001 129,334* 161,668* 194,001* 226,335*
400,000.......................... 111,251 148,334* 185,418* 222,501* 259,585*
450,000.......................... 125,501* 167,334* 209,168* 251,001* 292,500*
500,000.......................... 139,751* 186,334* 232,918* 279,501* 325,000*
</TABLE>
- - - -------------------------
* Section 415 of the Internal Revenue Code limits the benefits which can be paid
from any funded pension plan that qualifies for federal tax exemption. The
amount for calendar year 1994 is $118,800.
The credited years of service under the Company's pension plans to each of
the persons named above are: David R. Zimmer-2 years; Lawrence J. Murphy-13
years; Raymond H. Steben, Jr.-1 year; James P. Dixon-4 years; and Thomas G.
Hooper-13 years.
Compensation of Directors
The current standard arrangement for compensation of directors is as
follows: officers of the Company who are directors do not receive any additional
compensation for services as a director. Each director who is not an officer of
the Company receives a director fee in the annual amount of $11,000 plus $1,500
for each board meeting attended up to a maximum of $13,500 in meeting fees.
There are six regularly scheduled board meetings per year. An additional sum of
$1,000 per meeting is paid for attendance at a committee meeting if such meeting
falls on a day on which a meeting of the entire Board of Directors is not held.
Non-employee directors may elect to defer compensation for services as a
director until the person ceases to be a director. All deferred amounts are held
in the general funds of the Company and bear interest at the prime rate from the
date such fees would otherwise be paid. Four directors have elected to defer
their compensation pursuant to this plan.
The non-employee directors of the Company are eligible to participate in
the Company's 1991 Director Discounted Stock Option Plan, which was approved by
the stockholders on January 12, 1993. Under that Plan, directors may elect to
receive stock options exercisable at either 50% or 75% of market value on each
January 1 in lieu of director fees payable in cash. The number of options
granted annually is that number of options which provides aggregate discount
from market value equal to the cash fees forfeited. Under the Plan, 200,000
shares were reserved for issuance. Three of the Company's directors elected to
participate in the 1991 Director Discounted Stock Option Plan in fiscal 1994,
and stock options for a total of 15,731 shares (exercisable at $11.1563 per
share) were granted to them in fiscal 1994. All such options have a term of 10
years, and none had been exercised as of August 31, 1994.
8
<PAGE> 11
Compensation Committee Interlocks and Insider Participation
All the members of the Compensation Committee are non-employee directors of
the Company and are not former officers of the Company or its subsidiaries. No
executive officer of the Company serves as a member of the board of directors or
on the compensation committee of a corporation for which any of the directors on
the Compensation Committee or the Board of Directors is an executive officer.
Alan E. Schwartz, a director of the Company and a member of the
Compensation Committee, is a partner in the law firm of Honigman Miller Schwartz
and Cohn. The Company used the services of this firm during fiscal 1994 and
continues to use the firm's services as to certain matters in fiscal 1995. The
Company may retain the firm further should its legal expertise be appropriate in
meeting particular legal needs. Work done for the Company in fiscal 1994
accounted for less than one-third of one percent (.33%) of Honigman Miller
Schwartz and Cohn's annual revenues.
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION AND ORGANIZATION
The Compensation Committee of the Board of Directors, composed entirely of
non-employee directors, reviews and develops compensation programs for key
management, evaluates executive performance, administers the Company's
compensation programs, and makes recommendations as to compensation matters to
the full Board of Directors. The Committee has retained an independent
consultant to assist it in assessing the appropriateness of the Company's
compensation programs.
GENERAL POLICIES
The primary objectives of the Company's executive compensation programs
are: 1) to attract and retain highly capable executives to manage the Company's
businesses; 2) to offer appropriate incentives to achieve the goals and
objectives of the Company and, in particular, to enhance stockholder value; and
3) to encourage stock ownership by the Company's executives to further enhance
the mutuality of interests with stockholders.
