SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional proxy materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section
240.14a-12
Standex International Corporation
(Name of Registrant as Specified in Its Charter)
Deborah A. Rosen, Senior Corporate Attorney
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Rules
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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 transactions
computed pursuant to Exchange Act Rule 0-11.(1).
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] 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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STANDEX 6 Manor Parkway
Salem, New Hampshire 03079
September 18, 1995
To the Stockholders of Standex International Corporation:
You are cordially invited to attend the Annual Meeting of
Stockholders of Standex International Corporation which will be held at The
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts on
Tuesday, October 31, 1995 at 11:00 A.M.
We hope that you will be able to attend the meeting. However,
whether or not you plan to attend in person, please complete, sign, date
and return the enclosed proxy card promptly to ensure that your shares will
be represented. If you do attend the meeting, you may vote your shares
personally.
This booklet includes the Notice of Annual Meeting and the Proxy
Statement, which contain information about the formal business to be acted
on by the stockholders. The meeting will also feature a report on the
operations of your Company, followed by a question and discussion period.
Sincerely,
/s/ THOMAS L. KING
Thomas L. King
Chairman of the Board
STANDEX 6 Manor Parkway
Salem, New Hampshire 03079
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Standex International
Corporation (the "Company") will be held at The First National Bank of
Boston, 100 Federal Street, Boston, Massachusetts on Tuesday, October 31,
1995, at 11:00 A.M. local time for the following purposes:
1. To fix the number of directors at thirteen and to elect four
directors to hold office for three-year terms ending on the
date of the Annual Meeting of Stockholders in 1998;
2. To approve the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
June 30, 1996; and
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Stockholders of record at the close of business on September 11,
1995 will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ RICHARD H. BOOTH
Richard H. Booth, Secretary
September 18, 1995
Salem, New Hampshire
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR
PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU SO CHOOSE, YOU MAY
VOTE YOUR SHARES IN PERSON AT THE ANNUAL MEETING.
STANDEX INTERNATIONAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
October 31, 1995
This Proxy Statement is being furnished on or about September 18,
1995 in connection with the solicitation of proxies by the Board of
Directors of Standex International Corporation (the "Company") for use at
the Annual Meeting of Stockholders to be held on Tuesday, October 31, 1995.
All proxies will be voted in accordance with the instructions contained
therein and, if no choice is specified, will be voted FOR the election of
each of the individuals nominated by the Board of Directors and IN FAVOR OF
the other proposal set forth in the Notice of Meeting.
The election of Directors will require the affirmative vote of a
plurality of the shares of Common Stock voting in person or by proxy at the
Annual Meeting. The ratification of the appointment of Deloitte & Touche
LLP as independent auditors will require the affirmative vote of a majority
of the shares of Common Stock of the Company voting on the proposal in
person or by proxy at the Annual Meeting. Stockholders may vote in favor of
all nominees for Director or withhold their votes as to all nominees or
withhold their votes as to specific nominees. With respect to the
ratification of the appointment of Deloitte & Touche LLP as independent
auditors, stockholders should specify their choices on the enclosed form of
proxy.
Shares which abstain from voting as to a particular matter, and
shares held in "street name" by brokers or nominees who indicate on their
proxies that they do not have discretionary authority to vote such shares
as to a particular matter, will not be counted as votes in favor of such
matter, and will also not be counted as shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on a matter that requires the affirmative vote of a certain
percentage of the shares voting on a matter.
Any proxy may be revoked at any time before it is exercised by
delivery of written notice to the Secretary of the Company or by executing
a subsequent proxy.
The Board of Directors has fixed September 11, 1995 as the record date
for the determination of stockholders entitled to vote at the Annual
Meeting. At the record date, there were outstanding and entitled to vote
13,950,987 shares of the Common Stock of the Company. Each share is
entitled to one vote.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors and officers,
without additional remuneration, may solicit proxies in person and by
telecommunications. Brokers, custodians and fiduciaries will be requested
to forward proxy soliciting materials to the owners of stock held in their
names and the Company will reimburse them for their out-of-pocket expenses
in this regard.
To assure the presence in person or by proxy of the necessary quorum
for holding the meeting, the Company has employed the firm of Morrow & Co.,
Inc. to assist in soliciting proxies by mail, telephone, facsimile and
personal interview for a fee estimated at approximately $3,500.00 plus
disbursements.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to fix the number
of directors at thirteen and to elect as directors Messrs. William L.
Brown, Thomas L. King, Sol Sackel and Lindsay M. Sedwick, identified below
as nominees, for three-year terms expiring in 1998 unless authority to vote
for the election of directors is withheld by marking the proxy to that
effect.
