Table of Contents
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) and0-11. |
(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: |
(5) | Total fee paid: |
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. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
Table of Contents
![(LINCOLN ELECTRIC LOGO)](https://capedge.com/proxy/DEF 14A/0000950152-06-002569/l17917alincoln.gif)
Sincerely, | |
![]() | |
John M. Stropki, Jr. | |
Chairman, President and Chief Executive Officer | |
Lincoln Electric Holdings, Inc. |
Table of Contents
![(LINCOLN ELECTRIC LOGO)](https://capedge.com/proxy/DEF 14A/0000950152-06-002569/l17917alincoln.gif)
(1) | Election of three Directors, each for a term scheduled to expire in 2009; | |
(2) | Approval of the 2006 Equity and Performance Incentive Plan; | |
(3) | Approval of the 2006 Stock Plan for Non-Employee Directors; | |
(4) | Ratification of the appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2006; and | |
(5) | Any other business properly brought before the meeting, or any postponement(s) or adjournment(s) of the meeting. |
Frederick G. Stueber | |
Senior Vice President, | |
General Counsel and Secretary |
1
Table of Contents
2
Table of Contents
(1) | Election of three Directors, each to serve for a term scheduled to expire in 2009; | |
(2) | Approval of the 2006 Equity and Performance Incentive Plan; | |
(3) | Approval of the 2006 Stock Plan for Non-Employee Directors; and | |
(4) | Ratification of the appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2006. |
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 number1-888-693-8683, 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 a computer to access the websitewww.cesvote.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. |
3
Table of Contents
(1) | by sending a written notice to the Company’s Corporate Secretary stating that you want to revoke your proxy; | |
(2) | by submitting a properly completed and signed Proxy and Voting Instruction Form with a later date (which will automatically revoke the earlier proxy); | |
(3) | by entering later-dated telephone or Internet voting instructions (which will automatically revoke the earlier proxy); or | |
(4) | by voting in person at the Annual Meeting after requesting that the earlier proxy be revoked.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. |
4
Table of Contents
5
Table of Contents
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 |
6
Table of Contents
7
Table of Contents
Harold L. Adams | ||
Age: | 66 | |
Term Expires/Service: | 2006; standing for reelection at this Annual Meeting to serve until 2009; 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: | 64 | |
Term Expires/Service: | 2006; standing for reelection at this Annual Meeting to serve until 2009; 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: | 55 | |
Term Expires/Service: | 2006; standing for reelection at this Annual Meeting to serve until 2009; 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. | |
8
Table of Contents
Ranko Cucuz | ||
Age: | 62 | |
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 emerged from bankruptcy proceedings in June 2003, at which time Mr. Cucuz ceased serving as a director. | ||
Other Directorships: | Cleveland-Cliffs Inc and Rosta International | |
Kathryn Jo Lincoln | ||
Age: | 51 | |
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: | 63 | |
Term Expires/Service: | 2007; Director since 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. From 1993 to 2000, 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. | |
9
Table of Contents
David H. Gunning | ||
Age: | 63 | |
Term Expires/Service: | 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: | 59 | |
Term Expires/Service: | 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: | 57 | |
Term Expires/Service: | 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 (media) from 1998 until 2001. | |
Other Directorships: | Avaya Inc. | |
10
Table of Contents
Audit Committee | ||
Members: | Robert J. Knoll (Chair), 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 2005 Meetings: | Ten | |
Principal Responsibilities: | • appoints and 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, is included in this Proxy Statement as Appendix A. | ||
11
Table of Contents
Compensation and Executive Development Committee | ||
Members: | Hellene S. Runtagh (Chair), Harold L. Adams, Ranko Cucuz 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. Paul E. Lego also served as a member of the Committee until the Company’s 2005 Annual Meeting, when he retired from the Board. | |
Number of 2005 Meetings: | Seven | |
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. | ||
12
Table of Contents
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 2005 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 2005, 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. | ||
13
Table of Contents
Finance Committee | ||
Members: | David H. Gunning (Chair), Ranko Cucuz, Robert J. Knoll and G. Russell Lincoln. Paul E. Lego served as the Chair of the Committee until the Company’s 2005 Annual Meeting, when he retired from the Board. | |
Number of 2005 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. | ||
14
Table of Contents
15
Table of Contents
• | 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. |
• | an annual cash retainer of $30,000 for all Directors; | |
• | an annual cash retainer of $10,000 for the Lead Director; | |
• | an annual cash retainer of $5,000 for each Committee Chair; | |
• | Board meeting fees of $1,500 for each meeting attended; and | |
• | Committee meeting fees of $1,500 for each meeting attended |
• | an annual award of options to purchase shares of Lincoln Common pursuant to the Stock Option Plan for Non-Employee Directors; for 2005, the Nominating and Corporate Governance Committee awarded options to purchase 3,500 shares of Lincoln Common under the Plan; 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. |
16
Table of Contents
Chair | Meeting | Total Cash | Stock | |||||||||||||||||||||||
Director | Retainer | Retainers | Fees | Compensation | Options (#) | |||||||||||||||||||||
Harold L. Adams | $ | 40,000 | (1) | $ | 5,000 | $ | 27,000 | $ | 72,000 | 3,500 | ||||||||||||||||
Ranko Cucuz | 30,000 | — | 25,500 | 55,500 | 3,500 | |||||||||||||||||||||
David H. Gunning | 30,000 | 5,000 | 27,000 | 62,000 | 3,500 | |||||||||||||||||||||
Robert J. Knoll | 30,000 | 2,500 | (2) | 31,500 | 64,000 | 3,500 | ||||||||||||||||||||
G. Russell Lincoln | 30,000 | — | 27,000 | 57,000 | 3,500 | |||||||||||||||||||||
Kathryn Jo Lincoln | 30,000 | — | 31,500 | 61,500 | 3,500 | |||||||||||||||||||||
Hellene S. Runtagh | 30,000 | 5,000 | 34,500 | 69,500 | 3,500 | |||||||||||||||||||||
George H. Walls, Jr. | 30,000 | — | 31,500 | 61,500 | 3,500 | |||||||||||||||||||||
(1) | Includes Lead Director retainer of $10,000. |
