THE INTERLAKE CORPORATION
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(708) 852-8800
March 23, 1995
To Our Stockholders:
This year we are holding our annual meeting on Thursday, April 27, 1995,
at 10:00 a.m. local time, at the Radisson Hotel Lisle/Naperville, located at
3000 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 stockholders
will be given an opportunity to ask questions or make comments.
Inasmuch as many of our stockholders are unable to personally attend the
annual meeting, the Board of Directors solicits proxies so that each
stockholder is given an opportunity to vote. If you are a stockholder 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 the Interlake Salaried Employees
Retirement Savings Plan, 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 stockholders
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 all matters to be voted upon in accordance with the
recommendation of your Board of Directors, stockholders 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
THE INTERLAKE CORPORATION
550 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-4387
(708) 852-8800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Notice is hereby given that the annual meeting of stockholders of The
Interlake Corporation, a Delaware corporation, will be held at the Radisson
Hotel Lisle/Naperville, located at 3000 Warrenville Road, Lisle, Illinois
60532, on Thursday, April 27, 1995, at 10:00 a.m. local time, for the following
purposes:
1. To elect two directors;
2. To ratify and approve the selection of Price Waterhouse LLP as
independent accountants for the Corporation for the fiscal year 1995;
3. To consider and vote upon a proposal, recommended by the Board of
Directors, to amend the Corporation's Restated Certificate of
Incorporation to reduce from nine to seven the minimum number at
which the Board of Directors may set the size of the Board of
Directors; and
4. To transact 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, 1995,
as the record date for the determination of stockholders 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 23, 1995
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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.
[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 stockholders of Interlake to be held at the
Radisson Hotel Lisle/Naperville, 3000 Warrenville Road, Lisle, Illinois 60532,
on April 27, 1995, at 10:00 a.m. local time. Throughout this proxy statement,
"Interlake" and the Corporation mean The Interlake Corporation, "Board" means
the Board of Directors of Interlake, "last fiscal year" means the period which
began on December 27, 1993 and ended on December 25, 1994, "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
stockholders are being mailed to stockholders commencing on March 23, 1995.
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 to date (the
"Certificate"), provides for a Board consisting of not fewer than nine nor more
than 15 directors, the exact number to be fixed by the Board. The Board of
Directors currently consists of nine members. As discussed below under the
caption "Proposed Amendment to Restated Certificate of Incorporation," the
Board of Directors is recommending that the stockholders approve an amendment
to the Certificate which would allow the Board to set its size at any number
not fewer than seven nor more than 15. Subject to the approval of such
amendment, the Board of Directors has fixed the size of the Board at eight.
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 John E. Jones and W. Robert Reum for three year terms ending at
the 1998 annual meeting. If, for any reason not now anticipated, any of the
two nominees becomes unable to serve, the proxy holders will vote for a
substitute recommended by the Nominating Committee and designated by the Board.
Similarly, if the proposal to amend the Certificate is not approved, the size
of the Board of Directors will remain at nine, and the proxy holders may vote
for an additional candidate recommended by the Nominating Committee and
designated by the Board or, alternatively, may leave a vacancy which the Board
could choose to fill at a later date.
Mr. Jones is presently an Interlake director whose term expires at the
1995 annual meeting. Arthur G. Hansen, whose term of office also expires at
the 1995 annual meeting, is retiring after many years of faithful service. To
achieve a better balance in the membership of the three classes of directors,
Mr. Reum, who was elected to a three year term in 1994, has consented to stand
for election at the 1995 annual meeting of stockholders. If Mr. Reum is
elected at the 1995 annual meeting, he has consented to resign from the class
the term of which expires at the 1997 annual meeting.
There follows information about the two nominees and other incumbent
directors whose terms of office as directors will continue after the 1995
annual meeting of stockholders. The period of each director's Board service
includes both Interlake and, if applicable, predecessors of Interlake.
NOMINEES FOR TERM WHICH EXPIRES IN 1998
JOHN E. JONES, age 60, 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, Finance and Nominating.
