UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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.
PresidentELI MANCHESTER, JR.
Chairman and
Chief Executive Officer
July 27, 199920, 2000
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 25, 1999,23, 2000, 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 19992000 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 25, 199923, 2000
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 25, 1999,23, 2000, at 10:00 A.M. Central Daylight
Time, for the purpose of considering and acting upon the following:
(1) To elect three Class III directors;
(2) To consider and vote on a proposal to adopt the 2000 Key Employee
Stock Option Plan set forth as Appendix A to the accompanying
proxy statement;
(3) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on July 9, 19997, 2000 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 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 27, 199920, 2000
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YOUR VOTE IS IMPORTANT
Please vote, date and sign the enclosed proxy and return it
promptly in the enclosed envelope.
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KEWAUNEE SCIENTIFIC CORPORATION
Statesville, North CarolinaSTATESVILLE, 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 25, 1999,23, 2000, 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 28, 1999.20, 2000.
ELECTION OF DIRECTORS
Three Class III directors are to be elected at the meeting. The Board
of Directors, at its meeting on June 15, 1999,13, 2000, upon the recommendation of the
Nominating Committee, selected Margaret Barr Bruemmer, Wiley N. CaldwellJohn C. Campbell, Jr., James T. Rhind, and
Thomas F. PyleWilliam A. Shumaker as nominees for re-election as directors at the annual
meeting, each to serve for a three-year term. All of the nominees are serving
as directors as of the date of this Proxy Statement. The Class III and III
directors named below have terms which expire in 20002002 and 2001, respectively.
The three 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 three
nominees named below. If due to circumstances not now foreseen, any 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 2000 (Class II):
JOHN C. CAMPBELL, JR., 57, was elected a director of the Company in 1973. Since
May 1995, Mr. Campbell has been engaged in private consulting. From May
1992 to May 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, 78, was elected a director of the Company in 1966. Since
January 1, 1993, he has been engaged in the practice of law as of counsel
to the law firm of Bell, Boyd &
Lloyd LLC, Chicago, Illinois, counsel to the Company. Prior thereto, he was
a partner in that firm.
WILLIAM A. SHUMAKER, 52, was elected President of the Company in August 1999 and
a director of the Company in February 2000. He has served as the Company's
Chief Operating Officer since August 1998 when he was also elected
Executive Vice President. He served as General Manager of the Company's
Laboratory Products Group from February 1998 until August 1998. He joined
the Company in December 1993 as Vice President of Sales and Marketing.
Directors to serve until annual meeting of stockholders in 2002 (Class I):
MARGARET BARR BRUEMMER, 47,48, 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
Trustee of the Allis-Chalmers Corporation Product Liability Trust since
June 1996.
WILEY N. CALDWELL, 72,73, 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 also a director
of Consolidated Papers, Inc.
THOMAS F. PYLE, 58,59, 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.
Directors to serve until annual meeting of stockholders in 2000 (Class II):
JOHN C. CAMPBELL, JR., 56, was elected a director of the Company in 1973. Since
May 1995, Mr. Campbell has been engaged in private consulting. From May
1992 to May 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, 77, was elected a director of the Company in 1966. 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 a partner in that firm.
Directors to serve until annual meeting of stockholders in 2001 (Class III):
KINGMAN DOUGLASS, 75,76, was elected a director of the Company in 1986. He has
been engaged as a consultant in corporate counseling since 1986.
ELI MANCHESTER, JR., 68,69, was elected a director of the Company in November 1990.
He was elected President and Chief Executive Officer of the Company in July
1990. In August 1999 he was elected Chairman, retaining the position of
Chief Executive Officer.
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
seveneight 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 voteTHE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR the election of eachTHE ELECTION OF EACH
---
of the foregoing nominees for director.OF THE FOREGOING NOMINEES FOR DIRECTOR.
2
Meetings and Committees of the BoardMEETINGS 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,
1999,2000, the Board of Directors held fivesix 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, Manchester and ManchesterShumaker 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 two times during the
Company's last fiscal year.
The Audit Committee, consisting of Messrs. Douglass (Chairman) and
Campbell and Ms. Bruemmer, performs the responsibilities and duties described in
the company's Audit Committee Charter included as Appendix B and 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 full 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 three
timesonce
during the Company's last fiscal year.
3
The Financial/Planning Committee, consisting of Messrs. Pyle
(Chairman), Caldwell, DouglassDouglas, Manchester and ManchesterShumaker and Ms. Bruemmer, reviews
and provides recommendations 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, except for Mr. Pyle, who
attended 73% of all such meetings.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 CompensationDIRECTOR COMPENSATION
Each director who is not an employee of the Company receives for his
services as such an annual retainer of $15,000$17,000 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 $1,500.
Payment of such fees may be deferred at the request of a director. All directors
are reimbursed for their expenses for each Board and committee meeting attended.
Under the Company's 1993 Stock Option Plan for Directors, each of the Company's
non-employee directors was granted a one-time option to purchase 5,000 shares of
the Company's common stock. These options became exercisable in 25% increments
on August 1 of each of the next four years after the date of grant, and have
since been exercised in full by each director.
Non-employee directors may also elect to participate in the Company's
health insurance program. During the last fiscal year, Mr. Campbell
participated in this program.
Directors who are employees of the Company receive no compensation for
serving as directors.