(2) | Represents a pro rata portion of Committee Chair fees. Mr. Knoll was Chair of the Audit Committee for a portion of 2005 as the successor to Mr. Gunning. |
• | an annual cash retainer of $40,000 for all Directors; | |
• | an annual cash retainer of $15,000 for the Lead Director; | |
• | an annual cash retainer of $10,000 for the Chairs of the Audit and the Compensation and Executive Development Committees and $5,000 for each other Committee Chair; | |
• | Board meeting fees of $3,000 for each meeting attended; and | |
• | Committee meeting fees of $1,500 for each meeting attended. |
17
Table of Contents
• | 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. |
18
Table of Contents
19
Table of Contents
BENEFICIAL OWNERSHIP TABLE | |||||||||||
Number of Shares | Percent | ||||||||||
of Lincoln Common | of | ||||||||||
Directors | Beneficially Owned (1) | Class | |||||||||
Harold L. Adams | 14,000(2 | ) | * | ||||||||
Ranko Cucuz | 14,000(3 | ) | * | ||||||||
David H. Gunning | 13,485(4 | ) | * | ||||||||
Robert J. Knoll | 10,000(5 | ) | * | ||||||||
G. Russell Lincoln | 231,597(6 | ) | * | ||||||||
Kathryn Jo Lincoln | 531,105(7 | ) | 1.26 | % | |||||||
Hellene S. Runtagh | 16,000(8 | ) | * | ||||||||
George H. Walls, Jr. | 10,000(9 | ) | * | ||||||||
Named Executive Officers | |||||||||||
John M. Stropki, Jr. | 351,009(10 | ) | * | ||||||||
Vincent K. Petrella | 30,849(11 | ) | |||||||||
Frederick G. Stueber | 36,401(12 | ) | * | ||||||||
James E. Schilling | 10,706(13 | ) | * | ||||||||
George D. Blankenship | 45,468(14 | ) | * | ||||||||
All Directors and Executive Officers as a group (14 persons) | 1,331,202(15 | ) | 3.11 | % | |||||||
* | 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, 2006. | |
(2) | Includes 12,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(3) | Consists of 14,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(4) | Includes 10,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(5) | Includes 7,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(6) | Of the 231,597 shares reported, G. Russell Lincoln held of record 152,145 shares. An additional 514 shares were held of record by his spouse. The remaining 78,938 shares were held of record as follows: 6,159 shares by a trust for the benefit of his son, as to which Mr. Lincoln is a trustee; 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 10,000 shares that may be acquired upon the exercise of |
20
Table of Contents
stock options within 60 days of February 28, 2006. Mr. Lincoln disclaims beneficial ownership of the shares held by his spouse, the trust and the Foundation. | ||
(7) | Of the 531,105 shares reported, 23,443 shares were held of record by a trust established by Ms. Lincoln, under which she has sole investment and voting power. The remaining 507,662 shares were held of record as follows: 501,662 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 6,000 shares may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(8) | Includes 14,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. | |
(9) | Includes 8,000 shares that may be acquired upon the exercise of stock options within 60 days of February 28, 2006. |
(10) | Of the 351,009 shares reported, Mr. Stropki held of record 40,251 shares, 11,480 shares of which are restricted shares, and 6,025 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 304,733 shares upon the exercise of stock options within 60 days of February 28, 2006. |
(11) | Of the 30,849 shares reported, Mr. Petrella held of record 7,050 shares, 3,330 shares of which are restricted shares, and has or had the right to acquire 23,799 shares upon the exercise of stock options within 60 days of February 28, 2006. |
(12) | Of the 36,401 shares reported, Mr. Stueber held of record 8,000 shares, 3,000 shares of which are restricted shares, and has or had the right to acquire 28,401 shares upon the exercise of stock options within 60 days of February 28, 2006. |
(13) | Of the 10,706 shares reported, Mr. Schilling held of record 4,040 shares, 1,040 shares of which are restricted shares, and has or had the right to acquire 6,666 shares upon the exercise of stock options within 60 days of February 28, 2006. |
(14) | Of the 45,468 shares reported, Mr. Blankenship held of record 3,433 shares, 1,710 shares of which are restricted shares, and has or had the right to acquire 40,325 shares upon the exercise of stock options within 60 days of February 28, 2006. |
(15) | Includes 496,924 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, 2006. |
21
Table of Contents
No. of Shares and | |||||||||||
Nature of Beneficial | Percent | ||||||||||
Name and Address of Beneficial Owner | Ownership | of Class | |||||||||
David C. Lincoln | 2,279,908 | (1) | 5.4% | ||||||||
1741 East Morten Avenue, Suite A Phoenix, Arizona 85020 | |||||||||||
Royce & Associates, LLC | 5,213,857 | (2) | 12.4% | ||||||||
1414 Avenue of the Americas New York, New York 10019 | |||||||||||
(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 December 31, 2005, and shared voting and dispositive powers over 2,189,778 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) 183,523 shares held by four trusts of which he is one of two trustees and (b) 501,622 shares held by the Lincoln Foundation, Inc. of which he is a Director. In his Schedule 13G filed with the Securities and Exchange Commission on January 25, 2006, 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 January 30, 2006, Royce & Associates, LLC has sole voting and dispositive power over 5,213,857 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. |
22
Table of Contents
23
Table of Contents
24
Table of Contents
Executive Group | Ownership Guideline | |||||
CEO | 3 times base salary | |||||
Management Committee Members* | 1 times base salary | |||||
Other Officers | 1/2 times base salary | |||||
* | Includes Messrs. Petrella, Stueber, Schilling and Blankenship and other officers of the Company. |
• | base compensation for Mr. Stropki of $660,000, which is 30% above his base compensation for 2004 but is below the 45th percentile of his peer group; | |
• | cash bonus of $991,500 for Mr. Stropki, based on superior individual performance and consolidated financial results, which is 54% above the amount paid to him in 2004 (primarily due to a higher 2005 target) and is 32% above his target award, which places his 2005 cash compensation at the 65th percentile of his peer group; |
25
Table of Contents
• | a stock option grant of 49,600 shares and a restricted stock award of 11,480 shares for long-term incentive compensation for Mr. Stropki, placing him at what the Committee believes is just below the median of his current peer group for those portions of the long-term incentive program; and | |
• | a cash long-term performance plan payout of $224,000 for Mr. Stropki for the 2003 to 2005 performance cycle, placing him significantly below the median of his current peer group for overall long-term incentive compensation, primarily due to the fact that this cash plan target was set before Mr. Stropki became CEO. |
