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
Filed by the Registrant XX
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement Confidential, For Use of the
Commission Only (as Permit-
ted by Rule 14a-6(e)(2))
XX Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRION, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
XX No fee required.
Fee computed on table below per Exchange Act
Rules 14a-6(i)(I) 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 is 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:
<p>
Trion, Inc.
TRION, INC. Notice of Annual Meeting
of Shareholders
and Proxy Statement
Tuesday, April 15, 1997
10:00 A.M. (Local Time)
Dennis A. Wicker Civic Center
1801 Nash Street
Sanford, North Carolina
_____________________________________
Table of Contents Page
Notice of Annual Meeting of Shareholders . . 2
Proxy Statement . . . . . . . . . . . . . . 3
Shares Entitled to Vote . . . . . . . . . . 3
Election of Directors . . . . . . . . . . . 4
Security Ownership . . . . . . . . . . . . . 7
Section 16(a) Beneficial Ownership
Reporting Compliance . . . . . . . . . . . 8
Executive Compensation . . . . . . . . . . . 8
Corporate Performance . . . . . . . . . . . 14
Service Agreement . . . . . . . . . . . . .15
Independent Auditors . . . . . . . . . . . .15
Shareholder Proposals for
1998 Annual Meeting . . . . . . . . . . .15
Other Matters . . . . . . . . . . . . . . .15
______________________________________________
<p>
TRION, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
The Annual Meeting of Shareholders of Trion, Inc. will be held at the
Dennis A. Wicker Civic Center, 1801 Nash Street, Sanford, North Carolina, on
Tuesday, April 15, 1997, at 10:00 A.M. (local time), for the following
purposes:
(1) To elect two directors to serve for a term of three years.
(2) To transact any and all other business which may
properly come before the meeting or any adjournment or
adjournments thereof.
A Proxy Statement containing information for shareholders is annexed
hereto and a copy of the Annual Report of the Company for the fiscal year
ended December 31, 1996 is enclosed herewith.
Shareholders who do not expect to attend the meeting and desire to have
their stock voted at the meeting are requested to sign the enclosed Proxy and
return the same in the enclosed envelope, which requires no postage if mailed
in the United States.
By Order of the Board of Directors,
March 11, 1997 C. J. Monsma
Sanford, North Carolina Secretary
<p>
TRION, INC.
P.O. Box 760
Sanford, North Carolina 27331-0760
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Trion, Inc. (the "Company"), to be voted
at the Annual Meeting of Shareholders of the Company to be held on Tuesday,
April 15, 1997, beginning at 10:00 A.M. (local time) (the "Annual Meeting"),
at the Dennis A. Wicker Civic Center, 1801 Nash Street, Sanford, North
Carolina, and at any and all adjournments thereof.
The only business which the Company intends to present, or knows that
others will present, at the Annual Meeting is the business specified in the
accompanying Notice of the Annual Meeting. However, if other matters are
properly presented at the Annual Meeting, such matters will be considered and
acted upon and the persons named in the Proxies being solicited will vote such
Proxies in accordance with their best judgment on such matters.
This Proxy Statement and the accompanying Notice and form of Proxy will
be mailed to shareholders on or about March 11, 1997.
SHARES ENTITLED TO VOTE
Shareholders of record at the close of business on March 3, 1997, will
be entitled to vote at the Annual Meeting. As of March 3, 1997 there were
outstanding 6,997,519 shares of the Company's common stock, par value $0.50
per share (the "Common Stock"). Shareholders are entitled to one vote per
share of Common Stock and, in the election of directors, have cumulative
voting rights; that is, each shareholder (or his proxies) is entitled to as
many votes as his shares represent times the number of directors to be elected
and may cast all such votes for a single nominee or distribute them among the
nominees as he (or his proxies) sees fit. The persons named in the Proxies
will allocate the cumulated votes represented by the Proxies in the manner
they deem proper in their best judgment. A shareholder voting by signing and
returning the Proxy may not specify a manner of allocation on the Proxy, but
must be present at the Annual Meeting and vote by ballot or specify a manner
of allocation in a proxy given to another person in order to have his votes
allocated in a particular manner.
The Company has a confidential voting By-law which provides that, at the
shareholder's election, an individual shareholder's votes on a proxy card will
not be disclosed to the Company other than in specified situations. The
Company's proxy cards will be collected and tabulated by the judge of election
for the Annual Meeting, First Union National Bank. The tabulator will forward
comments written on the proxy cards to the Company for management's
information, but information about individual shareholders' votes who have
checked the box on the proxy card to elect confidential voting will not be
communicated to the Company's management except in specified situations.
In the election of directors, the two candidates who receive the highest
number of votes actually cast will be elected. If your Proxy is specifically
marked as withholding authority to vote for one or more of the director
nominees listed on the Proxy, your shares will not be voted for the election
of the nominee(s) as to whom you have withheld authority to vote, and will be
voted for the election of the other listed nominee, if applicable. Such votes
withheld will not have the effect of a "negative" vote with respect to the
election of directors. Any other proposal coming before the Annual Meeting
generally will be approved and authorized if it receives the affirmative vote
of a majority of the votes actually cast by shareholders entitled to vote on
the proposal. Therefore, abstentions, if any, from voting with respect to any
such matter will not have the effect of a "negative" vote with respect to such
matter. In accordance with Pennsylvania law, votes withheld from director
nominees or abstentions with respect to any other matter will be counted for
purposes of determining whether a quorum exists at the Annual Meeting.
