<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
The L.S. Starrett Company
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(same)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 ActRule 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:
Notes:
<PAGE>
THE L.S. STARRETT COMPANY
ATHOL, MASSACHUSETTS 01331
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 18, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders of The
L.S. Starrett Company will be held at the office of the Company in Athol,
Massachusetts, on Wednesday, September 18, 1996 at 2:00 p.m. for the following
purposes:
1. To elect a class of three directors, each to hold office for a term of
three years and until his successor is chosen and qualified.
2. To consider and act upon any other matter that may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed July 26, 1996 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting, or any
adjournments thereof, and to receive notice thereof. The transfer books of the
Company will not be closed.
You are requested to execute and return the enclosed proxy, which is
solicited by the management of the Company.
Peter MacDougall, Clerk
Athol, Massachusetts
August 16, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED FORM OF PROXY IN THE ENCLOSED STAMPED
AND ADDRESSED ENVELOPE. IF YOU DESIRE TO VOTE YOUR SHARES IN PERSON AT THE
ANNUAL MEETING, YOUR PROXY WILL BE RETURNED TO YOU.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF
THE L.S. STARRETT COMPANY
ATHOL, MASSACHUSETTS 01331
The enclosed form of proxy and this Proxy Statement have been mailed to
stockholders on or about August 16, 1996 in connection with the solicitation
by the Board of Directors of The L.S. Starrett Company (the "Company") of
proxies for use at the Annual Meeting of Stockholders to be held at the office
of the Company in Athol, Massachusetts on Wednesday, September 18, 1996 at
2:00 p.m., or at any adjournments thereof, for the purposes set forth in the
accompanying notice of annual meeting of stockholders.
It is the intention of the persons named as proxies to vote shares
represented by duly executed proxies for the proposals described in this Proxy
Statement unless contrary specification is made. Any such proxy may be revoked
by a stockholder at any time prior to the voting of the proxy by a written
revocation received by the Clerk of the Company, by properly executing and
delivering a later-dated proxy, or by attending the meeting, requesting return
of the proxy and voting in person. A PROXY, WHEN EXECUTED AND NOT SO REVOKED,
WILL BE VOTED AT THE MEETING, INCLUDING ANY ADJOURNMENTS THEREOF; AND IF IT
CONTAINS ANY SPECIFICATIONS, IT WILL BE VOTED IN ACCORDANCE THEREWITH.
Stockholders of record as at the close of business on July 26, 1996 will be
entitled to vote at this meeting. On that date, the Company had outstanding
and entitled to vote 5,055,185 shares of Class A Stock and 1,994,285 shares of
Class B Stock. Each outstanding share of Class A Stock entitles the record
holder thereof to one vote and each outstanding share of Class B Stock
entitles the record holder thereof to ten votes. The holders of Class A Stock
are entitled to elect 25% of the Company's directors to be elected at each
meeting and such holders voting together with the holders of Class B Stock as
a single class are entitled to elect the remaining directors to be elected at
the meeting. Except for the foregoing and except as provided by law, all
actions submitted to a vote of stockholders will be voted on by the holders of
Class A and Class B Stock voting together as a single class. Pursuant to
Massachusetts law, the Company's Board of Directors is divided into three
classes with one class to be elected at each annual meeting of stockholders.
I. ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at seven and
designated Andrew B. Sides, Jr., Douglas R. Starrett and Roger U. Wellington,
Jr. to serve as Class I Directors; Douglas A. Starrett and William S. Hurley
to serve as Class II Directors; and George B. Webber and Richard B. Kennedy to
serve as Class III Directors; and, in the case of each director, until his
successor is chosen and qualified. Mr. Kennedy was elected to fill the
unexpired term of Mr. J. Richard Bullock on June 12, 1996.
1
<PAGE>
It is the intention of the persons named in the proxy to vote for the
election of the three persons named below as Class I Directors, each to hold
office for a term of three years and until his successor is chosen and
qualified.
The names and ages of the nominees for directors proposed by the management,
their principal occupation, the significant business directorships they hold,
the years in which they first became directors of the Company and the amount
of securities of the Company beneficially owned by them as of July 26, 1996
are as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
PRINCIPAL OWNED(1)
OCCUPATION (PERCENT OF CLASS)
AND SIGNIFICANT DIRECTOR -----------------------
NAME(AGE) DIRECTORSHIPS SINCE CLASS A CLASS B
--------- ------------------------------------ -------- --------- ---------
<S> <C> <C> <C> <C>
CLASS I--DIRECTOR TO BE ELECTED BY CLASS A STOCKHOLDERS:
Andrew B. Sides, Jr. Consultant; formerly CEO of Rhode 1986 250 250
(71)................ Island Tool Company, Providence, (*) (*)
Rhode Island, producer of forgings;
Director, Colonial Gas Company.