4
EXECUTIVE COMPENSATION
Certain Summary Compensation InformationCERTAIN SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information for each of the
fiscal years ended April 30, 1999,2000, April 30, 19981999 and April 30, 1997,1998, with
respect to the compensation of the Chief Executive Officer and the Company's
four other most highly compensated executive officers (the "named executive
officers") in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
-------------------------
Securities All Other
Name and Fiscal Annual Compensation Underlying Compensation
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Principal Position Year Salary ($) Bonus ($) Other ($) Options (#) ($) (1)
- ------------------ ------ ---------- ------------------- --------- --------- ------------ ------------
Eli Manchester, Jr. 2000 285,600 - - - 19,665
Chairman & Chief 1999 284,666 205,576 - 7,500 20,033
President & ChiefExecutive Officer 1998 273,332 216,000 - 5,000 16,224
Executive Officer 1997 263,333 156,000 - 10,000 16,784
William A. Shumaker 2000 192,200 - - 5,000 11,261
President & Chief 1999 178,750 89,308 - 5,000 9,203
Executive Vice PresidentOperating Officer 1998 158,459 62,551 - 3,000 4,346
and Chief Operating 1997 144,759 42,135 - 5,000 3,739
Officer
D. Michael Parker 2000 138,130 - - 4,000 7,452
Vice President-Finance, 1999 132,166 47,723 - 4,000 7,292
Vice President-Finance,Chief Financial Officer, 1998 126,667 50,000 - 2,500 6,411
Chief Financial Officer, 1997 118,333 34,500 - 5,000 6,003
Treasurer and Secretary
Kurt P. Rindoks 2000 119,864 - - 3,000 6,736
Vice President-Engineering 1999 116,003 47,152 - 3,000 6,272
Vice President-Engineeringand General Manager, 1998 102,667 40,000 - 2,000 5,229
and General Manager, 1997 98,667 28,800 - 3,000 5,004
Resin Materials Division
James J. Rossi 2000 116,826 - - 3,000 6,313
Vice President- 1999 113,696 41,018 - 3,000 6,311
Vice President- 1998 110,116 43,611 - 2,000 5,612
Human Resources 1997 105,565 31,1511998 110,116 43,611 - 3,000 5,3592,000 5,612
___________________________- ---------------------------
(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 19992000 for each named executive officer are, respectively: Mr.
Manchester - $3,238$3,200 and $16,795;$16,465; Mr. Shumaker - $3,325$3,247 and $5,878;$8,014; Mr.
Parker - $3,202$3,242 and $4,090;$4,210; Mr. Rindoks- $2,995$3,206 and $3,277;$3,530; and Mr. Rossi-
$2,969$2,967 and $3,342.$3,346.
5
Option Grants in Last Fiscal YearOPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
options granted under the Company's 1991 Key Employee Stock Option Plan during
fiscal year 19992000 to each named executive officer.
OPTION GRANTS IN FISCAL YEAR 19992000
# of % of Total Potential Realized Value
Securities Options at Assumed Annual Rates
Underlying Granted to Exercise of Stock Price Appreciation
Options Employees Price Per Expiration for Option Term (2)
-------------------
Name Granted (1) in Fiscal Year Share ($) Date 5% ($) 10% ($)
- ---- ----------------------- --------------- --------- ---- ------ --------------------------
Eli Manchester, Jr. 7,500 21.0% 12.00 8/26/08 56,601 143,437- - - - - -
William A. Shumaker 5,000 14.0% 12.0017.8% 10.375 8/26/08 37,734 95,62525/09 32,624 82,676
D. Michael Parker 4,000 11.2% 12.0014.2% 10.375 8/26/08 30,187 76,50025/09 26,099 66,141
Kurt P. Rindoks 3,000 8.4% 12.0010.7% 10.375 8/26/08 22,640 57,37525/09 19,574 49,606
James J. Rossi 3,000 8.4% 12.0010.7% 10.375 8/26/08 22,640 57,37525/09 19,574 49,606
___________________
(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.
Option Exercises and HoldingsOPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to
options exercised during fiscal year 19992000 by the named executive 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
Shares Underlying Unexercised In-the-Money Options
Acquired Value Options at April 30, 19992000 at April 30, 19992000 ($) (2)
------------------------- --------------------------------------------------- --------------------------
Name on Exercise Realized ($) (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------------- ----------- ------------- ----------- --------------------------------------- --------------------------
Eli Manchester, Jr. - - 5,000 15,000 20,625 36,2507,500 34,375 1,875 10,625 2,696 45,279
William A. Shumaker 5,000 35,000 15,750 12,250 94,313 38,5632,500 16,875 19,000 11,500 164,228 40,631
D. Michael Parker - - 5,250 12,250 34,797 47,6413,500 24,031 8,500 9,500 71,574 35,161
Kurt P. Rindoks 5,750 45,470 2,000 7,250 10,375 21,5943,500 23,281 1,750 7,000 6,392 24,910
James J. Rossi 2,500 17,975 8,250 7,250 47,094 21,5942,250 13,031 9,250 7,000 76,521 24,910
___________________
(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, 19992000 and the exercise price of the options for each optionee.
6
Retirement PlanRETIREMENT 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. To the extent ERISA
rules restrict the amount otherwise payable under the Plan, the amount in excess
of the restrictions will be paid by the company under the provisions of the
Company's Pension Equalization Plan. At April 30, 1999,2000, the credited years of
service under the Retirement Plan for Messrs. Manchester, Shumaker, Parker,
Rindoks and Rossi were 8.6, 5.6, 8.7, 13.5,9.6, 6.6, 9.7, 14.5, and 15.5,16.5, respectively.
