SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
and Exchange Act of 1934
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 materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
______________________________________________________________________
THE INTERLAKE CORPORATION
550 Warrenville Road
Lisle, Illinois 60532-4387
(708) 852-8800
Stephen R. Smith
Vice President, Secretary and General Counsel
______________________________________________________________________
Payment of filing fee (Check the appropriate box):
x $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
$500 per each party to the controversy pursuant to Exchange Act Rule
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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
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:
PAGE
[Pasteup Logo]
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(708) 852-8800
March 18, 1994
To Our Shareholders:
This year we are holding our annual meeting on Thursday, April 28,
1994, at 10:00 a.m. local time, at the Radisson Hotel Lisle/Naperville,
located at 3000 Warrenville Road (north side of Warrenville Road), Lisle,
Illinois 60532.
Matters before the meeting are summarized in the formal notice of
meeting which appears on the next page. In addition, there will be a brief
statement concerning the affairs of The Interlake Corporation, after which
shareholders will be given an opportunity to ask questions or make
comments.
Inasmuch as many of our shareholders are unable to personally attend
the annual meeting, the Board of Directors solicits proxies so that each
shareholder is given an opportunity to vote. If you are a shareholder of
record (Interlake shares are registered in your name), please return the
white card to First Chicago Trust Company of New York. If your shares are
held for your account by a bank or broker, please return the accompanying
voting instructions to your bank or broker. If you participate in The
Interlake Corporation Employee Stock Ownership Plan or the Dexion UK Share
Award Scheme, enclosed are forms which direct the trustee to vote certain
shares in accordance with your instructions. If you participate in the
Chem-tronics, Inc. Employee Stock Ownership Plan, or the Interlake Stock
Fund of one of the three Interlake Salaried Employees Retirement Savings
Plans, you will soon receive forms which direct the trustee of your
employee benefit plan to vote certain shares held by such plan in
accordance with its terms.
It is important to you and helpful to your directors that all
shareholders participate in the affairs of The Interlake Corporation. You
may specify your choices by marking the appropriate boxes on the proxy card
or voting instructions. To vote on both matters to be voted upon in
accordance with the recommendation of your Board of Directors, shareholders
of record need only sign and return the proxy card in the addressed,
postage pre-paid envelope provided.
Sincerely,
[Pasteup Fac Sig]
W. ROBERT REUM
Chairman of the Board, President
and Chief Executive Officer
PAGE
[Pasteup Logo]
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(708) 852-8800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------------------------------------
Notice is hereby given that the annual meeting of shareholders of The
Interlake Corporation, a Delaware corporation, will be held at the Radisson
Hotel Lisle/Naperville located at 3000 Warrenville Road (north side of
Warrenville Road), Lisle, Illinois 60532, on Thursday, April 28, 1994, at
10:00 a.m. local time, to consider and act upon the following matters:
1. Election of four directors;
2. Ratification and approval of the selection of Price Waterhouse as
independent accountants for the Corporation for the fiscal year
1994; and
3. Transaction of such other business as may properly come before
said meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 10,
1994, as the record date for the determination of shareholders entitled to
notice of and to vote at such meeting or any adjournment thereof.
By order of the Board of Directors.
[Pasteup Fac Sig]
STEPHEN R. SMITH
Vice President, Secretary
and General Counsel
Lisle, Illinois
March 18, 1994
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- ---------------------------------------------------------
YOUR VOTE IS IMPORTANT
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- ---------------------------------------------------------
Please complete, sign and date the proxy card or voting instructions form
and return it promptly in the postage pre-paid envelope.
PAGE
[PASTEUP LOGO]
PROXY STATEMENT
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- ---------------------------------------------------------
This proxy statement is furnished in connection with the solicitation
on behalf of the Board of Directors of The Interlake Corporation of proxies
to be used at the annual meeting of shareholders of Interlake to be held at
the Radisson Hotel Lisle/Naperville, 3000 Warrenville Road (north side of
Warrenville Road), Lisle, Illinois 60532, on April 28, 1994, at 10:00 a.m.
local time. Throughout this proxy statement, "Interlake" means The
Interlake Corporation, "Board" means the Board of Directors of Interlake,
"last fiscal year" means the period which began on December 28, 1992 and
ended on December 26, 1993, "executive officers" means certain officers of
Interlake elected by the Board and operating executives not elected by the
Board who have been designated executive officers of Interlake for purposes
of the Securities Exchange Act of 1934, "Common Stock" means Interlake's
voting Common Stock, par value $1 per share, and shares "outstanding" means
shares issued less treasury shares.
Interlake's address is 550 Warrenville Road, Lisle, Illinois
60532-4387. This proxy statement, the accompanying proxy card and the
annual report to shareholders are being mailed to shareholders commencing
on March 18, 1994. This proxy statement is also being distributed to
participants in various employee benefit plans of Interlake or its
subsidiaries and to banks and brokers for redistribution to their
customers.