CLASS I--DIRECTORS TO BE ELECTED BY CLASS A AND CLASS B STOCKHOLDERS VOTING TOGETHER:
Douglas R. Starrett Chairman and CEO of the Company. 1952 97,219(3) 78,537(3)
(76)................ (1.9%) (3.9%)
Roger U. Wellington, Jr. Treasurer and Chief Financial 1987 8,469(4) 2,987(4)
(55)................ Officer of the Company. (*) (*)
</TABLE>
The following table sets forth the names and ages of the Class II and III
Directors, their principal occupations, the significant business directorships
they hold, the years in which they first became directors of the Company and
the amount of securities of the Company beneficially owned by them as of July
26, 1996:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
PRINCIPAL OWNED(1)
OCCUPATION (PERCENT OF CLASS)
AND SIGNIFICANT DIRECTOR -----------------------
NAME(AGE) DIRECTORSHIPS SINCE CLASS A CLASS B
--------- ------------------------------------ -------- --------- ---------
<S> <C> <C> <C> <C>
CLASS II--DIRECTORS SERVING UNTIL 1997 ANNUAL MEETING OF STOCKHOLDERS:
William S. Hurley Formerly Vice President Controller, 1993 200(6) --
(52).................. Bolt Beranek and Newman Inc., (*)
Cambridge, Massachusetts,
diversified high technology.
Douglas A. Starrett President of the Company. 1984 9,009(2) 8,217(2)
(44).................. (*) (*)
CLASS III--DIRECTORS SERVING UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS:
Richard B. Kennedy Vice President, Abrasives Marketing 1996 100(6) --
(53).................. Group, Norton Company, Worcester, (*) (*)
Massachusetts, producer of abrasives
and engineered materials.
George B. Webber Vice President, Webber 1962 68,224(5) 79,435(5)
(75).................. Gage Division of the Company. (1.3%) (4.0%)
</TABLE>
2
<PAGE>
- --------
(1) Includes shares beneficially owned as defined in applicable rules of the
Securities and Exchange Commission, whether or not interest in such shares
is disclaimed by the nominee. All shares are held with sole voting and
investment power except as indicated below for certain nominees.
(2) Includes 150 Class A and 550 Class B shares held with shared voting and
investment power and 4,860 Class A and 1,776 Class B shares held with sole
voting power only. Douglas A. Starrett is the son of Douglas R. Starrett.
(3) Includes 53,319 Class A and 48,758 Class B shares held with shared voting
and investment power, 2,912 Class A and 673 Class B shares held with
shared voting power only and 6,172 Class A and 4,369 Class B shares held
with sole voting power only.
(4) Includes 2,851 Class A and 944 Class B shares held with shared voting and
investment power and 5,618 Class A and 2,043 Class B shares held with sole
voting power only.
(5) Includes 4,690 Class A and 2,621 Class B shares held with sole voting
power only.
(6) Shares are held with shared voting and investment power.
* Less than 1%
At July 26, 1996, the directors' and officers' beneficial ownership of the
Company's Common Stock consisted of 191,159 Class A and 173,773 Class B shares
(3.8% and 8.7%, respectively, of the outstanding shares). Of these shares,
Charles H. Morrow, Vice President Sales of the Company, owned 7,688 Class A
and 4,347 Class B shares. All shares beneficially owned by the directors and
officers were held with sole voting and investment power, except that 57,810
Class A and 52,075 Class B shares were held with shared voting and investment
power, 2,912 Class A and 673 Class B shares were held with shared voting power
only and 27,838 Class A and 13,333 Class B shares were held with sole voting
power only.
Richard Newton, Douglas A. Starrett and Roger U. Wellington, Jr., as
Trustees under the Company's 401(k) Stock Savings Plan and Employee Stock
Ownership Plan, c/o the Company, 121 Crescent Street, Athol, Massachusetts
01331, at July 26, 1996 owned beneficially 998,092 Class A and 393,912 Class B
shares (19.7% and 19.8%, respectively, of the outstanding shares) of Common
Stock of the Company, all of which were held with sole dispositive power
subject to the terms of the respective Plans and 3,378 Class A and 1,886 Class
B shares were held with sole voting power. Except for an aggregate of 24,252
Class A and 11,482 Class B shares allocated to the accounts of Douglas A.