Hellene S. Runtagh, Chair Harold L. Adams | Ranko Cucuz G. Russell Lincoln |
26
Table of Contents
27
Table of Contents
![(Stock Performance Graph)](https://capedge.com/proxy/DEF 14A/0000950152-06-002569/l17917al1791700.gif)
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||
Lincoln | 100 | 132 | 124 | 139 | 198 | 232 | |||||||||||||||||||||||||
S&P 500 | 100 | 88 | 69 | 88 | 98 | 103 | |||||||||||||||||||||||||
Russell 2000 | 100 | 103 | 82 | 120 | 142 | 148 | |||||||||||||||||||||||||
28
Table of Contents
Annual Compensation | Long-Term Compensation | ||||||||||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||||||||||||||||||
Stock | Underlying | LTIP | |||||||||||||||||||||||||||||||||||||||
Name and | Other Annual | Awards | Options/ | Payouts | All Other | ||||||||||||||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Compensation | (1) | SARs | (2) | Compensation | |||||||||||||||||||||||||||||||||
John M. Stropki, Jr.(3) | 2005 | $ | 660,000 | $ | 991,500 | — | $ | 468,499 | 49,600 | $ | 224,000 | — | |||||||||||||||||||||||||||||
Chairman, President | 2004 | 506,250 | 644,583 | — | — | 120,000 | 158,620 | — | |||||||||||||||||||||||||||||||||
and Chief Executive | 2003 | 320,000 | 211,875 | — | — | 50,000 | — | — | |||||||||||||||||||||||||||||||||
Officer | |||||||||||||||||||||||||||||||||||||||||
Vincent K. Petrella(4) | 2005 | $ | 285,000 | $ | 279,930 | — | $ | 135,897 | 14,400 | $ | 43,400 | — | |||||||||||||||||||||||||||||
Senior Vice President, | 2004 | 206,644 | 185,000 | — | — | 25,000 | 20,394 | — | |||||||||||||||||||||||||||||||||
Chief Financial Officer | 2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
and Treasurer | |||||||||||||||||||||||||||||||||||||||||
Frederick G. Stueber | 2005 | $ | 275,000 | $ | 284,230 | — | $ | 122,430 | 13,000 | $ | 116,200 | — | |||||||||||||||||||||||||||||
Senior Vice President, | 2004 | 260,000 | 279,500 | — | — | 25,000 | 96,305 | — | |||||||||||||||||||||||||||||||||
General Counsel and | 2003 | 260,000 | 141,200 | — | — | 25,000 | — | — | |||||||||||||||||||||||||||||||||
Secretary | |||||||||||||||||||||||||||||||||||||||||
James E. Schilling | 2005 | $ | 230,000 | $ | 208,320 | — | $ | 42,442 | 4,500 | $ | 107,800 | — | |||||||||||||||||||||||||||||
Senior Vice President, | 2004 | 225,000 | 208,000 | — | — | 20,000 | 79,310 | — | |||||||||||||||||||||||||||||||||
Corporate Development | 2003 | 225,000 | 135,000 | — | — | 20,000 | — | — | |||||||||||||||||||||||||||||||||
George D. Blankenship | 2005 | $ | 225,000 | $ | 178,470 | — | $ | 69,785 | 7,400 | $ | 56,000 | — | |||||||||||||||||||||||||||||
Senior Vice President, | 2004 | 200,000 | 162,500 | — | — | 15,000 | 45,320 | — | |||||||||||||||||||||||||||||||||
Global Engineering | 2003 | 195,000 | 77,520 | — | — | 12,000 | — | — | |||||||||||||||||||||||||||||||||
(1) | The amounts shown in this column represent the dollar value of restricted stock grants during the past three fiscal years. All grants of restricted stock were made under the Company’s 1998 Stock Plan. |
On November 30, 2005, Mr. Stropki received a grant of 11,480 shares of restricted stock, Mr. Petrella received a grant of 3,330 shares of restricted stock, Mr. Stueber received a grant of 3,000 shares of restricted stock, Mr. Schilling received a grant of 1,040 shares of restricted stock and Mr. Blankenship received a grant of 1,710 shares of restricted stock. The dollar values shown are based on the closing price of a share of Lincoln Common on November 30, 2005 ($40.81). The restricted stock vests upon the earlier of (1) the recipient remaining in continuous employment for five years (to November 30, 2010), or (2) a determination by the Compensation and Executive Development Committee of the Board that the financial targets for the Company’s 2006-2008 cash long-term incentive plan are met (3 years). Any cash dividends on the restricted stock are sequestered by the Company until the shares are nonforfeitable, at which time such dividends are paid in shares of Lincoln Common. |
29
Table of Contents
The following details the aggregate share amount and the dollar value based on the closing price of a share of Lincoln Common on December 30, 2005 ($39.66) of the restricted stock held by the CEO and the next four highest paid Executive Officers: |
Number of Shares | Value | ||||||||||
John M. Stropki, Jr. | 11,480 | $ | 455,297 | ||||||||
Vincent K. Petrella | 3,330 | 132,068 | |||||||||
Frederick G. Stueber | 3,000 | 118,980 | |||||||||
James E. Schilling | 1,040 | 41,246 | |||||||||
George D. Blankenship | 1,710 | 67,819 | |||||||||
(2) | Amounts for 2005 and 2004 represent cash payouts earned for the periods 2003 to 2005 and 2002 to 2004, respectively, pursuant to the Company’s cash long-term incentive plan, which payments were based on average annual net income growth over those three-year periods. |
(3) | Mr. Stropki was elected Chairman, President and Chief Executive Officer during 2004. Mr. Stropki served as Executive Vice President during 2002 and 2003, and as Chief Operating Officer for a portion of 2003 and the beginning of 2004. |
(4) | Mr. Petrella was Corporate Controller of The Lincoln Electric Company during 2003. As Mr. Petrella was not an Executive Officer for 2003, no compensation information for that year has been provided. |
30
Table of Contents
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) | |||||||||||||||||||||
John M. Stropki, Jr. | 49,600 | 14.1 | % | $ | 39.93 | 11/30/15 | $ | 474,672 | ||||||||||||||||||
Vincent K. Petrella | 14,400 | 4.1 | % | $ | 39.93 | 11/30/15 | 137,808 | |||||||||||||||||||
Frederick G. Stueber | 13,000 | 3.7 | % | $ | 39.93 | 11/30/15 | 124,410 | |||||||||||||||||||
James E. Schilling | 4,500 | 1.3 | % | $ | 39.93 | 11/30/15 | 43,065 | |||||||||||||||||||
George D. Blankenship | 7,400 | 2.1 | % | $ | 39.93 | 11/30/15 | 70,818 | |||||||||||||||||||
(1) | 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, have10-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 four and one-half year period ended November 29, 2005 (25.75% for Lincoln Common); (ii) a risk-free rate of return based on the5-year treasury bond rate at November 29, 2005 (4.4%); and (iii) a dividend yield for Lincoln Common of 1.90%. 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. |
31
Table of Contents
Number of Securities | |||||||||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | ||||||||||||||||||||||||||||||
Options/SARS at Fiscal Year | In-the-Money Options/SARs | ||||||||||||||||||||||||||||||
End | at Fiscal Year End | ||||||||||||||||||||||||||||||
Number of | |||||||||||||||||||||||||||||||
Shares | |||||||||||||||||||||||||||||||
Acquired | |||||||||||||||||||||||||||||||