DIRECTORS AND NOMINEES
Interlake's Restated Certificate of Incorporation, as amended
("Certificate"), provides for a Board consisting of not fewer than 9 nor
more than 15 directors, the exact number to be fixed by the Board. The
Board of Directors currently consists of nine members.
The Certificate further provides that the directors are to be divided
into three classes and each class is to be elected for a three year term.
The Board has nominated Frederick C. Langenberg, William G. Mitchell, W.
Robert Reum and Erwin E. Schulze for three year terms ending in 1997. All
four of the nominees are current directors of Interlake whose terms expire
in 1994. If, for any reason not now anticipated, any of the four nominees
becomes unable to serve, the proxy holders will vote for a substitute
recommended by the Nominating Committee and designated by the Board.
There follows information about the four nominees and other incumbent
directors whose terms of office as directors will continue after the 1994
annual meeting of shareholders. The period of each director's Board
service includes both Interlake and, if applicable, predecessors of
Interlake.
NOMINEES FOR TERM WHICH EXPIRES IN 1997
FREDERICK C. LANGENBERG, age 66, retired in April 1991 as Chairman of the
Board of Interlake. Chairman of the Board from 1983 until his retirement
and Chief Executive Officer of Interlake from 1982 to January 1991.
Director of Carpenter Technology Corporation, Peoples Energy Corporation
and Dietrich Industries. Trustee of Piedmont College. Interlake director
since 1979. Committees: Audit Review, Executive and Finance.
WILLIAM G. MITCHELL, age 63, retired as Vice Chairman and Director of
Centel Corporation, a communications and electric services company, in
1987. Director of The Northern Trust Company, The Sherwin-Williams Company
and Peoples Energy Corporation. Interlake director since 1984.
Committees: Audit Review, Executive and Finance.
W. ROBERT REUM, age 51, Chairman of the Board, President and Chief
Executive Officer since April 26, 1991. President and Chief Executive
Officer since January 1, 1991. President and Chief Operating Officer from
August 1989 to December 31, 1990. Executive Vice President from May 1988
to August 1989. Director of Amsted Industries Incorporated. Interlake
director since 1987. Committees: Executive and Nominating.
ERWIN E. SCHULZE, age 68, retired as Chairman of the Board, President and
Chief Executive Officer, and Director, of The Ceco Corporation, a
manufacturer of building products and provider of concrete forming services
for the construction industry, in 1990. Executive officer and a Director
of Ceco for more than five years prior to 1990. Director of AAR
Corporation; Chairman of the Board of Governors of the Chicago Stock
Exchange. Interlake director since 1981. Committees: Compensation,
Executive and Finance.
TERM EXPIRES IN 1996
JOHN A. CANNING, JR., age 49, President, Madison Dearborn Partners, Inc.,
which is the manager of Madison Dearborn Capital Partners, L.P., a private
equity investment fund, since January 1993. Formerly President of First
Chicago Venture Capital from 1980 to 1993 and Executive Vice President of
The First National Bank of Chicago from 1987 to 1993. Director of Bayou
Steel Corporation, Tyco Toys, Inc., Chicago Capital Fund, Northwestern
Memorial Corporation and Northwestern Memorial Management Corporation;
member of the Board of Visitors of Duke University School of Law. Interlake
director since 1993. Committees: Compensation.
JAMES C. COTTING, age 60, Chairman and Chief Executive Officer and a
Director of Navistar International Corporation, a manufacturer of medium
and heavy duty trucks, since 1987. Director of Asarco Incorporated and USG
Corporation. Member of the Conference Board. Director of the National
Association of Manufacturers. Director of Junior Achievement of Chicago
and a trustee of the Adler Planetarium. Interlake director since 1989.
Committees: Compensation, Executive and Finance.
QUENTIN C. MCKENNA, age 67, Chairman of the Board and a Director of
Kennametal, Inc., a manufacturer of metal cutting tools, machining systems,
and materials for applications requiring wear resistance, for more than
five years. Retired as Chief Executive Officer of Kennametal in 1991.
Past Director of PNC Financial Corp. and its affiliate, Pittsburgh National
Bank; past director of the Federal Reserve Bank of Cleveland. Interlake
director since 1986. Committees: Audit Review and Compensation.
TERM EXPIRES IN 1995
ARTHUR G. HANSEN, age 69, Higher Education Consultant since 1987. Director
of American Electric Power Company, Inc., Navistar International
Corporation, and International Paper Company. Member of the National
Academy of Engineering and a Fellow of the American Association for
Advancement of Science; Chairman of the Corporation for Educational
Technology. Interlake director since 1984. Committees: Audit Review and
Nominating.
JOHN E. JONES, age 59, Chairman of the Board, President, Chief Executive
Officer and a Director of CBI Industries, Inc., a manufacturer of
industrial gases, provider of construction services and investor in oil
transport and storage businesses. Executive officer and Director of CBI
since 1976. Director of Allied Products Corporation, Amsted Industries
Incorporated, NICOR Inc. and Valmont Industries, Inc. Interlake director
since 1988. Committees: Audit Review, Executive and Finance.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board, acting upon the recommendation of its Audit Review
Committee, on February 24, 1994, selected Price Waterhouse as independent
accountants for Interlake for the fiscal year ending December 25, 1994.