<p>
Brokers, banks and other nominee holders of Common Stock will be
requested to obtain voting instructions of beneficial owners of such Common
Stock registered in the nominee holders' names. All shares represented by a
duly completed Proxy submitted by a nominee holder on behalf of beneficial
owners will be counted for purposes of determining whether a quorum exists at
the Annual Meeting, whether or not such shares are actually voted by the
nominee holder with respect to all matters presented at the Annual Meeting.
Such shares will be voted to the extent instructed by the nominee holder, and
if such nominee holder fails to vote a beneficial owner's shares for a
particular matter, such shares will not have the effect of a "negative" vote
with respect to such matter.
ELECTION OF DIRECTORS
The By-laws of the Company provide that directors are to be elected in
three classes. At the annual meeting in each year, the shareholders elect for
a term of three years a successor or successors to the director or directors
whose term or terms expire in such year. At the Annual Meeting, the
shareholders will elect a class of two directors for a term expiring in 2000.
It is intended that the Proxies will be voted for the election of the
nominees listed below. Grant R. Meyers and Samuel J. Wornom III are currently
serving as directors in the class to be elected at the Annual Meeting. If a
nominee is unable to serve for any reason not presently known, a substitute
will be nominated by the Board of Directors and the Proxies will be voted for
such substitute.
During this past year the Nominating Committee of the Board of Directors
conducted a search for another Director to increase the Board from seven to
eight members which resulted in the unanimous appointment of F. Trent Hill,
Jr. on October 22, 1996 to serve in the class whose term expires in 1999.
The following table lists information concerning the nominees for
election as directors and the continuing directors of the Company, including
the number of shares of Common Stock beneficially owned, directly or
indirectly, by each as of March 3, 1997. Unless otherwise indicated, the
holders of all shares shown in the table have sole voting and investment power
with respect to such shares, and hold less than 1% of the class.
Shares of
Name and Director Common Stock Percent of
Principal Occupation (1) Age Since Beneficially Owned (2) Class (2)(3)
(a) Nominees for director for terms to expire in 2000:
Grant R. Meyers (*) 54 1976 270,650 3.76%
Partner, Target Sales
manufacturers' repre-
sentative organization,
Davie, FL (4)
Samuel J. Wornom III (*)(**) 54 1982 90,013(6) 1.25%
President, Nouveau
Investments, Inc.,
Sanford, NC (5)
(b) Continuing directors whose terms expire in 1998:
Hugh E. Carr (*)(**) 64 1968 522,662(8) 7.26%
Former Chairman and
Chief Executive Officer,
Trion, Inc.
Sanford, NC (7)
<p>
Shares of
Name and Director Common Stock Percent of
Principal Occupation (1) Age Since Beneficially Owned (2) Class (2)(3)
Joseph W. Deering (***) 56 1995 4,388 --
President, PMI
Food Equipment Group
(a division of Premark
International, Inc.),
manufacturer of commercial
food service products,
Troy, OH (9)
Seddon Goode, Jr. (*)(***) 65 1979 81,812 1.14%
President, University
Research Park, a 501(c)(6)
corporation - real estate
developers,
Charlotte, NC (10)
(c) Continuing directors whose terms expire in 1999:
James E. Heins (***) 66 1981 12,570 --
Independent consultant-
communications,
Pinehurst, NC (11)
F. Trent Hill, Jr. 44 1996 10,000 --
Chief Financial Officer,
Sonoco Products Company,
manufacturer of packaging
products,
Hartsville, SC (12)
Steven L. Schneider (**) 53 1993 161,543(14) 2.25%
President and Chief
Executive Officer,
Trion, Inc.,
Sanford, NC (13)
(*) Member of audit committee
(**) Member of nominating committee
(***) Member of compensation committee
(1) There are no family relationships between any executive officers,
directors or persons nominated to become a director, except that Messrs.
Meyers and Carr are brothers-in-law. Except as otherwise indicated,
each director and nominee has held the principal occupation listed for
five years or more.
(2) These figures include shares owned by the immediate families (i.e.,
wives, minor children and relatives sharing the same home) of the
respective persons. Shares of Common Stock also include any shares
which each person has the right to acquire upon exercise of options
which are exercisable within sixty days of March 3, 1997.
<p>
(3) With respect to holdings of Common Stock, these percentages assume the
exercise of options exercisable within sixty days of March 3, 1997 owned
by the respective persons, but no other exercise, for each calculation.
(4) Mr. Meyers is also President of Scuba Marine Products, a manufacturer
and distributor of scuba diving and marine supplies and Vice President
of Island Trader Inc., a retail store in Key Largo, FL.
