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o Preliminary Proxy Statement | ||
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to Section 240.14a-12 |
þ | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
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o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(2) | Form, Schedule or Registration Statement No.: |
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(4) | Date Filed: |
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Sincerely, | |
John M. Stropki, Jr. | |
Chairman, President and Chief Executive Officer | |
Lincoln Electric Holdings, Inc. |
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(1) | Election of three Directors each for a term scheduled to expire in 2008; | |
(2) | Ratification of the Directors’ appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2005; and | |
(3) | Any other business properly brought before the meeting. |
Frederick G. Stueber | |
Senior Vice President, | |
General Counsel and Secretary |
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(1) | Election of three Directors, each to serve for a term scheduled to expire in 2008; and | |
(2) | Ratification of the Directors’ appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2005. |
By telephone. After reading the proxy materials and with your Proxy and Voting Instruction Form in front of you, you may call the toll-free number1-800-542-1160, using a touch-tone telephone. You will be prompted to enter your Control Number from your Proxy and Voting Instruction Form. This number will identify you and the Company. Then you can follow the simple instructions that will be given to you to record your vote. | |
Over the Internet. After reading the proxy materials and with your Proxy and Voting Instruction Form in front of you, you may use your computer to access the websitewww.votefast.com. You will be prompted to enter your Control Number from your Proxy and Voting Instruction Form. This number will identify you and the Company. Then you can follow the simple instructions that will be given to you to record your vote. | |
By mail. After reading the proxy materials, please mark, sign and date your Proxy and Voting Instruction Form and return it in the enclosed prepaid and addressed envelope. |
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(1) | by sending a written notice to the Company’s Corporate Secretary stating that you want to change your proxy vote; | |
(2) | by submitting a properly signed Proxy and Voting Instruction Form with a later date; | |
(3) | by entering later-dated telephone or Internet voting instructions; or | |
(4) | by voting in person at the Annual Meeting.NOTE: Because your 401(k) shares are held in a qualified plan, you are not able to vote 401(k) Plan shares at the Annual Meeting. |
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Lincoln Electric Holdings, Inc. | |
22801 Saint Clair Avenue | |
Cleveland, Ohio 44117-1199 | |
Attention: Roy Morrow, Director, Corporate Relations |
Lincoln Electric Holdings, Inc. | |
22801 Saint Clair Avenue | |
Cleveland, Ohio 44117-1199 | |
Attention: Corporate Secretary |
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Class of 2008. The class of Directors whose term ends in 2008 has been fixed at three. David H. Gunning, G. Russell Lincoln and Hellene S. Runtagh are standing for election. All of the Director nominees have been elected previously by the shareholders.
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David H. Gunning | ||
Age: | 62 | |
Term Expires/Service: | 2005; standing for reelection at this Annual Meeting to serve until 2008; Director since 1987. | |
Recent Business Experience: | Mr. Gunning serves as Vice Chairman of Cleveland-Cliffs Inc (iron ore producer), a position he has held since April 2001. Previously, Mr. Gunning served as the Principal of Encinitos Ventures (venture capital), a position he held from 1997 to 2001. Mr. Gunning also served as Chairman, President and Chief Executive Officer of Capitol American Financial Corporation from 1993 until its sale in early 1997. | |
Other Directorships: | Cleveland-Cliffs Inc and MFS Funds, Inc. | |
G. Russell Lincoln | ||
Age: | 58 | |
Term Expires/Service: | 2005; standing for reelection at this Annual Meeting to serve until 2008; Director since 1989. | |
Recent Business Experience: | Mr. Lincoln is President of N.A.S.T. Inc. (a personal investment firm), a position he has held since 1996. From 1984 to 1996, Mr. Lincoln served as Chairman of the Board and Chief Executive Officer of Algan, Inc. (chemicals). | |
Hellene S. Runtagh | ||
Age: | 56 | |
Term Expires/Service: | 2005; standing for reelection at this Annual Meeting to serve until 2008; Director since 2001. | |
Recent Business Experience: | Ms. Runtagh is the former President and Chief Executive Officer of Berwind Group (manufacturing and real estate holdings), a position she held from June 2001 through December 2001. Prior to that, Ms. Runtagh was Executive Vice President of Universal Studios (entertainment) from February 1997 until January 2001. | |
Other Directorships: | Avaya Inc. and Covad Communications Group, Inc. | |
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Harold L. Adams | ||
Age: | 65 | |
Term Expires/Service: | 2006; Director since 2002. | |
Recent Business Experience: | Mr. Adams is Chairman Emeritus of RTKL Associates Inc. (architects and engineers) and the former Chairman, President and Chief Executive Officer of RTKL, a position he held from 1967 to November 2003. | |
Other Directorships: | Commercial Metals Company and Legg Mason, Inc. | |
Robert J. Knoll | ||
Age: | 63 | |
Term Expires/Service: | 2006; Director since 2003. | |