Final Average Years of Service
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Compensation 10 15 20 25 30 35
- ------------ -- -- -- -- -- --
Greater than
$160,000 $18,590 $27,880 $37,170 $46,470 $55,760 $55,760
150,000 17,250 25,880 34,510 43,140 51,760 51,760
130,000 14,590 21,880 29,170 36,470 43,760 43,760$500,000 $63,800 $95,700 $127,600 $159,500 $191,400 $191,400
400,000 50,470 75,700 100,930 126,170 151,400 151,400
300,000 37,130 55,700 74,270 92,840 111,400 111,400
200,000 23,800 35,700 47,600 59,500 71,400 71,400
100,000 10,590 15,880 21,170 26,470 31,760 31,76010,470 15,700 20,930 26,170 31,400 31,400
__________________
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.
7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board, which consists of four non-
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 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 CompensationEXECUTIVE 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 level of experience, and his sustained
performance over time.
Annual Incentive Compensation
All 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 attainment of earnings goals established in the incentive bonus
plan and, to a lesser extent, on the executive officer's achievement of
established personal goals to the degree determined by the Board of Directors
upon the recommendation of the Chief Executive Officer.
At the beginning of each fiscal year, the Board of Directors approves
earnings goals for the Company and its two divisions for such year and, upon recommendation of the
Compensation Committee, establishes specified percentages of the executive
officers' beginning-beginning-of-the-year
8
of-the-year
base salaries that will be available for bonuses if the Company achieves
specified earnings goals and the executive officers achieve their personal
goals. The percentages increase as the earnings reach various established
levels. As the Company did not meet its established earnings goals under the
incentive bonus plan, no cash bonus was paid to any executive officer for fiscal
year 2000.
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.
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 of such option.
Individual awards are based on an 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
Mr. Manchester'sCHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation includes base salary,
incentive compensation, stock options, and benefits under various group plans.
The Compensation Committee considers Mr. Manchester's leadership an important
factor in the success of the Company in fiscal year 1999. For fiscal year 1999, the
Compensation Committee considered the same factors as in prior years forCompany. In establishing thehis base salary and stock
option grant, to Mr. Manchester, includingthe Compensation Committee considers 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, increasedAt Mr. Manchester's request, his base salary from $280,000 toremained unchanged
at $285,600 perduring fiscal year effective July
1, 1998,2000, and granted Mr. Manchesterhe also declined a non-qualified stock option on 7,500 shares
in August 1998.award.
The exercise price of the stock option was equalCEO's annual incentive compensation is determined pursuant to the fair
market value of the stock on the date of grant. In June 1999, Mr. Manchester
received a cash bonus of $205,576 for fiscal year 1999 under the terms of the Company's
incentive bonus plan. Compensation Committee MembersAs the Company did not meet its established earnings
goals under the incentive bonus plan, no cash bonus was paid to Mr. Manchester
for fiscal year 2000.
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 NASDAQNasdaq Market
Index, and (ii) an index of all NASDAQ,Nasdaq, non-financial companies with similar
market capitalizationcapitalizations to the Company /1/Company/1/. The graph is based on an investment
-
of $100 on April 30, 199428, 1995 (the last trading day prior to the end of the
Company's 1995 fiscal year) 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,Corporation, NASDAQ Market Index
and Similar Market Capitalization Index
[GRAPH APPEARS HERE][GRAPH]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----4/28/95 4/30/96 4/30/97 4/30/98 4/30/99 4/28/00
------- ------- ------- ------- ------- -------
Kewaunee Scientific Corporation 100.00 71.43 103.57 148.27 372.22 304.67145.00 207.58 521.11 426.53 580.78
Peer Group 100.00 108.54 112.49 116.63 89.69 96.31103.63 107.22 82.27 88.44 71.93
Nasdaq Market Index 100.00 109.19 152.42 162.47 241.31 318.66139.59 148.79 221.00 291.84 453.45
___________________________________
/1/ In addition to the Company, the Similar Market Capitalization Index is
-
comprised of the following companies: Amcor Limited; Canterbury Park Holding
Corporation; Enterprise Oil PLC; HMG/Courtland Properties Inc.; Huntway Partners
L.P.;Refining
Company; London Pacific Group, Limited; North Coast Energy, Inc.; OTR Express,
Inc.; P & F Industries, Inc.; Research, Incorporated; TAT Technologies Ltd.; TBA
Entertainment Corporation; Telscape International Incorporated; and Uniview
Technologies Corporation. 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,During fiscal year 2000, the Company entered into anagreements with
Messrs. Shumaker, Parker, Rossi and Rindoks that provide for the payment of
compensation and benefits in the event of termination of their employment agreement
with Mr. Shumaker providing forwithin
three years following a Change of Control of the Company, as defined in the
agreements. Each executive whose employment is so terminated will receive
compensation if the termination of his employment was by the Company or its
successor without cause, or by the executive for good reason, as Vice President-Sales and
Marketing. The agreement provides for an annual salary commencing at $125,000
and the opportunity to participatedefined in the
Company's Incentive Bonus Planagreements. Upon such a termination of employment within one year following a
Change of Control, the Company or its successor will be required to make, in
addition to unpaid ordinary compensation and Key
Employee Stock Option Plan, as well asa lump-sum cash payment for certain
benefits, generally availablea lump-sum cash payment equal to executivesthe executive's annual compensation
with respect to Messrs. Rossi and Rindoks and two (2) times the executive's
annual compensation with respect to Messrs. Shumaker and Parker. Upon a
termination of employment occurring after the first anniversary of the Company. The agreement also provides that if Mr. Shumaker is
terminated from employment without cause, Mr. Shumakerdate of
the Change of Control, in addition to unpaid ordinary compensation and a lump-
sum cash payment for certain benefits, Messrs. Rossi and Rindoks will be
entitled to separation paya lump-sum payment equal to six monthsone-half (1/2) 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.their annual
compensation and Messrs. Shumaker and 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 obligatedentitled to pay him separation paya lump-sum
payment 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 Ronald Gewin, currently Vice President and General Manager, Technical
Products Group of the Company. The agreement provides for antheir 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, as well as benefits
generally available to executives of the Company. On December 15, 1994, the
Company 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.compensation.