The Compensation Committee implements this policy with a compensation
program consisting of three components: base salaries, annual incentive bonuses,
and stock option grants. These elements, as well as the basis for the
compensation awarded to Mr. Zimmer, are described below.
Base Salary. The initial element of executive compensation is base salary.
Annual base salary is determined for each of the Company's key executives based
upon experience, sustained performance in leadership and accomplishment, and an
evaluation of the responsibilities of the position held by the executive.
Included in this evaluation is a comparison to comparable positions at similarly
sized diversified manufacturing companies. The Committee expects that base
salaries will typically range near the midpoint of survey data with a slight
bias to being short of the midpoint. It is anticipated that the annual and long
term incentives will provide an appropriate opportunity for above average
compensation dependent upon performance.
Annual Incentive Awards. The second component of each key executive's
compensation is participation in the Company's Annual Incentive Plan. The
Committee's policy is to provide management with a significant incentive
opportunity linked to achieving the Company's annual financial and
9
<PAGE> 12
operational goals, all of which are intended to increase stockholder value. It
is the intention of the Committee that a higher percentage of total annual
compensation be incentive related than in comparable companies. In addition, the
stockholders approved a proposal last year (the 1993 Stock Bonus Plan) to allow
management to predesignate a portion of the prospective annual incentive to be
paid in Common Stock of the Company, valued at fair market as of a date
determined by the Committee. The Committee believes that this feature will
encourage stock ownership by the executives and more closely link their
interests to stockholder value.
In 1994, management's opportunity to earn incentive awards was dependent
upon the Company's achievement of net earnings relative to standards set by the
Committee. The officers of the Company earned approximately 65% of the possible
1994 award, of which the officers had previously chosen to designate 50% to 100%
to be paid in Company stock. Per the plan, the designation occurred before
November 15, 1993. The value of the stock was $13.8125 per share on the
designation date. The value of the awarded stock was $10.5625 per share on the
payment date, resulting in management experiencing a 23.5% loss on the stock
element of the bonus.
For fiscal 1995 and beyond, the Committee has established goals predicated
upon economic value added (EVA) and earnings per share. The purpose of using EVA
is to provide incentive compensation to certain key employees, including all of
the senior executives, in a form which relates the financial reward to an
increase in the value of the corporation to its stockholders. EVA is an internal
measure of operating profits, less taxes and after deducting a charge for the
capital employed to generate the profits. Extensive empirical stock market
research has demonstrated that EVA has a strong correlation with stockholder
value. The capital charge is intended to represent the return expected by the
providers of the Company's capital. It is the weighted average cost of equity
capital and after-tax debt capital. The cost of equity is based on a 30 year
Treasury Bond yield plus the product of the average equity risk premium and the
business risk index for the Company. A further feature of the plan is that
management will be rewarded for continuous increases in EVA and penalized for
decreases. As a result, the Committee believes that the Company has further
aligned the financial interests of the management with those of the Company's
stockholders.
Long Term Incentives. As previously indicated, the Committee believes that
stock ownership by executives and compensation plans that foster alignment of
management's interests with those of stockholders is in the mutual interest of
both stockholders and management. Accordingly, the 1993 Performance Incentive
Plan was ratified by the stockholders in fiscal 1994. The plan is designed to
provide executives with stock options as an additional incentive to maximize
stockholder value. During fiscal 1994 the Committee granted options to purchase
Company stock to the executives as reflected in the "Option Grants in Last
Fiscal Year" table. A key feature of the options, which were granted at market
value, is the provision under which they may be exercised. The value of the
Company's stock must grow 15% and maintain that value for 30 calendar days
during the first three years following the grant for one-third of the grant to
become eligible for exercise by the executive. The Company's stock must increase
in value another 15% (or 32% in total) during the first three years following
the grant for the second one-third of the grant to be exercisable. Finally, the
Company's stock must increase in value another 15% (or 52% in total from the
grant price during the three year period) for the final one-third to become
exercisable. If the value of the stock fails to increase as specified in the
three years, the right to exercise the options is deferred to not sooner than
nine and one-half years from the date of grant. During fiscal 1994, the market
value of the Company's stock averaged greater than $15.31 for over thirty days,
the required period of time for the first one-third of the grants to become
exercisable.