on | Value | ||||||||||||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||||||
John M. Stropki, Jr. | 24,000 | $ | 534,324 | 304,733 | 146,267 | $ | 5,430,388 | $ | 671,672 | ||||||||||||||||||||||
Vincent K. Petrella | — | — | 23,799 | 34,401 | 282,865 | 123,045 | |||||||||||||||||||||||||
Frederick G. Stueber | 30,798 | 380,994 | 28,401 | 38,001 | 355,070 | 201,845 | |||||||||||||||||||||||||
James E. Schilling | 24,698 | 245,642 | 20,851 | 24,501 | 255,061 | 161,475 | |||||||||||||||||||||||||
George D. Blankenship | 22,000 | 343,900 | 40,325 | 21,400 | 616,275 | 105,340 | |||||||||||||||||||||||||
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 | |||||||||||||||||||||
John M. Stropki, Jr. | $ | 459,000 | 2006 to 2008 | $ | 0 | $ | 459,000 | $ | 642,000 | |||||||||||||||||
Vincent K. Petrella | 133,000 | 2006 to 2008 | 0 | 133,000 | 186,200 | |||||||||||||||||||||
Frederick G. Stueber | 120,000 | 2006 to 2008 | 0 | 120,000 | 168,000 | |||||||||||||||||||||
James E. Schilling | 83,000 | 2006 to 2008 | 0 | 83,000 | 99,600 | |||||||||||||||||||||
George D. Blankenship | 68,000 | 2006 to 2008 | 0 | 68,000 | 95,200 | |||||||||||||||||||||
(1) | Represents a range of possible cash payouts earned for the period 2006 to 2008 pursuant to the Company’s cash long-term incentive plan, which payments are based on income growth over a three-year cycle. |
32
Table of Contents
Number of Securities | |||||||||||||||
Remaining Available | |||||||||||||||
for Future Issuance | |||||||||||||||
Under Equity | |||||||||||||||
Number of Securities | Compensation Plans | ||||||||||||||
to be Issued Upon | Weighted-average | Excluding | |||||||||||||
Exercise of | Exercise Price of | Securities Reflected | |||||||||||||
Plan Category | Outstanding Options | Outstanding Options | in Column (a)) (1) | ||||||||||||
Equity compensation plans approved by security holders | 2,071,325 | $ | 28.54 | 1,048,694 | |||||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||||
Total | 2,071,325 | $ | 28.54 | 1,048,694 | |||||||||||
(1) | Represents 1,048,694 shares available for issuance under the 1998 Stock Plan and the Stock Option Plan for Non-Employee Directors, under which no further awards will be made if the proposals to approve the 2006 Equity and Performance Incentive Plan (Proposal 2) and the 2006 Stock Plan for Non-Employee Directors (Proposal 3) are approved. The 2006 Equity and Performance Incentive Plan authorizes the issuance of up to 3,000,000 shares and the 2006 Stock Plan forNon-Employee Directors authorizes the issuance of up to 300,000 shares, resulting in a net increase of 2,251,306 shares available for future issuance if the two new plans are approved. |
33
Table of Contents
34
Table of Contents
Years of Service | ||||||||||||||||||||||
Average | ||||||||||||||||||||||
Compensation | 25 Years | 30 Years | 35 Years | 40 Years | 45 Years | |||||||||||||||||
$ | 300,000 | $ | 85,887 | $ | 107,562 | $ | 129,237 | $ | 150,912 | $ | 172,512 | |||||||||||
600,000 | 194,262 | 237,612 | 280,962 | 324,312 | 367,512 | |||||||||||||||||
900,000 | 302,637 | 367,662 | 432,687 | 497,712 | 562,512 | |||||||||||||||||
1,200,000 | 411,012 | 497,712 | 584,412 | 671,112 | 757,512 | |||||||||||||||||
1,500,000 | 519,387 | 627,762 | 736,137 | 844,512 | 952,512 | |||||||||||||||||
1,800,000 | 627,762 | 757,812 | 887,862 | 1,017,912 | 1,147,512 | |||||||||||||||||
2,100,000 | 736,137 | 887,862 | 1,039,587 | 1,191,312 | 1,342,512 | |||||||||||||||||
2,400,000 | 844,512 | 1,017,912 | 1,191,312 | 1,364,712 | 1,537,512 |
35
Table of Contents
Annual Retirement | ||||||
Name | Annuity Program Benefits | |||||
John M. Stropki, Jr. | $ | 99,589 | (1) | |||
Vincent K. Petrella | 116,531 | (1) | ||||
Frederick G. Stueber | 86,250 | (1) | ||||
James E. Schilling | 32,719 | (2) | ||||
George D. Blankenship | 138,854 | (1) | ||||
(1) | Messrs. Stropki, Petrella, Stueber 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. |
(2) | Mr. Schilling is currently not receiving benefits but is beyond normal retirement age. The amount shown represents the benefit available on December 31, 2005 payable on a single life basis. |
36
Table of Contents
37
Table of Contents
• | options to purchase shares of Lincoln Common (“Option Rights”); | |
• | awards of free-standing or tandem appreciation rights (“SARs”); | |
• | restricted shares (“Restricted Shares”); | |
• | restricted stock units (“Restricted Stock Units”); | |
• | performance shares (“Performance Shares”); and | |
• | performance units (“Performance Units”). |
• | upon the exercise of Option Rights or SARs; | |
• | as Restricted Shares and released from substantial risk of forfeiture; | |
• | in payment of Restricted Stock Units; | |
• | in payment of Performance Shares or Performance Units that have been earned; and | |
• | in payment of dividend equivalents, paid with respect to awards under the 2006 EPI Plan. |
38
Table of Contents
• | The aggregate number of shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options may not exceed 2,000,000 shares. | |
• | The aggregate number of shares issued with respect to Restricted Shares (and released from substantial risk of forfeiture), Restricted Stock Units, Performance Shares or Performance Units may not exceed 1,000,000 shares. | |
• | No individual participant will be granted Option Rights or SARs, in the aggregate, for more than 500,000 shares of Lincoln Common during any calendar year. | |
• | No individual participant will be granted Restricted Shares or Restricted Stock Units that specify Management Objectives or Performance Shares, in the aggregate, for more than 250,000 shares during any calendar year. | |
• | In no event will any individual participant in any calendar year receive an award of Performance Units having an aggregate maximum value as of their respective dates of grant in excess of $1,500,000. |
• | options that are intended to qualify under particular provisions of the Internal Revenue Code (Incentive Stock Options), | |
• | options that are not intended to qualify under the Internal Revenue Code (Nonqualified Stock Options), or | |
• | a combination of the two. |
• | in cash; | |
• | by the transfer to the Company of shares of Lincoln Common previously owned by the optionee, having a value at the time of exercise equal to the total option price; | |
• | by a combination of those payment methods; or | |
• | by such other method as may be approved by the Board. |
39
Table of Contents
40
Table of Contents
41
Table of Contents
• | Profits(e.g., operating income, EBIT, EBIT before bonus, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
• | Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
• | Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
• | Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
• | Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); | |
• | Liquidity Measures(e.g.,debt-to-capital,debt-to-EBITDA, total debt ratio); | |
• | Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); | |
• | Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures; or |
42
Table of Contents
• | Any of the above criteria as compared to the performance of a published or a special index deemed applicable by the Board, including, but not limited to, the Standard & Poor’s 500 Stock Index. |
43
Table of Contents
44
Table of Contents
Tax Consequences to Participants |
45
Table of Contents
46
Table of Contents
• | An initial Option to purchase 6,000 shares of Lincoln Common will be granted to each newly eligible Director upon his or her election to the Board. | |
• | An annual grant of an Option to purchase 3,500 shares of Lincoln Common will be granted after each annual meeting and before the end of the calendar year to each eligible Director in office on the date of the grant. |
47
Table of Contents
• | in cash or by other consideration acceptable to the Company; | |
• | at the discretion of the Governance Committee, by the transfer to the Company of shares of Lincoln Common previously owned by the optionee for at least six months and having a market value at the time of exercise equal to the total option price; or | |
• | by a combination of both methods of payment. |
48
Table of Contents
• | the terms and conditions of awards under the Director Plan; | |
• | the number of shares of Lincoln Common underlying awards to be issued; and | |
• | the duration and nature of the awards. |
49
Table of Contents
Number of Securities Underlying | ||||||
Options Granted under | ||||||
the 2006 Stock Plan for | ||||||
Name | Non-Employee Directors | |||||
John M. Stropki, Jr. | N/A | |||||
Vincent K. Petrella | N/A | |||||
Frederick G. Stueber | N/A | |||||
James E. Schilling | N/A | |||||
George D. Blankenship | N/A | |||||
Executive Officer Group | N/A | |||||
Non-Executive Director Group | 28,000 | |||||
Non-Executive Officer Employee Group | N/A | |||||
50
Table of Contents
51
Table of Contents
Robert J. Knoll, Chair | Hellene S. Runtagh | |
Kathryn Jo Lincoln | George H. Walls, Jr. |
52
Table of Contents
2005 | 2004 | ||||||||||
Audit Fees | $ | 2,292,000 | $ | 2,285,000 | |||||||
Audit-Related Fees | 90,000 | 352,000 | |||||||||
Tax Fees | 235,000 | 301,000 | |||||||||
All Other Fees | 0 | 69,000 | |||||||||
$ | 2,617,000 | $ | 3,007,000 | ||||||||
53
Table of Contents
LINCOLN ELECTRIC HOLDINGS, INC. | |
Frederick G. Stueber | |
Senior Vice President, | |
General Counsel and Secretary |
54
Table of Contents
A-1
Table of Contents
A-2
Table of Contents
A-3
Table of Contents
A-4
Table of Contents
A-5
Table of Contents
Table of Contents
Page | ||||||||
1. | Purpose | B-1 | ||||||
2. | Definitions | B-1 | ||||||
3. | Shares Subject to this Plan | B-4 | ||||||
4. | Option Rights | B-5 | ||||||
5. | Appreciation Rights | B-6 | ||||||
6. | Restricted Shares | B-7 | ||||||
7. | Restricted Stock Units | B-8 | ||||||
8. | Performance Shares and Performance Units | B-8 | ||||||
9. | Administration of this Plan | B-9 | ||||||
10. | Adjustments | B-10 | ||||||
11. | Detrimental Activity | B-10 | ||||||
12. | Non-U.S. Participants | B-10 | ||||||
13. | Transferability | B-11 | ||||||
14. | Withholding Taxes | B-11 | ||||||
15. | Compliance with Section 409A of the Code | B-11 | ||||||
16. | Effective Date | B-11 | ||||||
17. | Amendments | B-12 | ||||||
18. | Termination | B-12 | ||||||
19. | Governing Law | B-12 | ||||||
20. | Miscellaneous Provisions | B-12 |
B-i
Table of Contents
B-1
Table of Contents
(i) Profits(e.g., operating income, EBIT, EBIT before bonus, EBT, net income, earnings per share, residual or economic earnings — these profitability metrics could be measured before special items and/or subject to GAAP definition); | |
(ii) Cash Flow(e.g., EBITDA, operating cash flow, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
(iii) Returns(e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity); | |
(iv) Working Capital(e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
(v) Profit Margins(e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); | |
(vi) Liquidity Measures(e.g.,debt-to-capital,debt-to-EBITDA, total debt ratio); | |
(vii) Sales Growth, Cost Initiative and Stock Price Metrics(e.g., revenues, revenue growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); | |
(viii) Strategic Initiative Key Deliverable Metricsconsisting of one or more of the following: product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures; and | |
(ix) Any of the above criteria as compared to the performance of a published or a special index deemed applicable by the Board, including, without limitation, the Standard & Poor’s 500 Stock Index. |
B-2
Table of Contents
B-3
Table of Contents
(i) Subject to adjustment as provided in Section 10 of this Plan, the number of Common Shares that may be issued or transferred (A) upon the exercise of Option Rights or Appreciation Rights, (B) as Restricted Shares and released from substantial risks of forfeiture thereof, (C) in payment of Restricted Stock Units, (D) in payment of Performance Shares or Performance Units that have been earned, or (E) in payment of dividend equivalents paid with respect to awards made under this Plan will not exceed in the aggregate 3,000,000 Common Shares, plus any Common Shares relating to awards that expire or are forfeited or are cancelled under this Plan. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing. | |
(ii) Common Shares covered by an award granted under this Plan shall not be counted as used unless and until they are actually issued and delivered to a Participant. Without limiting the generality of the foregoing, upon payment in cash of the benefit provided by any award granted under this Plan, any Common Shares that were covered by that award will be available for issue or transfer hereunder. Notwithstanding anything to the contrary contained herein: (A) Common Shares tendered in payment of the Option Price of an Option Right shall not be added to the aggregate plan limit described above; (B) Common Shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the aggregate plan limit described above; (C) Common Shares that are repurchased by the Company with Option Right proceeds shall not be added to the aggregate plan limit described above; and (D) all Common Shares covered by an Appreciation Right, to the extent that it is exercised and settled in Common Shares, whether or not all Common Shares covered by the award are actually issued to the Participant upon exercise of the right, shall be considered issued or transferred pursuant to this Plan. |
(i) The aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options shall not exceed 2,000,000. | |
(ii) The aggregate number of Common Shares issued or transferred as (or in payment of, as the case may be) Restricted Shares, Restricted Stock Units, Performance Shares or Performance Units shall not exceed 1,000,000. |