Recent Business Experience: | Mr. Knoll is a former Partner of Deloitte & Touche LLP (accounting), a position he held from 1978 to his retirement in 2000. From 1995 to 1999, Mr. Knoll served as National Director of the firm’s Accounting and Auditing Professional Practice with oversight responsibility for the firm’s accounting and auditing consultation process, SEC practice and risk management process. | |
John M. Stropki, Jr. | ||
Age: | 54 | |
Term Expires/Service: | 2006; Director since 1998. | |
Recent Business Experience: | Mr. Stropki is Chairman, President and Chief Executive Officer of the Company. Mr. Stropki was elected President and Chief Executive Officer in June 2004 and Chairman in October 2004. From May 2003 to June 2004, Mr. Stropki was Executive Vice President and Chief Operating Officer of the Company. From May 1996 to May 2003, Mr. Stropki was Executive Vice President of the Company and President, North America of The Lincoln Electric Company. | |
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Ranko Cucuz | ||
Age: | 61 | |
Term Expires/Service: | 2007; Director since 2001. | |
Recent Business Experience: | Mr. Cucuz is the former Chairman, President and Chief Executive Officer of Hayes Lemmerz International, Inc. (motor vehicle parts and accessories), formerly known as Hayes Wheels International, Inc. (“Hayes Lemmerz”). Mr. Cucuz held these positions from 1997 to September 2001. Mr. Cucuz was President and Chief Executive Officer of Hayes Wheels from 1992 to 1997, when Hayes Wheels acquired Lemmerz Holding. | |
Mr. Cucuz ceased serving as President and Chief Executive Officer of Hayes Lemmerz in August 2001 and ceased serving as Chairman in September 2001. In December 2001, Hayes Lemmerz filed for protection under Chapter 11 of the United States Bankruptcy Code. It came out of bankruptcy proceedings in June 2003, at which time Mr. Cucuz ceased serving as a director. | ||
Other Directorships: | Cleveland-Cliffs Inc | |
Kathryn Jo Lincoln | ||
Age: | 50 | |
Term Expires/Service: | 2007; Director since 1995. | |
Recent Business Experience: | Ms. Lincoln is Chairman of the Lincoln Institute of Land Policy (a non-profit educational institution teaching land economics and taxation), a position she has held since 1996, and President of the Lincoln Foundation, Inc. (a non-profit foundation that supports the foregoing Institute), a position she has held since 1999. | |
Other Directorships: | Johnson Bank Arizona, NA. | |
George H. Walls, Jr. | ||
Age: | 62 | |
Term Expires/Service: | 2007; Director since December 2003. | |
Recent Business Experience: | General Walls is the former Chief Deputy Auditor of the State of North Carolina, a position he held from January 2001 through December 2004. Prior to that, General Walls was special assistant to the chancellor and assistant secretary to the Board of Trustees at North Carolina Central University. General Walls retired from the U.S. Marine Corps in 1993 with the rank of Brigadier General, after nearly 29 years of distinguished service. | |
Other Directorships: | Thomas Industries, Inc. | |
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Audit Committee | ||||
Members: | David H. Gunning (Chair), Robert J. Knoll, Kathryn Jo Lincoln, Hellene S. Runtagh and George H. Walls, Jr., each of whom meets the independence standards set forth in the NASDAQ listing standards, and each of whom the Board of Directors has determined to have the financial competency required by the listing standards. In addition, because of Mr. Knoll’s professional training and past employment experience as described above under the caption “Director Biographies,” the Board of Directors has determined that he is a financially sophisticated Audit Committee Member under the NASDAQ listing standards and that he qualifies as an “audit committee financial expert” in accordance with SEC rules. Shareholders should understand that Mr. Knoll’s designation as an “audit committee financial expert” is an SEC disclosure requirement and that it does not impose upon him any duties, obligations or liabilities that are greater than those generally imposed on him as a member of the Audit Committee and the Board. | |||
Number of 2004 Meetings: | Seven | |||
Principal Responsibilities: | • | determines whether to retain or terminate the independent auditors | ||
• | approves all audit engagement fees, terms and services; approves any non-audit engagements | |||
• | reviews and discusses the independent auditors’ quality control | |||
• | reviews and discusses the independence of the auditors, the audit plan, the conduct of the audit and the results of the audit | |||
• | reviews and discusses with management the Company’s financial statements and disclosures, its interim financial reports and its earnings press releases | |||
• | reviews with the Company’s General Counsel legal matters that might have a significant impact on the Company’s financial statements and issues relating to compliance with the Company’s Code of Corporate Conduct and Ethics | |||
• | reviews with management the appointment, replacement, reassignment or dismissal of the Director of internal audit, the internal audit charter, internal audit plans and reports | |||
• | reviews with management the adequacy of internal controls over financial reporting |
A copy of this Committee’s Charter, which was adopted by the Board, (i) may be found on the Company’s website at www.lincolnelectric.com/corporate/about/governance.asp or (ii) will be made available upon request to the Company’s Corporate Secretary. | ||
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Compensation and Executive Development Committee | ||
Members: | Hellene S. Runtagh (Chair), Harold L. Adams, Ranko Cucuz, Paul E. Lego and G. Russell Lincoln, each of whom meets the independence standards set forth in the NASDAQ listing standards and each of whom is deemed to be an outside Director within the meaning of Section 162(m) of the Internal Revenue Code. | |