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, 1999,2000, 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).......................................................................... 95,544 3.9%
Wiley N. Caldwell.................................................Caldwell......................................... 5,500 *
John C. Campbell, Jr.(3)............................................................................ 41,667 1.7%
Kingman Douglass..................................................Douglass.......................................... 15,000 *
Eli Manchester, Jr................................................ 76,875 3.1%Jr........................................ 102,500 4.1%
Thomas F. Pyle(4).......................................................................................... 16,000 *
James T. Rhind(5).......................................................................................... 386,351 15.8%15.7%
William A. Shumaker............................................... 28,000 1.1%Shumaker....................................... 35,000 1.4%
D. Michael Parker(6).............................................. 16,250...................................... 21,375 *
Kurt P. Rindoks................................................... 8,783Rindoks........................................... 9,533 *
James J. Rossi(7)................................................. 12,073......................................... 15,825 *
Directors and executive officers as a group (12(11 persons).......... 714,543 29.2%.. 744,295 29.5%
________________________- -------------------
* Percentage of class is less than 1%.
(1) Includes shares which may be acquired within sixty (60) days from June 30,
19992000 upon exercise of options by: Mr. Manchester - 6,875;7,500; Mr. Shumaker -
19,000;23,500; Mr. Parker - 7,250;12,375; Mr. Rindoks - 5,250;4,500; Mr. Rossi - 9,250;12,000; and
all officers and directors as a group - 60,125.59,875.
(2) Includes 2,000 shares held as custodian for Ms. Bruemmer's children and
88,544 shares held by Ms. Bruemmer's husband.
(3) Includes 12,82613,826 shares held by Mr. Campbell's wife, as to which shares he
disclaims beneficial ownership.
(4) Includes 8,000 shares in which Mr. Pyle shares voting and investment power.
(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.
(6) Includes 9,000 shares in which Mr. Parker shares voting and investment
power.
(7) Includes 2,750 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, 1999,2000, 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
- ---- -------------- ----------------- -------
Elizabeth B. Gardner....................... 213,069(1) 8.7%Gardner............. 212,069(1) 8.6%
Laura Campbell Rhind.......................Rhind............. 386,351(2) 15.8%15.7%
Dimensional Fund Advisors, Inc............. 156,800(3)Inc... 157,100(3) 6.4%
Ernest and Patricia R. Ohnell.... 166,700(4) 6.8%
________________________- -------------------
(1) Includes 64,093 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 11,92512,925 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.
(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 Mrs. 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 thea third
director share voting and investment power over thesethe shares held by the
charitable foundation, but disclaim beneficial ownership of them. Mrs.
Rhind's address is 830 Normandy Lane, Glenview, Illinois 60025.
(3) The shares owned by Dimensional Fund Advisors listed in the table are shown
as being owned as of December 31, 19981999 according to a Schedule 13G filed
with the Securities and Exchange Commission in February 1999.2000. Dimensional
Fund Advisors' address is 1299 Ocean Avenue, Santa Monica, California
90401.
(4) The shares owned by Ernest and Patricia R. Ohnell listed in the table are
shown as being owned as of February 29, 2000 according to a Schedule 13D
filed with the Securities and Exchange Commission in March 2000. Ernest
Ohnell directly owns 127,700 shares and his wife, Patricia Ohnell, directly
owns 39,000 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
PROPOSAL TO APPROVE THE 2000 KEY EMPLOYEE STOCK OPTION PLAN
The board of directors adopted on June 13, 2000, and recommends that the
stockholders approve, the 2000 Key Employee Stock Option Plan (the "2000 Plan").
The 2000 Plan, a copy of which accompanies this proxy statement as Appendix
A, is intended to replace the Company's 1991 Key Employee Stock Option Plan (the
"1991 Plan"). The terms of the 2000 Plan are substantially similar to the terms
of the 1991 Plan. The 2000 Plan is designed to secure for the Company and its
stockholders the benefits of incentive inherent in the ownership of common stock
of the Company by key employees who will be responsible for its future growth
and continued success. If the 2000 Plan is approved by the stockholders, the
final grant of options under the 1991 Plan will be made at the August 23, 2000
meeting of the Board of Directors and no future options will be granted under
the 1991 Plan. It is expected, however, that substantially all of the options
available under the 1991 Plan will have been granted as of such date. No
options have been granted under the 2000 Plan.
The 2000 Plan will be administered by the Board of Directors or, in its
discretion, a committee (the "Committee") of three or more members of the Board
of Directors (none of whom is or was at any time within one year before
appointment to the Committee eligible to participate in the Plan). It provides
for the issuances of both incentive stock options ("qualified options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, and options
which do not qualify as incentive stock options ("non-qualified options"). The
2000 Plan authorizes the Board of Directors, until August 23, 2010, to grant
options to purchase a total of not more than 100,000 shares of the Company's
common stock to certain key employees of the Company and its subsidiaries
(including officers, whether or not they are directors). The Committee also may
grant substitute options, with the optionee's consent, at a different option
price to replace previously granted options.
