UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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Kewaunee Scientific Corporation
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(Name of Registrant as Specified In Its Charter)
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Notes:
KEWAUNEE SCIENTIFIC CORPORATION
2700 West Front Street
Statesville, North Carolina 28677-2927
Eli Manchester, Jr.
President and
Chief Executive Officer
July 25, 199724, 1998
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of
Stockholders of Kewaunee Scientific Corporation (the "Company"), which will be
held on the 37th floor at Harris Trust & Savings Bank, 111 West Monroe Street,
Chicago, Illinois, on August 27, 1997,26, 1998, at 10:00 A.M. Central Daylight Time.
At the meeting, management will review with you the Company's past
year's performance and the major developments which occurred during the year.
There will be an opportunity for stockholders to ask questions about the Company
and its operations. We hope you will be able to join us.
To assure that your shares are represented at the meeting, please
vote, sign and return the enclosed proxy card as soon as possible. The proxy is
revocable and will not affect your right to vote in person if you are able to
attend the meeting.
The Company's 19971998 Annual Report to Stockholders is enclosed.
Sincerely yours,
/s/ Eli Manchester, Jr.
KEWAUNEE SCIENTIFIC CORPORATION
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on
August 27, 199726, 1998
The Annual Meeting of Stockholders of Kewaunee Scientific Corporation
will be held on the 37th floor at Harris Trust & Savings Bank, 111 West Monroe
Street, Chicago, Illinois, on August 27, 1997,26, 1998, at 10:00 A.M. Central Daylight
Time, for the purpose of considering and acting upon the following:
(1) To elect two Class IIIII directors;
(2) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on July 11, 199710, 1998 will
be entitled to vote at the meeting. A list of stockholders will be available for
examination by any stockholder for any purpose germane to the meeting, during
normal business hours, at the offices of Bell, Boyd & Lloyd, 70 West Madison
Street, Chicago, Illinois, for a period of 10 days prior to the meeting.
It is important that your shares be represented at the meeting
regardless of the size of your holdings. Whether or not you intend to be present
at the meeting in person, we urge you to mark,vote, date and sign the enclosed proxy
and return it in the envelope provided for that purpose, which does not require
postage if mailed in the United States.
D. MICHAEL PARKER
Secretary
July 25, 199724, 1998
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YOUR VOTE IS IMPORTANT
Please vote, signdate and datesign the enclosed proxy and return it
promptly in the enclosed envelope.
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KEWAUNEE SCIENTIFIC CORPORATION
Statesville, North Carolina 28677-2927
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Kewaunee
Scientific Corporation (the "Company") for use at the annual meeting of
stockholders of the Company to be held on the 37th floor of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois, on August 27, 1997,26, 1998, at
10:00 A.M. Central Daylight Time, and at any postponements or adjournments
thereof. Proxies properly executed and returned in a timely manner will be voted
at the meeting in accordance with the directions noted thereon. If no direction
is indicated, proxies will be voted for the election of the nominees named
herein as directors, and on other matters presented for a vote in accordance
with the judgment of the persons acting under the proxies.
The Company's principal executive offices are located at 2700 West
Front Street, Statesville, North Carolina 28677-2927 (telephone 704/873-7202).
The proxy, together with this Proxy Statement and the accompanying
Notice of Annual Meeting of Stockholders, is being mailed to stockholders on, or
about, July 25, 1997.24, 1998.
ELECTION OF DIRECTORS
Two Class IIIII directors are to be elected at the meeting. The Board of
Directors, at its meeting on June 18, 1997,17, 1998, upon the recommendation of the
Nominating Committee, selected John C. Campbell,Eli Manchester, Jr. and James T. RhindKingman Douglass as
nominees for re-election as directors at the annual meeting, each to serve for a
three-year term expiring on the date of the 2000 annual meeting of stockholders
and until their successors are elected and qualified.term. Both of the nominees are serving as directors as of the date of
this Proxy Statement. The Class I and IIIII directors named below have terms which
expire in 19981999 and 1999,2000, respectively.
The two nominees receiving the greatest number of votes at the annual
meeting will be elected directors. Unless a stockholder indicates otherwise on
the proxy, proxies will be voted for the election of the two nominees named
below. If due to circumstances not now foreseen, one or both of the nominees
become unavailable for election, the proxies will be voted for such other person
or persons as the Board of Directors may select, or the Board will make an
appropriate reduction in the number of directors to be elected.
Nominees to serve until annual meeting of stockholders in 20002001 (Class II)III):
JOHN C. CAMPBELL, JR., 54,KINGMAN DOUGLASS, 74, was elected a director of the Company in 1973. Since
June 1995, Mr. Campbell1986. He has been
engaged as a consultant in private consulting. From May
1992 to June 1995, he was Chief Operating Officer, Executive Vice President
and a director of Grounds For Play, Inc. of Arlington, Texas, a
manufacturer of specialty equipment for children's playgrounds.
JAMES T. RHIND, 75,corporate counseling since 1986.
ELI MANCHESTER, JR., 67, was elected a director of the Company in 1966. Since
January 1, 1993, he has been engagedNovember 1990.
He was elected President and Chief Executive Officer of the Company in the practice of law as of counsel
to the law firm of Bell, Boyd & Lloyd, Chicago, Illinois, counsel to the
Company. Prior thereto, he was a partner in that firm.July
1990.