W. ROBERT REUM, age 52, Chairman of the Board, President and Chief Executive
Officer of Interlake since April 1991. President and Chief Executive Officer
since January 1991. President and Chief Operating Officer from August 1989 to
December 1990. Director of Amsted Industries Incorporated and Duplex Products,
Inc. Interlake director since 1987. Committees: Executive.
TERM EXPIRES IN 1997
FREDERICK C. LANGENBERG, age 67, retired in April 1991 as Chairman of the Board
of Interlake. Chairman of the Board of Interlake 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 64, 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 Nominating.
ERWIN E. SCHULZE, age 69, Chairman of the Board of Governors of the Chicago
Stock Exchange. 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. Director of AAR Corporation. Interlake
director since 1981. Committees: Compensation, Executive and Finance.
TERM EXPIRES IN 1996
JOHN A. CANNING, JR., age 50, 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, The Milnot Company, Tyco Toys, Inc., Chicago Capital Fund,
Northwestern Memorial Corporation and Northwestern Memorial Management
Corporation; member of the Board of Trustees of Northwestern University; member
of the Board of Visitors of Duke University School of Law. Interlake director
since 1993. Committees: Compensation and Finance.
JAMES C. COTTING, age 61, 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 68, 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.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board, acting upon the recommendation of its Audit Review Committee,
on February 23, 1995, selected Price Waterhouse LLP as independent accountants
for Interlake for the fiscal year ending December 31, 1995. Price Waterhouse
acted as Interlake's independent accountants for 1994 and as independent
accountants for Interlake and its predecessors for many years prior thereto.
The engagement of Price Waterhouse LLP as independent accountants for
Interlake for the fiscal year 1995 is conditioned upon the approval of such
engagement by the affirmative vote of the majority of shares of Common Stock
present in person or by proxy at the 1995 annual meeting of stockholders. In
the event such engagement is not so approved, the Board will reconsider its
selection of independent public accountants. A representative of Price
Waterhouse LLP will attend the meeting and will be available to respond to
questions and will have an opportunity to make a statement if he so desires.
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
Interlake's Certificate currently provides for a Board of Directors
consisting of not fewer than nine nor more than 15 directors, with the exact
number to be fixed from time to time by the Board. The Board presently has
nine members. As described above under the caption "Directors and Nominees,"
Mr. Hansen intends to retire from the Board at the conclusion of his term at
the 1995 annual meeting. In response to Mr. Hansen s retirement, the Board has
recommended that the Certificate, specifically the first sentence of ARTICLE
SIXTH, Section A, be amended to provide for a Board of Directors consisting of
not fewer than seven nor more than 15 directors. Subject to the approval of
such amendment by the Corporation s stockholders, the Board has fixed the size
of the Board of Directors at eight. The Board is recommending that the lower
end of the range be reduced to seven so as to allow flexibility in the future.
The Certificate requires the approval of not less than 80% of the shares
of the Corporation's outstanding Common Stock to approve the proposed amendment
to the Certificate. If the stockholder approval required to amend the
Certificate is not received, the proxy holders may cause to be elected an
additional candidate recommended by the Nominating Committee and designated by
the Board so as to cause the number of directors to be nine or, alternatively,
may leave a vacancy which the Board could choose to fill at a later date.
The Board of Directors has unanimously approved the proposed amendment to
the Certificate and recommends a vote FOR approval of the proposed amendment.
THE BOARD OF DIRECTORS AND COMMITTEES
There were ten meetings of the Board in 1994. Except for Mr. Mitchell,
each director attended at least 75% 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 64% 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 1994.
The Compensation Committee reviews and makes recommendations to the Board
regarding Interlake's compensation philosophy and policy, as well as salaries
and benefit plans relating to certain officers, reviews and makes
recommendations to the Board regarding revision or replacement of such benefit
plans, and administers certain benefit plans. The Compensation Committee met
three times in 1994.
The Nominating Committee's primary responsibility is to consider possible
nominees for directors, including individuals recommended by stockholders, and
to recommend possible nominees for directors to the full Board. Biographical
and other information about possible nominees recommended by stockholders in
accordance with the provisions of Interlake's by-laws should be sent to the
attention of the Secretary of Interlake. The Nominating Committee met once in
1994.
