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CASTECH ALUMINUM GROUP INC.
2630 EL PRESIDIO GROUP INC.
LONG BEACH, CA 90810
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about August 22, 1996, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"). You are receiving this Information Statement in connection
with the possible election of persons designated by Parent to a majority of
seats on the Company's Board of Directors (the "Parent Designees"). The Merger
Agreement requires the Company to take all action necessary to cause the Parent
Designees to be elected to the Board under the circumstances described therein.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended, and Rule 14f-1 thereunder. You are urged to
read this Information Statement carefully. You are not, however, required to
take any action.
The Offer commenced on August 22, 1996 and is scheduled to expire on
September 19, 1996.
The information contained in this Information Statement concerning Parent,
the Purchaser and the Parent Designees has been furnished to the Company by
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information. Certain capitalized terms used but not defined
in this Information Statement have the meanings ascribed to them in the Schedule
14D-9.
GENERAL INFORMATION REGARDING THE COMPANY
As of the close of business on August 16, 1996, there were 12,942,443 shares
of Common Stock issued and outstanding, which is the only class of securities
outstanding having the right to vote for the election of directors, each share
of which entitles its record holder to one vote. The Board is currently set at 9
members, with one vacant position. Each director holds office until such
director's successor is elected and qualified or until such director's earlier
resignation or removal.
DESIGNATION OF DIRECTORS
The Merger Agreement provides that, promptly upon the purchase of shares of
Common Stock pursuant to the Offer, the Company will, upon the request of the
Purchaser, take all actions necessary, subject to compliance with applicable
law, to cause persons designated by the Purchaser to become directors of the
Company, so that the total number of such persons equals a number, rounded up to
the next whole number equal to the product of (a) the total number of directors
on the Board and (b) the percentage that the number of shares of Common Stock
purchased by Parent plus any shares of Common Stock beneficially owned by the
Purchaser or its affiliates bears to the number of shares of Common Stock
outstanding at the time of the purchase.
It is expected that the Parent Designees may assume office at any time
following the purchase by the Purchaser of a majority of the outstanding shares
of Common Stock on a fully diluted basis pursuant to the terms of the Offer,
which purchase cannot be earlier than September 19, 1996, and that, upon
assuming office, the Parent Designees together with the continuing directors of
the Company will thereafter constitute the entire Board.
<PAGE>
PARENT DESIGNEES
As of the date of this Information Statement, Purchaser has not determined
who will be Parent Designees. However, Parent Designees will be selected from
among the following persons. Unless otherwise indicated, each person identified
below has been employed by Parent for the last five years, and each such
person's business address is 1200 Meidinger Tower, Louisville, Kentucky. All
persons listed below are citizens of the United States unless otherwise
indicated. Persons indicated by an asterisk are directors of Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
POSITIONS HELD DURING PAST FIVE YEARS, AND BUSINESS
NAME AND BUSINESS ADDRESS ADDRESS THEREOF
--------------------------------------------------------
<S> <C>
Mark V. Kaminski*....................................... Director, President and Chief Executive Officer of
Parent since 1991. Director, President and Chief
Executive Officer of Purchaser since August 1996.
Paul E. Lego*........................................... Chairman of the Board of Parent, Director since 1995;
Chairman and Chief Executive Officer of Westinghouse
Electric Corporation, 1990-93.
Catherine G. Burke*..................................... Director of Parent since 1995; Faculty of the School of
Public Administration at the University of Southern
California, Los Angeles, CA since 1973.
John E. Merow*.......................................... Director of Parent since 1995; Director of Purchaser
since August 1996; Chairman of Sullivan & Cromwell, 125
Broad Street, New York, NY, 1987-94.
Victor Torasso*......................................... Director of Parent since 1995; Management Consultant to
aluminum industry since 1990.