Directors to serve until annual meeting of stockholders in 1999 (Class I):
MARGARET BARR BRUEMMER, 45,46, was elected a director of the Company in February
1995. Ms. Bruemmer has been engaged in the practice of law in Milwaukee,
Wisconsin as a sole practitioner for more than five years and has been a
Trustee of the Allis-Chalmers Corporation Product Liability Trust since
June 1996.
WILEY N. CALDWELL, 70,71, was elected a director of the Company in 1988. From 1984
to 1992, when he retired, he was President of W.W. Grainger, Inc., a
distributor of electrical and mechanical equipment. He is a director of APS
Holdings, Inc. and Consolidated Papers, Inc.
THOMAS F. PYLE, 56,57, was elected a director of the Company in 1987. Since
September 1996, Mr. Pyle has been Chairman of The Pyle Group, LLC, a
financial service and investment company. From 1982 to August 1996, he was
Chairman of the Board, President, Chief Executive Officer and principal
owner of RAYOVAC Corporation, a manufacturer of batteries and battery-
operated lighting devices. He is also a director of Johnson Worldwide
Associates, Riverside Paper Corporation and Sub-Zero Freezer Co., Inc. and
a Trustee of the Wisconsin Alumni Research Foundation.Associates.
Directors to serve until annual meeting of stockholders in 19982000 (Class III)II):
KINGMAN DOUGLASS, 73,JOHN C. CAMPBELL, JR., 55, was elected a director of the Company in 1986. He1973. Since
May 1995, Mr. Campbell has been engaged asin private consulting. From May
1992 to May 1995, he was Chief Operating Officer, Executive Vice President
and a consultant in corporate counseling since 1986.
ELI MANCHESTER, JR., 66,director of Grounds For Play, Inc. of Arlington, Texas, a
manufacturer of specialty equipment for children's playgrounds.
JAMES T. RHIND, 76, was elected a director of the Company in November 1990.
He1966. Since January
1, 1993, he has been engaged in the practice of law as of counsel to the
law firm of Bell, Boyd & Lloyd, Chicago, Illinois, counsel to the Company.
Prior thereto, he was elected President and Chief Executive Officer of the Companya partner in July
1990.that firm.
Except as otherwise indicated, each director and nominee has had the
principal occupation mentioned above for more than five years. Mr. Campbell is
the first cousin of Laura Campbell Rhind, wife of Mr. Rhind.
The Board of Directors has set the size of the Board of Directors at
seven members, divided into three classes. The Company's certificate of
incorporation provides that the three classes shall be as nearly equal in number
as possible.
The Board of Directors recommends a vote FOR the election of each
of the foregoing nominees for director.
2
Meetings and Committees of the Board
The business and affairs of the Company are managed under the
direction of the Board of Directors. Members of the Board keep informed of the
Company's business and activities by reports and proposals sent to them
periodically and in advance of each Board meeting and reports made to them
during these meetings by the President and other Company officers. The Board is
regularly advised of actions taken by the Executive Committee and other
committees of the Board, as well as significant actions taken by management.
Members of management are available at Board meetings and other times to answer
questions and discuss issues. During the Company's fiscal year ended April 30,
1997,1998, the Board of Directors held fourfive meetings.
The four standing committees of the Board of Directors of the Company
are the Executive Committee, the Audit Committee, the Compensation Committee and
the Financial/Planning Committee, the functions and membership of which are
described below.
The Executive Committee, consisting of Messrs. Rhind (Chairman),
Campbell and Manchester and Ms. Bruemmer, exercises the authority of the Board
between meetings of the full Board, subject to the limitations of the Delaware
General Corporation Law. It also acts as the Nominating Committee of the Board.
The Nominating Committee's function is to make recommendations to the full Board
with respect to candidates for Board membership, officers of the Company, and
Board committee membership. The Nominating Committee will consider as
prospective Board nominees persons brought to its attention by officers,
directors and stockholders. Proposals may be addressed to the Nominating
Committee at the address shown on the cover of this Proxy Statement, attention
of the Corporate Secretary. The Executive Committee met threetwo times during the
Company's last fiscal year.
The Audit Committee, consisting of Messrs. Douglass (Chairman) and
Campbell and Ms. Bruemmer, is responsible for recommending annually to the Board
of Directors a firm of independent public accountants; reviewing the overall
scope of audits and the annual financial statements of the Company and reporting
to the Board on the Committee's conclusions; and making inquiries of the
independent accountants and the Company's financial officers and reporting to
the full Board concerning accounting methods, policies and financial and
operating controls. The Audit Committee met once during the Company's last
fiscal year.
The Compensation Committee, consisting of Messrs. Caldwell (Chairman),
Douglass, Pyle and Rhind, considers and provides recommendations to the Board of
Directors with respect to the compensation (salaries and bonuses) of officers of
the Company; short- and long-range compensation programs for officers and other
key employees of the Company; benefit programs for all employees of the Company;
and stock option grants to key employees. The Compensation Committee also acts
as the Stock Option Committee, administering and interpreting the stock option
plans for officers and other key employees. The Compensation Committee met fourtwo
times during the Company's last fiscal year.
3
The Financial/Planning Committee, consisting of Messrs. Pyle
(Chairman), Caldwell, Douglass and Manchester and Ms. Bruemmer, reviews and
provides recommendations
3
to the Board of Directors with respect to the annual
budget for the Company, the Company's strategic plan and certain major
expenditures of the Company. The Financial/Planning Committee also reviews the
investment results of the Company's retirement plans. The Financial/Planning
Committee met three times during the Company's last fiscal year.