The Finance Committee reviews and makes recommendations to the Board
regarding the capitalization of the Corporation and major debt and equity
financing transactions, and reviews the general administration of the
retirement plans of the Corporation. The Finance Committee met twice in 1994.
The Executive Committee of the Board did not meet in 1994.
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, 1995 will be entitled to vote at the meeting. On that date,
22,816,195 shares of Common Stock were outstanding, each share being entitled
to one vote.
On March 10, 1995, officers, directors and employees of Interlake and its
subsidiaries had voting rights with respect to approximately 3,029,021 shares,
or 13.3% of the shares of Common Stock then 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 March 10, 1995. Common Stock is the only class of capital stock entitled to
be voted at the meeting. For the purposes of this section, a person is deemed
to be a beneficial owner if such person 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 such person
beneficially owns more than five percent of Interlake's Common Stock.
Number of
Shares Percent(1)
FIRST CAPITAL CORPORATION OF CHICAGO
and MADISON DEARBORN PARTNERS VIII
One First National Plaza
Chicago, Illinois 60670 6,730,768(2) 22.8%
SMITH BARNEY INC./
THE TRAVELERS INC.
1345 Avenue of the Americas
New York, New York 10105 4,105,843(3) 18.0%
THE NETWORK COMPANY II LIMITED
c/o Gildea Management Company, L.P.
675 Third Avenue
New York, New York 10017 1,549,300(4) 6.8%
(1)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.
(2)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 6,057,692 and
673,076 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
March 10, 1995 FCCC and MD VIII would have had such a regulatory problem.
(3)Pursuant to its most recent Schedule 13G filed with the Securities and
Exchange Commission, Smith Barney Inc. indicated that it is the beneficial
owner of 4,105,843 shares of Common Stock, over all of which it had shared
voting and dispositive power. The Travelers Inc. is the parent company of
Smith Barney Inc.
(4)Interlake has been advised that The Network Company II Limited is the
beneficial owner of, with sole voting power and sole dispositive power over,
1,549,300 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.
The table which follows shows the beneficial ownership of Interlake's Common
Stock by directors, nominees, named executive officers, and incumbent directors
and incumbent 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, Pedersen,
Greisch, Stiller and Gregory and incumbent executive officers as a group to
purchase 62,336, 91,198, 23,904, 18,906, 12,000, 12,000 and 243,678 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 or group of holders of
options exercisable within 60 days, that holder's or group'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. Brenton S.
Fuller, the Managing Director of Interlake's Asia Pacific Handling operations
and a resident of Australia, who has been designated an "executive officer" for
purposes of the Securities Exchange Act of 1934, failed to file a Form 4 with
respect to a sale of Interlake shares in October 1994; that transaction was
reflected in a Form 5 filed in February 1995.
Number of
Name Shares Percent(1)
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John A. Canning, Jr.(2) 1,200 *
James C. Cotting 3,200 *
Stephen Gregory 134,420 0.6
John J. Greisch 152,704 0.7
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 29,027 0.1
W. Robert Reum 454,269 2.0
Erwin E. Schulze 7,200 *
Bernd Stiller 14,909 0.1
All Directors and Executive Officers 1,376,317 6.0
(1)An asterisk in the table means that less than one-tenth of one percent
of the outstanding shares are beneficially owned.
(2)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, own 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. It is possible that Mr. Canning would be deemed to be
the beneficial owner of all of the Series A2 Convertible Exchangeable Preferred
Stock and the shares of Common Stock into which it is convertible.