Number of 2004 Meetings: | Six | |
Principal Responsibilities: | • reviews and establishes total compensation of the Chief Executive Officer and the other Executive Officers | |
• annually assesses the performance of the Chief Executive Officer and the other Executive Officers | ||
• monitors the Company’s key management resources, structure, succession planning, development and selection processes and the performance of key executives | ||
• reviews and recommends to the Board the appointment and removal of elected officers of the Company | ||
• administers the Company’s employee stock and incentive plans and reviews and makes recommendations to the Board concerning all employee benefit plans | ||
• reviews and recommends to the Board new or amended executive compensation plans | ||
A copy of this Committee’s Charter (i) may be found on the Company’s website at www.lincolnelectric.com/corporate/about/ governance.asp or (ii) will be made available upon request to the Company’s Corporate Secretary. | ||
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Nominating and Corporate Governance Committee | ||
Members: | Harold L. Adams (Chair), David H. Gunning, Kathryn Jo Lincoln and George H. Walls, Jr., each of whom meets the independence standards set forth in the NASDAQ listing standards. | |
Number of 2004 Meetings: | Five | |
Principal Responsibilities: | In evaluating candidates for Director, including persons nominated by shareholders, the Committee expects that any candidate for election as a Director of the Company must have these minimum qualifications: | |
• demonstrated character, integrity and judgment | ||
• high-level managerial experience or experience dealing with complex problems | ||
• ability to work effectively with others | ||
• sufficient time to devote to the affairs of the Company | ||
and these specific qualifications: | ||
• specialized experience and background that will add to the depth and breadth of the Board | ||
• independence as defined by the NASDAQ listing standards | ||
• financial literacy | ||
The Committee’s process for identifying and evaluating nominees for Director includes annually preparing and discussing prospective Director specifications, which serve as the baseline to evaluate candidates. From time-to-time, the Company has retained an outside firm to help identify candidates, but no firm was retained on that basis in 2004, and no firm is currently being retained. | ||
Shareholders may nominate one or more persons for election as Director of the Company. The process for doing so is set forth on page 5 of the Proxy Statement, under the caption “May I submit a nomination for Director?”. | ||
A copy of this Committee’s Charter (i) may be found on the Company’s website at www.lincolnelectric.com/corporate/about/ governance.asp or (ii) will be made available upon request to the Company’s Corporate Secretary. | ||
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Finance Committee | ||
Members: | Paul E. Lego (Chair), Ranko Cucuz, Robert J. Knoll and G. Russell Lincoln. | |
Number of 2004 Meetings: | Five | |
Principal Responsibilities: | considers and makes recommendations, as necessary, on matters related to the financial affairs and policies of the Company, including | |
• financial performance | ||
• capital structure issues | ||
• financial operations | ||
• capital expenditures | ||
• pension plan funding and plan investment management performance | ||
A copy of this Committee’s Charter (i) may be found on the Company’s website at www.lincolnelectric.com/corporate/about/governance.asp or (ii) will be made available upon request to the Company’s Corporate Secretary. | ||
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• | a significant portion of Director compensation should be aligned with creating and sustaining shareholder value; | |
• | Directors should have equity interest in the Company; and | |
• | total compensation should be structured to attract and retain a diverse and truly superior Board of Directors. |
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Cash |
• | an annual cash retainer of $30,000 for all Directors (in late April 2004, the retainer was increased from $24,000 to $30,000, effective for the last two quarters of 2004); | |
• | an annual cash retainer of $10,000 for the Lead Director, a new position created by the Board in late 2004; | |
• | an annual cash retainer of $5,000 for each Committee chair (in late April 2004, this was increased from $2,000 to $5,000 annually, effective for the last two quarters of 2004); | |
• | an annual cash retainer of $2,000 for each Committee member through June 2004; thereafter, this retainer was eliminated; | |
• | Board meeting fees of $1,000 for each meeting attended through April 29, 2004; thereafter, this fee was increased to $1,500 per meeting; and | |
• | Committee meeting fees of $1,000 for each meeting attended through April 29, 2004; thereafter, this fee was increased to $1,500 per meeting. |
Stock |
• | an annual award of options to purchase 2,000 shares of Lincoln Common pursuant to the Stock Option Plan for Non-Employee Directors; and | |
• | an initial award of options to purchase 6,000 shares of Lincoln Common to Directors who become eligible by virtue of their election after December 31, 1999. |
• | elect to defer a specified dollar amount or a percentage of his or her cash compensation; | |
• | have the deferred amount credited to the Director’s account and deemed invested in one or more of the options available under the Plan; and | |
• | elect to begin payment of the deferred amounts as of the earlier of termination of services as a Director, death or a date not less than two years after the fees are initially deferred. |
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Number of Shares | Percent | |||||||
of Lincoln Common | of | |||||||