(i) No Participant shall be granted Option Rights or Appreciation Rights, in the aggregate, for more than 500,000 Common Shares during any calendar year. | |
(ii) No Participant shall be granted Restricted Shares or Restricted Stock Units that specify Management Objectives or Performance Shares, in the aggregate, for more than 250,000 Common Shares during any calendar year. | |
(iii) Notwithstanding any other provision of this Plan to the contrary, in no event shall any Participant in any calendar year receive an award of Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $1,500,000. |
B-4
Table of Contents
(a) Each grant will specify the number of shares of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan. | |
(b) Each grant will specify an Option Price per share, which may not be less than the Market Value Per Share on the Date of Grant. | |
(c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment, or (iv) by such other methods as may be approved by the Board. | |
(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. | |
(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised. | |
(f) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable. A grant of Option Rights may provide for the earlier exercise of such Option Rights in the event of retirement, death or disability of the Participant or a Change of Control. | |
(g) Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights. Such grant of Option Rights will specify that, before the exercise or early exercise of such Option Rights, the Board must determine that the Management Objectives have been satisfied. | |
(h) Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code. | |
(i) The Board may at the Date of Grant of any Option Rights (other than Incentive Stock Options), provide for the payment of dividend equivalents to the Optionee on either a current or deferred or contingent basis, either in cash or in additional Common Shares. | |
(j) The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan. | |
(k) No Option Right will be exercisable more than 10 years from the Date of Grant. | |
(l) The Board reserves the discretion at or after the Date of Grant to provide for (i) the payment of a cash bonus at the time of exercise; (ii) the availability of a loan at exercise; and (iii) the right to tender in satisfaction of the Option Price nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price. |
B-5
Table of Contents
(m) The Board may substitute, without receiving Participant permission, Appreciation Rights payable only in Common Shares (or Appreciation Rights payable in cash, Common Shares, or in any combination thereof as elected by the Board) for outstanding Options;provided,however, that the terms of the substituted Appreciation Rights are substantially the same as the terms for the Options and the difference between the Market Value Per Share of the underlying Common Shares and the Base Price of the Appreciation Rights is equivalent to the difference between the Market Value Per Share of the underlying Common Shares and the Option Price of the Options. If, in the opinion of the Company’s auditors, this provision creates adverse accounting consequences for the Company, it shall be considered null and void. | |
(n) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award shall be subject to this Plan and shall contain such terms and provisions, consistent with this Plan, as the Board may approve. |
(i) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives. | |
(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant. | |
(iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods. | |
(iv) Any grant may specify that such Appreciation Right may be exercised only in the event of, or earlier in the event of, retirement, death or disability of the Participant or a Change of Control. | |
(v) Any grant may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis. | |
(vi) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights. Such grant of Appreciation Rights will specify that, before the exercise or early exercise of such Appreciation Rights, the Board must determine that the Management Objectives have been satisfied. | |
(vii) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Board may approve. |
B-6
Table of Contents
(i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which may not be less than the Market Value Per Share on the Date of Grant; | |
(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and | |
(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. |
(a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. | |
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value Per Share at the Date of Grant. | |
(c) Each such grant or sale will provide that the Restricted Shares covered by such grant or sale that vests upon the passage of time will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period of not less than three years to be determined by the Board at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture as provided in Section 6(e) below or in the event of retirement, death or disability of the Participant or a Change of Control. | |
(d) Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee). | |
(e) Any grant of Restricted Shares may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Shares;provided,however, that restrictions relating to Restricted Shares that vest upon the achievement of Management Objectives may not terminate sooner than one year from the Date of Grant. Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Shares on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. Such grant of Restricted Shares will specify that, before the termination or early termination of the restrictions applicable to such Restricted Shares, the Board must determine that the Management Objectives have been satisfied. | |
(f) Any such grant or sale of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional shares of Restricted Shares, which may be subject to the same restrictions as the underlying award. | |
(g) Each grant or sale of Restricted Shares will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless |
B-7
Table of Contents
otherwise directed by the Board, all certificates representing shares of Restricted Shares will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Restricted Shares. |
(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Board may specify. | |
(b) If a grant of Restricted Stock Units specifies that the Restriction Period will terminate upon the achievement of Management Objectives, such Restriction Period may not terminate sooner than one year from the Date of Grant. Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of shares of Restricted Stock Units on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. Such grant of Restricted Stock Units will specify that, before the termination or early termination of the Restriction Period applicable to such Restricted Stock Units, the Board must determine that the Management Objectives have been satisfied. | |