(5) Mr. Wornom was the President and sole shareholder of First Southern
Financial Corp. ("First Southern"), a factoring business which he
purchased in 1988. Mr. Wornom was not active in the day-to-day
operations of First Southern. In 1991, the Executive Vice President and
General Manager of First Southern pleaded guilty to falsifying reports
furnished to a federal bank and as a result of his activities, First
Southern initiated liquidation proceedings under Chapter 7 of the United
States Bankruptcy Code in March 1992.
(6) Includes 35,000 shares which Mr. Wornom has the right to acquire upon
the exercise of stock options.
(7) Mr. Carr is a director of the Sanford branch of Wachovia Bank of North
Carolina. Wachovia is the Company's principal banking affiliation. The
amount of shares of Common Stock beneficially owned by Mr. Carr includes
310,399 shares of Common Stock owned of record and beneficially by his
spouse, as to which she has sole voting and investment power and as to
which he disclaims beneficial ownership.
(8) Includes 30,000 shares which Mr. Carr has the right to acquire within
sixty days of March 3, 1997 upon the exercise of stock options. See
"Service Agreement."
(9) Prior to assuming his current position in June 1992, Mr. Deering was
President of Leucadia Manufacturing, a division of Leucadia National,
Inc., a diversified insurance, banking and manufacturing company,
beginning in 1991.
(10) As of November 1996, Mr. Goode is also a director of Riscorp, Inc.
(11) Mr. Heins was employed by ALLTEL Corporation, a communications company,
from 1986 until his retirement in 1991. His most recent position
was Vice President Government Relations. Mr. Heins is also a director of
BB&T Financial Corporation.
(12) Prior to assuming his current position in 1995, Mr. Hill was Vice
President-Finance in 1994 and Vice President-Industrial Products
Division, N.A. from 1990 through 1994 for Sonoco Products Company.
(13) Prior to joining the Company in May 1993, Mr. Schneider served as Group
President of Tomkins Industries, Inc., a diversified manufacturing
company and a subsidiary of Tomkins PLC, for more than five years.
(14) Includes 101,374 shares which Mr. Schneider has the right to acquire
within sixty days of March 3, 1997 upon the exercise of stock options.
Also includes 14,869 shares of Common Stock owned by the Trion
Charitable Foundation with respect to which Mr. Schneider shares the
voting and investment power as one of four co-trustees, but as to which
he has no economic interest.
The Company has standing audit, compensation and nominating committees.
During 1996 the Board of Directors met five times; the audit committee met
once; the compensation committee met twice; and the nominating committee met
four times. Each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and of the committees on which he
served. The functions of the audit committee consist primarily of selecting
the Company's independent auditors and reviewing their independence; approving
the scope of annual or special audit activities and reviewing audit results;
monitoring financial reporting and accounting practices; and reviewing the
adequacy of the Company's system of internal accounting controls. The
functions of the compensation committee are to make recommendations to the
Board on all matters of policy and procedures relating to compensation of
executive management; to conduct an annual review of the
<p>
performance of the Company's executives and make recommendations to the Board
regarding the level and form of compensation to be awarded each executive,
including the granting of stock options; and to make reports and recommend
actions to the Board concerning compensation plans, including an annual
Management Incentive Plan. The functions of the nominating committee consist of
making recommendations to the Board concerning its size, the composition of its
classes and candidates for election as directors, including consideration of
individuals recommended by shareholders for election as a director. Any such
recommendations, together with the individual's qualifications and consent to be
considered as a nominee, should be sent to the Secretary of the Company for
presentation to the nominating committee.
Under current arrangements, the non-employee directors are paid an
annual retainer of $6,000 which is paid in shares of Common Stock plus a fee
of $600 for participation in each meeting of the Board of Directors and each
committee meeting. Each director has $50,000 in life insurance coverage and
$200,000 in travel and accident coverage through the Company's group plans.
Mr. Carr receives compensation in his capacity as a consultant as described
under "Service Agreement," and did not receive the annual retainer or the
meeting fees during 1996.
SECURITY OWNERSHIP
Information concerning beneficial ownership of Common Stock by
individual directors and nominees, including S. L. Schneider, who is also
named in the Summary Compensation Table below, is set forth under "Election of
Directors." The following table sets forth the number of shares of Common
Stock beneficially owned by the other executive officers named in the Summary
Compensation Table and by the directors, nominees and executive officers of
the Company as a group (twelve persons) on March 3, 1997:
Name Shares Beneficially Owned (1) Percent of Class (1)
- ---------------------- ----------------------------- -------------------
B. H. Boender 24,071 --
C. J. Monsma 14,203 --
C. A. Haynes 6,915 --
H. A. Rose 1,667 --
Directors and executive 1,228,012 17.07%
officers as a group
- -------------------------
(1) Includes shares which were deemed outstanding because the individuals
had the right to acquire them upon exercise of options which are
exercisable within sixty days of March 3, 1997 as follows: Mr. Boender,
14,071; Mr. Monsma, 13,203; Mr. Haynes, 6,100; Mr. Rose, 1,667; and the
group, 218,808.
The only person known to the Company to be the beneficial owner of more
than 5% of the Common Stock on March 3, 1997 is Hugh E. Carr, whose address is
318 Court Square, Suite A, Sanford, North Carolina 27330-5658. Information as
to Mr. Carr's beneficial ownership is set forth above under "Election of
Directors."