Price Waterhouse acted as Interlake's independent accountants for 1993 and
as independent accountants for Interlake and its predecessors for many
years prior thereto.
The engagement of Price Waterhouse as independent accountants for
Interlake for the fiscal year 1994 is conditioned upon the approval of such
engagement by the affirmative vote of the majority of shares of Common
Stock present or represented at the annual meeting of shareholders. In the
event such engagement is not so approved, the Board will reconsider its
selection of independent public accountants. A representative of Price
Waterhouse will be at the meeting and available to respond to questions and
will have an opportunity to make a statement if he so desires.
THE BOARD OF DIRECTORS AND COMMITTEES
There were seven meetings of the Board in 1993. Except for Mr.
Mitchell, each director attended at least 75 per cent of the aggregate of
(i) the total number of meetings of the Board held during the period during
which he was a director, and (ii) the total number of meetings held by all
committees of the Board on which he served during the period that he was a
committee member. Mr. Mitchell attended 73 per cent of such meetings.
The Audit Review Committee is charged with the duties of recommending
to the Board the appointment of independent accountants; meeting
periodically with the independent accountants and internal auditors and
certain executive officers of Interlake to review the adequacy of internal
controls and financial reporting; reviewing consolidated financial
statements; reviewing, appraising, and reporting to the Board on accounting
and financial reporting practices, the internal control system and the
audit effort by both the independent and internal auditors; and performing
any other duties or functions deemed appropriate by the Board. The Audit
Review Committee met three times in 1993.
The Compensation Committee reviews and makes recommendations to the
Board regarding salaries and benefit plans relating to certain officers of
Interlake, reviews and makes recommendations to the Board regarding
revision or replacement of such benefit plans, and administers certain
benefit plans. The Compensation Committee met five times in 1993.
The Nominating Committee's primary responsibility is to consider
possible nominees for directors, including individuals recommended by
shareholders, and to recommend possible nominees for directors to the full
Board. Biographical and other information about possible nominees
recommended by shareholders should be sent to the attention of the
Secretary of Interlake. The Nominating Committee met once in 1993.
Other committees of the Board are Finance and Executive. The Finance
Committee met once in 1993. The Executive Committee did not meet in 1993.
VOTING SECURITIES AND SECURITY OWNERSHIP BY CERTAIN
PERSONS AND MANAGEMENT
Holders of shares of Common Stock of record at the close of business
on March 10, 1994 will be entitled to vote at the meeting. On that date,
22,026,695 shares of Common Stock were outstanding, each share being
entitled to one vote.
On February 15, 1994, officers, directors and employees of Interlake
and its subsidiaries had voting rights with respect to approximately
2,303,202 shares, or 10.46% of the shares of Common Stock outstanding,
exclusive of shares owned outright by employees who are not executive
officers. Such voting rights arise from shares owned outright (in the case
of directors and officers), shares as to which the individual holder's
beneficial interest is limited to voting rights, and shares owned by
various employee benefit plans under which the plan trustee receives voting
instructions from plan participants.
Security Ownership by Certain Persons and Management
This section of the proxy statement relates to beneficial ownership of
Interlake's Common Stock based on information available to the Corporation
as of February 15, 1994. Common Stock is the only class of capital stock
entitled to be voted at the meeting. A person is deemed to be a beneficial
owner if he has or shares voting power or investment power in respect of
such shares or has the right to acquire beneficial ownership within 60
days.
The table which follows shows beneficial ownership of Interlake's
Common Stock by each person who has advised management that it beneficially
owns more than five percent of Interlake's Common Stock.
PAGE
Number of
Shares Percent<F1>
- -----------------------------------------------------------------------------
FIRST CAPITAL CORPORATION OF CHICAGO
and MADISON DEARBORN PARTNERS VIII
Three First National Plaza
Chicago, Illinois 60670 6,172,840<F2> 21.9%
SMITH BARNEY SHEARSON INC./
THE TRAVELERS INC.
1345 Avenue of the Americas
New York, New York 10105 3,197,963<F3> 14.5%
HEINE SECURITIES CORPORATION
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078 2,510,506<F4> 11.0%
THE NETWORK COMPANY II LIMITED
c/o Gildea Management Company, L.P.
675 Third Avenue
New York, New York 10017 1,564,300<F5> 7.1%
UBS ASSET MANAGEMENT (NEW YORK) INC.
1211 Avenue of the Americas
New York, New York 10036 1,168,150<F6> 5.3%
<F1>Percentages are percentages of Interlake's Common Stock computed as
provided in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as
amended. This means that, in the case of any holder of Series A
Convertible Exchangeable Preferred Shares ("Series A Shares"), that
holder's Series A Shares are treated as being converted into shares of
Common Stock, but no other Series A Shares are treated as converted. In
the case of all other holders, no Series A Shares are treated as converted;
computations are based solely upon outstanding shares of Common Stock.