Starrett, Roger U. Wellington, Jr., George B. Webber and Douglas R. Starrett
in the Plans, such shares are not reflected in the holdings in the above
table.
The Company has been advised that as of February 12, 1996, David L. Babson &
Co., Inc., One Memorial Drive, Cambridge MA 02142 was the beneficial owner of
473,000 Class A shares (9.4% of the outstanding Class A shares) of which
325,400 shares were held with sole voting and investment power and 147,600
shares were held with shared voting and sole investment power.
All of the nominees and directors listed above have had the principal
occupations listed for at least five years except for Douglas R. Starrett who
was President of the Company until 1994, Douglas A. Starrett who was Executive
Vice President of the Company until 1994 and except for William S. Hurley who
was Vice President and Treasurer of Wyman-Gordon Company until 1992.
During the fiscal year ended June 29, 1996, there were six meetings of the
Company's Board of Directors, three meetings of the Audit Committee and one
meeting of the Salary (Compensation)
3
<PAGE>
Committee. The members of the Audit Committee during fiscal 1996 were Messrs.
Bullock, Hurley and Sides. In general, the Audit Committee recommends to the
Board of Directors the independent auditors to be selected and confers with
the Company's independent auditors to review the audit scope, the Company's
internal controls, financial reporting issues, results of the audit and the
range of non-audit services. See also "Relationship with Independent
Accountants" below. The members of the Salary Committee during fiscal 1996
were Messrs. Bullock, Hurley, Sides and Douglas R. Starrett. The function of
the Salary Committee is to review the salaries of key management personnel.
The Company does not have a standing nominating committee.
Directors who are not employees of the Company receive an annual retainer
fee of $6,000 payable in quarterly installments and a fee of $700, plus
expenses, for each Board of Directors and committee meeting that they attend.
Only one meeting attendance fee is paid for attending two meetings on the same
day. All directors attended at least 75% of the aggregate number of all
meetings of the Board of Directors and of all committees on which they served.
Non-employee directors may elect to defer part or all of their director's fees
in which event such deferred fees and interest thereon will generally be
payable in five equal annual installments after they cease to be a director.
A. COMPENSATION COMMITTEE REPORT
During fiscal 1996, the Compensation Committee of the Company was chaired by
J. Richard Bullock. The members of the Committee are all the outside directors
and the Chairman and CEO of the Company, Douglas R. Starrett. The Committee
reviews and sets compensation for all the executive officers listed in the
proxy statement. The Chairman and CEO is not present when his compensation is
considered.
Setting compensation is not done by formula. It is a subjective judgment
based on the following factors.
We do not look at the performance of just one year, but for a number of
years, and consider the economic climate in all areas of the world where we
operate. We look at how both stockholders and employees at all locations have
fared during these periods.
In particular, we look at stockholders' equity, which shows the value of the
Company to the stockholders. We also look at the dividend policy of the
Company to make sure that it is consistent or improving, since this is
important to all stockholders. At the same time, we must see that there are
funds left in the Company to provide for growth.
We consider stock price movement, bearing in mind that the stock market is
generally short-term oriented and subjected to pressures that are not under
the control of executive officers.
Compensation is primarily made up of basic salary. We make a judgment based
on competitive compensation of companies of similar size and in similar
fields, as shown by a national survey, The National Executive Compensation
Survey. This is the most comprehensive survey of its kind. It covers top
executive positions for manufacturing organizations by sales volume. We also
draw on our knowledge of the market cost of any executive who might have to be
replaced.
4
<PAGE>
There are also long-term incentives for everyone in the Company, including
the officers, to own company stock. This is available by way of an ESOP, a
401(k) plan, and stock option plans approved by stockholders. All officers
participate in these plans.
The Company does not have special perks for executives that are not
available to everyone in the Company, and we maintain a common sense
relationship between executive pays and average pays.
The performance of the Company in the early years of the 90's was hurt by
the poor economic climate in most of the world. Even though competition has
been fierce in our product lines, the Company has remained stable, profitable,
and the equity of the Company has increased each year. The Company has
remained in good shape to meet the future, but in recognition of the economic
climate, the salary for the CEO was held over the five years through fiscal
1995, and most other executives' pays were held, with some adjustments because
of varying degrees of responsibility.
During this past year there has been a definite improvement in the worldwide
performance of the Company, attributable more to efforts within the Company
than to rising economies. Consequently, this last year we increased the total
compensation of the CEO and other officers listed by a net total of
approximately $38,000. As we have previously stated, if the good performance
of the Company continues, we expect executive pays to increase as merited.