Donald L. Marsh, Jr..................................... Vice President Finance, Chief Financial Officer and
Secretary of Parent since March 1996; Senior Vice
President Development, Castle Energy Corporation,
1995-96; Chief Financial Officer, Castle Energy
Corporation, One Radnor Corporate Center, Suite 250,
Radnor, PA, 1993-95; President, Earned Interest Inc., 20
Leigh Street, Clinton, NJ, 1986-93; Vice President
Finance, Chief Financial Officer and Secretary of
Purchaser since August 1996.
Scott T. Davis ......................................... Vice President Operations of Parent since 1994;
1372 State Road 1957 Production Planning Manager of Parent, 1992-94; Casting
P.O. Box 480 Manager, 1989-92.
Lewisport, KY 42351
James K. O'Donnell...................................... Vice President Engineering and Technology of Parent
since 1992; Manager of Engineering Planning of Parent,
1985-92.
John J. Wasz............................................ Vice President Marketing and Sales of Parent since
December 1993; Distribution Marketing Manager of Parent,
1991-93.
Henry E. Ford III....................................... Manager, Business Analysis and Investor Relations of
Parent since February 1996; Manager and Principal
Consultant - Organizational Effectiveness, 1995-96;
Manager, Cold Rolling, 1992-95; Senior Industrial
Engineer, 1990-92.
</TABLE>
2
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CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE BUSINESS EXPERIENCE
- --------------------------------- --------- ------------------------------------------------------------------------
<S> <C> <C>
Charles J. Pilliod, Jr........... (77) Mr. Pilliod has been Chairman of the Board of Directors of the Company
since April 1989 and was the Chief Executive Officer from April 1989
through March 1993. From 1985 to 1989, Mr. Pilliod served as U.S.
Ambassador to Mexico. Prior to that, he was Chairman of the Board of
Directors and Chief Executive Officer of Goodyear Tire & Rubber Company.
Mr. Pilliod serves as Chairman of the Board of Directors of Dal-Tile
International Inc.
Norman E. Wells, Jr.............. (47) Mr. Wells has been President and Chief Executive Officer of the Company
since March 1993 and a director since 1992. He has been an employee of
the Company since 1989, holding various positions. From 1989 to 1991,
Mr. Wells was Vice President of Production of Barmet, and since March
1991 has been President and Chief Executive Officer of Barmet Aluminum
Corporation ("Barmet"). Prior to 1989, Mr. Wells held various positions
at Kaiser Aluminum Corporation.
Robert D. Lloyd.................. (62) Mr. Lloyd has been a director of the Company since June 1992. He has
been President of Alflex, a division of the Company, since June 1991.
Prior to joining the Company in 1991, Mr. Lloyd was Vice President,
Western Operations of Triangle PWC, Inc., a manufacturer of wire and
cable, from March 1984 to May 1991.
Philip Caldwell.................. (76) Mr. Caldwell has been a director of the Company since March 1994. Since
1985, Mr. Caldwell has been Senior Managing Director of Lehman Brothers
Inc. and its predecessor, Shearson Lehman Brothers Holdings Inc. Mr.
Caldwell spent 32 years at Ford Motor Company where he was Chairman of
the Board of Directors and Chief Executive Officer from 1980 to 1985 and
a director from 1973 through 1990. Mr. Caldwell is a director of Lehman
Brothers Inc., The Mexico Fund, Zurich Reinsurance Centre Holdings,
Inc., Waters Corporation, American Guarantee & Liability Insurance
Company, Zurich Holding Company of America, Inc. and Russell-Reynolds
Associates, Inc.
C. Fred Fetterolf................ (67) Mr. Fetterolf has been a director of the Company since March 1995. Mr.
Fetterolf was President and Chief Operating Officer of Aluminum Company
of America (Alcoa) from 1985 to 1991, and served as President of Alcoa
from 1983 to 1985. Mr. Fetterolf is a director of Allegheny Ludlum
Corporation, Mellon National Bank, Union Carbide Corporation, Quaker
State Corporation, Praxair, Dentsply International and Urethane
Technologies, Inc.