<F2>First Capital Corporation of Chicago ("FCCC") and Madison Dearborn
Partners VIII ("MD VIII") are the record and beneficial owners of 31,500
and 3,500 shares, respectively, of Interlake's Series A2 Convertible
Exchangeable Preferred Stock ("Series A2 Shares"). Interlake has been
advised that the portfolios of both FCCC and MD VIII are managed by Madison
Dearborn Partners, Inc., of which John A. Canning, Jr. is President. (See
DIRECTORS AND NOMINEES.) As of the date hereof, the Series A2 Shares are
convertible into 5,555,556 and 617,284 shares, respectively, of Non-Voting
Common Stock at any time, and into the same number of shares of Common
Stock in certain limited circumstances. (The number of shares of Common
Stock into which the Series A2 Shares are convertible increases on each
June 30th and December 31st if preferential cash dividends accruing at the
rate of nine percent per annum are not paid.) Series A2 Shares may be
converted into Series A1 Shares, which in turn are convertible at any time
into shares of Common Stock, by any holder who can certify that by virtue
of such conversion it would not have a regulatory problem under certain
laws or regulations applicable to banks, bank holding companies, small
business investment companies or their affiliates. Interlake believes that
as of February 15, 1994 FCCC and MD VIII would have had such a regulatory
problem.
<F3>Pursuant to its most recent Schedule 13G filed with the Securities
and Exchange Commission, Smith Barney Shearson Inc. advised Interlake that it
is the beneficial owner of 3,197,963 shares of Common Stock, over 703,665
of which it had sole voting power; over 3,181,788 of which it had sole
dispositive power; and with respect to 16,175 of which it shared
dispositive power. The Travelers Inc. is the parent company of Smith
Barney Shearson Inc.
<F4>Pursuant to its most recent Schedule 13G filed with the Securities
and Exchange Commission, Heine Securities Corporation advised Interlake that
it is the beneficial owner of, with sole voting and sol
over, 1,628,672 shares of Common Stock and 5,000 shares of Series A3
Convertible Exchangeable Preferred Stock ("Series A3 Shares"). As of the
date hereof, the Series A3 Shares are convertible into 881,834 shares of
Common Stock. (The number of shares of Common Stock into which the Series
A3 Shares are convertible increases on each June 30th and December 31st if
preferential cash dividends accruing at the rate of nine percent per annum
are not paid.) Interlake has been further advised that Michael F. Price,
who as President of Heine Securities Corporation exercises voting control
and dispositive power over its securities, directly or indirectly
beneficially owns 40,100 shares of Common Stock. Thus, he may be deemed to
be the beneficial owner of 2,550,606 shares of Common Stock.
<F5>Interlake has been advised that The Network Company II Limited is
the beneficial owner of, with sole voting power and sole dispositive power
over, 1,564,300 shares of Common Stock, and that Mr. John Gildea, at the
same address, may also be deemed to be a beneficial owner of such shares.
<F6>Pursuant to its most recent Schedule 13G filed with the Securities
and Exchange Commission, UBS Asset Management (New York) Inc. advised Interlake
that it is the beneficial owner of 1,168,150 shares with sole voting power
over 1,052,150 shares and sole dispositive power over 1,168,150 shares of
Common Stock.
The table which follows shows the beneficial ownership of Interlake's
Common Stock by directors, nominees, named executive officers, and
directors and executive officers as a group, including an immaterial number
of shares held in joint tenancy with close family members. The table
includes options exercisable within 60 days held by Messrs. Langenberg,
Reum, Gregory, White, Pedersen and Stiller and executive officers as a
group to purchase 62,336, 76,198, 4,000, 45,982, 15,904, 4,000 and 174,360
shares respectively. The percentage of outstanding shares beneficially
owned is computed in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934. This means that, in the case of any holder of
options exercisable within 60 days, that holder's options are treated as
exercised, but no other options are treated as exercised. In the case of
all other holders, no options are treated as exercised.
PAGE
Number of
Name Shares Percent<F1>
- ---- ------ ------
John A. Canning, Jr.<F2> 1,200 *
James C. Cotting 3,200 *
Stephen Gregory 12,332 0.1
Arthur G. Hansen 3,550 *
John E. Jones 3,200 *
Frederick C. Langenberg 224,614 1.0
Quentin C. McKenna 3,200 *
William G. Mitchell 6,800 *
Robert A. Pedersen 20,696 0.1
W. Robert Reum 111,181 0.5
Erwin E. Schulze 7,200 *
Bernd Stiller 6,909 *
Ian A. White 97,384 0.4
All Directors and Executive Officers 560,349 2.5
<F1>An asterisk in the table means that less than one-tenth of one
percent of the outstanding shares is beneficially owned.
<F2>As described above, Mr. Canning is President of Madison Dearborn
Partners, Inc., a private equity investment fund which manages the
investment portfolio of First Capital Corporation of Chicago ("FCCC").