In the Company's last fiscal year, no director attended less than 75%
of the aggregate of all meetings of the Board and all meetings held by
committees of the Board on which such director served. No executive officer of
the Company served as a member of the Compensation Committee or as a director of
any other entity, one of whose executive officers serves on the Compensation
Committee or is a director of the Company.
Director Compensation
Each director who is not an employee of the Company receives for his
services as such an annual retainer of $13,000 plus a fee of $1,000 for each day
of Board and/or committee meetings attended, a multiple-meeting fee of $1,250
and a $500 fee for telephone meetings. In addition, the Chairmen of the Audit,
Compensation and Financial/Planning Committees receive an annual fee of $1,500.
Payment of such fees may be deferred at the request of a director. Non-employeeAll directors
are also reimbursed for their expenses for each Board and committee meeting attended.
Under the Company's 1993 Stock Option Plan for Directors, each of the Company's
non-employee directors was granted a one-time option to purchase 5,000 shares of
the Company's common stock. These options become exercisable in 25% increments
on August 1 of each of the next four years after the date of grant.
Non-employee directors may also elect to participate in the Company's
health insurance program, with a cost to them equal to the amounts paid by the
Company's employees for participation in the same programs.program. During the last fiscal year, Mr. Campbell participated
in this program.
Directors who are employees of the Company receive no compensation for
serving as directors.
4
EXECUTIVE COMPENSATION
Certain Summary Compensation Information
The following table sets forth certain information for each of the
fiscal years ended April 30, 1997,1998, April 30, 19961997 and April 30, 1995,1996, with
respect to the compensation of the Chief Executive Officer and the Company's
four other most highly compensated executive officers (the "named executive
officers") in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------------
Annual Compensation Securities All Other
Name and Fiscal --------------------------------------------------------------------- Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Other ($) Options (#) ($) (1)
- ---------------------------------------------- ------ ---------- ------------------- --------- ------------ ------------
Eli Manchester, Jr. 1998 273,332 216,000 - 5,000 16,224
President & Chief 1997 263,333 156,000 - 10,000 16,784
President & ChiefExecutive Officer 1996 253,333 10,000 - - 11,107
Executive Officer 1995 250,000 - - - 8,600
William A. Shumaker 1998 158,459 62,551 - 3,000 4,346
Vice President and 1997 144,759 42,135 - 5,000 3,739
Vice President andGeneral Manager, 1996 134,317 5,000 25,992 (2) 10,000 2,806
General Manager, 1995 127,083 6,000 - 10,000 875
Laboratory Products Group
T. Ronald Gewin 1998 141,578 51,024 - 3,000 6,221
Vice President and 1997 140,175 15,000 - - 6,083
Vice President-Operations,General Manager, 1996 140,175 - - 10,000 5,614
Technical ProductProducts Group 1995 135,725 6,000 - - 6,009
D. Michael Parker (3) 1998 126,667 50,000 - 2,500 6,411
Vice President-Finance, 1997 118,333 34,500 - 5,000 6,003
Vice President-Finance,Chief Financial Officer, 1996 99,083 5,000 - 10,500 4,032
Chief Financial Officer, 1995 - - - - -
Treasurer and Secretary
Ronald D. PopielJames J. Rossi (4) 1998 110,116 43,611 - 2,000 5,612
Vice President- 1997 133,333 34,500105,565 31,151 - 3,000 5,359
Human Resources 1996 100,538 3,000 - 5,991
Vice President-Manu- 1996 106,943 10,0005,000 3,941
- 12,500 2,800
facturing (Laboratory 1995 - - - - -
Products Group)---------------------------
___________________
(1) The amount listed for each named executive officer consists of matching
contributions made by the Company during the year on behalf of that
executive officer to the Company's (i) Incentive Savings Plan and (ii)
Executive Deferred Compensation Plan. The separate amounts paid during
fiscal year 19971998 for each named executive officer are, respectively: Mr.
Manchester - $3,200$3,222 and $13,584;$13,002; Mr. Shumaker - $3,739$3,218 and $0;$1,128; Mr.
Gewin -
$2,979Gewin-$2,948 and $3,104;$3,273; Mr. Parker - $2,940Parker- $3,099 and $3,063;$3,312; and Mr. Popiel- $2,934Rossi-
$2,686 and $3,057.$2,926.
(2) This amount represents amounts paid to or on behalf of Mr. Shumaker for
moving and relocation expenses.
(3) Mr. Parker was elected Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary effective August 1, 1995.
(4) Mr. PopielRossi was elected Vice President-ManufacturingPresident-Human Resources, effective January 1,
1996.
5
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to
options granted under the Company's 1991 Key Employee Stock Option Plan during
fiscal year 19971998 to each named executive officer.