(c) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value Per Share at the Date of Grant. | |
(d) If the Restriction Period lapses only by the passage of time, each such grant or sale will be subject to a Restriction Period of not less than three years, as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of retirement, death or disability of the Participant or a Change of Control. | |
(e) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current, deferred or contingent basis, either in cash or in additional Common Shares. | |
(f) Each grant or sale will specify the time and manner of payment of Restricted Stock Units that have been earned. Any grant or sale may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives. | |
(g) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Board may approve. |
(a) Each grant will specify the number of Performance Shares or Performance Units to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors;provided,however, that no such adjustment will be made in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code. |
B-8
Table of Contents
(b) The Performance Period with respect to each Performance Share or Performance Unit will be such period of time (not less than one year), commencing with the Date of Grant as will be determined by the Board at the time of grant which may be subject to earlier lapse or other modification in the event of retirement, death or disability of the Participant or a Change of Control. | |
(c) Any grant of Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives level a minimum of achievement and will set forth a formula for determining the number of Performance Shares or Performance Units that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. The grant of Performance Shares or Performance Units will specify that, before the Performance Shares or Performance Units will be earned and paid, the Board must determine that the Management Objectives have been satisfied. | |
(d) Each grant will specify the time and manner of payment of Performance Shares or Performance Units that have been earned. Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives. | |
(e) Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Board at the Date of Grant. Any grant of Performance Units may specify that the amount payable or the number of Common Shares issued with respect thereto may not exceed maximums specified by the Board at the Date of Grant. | |
(f) The Board may at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof on either a current, deferred or contingent basis, either in cash or in additional Common Shares. | |
(g) Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Board may approve. |
(a) This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation and Executive Development Committee or any other committee of the Board (or a subcommittee thereof), as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee. A majority of the committee (or subcommittee) will constitute a quorum, and the action of the members of the committee (or subcommittee) present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the committee (or subcommittee). | |
(b) The interpretation and construction by the Board of any provision of this Plan or of any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares or Performance Units and any determination by the Board pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive. No member of the Board will be liable for any such action or determination made in good faith. | |
(c) To the extent permitted by Ohio law, the Board may, from time to time, delegate to one or more officers of the Company the authority of the Board to grant and determine the terms and conditions of awards granted under this Plan. In no event shall any such delegation of authority be permitted with respect to awards to any executive officer or any person subject to Section 162(m) of the Code. |
B-9
Table of Contents
(a) Forfeit any award granted under this Plan then held by the Participant; | |
(b) Return to the Company, in exchange for payment by the Company of any amount actually paid therefor by the Participant, all Common Shares that the Participant has not disposed of that were offered pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity; and | |
(c) With respect to any Common Shares so acquired that the Participant has disposed of, pay to the Company in cash the difference between: | |
(i) Any amount actually paid therefor by the Participant pursuant to this Plan, and | |
(ii) The Market Value Per Share of the Common Shares on the date of such acquisition. |
B-10
Table of Contents
B-11
Table of Contents
B-12
Table of Contents
B-13
Table of Contents
C-1
Table of Contents
C-2
Table of Contents
(a) An initial Option to purchase 6,000 Common Shares shall be granted to each Newly Eligible Director upon his or her election to the Board. | |
(b) An Option to purchase 3,500 Common Shares shall be granted after each annual meeting of the Company’s shareholders, and before the end of that calendar year, to each Eligible Director serving as a Director on the Date of Grant. The Date of Grant shall be the last business day in November, unless the Committee specifies a different date. |
(a) Each Option, until terminated as provided in Section 6(e) of this Plan, shall become exercisable to the extent of 100% of the underlying Common Shares when the Optionee has continuously served as a Director for one year from the Date of Grant. If an Optionee ceases to be a Director by reason of death, Disability or Retirement, or upon a Change in Control of the Company, all Options held by that Optionee shall become immediately exercisable in full. | |
(b) An Optionee may exercise an Option in whole or in part at any time and from time to time during the period within which an Option may be exercised. To exercise an Option, an Optionee shall give notice to the Company in either written or electronic form, specifying the number of Common Shares to be purchased and provide payment of the Option Price and any other documentation that may be required by the Company. | |
(c) The Option Price shall be payable (i) in cash or by other consideration acceptable to the Company, (ii) at the discretion of the Committee, by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least six months, having a Fair Market Value at the time of exercise equal to the Option Price, or (iii) by a combination of both methods of payment. | |
(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a broker on a date satisfactory to the Company of some or all of the Common Shares to which the exercise relates. | |
(e) Each Option shall terminate on the earliest to occur of the following dates: |