<p>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and executive
officers to file reports with the Securities and Exchange Commission indicating
their holdings of and transactions in the Company's equity securities and to
provide copies of such reports to the Company. To the Company's knowledge
insiders of the Company complied with all such filing requirements for 1996.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation during
1996 of the President and Chief Executive Officer of the Company and the other
executive officers of the Company whose salary and bonus exceeded $100,000 in
1996:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Awards(s) Options Payout Compensation
($) ($) ($) ($) (#) ($) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S. L. Schneider 1996 197,600 27,960 N/A N/A 9,912 N/A 16,195
President and Chief 1995 190,000 45,410 N/A N/A 9,248 N/A 1,879
Executive Officer(2) 1994 182,500 48,711 N/A N/A 10,205 N/A 1,190
B. H. Boender 1996 102,360 18,044 N/A N/A 5,280 N/A 8,896
Vice President/Sales 1995 98,800 26,592 N/A N/A 4,925 N/A 1,508
Marketing 1994 95,944 27,166 N/A N/A 4,028 N/A 647
C. J. Monsma 1996 104,200 13,806 N/A N/A 5,008 N/A 9,065
Vice President and 1995 99,996 18,946 N/A N/A 2,302 N/A 312
Chief Financial 1994 47,756 9,791 N/A N/A 15,000(4) N/A N/A (5)
Officer(3)
C. A. Haynes 1996 94,050 12,609 N/A N/A 4,511 N/A 8,186
Vice President 1995 90,000 17,145 N/A N/A 2,121 N/A 281
Engineering(6) 1994 44,019 9,001 N/A N/A 5,000(7) N/A N/A (5)
H. A. Rose 1996 95,833 11,553 N/A N/A 5,000(9) N/A N/A (10)
Vice President/Sales
Marketing(8)
</TABLE>
______________
(1) Represents the Company's contribution to the Trion Savings Plus Plan
(401(k)) for the accounts of the named executive officers and, in 1996,
amounts credited under the Non-Qualified Retirement and Savings Plan
which provides for an annual accrual equal to 7% of the named executives
base salary plus interest thereon. The amounts credited in 1996 under
the Non-Qualified Retirement and Savings Plan were as follows: Mr.
Schneider - $14,275; Mr. Boender - $7,395; Mr. Monsma - $7,528; and Mr.
Haynes - $6,798.
<p>
(2) Mr. Schneider is employed pursuant to an employment agreement described
under the caption "Compensation Agreements."
(3) Mr. Monsma joined the Company on July 11, 1994.
(4) Mr. Monsma was granted incentive stock options to purchase 15,000 shares
of Common Stock under the 1985 Option Plan in connection with his
employment. The exercise price per share of such options is $5.375. The
options become exercisable ratably over three years from the first
anniversary of the date of grant.
(5) Mr. Monsma and Mr. Haynes were not eligible to participate in the Trion
Savings Plus Plan (401(k)) in 1994.
(6) Mr. Haynes joined the Company on July 6, 1994.
(7) Mr. Haynes was granted incentive stock options to purchase 5,000 shares
of Common Stock under the 1985 Option Plan in connection with his
employment. The exercise price per share of such options is $5.00. The
options become exercisable ratably over three years from the first
anniversary of the date of grant.
(8) Mr. Rose joined the Company on January 15, 1996.
(9) Mr. Rose was granted incentive stock options to purchase 5,000 shares of
Common Stock under the 1995 Option Plan in connection with his
employment. The exercise price per share of such options is $4.875. The
options become exercisable ratably over three years from the first
anniversary of the date of grant.
(10) Mr. Rose was not eligible to participate in the Trion Savings Plus Plan
(401(k)) in 1996 and is not a participant in the Non-Qualified Retirement
and Savings Plan.
The following table sets forth information concerning stock option grants
during 1996 to the executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants (1) Option Term
- ------------------------------------------------------------- --------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
---- ---------- --------- ------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
S. L. Schneider 9,912 21.32 6.1250 2/14/01 15,534 37,065
B. H. Boender 5,280 11.36 6.1250 2/14/01 8,275 19,744
C. J. Monsma 5,008 10.77 6.1250 2/14/01 7,849 18,727
C. A. Haynes 4,511 9.70 6.1250 2/14/01 7,070 16,868
H. A. Rose 5,000 10.76 4.8750 1/15/01 6,735 14,881
</TABLE>
_____________
<p>
(1) All stock options reflected in the table were granted under the 1995
Option Plan and are incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986. The options become exercisable
ratably over three years from the first anniversary of the date of grant.