In the event that any nominee for election should become unavailable,
the person acting under the proxy may vote for the election of a
substitute. Management has no reason to believe that any nominee will
become unavailable.
Information about each director and nominee for director at July 31,
1995 follows:
Nominees For Directors Principal Occupations During
For Terms Past Five Years And
Expiring In 1998 Certain Other Directorships
---------------------- ---------------------------
William L. Brown* Chairman of the Board of Bank of Boston Corporation and
Director Since 1961 The First National Bank of Boston from January 1983 to
Age 73 March 1989.
Director of G.C. Companies, Inc., Stone & Webster,
Incorporated, Ionics, Incorporated, Bradley Real Estate Trust
and North American Mortgage Company.
Thomas L. King* Chairman of the Board of the Company since January 1992;
Director Since 1970 President of the Company from August 1984 to July 1994;
Age 65 Chief Executive Officer of the Company from July 1985 to
June 1995.
Director of Augat Inc.
Sol Sackel Former Senior Vice President of the Company.
Director Since 1983
Age 71
Lindsay M. Sedwick Vice President of the Company since January 1990 and
Director Since 1992 Treasurer of the Company since January 1986.
Age 60
Directors To Continue Principal Occupations During
In Office For Terms Past Five Years And
Expiring In 1996 Certain Other Directorships
--------------------- ---------------------------
John Bolten, Jr.+ Consultant to the Company.
Director Since 1955
Age 75
David R. Crichton Executive Vice President/Operations of the Company since
Director Since 1992 June 1989; President of the Standex Precision Engineering
Age 57 Division of the Company from June 1987 to May 1989.
Samuel S. Dennis 3d*+ Senior Partner, Hale & Dorr (Attorneys), Boston, MA; Vice
Director Since 1955 President of the Company from November 1957 to June 1989.
Age 85
Director of Augat Inc.
Daniel B. Hogan, Ph.D. President, The Apollo Group (Management Consultants) since
Director Since 1983 1991; Vice President and Director, Research and Develop-
Age 52 ment, McBer Co. 1990; Management Consultant from 1989
through 1990; Psychologist, McLean Hospital, Belmont, MA;
Instructor of Psychology, Harvard Medical School,
Cambridge, MA from 1983 through 1989.
Directors To Continue Principal Occupations During
In Office For Terms Past Five Years And
Expiring In 1997 Certain Other Directorships
--------------------- ----------------------------
Thomas H. DeWitt Executive Vice President/Administration of the Company
Director Since 1987 since January 1987; General Counsel of the Company since
Age 53 October 1985; Secretary of the Company from July 1984 to
March 1988.
Walter F. Greeley Chairman, High Street Associates, Inc. (a management and
Director Since 1989 acquisition group) since 1988; Senior Vice President and
Age 64 Secretary, Cabot Corporation from 1985 to 1988.
C. Kevin Landry Managing Director and CEO, TA Associates, Inc. (a private
Director Since 1975 equity firm), Boston, MA. since January 1994 and prior
Age 51 thereto Managing Partner of TA Associates.
H. Nicholas Muller, III, Ph.D. Director of the State Historical Society of Wisconsin since
Director Since 1984 October 1985.
Age 56
Edward J. Trainor* Chief Executive Officer of the Company since July 1995;
Age 55 President of the Company since July 1994; Chief Operating
Officer of the Company from July 1994 to June 1995; President
of the Standex Institutional Products Division of the
Company from February 1987 to July 1994; Vice President
of the Company from August 1992 to July 1994.
<FN>
<F1> + Founder of the Company.
<F2> * Member of the Executive Committee of the Board of Directors.
</FN>
STOCK OWNERSHIP IN THE COMPANY
Stock Ownership by Directors, Nominees for Director and Executive Officers
The following table sets forth information regarding beneficial
ownership of the Company's Common Stock as of July 31, 1995 of each
director, each nominee for director, each executive officer named in the
Summary Compensation Table and all directors and executive officers of the
Company as a group.
Beneficial Ownership (1) -
-----------------------------
Percentof
No. of Outstanding
Name Shares , Common Stock
---- ------ ------------
John Bolten, Jr. 279,402(3) 1.9
William L. Brown 48,360 **
David R. Crichton 14,884(2) **
Samuel S. Dennis 3d 562,244(4) 4.0
Thomas H. DeWitt 93,871(2)(5) **
Walter F. Greeley 2,004 **
Daniel B. Hogan, Ph.D. 13,418(6) **
Thomas L. King 152,927(2) 1.0
C. Kevin Landry 5,368 **
H. Nicholas Muller, III, Ph.D. 3,630 **
Sol Sackel 10,416 **
Lindsay M. Sedwick 39,305(2) **
Edward J. Trainor 38,068(2) **
All Directors and Executive Officers 1,276,075 9.1
as a Group (15 Persons)
<FN>
<F1> ** Less than 1% of outstanding Common Stock.