10
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The value of the Company's stock must average greater than $17.61 and $20.25 for
more than 30 days before November 8, 1996 for the second and third tranches to
become eligible for exercise by the executives. The Committee believes this
arrangement clearly links management's interest with the stockholders'. In
addition, the Committee believes this program requires significantly more
performance from management, who therefore have more at risk than their
counterparts in most other companies.
Chief Executive Officer Compensation. Mr. Zimmer's base compensation for
the 1994 fiscal year was $291,667, a 6.1% increase from the prior year. The
Committee believes this base compensation to be consistent with its philosophy
of maintaining base salaries slightly below the median range for comparably
sized diversified manufacturing companies, and thereby placing a somewhat higher
percentage of Mr. Zimmer's total compensation dependent directly upon
performance. In addition, Mr. Zimmer was awarded a bonus of $152,015, of which
$70,800 was paid in cash and $81,215 was awarded in the Company's common stock.
The basis of the award was directly related to specific earnings per share
objectives and achievement against those objectives. As part of the choice
provided to the Company's officers under the 1993 Stock Bonus Plan, Mr. Zimmer
had predesignated 60% of any award be paid in unrestricted stock of the Company.
Because the Company's stock declined in value between the designation and award
dates, Mr. Zimmer's award was reduced by $24,985 relative to what it would have
been had he not accepted the market risk accepted by stockholders. Under the
1993 Performance Incentive Plan, Mr. Zimmer was granted an option for 83,000
shares of Company stock at market value of $13.3125 on the day of grant. As
previously discussed, the exercisability of these options prior to 9 1/2 years
from grant date depends upon significant improvement in the price of the
Company's stock. The number of options granted Mr. Zimmer was based in part upon
a review of total compensation in other companies. However, with the stock price
improvement proviso for exercisability, we believe these options are
significantly more at risk than options generally granted by other companies.
In total, we believe Mr. Zimmer's compensation package is competitive, but
significantly more at risk based upon performance in terms of EVA, earnings per
share, and stock value. In short, his actual compensation is highly tied to
value being added to the Company's stockholders. Mr. Zimmer did not participate
in the approval of his own compensation, but he did participate in the
discussion of Company performance and he made recommendations concerning the
compensation of executives reporting to him.
By The Compensation Committee
Alan E. Schwartz
Robert G. Stone, Jr.
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PERFORMANCE GRAPHS
The following graphs compare the cumulative stockholder return for the
Company's common stock with the cumulative total return of the Standard & Poor's
500 Composite Index and the Standard & Poor's Diversified Manufacturers Index
for the past five and three years.
INDEXED FIVE YEAR TOTAL RETURN
Index Points - 8/31/89 through 8/31/94
<TABLE>
<CAPTION>
Compound
1989 1990 1991 1992 1993 1994 Return
<S> <C> <C> <C> <C> <C> <C> <C>
Core Industries 100 70 61 73 134 104 0.7%
S&P Diversified Mfr. 100 91 115 114 143 160 9.8%
S&P 500 100 95 121 130 150 158 9.6%
</TABLE>
12
<PAGE> 15
INDEXED THREE YEAR TOTAL RETURN
Index Points - 8/31/90 through 8/31/94
<TABLE>
<CAPTION>
Compound
1991 1992 1993 1994 Return
<S> <C> <C> <C> <C> <C>
Core Industries 100 120 221 170 19.3%
S&P Diversified Mfr. 100 98 124 138 11.4%
S&P 500 100 108 124 131 9.5%
</TABLE>
13
<PAGE> 16
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Board of Directors of the Company engaged Coopers & Lybrand L.L.P.,
certified public accountants, as independent auditors for the Company for the
fiscal year ending August 31, 1994. The selection of auditors by the Board was
made upon the recommendation of the Audit Committee of the Board. The Audit
Committee will make a recommendation to the Board of Directors with respect to
the fiscal year ended August 31, 1995 in due course.