The following table sets forth information concerning the options exercised
during 1996 and the unexercised options held at December 31, 1996 by the
executive officers named in the Summary Compensation Table:
<TABLE>
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR END OPTION VALUES
<CAPTION>
Value of Unexercised
Shares Number of Securities In-the-Money
Acquired Value Underlying Unexercised Options at Fiscal Year-
on Realized Options at Fiscal Year-End (#) End ($)(1)
Name Exercise # $ Exercisable Unexercisable Exercisable Unexercisable
---- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
S. L. Schneider - - 88,503 72,562 107,763 68,750
B. H. Boender - - 9,326 9,907 - -
C. J. Monsma - - 10,767 11,543 - -
C. A. Haynes - - 4,040 7,592 - -
H. A. Rose - - - 5,000 - -
_____________________
(1) Represents the difference between the exercise price of the options
and the closing sales price of the Common Stock as reported on the
NASDAQ National Market System on December 31, 1996 of $4.125 per share.
Pension Benefits
The Company maintains a noncontributory defined benefit retirement plan (the
"Plan") for all domestic employees of the parent Company, Trion, Inc., who
have completed one year of service with the Company and have reached the age
of 21.
Historically, benefits under the Plan were calculated for each participant
on two separate bases. With respect to any years of service prior to January
1, 1982, benefits were based on the participant's average monthly earnings
during the period from January 1, 1977 to December 31, 1981. With respect to
years of service beginning January 1, 1982, through December 31, 1995,
benefits for each participant were determined based on the individual's actual
earnings, and the annual amounts as calculated were aggregated. Beginning
January 1, 1996, the Company amended the Plan to a cash balance basis.
<p>
Under the terms of the conversion to a cash balance pension plan, benefits
are based on hypothetical account balances. The benefit accrued by each
participant prior to January 1, 1996 was converted into an actuarially
equivalent cash balance amount. For 1996 and subsequent years, each
participant will accrue an additional benefit equal to 2.75% of eligible
compensation and interest will be credited on the hypothetical accounts at a
rate fixed by the Board of Directors. The rate for 1996 was 6.5%. Eligible
compensation for purposes of the Plan includes salary and bonus, as referenced
in the Summary Compensation Table, subject to maximum annual compensation of
$150,000 which is indexed for inflation. For 1996, the maximum annual pension
payable under the Plan was $120,000.
The normal form of benefit payment as calculated is a straight life annuity
with joint and survivor options available. With the conversion to a cash
balance pension plan, lump sum distributions are also permitted.
The estimated annual benefit payable under the Plan at the normal
retirement age of 65 to the named executive officers is: Mr. Schneider -
$19,813; Mr. Boender - $25,051; Mr. Monsma - $26,109; Mr. Haynes - $18,549;
and Mr. Rose - $32,940.
Compensation Agreements
On March 31, 1993 the Company and Steven L. Schneider entered into an
employment agreement which was subsequently amended and restated on July 28,
1995 (the "Agreement") providing for his employment as President and Chief
Executive Officer for a three-year term commencing on May 24, 1993 (the
"Commencement Date"). The Agreement will be automatically extended for an
additional year on each anniversary date unless either party gives written
notice of termination at least 90 days prior to an anniversary date. The
Agreement provides for a base salary of $190,000 per year, subject to review
and adjustment by the Board of Directors or the Compensation Committee. The
initial Agreement also provided for the grant of options to purchase an
aggregate of 175,000 shares of the Common Stock described in more detail
below. In the event of Mr. Schneider's death, disability or resignation or
discharge by the Company other than a termination without cause (as described
below), the Company will pay him all accrued obligations including his base
salary through the date of termination, the amount of any accrued bonus and
incentive, deferred or other cash compensation, and all accrued benefits under
the Company's retirement, incentive and other benefit plans. In the event of
a termination without cause, he is entitled to receive the product of two
times the highest base salary during the term of the Agreement; a pro rata
incentive bonus equal to the full target award for the then current fiscal
year; all accrued benefits under the Company's retirement and other benefit
plans; and, for a period of two years, the Company shall arrange to provide
insurance coverage generally provided for other Company executives or until
such time as Mr. Schneider is provided with substantially equivalent benefits
by another employer. For this purpose, a termination without cause includes a
discharge by the Company without cause or a resignation by Mr. Schneider
within one year after a substantial reduction of Mr. Schneider's compensation
or duties, the giving of notice by the Company that it elects not to extend
the Agreement or a failure by the Company to cause a successor to assume the
Company's obligations under the Agreement. The Agreement provides that the
Company will indemnify Mr. Schneider to the fullest extent permitted by law
against claims relating to his service as a director, officer or employee of
the Company or any other enterprise for which he acts in such capacity at the
Company's request. Mr. Schneider has agreed that while employed by the
Company and for a period of two years following his resignation or discharge
for cause he will not directly or indirectly work for or participate in the
activities of any firm engaged in the manufacture or sale of products
competing with the Company.
On March 31, 1993 the Company and Mr. Schneider entered into a Stock Option
Agreement pursuant to which the Company granted to Mr. Schneider nonstatutory
stock options to purchase an aggregate of 175,000 shares of the Common Stock;
100,000 shares effective as of the Commencement Date at an exercise price of
$2.50 per share (the "1993 Options") and 75,000 shares effective as of May 24,
1994 at an exercise price of $3.00 per share (the "1994 Options"). The fair
market value of the Common Stock at the time of grant of the options was $3.75
per share. The 1993 Options are exercisable in increments of 25,000 shares on
each of the first through the fourth anniversaries of the Commencement Date.