Compensation Committee
J. Richard Bullock
William S. Hurley
Andrew B. Sides, Jr.
Douglas R. Starrett
Compensation Committee Interlocks and Insider Participation:
There were no Compensation Committee interlocks during the last fiscal year.
Douglas R. Starrett, Chairman and CEO of the Company, served as a member of
the Company's Compensation Committee during fiscal 1996.
5
<PAGE>
B. REMUNERATION
The following information is given on an accrual basis for the last three
fiscal years with respect to the five executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
PROFIT ALL OTHER
NAME AND POSITION YEAR SALARY SHARING (1) OPTIONS COMPENSATION (2)
----------------- ---- -------- ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
D.R. Starrett........... 1994 $250,000 -- 300 $4,428
Chairman and CEO 1995 250,000 -- 300 4,469
1996 270,833 10,625 300 2,521
D.A. Starrett........... 1994 115,000 -- 50 2,224
President 1995 152,500 -- 300 2,542
1996 170,833 6,650 400 2,847
G.B. Webber............. 1994 130,000 -- -- 2,877
Vice President 1995 130,000 -- 400 4,091
Webber Gage Division 1996 110,000 4,600 109 1,788
C.H. Morrow............. 1994 132,000 -- 300 2,841
Vice President Sales 1995 138,000 -- -- 4,080
1996 148,333 5,830 -- 2,397
R.U. Wellington, Jr..... 1994 137,000 -- 126 2,651
Treasurer and CFO 1995 143,000 -- 1245 2,383
1996 150,833 5,955 61 2,514
</TABLE>
- --------
(1) Under the Company's Profit-Sharing Plan, most domestic employees of the
Company with at least one year's service share in proportion to their base
compensation in a fund equal to 20% of the excess of pre-tax domestic
operating profits over 10% of domestic sales, subject to certain
limitations. Payments are made annually in cash. No amounts were payable
under such plan for fiscal 1994 or 1995. In addition to payments under
such plan, the profit sharing amounts in the above table include a one-
time discretionary bonus paid to all employees entitled to participate in
the Plan which amounted to 1% of their base salary.
(2) Consists of the market value of one-third matching shares allocated under
the Company's 401(k) plan and 10% of the market value of shares allocated
under the Company's ESOP plan. The other 90% of the shares allocated under
the ESOP serve to reduce the benefits otherwise due under the Company's
Employees' Retirement Plan. See additional information under Retirement
Plan and under Employee Stock Savings and Ownership Plans.
C. RETIREMENT PLAN
The Company's Employees' Retirement Plan covers all domestic employees who
have at least one year of service and have attained age 21. Benefits under the
Retirement Plan are determined by reducing a formula amount calculated under
the Retirement Plan by 90% of the annuity value of the employee's vested
account balance, if any, under The L.S. Starrett Company Employee Stock
Ownership Plan (the "ESOP"). See below, "Employee Stock Savings and Ownership
Plans." At no time will the combined benefit of any participant under the
Retirement Plan and the ESOP be
6
<PAGE>
less than such participant's benefits, if any, under the Retirement Plan
before establishment of the ESOP. Prior to July 1, 1996, the formula amount
calculated under the Retirement Plan was based on the sum of 1% of the
employee's average base salary up to $3,000 plus 1.25% over $3,000, times the
number of years of service up to but not exceeding 30 years. As of July 1,
1996, the formula amount calculated under the Retirement Plan is based on the
sum of 1.25% of the employee's average base salary up to his Social Security
covered compensation plus 1.70% of the employee's average base salary over
covered compensation, times the number of years of service up to but not
exceeding 31 years (33 years for retirements after June 30, 1997 and 35 years
for retirements after June 30, 1998). An employee's average base salary is his
average base salary for the five consecutive highest paid of his last ten
years of employment.
Pursuant to provisions of the Internal Revenue Code of 1986, as amended, not
more than $150,000 of a participant's annual compensation may be taken into
account in computing a participant's benefit under the plan and annual annuity
benefits may not exceed a specified dollar limit (in general for 1996,
$120,000). However, this limitation shall not operate to reduce the benefits
of any employee accrued prior to the 1994 plan year. The Company has
established a Supplemental Executive Retirement Plan ("SERP") to provide on an
unfunded basis out of the general assets of the Company benefits earned under
the Retirement Plan formula (less the ESOP offset) that are in excess of
Internal Revenue Code limits. Amounts paid under the Company's Profit-Sharing
Plan are not included in base salary. At July 1, 1996, under the Retirement
Plan and SERP the credited years of service of certain executive officers of
the Company and their credited salaries for the fiscal year then ended were as
follows: Douglas R. Starrett--31 years, $270,333; George B. Webber--31 years,
$110,000; Charles H. Morrow--31 years, $148,333; Douglas A. Starrett--18
years, $170,833; and Roger U. Wellington, Jr.--10 years, $150,833.