<F2> (1) As used herein, "beneficial ownership" means the sole or shared power
to vote, and/or the sole or shared investment power with respect to
shares of Common Stock. The directors have sole voting and investment
power with respect to the shares shown as beneficially owned by them
except for 65 shares for Mr. Crichton, 50,437 shares for Mr. DeWitt,
2,004 shares for Mr. Greeley, 4,000 shares for Mr. Landry, 1,300
shares for Mr. Sedwick, 10,416 shares for Mr. Sackel and 14,009
shares for Mr. Trainor, which are jointly held with their respective
spouses. The shares owned by spouses or minor children of certain
directors have not been included because the respective directors
have disclaimed beneficial interest in the shares. These
shareholdings are: Mrs. DeWitt (874), Mrs. Dennis (61,000), Mr.
Hogan's children (6,000), Mrs. Landry and their children (137,254),
and Mrs. Sackel (2,000).
<F3> (2) The numbers listed include estimates of the shares held in the Standex
Employees' Stock Ownership Plan at June 30, 1995, which are vested to
the accounts of Messrs. King, DeWitt, Sedwick, Crichton and Trainor.
These individuals have voting power over the shares allocated to them
in this plan, but no investment power; however, in the event of a
tender or exchange offer for the Common Stock of the Company, these
individuals (along with all other participants) will determine, on a
confidential basis, whether the Common Stock held in their accounts
should be tendered or exchanged. The numbers also include the
following shares which are capable of being purchased by exercise of
stock options within 60 days of July 31, 1995: Mr. Trainor (20,000),
Mr. DeWitt (16,200) and Mr. Sedwick (6,400).
<F4> (3) The number listed includes 28,710 shares held in a trust of which
Messrs. Bolten, Jr., Hogan and Dennis are trustees. To avoid
duplication, these shares have only been shown as beneficially owned
by Mr. Bolten, Jr.
<F5> (4) The number listed includes 17,000 shares held in trusts as to which
Mr. Dennis is sole trustee and 243,382 shares as to which he is co
trustee. The latter number includes a trust holding 62,188 shares
wherein Mr. Dennis is a co-trustee with Messrs. Bolten, Jr. and
Hogan. To avoid duplication, these shares have only been shown as
beneficially owned by Mr. Dennis. Mr. Bolten, Jr. is also a co-
trustee with Mr. Dennis of a trust holding 125,738 shares. However,
in order to avoid duplication, these shares have only been shown as
beneficially owned by Mr. Dennis.
<F6> (5) The number listed includes 12,500 shares held in a trust as to which
Mr. DeWitt is a co-trustee.
<F7> (6) The number listed includes 6,040 shares held in a testamentary estate
as to which Mr. Hogan is executor.
</FN>
-------------------
Stock Ownership of Certain Beneficial Owners
The table below sets forth each stockholder who, based on public
filings, is known to the Company to be the beneficial owner of more than 5%
of the Common Stock of the Company as of July 31, 1995.
Beneficial Ownership --
----------------------------
Percent of
Name and Address No. of Outstanding
Of Beneficial Owner Shares Common Stock
------------------- ---------- -----------
--
State Street Bank and Trust Company, as Trustee of 1,657,154(1) 11.8
the Standex International Corporation Employees'
Stock Ownership Trust,
225 Franklin Street, Boston, MA
FMR Corp. 796,500(2) 5.0
82 Devonshire Street
Boston, MA 02109-3614
<FN>
<F1> (1) This number includes shares allocated to participating employees'
accounts over which such participants have sole voting power.
<F2> (2) FMR Corp. is a parent holding company of Fidelity Management and
Research Company, an investment advisory company that manages funds
for investment companies. Its beneficial ownership, as set forth in
its most recent statement, filed as of December 31, 1994 pursuant
to Section 13G of the Securities Exchange Act of 1934 (the "Act"),
consists of 796,500 shares over which it has sole dispositive power
and 36,500 shares over which it has sole power to vote or direct
the vote.