FCCC, together with Madison Dearborn Partners VIII, of which Mr. Canning is
a partner, owns all of the outstanding shares of Interlake's Series A2
Convertible Exchangeable Preferred Stock, which shares are in certain
circumstances convertible into shares of Common Stock.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table which follows shows the compensation paid to or earned by
Interlake's Chief Executive Officer and the four executive officers who, in
1993, were the next most highly compensated.
PAGE
SUMMARY COMPENSATION TABLE
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LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDER- ALL
LYING OTHER
NAME AND PRINCIPAL YEAR SALARY BONUS OPTIONS/ COMPEN-
POSITION ($) ($) SARs SATION<F1> (#)
___________________________________________________________________________
W. ROBERT REUM 1993 $425,200 $ 0 0 $72,257
Chairman of the Board,1992 383,400 71,312 75,000 76,561
President and Chief 1991 375,000 135,000 0 81,488
Executive Officer
STEPHEN GREGORY 1993 $160,667 $ 65,478 0 $26,691
President, Material 1992 146,676 22,741 40,000 21,685
Handling Division of 1991 140,016 0 0 29,913
The Interlake Com-
panies, Inc.
IAN A. WHITE 1993 $178,205 $ 35,913 0 $ 1,421
President - Hoeganaes 1992 160,671 74,538 40,000 1,475
Corporation 1991 154,008 22,325 0 2,994
ROBERT A. PEDERSEN 1993 $155,000 $ 56,835 0 $25,022
President - Interlake 1992 143,350 16,937 40,000 27,999
Packaging Corporation 1991 143,493 46,237 0 30,225
BERND STILLER 1993 $194,028 $ 0 22,000 $ 0
Managing Director - 1992 171,699 53,978 18,000 0
Dexion Group plc 1991 148,181 74,683 0 0
<F1>Contributions to defined contribution plans plus amounts paid or
payable in cash which would have been payable as contributions pursuant to
such plans had contributions not been statutorily limited.
Options Granted in 1993
The table which follows shows the numbers, certain terms of, and the
grant date values of the options granted during fiscal year 1993 to the
named executive officers.
PAGE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
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INDIVIDUAL GRANTS
-----------------
Number of Percent of
Securities Total
Underlying Options/SARs Grant
Options/ Granted to Exercise Date
SARs Employees or Base Present
Granted<F1> in Fiscal Price Expiration Values<F2>
Name (#) Year ($/Share) Date ($)
- -----------------------------------------------------------------------
W. ROBERT REUM 0
STEPHEN GREGORY 0
IAN A. WHITE 0
ROBERT A. PEDERSEN 0
BERND STILLER 22,000 20.75% $4.125 8/27/02 $34,096
<F1>Mr. Stiller's options are exercisable to the extent of 10% on August
26, 1993; 30% on August 26, 1994; 60% on August 26, 1995; and 100% on
August 26, 1996.
<F2>Determined using the Black-Scholes option pricing model and assuming
volatility of 35%, a risk-free rate of 2.99%, a dividend yield of 0% and
exercise just prior to expiration.
Aggregated Option/SAR Exercises in Last Year and
Fiscal Year-End Option/SAR Values
During fiscal year 1993, there were no stock option or SAR exercises.
The number of unexercised options/SARs at fiscal year end for each of the
named executive officers is set forth in the table which follows. None of
the unexercised options, either exercisable or unexercisable, was
in-the-money as of the fiscal year end and therefore no year-end values
have been indicated.
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS/SARs AT
FISCAL YEAR END (#)
-------------------------------
NAME EXERCISABLE/UNEXERCISABLE
- -----------------------------------------------------------------
W. ROBERT REUM 76,198 / 67,500
STEPHEN GREGORY 4,000 / 36,000
IAN A. WHITE 45,982 / 36,000
ROBERT A. PEDERSEN 15,904 / 36,000
BERND STILLER 4,000 / 36,000
PAGE
Defined Benefit Retirement Plans
No executive officer is a participant in an Interlake defined benefit
plan. Mr. White is an employee of Hoeganaes Corporation; his estimated
annual retirement benefit under Hoeganaes' defined benefit plan assuming
retirement at age 65 is $87,260. Mr. Stiller is an employee of Dexion
Group plc; his estimated annual retirement benefit under Dexion's defined
benefit plan assuming retirement at age 65 is 34,800 pounds sterling or
approximately $52,134.
Key Executive Severance Pay Plan
Messrs. Reum, Gregory, White, Pedersen and Stiller and all other
incumbent executive officers of Interlake are participants in Interlake's
Key Executive Severance Pay Plan.
A participant may be entitled to severance benefits under the Key
Executive Severance Pay Plan if there is a termination of his employment
without cause at any time within three years (or, if less than three years,
within the period ending at the participant's attainment of age 65 or
death) after a "Change in Control" (as defined). In addition, following a
"Change in Control" a participant may elect to terminate his employment
without loss of severance benefits in certain specified contingencies.