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
1994, were the next most highly compensated.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Securities
Annual Compensation Underlying All Other
Salary Bonus Options/SARs Compensation(1)
Name and Principal
Position Year ($) ($) (#) ($)
W. Robert Reum 1994 $437,964 $383,503 0 $69,348
Chairman of the Board, 1993 425,200 0 0 72,257
President and Chief 1992 383,400 71,312 75,000 76,561
Executive Officer
Robert A. Pedersen 1994 $183,150 $132,790 0 $31,798
President-Interlake 1993 155,000 56,835 0 25,022
Packaging Corporation 1992 143,350 16,937 40,000 27,999
John J. Greisch 1994 $189,770 $123,910 0 $23,004
President-Material 1993 159,000 0 0 62,468
Handling Group 1992 134,167 27,370 40,000 163,981
Bernd Stiller 1994 $229,185 $68,296 0 0
Managing Director- 1993 194,028 0 22,000 0
Dexion Continental 1992 171,699 53,978 18,000 0
Europe
Stephen Gregory 1994 $175,100 $120,263 0 $31,879
Vice President- 1993 160,667 65,478 0 26,691
Finance, Treasurer and 1992 146,676 22,741 40,000 21,685
Chief Financial Officer
(1) In 1994, contributions to defined contribution retirement plans plus
tax-adjusted amounts paid or payable in cash which would have been payable as
contributions pursuant to such plans had contributions not been statutorily
limited. Mr. Greisch's 1992 and 1993 totals include cost-of-living, housing
and other allowances related to his living abroad.
Aggregated Option/SAR Exercises in Last Year and
Fiscal Year-End Option/SAR Values
During fiscal year 1994, no stock options or SARs were awarded to the
named executive officers, and there were no stock option or SAR exercises. The
number of unexercised options 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 91,198 / 52,500
ROBERT A. PEDERSEN 23,904 / 28,000
JOHN J. GREISCH 18,906 / 28,000
BERND STILLER 12,000 / 28,00
STEPHEN GREGORY 12,000 / 28,000
Key Executive Severance Pay Agreements
In February 1994, the Board of Directors authorized the entering into of
Key Executive Severance Pay Agreements (the Severance Pay Agreements ) with
Messrs. Reum, Pedersen, Greisch, Stiller and Gregory, and the other incumbent
executive officers of Interlake (as designated for purposes of the Securities
Exchange Act of 1934). The agreements replaced and superseded all benefits
under Interlake's prior Key Executive Severance Pay Plan.
Under the Severance Pay Agreements, an executive officer is entitled to
severance benefits if there is a termination of his or her employment without
cause and other than due to death or disability at any time within a severance
period of three years, subject to extension for an additional year each year
unless written notice is given to the contrary (or, if less than the term of
such severance period, within the period ending at the participant's attainment
of age 65, death or permanent disability) after a change in control as defined
in the agreements. In addition, following a change in control, a participant
may elect to terminate his employment without loss of severance benefits in
certain specified circumstances.
For purposes of the Severance Pay Agreements, 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, subject to certain limited exceptions,
(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, or (iv) the
Corporation files a report or proxy statement with the Securities and Exchange
Commission disclosing that a change in control has occurred or will occur in
the future.
In the event of a change in control, any executive who is terminated or
terminates his employment with rights to severance compensation will be
entitled to receive a lump sum payment equal to, in the cases of Messrs. Reum,
Pedersen, Greisch, Stiller and Gregory, three times the sum of his highest base
pay in effect for any period prior to the termination plus the target bonus
established for the fiscal year in which the change in control or the
termination occurs, whichever is higher. In addition, such executive will be
entitled to certain benefits for a three year period following the termination.
In addition, the Severance Pay Agreements provide that, in the case of a
termination other than for cause or upon death or permanent disability, and
other than upon termination during a change in control severance period, the
executive is entitled to a lump sum amount equal to, in the case of Messrs.
Reum, Pedersen, Greisch, Stiller and Gregory, one year s base pay at the rate
in effect at the time of the termination, plus the executive s target bonus for
the year of termination. In addition, such executive will be entitled to
certain benefits for a one year period after the termination.
The Severance Pay Agreements provide that Interlake will pay for the legal
expenses of an executive if he has to enforce his rights under the agreement
following a change in control. A letter of credit has been obtained for the
purpose of securing the payment of such expenses. The terms of the Severance
Pay Agreements, in the case of the five named executives, run through February
28, 1997, subject to automatic one-year extensions absent notice to the
contrary.