</FN>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
on the Company's Common Stock as of the end of each of the last five fiscal
years with the cumulative total stockholder return on the Standard & Poor's
Manufacturing (Diversified Industry) Index and on the Russell 2000 Index,
assuming an investment of $100 in each at their closing prices on June
30, 1990 and the reinvestment of all dividends.
Standex S & P
Measurement Period International Russell Manufacturing
Fiscal Year Covered Corporation 2000 (Div. Ind.)
------------------- ------------- ------- -------------
Measurement Pt.-6/30/90 $100 $100 $100
FYE 6/30/91 $ 98 $101 $106
FYE 6/30/92 $139 $116 $105
FYE 6/30/93 $181 $146 $124
FYE 6/30/94 $234 $152 $139
FYE 6/30/95 $287 $183 $183
--------------------------------------------------------------------
| Standex International S & P |
| Corporation Russell 2000 Manufacturing (Div Ind)|
--------------------------------------------------------------------
REPORT OF THE
SALARY AND EMPLOYEE BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is founded on the same
principles that guide the Company in establishing compensation programs at
all levels of the organization. The overall objective is to attract, retain
and motivate highly qualified individuals for all positions within the
Company.
Policies
Consistent with this objective, all compensation programs, including
those for executives, adhere to the following policies:
* Compensation is based on the level of job responsibility, the
individual's level of performance and Company or unit performance.
* Compensation takes into account the value of the job in the market
place. The Company strives to be competitive with the pay of
employers of a similar size and stature who compete with the
Company for talent.
* Equity ownership is encouraged at all levels of the Company to
more closely align the interests of employees with those of the
stockholders. Through its Stock Purchase Plan, the Company offers
the opportunity for equity ownership to all employees at U. S.
locations. In addition, the Company provides key management
employees worldwide the opportunity to build significant equity
ownership through the stock option program.
Consistent with these policies, the compensation of executive
officers is closely related to Company performance and, in addition to base
salary, is comprised of three elements: bonus, PIPS awards and stock
options.
Bonus
Cash bonus awards are made each year to more than 900 employees of
the Company in order to motivate them and reward their contribution toward the
financial performance of the Company in the immediately preceding fiscal
year.
As part of this program, bonus awards are considered each year for
the divisional management group as well as the executive officers of the
Company. The total amount awarded to top Divisional management
(approximately 85 employees) under this Program is determined by the Salary
and Employee Benefits Committee (the "Committee") on the basis of the
Company's overall performance (principally net income and earnings per
share) in the preceding fiscal year.
Bonus awards to top Divisional management are based on the net income
of the Division measured against its historical performance and its
performance relative to the other Divisions that year. Bonus awards to
corporate executive officers in fiscal 1994 (as a percentage of base
salary) were equal to the average percentage of base salary awarded to all
divisional executives in that year. In this way, the bonus awards received
by corporate executive officers were directly tied to the performance of
the operating units.
PIPS Plan
The Company's PIPS Plan is intended to provide an incentive to a
broad group of approximately 285 management employees (including executive
officers) to increase the earnings per share of the Company on a long-term
basis. Sustained increases in the Company's earnings per share will
presumably, under normal market conditions, lead to higher prices for the
Company's Common Stock. Payments under the PIPS Plan are made only when
increases in earnings per share have been achieved over the preceding five
year period. Since the inception of this program, there have been several
years when no payments were made.
The Committee approves grants of PIPS shares each year, including
those to executive officers of the Company, based on operational and
individual performance. Awards are weighted toward the employees who have
the greatest potential to impact the earnings per share of the Corporation.
At maturity, the increase, if any, in the earnings per share of the Company
over the base year is accorded a price/earnings ratio of 10 and is paid to
the participant in cash.
The PIPS awards, in addition to providing a direct link to increases
in earnings per share and an indirect link to increases in the market price
of the stock, also create an incentive for participants to remain with the
Company for the long term. PIPS vest one-third per year in the last three
years of each five year term. Therefore, a participant leaving the Company
prior to the maturity year forfeits all non-vested PIPS.
Stock Options
The Company believes that significant stock ownership by the
executive officers of the Corporation is a major incentive in building
stockholder value. Stock options are intended to encourage such stock
ownership and to directly align the interests of executive officers with
those of the stockholders.
Under the 1994 Stock Option Plan and 1985 Stock Option Plan,
executive officers are eligible to receive occasional grants of incentive
stock options and/or non-qualified stock options. Incentive stock options
are granted at the fair market value of the underlying Common Stock at the
date of grant and are exercisable six months from the date of grant. Non
qualified stock options may be granted below fair market value on the date
of grant and generally vest in installments over a period of years. This
vesting feature of non-qualified options has the effect of encouraging long
term commitment to the Company and its goals.