Ronald D. Glosser................ (63) Mr. Glosser has been a director of the Company since March 1994. From
February 1989 to December 1995, Mr. Glosser served as President and
Chief Executive Officer of Hershey Trust Company, as well as Chairman of
the Board of Directors and Chief Executive Officer of The M.S. Hershey
Foundation. From 1982 to 1989, he served as President of National City
Bank in Akron, Ohio.
</TABLE>
3
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<TABLE>
<S> <C> <C>
Robert S. Hatfield............... (80) Mr. Hatfield has been a director of the Company since March 1994. Mr.
Hatfield was Chairman of the Board of Directors and Chief Executive
Officer of The Continental Group, Inc. (Continental Can Company) from
1971 to 1981. Prior to that, he held various executive positions at The
Continental Group from 1936 to 1991. Mr. Hatfield is currently Chairman
of the Board of Directors and Chief Executive Officer of The National
Executive Service Corps., a nonprofit firm that provides management
assistance to social service, educational, health, cultural, religious
and governmental organizations. He also served as Chairman of the Board
of Governors of The Society of the New York Hospital from 1981 to 1988.
Reginald H. Jones................ (78) Mr. Jones has been a director of the Company since March 1994. Mr. Jones
retired as Chairman of the Board of Directors of General Electric
Company in April 1981. At General Electric, he served as Chairman of the
Board of Directors and Chief Executive Officer from December 1972
through April 1981, President from June 1972 to December 1972 and a
Director from August 1971 to April 1981. Mr. Jones is also a director of
ASA Limited and Birmingham Steel Corporation.
Thomas P. Salice................. (35) Mr. Salice has been a director of the Company since February 1991. Mr.
Salice is a Managing Director of AEA Investors Inc., a privately-held
investment firm, and has been associated with AEA since June 1989. Mr.
Salice is also a director of Waters Corporation.
Terry D. Smith................... (42) Mr. Smith has been Chief Financial Officer, Vice President and Treasurer
of the Company since April 1988. He joined Barmet in 1980 and is
currently a Director, Vice President, Chief Financial Officer and
Treasurer. Prior to such time, Mr. Smith was employed by Coopers &
Lybrand from 1977 to 1980.
Gerald L. Hadeen................. (54) Mr. Hadeen has been Senior Vice President of Alflex since 1993. From
1984 to 1993, Mr. Hadeen was Vice President of Production at Alflex.
Prior to such time, Mr. Hadeen was Plant Manager at Alflex.
Stanley W. Platek................ (57) Mr. Platek has been Vice President of Technology of Barmet since 1988.
From 1983 to 1988, Mr. Platek was Plant Manager at Barmet.
</TABLE>
4
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the shares of Common
Stock beneficially owned as of August 16, 1996, by each current director and
executive officer, and by all directors and executive officers of the Company as
a group. Unless otherwise noted, each beneficial owner listed below has sole
investment and voting power with respect to the shares of Common Stock
indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED (1) CLASS
- --------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Charles J. Pilliod, Jr........................................................... 165,749 1.28
Norman E. Wells, Jr.............................................................. 107,000 .82
Robert D. Lloyd.................................................................. 70,143 .54
Philip Caldwell (2).............................................................. 6,242 .05
C. Fred Fetterolf................................................................ 1,500 .01
Ronald D. Glosser................................................................ 1,000 .01
Robert S. Hatfield............................................................... 5,684 .04
Reginald H. Jones................................................................ 5,684 .04
Thomas P. Salice (3)............................................................. 281,949 2.18
Terry D. Smith................................................................... 42,280 .32
Gerald L. Hadeen................................................................. 40,781 .31
Stanley W. Platek................................................................ 40,781 .31
All directors and executive officers as a group (12 persons) (4)................. 485,702 3.75
</TABLE>
- ------------------------
(1) The foregoing percentages and the share amounts shown in the table include
with respect to Messrs. Pilliod, Wells, Smith, Lloyd, Platek, Hadeen and all
directors and executive officers as a group (including those named) 163,125
shares, 104,400 shares, 40,781 shares, 70,143 shares, 40,781 shares, 40,781
shares and 460,011 shares, respectively, subject to options which are
exercisable within sixty days of August 16, 1996.