The following table sets forth estimates of the pre-offset formula benefit
amount determined under the Retirement Plan for employees in various salary
and years-of-service categories, calculated as a benefit payable upon
retirement at age 65 on or after July 1, 1996. In the case of any employee
with a vested account balance under the ESOP, the formula benefit amount under
the Retirement Plan, estimates of which are shown below, would be subject to
offset by 90% of the annuity value of the ESOP vested account balance, but no
deduction would be made for Social Security benefits or other offset amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE ANNUAL ----------------------------------------------------------------------
EARNINGS 15 25 35
-------------- -------- -------- --------
<S> <C> <C> <C>
$125,000 30,015 50,025 70,035
150,000 36,390 60,650 84,910
175,000 42,765 71,275 99,785
200,000 49,140 81,900 114,660
225,000 55,515 92,525 129,535
250,000 61,890 103,150 144,410
275,000 68,265 113,775 159,285
</TABLE>
7
<PAGE>
D. EMPLOYEE STOCK SAVINGS AND OWNERSHIP PLANS
The Company has for its domestic employees an Employee Stock Ownership Plan
(ESOP), established in 1984, and a 401(k) Stock Savings Plan (401(k) Plan),
which was established in 1986. Both are designed to supplement retirement
benefits provided under the Company's Retirement Plan and to enable employees
to share in the growth of the Company.
In November 1984 the ESOP purchased 800,000 shares of stock from the Company
using funds obtained from borrowings guaranteed by the Company which were
repaid over a ten year period. Contributions made by the Company as well as
dividends paid on the ESOP's stock holdings were used to repay ESOP
indebtedness. As the indebtedness was repaid, the stock was allocated to
accounts of participants in the ESOP. Additional cash contributions were made
by the Company to make up for the dividends that were used to pay debt
service.
All employees of the Company are participants in the ESOP after completing
one year of service and attaining age 21. Allocations to a participant's
account under the ESOP are made in proportion to the ratio that the
participant's compensation bears to the aggregate compensation of all
participants. Prior to such allocations, shares purchased with funds borrowed
by the ESOP were held in a suspense account. The combined allocations of Class
A and B shares during the last three fiscal years ended June 29, 1996 to all
executive officers and to all employees of the Company as a group were:
Douglas R. Starrett--574 shares; George B. Webber--498 shares; Charles H.
Morrow--503 shares; Douglas A. Starrett--440 shares; Roger U. Wellington,
Jr.--525 shares; and all employees as a group--104,982 shares.
Employees who retire, die, or otherwise terminate employment under the ESOP
will be entitled to receive their vested account balance, which will generally
be distributed at the same time that the employee is eligible to begin
receiving a benefit under the Retirement Plan. An amount equal to 90% of an
employee's vested ESOP account balance, expressed in annuity form, will be
used to offset the employee's benefit under the Retirement Plan. See above,
"Retirement Plan."
The 401(k) Plan is a savings and salary deferral plan that is intended to
qualify for favorable tax treatment under Section 401(k) of the Internal
Revenue Code. To be a participant an employee must have completed six months
of service and be at least 18 years old. Plan participants may authorize
deferral of a portion of their salary through payroll deductions. Participants
may elect to have up to 15% of their compensation (as determined under the
Plan) contributed to a trust fund established for the Plan as a salary
deferral contribution.
The Company may contribute to the Plan quarterly on behalf of each
participant a matching contribution in Common Stock of the Company equal to a
portion of the participant's salary deferral contribution. At present, the
matching contribution is equal to one-third of the participant's salary
deferral contribution. Salary deferral contributions vest immediately.
Matching contributions vest immediately for participants with five or more
years of service or at death, disability or retirement if earlier.
Participants in the 401(k) Plan are not subject to Federal or state income
tax on salary deferral contributions or on Company matching contributions or
the earnings thereon until such amounts are withdrawn from the Plan. Amounts
contributed to the Plan are invested in the Company's Common Stock.
Withdrawals from the Plan may only be made upon termination of employment,
attainment of
8
<PAGE>
age 59 1/2 or in connection with certain provisions of the Plan that permit
hardship withdrawals. The Plan also permits loans to participants.