Under the Key Executive Severance Pay Plan, a "Change in Control" is
deemed to have occurred if (i) Interlake is merged or reorganized into or
with, or sells all or substantially all of its assets to, another company
in a transaction in which former Interlake stockholders own less than 75
percent of the outstanding securities of the surviving or acquiring company
after the transaction, (ii) a filing is made with the Securities and
Exchange Commission disclosing the beneficial ownership by any person or
group of 25 percent or more of the voting power of Interlake, or (iii)
during any period of two consecutive years individuals who were directors
at the beginning of such period cease to constitute a majority of the Board
without the approval of two-thirds of the remaining Board members.
In such event, the terminated participant who is terminated with
rights to severance compensation under this plan will be entitled to
receive in respect of the "Severance Period" (defined to be the lesser of
(X) three years from date of termination, and (Y) the period from date of
termination until the date on which the participant would, if he survived,
have attained age 65):
(i) the present value of (a) his aggregate base salary, based on
the highest annual base salary rate in effect during the period after
adoption of the Key Executive Severance Pay Plan, which he would have
received had he remained employed during the Severance Period, plus
(b) the highest annual payment amount paid out to him since 1979 under
an executive incentive compensation plan, multiplied by the number of
whole years and fractions thereof in the Severance Period;
reduced by
(ii) the present value of amounts of cash compensation payable to
such participant during the Severance Period pursuant to any "Other
Plan." "Other Plans" are defined for this purpose to include such
programs as the Long-Term Disability Program (a plan applicable to
Interlake salaried employees generally), existing agreements with
certain executive officers, including Mr. Reum (described below), but
exclude amounts the participant receives, on termination of
employment, from Interlake's defined contribution retirement savings
plans and various stock-related plans.
The net amount payable to any participant under this plan, taking into
account payments under the Other Plans, as appropriate, may not exceed 2.99
times his "base amount" as defined in Section 280G of the Internal Revenue
Code (which, in general, is the average of his taxable income received
during a five-year period from Interlake or a subsidiary) to avoid the
special tax rules applicable to "excess parachute payments" under the
Internal Revenue Code.
A trust, established in 1988 for the benefit of participants in the
Key Executive Severance Pay Plan, is substantially unfunded at present.
Should it be funded in the future and should Interlake become insolvent,
the assets of the trust will be subject to the claims of Interlake's
creditors.
The Key Executive Severance Pay Plan provides that Interlake will pay
for the legal expenses of a participant if he has to enforce his rights
under this plan. A letter of credit has been obtained for the purpose of
securing the payment of such expenses.
Compensation of Outside Directors
Each outside director is paid a retainer at the annual rate of $20,000
and a fee of $750 for attending a meeting of the Board or a meeting of a
committee of the Board. The chairmen of the Audit Review, Compensation,
Finance and Nominating Committees are paid an additional annual retainer of
$2,000. Attendance fees are also paid for services similar to attendance
at Board and committee meetings. Interlake provides accidental death and
dismemberment insurance for its directors, and directors are reimbursed
their expenses of attendance at meetings of the Board or committees of the
Board.
Following shareholder approval in 1990 of the 1989 Stock Incentive
Program (which included a form of stock award to be granted to outside
directors), each outside director was granted a stock award of 3,000
shares, deliverable in five annual installments, beginning immediately
after the 1991 annual meeting, subject to acceleration and to forfeiture as
provided in the award. Pursuant to the 1989 Stock Incentive Program, Mr.
Langenberg was granted a stock award of 2,400 shares when he retired as an
officer and became an outside director. His stock award is deliverable in
the form of annual installments which began immediately after the 1992
annual meeting. Mr. Canning was granted a stock award of 1,200 shares
after he was elected a director; his stock award is deliverable in the form
of two annual installments beginning in 1994.
Under the Directors' Post-Retirement Income Plan, each outside
director with four years' service as a director is entitled to annual
post-retirement income beginning at age 65 or retirement from the Board,
whichever is later, and continuing for the lifetime of the retired
director. Should an outside director who has reached age 65 retire during
the year beginning in April 1994, the annual retirement benefit will be
$30,000, reduced 10 percent for each full year that his combined service as
an outside director of Interlake, Inc. and Interlake is less than 10 years.
Interlake regards the right to receive such benefits as compensation earned
during the period of his service as a director, though payment is deferred.
In 1988, Interlake established a trust for the payment of
post-retirement income to outside directors and provided the trustee with
funds to purchase annuities for retired directors covered by the plan and
for incumbent directors having more than four years service on the Board of
Interlake and Interlake, Inc. Should Interlake become insolvent, the
assets of the trust would be subject to the claims of Interlake's
creditors.
The Directors' Post-Retirement Income Plan provides that Interlake
will pay the legal expenses of a participant if he has to take legal action
to enforce his rights under the plan.