(2) All such shares are held by members of Mr. Caldwell's family. Mr. Caldwell
disclaims beneficial ownership of such shares.
(3) All such shares are held by AEA Investors Inc. Mr. Salice, a Managing
Director of AEA, disclaims beneficial ownership of all such shares.
(4) Excludes 288,191 shares as to which beneficial ownership is disclaimed.
5
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PRINCIPAL STOCKHOLDERS
The following table sets forth as of August 16, 1996 (i) the name of each
person known to the Company, based upon filings made by such persons with the
Securities and Exchange Commission (the "SEC") or information provided by such
persons to the Company, to be the beneficial owner of more than five percent of
the outstanding shares of Common Stock, (ii) the total number of shares of
Common Stock beneficially owned by such person and (iii) the percentage of the
outstanding shares of Common Stock so owned.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OWNERSHIP(1)(2) OF CLASS
- ------------------------------------------------------------------------------ ------------------------ -----------
<S> <C> <C>
Neumeier Investment Counsel
26435 Carmel Rancho Boulevard
Carmel, CA 93923............................................................. 1,172,525(3) 9.06%
Pioneering Management Corporation
60 State Street
Boston, MA 02109............................................................. 1,295,300(4) 10.0%
Merrill Lynch & Co., Inc...................................................... 1,808,400(5) 14%
</TABLE>
- ------------------------
(1) Except as otherwise noted, the number of shares beneficially owned is deemed
to include shares of Common Stock in which the persons named have or share
either investment or voting power.
(2) Each of the above beneficial owners stated in its Schedule 13G that its
shares were acquired in the ordinary course of business and not for the
purpose of changing or influencing the control of the Company.
(3) Based solely on a Schedule 13G dated February 6, 1996 filed with the SEC by
Neumeier Investment Counsel ("Neumeier"). Neumeier, a registered investment
advisor, states in its Schedule 13G that it has sole dispositive power over
all of these shares and sole power to vote or direct the voting of 795,225
shares.
(4) Based solely on a Schedule 13G dated January 26, 1996 filed with the SEC by
Pioneering Management Corporation ("PMC"). PMC, a registered investment
advisor, states in its Schedule 13G that it has the sole power to vote or
direct the voting of all these shares. PMC has the sole dispositive power
over 720,300 shares and shared dispositive power over 575,000 shares.
(5) Based solely on a Schedule 13G dated August 9, 1996, filed with the SEC by
Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("Group"),
Princeton Services, Inc. ("PSI"), Merrill Lynch Asset Management, L.P.
("MLAM") and Merrill Lynch Global Allocation Fund, Inc. (the "Fund"). ML&Co.
states in its 13G that it has shared voting and dispositive power over
1,808,400 shares held by or deemed to be beneficially owned by its
wholly-owned direct subsidiaries, Group and Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"). PSI, a wholly-owned direct subsidiary of
Group, is the general partner of MLAM and Fund Asset Management, L.P.
("FAM"). PSI states in its 13G that it has shared voting and dispositive
power over 1,807,100 shares by virtue of its being the general partner of
MLAM and FAM. Group states in its 13G that it has shared voting and
dispositive power over 1,807,100 shares by virtue of its control of PSI.
MLAM and FAM are registered investment advisors and MLAM states in its 13G
that it has shared voting and dispositive power over 1,310,100 shares. The
Fund, a registered investment company advised by MLAM, states in its 13G
that it has shared voting and dispositive power over 1,232,000 shares.
MLPF&S may be deemed to be the beneficial owner of certain of the shares
held in customer accounts over which MLPF&S has discretionary power.
6
<PAGE>
To the best knowledge of the Company's management, there is no other
beneficial owner of more than 5% of the Company's Common Stock.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
the fiscal year ended March 31, 1996. The Board of Directors has two committees,
the Audit Committee and the Compensation Committee, which met two and three
times, respectively, during fiscal 1996. Each incumbent director serving during
the last fiscal year attended at least 75% of the aggregate of all meetings of
the Board of Directors and the committees of the Board upon which such director
served.