The Committee determines the amount of all grants to executive
officers, the term of the options and the vesting period. The size of
option grants to executive officers is based on the officer's level of
responsibility at the time of grant.
1994 Compensation of the Chief Executive Officer
As Chairman and Chief Executive Officer, during fiscal 1994, Mr. King
was responsible for advancing the performance, growth and prospects of the
Company's diverse worldwide businesses. In fiscal 1994, under his
leadership, the Company had another outstanding year. Net income increased
13.1% and earnings per share were up 21.1%. Return on equity was a record
22.8%. The total return to stockholders in fiscal 1994 (market appreciation
plus dividends paid) was 29%.
Based on the strong performance of the Company during fiscal 1994,
the Committee recommended, and the Board approved, an increase of 8.4% in
Mr. King's base salary to $775,000, effective October 1, 1994. As is its
custom, the Committee approved a bonus award which, as a percentage of Mr.
King's base salary, was equal to the average percentage of base salary
awarded to all Divisional executives for fiscal 1994 (25.4%). In addition,
the Committee awarded Mr. King a PIPS grant equal to 2.7% of the total
shares awarded.
Salary and Employee Benefits Committee
Walter F. Greeley,
Chairman William L. Brown
Samuel S. Dennis 3d
Daniel B. Hogan
Compensation Committee Interlocks and Insider Participation
Mr. Dennis was Vice President of the Company from November 1957
through June 1989. In addition, the Company utilizes the services of the
law firm of Hale & Dorr, of which a corporation controlled by Mr. Dennis is
a senior partner.
-------------------
EXECUTIVE COMPENSATION
The following table shows for fiscal years ending June 30, 1995, 1994
and 1993, the cash compensation as well as certain other compensation, paid
to the named executive officers.
SUMMARY COMPENSATION TABLE
Long Term Compensation -----------------
---------
Annual Compensation Awards Payouts
-------------------------------------------- ---------- -------------
Other Securities
Name and Fiscal Annual Underlying LTIP All Other
Principal Position Year Salary($) Bonus($) Compensation($)(8) Options(#) Payouts($)(3) Compensation(4)
------------------ ------ --------- ------------- ------------------ ---------- ------------- ---------------
Thomas L. King 1995 $760,000 $ 181,600 $7,240 $ 83,700 $40,858(5)
Chairman & CEO 1994 $698,750 $1,160,000(2) $110,400 $42,123(5)
1993 $635,000 $ 128,600 $157,500 $37,358(5)
Edward J. Trainor(1) 1995 $321,667 $ 100,000 $ 488 100,000 $ 27,900 $ 8,182(6)
President & COO 1994 $222,500 $ 70,000 $ 40,480 $ 8,988(6)
1993 $195,000 $ 55,000 20,000 $ 21,000 $10,264(6)
Thomas H. DeWitt 1995 $323,000 $ 78,200 $ 759 $ 40,300 $ 4,982(7)
Executive Vice President/ 1994 $304,250 $ 72,100 $ 55,200 $ 6,778(7)
Administration 1993 $289,250 $ 60,600 $ 78,750 $ 6,848(7)
David R. Crichton 1995 $236,250 $ 57,200 $ 733 $ 34,100 $ 4,632(7)
Executive Vice President/ 1994 $221,250 $ 51,700 $ 27,600 $ 6,427(7)
Operations 1993 $203,750 $ 40,300 $ 19,950 $ 6,465(7)1
Lindsay M. Sedwick 1995 $206,250 $ 49,500 $1,014 $ 21,700 $ 3,182
Vice President & 1994 $190,000 $ 43,100 8,000 $ 25,760 $ 4,988
Treasurer 1993 $168,750 $ 32,700 $ 13,650 $ 4,947
<FN>
<F1> (1) Mr. Trainor became CEO of the Company on July 1, 1995, President of
the Company on July 27, 1994, was COO of the Company from July 1994 to
June 1995, and was a Vice President of the Company from July 29, 1992
through July 27, 1994.
<F2> (2) This amount includes a $1,000,000 special bonus awarded to Mr. King in
fiscal 1994.
<F3> (3) LTIP Payouts reflect payments received by the named executive officers
pursuant to the Company's profit improvement plan described on page 13.
<F4> (4) All other compensation includes contributions made by the Company to
the Standex Employees' Stock Ownership Plan, a defined contribution
plan. Estimates of the aggregate amounts contributed to this plan
during fiscal 1995 are $3,182 for each named executive, during fiscal
1994; $4,988 for each named executive and during fiscal 1993 are:
Messrs. King, DeWitt, Crichton and Trainor, $5,264 respectively and
Mr. Sedwick $4,947.