Directors | Beneficially Owned (1) | Class | ||||||
Harold L. Adams | 12,000 | (2) | * | |||||
Ranko Cucuz | 12,000 | (3) | * | |||||
David H. Gunning | 11,485 | (4) | * | |||||
Robert J. Knoll | 8,000 | (5) | * | |||||
Paul E. Lego | 11,559 | (6) | * | |||||
G. Russell Lincoln | 261,315 | (7) | * | |||||
Kathryn Jo Lincoln | 996,215 | (8) | 2.39 | % | ||||
Hellene S. Runtagh | 14,000 | (9) | * | |||||
George H. Walls, Jr. | 6,000 | (10) | * | |||||
Named Executive Officers | ||||||||
Anthony A. Massaro | 507,603 | (11) | 1.20 | % | ||||
John M. Stropki, Jr. | 287,878 | (12) | * | |||||
Frederick G. Stueber | 29,466 | (13) | * | |||||
James E. Schilling | 19,699 | (14) | * | |||||
Vincent K. Petrella | 12,805 | (15) | * | |||||
George D. Blankenship | 30,700 | (16) | * | |||||
All Directors and Executive Officers as a group (16 persons) | 2,228,858 | (17) | 5.23 | %(17) |
* | Indicates less than 1% |
(1) | Reported in compliance with the beneficial ownership rules of the Securities and Exchange Commission, under which a person is deemed to be the beneficial owner of a security, for these purposes, if he or she has or shares voting power or investment power over the security or has the right to acquire the security within 60 days of February 28, 2005. | |
(2) | Includes 10,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(3) | Consists of 12,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(4) | Includes 8,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(5) | Consists of 8,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(6) | Includes 2,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(7) | Of the 261,315 shares reported, G. Russell Lincoln held of record 165,145 shares. An additional 514 shares were held of record by his spouse. The remaining 95,656 shares were held of record as follows: 24,877 shares by three trusts, as to each of which Mr. Lincoln is a trustee, for the |
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benefit of his children; 35,279 shares by the Laura R. Heath Family Trust for which Mr. Lincoln serves as trustee; 27,500 shares by The G. Russell and Constance P. Lincoln Family Foundation for which Mr. Lincoln serves as a trustee; and 8,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. Mr. Lincoln disclaims beneficial ownership of the shares held by his spouse, the trusts and the Foundation. | ||
(8) | Of the 996,215 shares reported, 40,443 shares were held of record by a trust established by Ms. Lincoln, under which she has sole investment and voting power. The remaining 955,772 shares were held of record as follows: 951,772 shares were held of record by the Lincoln Foundation, Inc., of which Ms. Lincoln is the President, as to which shares Ms. Lincoln disclaims beneficial ownership; and 4,000 shares may be acquired upon the exercise of stock options within 60 days of February 28, 2005. | |
(9) | Includes 12,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. |
(10) | Consists of 6,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2005. |
(11) | Of the 507,603 shares reported, Mr. Massaro held of record 35,203 shares and has or had the right to acquire 472,200 shares upon the exercise of stock options within 60 days of February 28, 2005. The remaining 200 shares were held of record by Mr. Massaro’s spouse, as to which shares he disclaims beneficial ownership. |
(12) | Of the 287,878 shares reported, Mr. Stropki held of record 7,119 shares and 24,827 shares were held of record by a trust established by Mr. Stropki and his spouse, under which they share investment and voting power. Mr. Stropki has or had the right to acquire 255,932 shares upon the exercise of stock options within 60 days of February 28, 2005. |
(13) | Of the 29,466 shares reported, Mr. Stueber held of record 5,000 shares and has or had the right to acquire 24,466 shares upon the exercise of stock options within 60 days of February 28, 2005. |
(14) | Of the 19,699 shares reported, Mr. Schilling held of record 3,000 shares and has or had the right to acquire 16,699 shares upon the exercise of stock options within 60 days of February 28, 2005. |
(15) | Of the 12,805 shares reported, Mr. Petrella held of record 3,606 shares and has or had the right to acquire 9,199 shares upon the exercise of stock options within 60 days of February 28, 2005. |
(16) | Of the 30,700 shares reported, Mr. Blankenship held of record 3,317 shares and has or had the right to acquire 27,383 shares upon the exercise of stock options within 60 days of February 28, 2005. |
(17) | Includes 882,046 shares which all Executive Officers and Directors, as a group, have or had the right to acquire upon the exercise of stock options within 60 days of February 28, 2005. |
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No. of Shares and | |||||||||
Nature of Beneficial | Percent | ||||||||
Name and Address of Beneficial Owner | Ownership | of Class | |||||||
David C. Lincoln | 3,656,019 | (1) | 8.76 | % | |||||
1741 East Morten Avenue, Suite A Phoenix, Arizona 85020 | |||||||||
Royce & Associates, LLC | 4,442,357 | (2) | 10.65 | % | |||||
1414 Avenue of the Americas New York, New York 10019 | |||||||||
KeyCorp | 2,279,137 | (3) | 5.46 | % | |||||
127 Public Square Cleveland, Ohio 44114 |
(1) | Of the total amount reported by Mr. Lincoln, he has sole voting and dispositive power over 90,130 shares, which amount includes stock options for 4,000 shares exercisable within 60 days of February 28, 2005, and shared voting and dispositive powers over 3,565,889 shares. With respect to the shares over which Mr. Lincoln has sole voting and dispositive powers, he disclaims beneficial ownership of 86,130 shares held by two trusts of which he is the sole trustee. With respect to the shares over which Mr. Lincoln has shared voting and dispositive powers, he disclaims beneficial ownership of (a) 1,084,034 shares held by four trusts of which he is one of two trustees and (b) 951,772 shares held by the Lincoln Foundation, Inc. of which he is a Director. In his January 27, 2005 Schedule 13G filing with the Securities and Exchange Commission, Mr. Lincoln states that the shares of Lincoln Common reported in the filing were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the Company and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. |