OPTION GRANTS IN FISCAL YEAR 19971998
Potential Realized Value
# of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options Employees Price Per Expiration ----------------------------------------------
Name Granted (1) in Fiscal Year Share ($) Date 5% ($) 10% ($)
---- ----------- -------------- --------- ---------- ------ -------
Eli Manchester, Jr. 10,000 38.5% 3.8755,000 20.4 8.125 8/28/06 24,370 61,75827/07 25,553 64,594
William A. Shumaker 5,000 19.2% 3.8753,000 12.2 8.125 8/28/06 12,185 30,87927/07 15,332 38,756
T. Ron Gewin 3,000 12.2 8.125 8/27/07 15,332 38,756
D. Michael Parker 5,000 19.2% 3.8752,500 10.2 8.125 8/28/06 12,185 30,879
- -------------------27/07 12,777 32,297
James J. Rossi 2,000 8.2 8.125 8/27/07 10,221 25,838
___________________
(1) All options were granted at fair market value on the grant date. Options
become exercisable in 25% increments on the first through fourth
anniversaries of the grant date. Exercisability of options is accelerated
in the event of a "change of control" of the Company as defined in the
Plan.
(2) These amounts represent hypothetical gains that could be achieved for
options if they are exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the options are granted to the end of the
option term. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Company's common stock and the optionee's
continued employment through the vesting period. There can be no assurance
that the amounts reflected in this table will be achieved.
Aggregate Option Exercises in Last Fiscal Year and Option Values at Fiscal Year-
EndHoldings
The following table reflects the unexercised options and the value of
those options as of April 30, 1997 held by each named executive officer. There
were nosets forth certain information with respect to
options exercised during fiscal year 1997 for1998 by the named executive officers.officers and
with respect to options held at the end of the year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT FISCAL YEAR-END
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
In-the-MoneyShares Options at April 30, 19971998 at April 30, 19971998 ($) --------------------- ---------------------(2)
Acquired Value ---------------------------- ----------------------------
Name on Exercise Realized ($) (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------------- ----------- ------------- ----------- -------------
Eli Manchester, Jr. - 10,000 -2,500 14,062 -- 12,500 -- 88,125
William A. Shumaker 10,000 15,000 12,500 26,250-- -- 16,250 11,750 144,063 95,688
T. Ronald Gewin 14,000 10,000 15,188 19,063122,250 5,000 8,000 40,000 62,875
D. Michael Parker 2,875 13,125 7,796 28,699
Ronald D. Popiel 3,125 9,375 4,547 13,6415,000 34,060 1,875 11,625 16,922 99,266
James J. Rossi 2,000 4,500 8,250 6,750 71,250 53,375
- -------------------
(1) Based on the difference between the exercise price and the fair market
value of the Company's stock at the date of exercise.
(2) Based on the difference between the closing price of the Company's stock on
April 30, 1998 and the exercise price of the options for each optionee.
6
Retirement Plan
The executive officers of the Company participate in the Company's
Retirement Plan. The Retirement Plan provides retirement benefits for
participating employees which are calculated with reference to years of service
and final average monthly compensation (salary and bonus). The benefit amount is
calculated as 40% of the 10-year final average annual compensation (subject to a
maximum of $160,000) minus 50% of the Primary Social Security Benefit, all
multiplied by a fraction, the numerator of which is the number of years of
credited service up to 30 years, and the denominator of which is 30.
Participants in the Retirement Plan may elect among several payment
alternatives. The following table shows estimated annual benefits payable to
employees with the indicated years of service and final average annual
compensation. The estimated annual benefits are based upon the assumption that
the Retirement Plan will continue in effect, without change, that the
participant retires at age 65, and that the participant does not elect any
alternate payment option under the Retirement Plan. At April 30, 1997,1998, the
credited years of service under the Retirement Plan for Messrs. Manchester,
Shumaker, Gewin, Parker, and PopielRossi were 6.6, 3.6,7.6, 4.6, 6.7,5.6, 7.7, and 3.5,14.5,
respectively.
Years of Service
Final Average ------------------------------------------------------------------------------------------------------------------
Compensation 10 15 20 25 30 35
- ------------ -- -- -- -- -- --------------- ------- ------- ------- ------- ------- -------
Greater than
$160,000 $18,680 $28,020 $37,360 $46,700 $56,040 $56,040$18,650 $27,970 $37,300 $46,620 $55,950 $55,950
150,000 17,350 26,020 34,700 43,370 52,040 52,04017,320 25,970 34,630 43,290 51,950 51,950
130,000 14,680 22,020 29,360 36,700 44,040 44,04014,650 21,970 29,300 36,620 43,950 43,950
100,000 10,680 16,020 21,360 26,700 32,040 32,04010,650 15,970 21,300 26,620 31,950 31,950
7
------------
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Compensation Committee
Report on Executive Compensation" and "Performance Graph" will not be deemed to
be filed or to be proxy soliciting material or incorporated by reference in any
prior or future filings by the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (the "Exchange Act").
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is designed to attract,
motivate, reward and retain management talent critical to the Company's
achievement of its objectives.7
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board, which consists of four non-employeenon-
employee directors of the Company, considers and provides recommendations to the
full Board of Directors with respect to salaries and other compensation programs
for executive officers of the Company.
The objective of the Company's executive compensation program is to
attract, motivate, reward and retain management talent critical to the Company's
achievement of its objectives. Salaries and other compensation for the Company's
executive officers are based on each executive officer's responsibilities, level
of experience, and on his or her performance over time, as well as on the recommendation of
the Chief Executive Officer. In order to assure that salaries and compensation
remain competitive, the Company subscribes to and consults various published
surveys on executive compensation.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the deduction for federal income tax purposes of certain compensation
paid by any publicly-held corporation to its chief executive officer and its
four other most highly compensated officers to $1 million per year for each such
executive. These deductibility levels are not relevant to the Company at the
current levels of compensation of its executive officers.