For the last three fiscal years ended June 29, 1996, Company matching
contributions for all executive officers of the Company as a group were 1,715
shares and for all employees of the Company as a group were 57,889 shares.
E. STOCK OPTION AND PURCHASE PLANS
The Company currently has in effect for the benefit of eligible employees
the 1992 Employees' Stock Purchase Plan (the "1992 Plan") to provide a
convenient means for these employees to acquire an interest in the future of
the Company by purchasing up to 800,000 shares of Common Stock. At June 29,
1996, there were 1,641 employees eligible to participate in the 1992 Plan.
The option price to purchase shares of the Company's Common Stock under the
1992 Plan is the lower of 85% of the market price on the date of grant or 85%
of the market price on the date of exercise (two years from the date of
grant). The Company also sells treasury shares to employees under an
Employees' Stock Purchase Plan adopted in 1952 (the "1952 Plan"). The Company,
from time to time, purchases these shares in the open market to be held in
treasury. The Company pays brokerage and other expenses incidental to
purchases and sales under the 1952 Plan and employees may authorize regular
payroll deductions for purchases of shares.
The following table sets forth information regarding options for shares of
the Company's Class A Common Stock under the terms of the Company's stock
option and purchase plans for the executive officers of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
AS %
NUMBER OF OF TOTAL MARKET GRANT
OPTIONS EMPLOYEE PRICE AT EXERCISE EXPIRATION DATE
NAME GRANTED GRANTS GRANT DATE PRICE(1) DATE VALUE(2)
---- --------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
D.R. Starrett........... 200 1.1 $22.88 $19.45 11/20/97 $1,200
100 .7 25.75 21.89 6/3/98 700
D.A. Starrett........... 300 1.7 22.88 19.45 11/7/96 1,700
100 .7 25.75 21.89 6/3/98 700
G.B. Webber............. 109 .7 25.75 21.89 6/3/98 700
R.U. Wellington, Jr..... 261 .3 22.88 19.45 11/20/97 400
</TABLE>
- --------
(1) Exercise price represents 85% of market price on dates of grant. Exercise
price will be 85% of market price on date of exercise, if lower.
(2) Based on the Black-Scholes option pricing model (assuming volatility of
14% and an interest rate of 6.2%).
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NUMBER FISCAL YEAR FISCAL YEAR
OF SHARES VALUE END (NONE END (NONE
NAME ACQUIRED REALIZED EXERCISABLE) EXERCISABLE)
---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C>
D.R. Starrett...................... 300 $1,018 600 $ 4,016
D.A. Starrett...................... 50 168 700 4,671
G.B. Webber........................ -- -- 309 2,098
C.H. Morrow........................ 300 1,012 -- --
R.U. Wellington, Jr. .............. -- -- 1,306 10,671
</TABLE>
F. STOCK PERFORMANCE GRAPH
The following graph sets forth information comparing the cumulative total
return to holders of the Company's Common Stock over the last five fiscal
years with (1) the cumulative total return of the Standard & Poor's 500 Index
("S&P 500") and (2) an index reflecting the cumulative total returns of the
following companies ("Peer Group"): Danaher, Loctite, Regal Beloit,
Kennametal, WD-40, Stanley, Acme Cleveland, Black & Decker, IMO Industries and
Brown & Sharpe.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
6/91 6/92 6/93 6/94 6/95 6/96
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 113.36 128.74 130.59 164.53 207.19
PEER GROUP 100 118.72 123.97 131.02 171.5 220.51
STARRETT 100 109.95 111.88 102.03 110.74 131.00
---------------------------------------------------------------------
</TABLE>
10
<PAGE>
II. RELATIONSHIP WITH INDEPENDENT AUDITORS
During the year ended June 29, 1996, Deloitte & Touche was engaged to
perform the annual audit. Representatives of Deloitte & Touche are expected to
be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so; they will be available to respond to
appropriate questions.
The Company presently expects to engage Deloitte & Touche as auditors for
the 1997 fiscal year, but the selection will not be made until the September
1996 meeting of the Company's Board of Directors.
III. GENERAL
A. SOLICITATION AND VOTING
In case any person or persons named herein for election as a director should
not be available for election at the Annual Meeting, proxies in the enclosed
form (in the absence of express contrary instructions) may be voted for a
substitute or substitutes as well as for other persons named herein.
As of the date of this statement your management knows of no business that
will be presented to the Annual Meeting that is not referred to in the
accompanying notice, other than the approval of the minutes of the last
meeting of stockholders, which action will not be construed as approval or
disapproval of any of the matters referred to in such minutes.