Other Compensation
Mr. Reum is entitled to salary and benefits for the shorter of (i) one
year after his employment is terminated involuntarily or by mutual
agreement and (ii) the period ending with his commencement of other
suitable employment. Any amount payable under this agreement would
constitute amounts payable under Other Plans and thereby reduce the amounts
otherwise payable under the Key Executive Severance Pay Plan.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of non-employee directors. The Committee makes
recommendations to the full Board as to the salaries of Board-elected
officers (other than assistant officers) of The Interlake Corporation, and
as to the terms of and payments under Interlake's Executive Incentive
Compensation (EIC) Plan for key executives of both Interlake and certain
subsidiaries. In addition, any stock options or stock-based awards are
granted upon the authorization of the Committee.
Compensation Strategy
In January, 1993, the Compensation Committee initiated a comprehensive
review of Interlake's executive compensation philosophy and practices. The
Committee retained The Hay Group ("Hay") to advise it with respect to a
review of executive compensation.
As a first step in its review, Hay evaluated 40 top management
positions in terms of the positions' requirements and demands. Using these
evaluations, Hay compared total remuneration for each of the 40 positions
against competitive market practice as set forth in Hay's Executive
Compensation Report, a data base of approximately 500 publicly traded
industrial companies. Based on Hay's review, the Committee concluded that
total remuneration for top Interlake executives fell below median practice.
Based on its findings, the Compensation Committee adopted a strategy
designed to produce median level compensation if significantly improved
performance is achieved. The strategy maintains a low fixed cost component
of total compensation, while offering executives opportunities which are
largely driven by improved performance. The elements of this strategy are
as follows:
Base salaries below median market practice as measured by
Hay.
Annual bonus opportunities at the 50th percentile as
identified by Hay, based primarily upon yearly operating
performance.
Long-term incentives which will deliver above-median
long-term compensation if maximum performance levels are
achieved, thereby providing executives with an
opportunity to earn a median level total compensation
package.
The Compensation Committee believes this strategy will enable Interlake to
attract and retain executives of a high caliber in a manner consistent with
its general emphasis on cost control.
Base Salaries
In keeping with the foregoing strategy, Interlake increased the base
pay for 1993 of all of the named executives, all of whom had previously
been below the established base pay targets.
Annual Incentive Pay
Interlake's Executive Incentive Compensation Plan for 1993 (EIC Plan)
provided for bonus payments as specified percentages of executives' base
salaries based upon the performance, in the case of Interlake executives,
of Interlake as a whole, and in the case of subsidiary executives, of each
executive's operating unit, as measured against financial targets approved
by the Board at the beginning of the year. In 1993, consistent with the
Corporation's need to maximize cash flow in order to service its debt
obligations, the financial targets set by the EIC Plan were the achievement
of specified levels of earnings before interest and taxes (EBIT) and ratios
of working capital to sales. The EBIT targets comprised 60% of executives'
bonus opportunities and the working capital to sales ratio represented 40%.
No participant in the EIC Plan was eligible for a payout unless his
operating unit achieved its minimum EBIT target. All amounts paid for 1993
under the EIC Plan were due to participants' operating units meeting
certain performance levels stipulated in the plan.
Long-Term Incentives
The Committee made multi-year grants of options in 1992. Thus, no new
grants were made in 1993, apart from a small number of grants of stock
options to new or recently promoted executives. The amounts of the grants
made in 1993 were consistent with those previously made to similarly
situated executives.
As part of its overall compensation strategy discussed above, the
Committee is considering the implementation in 1994 of a long term
incentive plan which will provide executives with significant compensation
opportunities based upon performance.
Limitations on Deductibility
The Committee is cognizant of provisions under Section 162(m) of the
Internal Revenue Code (the "Code") which limit the deductibility of certain
compensation expense, and considers those provisions in recommending
compensation decisions. Section 162(m) of the Code will not limit the
deductibility of any compensation expense paid by Interlake in 1993.
CEO Compensation
Consistent with the general strategy with respect to base salaries
adopted by the Committee in 1993, Mr. Reum's compensation for the year
reflects an increase in base pay to a level which is still below the median
level identified by Hay. Mr. Reum did not receive any annual bonus pay
under Interlake's EIC Plan due to Interlake not meeting its minimum EBIT
goal on a consolidated basis. As indicated above, no general program of
long-term incentives was instituted in 1993, and thus Mr. Reum did not
receive any long-term grants during the year.
The Compensation Committee
John A. Canning, Jr.
James C. Cotting
Quentin C. McKenna
Erwin E. Schulze
PAGE
Performance Graph
The following graph compares the yearly percentage change in
Interlake's cumulative shareholder return on its Common Stock with that of
the Standard & Poor's 500 Stock Index and that of the Standard & Poor's
Manufacturing Index (Diversified Industrials) over the period of
Interlake's last five fiscal years. The graph assumes that dividends have
been reinvested, except that for the purpose of computing Interlake's
cumulative shareholder return, the $45 per share special dividend paid in
September 1989, is treated as not having been reinvested in Interlake
Common Stock or otherwise. Interlake has not paid any dividends subsequent
to the special dividend.
