<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 [ ] 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 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, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 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:
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<PAGE> 2
CORE INDUSTRIES INC
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 14, 1997
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 14, 1997, at 10:30 A.M. for the following purposes:
1. To elect three directors.
2. To act upon the stockholder resolution requesting that stock options and
bonuses not be awarded to officers of the Company unless certain
dividend and net income targets are achieved for a three year period, if
such resolution is brought before the meeting.
3. 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 18, 1996 will be
entitled to vote at the meeting.
The Annual Report of the Company with financial statements for the fiscal
year ended August 31, 1996 is enclosed.
By Order of the Board of
Directors
LAWRENCE J. MURPHY
Executive Vice President and
Secretary
Dated: November 27, 1996
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 14, 1997
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 14, 1997. 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 18,
1996, the record date for the determination of stockholders entitled to vote at
the Annual Meeting, there were outstanding 10,722,931 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 27, 1996.
I. ELECTION OF DIRECTORS
The Board of Directors of the Company has designated Lawrence J. Murphy,
Robert G. Stone, Jr. and Lloyd Reuss as its nominees for directors, to hold
office until the Annual Meeting of Stockholders in 2000. Messrs. Murphy and
Stone 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 three 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
OUTSTANDING
COMMON COMMON SHARES
SHARES BENEFICIALLY
BENEFICIALLY OWNED
NAME AND YEAR POSITION AND OFFICES PROPOSED OWNED AS OF AS OF
FIRST BECAME WITH COMPANY AND OTHER TERM NOV. 18, NOV. 18,
A DIRECTOR (IF ANY) AGE PRINCIPAL OCCUPATION* EXPIRES 1996 1996**
- -------------------- --- -------------------------------------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Lawrence J. Murphy
(1992)............ 54 Executive Vice President and Secretary
of the Company........................ 2000 36,546 --
Lloyd Reuss......... 60 Former President, General Motors
Corporation........................... 2000 1,000 --
Robert G. Stone, Jr.
(1976)............ 73 Chairman Emeritus, Kirby Corporation,
Houston, Texas, inland and off-shore
marine transportation and diesel
repair................................ 2000 3,375 --
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
PERCENTAGE OF
COMPANY'S
OUTSTANDING
COMMON COMMON SHARES
SHARES BENEFICIALLY
BENEFICIALLY OWNED
NAME AND YEAR POSITION AND OFFICES OWNED AS OF AS OF
FIRST BECAME WITH COMPANY AND OTHER TERM NOV. 18, NOV. 18,
A DIRECTOR AGE PRINCIPAL OCCUPATION* EXPIRES 1996 1996**
- -------------------- --- --------------------------------------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Harold M. Marko
(1955)............ 71 Chairman Emeritus of the Company....... 1998 427,236(1) 3.9
Alan E. Schwartz
(1960)............ 70 Partner, Honigman Miller Schwartz and
Cohn, Detroit, Michigan, attorneys..... 1998 190,300(2) 1.7
Richard P. Kughn
(1988)............ 67 Chairman and Chief Executive Officer,
Kughn Enterprises, a sole
proprietorship engaged in the
management of various business
interests.............................. 1999 62,877 --
David R. Zimmer
(1992)............ 50 President and Chief Executive Officer
of the Company......................... 1999 125,407 1.1
</TABLE>
- -------------------------
* The indicated occupations have been held by each director for the past five
years, except that: Mr. Stone served as Chairman of the Board of Kirby
Corporation until April, 1995; Mr. Kughn served as Chairman and Chief
Executive Officer of Lionel Trains, Inc. until September, 1995; Mr. Zimmer
served as President and Chief Executive Officer of New Venture Gear, Inc.
from January, 1990 until March, 1992
2
<PAGE> 5
(when he became President of Core Industries Inc); and Mr. Reuss served as
President of General Motors Corporation from August, 1990 until April, 1992
and as Executive Vice President of New Vehicles and Systems of General
Motors Corporation from April, 1992 until January, 1993.