The 1994 Options are exercisable in increments of 25,000 shares on each of the
second through the fourth anniversaries of the Commencement Date.
<p>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors makes recommendations
to the Board of Directors concerning compensation plans for the Company
generally and the specific forms and levels of compensation for executive
officers of the Company. The Compensation Committee, which is comprised of
three members, each of whom is a non-employee director, makes the following
report on executive compensation:
Compensation Philosophy
The executive compensation policies established by the Board of Directors
are intended to provide compensation to the Company's executive officers at
competitive levels in order to attract and retain qualified executive
officers, to reward executive officers based on the Company's annual and
long-term performance, and to thereby enhance shareholder value. The
Compensation Committee views stock-based awards as an important means of
linking compensation to corporate performance and providing executive officers
with an added incentive to enhance shareholder value.
The Company will not be affected for the 1996 tax year by the limitation on
deductibility of executive compensation imposed by Section 162(m) of the
Internal Revenue Code of 1986, and it is not presently anticipated that
Section 162(m) will affect the Company's compensation deductions in future
years. The Compensation Committee intends to review this issue periodically.
Elements of Executive Compensation
Compensation of the Company's executive officers currently consists of the
following elements: base salary, cash payments under the Trion, Inc.
Management Incentive Plan as adopted for a particular year (the "Management
Incentive Plan"), and stock option awards, including awards under the 1995
Option Plan.
Base Salary. As to all executive officers other than the Chief Executive
Officer, the Compensation Committee establishes base salaries primarily on the
basis of the Chief Executive Officer's recommendations. The Chief Executive
Officer's approach to determining recommended base salary for a new executive
officer includes consideration of responsibilities of the position, the
candidate's experience, skills and expertise, prior accomplishments, current
compensation, competitive salary data including various national reports and
surveys and cost of living comparisons of new location versus old location.
In order to ensure that a new officer's base salary bears a reasonable
relation to the base salaries paid to others, the compensation levels of
existing executive officers are also considered. The primary factors
influencing the Chief Executive Officer's annual recommended changes in base
salaries for existing executive officers are his personal evaluation of
individual performances for the prior year including attainment of personal
objectives and goals, attainment of Company performance goals, the Company's
salary structure, competitive salary data including various national reports
and surveys and the prior year's national percentage increase in the cost of
living.
Management Incentive Plan. Each year a Management Incentive Plan is adopted
by the Board of Directors to provide executive officers and key management
employees with cash compensation commensurate with the level of attainment of
certain performance goals. Target amounts payable under the Management
Incentive Plan to individual executives are determined at the discretion of
the Board of Directors and amounts earned, if any, are paid annually early in
the succeeding year. Target incentive amounts are earned if certain pre-
established Company and individual performance goals are achieved. The
structure and elements of each year's Management Incentive Plan historically
have been similar from year to year. Company goals under the Management
Incentive Plan for 1996 were comprised of targeted amounts of net sales (40%)
and operating income (60%). Individual performance goals are established by
the executive officer to whom the individual reports, after consultation with
the individual.
<p>
The target amounts which may be earned by individual executive officers if
performance goals are achieved are set at a specified percentage of base
salary. The target percentages for 1996 for executive officers other than the
Chief Executive Officer ranged from 35% to 50% of base salary and were set by
the Board of Directors based on the Chief Executive Officer's recommendations.
The target percentage for the Chief Executive Officer was set at 50% for 1996
by the Board of Directors.
Incentive compensation can be earned at levels below and above the targeted
percentages of base salary, with the minimum and maximum amounts for 1996
being 0% and 150% of each individual's target percentage. Threshold and
maximum Company performance criteria are established in addition to the target
performance criteria, and actual percentages of base salary earned are
determined by proration based on the level of achievement within the range
between the threshold and maximum performance criteria. No payments are made
if the threshold criteria are not met.
Options. The grant of stock options is intended to provide long-term
performance-based compensation to executive officers of the Company. Options
also are intended to provide executive officers with an additional incentive
to increase and promote shareholder value.
For incentive stock option grants in 1996, the Chief Executive Officer
recommended, and the Compensation Committee approved, a determination based
for each individual on the total of his 1995 base salary and incentive
compensation earned under the 1995 Management Incentive Plan. Each executive
officer's grant amount expressed in dollar terms was 20% of his total earned
compensation for 1995, and the number of options granted was equal to the
dollar amount of the grant divided by the price of the Common Stock on the
first trading day of 1995 ($6.125). The exercise price of the options is
equal to the fair market value of the Common Stock on the date of grant.
The Board of Directors has generally granted incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, and all
options granted in 1996 were incentive stock options. The Compensation
Committee also from time to time recommends that the Board of Directors award,
in its discretion, non-statutory stock options to executive officers,
particularly where a one-time grant involving a significant number of shares
is considered appropriate in connection with the recruitment of a new
executive to the Company, such as the options granted to the Company's Chief
Executive Officer in 1993 as described under the caption "Compensation
Agreements."
Compensation of Chief Executive Officer
Mr. Schneider's Employment Agreement as currently in effect and related
Stock Option Agreement are described under the caption "Compensation
Agreements."