The Interlake S&P Manufacturing
Corporation Index S&P 500
- ----------------------------------------------------------------------------
1988 100.0 100.0 100.0
1989 143.8 113.3 131.5
1990 119.2 111.7 126.8
1991 123.2 130.6 161.9
1992 119.5 150.6 180.4
1993 117.4 179.2 197.1
Assumptions:
Reinvestment of all dividends except 1989 special Interlake dividend
of $45 per share
December 1988 = 100
PAGE
GENERAL
The solicitation of proxies in the form which accompanies this proxy
statement is made on behalf of the Board. Proxies in such form will confer
discretionary authority with respect to any other matters which may
properly be brought before the meeting.
For a matter to be properly before the meeting, or for a shareholder
nomination of director candidates to be considered, notice containing the
information specified in Interlake's By-laws must have been received by the
close of business on March 27, 1994. Shareholders or their proxies wishing
to nominate one or more directors or bring other business before the
meeting should promptly contact the Secretary for the information required
to be included in the required notice. If other matters properly come
before the meeting, the persons holding such proxies intend to vote the
proxies in accordance with their judgment on all such matters.
A shareholder who signs and returns the enclosed form of proxy may
revoke the same at any time before it is voted by giving notice to the
Secretary of Interlake.
The cost of solicitation of proxies will be borne by Interlake. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by a few executive officers or regular employees of Interlake,
none of whom will receive any compensation therefor in addition to their
regular remuneration. Interlake will reimburse brokers and certain other
persons holding stock in their names or in the names of nominees for their
expenses in sending proxy material to principals and obtaining their
proxies.
As in past years, Interlake has retained Georgeson & Co., Wall Street
Plaza, New York, New York, to aid in the solicitation of proxies from
brokers, banks, nominees and other institutional owners, but not individual
holders of record, by personal interview, telephone, telecopy or mail.
Interlake will pay Georgeson & Co. a $5,000 fee and will reimburse such
organization for certain expenses incurred by it.
Vote Required
The Delaware General Corporation Law requires that each of the four
nominees for director be elected by a plurality of the votes of the shares
of Common Stock present in person or represented by proxy at the Annual
Meeting and that the selection of the Company's independent accountants be
approved by the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting.
At the Annual Meeting, the results of stockholder voting will be
tabulated by the inspector of elections appointed for the Annual Meeting.
Under Delaware law and the Company's Certificate of Incorporation and
By-laws, properly executed proxies that are marked "abstain" or are held in
"street name" by brokers that are not voted on one or more particular
proposals (if otherwise voted on at least one proposal) will be counted for
purposes of determining whether a quorum has been achieved at the Annual
Meeting. Abstentions will have the same effect as a vote against the
proposal to which such abstention applies. Broker non-votes will be
treated neither as a vote for nor a vote against any of the proposals to
which such broker non-votes apply. Proxy cards which are timely signed and
returned with no other marking will be voted in accordance with the
recommendation of the Board of Directors.
Shareholder Proposals
In order to be considered for inclusion in Interlake's proxy statement
and form of proxy for the 1995 annual meeting of shareholders, any
shareholder proposal intended to be presented at that meeting must be
received by Interlake at 550 Warrenville Road, Lisle, Illinois 60532-4387
on or before November 18, 1994.
By order of the Board of Directors.
[Pasteup Fac Sig]
STEPHEN R. SMITH
Vice President, Secretary
and General Counsel
Lisle, Illinois
Dated: March 18, 1994
PAGE
PROXY
THE INTERLAKE CORPORATION
550 Warrenville Road
Lisle, Illinois 60532-4387
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned acknowledges receipt of the accompanying notice of
meeting and 1994 proxy statement and hereby appoints John J. Greisch, W.
Robert Reum and Stephen R. Smith, and each of them, with power of
substitution, attorneys and proxies to vote all shares of the Company's
common stock, par value $1.00 per share, on behalf of the undersigned at the
annual meeting of shareholders of The Interlake Corporation to be held at the
Radisson Hotel Lisle/Naperville located at 3000 Warrenville Road (north side
of Warrenville Road), Lisle, Illinois 60532, on Thursday, April 28, 1994, at
10:00 a.m. local time, and at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW ____ WITHHOLD AUTHORITY ____
(except as marked to the contrary below) to vote for all nominees listed
F. C. Langenberg, W. G. Mitchell, W. R. Reum and E. E. Schulze
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
---------------------------------------------------------
2. Ratify and approve the selection of Price Waterhouse as independent
accountants for The Interlake Corporation for fiscal year 1994.
___ FOR ___ AGAINST ___ ABSTAIN
3. In their discretion, to vote upon such other business as may properly
come before said meeting or any adjournment thereof.
(Continued and to be signed on the reverse side)
PAGE
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted for Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED:_______________, 1994 ____________________________________
Signature
PLEASE MARK, SIGN, DATE AND
____________________________________
RETURN THE PROXY CARD PROMPTLY Signature if held jointly
USING THE ENCLOSED ENVELOPE.