(2) | According to its Schedule 13G, most recently amended on February 8, 2005, Royce & Associates, LLC has sole voting and dispositive power over 4,442,357 shares. In its Schedule 13G filing, Royce states that the shares of Lincoln Common reported in the filing were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. |
(3) | According to its Schedule 13G filed on February 14, 2003, KeyCorp has voting and dispositive power over a total of 2,279,137 shares. In its Schedule 13G filing, KeyCorp states that the shares of Lincoln Common reported in the filing were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. |
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• | base compensation for Mr. Massaro of $750,000, which is above the peer group 45th percentile by approximately 6% and base compensation for Mr. Stropki of $600,000 (on an annualized basis) which is below the peer group 45th percentile by approximately 15% (partially attributable to the fact that he was newly elected to this position); |
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• | cash bonus of $975,000 for Mr. Massaro, based on individual performance and consolidated financial results, which is 79% above the amount paid to him in 2003, is 30% above his target award, and places him above the peer group 65th percentile and cash bonus of $644,583 for Mr. Stropki, based on individual performance and consolidated financial results, which is 204% above the amount paid to him in 2003 (when he held a different position within the Company), is 30% above his target award, but places him below the peer group 65th percentile (partially attributable to the fact that he was newly elected to this position); | |
• | a stock option grant for long-term incentive compensation for Mr. Stropki, placing him at what the Compensation Committee believes is below the median of his peer group for long-term incentive programs (partially attributable to the fact that he was newly elected to this position); | |
• | a cash long-term performance plan payout of $615,282 for Mr. Massaro, which amount is pro-rated based on his retirement date of October 31 2004, and a cash long-term performance plan payout of $158,620 for Mr. Stropki, granted before he assumed his current position and, therefore, still placing him below the market median of his peer group for long-term incentive compensation when combined with the stock option grant above; and | |
• | a deferred compensation retention benefit of $400,000 per year for Mr. Massaro, which was established in 1999 under his employment agreement. |
Hellene S. Runtagh, Chair Harold L. Adams Ranko Cucuz | Paul E. Lego G. Russell Lincoln |
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||||
Lincoln | 100 | 98 | 129 | 122 | 137 | 195 | ||||||||||||||||||||
S&P 500 | 100 | 91 | 80 | 63 | 80 | 89 | ||||||||||||||||||||
Russell 2000 | 100 | 97 | 100 | 79 | 117 | 138 |
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Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||
Underlying | ||||||||||||||||||||||||||||
Name and | Other Annual | Options/ | LTIP | All Other | ||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Compensation | SARs | Payouts (3) | Compensation | |||||||||||||||||||||
Anthony A. Massaro (1) | 2004 | $ | 750,000 | $ | 975,000 | $ | 22,428 | (2) | — | $ | 615,282 | (4) | $ | 916,667 | (5) | |||||||||||||
Chairman (to 10/13/04), | 2003 | 750,000 | 544,500 | 28,430 | (2) | 125,000 | — | 400,000 | (6) | |||||||||||||||||||
President and Chief | 2002 | 700,000 | 681,300 | 34,263 | (2) | 167,200 | — | 400,000 | (6) | |||||||||||||||||||
Executive Officer (to 6/3/04) | ||||||||||||||||||||||||||||
John M. Stropki, Jr. (7) | 2004 | $ | 506,250 | $ | 644,583 | — | 120,000 | $ | 158,620 | — | ||||||||||||||||||
Chairman (from 10/13/04), | 2003 | 320,000 | 211,875 | — | 50,000 | — | — | |||||||||||||||||||||
President and Chief Executive | 2002 | 320,000 | 191,115 | — | 48,400 | — | — | |||||||||||||||||||||
Officer (from 6/3/04) | ||||||||||||||||||||||||||||
Frederick G. Stueber | 2004 | $ | 260,000 | $ | 279,500 | — | 25,000 | $ | 96,305 | — | ||||||||||||||||||
Senior Vice President, | 2003 | 260,000 | 141,200 | — | 25,000 | — | — | |||||||||||||||||||||
General Counsel and Secretary | 2002 | 250,000 | 166,440 | — | 24,200 | — | — | |||||||||||||||||||||
James E. Schilling | 2004 | $ | 225,000 | $ | 208,000 | — | 20,000 | $ | 79,310 | — | ||||||||||||||||||
Senior Vice President, | 2003 | 225,000 | 135,000 | — | 20,000 | — | — | |||||||||||||||||||||
Corporate Development | 2002 | 215,000 | 153,120 | — | 22,550 | — | — | |||||||||||||||||||||
Vincent K. Petrella (8) | 2004 | $ | 206,644 | $ | 185,000 | — | 25,000 | $ | 20,394 | — | ||||||||||||||||||
Vice President, Chief | 2003 | — | — | — | — | — | — | |||||||||||||||||||||
Financial Officer and Treasurer | 2002 | — | — | — | — | — | — | |||||||||||||||||||||
George D. Blankenship (9) | 2004 | $ | 200,000 | $ | 162,500 | — | 15,000 | $ | 45,320 | — | ||||||||||||||||||
Vice President, Engineering | 2003 | 195,000 | 77,520 | — | 12,000 | — | — | |||||||||||||||||||||
and Quality Assurance, | 2002 | 185,000 | 91,425 | — | 11,825 | — | — | |||||||||||||||||||||
The Lincoln Electric Company |
(1) | Mr. Massaro ceased serving as President and Chief Executive Officer effective June 3, 2004 and Chairman effective October 13, 2004. Mr. Massaro retired from the Company effective October 31, 2004. |