** Ownership percentages not shown if less than 1%.
(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
18, 1996 pursuant to the Company's stock option plans if the options were
exercised by them within such period: Mr. Murphy -- 22,833 shares; Mr. Marko --
35,736 shares; Mr. Schwartz -- 45,027 shares; Mr. Kughn -- 62,877 shares; and
Mr. Zimmer -- 107,667 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 912,153 shares (8.3%) of Common Stock as of November 18, 1996, including
317,983 shares which they have the right to acquire within 60 days of November
18, 1996 pursuant to the Company's stock option plans if the options were
exercised by them within such period.
OTHER INFORMATION RELATING TO DIRECTORS
Mr. Murphy is a director of Jabil Circuit, Inc.
Mr. Reuss is a director of the following corporations: Detroit Mortgage &
Realty; Handleman Company; International Speedway Corporation; and U.S. Sugar
Corporation.
Mr. Stone is a director of the following corporations: Novacare; Russell
Reynolds Associates, Inc.; Tandem Computers, Inc.; Tejas Gas Corporation; and
several funds managed by Scudder, Stevens & Clark. He is Director Emeritus of
The Chubb Corporation, Corning, Inc., The Japan Fund, and The Pittston Company.
Mr. Stone is also a Fellow of Harvard College.
Mr. Schwartz is a director of the following corporations: The Detroit
Edison Company; DTE Energy Company; Handleman Company; Howell Industries, Inc.;
Pulte Corporation; and Unisys Corporation.
Mr. Kughn is a director of AAA Michigan and Chairman Emeritus of Lionel
L.L.C.
Mr. Zimmer is a director of Twin Disc, Incorporated.
During the fiscal year ended August 31, 1996, the Board of Directors held
eight 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 Harold M. Marko and Alan E. Schwartz. During fiscal 1996, the
Audit Committee held two 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.
3
<PAGE> 6
The Company has a standing Compensation Committee. The members of the
Compensation Committee are Richard P. Kughn and Robert G. Stone, Jr. During
fiscal 1996, the members of the Compensation Committee held two meetings as well
as informal discussions in lieu of formal 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 1996, 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 1996, 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
30, 1997.
During the fiscal year ended August 31, 1996, the Company engaged Jay Alix
& Associates, of which Jay A. Alix, a former director of the Company who
submitted his resignation to be effective January 13, 1997, 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.
Alan E. Schwartz, a director of the Company, is a partner in the law firm
of Honigman Miller Schwartz and Cohn. The Company used the services of this firm
during fiscal 1996 and continues to use the firm's services as to certain
matters in fiscal 1997. 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 1996 accounted for less than one-third of one percent (.33%)
of Honigman Miller Schwartz and Cohn's annual revenues.
There are no persons known by the Company to be the beneficial owner of
more than 5% of the Company's outstanding Common Stock.
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, 1996, 1995 and 1994 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
$100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
---------------------------------
FISCAL
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) OTHER
- ------------------------------------------- ------ --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
David R. Zimmer............................ 1996 $ 313,333 $ 211,239 83,000 --
President and Chief 1995 300,000 200,803 -- --
Executive Officer 1994 291,667 152,015 83,000 --
Lawrence J. Murphy......................... 1996 201,667 118,925 46,000 --
Executive Vice President 1995 195,000 108,400 -- --
and Secretary 1994 190,000 84,311 46,000 --
Raymond H. Steben, Jr...................... 1996 123,283 53,961 30,000 --
Vice President -- Finance 1995 151,667 73,855 -- --
and Chief Financial Officer(3) 1994 145,000 43,514 30,000 --
James P. Dixon............................. 1996 150,000 94,407 14,000 --
Vice President -- Planning 1995 145,667 82,463 -- --
1994 137,000 34,936 14,000 $62,888(4)
Thomas G. Hooper........................... 1996 115,333 46,060 12,000 --
Treasurer and Controller 1995 110,000 44,926 -- --
1994 108,333 21,452 12,000 --
</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 $112,068, $56,162, $26,792, $49,998 and $23,746 in 1996;
$112,303, $60,625, $41,305, $46,119 and $25,126 in 1995; and $81,215,
$36,536, $23,290, $18,854 and $15,136 in 1994 awarded to the five named
individuals, respectively, in unrestricted common stock of the Company as
part of the earned annual bonus.
(3) Mr. Steben was employed by the Company as Vice President -- Finance and
Chief Financial Officer until June 17, 1996.