Coopers & Lybrand L.L.P. have been independent auditors for the Company
since 1994. Representatives of Coopers & Lybrand L.L.P. will be present at the
Annual Meeting of Stockholders with an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
On January 11, 1994, the Company's Board of Directors, acting upon the
recommendation of the Company's Audit Committee of the Board of Directors,
selected Coopers & Lybrand L.L.P. to replace Deloitte & Touche L.L.P. as its
certified public accountants. Deloitte & Touche L.L.P. was replaced as the
Company's certified public accountants as of that date.
The reports of Deloitte & Touche L.L.P. on the Company's financial
statements for the two fiscal years prior to its dismissal did not contain an
adverse opinion or a disclaimer of opinion, nor were the reports qualified as to
uncertainty, audit scope or accounting principles. There were no disagreements
with Deloitte & Touche L.L.P. on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure during
the Company's two fiscal years, or any subsequent interim period, preceding the
dismissal of Deloitte & Touche L.L.P. None of the kinds of events listed in Item
304(a)(1)(v) of Regulation S-K occurred within the Company's two fiscal years,
or any subsequent interim period, preceding the dismissal of Deloitte & Touche
L.L.P.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies for the Annual Meeting, including the
preparing, assembling and mailing of this Proxy Statement and the additional
material furnished the stockholders herewith, will be borne by the Company. The
Company will also reimburse brokers and other nominees for their services in
forwarding proxy materials to principals. In addition to the use of the mails,
proxies may be solicited by telephone, personal interviews and otherwise.
14
<PAGE> 17
OTHER BUSINESS
Management is not aware of any matter which is to be presented for action
at the Annual Meeting other than the matters set forth herein. Should any other
matter requiring a vote of the stockholders arise, the proxies in the enclosed
form confer upon the persons entitled to vote the shares represented by such
proxies, discretionary authority to vote the same in respect to any such other
matter in accordance with their best judgment.
Stockholder proposals intended to be presented at the 1996 Annual Meeting
must be received by the Company at its principal executive offices for inclusion
in the 1996 Proxy Statement no later than July 26, 1995.
For the Board of Directors
LAWRENCE J. MURPHY
Executive Vice President and Secretary
November 23, 1994
15
<PAGE> 18
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PROXY PROXY
CORE INDUSTRIES INC
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 10, 1995
The undersigned Stockholder of Core Industries Inc hereby appoints Jay
A. Alix and Lawrence J. Murphy and each of them, proxies, with power of
substitution, to vote at the Annual Meeting of Stockholders of said Company to
be held at the Northfield Hilton, 5500 Crooks Road at I-75, Troy, Michigan on
Tuesday, January 10, 1995 at 10:30 a.m., EST, or at any postponement or
adjournment thereof.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- - - --------------------------------------------------------------------------------
<PAGE> 19
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------------------------------------------------
CORE INDUSTRIES INC
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / X /
<S> <C>
FOR ALL
FOR WITHHOLD EXCEPT NOMINEE(S) WRITTEN BELOW
1. ELECTION OF DIRECTORS -- / / / / / /
Nominees: Harold M. Marko and Alan E. Schwartz ---------------------------------------------------
2. In the discretion of the proxies, in the
transaction of such other business which may
properly come before this meeting; all as
described in the Notice of 1994 Annual
Meeting of Stockholders and related Proxy
Statement.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR ITEM 1. THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED, BUT WHERE NO DIRECTION IS GIVEN, THOSE
SHARES WILL BE VOTED FOR SUCH ITEM.
DATED:___________________________, 1994
SIGNATURE(S) _______________________________________
____________________________________________________
PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME
BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- - - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