The option price of an option granted under the 2000 Plan is to be
determined by the Board of Directors at the time of grant but may not be less
than the fair market value of the Company's common stock on the date of grant.
Options may be exercised by giving written notice to the Company specifying the
number of shares to be purchased, accompanied by the full purchase price in cash
or by certified or cashier's check or, with the consent of the Board of
Directors, through the surrender of previously-acquired shares of the Company's
common stock. At the time of exercise of any option that is not a qualified
option, an optionee must pay the Company at the time of exercise, an amount
equal to any tax that the Company is required to withhold (less any amount
withheld from the optionee's regular compensation in connection with such
exercise).
Options may be granted under the 2000 Plan for a term of not more than ten
years and will be exercisable in such installments, at such time or times and
subject to such conditions, as the Board of Directors in its discretion
determines. In the event of a "change in control" of the Company, as defined
under the 2000 Plan, all options outstanding granted under the 2000 Plan to
optionees who are employees of the Company become immediately exercisable in
full without regard to any installments. The foregoing does not apply to an
option which contains performance standards as a condition upon exercise, except
that in the event of a change in control the Board of Directors may waive the
performance standards if it determines, in its sole
14
discretion, that based on results of operations prior to the change in control,
the standards would reasonably be expected to have been met within the relevant
period or periods. In the event that any outstanding option for any reason
expires or is terminated, the shares allocable to the unexercised portion of
such option may again be optioned.
The Board may amend or discontinue the 2000 Plan, except that no amendment
or discontinuance may change or impair any option previously granted without the
consent of the optionee, increase the maximum number of shares which may be
purchased under the 2000 Plan, change the minimum purchase price, change the
limitations on the option period, or increase the time limitation on the grant
of options.
In the event that the Company's shares of common stock are changed by a
stock dividend, stock split or combination of shares, or a merger, consolidation
or reorganization with another company in which holders of the Company's common
stock receive other securities, or other relevant change in the capitalization
of the Company, a proportionate or equitable adjustment will be made in the
number or kind of shares subject to unexercised options or available for options
and in the purchase price for shares.
Options are not transferable by the optionee otherwise than by will or the
laws of descent and distribution. Options expire if the optionee's employment
is terminated for "cause," which is defined in the 2000 Plan as dishonesty,
disloyalty or gross misconduct. In the event an optionee dies while employed
with the Company, the optionee's heirs, legatees or legal representatives,
within one year after the date of death, may exercise the option in full if
death occurred on or after the first anniversary of the option. If death
occurred before the first anniversary of the option, the option may be exercised
to the extent it was exercisable at the date of death. In the event of
termination because of disability, the optionee may exercise the option within
one year after such termination to the extent it was exercisable at the date of
termination. In the event that an optionee retires, options held by the
optionee may be exercised within three years of the date of retirement to the
extent they were exercisable on the date of retirement. If the option so
provided, if such retirement occurs after the first anniversary of the option,
the option may be exercised in full during its specified term during the
exercise period. In the event of termination other than for cause or by death,
disability or retirement, the optionee may exercise the option within three
months after such termination to the extent it was exercisable at the date of
termination. Notwithstanding the foregoing, in no event is an option
exercisable after the termination date specified in the option grant.
With respect to non-qualified options granted under the 2000 Plan, the
Company understands that under existing federal income tax law (i) no income
will be recognized to the optionee at the time of grant, (ii) upon exercise of
an option, the optionee will be required to treat as ordinary income the
difference on the date of exercise between the option price and the fair market
value of the stock purchased, and the Company will be entitled to a deduction
equal to such amount, and (iii) assuming the shares received upon the exercise
of such option constitute capital assets in the optionee's hands, any gain or
loss upon disposition of the shares (measured by reference to the fair market
value of the shares on the date of exercise) will be treated as capital gain or
loss which will be long-term if the shares have been held longer than one year.
In the case of an optionee who is subject to Section 16(b) of the Securities and
Exchange Act of 1934 (an officer, director or ten percent stockholder) and who
exercises an option less than 6
15
months after its date of grant, the amount of income recognized for federal
income tax purposes (and the amount of the Company's deduction) will be
determined by the fair market value of the stock purchased on the date which is
six months after the date of exercise unless the optionee makes an election to
use the stock's fair market value on the exercise date.
Qualified options granted under the 2000 Plan are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986. The Company understands that under existing federal
income tax law, if shares purchased pursuant to the exercise of a qualified
option are not disposed of by the optionee within two years from the date of
grant of the option or within one year after the transfer of the shares to him,
then (i) no income will be recognized by the optionee upon either the grant or
the exercise of the option, (ii) any gain or loss will be recognized by the
optionee only upon ultimate disposition of the shares and, assuming the shares
constitute capital assets in the optionee's hands, will be treated as long-term
capital gain or loss, and (iii) the Company will not be entitled to a federal
income tax deduction in connection with the grant or the exercise of the option.
For purposes of computing the alternative minimum tax, the difference between
the option price and the fair market value of the shares acquired upon exercise
of a qualified option will increase the optionee's alternative minimum taxable
income.
If an optionee disposes of the shares acquired upon exercise of a qualified
option within two years from the date of grant of the option or within one year
after the transfer of the shares to him, ordinary income will be recognized to
the optionee in an amount equal to the difference between the option price and
the lesser of the fair market value of the shares on the date of exercise or the
selling price. The balance of the optionee's gain on such disposition, if any,
will be taxed as capital gain. The Company will be entitled to a deduction in
the year of disposition equal to the amount of ordinary income recognized to the
optionee.