As is the case for each of the Company's executive officers, Mr. Schneider's
compensation currently includes three primary components: base salary, cash
payments under the Management Incentive Plan and stock option awards. Mr.
Schneider's base salary was increased effective January 1, 1997, reflecting
the Company's and Mr. Schneider's performances during 1996. His target bonus
under the 1996 Management Incentive Plan was 50% of base salary, to be based
100% on Company performance. Targeted Company performance goals established
for 1996 at the end of 1995 were weighted 40% to net sales and 60% to
operating income. 56.5% of the Company's weighted performance goals were
achieved, resulting in Mr. Schneider being awarded 14.1% of base salary as
incentive compensation under the 1996 Management Incentive Plan. The grant to
Mr. Schneider in February 1996 of options to purchase 9,912 shares of Common
Stock at an exercise price of $6.125 per share was determined pursuant to the
formula described above under "Elements of Executive Compensation - Options",
based on his total 1995 earned cash compensation.
Joseph W. Deering, Chairman
Seddon Goode, Jr.
James E. Heins
<p>
CORPORATE PERFORMANCE
The following table represents a performance comparison of cumulative total
returns on the Company's Common Stock compared to the NASDAQ Market (U.S.
companies) and to NASDAQ Non-Financial Stocks for the period of five years
ended December 31, 1996.
The Company has chosen the latter index because it cannot reasonably
identify a peer group or specific industry index for comparison purposes.
Most of the Company's competitors are minor components of large enterprises or
are privately held.
" Date " " Company" " Market" " Market" " Peer" "Peer "
" " " Index " " Index " " Count " " Index" "Count"
"12/31/91", 100.000, 100.000, 3940, 100.000, 3194
"01/31/92", 100.000, 105.847, 3953, 106.148, 3209
"02/28/92", 107.407, 108.246, 3957, 108.002, 3212
"03/31/92", 111.111, 103.137, 3969, 101.581, 3234
"04/30/92", 103.704, 98.714, 3968, 95.355, 3239
"05/29/92", 103.704, 99.996, 3956, 95.964, 3225
"06/30/92", 92.593, 96.086, 3936, 91.232, 3206
"07/31/92", 92.593, 99.490, 3900, 94.084, 3173
"08/31/92", 85.185, 96.449, 3881, 90.823, 3160
"09/30/92", 74.074, 100.034, 3879, 94.133, 3165
"10/30/92", 70.370, 103.974, 3891, 97.953, 3184
"11/30/92", 103.704, 112.247, 3907, 106.162, 3203
"12/31/92", 92.593, 116.378, 3931, 109.394, 3232
"01/29/93", 96.296, 119.691, 3919, 112.334, 3224
"02/26/93", 83.333, 115.226, 3950, 106.713, 3256
"03/31/93", 107.407, 118.561, 3974, 109.595, 3289
"04/30/93", 114.815, 113.501, 4008, 105.066, 3316
"05/28/93", 114.815, 120.281, 4036, 113.564, 3340
"06/30/93", 125.926, 120.837, 4072, 113.683, 3371
"07/30/93", 148.148, 120.980, 4104, 112.718, 3401
"08/31/93", 144.444, 127.233, 4139, 119.322, 3439
"09/30/93", 133.333, 131.022, 4174, 122.564, 3474
"10/29/93", 151.852, 133.967, 4222, 126.400, 3506
"11/30/93", 151.852, 129.972, 4305, 122.687, 3582
"12/31/93", 148.148, 133.595, 4377, 126.300, 3647
"01/31/94", 185.185, 137.650, 4401, 130.536, 3665
"02/28/94", 162.963, 136.363, 4440, 129.184, 3709
"03/31/94", 188.889, 127.976, 4492, 120.237, 3760
"04/29/94", 174.074, 126.315, 4521, 117.475, 3782
"05/31/94", 174.074, 126.624, 4563, 116.569, 3820
"06/30/94", 170.370, 121.993, 4576, 110.876, 3834
"07/29/94", 151.852, 124.495, 4594, 113.787, 3849
"08/31/94", 162.963, 132.432, 4612, 121.545, 3861
"09/30/94", 162.963, 132.093, 4615, 121.872, 3865
"10/31/94", 170.370, 134.689, 4637, 125.421, 3876
"11/30/94", 159.259, 130.221, 4653, 121.321, 3897
"12/30/94", 137.037, 130.586, 4658, 121.444, 3906
"01/31/95", 148.148, 131.318, 4648, 121.016, 3911
"02/28/95", 185.829, 138.263, 4650, 127.253, 3917
"03/31/95", 180.254, 142.361, 4644, 131.751, 3918
"04/28/95", 174.680, 146.843, 4655, 136.477, 3923
"05/31/95", 179.003, 150.630, 4654, 139.604, 3930
"06/30/95", 175.274, 162.836, 4671, 152.342, 3951
"07/31/95", 164.086, 174.805, 4690, 163.963, 3964
"08/31/95", 187.059, 178.348, 4713, 166.115, 3977
"09/29/95", 187.059, 182.449, 4709, 169.856, 3977
"10/31/95", 172.094, 181.404, 4746, 168.126, 4011
"11/30/95", 154.017, 185.663, 4778, 171.282, 4041
"12/29/95", 154.017, 184.675, 4818, 169.245, 4092
"01/31/96", 157.774, 185.588, 4808, 170.456, 4097
"02/29/96", 177.133, 192.660, 4838, 178.031, 4133
"03/29/96", 203.514, 193.301, 4877, 177.760, 4180
"04/30/96", 211.052, 209.340, 4922, 194.975, 4224
"05/31/96", 256.967, 218.952, 4980, 204.753, 4274
"06/28/96", 192.725, 209.081, 5033, 193.426, 4329
"07/31/96", 181.388, 190.460, 5065, 173.802, 4357
"08/30/96", 170.656, 201.129, 5089, 183.494, 4384
"09/30/96", 170.656, 216.524, 5095, 198.263, 4402
"10/31/96", 151.694, 214.136, 5137, 194.687, 4449
"11/29/96", 137.132, 227.396, 5176, 206.419, 4492
"12/31/96", 125.704, 227.158, 5173, 205.622, 4502
<p>
SERVICE AGREEMENT
On July 30, 1992, Hugh E. Carr, a director of the Company, resigned his