Executive Officer Compensation
The Company's compensation program for executive officers has four
principal components which are discussed below.
Base Salary
The base salary of each of the executive officers, other than the
Chief Executive Officer, is determined after considering the compensation levels
of management personnel with similar responsibilities at other companies,
utilizing compensation surveys for manufacturing and service companies with
generally similar annual sales volume. As these surveys are broad-based, they
include companies other than those comprising the Similar Market Capitalization
Index used in the Performance Graph below. Using the compensation surveys, a
salary range consisting of minimum, mid-point and maximum reference points is
established for each executive officer. The base salary for each executive
officer is then determined by considering the particular qualifications of the
executive holding the position, his or her level of experience, and his or her sustained
performance over time.
Annual Incentive Compensation
TheAll of the Company's executive officers are eligible to participate in
an annual incentive bonus plan, pursuant to which each executive officer is
eligible to earn a cash bonus for each fiscal year of the Company, based
primarily on the Company's attainment of earnings goals established in the incentive bonus
plan and, to a lesser extent, on the executive officer's achievement of
individual performance and other relevant factors whichestablished personal goals to the degree determined by the Board takes into account on a discretionary basis.of Directors
upon the recommendation of the Chief Executive Officer.
At the beginning of each fiscal year, the Board establishesof Directors approves
earnings goals for the Company and its two divisions for such year and, upon
recommendation of the Compensation Committee, establishes 8
specified percentages
of the executive officers' beginning-of-the-yearbeginning-
8
of-the-year base salaries that will be available for bonuses if the Company
achieves thesethe earnings goals and the executive officers achieve their personal
goals. The percentages increase as the earnings goals reach various established
levels. For fiscal year 1997,1998, the Company's earnings reached the maximum
established goal, permitting the participating executive officers to earnearned their maximum payout
percentages.
CEO Compensation
In establishing Mr. Manchester's salary for fiscal year 1997, the
Compensation Committee considered the same factors as in prior years, including
operating results for the prior year and the current year, development of the
Company's business through a strong management team, containment of operating
costs and general expenses, and the price of the Company's stock. Based on these
considerations, the Board, upon recommendation of the Compensation Committee,
increased Mr. Manchester's base salary from $260,000 to $270,000 per year,
effective January 1, 1997. Mr. Manchester received a cash bonus of $156,000 for
fiscal year 1997, equal to 60% of his base salary, under the Company's incentive
bonus plan, because the Company's earnings for the year reached the maximum
earnings goal. In August 1996, the Board granted Mr. Manchester a non-qualified
stock option on 10,000 shares of the Company's common stock with an exercise
price equal to the fair market value of the stockpercentages based on the dateearnings levels achieved and achievement of grant.personal
goals, with the exception of Mr. Gewin, whose division earned slightly less than
the amount allowing a maximum payout percentage.
Stock Option Plans
The Company uses stock options as its primary long-term incentive plan
for executive officers. Stock options provide executive officers with an
incentive to improve the operations and increase profits of the Company, along
with the opportunity to acquire and build an ownership interest in the Company and
share in the benefits of strong operating results and growth development.Company.
The exercise price of stock options may not be less than the fair market value
of the Company's common stock on the date of the grant.grant of such option.
Individual awards are based on thean individual's performance, his or her
comparative base salary level and the number of stock option grants previously
made. Stock option awards are normally made annually in August by the Board of
Directors, based on the recommendations of the Chief Executive Officer and the
Compensation Committee.
Other Compensation Plans
Each of the Company's executive officers is entitled to receive
additional compensation in the form of payments, allocations, or accruals under
various group compensation and benefit plans. Benefits under these plans are not
directly, or indirectly, tied to employee or Company performance.
CEO Compensation
The Compensation Committee considers Mr. Manchester's leadership an
important factor in the success of the Company in fiscal 1998. In establishing
Mr. Manchester's salary for the year, the Compensation Committee considered the
same factors as in prior years, including operating results for the prior year
and the current year, development of the Company's business through a strong
management team, operational improvements, and the price of the Company's common
stock. Based on these considerations, the Board of Directors, upon
recommendation of the Compensation Committee, increased Mr. Manchester's base
salary from $270,000 to $280,000 per year, effective January 1, 1998. Mr.
Manchester received a cash bonus of $216,000 for fiscal year 1998, equal to his
maximum payout percentage under the terms of the Company's incentive bonus plan.
In August 1997, the Board of Directors granted Mr. Manchester a non-qualified
stock option on 5,000 shares of the Company's common stock with an exercise
price equal to the fair market value of the stock on the date of grant.
Compensation Committee Members
Wiley N. Caldwell, Chairman
Kingman Douglass
Thomas F. Pyle
James T. Rhind
9
PERFORMANCE GRAPH
The graph below sets forth a comparison of the Company's annual
stockholder return with the annual stockholder return of (i) the NASDAQ Market
Index, and (ii) an index of all NASDAQ, non-financial companies with similar
market capitalization to the Company/1/. The graph is based on an investment of
$100 on April 30, 19921993 in the Company's common stock, assuming dividend
reinvestment. The graph is not an indicator of the future performance of the
Company. Thus, it should not be used to predict the future performance of the
Company's stock. The graph and related data were furnished by Media General
Financial Services, Richmond, Virginia.