<F5> (5) This amount includes $32,094, the premium paid by the Company on whole
life insurance owned by a trust of which Mr. King is a trustee for
fiscal 1995, 1994 and 1993, respectively. Also included are $5,582
and $5,041, the premiums paid by the Company for additional group
term life insurance in 1995 and 1994, respectively.
<F6> (6) This amount also includes performance bonuses of $5,000, $4,000 and
$5,000 awarded to Mr. Trainor in 1995, 1994 and 1993, respectively.
<F7> (7) This amount includes the dollar value of term life insurance premiums
paid by the Company (Mr. DeWitt--$1,800 in 1995, $1,790 in 1994 and
$1,584 in 1993; Mr. Crichton--$1,450 in 1995, $1,439 in 1994 and
$1,201 in 1993).
<F8> (8) This column reflects amounts reimbursed during the fiscal year for
payment of FICA-HI taxes in connection with the Company's non
qualified pension plan.
</FN>
-------------------
Stock Options
The following two tables provide information on stock option grants
made to the named executive officers in fiscal year 1995, options exercised
during fiscal year 1995 and options outstanding on June 30, 1995.
-------------------
STOCK OPTION GRANTS IN FISCAL 1995
Number of
Securities % of Total Grant
Date
Underlying Options Granted Exercise or
Present
Options to Employees Base Price Expiration Value
Name Granted(#)(1) in Fiscal Year ($/Sh) Date ($)(2)
---- ------------- --------------- ----------- ---------- ----------
Thomas L. King -0- -- -- -- --
Edward J. Trainor 100,000 69.4% $23.00 7/27/02 $1,108,000
Thomas H. DeWitt -0- -- -- -- --
David R. Crichton -0- -- -- -- --
Lindsay M. Sedwick -0- -- -- -- --
<FN>
<F1> (1) Below market grant of non-qualified option first exercisable one year
from date of grant in annual increments of one-fifth of aggregate
shares subject to grant and all shares subject to option exercisable
on and after the fifth anniversary of the date of grant. In order to
exercise the option, the employee must be employed by the Company or
the exercise must be within three months of termination of
employment, unless such termination is due to death or disability.
<F2> (2) In accordance with Securities and Exchange Commission Rules, the
Black-Scholes option pricing model was chosen to estimate the grant
date present value of the option granted. Assumptions used to
calculate Grant Date Present Value of all option shares granted
during the fiscal year were: expected volatility-0.204; risk free
rate of return-6.75%; dividend yield-2.0%; and time of exercise--8
years. The valuation model was not adjusted for non-transferability,
risk of forfeiture or the vesting restrictions in the option. The
Company does not believe that the Black-Scholes model or any other
model, whether or not modified, can accurately determine the future
value of an option because such values depend on future unpredictable
factors. The future values realized may vary significantly from the
values estimated by the Black-Scholes model or any other model. Any
future values realized will ultimately depend upon the excess of the
market price of the stock over the grant price on the date the option
is exercised.
</FN>
-------------------
AGGREGATED OPTION EXERCISES IN FISCAL 1995
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at
Shares Acquired Value At Fiscal Year End Fiscal Year End($)(2)
Name On Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
Thomas L. King 42,000 $1,001,700 -0- -0- -0- -0-
Edward J. Trainor 10,400 $ 178,050 -0- 113,200 -0- $1,067,050
Thomas H. DeWitt 4,000 $ 82,740 16,200 5,400 $388,800 $ 129,600
David R. Crichton 5,400 $ 126,255 -0- 5,400 -0- $ 129,600
Lindsay M. Sedwick 12,132 $ 270,904 4,800 8,800 $101,688 $ 156,800
<FN>
<F1> (1) Value Realized equals the fair market value of underlying securities
at time of exercise, minus the exercise price, multiplied by the
number of shares acquired without deducting for taxes paid by
the employee.
<F2> (2) Calculated based on June 30, 1995 market price of $31.50 less the
price to be paid upon exercise.
</FN>
Long Term Incentive Plan
The following table provides information regarding awards made to the
named executive officers during fiscal 1995 under the Company's profit
improvement plan. Each year certain eligible employees are granted profit
improvement participation shares ("PIPS") which mature in five years
vesting one-third per year in the last three years of the five year term.
At maturity, the increase, if any, in the earnings per share of the
Company over the base year is accorded a price/earnings ratio of 10 and is
paid to the participant in cash. There is no maximum payout. The figures in
the Target column were calculated based on the assumption that the payout
rate on the PIPS shares granted in 1994 would be equal to the actual payout
rate on shares maturing in 1995.