(2) | The amounts reported here for the years 2002-2004 consist of tax payments associated with retention benefits credited to Mr. Massaro’s account in the Company’s Deferred Compensation Plan for Certain Retention Agreements and Contractual Arrangements (as discussed under “Pension Benefits” below) under the terms of his employment agreement. See “All Other Compensation” for information on such retention benefits; See “Other Compensation Arrangements” below for a discussion of Mr. Massaro’s employment agreement. |
(3) | Represents cash payouts earned for the period 2002 to 2004 pursuant to the Company’s Long-Term Incentive Plan, which payments were based on average annual net income growth over that three-year period. |
(4) | In connection with his retirement during 2004, Mr. Massaro may be entitled to receive additional LTIP payments during 2006 (for the 2003 to 2005 cycle) and 2007 (for the 2004 to 2006 cycle), which payments are contingent upon the Company’s performance for the applicable periods. Any such additional LTIP payments would be based on the average net income growth of the Company over the preceding three-year cycle and would be pro-rated based on Mr. Massaro’s active employment during the applicable three-year cycle. LTIP payments for 2006 and 2007 could be as low as zero or as high as 140% of the applicable targets, reduced by the proration factor. The Company has currently accrued $195,000 for such additional LTIP payments for Mr. Massaro. |
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(5) | Mr. Massaro ceased serving as President and Chief Executive Officer effective June 3, 2004. Mr. Massaro ceased serving as Chairman of the Board effective October 13, 2004 and retired from the Company effective October 31, 2004. As discussed under “Other Compensation Arrangements” below, Mr. Massaro and the Company entered into an employment agreement in June 2003 whereby the Company established compensation components that would be provided to Mr. Massaro for his continued employment through May 2, 2005 or in the event of his retirement before May 2, 2005 under certain conditions. In connection with his retirement during 2004, the amount reported here consists of the following: (i) $400,000 represents retention benefits credited to Mr. Massaro’s account in 2004 in the Company’s Deferred Compensation Plan for Certain Retention Agreements and Contractual Arrangements under the terms of his employment agreement, (ii) $266,667 represents retention benefits that will be credited to Mr. Massaro’s account in 2005 in the Company’s Deferred Compensation Plan for Certain Retention Agreements and Contractual Arrangements under the terms of his employment agreement, and (iii) $250,000 represents bonus compensation for the period January 1, 2005 through May 2, 2005 that will be paid in 2006. In addition, Mr. Massaro received a lump-sum payment during 2004 of retirement benefits provided for under the SERP in the amount of $10,182,064 and will receive an additional lump-sum payment under the SERP during 2005 in the amount of $530,779, which amount represents a true-up payment to reflect the impact of Mr. Massaro’s actual 2004 bonus on his SERP calculation. For additional information about Mr. Massaro’s supplemental retirement, retention and termination benefits under the terms of his employment agreement, see “Other Compensation Arrangements” below. |
(6) | The amount reported represents retention benefits credited to Mr. Massaro’s account in the Company’s Deferred Compensation Plan for Certain Retention Agreements and Contractual Arrangements under the terms of his employment agreement. See “Other Compensation Arrangements” below for a discussion of Mr. Massaro’s employment agreement. |
(7) | Mr. Stropki was elected President and Chief Executive Officer effective June 3, 2004 and Chairman effective October 13, 2004. Mr. Stropki served as Executive Vice President during 2002 and 2003 and Chief Operating Officer for a portion of 2003. |
(8) | Mr. Petrella was elected Vice President, Chief Financial Officer and Treasurer effective February 4, 2004. Mr. Petrella was acting Chief Financial Officer from January 5, 2004 to February 4, 2004 and Corporate Controller of The Lincoln Electric Company from 2001 to 2003. As Mr. Petrella was not an executive officer for 2002 and 2003, no compensation information has been provided for those years. |
(9) | Mr. Blankenship was elected Vice President, Engineering and Quality Assurance of The Lincoln Electric Company, effective January 1, 2000. |
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Percent of | ||||||||||||||||||||
Number of | Total | |||||||||||||||||||
Securities | Options/SARs | Exercise | ||||||||||||||||||
Underlying | Granted to | or Base | Grant Date | |||||||||||||||||
Options/SARs | Employees in | Price | Expiration | Present | ||||||||||||||||
Name | Granted (1) | Fiscal Year | ($/Sh.) | Date | Value (2) | |||||||||||||||
Anthony A. Massaro | — | — | — | — | — | |||||||||||||||
John M. Stropki, Jr. | 30,000 | 5.9 | % | $ | 31.90 | 6/3/14 | $ | 222,300 | ||||||||||||
90,000 | 17.8 | % | $ | 35.43 | 11/30/14 | 767,700 | ||||||||||||||
Frederick G. Stueber | 25,000 | 4.9 | % | $ | 35.43 | 11/30/14 | 213,250 | |||||||||||||
James E. Schilling | 20,000 | 3.9 | % | $ | 35.43 | 11/30/14 | 170,600 | |||||||||||||
Vincent K. Petrella | 25,000 | 4.9 | % | $ | 35.43 | 11/30/14 | 213,250 | |||||||||||||
George D. Blankenship | 15,000 | 3.0 | % | $ | 35.43 | 11/30/14 | 127,950 |
(1) | These options were granted pursuant to the Company’s 1998 Stock Plan. The options were granted at the fair market value of Lincoln Common on the date of grant, have 10-year terms and become exercisable in equal annual increments over a three-year period. Vesting of the options is accelerated by the occurrence of a change in control (see “Other Compensation Arrangements”). |