As to other business, if any, that may properly come before the Annual
Meeting, it is intended that proxies in the attached form that do not contain
specific instructions to the contrary will be voted in respect thereof in
accordance with the judgment of the persons voting the proxies.
A summary of the Annual Meeting of the Stockholders of the Company will be
sent to each stockholder.
The enclosed proxy is solicited by the Board of Directors of the Company.
The cost of solicitation will be borne by the Company. Such solicitation will
be made by mail and may also be made by the Company's officers and employees
personally or by telephone or telegram. The Company will, on request,
reimburse brokers, custodians and nominees for their expenses in sending
proxies and proxy material to beneficial owners. A proxy that is executed but
that does not specify a vote for, against or in abstention will be voted in
accordance with the recommendation of the Board of Directors contained herein.
Consistent with state law and under the Company's by-laws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed
by the Company to act as election tellers for the Annual Meeting. The two
nominees for election as directors at the Annual Meeting who receive the
greatest number of votes properly cast for the election of directors shall be
elected directors.
11
<PAGE>
The election tellers will count shares represented by proxies that withhold
authority to vote for a nominee for election as a director or that reflect
abstentions and "broker non-votes" (i.e., shares represented at the meeting
held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither abstentions nor
broker non-votes will have any effect on the outcome of voting on the matter.
B. SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's proxy statement for its
1997 Annual Meeting must be received by the Company no later than April 15,
1997.
IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED IT IS IMPORTANT THAT
THE PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE URGED TO EXECUTE
AND RETURN THE ENCLOSED PROXY IN THE STAMPED ENVELOPE ADDRESSED TO THE COMPANY
AT ATHOL, MASSACHUSETTS. Stockholders who send in proxies, but attend the
Annual Meeting in person, may withdraw their proxies and vote directly if they
prefer or may allow their proxies to be voted with the similar proxies sent in
by other stockholders.
August 16, 1996
12
<PAGE>
THE L.S. STARRETT COMPANY PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1996
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas
R. Starrett and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated below at the Annual Meeting of Stockholders of The L.S. Starrett
Company (the "Company") to be held on the 18th day of September, 1996 at 2:00
p.m. at the office of the Company in Athol, Massachusetts and any adjournments
thereof, upon and in respect of all of the shares of the Class A and B Common
Stock of the Company as to which the undersigned may be entitled to vote or act,
with all powers the undersigned would possess if personally present, and without
limiting the general authorization hereby given, the undersigned directs that
his vote be cast as specified in this Proxy. The undersigned hereby revokes any
proxy previously granted to vote the same shares of stock for said meeting.
Management recommends a vote FOR the following proposal:
1. ELECTION OF DIRECTORS: As set forth in the Proxy Statement.
<TABLE>
<CAPTION>
<S> <C>
Class A Stockholders: Andrew B. Sides, Jr. Class A and B Stockholders: Douglas R. Starrett
Roger U. Wellington, Jr.
[_] FOR [_] WITHHELD [_] FOR [_] WITHHELD
BOTH NOMINEES FROM BOTH NOMINEES
For, except vote withheld from the following nominee:
[_]
------------------------------------------------
</TABLE>
<PAGE>
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Item 1.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ,1996
-------------------
(Please Date)
------------------------------
------------------------------
Sign Here
Note: Please sign exactly as name(s)
appear hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If signer is a corporation,
please sign corporate name in full by
authorized officer.
<PAGE>
THE L.S. STARRETT COMPANY PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1996
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas
R. Starrett and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated below at the Annual Meeting of Stockholders of The L.S. Starrett
Company (the "Company") to be held on the 18th day of September, 1996 at 2:00
p.m. at the office of the Company in Athol, Massachusetts and any adjournments
thereof, upon and in respect of all of the shares of the Class A and B Common
Stock of the Company as to which the undersigned may be entitled to vote or act,
with all powers the undersigned would possess if personally present, and without
limiting the general authorization hereby given, the undersigned directs that
his vote be cast as specified in this Proxy. The undersigned hereby revokes any
proxy previously granted to vote the same shares of stock for said meeting.
Management recommends a vote FOR the following proposal:
1. ELECTION OF DIRECTORS: As set forth in the Proxy Statement.
<TABLE>
<CAPTION>
<S> <C>
Class A Stockholders: Andrew B. Sides, Jr. Class A and B Stockholders: Douglas R. Starrett
Roger U. Wellington, Jr.