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
Estimated Future
Payouts Under Non-
Stock
Number of Shares, Performance or Price Based Plans
Units or Other Other Period Until Target
Name Rights(#) Maturation or Payout ($ or #)
---- ----------------- -------------------- ------------------------
Thomas L. King 4,000 5 years $51,800
Edward J. Trainor 2,400 5 years $31,080
Thomas H. DeWitt 2,000 5 years $25,900
David R. Crichton 2,000 5 years $25,900
Lindsay M. Sedwick 1,600 5 years $20,720
Pension Plan Table
The following table shows the estimated annual benefits payable upon
retirement for the named executive officers in the compensation and years of
service classifications indicated under the Company's pension plan.
Years of Service
-------------------------------------
Average Compensation 10 20 25 30
-------------------- ------- ------- ------- -------
200,000 27,000 54,000 67,500 81,000
300,000 40,500 81,000 101,250 121,500
400,000 54,000 108,000 135,000 162,000
500,000 67,500 135,000 168,750 202,500
600,000 81,000 162,000 202,500 243,000
700,000 94,500 189,000 236,250 283,500
800,000 108,000 216,000 270,000 324,000
900,000 121,500 243,000 303,750 364,500
1,000,000 135,000 270,000 337,500 405,000
Pensions are computed on a straight-life annuity basis and are not
reduced for Social Security or other offset amounts. Participants receive
a pension based upon average compensation in the three highest consecutive
calendar years multiplied by the number of years of service, times 1.35%.
Average annual compensation is determined by adding the three highest
consecutive years' earnings and dividing by three.
The Internal Revenue Code of 1986, as amended, limits the benefits
which may be paid from a tax-qualified retirement plan. As permitted by the
Employee Retirement Income Security Act of 1974, the Company has a non
qualified pension plan to provide for the full payment of the above
pensions to the extent the pension amounts exceed tax-qualified limits. The
pension amounts that exceed tax-qualified limits will be accounted for by
the Company as an operating expense.
The compensation covered by the pension plan is based on the combined
amounts set forth under the headings "Salary", "Bonus" and "LTIP Payouts"
of the Summary Compensation Table. However, the $1 million bonus paid to
Mr. King was excluded by agreement from compensation covered by the pension
plan. The years of credited service as of June 30, 1995 for the executive
officers named on the Summary Compensation Table are as follows: Thomas L.
King--31 years; Edward J. Trainor--11 years; Thomas H. DeWitt--22 years;
David R. Crichton--23 years and Lindsay M. Sedwick--25 years.
Employment Agreements
Messrs. King, DeWitt, Crichton, Sedwick and Trainor each have
employment agreements with the Company which provided for full-time
employment until June 30, 1995 for Mr. King and which provide for full-time
employment until January 31, 1996 for Messrs. Trainor, DeWitt, Crichton and
Sedwick respectively. Messrs. Trainor, DeWitt, Crichton and Sedwick's
employment agreements automatically renew for two consecutive three year
terms unless notice of termination is given one year prior to the end of
the then current term. The agreements provide for the payment of minimum
annual compensation of $400,000 for Mr. King, $200,000 for Mr. Trainor,
$293,000 for Mr. DeWitt, $210,000 for Mr. Crichton and $175,000 for Mr.
Sedwick. Since expiration of his full-time employment on June 30, 1995, Mr.
King has acted in a consulting capacity and, pursuant to his agreement,
will act as a consultant for a period of three years, at a compensation
level equal to $516,667. Pension and other deferred benefits to which Mr.
King is entitled may be paid in addition to the above amount. Their
respective agreements prohibit Messrs. King, Trainor, DeWitt, Crichton and
Sedwick from competing with the present or future business of the Company
for two years subsequent to the termination of their respective
employments. Mr. Trainor presently receives base compensation under his
agreement at an annual rate of $430,000, Mr. DeWitt receives $328,000, Mr.
Crichton receives $240,000 and Mr. Sedwick receives $210,000.
Mr. King's employment agreement contains an additional provision
permitting him to participate for the remainder of his life, after
termination of his employment with the Company, in any medical,
hospitalization or other health plan of the Company provided Mr. King pays
all premiums attributable to such coverage.
The named executives' respective employment agreements contain
provisions that protect the executives from termination of employment in
the event of a hostile change in control as defined in their employment
agreements. These provisions require, in the event of termination, payment
of three times the respective executive's then current annual base salary
and bonus, 100% vesting in all benefit plans in which the executive
participates and three additional years of benefit service credited to the
executive under the Company's retirement plans. Additionally, all life and
medical insurance plans would be continued for three years for each
terminated executive.