(2) | The Grant Date Present Value was calculated using the Black-Scholes option pricing model. The model assumes (i) volatility calculated using the trading information for Lincoln Common during the three year and eleven month period ended November 29, 2004 (27.77% for Lincoln Common); (ii) a risk-free rate of return based on the 5-year treasury bond rate at November 29, 2004 (3.7%); and (iii) a dividend yield for Lincoln Common of 2.03%. The actual amount, if any, realized upon the exercise of stock options will depend upon the market price of Lincoln Common relative to the exercise price per share of the stock option at the time of exercise. There is no assurance that the hypothetical Grant Date Present Values of the stock options reflected in this table will actually be realized. |
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Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money | |||||||||||||||||||||||
Options/SARS | Options/SARs | |||||||||||||||||||||||
at Fiscal Year End | at Fiscal Year End | |||||||||||||||||||||||
Number of | ||||||||||||||||||||||||
Shares | ||||||||||||||||||||||||
Acquired | ||||||||||||||||||||||||
on | Value | |||||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Anthony A. Massaro (1) | 415,100 | $ | 5,061,675 | 472,200 | 0 | $ | 5,616,601 | $ | 0 | |||||||||||||||
John M. Stropki, Jr. | 28,398 | 461,250 | 255,932 | 169,468 | 3,901,558 | 612,638 | ||||||||||||||||||
Frederick G. Stueber | 52,000 | 438,600 | 34,466 | 49,734 | 396,717 | 266,719 | ||||||||||||||||||
James E. Schilling | 39,900 | 423,722 | 24,699 | 40,851 | 285,532 | 225,162 | ||||||||||||||||||
Vincent K. Petrella | 9,000 | 107,503 | 9,199 | 34,601 | 100,458 | 103,446 | ||||||||||||||||||
George D. Blankenship | — | — | 49,383 | 26,942 | 739,904 | 128,797 |
(1) | Upon the effective date of Mr. Massaro’s retirement, October 31, 2004, all of his outstanding options and SARs became immediately exercisable. |
Estimated Future Payouts Under | ||||||||||||||||||||
Non-Stock Price-Based Plans (1) | ||||||||||||||||||||
Number of | Performance | |||||||||||||||||||
Shares, Units | or Other | |||||||||||||||||||
or Other | Period Until | |||||||||||||||||||
Rights | Maturation or | |||||||||||||||||||
Name | ($) | Payout | Threshold | Target | Maximum | |||||||||||||||
Anthony A. Massaro | — | — | — | — | — | |||||||||||||||
John M. Stropki, Jr. | $ | 361,000 | 2005 to 2007 | $ | 0 | $ | 361,000 | $ | 505,400 | |||||||||||
Frederick G. Stueber | 106,000 | 2005 to 2007 | 0 | 106,000 | 148,400 | |||||||||||||||
James E. Schilling | 85,000 | 2005 to 2007 | 0 | 85,000 | 119,000 | |||||||||||||||
Vincent K. Petrella | 106,000 | 2005 to 2007 | 0 | 106,000 | 148,400 | |||||||||||||||
George D. Blankenship | 64,000 | 2005 to 2007 | 0 | 64,000 | 89,600 |
(1) | Represents a range of possible cash payouts earned for the period 2005 to 2007 pursuant to the Company’s Long-Term Incentive Plan, which payments are based on income growth over a three-year cycle. |
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Years of Service | ||||||||||||||||||||||
Average | ||||||||||||||||||||||
Compensation | 25 Years | 30 Years | 35 Years | 40 Years | 45 Years | |||||||||||||||||
$ | 300,000 | $ | 86,967 | $ | 108,642 | $ | 130,317 | $ | 151,992 | $ | 173,592 | |||||||||||
600,000 | 195,342 | 238,692 | 282,042 | 325,392 | 368,592 | |||||||||||||||||
900,000 | 303,717 | 368,742 | 433,767 | 498,792 | 563,592 | |||||||||||||||||
1,200,000 | 412,092 | 498,792 | 585,492 | 672,192 | 758,592 | |||||||||||||||||
1,500,000 | 520,467 | 628,842 | 737,217 | 845,592 | 953,592 | |||||||||||||||||
1,800,000 | 628,842 | 758,892 | 888,942 | 1,018,992 | 1,148,592 | |||||||||||||||||
2,100,000 | 737,217 | 888,942 | 1,040,667 | 1,192,392 | 1,343,592 |
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Annual Retirement | ||||
Name | Annuity Program Benefits | |||
Anthony A. Massaro | $ | 36,873 | (1) | |
John M. Stropki, Jr. | 98,589 | (2) | ||
Frederick G. Stueber | 84,563 | (2) | ||
James E. Schilling | 27,573 | (3) | ||
Vincent K. Petrella | 113,094 | (2) | ||
George D. Blankenship | 135,042 | (2) |
(1) | Mr. Massaro is currently receiving $36,873 annually from the Retirement Annuity Program on a 100% joint and survivor basis. |
(2) | Messrs. Stropki, Stueber, Petrella and Blankenship are currently under normal retirement age. The amounts shown represent those anticipated at normal retirement age, assuming that current compensation continues unchanged to that date and that the benefits are payable on a single life basis. |
(3) | Mr. Schilling is currently not receiving benefits but is beyond normal retirement age. The amount shown represents the benefit available on December 31, 2004 payable on a single life basis. |
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David H. Gunning, Chair Robert J. Knoll Kathryn Jo Lincoln | Hellene S. Runtagh George H. Walls, Jr. |
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2004 | 2003 | |||||||
Audit Fees | $ | 2,285,000 | $ | 905,000 | ||||
Audit-Related Fees | 352,000 | 157,000 | ||||||
Tax Fees | 301,000 | 148,000 | ||||||
All Other Fees | 69,000 | 61,000 | ||||||
$ | 3,007,000 | $ | 1,271,000 |
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LINCOLN ELECTRIC HOLDINGS, INC. | |
Frederick G. Stueber | |
Senior Vice President, | |
General Counsel and Secretary |
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Table of Contents
Corporate Trust Operations
Locator 5352
P. O. Box 92301
Cleveland, OH 44197-1200
Vote by Telephone
Call Toll-Free using a
touch-tone telephone:
1-800-542-1160
Vote by Internet
Access the Website and
cast your vote:
http://www.votefast.com
Vote by Mail
Return your proxy and
voting instruction form in the
postage-paid envelope provided.