The Audit Committee of the Board of Directors consists of directors Jones
(Chairman), Caldwell and Glosser. The Audit Committee recommends engagement of
the Company's independent public accountants and is primarily responsible for
approving the services performed by the Company's independent public accountants
and for reviewing and evaluating the Company's principles and its system of
internal accounting controls.
The Compensation Committee of the Board of Directors consists of directors
Pilliod (Chairman), Hatfield, Salice and Fetterolf. The Compensation Committee
reviews and approves the Company's executive compensation policy and grants
stock options to employees of the Company, including officers, pursuant to the
Company's stock option plan.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not full-time employees of the
Company presently receive an annual retainer fee of $15,000 (except for the
Chairman of the Board who receives $25,000), plus $1,000 for each board and
board committee meeting attended. All directors are reimbursed for their
traveling costs and other out-of-pocket expenses incurred in attending board and
board committee meetings. Directors who serve on either or both of the Audit
Committee and Compensation Committee receive no additional compensation.
The Board of Directors and the stockholders have approved a new compensation
plan for the Company's non-employee directors in order to further align their
interests with the long-term interests of the stockholders. Under this plan
which is effective commencing with the fiscal year ending March 31, 1997,
instead of receiving an annual cash retainer fee, non-employee directors would
receive 1,000 shares of the Company's Common Stock each year. No shares of
Common Stock have been issued pursuant to this plan and, in connection with the
Merger Agreement and pursuant to an amendment to the non-employee stock option
plan, the Company agreed that, pending consummation or abandonment of the Merger
Agreement, no shares of Common Stock will be issued under the plan. In the event
the Merger is abandoned and not consummated, Common Stock shall be awarded
pursuant to the plan. In the event the Merger is consummated, in lieu of Common
Stock awarded under the plan, eligible participants shall be entitled to receive
a cash fee, prorated for their time of service as a director during the fiscal
year commencing April 1, 1996, at an annual rate of $15,000 for each participant
other than the Chairman of the Company and at an annual rate of $25,000 for the
Chairman.
7
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REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors is composed of four
independent non-employee directors. The Committee is responsible for the
evaluation and approval of compensation for the Company's executive officers.
The Committee's objective is to establish a compensation program for the
Company's executive officers that will attract and maintain quality management
talent while remaining consistent with the Company's overall business strategy
and compensation philosophy. The Committee's decisions relating to compensation
of the Company's executive officers are reviewed by the full Board of Directors
of the Company.
The Committee's compensation policies have been designed to reflect the
Company's commitment to a "pay-for-performance" philosophy. Towards that end,
executive officers are rewarded for their contributions to the enhancement of
shareholder value and the attainment of corporate goals through the award of
stock options and cash bonus incentives. In general, base pay is targeted at or
below a level that is competitive for similar executive positions in comparable
companies. As such, the Company believes that its compensation policies place
greater emphasis on annual and long-term performance incentives. The Committee
uses outside, independent benefits and compensation specialists and related
outside surveys to assist the Company in developing and assessing the
reasonableness of the Company's compensation program for its executive officers.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
Compensation paid to the Company's executive officers is composed primarily
of base salary compensation, annual cash incentive compensation and long-term
incentive compensation in the form of stock options. In addition, certain key
executive officers have individual deferred compensation agreements which are
funded through life insurance policies and which are payable upon retirement.
BASE SALARY. The Company's base salary compensation for executive officers
is established after examining both objective and subjective criteria. In
determining base salary, the Committee considers the responsibility of the
individual's position, the individual's overall job performance, and the base
salaries of similar positions in comparable companies. Individual performance is
measured against the achievement of annual business goals and long-term
strategic objectives. These factors are considered subjectively in the aggregate
and neither of these factors is accorded a specific weight. In general, the
Committee establishes base salary for executive officers that is at or below the
average paid for comparable positions at other similarly sized companies as set
forth in national compensation surveys.