OTHER INFORMATION CONCERNING THE COMPANY
Board of Directors and Its Committees
Six meetings of the Board of Directors were held during the fiscal
year ended June 30, 1995. Each director of the Company attended at least
75% of the meetings held during the year by the Board and all committees on
which the director served with the exception of Mr. Bolten, Jr. and Mr.
Crichton who attended 50% and 66% of the meetings, respectively.
The Board has a Salary and Employee Benefits Committee consisting of
Messrs. Brown, Greeley, (each of whom served as Chairman for part of the
fiscal year), Dennis and Hogan. During fiscal 1995, the Committee held two
meetings. The Committee makes recommendations to the Board on the
compensation of the top management of the Company and reviews the
compensation of top divisional management of the Company. Between meetings
of the Board of Directors, the Committee exercises the powers of the Board
pertaining to the Employee Stock Purchase Plan, the 1994 Stock Option Plan
and the 1985 Stock Option Plan.
Messrs. Brown (Chairman), Greeley and Landry serve on the Company's
Audit Committee. During fiscal 1995, the Committee met on two occasions.
The Audit Committee reviews, both prior to and after the audit, the
Company's financial reporting function, the scope and results of the audit
performed (or to be performed) by the independent auditors of the Company
and the adequacy of the Company's internal controls and reports thereon to
the Board of Directors.
During the fiscal year, the Nominating Committee of the Board
consisted of Messrs. Dennis (Chairman), Brown and King. The function of the
Committee is to consider and recommend to the Board nominees for election
as directors of the Company. The Committee will consider nominees
recommended by stockholders. Although no formal procedure has been
established, stockholders may submit recommendations to the Secretary of
the Company, 6 Manor Parkway, Salem, New Hampshire 03079 at the time set
forth for submitting shareholder proposals generally.
During fiscal 1995, the Company paid certain non-employee directors
$17,000 as a retainer plus $1,000 for each Board meeting attended. Each
director also received $750 for each Committee meeting attended.
Additionally, non-employee directors serving as Committee chairmen were
paid $1,000 or a pro-rated amount for serving in that capacity for the
fiscal year or portion thereof.
Certain Transactions
The Company utilizes the services of the law firm of Hale & Dorr, of
which a corporation controlled by Mr. Dennis is a senior partner.
Indebtedness of Management
The Company has a Stock Option Loan Plan pursuant to which it has
made loans to employees to enable them to exercise stock options. Loans
under this plan are made at market interest rates at the time the loan is
extended. The loans must be repaid within ten years. Regular quarterly
payments are made which reduce the outstanding indebtedness. The Company
holds as collateral all stock received on the exercise of options under
this plan.
The largest amount of indebtedness outstanding under this plan as to
certain directors and officers of the Company at any time since the
beginning of the last fiscal year, as well as the amount outstanding as of
July 31, 1995, are as follows:
Largest
Amount Amount
Outstanding Outstanding
Name of Since As of
Individual July 1, 1994 July 31, 1995
---------- ------------ -------------
Lindsay M. Sedwick $171,006 $164,569
PROPOSAL 2--APPROVAL OF AUDITORS
Subject to approval by the stockholders, the Board of Directors has
appointed the firm of Deloitte & Touche LLP, independent public
accountants, as auditors of the Company for the year ending June 30, 1996.
This firm and two predecessor firms have been auditors of the Company since
1955.
It is expected that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting of Stockholders where they will have the
opportunity to make a statement, if they desire to do so, and to respond to
appropriate questions.
OTHER PROPOSALS
Management does not know of any other matters which may come before
the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy
to vote, or otherwise act, in accordance with their judgment on such
matters.
Compliance With The Securities Exchange Act
Pursuant to the Securities Exchange Act of 1934, the Company's
executive officers and directors are required to file reports of ownership
and changes in ownership in the Common Stock of the Company with the
Securities and Exchange Commission and the New York Stock Exchange with
copies of those reports filed with the Company.
Based solely upon a review of the copies of the reports furnished to
the Company, the Company believes that during fiscal 1995 all executive
officers and directors have complied with such filing requirements.
-------------------
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for consideration at
the 1996 Annual Meeting of Stockholders must submit such proposal to the
Company in writing on or before May 19, 1996.
By the Board of Directors
/s/ RICHARD H. BOOTH
Richard H. Booth, Secretary
September 18, 1995