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.
Interlake provides accidental death and dismemberment insurance for its
directors, and non-employee directors are reimbursed their expenses of
attendance at meetings of the Board or committees of the Board.
Following stockholder 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 then serving 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. The annual benefit
upon the retirement of any current director 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.
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 heads of
certain key operating units, and as to the terms of and payments under
Interlake's Executive Incentive Compensation Plan for key executives of
both Interlake and certain operating units. In addition, any stock options or
stock-based awards are granted upon the authorization of the Committee.
Compensation Philosophy and Strategy
The Compensation Committee has adopted a compensation philosophy and
strategy designed to produce median level compensation upon achievement of
improved earnings performance. The elements of this strategy include: base
salaries below median market practice; annual bonus opportunities at the 50th
percentile, based primarily upon yearly operating performance; and longer-term
incentives which will deliver above-median long-term compensation if targeted
levels of improved performance are achieved, thereby providing executives with
an opportunity to earn a fully competitive total compensation package.
Implementation of Philosophy in 1994
In keeping with its philosophy, the Committee set base salaries for 1994
which remain below the median based on The Hay Group Executive Compensation
Report. The Hay report is a data base of approximately 500 publicly traded
industrial companies.
Interlake's annual bonus payments under its Executive Incentive Compensation
Plan for 1994 (the "EIC Plan") reflected significantly improved earnings
performance at virtually all of the Corporation s operating units. The 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 1994, 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 70% of executives' bonus
opportunities and the working capital to sales ratios represented 30%. No
participant in the EIC Plan was eligible for a payout unless his operating unit
achieved its minimum EBIT target. All amounts paid for 1994 under the EIC Plan
were due to participants' operating units meeting certain performance levels
stipulated in the plan. In the case of most operating units, as well as the
Corporation as a whole, EIC payouts reflected performance which exceeded plan
levels.
Longer-Term Incentives
Although the Compensation Committee considered various approaches to longer-
term incentives in 1994, Interlake did not implement a plan until early 1995,
when the Board of Directors, upon the recommendation of the Compensation
Committee, adopted a Key Executive Retention Program (the Retention Program ).
The Retention Program reflects the Committee s belief that over the mid-term,
during which Interlake needs to continue to improve its operating earnings
while at the same time addressing its refinancing needs, the Corporation needs
an incentive program which will reward executives for achieving those two
objectives, while at the same time promoting the retention of key executives.
Under the Retention Program, cash awards are payable to key executives
based upon achievement by the Corporation from 1994 through 1996 of
substantially improved EBIT levels. In addition, for those executives most
responsible for successfully addressing Interlake s capital structure issues,
the Retention Program provides for restricted stock awards, thereby offering
incentives for the successful management of Interlake s financing needs. The
program further promotes retention by delaying the payout of awards beyond the
times of their earnout, with continued employment as a prerequisite for payout.
In the case of those receiving stock awards, the Program is intended to further
both retention and executive stock ownership by means of conditioning share
delivery upon employment beyond the performance vesting period and using
restricted stock. The Committee feels that, taken as a whole, the features of
the Retention Program will achieve the goals of promoting retention, driving
EBIT performance and rewarding successful management of Interlake s refinancing
risk.
Limitations on Deductibility
The Committee considers the provisions under Section 162(m) of the Internal
Revenue Code (the "Code") which limit the deductibility of certain compensation
expense in recommending compensation decisions. Section 162(m) of the Code
will not limit the deductibility of any compensation expense paid by the
Corporation in 1994. With respect to the Key Executive Retention Program,
although it is a performance-based plan, the Committee chose not to take steps
to meet the tests for performance-based compensation under Section 162(m), as
it deemed the benefits of doing so to be outweighed by the attendant additional
costs and the resulting reduction of flexibility under the program.
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 a three
percent increase in base pay to a level which remains below the median level.