(4) Mr. Dixon relocated his household during the 1994 fiscal year. Of the amount
shown, $58,382 was part of a relocation reimbursement agreed to in fiscal
year 1990.
5
<PAGE> 8
Option Grants in Last Fiscal Year
The Core Industries Inc 1993 Performance Incentive Plan approved by
shareholders provides for the granting of stock options with respect to Common
Stock.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(2)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------
NAME OPTIONS FISCAL YEAR ($/SHARE)(1) DATE 0%($) 5%($) 10%($)
- ----------------------- ---------- ------------ ------------ ---------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Zimmer........ 83,000 37.3% $13.75 11/29/05 0 $717,726 $1,818,859
Lawrence J. Murphy..... 46,000 20.7 13.75 11/29/05 0 397,726 1,008,042
Raymond H. Steben,
Jr. ................. 30,000 13.5 13.75 11/29/05 0 259,419 657,419
James P. Dixon......... 14,000 6.3 13.75 11/29/05 0 121,062 306,795
Thomas G. Hooper....... 12,000 5.4 13.75 11/29/05 0 103,768 262,968
Total
Stockholders(3)...... 0 92,724,413 234,981,868
</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 will vest if the Company's stock averages greater than
$15.81 for 30 calendar days before November 30, 1998, another one-third will
vest if the Company's stock price averages greater than $18.18 for 30
calendar days before such date and the final one-third will vest if the
Company's stock price averages $20.91 for 30 calendar days before such date.
Any options that fail to become exercisable under these provisions will vest
9 1/2 years from the grant date.
(2) "Potential realizable value" is disclosed in response to SEC rules which
require such disclosure for illustration only. The values disclosed are not
intended to be, and should not be interpreted by stockholders as,
representations or projections of future value of the Company's stock.
(3) To lend perspective to the illustrative "potential realizable value," if the
Company's stock price increased five percent or 10 percent per year from the
date of the grant of the options for 10 years (disregarding dividends and
assuming for purpose of the calculation a constant number of shares
outstanding), the total increase in the value of all shares presently
outstanding is shown above as "potential realizable value" for all of the
Company's stockholders ("Total Stockholders").
6
<PAGE> 9
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Value
Table
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended August 31, 1996 by each of the
executive officers named in the Summary Compensation Table above and the value
of unexercised options held by such persons as of August 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY END(#) AT FISCAL YEAR END($)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R. Zimmer........... 0 0 107,667 158,333 $ 475,000 $ 118,750
Lawrence J. Murphy........ 0 0 22,833 76,667 8,906 --
Raymond H. Steben, Jr. ... 0..... 0 18,000 50,000 23,000 --
James P. Dixon............ 0 0 6,667 23,333 13,750 --
Thomas G. Hooper.......... 0 0 7,500 20,000 4,156 --
</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 and 401(a)(17) of the Internal
Revenue Code of 1986. The following table shows estimated annual retirement
benefits payable under both plans to an
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<PAGE> 10
employee at normal retirement 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> <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 1996 is $120,000. In addition, Section 401(a)(17) of
the Internal Revenue Code limits the amount of compensation that may be used
in the calculation of the benefit to $150,000 for 1996.
The credited years of service under the Company's pension plans to each of
the persons named above are: David R. Zimmer - 4 years; Lawrence J. Murphy - 15
years; Raymond H. Steben, Jr. - 3 years; James P. Dixon - 6 years; and Thomas G.
Hooper - 15 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 $1,750
for each board meeting attended up to a maximum of $15,750 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. Two 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. 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. Two of the Company's directors
elected to participate in the 1991 Director Discounted Stock Option Plan in
fiscal 1996, and stock options for a total of 12,941 shares (exercisable at
$9.56 per share) were granted to them in fiscal 1996. All such options have a
term of 10 years, and none had been exercised as of August 31, 1996.
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.
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION AND ORGANIZATION
The Compensation Committee of the Board of Directors is composed entirely
of non-employee directors. It reviews and develops compensation programs for key
management, evaluates executive performance, administers the Company's
compensation programs and makes compensation recommendations to the full Board
of Directors. The Committee periodically retains 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 awards
and stock option grants. These elements are discussed below, as well as the
basis for the compensation awarded to Mr. Zimmer.