Comparison of 5-Year Cumulative Total Return
Kewaunee Scientific Corporation, NASDAQ Market Index
and Similar Market Capitalization Index
[GRAPH][graph appears here]
1992
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---------- ------ ------ ------ ------
Kewaunee Scientific Corporation 100 63.74 52.50 37.50 54.37 77.8482.35 58.82 85.29 122.11 306.54
Peer Group 100 73.20 61.79 42.56 41.22 43.10115.71 125.56 130.19 134.96 103.81
Nasdaq Market Index 100 119.48 134.11 146.43 204.40 217.88112.24 122.56 171.08 182.36 270.85
- ---------------
/1/ In addition to the Company, the Similar Market Capitalization Index is
comprised of the following companies: Amcor Limited; Canterbury Park Holding
Corporation; Curtis Mathes Holding Corporation; Enterprise Oil;Oil PLC; Great Pines Water Company, Inc.; HMG/Courtland
Properties Inc.; Huntway Partners L.P.; London Pacific Group, Limited; Nashville Country Club, Inc.; North
Coast Energy, Inc.; OTR Express, Inc.; P & F Industries, Inc.; Research,
Incorporated; Stacey's Buffet, Inc.; Synergy Renewable Resource Technologies Inc.; TAT Technologies
Ltd.; THTTBA Entertainment Corporation; Telscape International Incorporated;
Tubby's Inc.; Tubby's Inc.;Uniview Technologies Corporation; Valley Systems, Inc.; and Waste
Technology Corp. Consistent with the prior year, the Company used for an index
NASDAQ, non-financial companies with a market capitalization similar to that of
the Company. This index was used because there exists no applicable published
industry index or line-of-business index, and the Company does not believe it
can reasonably identify a peer group of companies in its industry because the
Company's primary competitors are either divisions of larger corporations or are
privately owned.
10
AGREEMENTS WITH CERTAIN EXECUTIVES
On December 7, 1993, the Company entered into an employment agreement
with Mr. Shumaker providing for his employment as Vice President-Sales and
Marketing. The agreement provides for an annual salary commencing at $125,000
and the opportunity to participate in the Company's Incentive Bonus Plan and Key
Employee Stock Option Plan. Mr. Shumaker also receivesPlan, as well as benefits generally available to
executives of the Company. The agreement also provides that if Mr. Shumaker is
terminated from employment without cause, Mr. Shumaker will be entitled to
separation pay equal to six months of his then base salary, reduced by income
earned during the payment period.
On December 8, 1992, the Company entered into an employment agreement
with Mr. Gewin providing for his employment as Vice President-Manufacturing. The
agreement provides for an annual salary commencing at $125,000 and the
opportunity to participate in the Company's Incentive Bonus Plan and the Key
Employee Stock Option Plan. He also is entitled to receivePlan, as well as benefits generally available to
executives of the Company. On December 15, 1994, the Company also
entered into an
additional agreement with Mr. Gewin which provides that if the Company is
acquired, and he is terminated without cause within two years from the
acquisition date, the Company or successor entity will be obligated to pay him
separation pay equal to twelve months of his then base salary, reduced by income
earned during the payment period.
On September 17, 1996, the Company entered into an agreement with Mr.
Parker which provides that if the Company is acquired, and he is terminated
without cause within two years from the acquisition date, the Company or
successor entity will be obligated to pay him separation pay equal to six months
of his then base salary, reduced by income earned during the payment period.
On April 22, 1996, the Company entered into an employment agreement
with Mr. Popiel providing for his employment as Vice President-Manufacturing.
The agreement provides for a minimum annual compensation of $140,000 per year,
effective fiscal year 1997, reached through the combination of base salary and
incentive compensation. Mr. Popiel also receives benefits generally available to
executives of the Company. The agreement also provides that if Mr. Popiel is
terminated from employment without cause, Mr. Popiel will be entitled to
separation pay equal to twelve months of his then annual base salary, reduced by
income earned during the payment period.
11
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 1997,1998, by (i) each director
and director nominee, (ii) each of the named executive officers and (iii) all
directors and executive officers as a group. Except as otherwise indicated by
footnote, the shares shown are held directly with sole voting and investment
power.
Shares Percent
beneficially of
Name owned (1) class
- ---- --------- ------------------ --------
Margaret Barr Bruemmer(2)................................. 48,135 2.0%95,544 3.9%
Wiley N. Caldwell......................................... 5,500 *
John C. Campbell, Jr.(3).................................. 46,667 2.0%41,667 1.7%
Kingman Douglass(4).......................................Douglass.......................................... 15,000 *
Eli Manchester, Jr.(5).................................... 67,800Jr........................................ 71,250 2.9%
Thomas F. Pyle(6)Pyle(4)......................................... 11,000 *
James T. Rhind(7)Rhind(5)......................................... 386,351 16.3%15.9%
T. Ronald Gewin(8)........................................ 19,060Gewin........................................... 8,250 *
William A. Shumaker....................................... 15,25022,250 *
D. Michael Parker(9)Parker(6)...................................... 9,75014,500 *
Ronald D. Popiel.......................................... 3,250James J. Rossi(7)......................................... 9,871 *
Directors and executive officers as a group (13(12 persons).. 644,679 27.2%686,715 28.3%
- -------------------
* Percentage of class is less than 1%.