[_] FOR [_] WITHHELD [_] FOR [_] WITHHELD
BOTH NOMINEES FROM BOTH NOMINEES
For, except vote withheld from the following nominee:
[_]
------------------------------------------------
</TABLE>
<PAGE>
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Item 1.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ,1996
-------------------
(Please Date)
------------------------------
------------------------------
Sign Here
Note: Please sign exactly as name(s)
appear hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If signer is a corporation,
please sign corporate name in full by
authorized officer.
<PAGE>
THE L.S. STARRETT COMPANY
DIRECTIONS UNDER 401(K) STOCK SAVINGS PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1996
The undersigned hereby directs Douglas A. Starrett, Roger U. Wellington,
Jr. and Richard C. Newton, and each of them, as trustees under the 401(K)
Stock Savings Plan and Employee Stock Ownership Plan (the "Plans") of the L.S.
Starrett Company (the "Company"), to vote and act in the manner designated below
at the Annual Meeting of Stockholders to be held on the 18th day of September,
1996 at 2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class A
and Class B Common Stock of the Company allocated to the undersigned under the
Plans. The undersigned hereby revokes any other directions previously given to
vote the same shares of stock for said meeting.
Management recommends a vote FOR the following proposal:
1. ELECTION OF DIRECTORS: As set forth in the Proxy Statement.
<TABLE>
<CAPTION>
<S> <C>
Class A Stockholders: Andrew B. Sides, Jr. Class A and B Stockholders: Douglas R. Starrett
Roger U. Wellington, Jr.
[_] FOR [_] WITHHELD [_] FOR [_] WITHHELD
BOTH NOMINEES FROM BOTH NOMINEES
For, except vote withheld from the following nominee:
[_]
------------------------------------------------
</TABLE>
<PAGE>
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Item 1.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ,1996
-------------------
(Please Date)
------------------------------
------------------------------
Sign Here
Note: Please sign exactly as name(s)
appear hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If signer is a corporation,
please sign corporate name in full by
authorized officer.
<PAGE>
FOR VOTING CLASS B COMMON STOCK ONLY PROXY CARD
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1996
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas
R. Starrett and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated below at the Annual Meeting of Stockholders of The L.S. Starrett
Company (the "Company") to be held on the 18th day of September, 1996 at 2:00
p.m. at the office of the Company in Athol, Massachusetts and any adjournments
thereof, upon and in respect of all of the shares of the Class B Common Stock of
the Company as to which the undersigned may be entitled to vote or act, with all
powers the undersigned would possess if personally present, and without limiting
the general authorization hereby given, the undersigned directs that his vote be
cast as specified in this Proxy. The undersigned hereby revokes any proxy
previously granted to vote the same shares of stock for said meeting.
Management recommends a vote FOR the following proposal:
1. ELECTION OF DIRECTORS: As set forth in the Proxy Statement.
Nominees: Douglas R. Starrett
Roger U. Wellington, Jr.
[_] FOR [_] WITHHELD
BOTH NOMINEES FROM BOTH NOMINEES
For, except vote withheld from the following nominee:
[_]
-------------------------------------------------
<PAGE>
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Item 1.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ,1996
-------------------
(Please Date)
------------------------------
------------------------------
Sign Here
Note: Please sign exactly as name(s)
appear hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If signer is a corporation,
please sign corporate name in full by
authorized officer.
<PAGE>
FOR VOTING CLASS A COMMON STOCK ONLY PROXY CARD
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1996
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas
R. Starrett and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated below at the Annual Meeting of Stockholders of The L.S. Starrett
Company (the "Company") to be held on the 18th day of September, 1996 at 2:00
p.m. at the office of the Company in Athol, Massachusetts and any adjournments
thereof, upon and in respect of all of the shares of the Class A Common Stock of
the Company as to which the undersigned may be entitled to vote or act, with all
powers the undersigned would possess if personally present, and without limiting
the general authorization hereby given, the undersigned directs that his vote be
cast as specified in this Proxy. The undersigned hereby revokes any proxy
previously granted to vote the same shares of stock for said meeting.
Management recommends a vote FOR the following proposal:
1. ELECTION OF DIRECTORS: As set forth in the Proxy Statement.
Nominees: Andrew B. Sides, Jr.
Douglas R. Starrett
Roger U. Wellington, Jr.
[_] FOR [_] WITHHELD
ALL NOMINEES FROM ALL NOMINEES
For, except vote withheld from the following nominee(s):
[_]
-------------------------------------------------
<PAGE>
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Item 1.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ,1996
-------------------
(Please Date)
------------------------------
------------------------------
Sign Here
Note: Please sign exactly as name(s)
appear hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If signer is a corporation,
please sign corporate name in full by
authorized officer.