The Board of Directors recommends approval of the 2000 Plan by
stockholders. The affirmative vote of the holders of a majority of the shares
of the Company's common stock present or represented at the Annual Meeting of
Stockholders is necessary to adopt the 2000 Plan. Unless otherwise instructed,
signed proxies returned in a timely manner will be voted for the 2000 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2000 PLAN.
---
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers 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,
2000.2001. PricewaterhouseCoopers LLP served as independent public accountants for
the Company for the fiscal year ended April 30, 1999.2000. A representative of
PricewaterhouseCoopers 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.
16
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 9, 1999,7, 2000, the record date for
determination of stockholders entitled to vote at the annual meeting, there were
2,447,0462,465,871 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 three nominees for director. Approval of any other matter
submitted to the stockholders for their consideration at the meeting, including
approval of the 2000 Plan, 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 proposals presented to stockholders.
Thus, an abstention, direction to withhold authority, or broker non-vote with
respect to a matter other than the election of directors, may have the same
legal effect as a vote against the matter. With respect to the election of
directors, an abstention, direction to withhold authority or broker non-vote
will have no effect. 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 III directors.
1417
STOCKHOLDER PROPOSALS
The deadline for receipt of stockholder proposals for inclusion in the
Company's 19992001 proxy material is March 19, 2000.22, 2001. 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, 19992000 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 27, 1999
1519, 2000
18
APPENDIX A
KEWAUNEE SCIENTIFIC CORPORATION
2000 KEY EMPLOYEE STOCK OPTION PLAN
___________________
The purpose of this Stock Option Plan (the "Plan") is to benefit KEWAUNEE
SCIENTIFIC CORPORATION (the "Company") and its subsidiaries through the
maintenance and development of top management by offering certain present and
future executive and key personnel a favorable opportunity to become holders of
stock in the Company over a period of years, thereby giving them a permanent
stake in the growth and prosperity of the Company and encouraging the
continuance of their services with the Company or its subsidiaries. Options
granted under this Plan are intended to qualify as "Incentive Stock Options" as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or as stock options that are not incentive stock options, according to
the designation at time of grant by the Board of Directors of the Company.
1. Administration. The Plan shall be administered by the Board of
Directors of the Company, whose interpretation of the terms and provisions of
the Plan shall be final and conclusive. The Board of Directors may, in its
discretion, delegate to a committee of three or more members of the Board (none
of whom is or was at any time within one year before appointment to the
Committee eligible to participate in the Plan) the authority to administer such
matters under the Plan and options granted under the Plan as the Board of
Directors may specify.
2. Eligibility. Options shall be granted only to key employees of the
Company and its subsidiaries (including officers, and including directors of the
Company and its subsidiaries who are also employees), selected initially and
from time to time thereafter by the Board of Directors on the basis of the
special importance of their services in the management, development and
operations of the Company or its subsidiaries. In the case of incentive stock
options, no option shall be granted to any employee who, immediately after such
option is granted, would own, within the meaning of section 422(b)(6) of the
Code, stock possessing more than 10 percent of the total combined voting power
of all classes of stock of the Company or any of its subsidiaries, except that
an option may be granted to such an employee if at the time the option is
granted the option price is at least 110 percent of the fair market value of the
stock subject to the option and the option by its terms is not exercisable after
the expiration of five years from the date the option is granted.
3. Granting of Options. The Board of Directors may grant options to
purchase from the Company a total of not more than 100,000 shares of the common
stock of the Company, subject to adjustment as provided in Paragraph 10. For
incentive stock options granted under the Plan, the aggregate fair market value
(determined as of the time the option is granted) of the stock with respect to
which options are exercisable for the first time by any employee during any
calendar year (under all incentive stock option plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000.
A-1
No options shall be granted under the Plan subsequent to August 23, 2010.
In the event that an option expires or is terminated or cancelled
unexercised as to any shares, such released shares may again be optioned.
Shares subject to options may be made available from unissued or reacquired
shares of common stock.
The Board of Directors may, with the optionee's consent, grant substitute
options at a different price or with different provisions to replace previously-
granted outstanding options.
Nothing contained in the Plan or in any option granted pursuant thereto
shall confer upon any optionee any right to be continued in the employment of
the Company or any subsidiary of the Company, or interfere in any way with the
right of the Company or its subsidiaries to terminate his employment at any
time.
4. Option Price. The option price shall be determined by the Board of
Directors and, subject to the provisions of Paragraph 2 and Paragraph 10 hereof,
shall be not less than the fair market value, at the time the option is granted,
of the stock subject to the option.
5. Duration of Options, Increments and Extensions. Subject to the
provisions of Paragraph 2 and Paragraph 8 hereof, each option shall be for such
term of not more than ten years as shall be determined by the Board of Directors
at the date of the grant. Each option shall become exercisable in such
installments, at such time or times, and may be subject to such conditions,
including conditions based upon the performance of the Company, as the Board of
Directors may in its discretion determine at the date of grant.
Subject to the foregoing, the Board of Directors may in its discretion (i)
accelerate the exercisability of any option or (ii) at any time prior to the
expiration or termination of an option previously granted, extend the term of
such option (including options held by officers or directors) for such
additional period as the Board of Directors, in its discretion, shall determine;
provided, however, that the aggregate option period with respect to any option,
including the original term of the option and any extensions thereof, shall
never exceed ten years.