(i) The date on which the Optionee ceases to be a Director, unless the Optionee ceases to be a Director after completion of one year of continuous service as a Director, on account of death, Disability or Retirement, or following a Change in Control of the Company; | |
(ii) One year after the death of the Optionee; | |
(iii) Three years after the Optionee’s Termination of Service becomes effective; provided, however, that this Section 6(e)(iii) shall only apply where (x) the Termination of Service occurs |
C-3
Table of Contents
after the Optionee has served continuously as a Director for less than six years and (y) the Termination of Service does not occur following a Change in Control of the Company; or | |
(iv) Ten years from the Date of Grant. |
(f) An Optionee shall be treated for all purposes as the owner of record of the number of Common Shares purchased pursuant to the exercise of the Option (in whole or in part) as of the date the conditions set forth in Section 6(b) of this Plan are satisfied. Upon the effective exercise of an Option (in whole or in part), the Company shall deliver to the Optionee the number of Common Shares for which the Option is exercised, adjusted for any Common Shares sold or withheld in connection with the exercise. | |
(g) Except as otherwise determined by the Committee, no Option shall be transferable other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order, and each Option may be exercised, during an Optionee’s lifetime, only by the Optionee or, in the event of the Optionee’s incapacity, including incapacity arising from a Disability, by the Optionee’s guardian or legal representative acting in a fiduciary capacity. | |
(h) To the extent permitted by Section 409A of the Code, the Committee may permit Optionees to elect, or may require Optionees, to defer the issuance of Common Shares under this Plan pursuant to the rules, procedures or programs as it may establish for purposes of this Plan. The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts. | |
(i) On receipt of written or electronic notice to exercise, the Committee may, in its sole discretion, elect to cash out all or part of the portion of the Option(s) to be exercised by paying the Optionee an amount, in cash or Common Shares, equal to the excess of the Fair Market Value of the Common Shares over the Option Price on the effective date of the cash-out. |
(a) Each such award shall constitute an immediate transfer of the ownership of Common Shares to the Eligible Directors in consideration of the performance of services, entitling such Eligible Directors to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. | |
(b) Each such award shall provide that the Restricted Shares covered by such award shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period of not less than three (3) years to be determined by the Committee at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture in the event of Retirement, death or Disability or upon a Change in Control. | |
(c) Each such award shall provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee). | |
(d) Any such award of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional Restricted Shares, which may be subject to the same restrictions as the underlying award. | |
(e) Unless otherwise directed by the Committee, all certificates representing Restricted Shares shall be held in custody by the Company until all restrictions thereon shall have lapsed, |
C-4
Table of Contents
together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Restricted Shares. |
(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Eligible Director in the future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Restriction Period as the Committee may specify. | |
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Eligible Director that is less than the Fair Market Value at the Date of Grant. | |
(c) Each such grant or sale will be subject to a Restriction Period of not less than three years, as determined by the Committee at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of the Retirement, death or Disability of the Eligible Director or upon a Change in Control of the Company. | |
(d) During the Restriction Period, the Eligible Director will have no right to transfer any rights under his or her award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Committee may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current, deferred or contingent basis, either in cash or in additional Common Shares. | |
(e) Each grant or sale will specify the time and manner of payment of Restricted Stock Units that have been earned. Any grant or sale may specify that the amount payable with respect thereto may be paid by the Company in cash, in shares of Common Shares or in any combination thereof and may either grant to the Eligible Director or retain in the Board the right to elect among those alternatives. |
C-5
Table of Contents
C-6
Table of Contents
![(MAP)](https://capedge.com/proxy/DEF 14A/0000950152-06-002569/l17917al1791702.gif)
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:
1-888-693-8683
Vote by Internet
Access the Website and
cast your vote:
http://www.cesvote.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 6:00 a.m. Eastern Daylight Time on April 25, 2006 if you are a participant in The Lincoln Electric Company Employee Savings Plan, or by 6:00 a.m. Eastern Daylight Time on April 28, 2006 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 10:00 a.m. on April 28, 2006, or at any postponement(s) or adjournment(s) of the meeting, and, in their discretion, on all other business properly brought before the meeting or at any postponement(s) or adjournment(s) of 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: ________________________________________, 2006 | ||
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. |
Table of Contents
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. Apostage-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. | PROXY AND VOTING INSTRUCTION FORM |
1. | Election of Directors: Class Whose Term Ends in 2009: | |||||||||||||||||
(01 | ) | Harold L. Adams | (02 | ) | Robert J. Knoll | (03 | ) | John M. Stropki, Jr. | ||||||||||
o | FOR ALL | o | WITHHOLD ALL | o | FOR ALL EXCEPT (write names below): | |||||||||||||
Vote withheld from the following (write names below): | ||||||||||||||||||
2. | Approval of the 2006 Equity and Performance Incentive Plan. | |||||||||||||||||
o | FOR | o | AGAINST | o | ABSTAIN | |||||||||||||
3. | Approval of the 2006 Stock Plan for Non-Employee Directors. | |||||||||||||||||
o | FOR | o | AGAINST | o | ABSTAIN | |||||||||||||
4. | Ratification of Independent Auditors. | |||||||||||||||||
o | FOR | o | AGAINST | o | ABSTAIN | |||||||||||||
5. | 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 adjournment(s) or postponement(s) 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: | |||||||||||||||||