position as Chairman and Chief Executive Officer of the Company. In an
agreement dated October 30, 1992 between the Company and Mr. Carr, Mr. Carr
agreed to remain available to render consulting services to the Company
through September 30, 1997. It was also agreed that during this period Mr.
Carr would not have any financial interest in or make his services available
to any person or entity engaged in any business activity competing with the
Company. The Company agreed to compensate Mr. Carr in the amount of $12,500
per month and that he will be entitled to participate in all employee benefit
plans in which he previously participated, including the 1985 Option Plan.
The agreement also provided, among other things, for the regrant of a stock
option held by Mr. Carr and scheduled to expire December 10, 1992 covering
30,000 shares of Common Stock, with the exercise price to be set at market
value on the date of regrant ($3.75 per share).
Upon retirement on October 1, 1997, Mr. Carr will be entitled to receive a
monthly pension supplement from the Company until his death sufficient to
bring his gross annual retirement benefits to $81,000. In determining the
amount of the supplement to be paid by the Company there will be deducted the
amount of primary benefit to which Mr. Carr is entitled under the federal
social security laws then in effect and his gross retirement benefit under the
Company's pension plan. It is estimated that any supplement, if required,
would be immaterial.
INDEPENDENT AUDITORS
The independent auditors selected by the Company for the current fiscal
year and the fiscal year ended December 31, 1996, are Ernst & Young LLP,
Raleigh, North Carolina, representatives of which will be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so. They will be available to respond to appropriate questions at that time.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal of shareholders intended to be presented for consideration at
the 1998 Annual Meeting must be received no later than November 11, 1997, by
the Secretary of the Company for inclusion in the Company's proxy statement
and form of proxy relating to the 1998 Annual Meeting.
OTHER MATTERS
The solicitation of Proxies is made on behalf of the Board of Directors of
the Company and the cost thereof will be borne by the Company. In addition to
soliciting Proxies by mail, directors, officers and employees of the Company,
without receiving additional compensation therefore, may solicit Proxies by
telephone, telegram, in person or by other means. Arrangements also will be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of Common Stock
held of record by such persons and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
All Proxies received pursuant to this solicitation will be voted as
directed and, if no direction is given, will be voted FOR all nominees named
herein. Such Proxies will be voted in the discretion of the Proxies on any
other matter properly presented at the meeting. Shareholders who execute
Proxies may revoke them by giving notice in writing to the Secretary of the
Company at the principal executive office of the Company, which notice must be
received before the Proxies are voted.
By Order of the Board of Directors,
March 11, 1997 C. J. Monsma
Secretary
<p>
1997 ANNUAL MEETING PROXY CARD
- ------------------------------------------------------------------------------
PROXY TRION, INC.
P.O. Box 760
Sanford, NC 27331-0760
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Seddon Goode, Jr. and Steven L.
Schneider, and each of them, Proxies with power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of common stock of Trion, Inc. held of record by the undersigned
at the close of business on March 3, 1997, at the Annual Meeting of
Shareholders to be held on April 15, 1997, at 10:00 A.M. (local time) at the
Dennis A. Wicker Civic Center, 1801 Nash Street, Sanford, North Carolina, and
any adjournments thereof.
The Board of Directors recommends a vote "FOR" all nominees identified in
Proposal 1.
1. ELECTION OF DIRECTORS
- - FOR election as Directors of the - - WITHHOLD AUTHORITY
following nominees identified in to vote for all nominees
the Proxy Statement:
Grant R. Meyers and Samuel J. Wornom III.
Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided:
---------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(over)
==============================================================================
- - The undersigned desires to elect voting confidentiality, to the extent
applicable under the Trion, Inc. By-laws.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IDENTIFIED IN PROPOSAL 1.
Please sign exactly as name appears below. 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.
Dated:__________________, 1997
Signature
Signature
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
</TABLE>