6. Change in Control. Any option granted under the Plan to an optionee
who is an employee of the Company or any of its subsidiaries on the date of a
Change in Control shall be immediately exercisable in full on such date and
thereafter during its specified term. The words "Change in Control" shall mean
the occurrence, at any time during the specified term of an option granted under
the Plan, of any of the following events:
(a) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, or there is an offer to holders
of the common stock generally relating to the acquisition of their shares,
and as a result of such merger, consolidation, reorganization or offer,
less than 75% of the outstanding voting securities or other capital
interests of the surviving, resulting or acquiring corporation or other
legal person are owned in the aggregate by the stockholders of the Company
immediately prior to such merger, consolidation, reorganization or offer;
(b) The Company sells all or substantially all of its business and/or
assets to any other corporation or other legal person, less than 75% of the
outstanding voting
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securities or other capital interests of which are owned in the aggregate,
directly or indirectly, by the persons who were stockholders of the Company
immediately before or after such sale; or
(c) During any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of
each new director of the Company, was approved by a vote of at least two-
thirds of such directors of the Company then still in office who were
directors of the Company at the beginning of any such period.
The provisions of this Paragraph 6 shall not apply to an option which
contains performance standards as a condition upon exercise, except that in the
event of a Change of Control the Board of Directors may waive the performance
standards if it determines, in its sole discretion, that based on results of
operations prior to the Change of Control, the standards would reasonably be
expected to have been met within the relevant period or periods.
7. Exercise of Option; Withholding. An option may be exercised by giving
written notice to the Company, attention of the Secretary, specifying the number
of shares to be purchased, accompanied by the full purchase price for the shares
to be purchased in cash, or by certified or cashier's check, except that the
Board of Directors may permit the purchase price for the shares to be paid, all
or in part, by the delivery to the Company of other shares of common stock of
the Company in such circumstances and manner as it may specify. For this
purpose, the per share value of the Company's common stock shall be its fair
market value at the close of business on the date preceding the date of
exercise. The optionee shall pay the Company at the time of exercise an amount
equal to any tax that the Company is required to withhold from the optionee upon
exercise (less any amount withheld from the optionee's regular compensation in
connection with such exercise).
At the time of any exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the optionee (or the
optionee's heirs, legatees, or legal representatives, as the case may be) as a
condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the optionee upon exercise of part or all of the option and a stop transfer
order may be placed with the transfer agent. Each option shall also be subject
to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or Federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the issue or purchase of
shares thereunder, the option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable by the Company.
8. Termination of Employment--Exercise Thereafter. Unless otherwise
determined by the Board of Directors at the time of grant:
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(a) If the employment of an optionee with the Company or any of its
subsidiaries terminates for any reason except discharge for cause, an
option which is not an incentive stock option may be exercised as follows:
(i) if the optionee's employment is terminated otherwise than
by death, disability or retirement, by the optionee at any time within
three months after such termination;
(ii) if the optionee's employment is terminated by death, by the
optionee's heirs, legatees or legal representatives at any time within
one year after the date of death;
(iii) if the optionee's employment is terminated because of
disability (as defined in Section 22(e)(3) of the Code), by the
optionee at any time within one year after the date of such
termination; or
(iv) if the optionee's employment is terminated by retirement
(as defined in the Company's qualified retirement plan for salaried
employees), by the optionee within three years after the date of
retirement.
For an incentive stock option, these same provisions shall apply except the
exercise period following termination of employment because of death or
retirement shall not exceed three months.
(b) Notwithstanding the foregoing, an option shall not be exercisable
after the expiration of its specified term and shall be exercisable only to
the extent it was exercisable at the date of such termination of
employment, except that if the optionee's employment is terminated by death
or, if the option so provides, by retirement, at any time on or after the
first anniversary of the option, the option may be exercised in full during
its specified term during the period provided above.
(c) If an optionee is discharged for cause, the option shall expire
forthwith and all rights to purchase shares under it shall terminate
immediately. For this purpose, "discharge for cause" means a discharge on
account of dishonesty, disloyalty or gross misconduct.
9. Non-Transferability of Options. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution and each
option shall be exercisable during an optionee's lifetime only by the optionee.
10. Adjustment. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
Company's outstanding common stock is changed by any stock dividend, stock split
or combination of shares, the number of shares subject to the Plan and to
options granted thereunder shall be proportionately adjusted; (b) in the event
of any merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable basis as
determined by the Board of Directors, for each share of common stock then
subject to the Plan, whether or not at the time subject to outstanding options,
the number and kind of shares of stock
A-4
or other securities or cash or other property to which the holders of common
stock of the Company will be entitled pursuant to the transaction; and (c) in
the event of any other relevant change in the capitalization of the Company, the
Board of Directors shall provide for an equitable adjustment in the number of
shares of common stock then subject to the Plan, whether or not then subject to
outstanding options. In the event of any such adjustment, the purchase price per
share shall be proportionately adjusted.
11. Amendment of Plan. The Board of Directors may amend or discontinue
the Plan at any time. However, no such amendment or discontinuance shall (a)
change or impair any option previously granted, without the consent of the
optionee, (b) increase the maximum number of shares which may be purchased by
all employees, (c) change the minimum purchase price, or (d) change the
limitations on the option period or increase the time limitations on the grant
of option.
12. Effective Date. The Plan has been adopted by the Board of Directors
for submission to the stockholders of the Company. If the Plan is approved by
the affirmative vote of the holders of a majority of the voting stock of the
Company voting in person or by proxy at a duly held stockholders' meeting, it
shall be deemed to have become effective on August 23, 2000, the date of such
approval by the Company's stockholders.
A-5
APPENDIX B
CHARTER
OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
KEWAUNEE SCIENTIFIC CORPORATION (THE "COMPANY")
I. ORGANIZATION
The Audit Committee of the Board of Directors shall be comprised of at
least three directors who are independent of management and the Company.