(Based on The Hay Group Compensation Survey the target median base salary level
for Mr. Reum in 1994 was approximately $470,000.) Mr. Reum s bonus payout under
the EIC Plan reflects Interlake s strong performance in 1994, with EBIT levels
before unusual items exceeding the prior year s by 33%, and exceeding the plan
for the year. In 1993, Mr. Reum did not receive a bonus, as targeted
performance levels were not achieved. Finally, as in 1993, Mr. Reum did not
receive any additional long-term incentive in 1994. He is a participant in the
newly adopted Retention Program, which offers him the potential for awards if
operating performance continues to improve and if he successfully manages
Interlake s implementation of a financing strategy over the coming two years.
The Compensation Committee
John A. Canning, Jr.
James C. Cotting
Quentin C. McKenna
Erwin E. Schulze
Performance Graph
The following graph compares the yearly percentage change in Interlake's
cumulative stockholder 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 an investment of $100 on 12/31/89 and reinvestment of
all dividends into additional shares. Interlake has not paid any dividends
since the special dividend of $45 per share in 1989.
1989 1990 1991 1992 1993 1994
The Interlake Corporation 100.00 25.90 38.00 26.90 20.40 13.00
S&P 500 100.00 96.40 123.10 137.20 149.90 151.60
S&P Manufacturing Index 100.00 98.60 115.30 132.90 158.10 164.80
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 stockholder
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 April 2, 1995. Stockholders 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 stockholder who signs and returns the enclosed form of proxy may revoke
the same at any time before it is voted by submitting a subsequently dated
proxy or 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 fee not to exceed $5,500 and will reimburse such organization
for certain expenses incurred by it.
Vote Required
The Delaware General Corporation Law requires that each of the two
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. Under the Corporation's
Restated Certificate of Incorporation, the amendment of ARTICLE SIXTH of the
Restated Certificate requires the approval of not less than 80% of the shares
of the Corporation's outstanding Common Stock.
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 Restated 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.
Stockholder Proposals
In order to be considered for inclusion in Interlake's proxy statement and
form of proxy for the 1996 annual meeting of stockholders, any stockholder
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 23,
1995, and must set forth the matters detailed in the Corporation's by-laws.
By order of the Board of Directors.
[Pasteup Fac Sig]
STEPHEN R. SMITH
Vice President, Secretary
and General Counsel
Lisle, Illinois
Dated: March 23, 1995
APPENDIX
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 1995 proxy statement and hereby appoints Stephen Gregory, 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, held of record by the undersigned on March 10, 1995, on behalf of
the undersigned at the annual meeting of stockholders of The Interlake
Corporation to be held at the Radisson Hotel Lisle/Naperville located at 3000
Warrenville Road, Lisle, Illinois 60532, on Thursday, April 27, 1995, at 10:00
a.m. local time, and at any adjournment thereof, on the following matters:
1. ELECTION OF DIRECTORS, Nominees:
J. E. Jones W. R. Reum
2. Proposal to ratify and approve the selection of Price Waterhouse as
independent accountants for The Interlake Corporation for fiscal year
1995.
3. Proposal to approve the amendment of the Restated Certificate of
Incorporation to reduce from nine to seven the minimum size of the Board
of Directors.
4. Such other business as may properly come before said meeting or any
adjournment thereof.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your shares unless you sign and return this card.
- -----------------
SEE REVERSE SIDE
- -----------------
/ X / Please mark your votes as in this example.
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 all nominees listed in Proposal 1; for Proposals 2 and 3; and in
accordance with the discretion of the proxyholders on all other business.
- -------------------------------------------------------------------------------
Directors recommend a vote "FOR"
- -------------------------------------------------------------------------------
1. Election of Directors
FOR ALL NOMINEES LISTED BELOW / /
(except as marked to the contrary below)
WITHHOLD AUTHORITY / /
to vote for all nominees listed
J. E. Jones and W. R. Reum
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
--------------------------------
2. Approval of Auditors
/ / FOR / / AGAINST / / ABSTAIN
3. Amendment to Reduce Minimum Size of Board
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion to vote upon such other business as may properly come
before said meeting or any adjournment thereof.