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
equivalently sized diversified manufacturing companies. The Committee expects
that base salaries will typically range near the midpoint of such 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 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. Further, the stockholders
have previously approved the 1993 Stock Bonus Plan which allows selected
executives and managers 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
encourages stock ownership by the executives and more closely links their
interests to shareholder value.
In 1996, management's opportunity to earn incentive awards was dependent
upon the Company's achievement of economic value added (EVA) and net earnings
per share relative to standards set by the
9
<PAGE> 12
Committee. Based on the continuing operations results, the Committee awarded the
officers of the Company 100% of the target bonus for 1996 and credited an
additional 15% of targeted bonus for possible payout in future years based on
Company performance. Of the amount awarded for 1996, all the officers had
previously chosen to designate 50% to be paid in Company stock. Pursuant to the
plan, the designation occurred before November 15, 1995. The value of the stock
was $12.50 per share on the designation date. The value of the awarded stock was
$12.125 per share on August 31, 1996, resulting in management experiencing a 3%
loss on the stock related element of the bonus.
For fiscal 1997, the Committee has established goals predicated upon
earnings per share and EVA. As a result, the Committee believes that the Company
has 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 are in the mutual interest of
both stockholders and management. The 1993 Performance Incentive Plan is
designed to provide executives with stock options as an additional incentive to
maximize stockholder value. During fiscal 1996 the Committee granted options to
purchase Company stock to the executives, as reflected in the Option Grants in
the Last Fiscal Year table. A key feature of the options granted in 1996, 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 an
average of that value for thirty consecutive 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 stock must
increase in value another 15% (or 52% in total from the grant price during the
three year period) for the final 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 until nine and one-half years from the date of
grant. No options became exercisable under these provisions during fiscal 1996.
The value of the Company's stock must average greater than $15.81, $18.18 and
$20.91 for more than thirty days before November 30, 1998 for the three
tranches, respectively, to become eligible for exercise by the executives. The
Committee believes this arrangement clearly links management's interest with the
stockholders' interest. 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 1996 fiscal year was $313,333, a 4.4% increase from the prior year. Based on
studies by an independent consultant, 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 $211,239, of which $99,171 was paid in cash and $112,068
was awarded in the Company's common stock (the value of the common stock
includes appreciation from the end of the fiscal year until the date of
distribution). The basis of the award was directly related to specific earnings
per share and EVA 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 50% of any award (prior to certain income tax
withholding) to be paid in unrestricted stock of the Company. Because the
Company's stock decreased in value between the designation and award dates, Mr.
Zimmer's award was decreased by $2,975 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
10
<PAGE> 13
shares of Company stock at market value of $13.75 on the day of the grant. As
previously discussed, the exercisability of those options prior to nine and
one-half 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 paid by other companies. However, with
the stock price improvement restriction on exercisability, the Committee
believes these options are significantly more at risk than options generally
granted by other companies.
In total, the Committee believes 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, than the compensation paid to chief
executive officers by comparable companies. 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 the Company's performance and he made recommendations
concerning the compensation of executives reporting to him.
By The Compensation Committee
Richard P. Kughn
Robert G. Stone, Jr.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares 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 years.
INDEXED FIVE YEAR TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CORE INDUS- S & P DIVER-
(FISCAL YEAR COVERED) TRIES INC. S & P 500 SIFIED MFR
<S> <C> <C> <C>
1991 100 100 100
1992 120 108 98
1993 221 124 124
1994 170 131 138
1995 191 159 181
1996 205 189 224
COMPOUND RETURN 15.4% 13.6% 17.5%
</TABLE>
12
<PAGE> 15
II. STOCKHOLDER PROPOSAL TO CONDITION THE AWARD OF
STOCK OPTIONS AND BONUSES ON THE ACHIEVEMENT
OF CERTAIN DIVIDEND AND NET INCOME TARGETS
Mr. E. J. Marcinkiewicz, 8665 Brookville Road, Plymouth, Michigan 48170,
beneficial owner of 3,846 shares of Common Stock, has advised the Company that
he intends to propose the following resolution from the floor at the Annual
Meeting:
"RESOLVED: It is requested that the Board of Directors of Core Industries
take the necessary steps in the immediate future to refrain the issuance of
stock options and bonuses to Executive Officers in the absence of a three year
period where dividends are not increased six (6) per cent per year and net
earnings are not increased nine (9) per cent per year."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THE
RESOLUTION FOR THE FOLLOWING REASONS:
As described in the Report of the Compensation Committee contained on pages
9-11 of this Proxy Statement, the Compensation Committee of the Board of
Directors uses a compensation program consisting of base salaries, annual
incentive awards and stock option grants, in an attempt to attract and retain
highly capable executives to manage the Company's businesses. The Compensation
Committee of the Board of Directors believes that the Company's current
compensation program is appropriate for the Company.