Telephone and Internet access is available 24 hours a day, 7 days a week. In order to be counted in the final tabulation, your telephone or Internet vote must be received by 11:59 p.m. Eastern Daylight Time on May 2, 2005 if you are a participant in The Lincoln Electric Company Employee Savings Plan, or by 11:59 p.m. Eastern Daylight Time on May 4, 2005 if you are a registered holder.
®
¯ Please fold and detach card at perforation before mailing. ¯
LINCOLN ELECTRIC HOLDINGS, INC. | PROXY AND VOTING INSTRUCTION FORM |
The shareholder signing this card appoints John M. Stropki, Jr., Vincent K. Petrella and Frederick G. Stueber, together or separately, as proxies, each with the power to appoint a substitute. They are directed to vote, as indicated on the reverse side of this card, all the Lincoln Electric common shares held by the signing shareholder on the record date, at the Company’s Annual Meeting of Shareholders to be held at 10:30 a.m. on May 5, 2005, or at any adjournment of the meeting, and, in their discretion, on all other business properly brought before the meeting.
As described more fully in the proxy statement and on the reverse side, this card also provides voting instructions to Fidelity Management Trust Company, as Trustee under The Lincoln Electric Company Employee Savings Plan (“401(k) Plan” or “Plan”). The signing Plan participant directs the Trustee to vote, as indicated on the reverse side of this card, all the Lincoln Electric common shares credited to the account of the signing Plan participant as of the record date, at the Annual Meeting of Shareholders, and in the Trustee’s discretion, on all other business properly brought before the meeting.
Signature(s)________________________________________ | ||
_________________________________________________ | ||
Date: ________________________________________, 2005 | ||
Please sign exactly as your name or names appear opposite. If shares are held jointly, all joint owners should sign. When signing as executor, administrator, attorney, trustee or guardian, etc., please give your full title. |
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NOTE TO PARTICIPANTS IN THE LINCOLN ELECTRIC COMPANY EMPLOYEE SAVINGS PLAN (“401(k) PLAN” or “PLAN”).As a participant in the 401(k) Plan, you have the right to direct Fidelity Management Trust Company, as Trustee for the Plan, to vote the shares allocated to your Plan account. Participant voting directions will remain confidential. Please note that the number of shares reported on this card is an equivalent number of shares based on the units credited to your Plan account. To direct the Trustee by mail to vote the shares allocated to your Plan account, please mark the voting instruction form below and sign and date it on the reverse side. A postage-paid envelope for mailing has been included with your materials. To direct the Trustee by telephone or over the Internet to vote the shares allocated to your Plan account, please follow the instructions and use theControl Numbergiven on the reverse side. Each participant who gives the Trustee voting directions acts as a named fiduciary for the 401(k) Plan under the provisions of the Employee Retirement Income Security Act of 1974, as amended.
If you do not give specific voting directions on the voting instruction form or when you vote by phone or over the Internet, the Trustee will vote your Plan shares as recommended by the Board of Directors. If you do not return the voting instruction form or do not vote by phone or over the Internet, the Trustee shall not vote your Plan shares. Plan shares representing forfeited Account values that have not been reallocated at the time of the proxy solicitation will be voted by the Trustee in proportion to the way other 401(k) Plan participants directed their Plan shares to be voted.
YOUR VOTE IS IMPORTANT !
Be sure that your shares are represented. Whether or not you plan to attend the Annual Meeting, please vote your shares by mail, by telephone or over the Internet.
¯ Please fold and detach card at perforation before mailing.¯
LINCOLN ELECTRIC HOLDINGS, INC. Annual Meeting of Shareholders, May 5, 2005 | PROXY AND VOTING INSTRUCTION FORM |
1. | Election of Directors: Class Whose Term Ends in 2008: | |||||||||||||||||
(01 | ) | David H. Gunning, | (02 | ) | G. Russell Lincolnand | (03 | ) | Hellene S. Runtagh | ||||||||||
o | FOR ALL | o | WITHHOLD ALL | o | FOR ALL EXCEPT (write names below): | |||||||||||||
Vote withheld from the following (write names below): | ||||||||||||||||||
2. | Ratification of Independent Auditors. | |||||||||||||||||
o | FOR | o | AGAINST | o | ABSTAIN | |||||||||||||
3. | In their discretion, the proxies named herein are also authorized to take any action upon any other business that may properly come before the Annual Meeting, or any reconvened meeting following an adjournment or postponement of the Annual Meeting. | |||||||||||||||||
o | I plan to attend the Annual Meeting. | |||||||||||||||||
o | I consent to access future shareholder communications over the Internet as stated in the Proxy Statement. | |||||||||||||||||
o | Change of Address: | |||||||||||||||||