(1) Includes shares which may be acquired within sixty (60) days from June 30,
19971998 upon exercise of options by: Ms. Bruemmer - 3,750; Mr. Caldwell -
5,000; Mr. Campbell - 5,000; Mr. Douglass - 5,000;2,500; Mr. Manchester -
2,500;3,750; Mr. Pyle - 5,000; Mr. Rhind - 5,000; Mr. Gewin - 19,000;8,250; Mr. Shumaker - 13,750;15,750; Mr.
Parker - 6,750;6,500; Mr. PopielRossi - 3,250;8,250; and all directors and executive officers
as a group - 89,500.52,000.
(2) Includes 2,000 shares held as custodian for Ms. Bruemmer's minor children
and 42,38588,544 shares held by Ms. Bruemmer's husband.
(3) Includes 11,826 shares held by Mr. Campbell's wife, as to which shares he
disclaims beneficial ownership.
(4) Includes 10,000 shares held by a trust of which Mr. Douglass is a trustee.
(5) Includes 300 shares held by a trust of which Mr. Manchester is trustee.
(6) Includes 6,0003,000 shares in which Mr. Pyle shares voting and investment power.
(7)(5) Includes 243,079 shares held by Mr. Rhind's wife, Laura Campbell Rhind,
44,080 shares held by a trust under the will of Ruth Haney Campbell, as to
which Mrs. Rhind is a trustee and beneficiary, 44,910 shares held by two
trusts of which Mr. Rhind is sole trustee, and 12,000 shares owned by a
charitable foundation of which Mr. and Mrs. Rhind are two of three
directors. Mr. Rhind disclaims beneficial ownership of all of such shares.
(8) Includes 60 shares held by Mr. Gewin's wife, as to which shares he
disclaims beneficial ownership.
(9)(6) Includes 3,000 shares in which Mr. Parker shares voting and investment
power.
(7) Includes 1,550 shares in which Mr. Rossi shares voting and investment
power.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 1997,1998, by each person who is
known by management of the Company to have been the "beneficial owner" of more
than five percent of such stock as of such date. Except as otherwise indicated
by footnote, the shares shown are held with sole voting and investment power.
Shares Percent
beneficially of
Name owned class
- ---- --------------------------- --------
John L. Bruemmer............................ 138,475(1) 5.9%
Coronet Insurance Company and Subsidiaries.. 189,600(2) 8.0%
Elizabeth B. Gardner........................ 224,569(3) 9.5%Gardner............. 224,569(1) 9.2%
Laura Campbell Rhind........................ 386,351(4) 16.3%Rhind............. 386,351(2) 15.9%
Dimensional Fund Advisors, Inc.............. 120,600(5) 5.1%Inc... 147,700(3) 6.1%
- -------------------
(1) Mr. Bruemmer's address is 1556 E. Goodrich Lane, Milwaukee, Wisconsin
53217.
(2) The shares owned by Coronet Insurance Company listed in the table are shown
as being owned as of July 31, 1996 according to a Form 4 Report filed with
the Securities and Exchange Commission on September 9, 1996. Coronet
Insurance Company's address is 4500 West Peterson Avenue, Chicago, Illinois
60659.
(3) Includes 77,593 shares held by Mrs. Gardner as a trustee of certain
irrevocable trusts for the benefit of her children, as to which shares she
disclaims beneficial ownership, and 11,925 shares held by Mrs. Gardner's
husband, as to which shares she disclaims beneficial ownership. Mrs.
Gardner's address is 42 Logan Terrace, Golf, Illinois 60029.
(4)(2) Includes 44,080 shares held as trustee and beneficiary of a trust under the
will of Ruth Haney Campbell, 87,192 shares held by Mr. Rhind personally or
as trustee, as to which shares sheMrs. Rhind disclaims beneficial ownership,
and 12,000 shares held by a charitable foundation of which Mr. and Mrs.
Rhind are two of three directors. Mr. and Mrs. Rhind and the third
director share voting and investment power over these shares, but disclaim
beneficial ownership of them. Mrs. Rhind's address is 830 Normandy Lane,
Glenview, Illinois 60025.
(5)(3) The shares owned by Dimensional Fund Advisors listed in the table are shown
as being owned as of December 31, 19961997 according to a Schedule 13G filed
with the Securities and Exchange Commission onin February 12, 1997.1998. Dimensional
Fund Advisors' address is 1299 Ocean Avenue, Santa Monica, California
90401.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and 10% stockholders to file reports of
ownership with the Securities and Exchange Commission. Such persons also are
required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of copies of such forms received by it and
inquiries of such persons, the Company believes that all such filing
requirements applicable to its executive officers, directors and 10%
stockholders were complied with.
13
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & TouchePricewaterhouseCoopers LLP has been selected by the Board of
Directors, upon the recommendation of its Audit Committee, to act as the
Company's independent public accountants for the fiscal year ending April 30,
1999. PricewaterhouseCoopers LLP served as independent public accountants for
the Company for the fiscal year ended April 30, 1997.1998. A representative of
Deloitte &
TouchePricewaterhouseCoopers LLP is expected to attend the annual meeting and will be
afforded an opportunity to make a statement if he desires to do so and to
respond to questions by stockholders.