The Company competes for executive personnel in the national marketplace,
which is highly competitive. The Company's key employees are highly capable and
very marketable individuals, who would easily be able to secure alternate
employment in the event the Company's compensation program were made less
attractive. In order to retain its current management team and to attract new
personnel, the Company must offer a competitive compensation program. The Board
of Directors is proud of the success of its management team (as demonstrated in
the Performance Graph contained on page 12 of this Proxy Statement), and does
not wish to take any drastic action which might adversely impact the Company's
prospects for continued success.
If the stockholder proposal were implemented, the Company would apparently
not be able to pay bonuses or grant stock options for at least three years, as
the dividend increase requirement set forth in the proposal could not be met
until that time. As a result, the Company would be forced to increase base
salaries significantly to retain management personnel, thereby reducing the
connection between management compensation and stockholder value.
The stockholder proposal would tie management compensation to increases in
annual dividends, a concept with which the Board of Directors of the Company
takes strong exception. The declaration of dividends is within the authority of
the Board of Directors, and is not within management's control. Moreover,
decisions as to the declaration of dividends are influenced by matters such as
the Company's acquisition and growth policy, the Company's current and
anticipated cash needs and the extent to which the Company repurchases its
outstanding shares in the market from time to time. Those matters are not, in
the opinion of the Board of Directors, appropriate matters on which management
compensation should depend.
Finally, the stockholder proposal is vague and would be difficult to
implement. It is not clear under the proposal whether existing contractual bonus
arrangements would have to be breached by the Company or whether annual awards
would have to immediately cease or could be granted but would be contingent on
meeting the stated requirements.
13
<PAGE> 16
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION
OF THE PROPOSED RESOLUTION WOULD BE INADVISABLE AND RECOMMENDS THAT THE
STOCKHOLDERS VOTE AGAINST THE RESOLUTION. Valid proxies will be voted for or
against the stockholder proposal as directed on the proxy, and will be voted
AGAINST the proposal where no direction is indicated.
The stockholder proposal requires for its passage a majority of the votes
present in person or by proxy at the Annual Meeting. The Company expects that
its directors and officers who are also stockholders will vote against this
proposal.
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, 1996. 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, 1997 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.
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 1998 Annual Meeting
must be received by the Company at its principal executive offices for inclusion
in the 1998 Proxy Statement no later than July 30, 1997.
For the Board of Directors
LAWRENCE J. MURPHY
Executive Vice President and Secretary
November 27, 1996
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 14, 1997
The undersigned Stockholder of Core Industries Inc hereby appoints Harold
M. Marko and David R. Zimmer 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 14, 1997 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.)
- --------------------------------------------------------------------------------
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<TABLE>
<S><C>
CORE INDUSTRIES INC
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 2.
1. Election of Directors-- 2. Stockholder Resolution to condition
Nominees: Kevin K. Coyne, FOR FOR ALL the award of stock options and
Lawrence J. Murphy, ALL WITHHOLD EXCEPT bonuses on the achievement of certain FOR AGAINST ABSTAIN
Robert G. Stone, Jr., / / / / / / dividend and net income targets for a / / / / / /
Lloyd Reuss three year period.
-------------------------------------------
(Except Nominee(s) written above)
3. In the discretion of the proxies, in the transaction THE BOARD OF DIRECTORS FAVORS A VOTE FOR ITEM 1 AND AGAINST ITEM 2.
of such other business which may properly come before THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, BUT
the meeting. WHERE NO DIRECTION IS GIVEN, THOSE SHARES WILL BE VOTED FOR ITEM 1
AND AGAINST ITEM 2.
Dated: , 1996
-----------------------------------------------
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>
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