Members of the Audit Committee shall be considered independent if they have no
relationship to the Company that may interfere with the exercise of their
independence from management and the Company, and shall otherwise satisfy the
applicable membership requirements under the rules of the Nasdaq Stock Market.
Each Audit Committee member shall be financially literate or become financially
literate within a reasonable period of time after his or her appointment to the
Audit Committee, and at least one member shall have accounting or related
financial management expertise.
II. STATEMENT OF POLICY
The primary function of the Audit Committee is oversight. The Audit
Committee shall provide assistance to the Board of Directors in fulfilling the
Board's responsibility to the Company's shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Company, and the quality and integrity of financial reports regarding the
Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication between the directors, the independent
auditors, and the senior management of the Company.
III. MEETINGS
The Audit Committee shall meet annually, or more frequently as
circumstances dictate. As part of its oversight function, the Audit Committee
also shall meet at least annually with management and the independent auditors
in separate executive sessions to discuss any matters that the Audit Committee
or each of these groups believe should be discussed
IV. RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities and duties, the Audit Committee
believes its policies and procedures should remain flexible, to best react to
changing conditions and to reasonably ensure to the directors and shareholders
that the corporate accounting and reporting practices of the Company are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities and duties, the Audit Committee
shall:
B-1
DOCUMENTS/REPORTS REVIEW
. Obtain the full Board of Directors' approval of this Charter and review and
reassess this Charter as conditions dictate, but no less frequently than
annually.
. Review the organization's annual financial statements and any related reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by the
independent auditors.
INDEPENDENT AUDITORS
. Recommend to the Board of Directors the selection of, and the fees and other
compensation paid to, the independent auditors. On an annual basis, the Audit
Committee shall review and discuss with the auditors all significant
relationships the auditors have with the Company to determine the auditors'
independence. In so doing, the Audit Committee shall require a report from the
independent auditors delineating all relationships between the auditors and the
Company, consistent with Independence Standards Board Standard 1.
. Establish a clear understanding that independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee, as
representatives of shareholders, and that these shareholder representatives have
the ultimate authority and responsibility to select, evaluate, and, where
appropriate, replace the independent auditor.
. Review the performance of the independent auditors and approve any proposed
discharge of the independent auditors when circumstances warrant.
. Periodically consult with the independent auditors regarding internal
controls and the fullness and accuracy of the organization's financial
statements.
FINANCIAL REPORTING PROCESSES
. In consultation with the independent auditors, review the integrity of the
organization's financial reporting processes, both internal and external.
. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
. Consider and approve, if appropriate, major changes to the Company's auditing
and accounting principles and practices as suggested by the independent auditors
or management.
PROCESS IMPROVEMENT
. Establish regular and separate systems of reporting to the Audit Committee by
each of management and the independent auditors regarding any significant
judgments made in management's preparation of the financial statements and the
view of each as to appropriateness of such judgments.
B-2
. Following completion of the annual audit, review separately with each of
management and the independent auditors any significant difficulties encountered
during the course of the audit, including any restrictions on the scope of work
or access to required information.
. Review any significant disagreement among management and the independent
auditors in connection with the preparation of the financial statements.
. Review with the independent auditors, the internal auditing department and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
. Review, with the Company's counsel, legal compliance matters including
corporate securities trading policies.
. Review, with the Company's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
. Perform any other activities consistent with this Charter, the Company's
Bylaws and governing law, as the Audit Committee or the Board of Directors deems
necessary or appropriate.
While the Audit Committee has the responsibilities and duties set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is
the responsibility of management and the independent auditor. Nor is it the
duty of the Audit Committee to conduct investigations, to resolve disagreements,
if any, between management and the independent auditor or to assure compliance
with laws and regulations.
B-3
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 Eli Manchester, Jr., Wiley N. Caldwell
and Thomas F. Pyle 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 7, 2000, at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Daylight Time, on August 23, 2000
and at any adjournment thereof.
Your vote for three directors may be indicated on the reverse side.
John C. Campbell, Jr., James T. Rhind and William A. Shumaker have been
nominated for election as Class II Directors. Your vote for approval of the
Company's 2000 Key Employee Stock Option Plan may also be indicated on the
reverse side.
(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.below and FOR the approval of
the Company's 2000 Key Employee Stock Option Plan. Please mark your vote inside
one box below.
1. Election of Class III Directors:
Margaret Barr Bruemmer, Wiley N. CaldwellJohn C. Campbell, Jr., James T. Rhind and Thomas F. PyleWilliam A. Shumaker
FOR the nominees listed WITHHOLD AUTHORITY
above (except as to vote for the nominee
marked to the contrary) listed above
[_] [_]
If you wish to withhold authority for any of the
nominees, write such nominee's name in this space
__________________________________________
2. To approve the Company's 2000 Key Employee Stock Option Plan.
[_] For [_] Against [_] Abstain
3. 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:_________________________________, 1999 _______________________________ , 2000
____________________________________________
Signature
____________________________________________
Signature if held jointly
IMPORTANT: Please sign 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.
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 Eli Manchester, Jr., James T. Rhind
and John C. Campbell, Jr. 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 9, 1999, at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Daylight Time, on August 25, 1999
and at any adjournment thereof.
Your vote for three directors may be indicated on the reverse side.
Margaret Barr Bruemmer, Wiley N. Caldwell and Thomas F. Pyle have been nominated
for election as Class I Directors.
(Continued and to be signed on the reverse side)