STOCKHOLDER PROPOSALS
The deadline for receipt of stockholder proposals for inclusion in the
Company's 1998 proxy material is March 21, 1998. Any stockholder proposal should
be submitted in writing to the Secretary of the Company at its principal
executive offices. The stockholder proposal must include the stockholder's name
and address as it appears on the Company's records and the number of shares of
the Company's common stock beneficially owned by such stockholder. In addition,
(i) for proposals other than nominations for the election of directors, such
notice must include a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and any
material interest of the stockholder in such business, and (ii) for proposals
relating to stockholder nominations for the election of directors, such notice
must also include, with respect to each person nominated, the information
required by Regulation 14A under the Exchange Act.
PROXIES AND VOTING AT THE MEETING
The expense of solicitation of proxies is to be paid by the Company.
The Company will also reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in sending proxies and proxy
material to the beneficial owners of the stock.
At the close of business on July 11, 1997,10, 1998, the record date for
determination of stockholders entitled to vote at the annual meeting, there were
2,365,9212,428,671 shares of common stock of the Company outstanding and entitled to
vote.
Each share of common stock is entitled to one vote. Any stockholder
giving a proxy has the power to revoke it at any time before it is voted, by
written notice to the Secretary, by delivery of a later-dated proxy or in person
at the meeting.
The holders of a majority of the total shares of common stock issued
and outstanding, whether present in person or represented by proxy, will
constitute a quorum for the transaction of business at the meeting. The vote of
a plurality of the shares represented at the meeting, in person or by proxy, is
required to elect the two nominees for director. Approval of any other matter
submitted to the stockholders for their consideration at the meeting requires
the affirmative vote of the holders of a majority of the shares of common stock
represented at the meeting, in person or by proxy, and entitled to vote.
Abstentions, directions to withhold authority, and broker non-votes are counted
as shares present in the determination of whether the shares of stock
represented at the meeting constitute a quorum. Abstentions, directions to
withhold authority, and broker non-votes are not counted in tabulations of the
votes cast on 14
proposals presented to stockholders. Thus, an abstention,
direction to withhold authority, or broker non-vote with respect to a matter has
the same legal effect as a vote against the matter. An automated system
administered by the Company's transfer agent will be used to tabulate votes.
A stockholder entitled to vote for the election of directors can
withhold authority to vote for any of the nominees for Class IIIII directors.
14
STOCKHOLDER PROPOSALS
The deadline for receipt of stockholder proposals for inclusion in the
Company's 1999 proxy material is March 19, 1999. Any stockholder proposal should
be submitted in writing to the Secretary of the Company at its principal
executive offices. The stockholder proposal must include the stockholder's name
and address as it appears on the Company's records and the number of shares of
the Company's common stock beneficially owned by such stockholder. In addition,
(i) for proposals other than nominations for the election of directors, such
notice must include a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and any
material interest of the stockholder in such business, and (ii) for proposals
relating to stockholder nominations for the election of directors, such notice
must also include, with respect to each person nominated, the information
required by Regulation 14A under the Exchange Act.
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report to Stockholders for the
fiscal year ended April 30, 19971998 with this Proxy Statement. Stockholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated in this Proxy Statement and is not a part of
the proxy soliciting material.
OTHER MATTERS
Management of the Company knows of no other matters which are likely
to be brought before the annual meeting. If any such matters are brought before
the meeting, the persons named in the enclosed proxy will vote thereon according
to their judgment.
By Order of the Board of Directors
/s/ D. Michael Parker
D. MICHAEL PARKER
Secretary
July 25, 199724, 1998
15
PROXY
KEWAUNEE SCIENTIFIC CORPORATION
2700 West Front Street
Statesville, North Carolina 28677-2927
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Margaret Barr Bruemmer, Eli
Manchester,Wiley N. Caldwell, John C. Campbell,
Jr. and Thomas F. PyleJames T. Rhind as Proxies, each with power of substitution, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of common stock of Kewaunee Scientific Corporation held
of record by the undersigned on July 11, 1997,10, 1998, at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Daylight Time, on August 27, 199726, 1998
and at any adjournment thereof.
Your vote for two directors may be indicated on the reverse side.
John
C. Campbell,Kingman Douglass and Eli Manchester, Jr. and James T. Rhind have been nominated for election as
Class IIIII Directors.
(Continued and to be signed on the reverse side)
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the election of the nominees named in Item 1 below. Please mark your vote inside
one box below.
1. Election of Class IIIII Directors:
John C. Campbell,Kingman Douglass and Eli Manchester, Jr. and James T. Rhind
FOR the nominees listed WITHHOLD AUTHORITY
above (except as to vote for
marked to the contrary the nominees
on the line below) listed above
[_] [_]
If you wish to withhold authority for either of the nominees, write such
nominee's name in this space
_______________________________________- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
You are urged to date, sign and return promptly this proxy in the envelope
provided. It is important for you to be represented at the Meeting. The
execution of this proxy will not affect your right to vote in person if you are
present at the Meeting and wish to so vote.
Date:______________________, 1997
_________________________________ , 1998
--------------------------
--------------------------------------
Signature
_________________________________--------------------------------------
Signature if held jointly
IMPORTANT: Please signassign exactly as
your name or names appear hereon. If
signing as an attorney, executor,
administrator, trustee, guardian, or
in some other representative capacity,
or as an officer of a corporation,
please indicate your capacity or full
title. If stock is held jointly, each
joint owner should sign.