BONUS PLAN. Each of the Company's executives participates in a Management
Incentive Program which provides for the payment of annual cash bonuses. The
Management Incentive Program's purpose is to align a substantial portion of
executive compensation with the achievement of the Company's annual financial
goals. Bonus payments are established by the Committee and in such amounts such
that the Company's attainment of targeted levels of performance will provide
total annual cash compensation to the Company's executive officers that is at or
somewhat above the average paid for comparable positions at other similarly
sized companies. Under this program, the Company establishes earnings-based
performance targets for the Company as a whole and separately for each of the
Company's two operating units. (These confidential performance targets are not
disclosed in this Information Statement, in order to avoid compromising the
Company's competitive position.) It is the Committee's belief that
earnings-based targets are the best measure of the Company's performance,
although the Committee is vested with the discretion to change the standards
used to measure performance as appropriate in order to create proper incentives
for the Company's executives. The Committee establishes four tiers of
performance targets for each applicable business unit. The amount of an
executive's bonus is based upon which tier of the business unit's earnings
targets is reached. The higher the earnings target that is achieved, the higher
the amount of
8
<PAGE>
the bonus award. The minimum level at which an executive will earn any incentive
payment, and the levels at which the bonus payments increase, are established by
the Committee in the early part of the fiscal year.
STOCK OPTIONS. Stock options which, in the Committee's view, provide
additional incentive to executives to work towards maximizing shareholder value,
is one of the more important components of the Company's long-term
performance-based compensation philosophy. The Company grants stock options to
its executives at or near the date of hire and, in some instances, through
subsequent periodic grants. These options have exercise prices equal to the fair
market value at the time of grant, and generally vest over a four-year period.
Unless the Committee otherwise provides, options become exercisable as to 20% of
the shares covered thereby on the date of grant and as to an additional 20% of
such shares on each of the next four anniversaries of the date of grant. The
initial option grant is designed to be competitive with those made by comparable
companies for similar executive positions and is designed to motivate the
executive to make the kinds of decisions and implement strategies and programs
that will contribute to an increase in the Company's stock price over time. In
determining the persons to whom awards shall be granted and the number of shares
covered by each award, the Committee takes into account the duties of the
respective executive, the individual's present and potential contribution to the
financial success of the Company and such other factors as the Committee deems
relevant.
OTHER. In addition to the foregoing, the Company has entered into deferred
compensation agreements with certain key executive officers. These agreements
provide for a fixed benefit payable monthly upon the death or retirement of the
covered executive. The Company has obtained life insurance policies to fund the
benefits payable under these deferred compensation agreements. Participating
executives are not entitled to any payments if their employment is terminated
for reasons other than death, retirement or termination without cause.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The factors considered by the Committee in determining the compensation of
Mr. Wells, the Company's Chief Executive Officer, in addition to survey data,
include the Company's operating and financial performance, as well as the CEO's
leadership and establishment and implementation of strategic direction for the
Company. These factors are considered subjectively and none of these factors is
accorded specific weight. In determining Mr. Wells' compensation for fiscal
1996, the Committee considered the Company's outstanding financial results for
fiscal 1995, Mr. Wells' decisive management of operational issues, and the
improved overall competitive position of the Company. As a result, effective in
the second quarter of fiscal 1996, Mr. Wells' base salary was increased an
additional $25,000 so that his annual base salary would be $290,000. The
Committee believes that, even with this increase in base salary, Mr. Wells' base
salary is below the average for chief executive officers in comparable
companies. Mr. Wells' cash bonus for fiscal 1996 was paid in accordance with the
Company's Management Incentive Program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation Committee during fiscal
1996: Charles J. Pilliod, Jr. (Chairman), C. Fred Fetterolf, Robert S. Hatfield
and Thomas P. Salice. Mr. Pilliod served as an officer of the Company during the
past fiscal year.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning compensation paid by the
Company to the Chief Executive Officer of the Company and the other four most
highly compensated executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively with the Chief Executive Officer, the
"Named Executives") for each of the last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------
------------------------------------------------------ SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION (A) OPTIONS (#) COMPENSATION ($)
- ------------------------------ --------- --------- --------- --------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Norman E. Wells, Jr........... 1996 300,849 99,375 -- -- -- -- 76,327(b)
Chief Executive Officer 1995 255,816 150,000 -- 50,514(b)
1994 259,700 75,000 174,000 21,186(b)
Robert D. Lloyd............... 1996 225,385 40,000 -- -- -- -- 50,888(c)
Executive Vice President and 1995 206,668 90,000 -- 19,000(c)
President-Alflex Division 1994 190,000 90,000 116,906 18,600(c)
Terry D. Smith................ 1996 149,292 45,000 -- -- -- -- 28,815(d)
Chief Financial Officer 1995 143,076 75,000 -- 23,217(d)
and Secretary 1994 144,020 37,500 67,968 8,167(d)
Gerald L. Hadeen.............. 1996 146,877 18,000 -- -- -- -- 39,381(e)
Senior Vice President, 1995 138,000 60,000 -- 6,600(e)
Alflex Division 1994 138,000 60,000 67,968 6,600(e)
Stanley W. Platek............. 1996 145,698 45,000 -- -- -- -- 58,363(f)
Vice President - 1995 137,161 75,000 -- 46,558(f)
Technology, Barmet 1994 142,860 37,500 67,968 26,442(f)
</TABLE>
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(a) The dollar value of perquisites and other personal benefits was less than
the lesser of $50,000 and 10% of the total annual salary and bonus for each
Named Executive and therefore has been excluded.
(b) Includes Company contributions to a defined contribution retirement plan
totalling $38,619, $30,389 and $10,005 and accrued wages under a deferred
compensation agreement payable on retirement of $37,708, $20,125 and $11,181
for the years ended March 31, 1996, 1995 and 1994, respectively.
(c) Includes Company contributions to a defined contribution retirement plan
totalling $19,000 for each of the years ended March 31, 1996 and 1995 and
$18,600 for the year ended March 31, 1994 and accrued wages under a deferred
compensation agreement payable on retirement of $31,888 for the year ended
March 31, 1996.
(d) Includes Company contributions to a defined contribution retirement plan
totalling $19,440, $16,583 and $5,613 and accrued wages under a deferred
compensation agreement payable on retirement of $9,375, $6,634 and $2,554
for the years ended March 31, 1996, 1995 and 1994, respectively.
(e) Includes Company contributions to defined contribution retirement plan
totalling $6,600 for each of the years ended March 31, 1996, 1995 and 1994
and accrued wages under a deferred compensation agreement payable on
retirement of $32,781 for the year ended March 31, 1996.
(f) Includes Company contributions to a defined contribution retirement plan
totalling $19,045, $16,123 and $5,688 and accrued wages under a deferred
compensation agreement payable on retirement of $39,318, $30,435 and $20,754
for the years ended March 31, 1996, 1995 and 1994, respectively.
10
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OPTION EXERCISES AND VALUES
No stock options were exercised by the Named Executives in the year ended
March 31, 1996. The following table sets forth information with respect to the
aggregate number of unexercised options to purchase Common Stock granted in all
years to the Named Executives and held by them as of March 31, 1996, and the
value of unexercised in-the-money options (i.e., options that had a positive
spread between the exercise price and the fair market value of the Common Stock)
as of March 31, 1996:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Norman E. Wells. Jr.................................... 104,400 69,600 $ 420,210 $ 280,140
Robert D. Lloyd........................................ 70,143 46,763 282,326 188,221
Terry D. Smith......................................... 40,781 27,187 164,144 109,428
Gerald L. Hadeen....................................... 40,781 27,187 164,144 109,428
Stanley W. Platek...................................... 40,781 27,187 164,144 109,428
</TABLE>
- ------------------------
(1) Based on the New York Stock Exchange closing price of the Company's Common
Stock on March 31, 1996 of $14.375.
STOCK OPTIONS
No stock options were granted under the Company's Stock Option Plan to the
Named Executives during the year ended March 31, 1996.
11