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: ---------------------, 1995 ---------------------------------
Signature
---------------------------------
Signature if held jointly
VOTING INSTRUCTIONS TO UNION BANK, TRUSTEE
UNDER THE CHEM-TRONICS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
TO:
Enclosed with these voting instructions are The Interlake Corporation's annual
report to shareholders for 1994 and the proxy statement for the 1995 annual
meeting of shareholders. Please read both documents before deciding how to
vote.
Management and the Board of Directors have recommended a vote FOR the two
nominees named below, FOR the ratification and approval of the selection of
Price Waterhouse as independent accountants for The Interlake Corporation for
fiscal year 1995 and FOR the amendment of the Restated Certificate of
Incorporation to reduce from nine to seven the minimum size of the Board of
Directors. To support these matters as recommended by management and the Board
of Directors, you need only sign and date the voting instructions below and
return them to Union Bank in the return envelope provided.
Participants who give timely voting instructions determine how both the
allocated and unallocated shares will be voted. On the other hand,
participants who don't give timely voting instructions will have their shares
treated as unallocated shares for voting purposes. If Union Bank does not
receive your signed voting instructions by April 20, 1995, other participants
will effectively be exercising the voting rights which the ESOP makes available
to you. Your voting instructions are confidential. Your employer will not
know how you vote or whether you vote at all. Finally, the ESOP also provides
that participants who provide the Trustee with voting instructions shall be
"named fiduciaries" under the ESOP for such purposes.
To be effective, these voting instructions must be signed and mailed to Union
Bank in the accompanying return envelope in time to be received by the close of
business on April 20, 1995.
1. Election of Directors
FOR ALL NOMINEES LISTED BELOW / /
(except as marked to the contrary below)
WITHHOLD AUTHORITY / /
to vote for all nominees listed
J. E. Jones and W. R. Reum
(INSTRUCTIONS: To direct the Trustee 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 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. Approve the amendment of the Restated Certificate of Incorporation to
reduce from nine to seven the minimum size of the Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
Dated this ------ day of ------------------, 1995.
------------------------------------
Signature of ESOP Participant
Name:
Social Security Number:
Number of Allocated Shares:
To: Interlake Stock Fund Participant
You have received, or soon will receive, The Interlake Corporation's
annual report to shareholders for 1994 plus a notice of meeting and proxy
statement for the 1995 annual meeting of shareholders to be held on April
27, 1995. Please read both documents before deciding how to vote.
Each Plan provides that the trustee must vote your proportionate share of
the Interlake Stock Fund as you direct; and, if you do not send your
voting instructions to the trustee at least five business days prior to
the shareholders' meeting, your share will be voted in accordance with
Management's recommendations which are set forth in the 1995 proxy
statement.
Your proportionate share of the Interlake Stock Fund is your account
balance in the Interlake Stock Fund as of December 31, 1994 divided by the
account balance in the Interlake Stock Fund of all participants, and is
shown above as a decimal equivalent.
VOTING INSTRUCTIONS TO TRUSTEE
To: Continental Trust Company, Trustee under the SALARIED EMPLOYEES RETIREMENT
SAVINGS PLAN of The Interlake Corporation:
In accordance with provisions of the Plans, I hereby direct that at the
Annual Meeting of Shareholders of THE INTERLAKE CORPORATION, a Delaware
corporation, to be held in Lisle, Illinois, on April 27, 1995, and at any
adjournment thereof, my proportionate share of the Interlake Stock Fund
shall be voted or caused to be voted as follows, on the following matters
identified in the notice of 1995 annual meeting of shareholders and set
forth in the 1995 proxy statement.
1. FOR / / / / Withhold Vote
Director Proposal
2. FOR / / / / AGAINST
Auditor Proposal
3. FOR / / / / AGAINST
Amendment Proposal
Dated this -----day of ----------------, 1995
- ---------------------------------------
Signature of Participant
These voting instructions will be voted as directed, but will be voted FOR the
above proposals if no direction is given to the contrary by April 20, 1995.
To: Dexion UK Share Award Scheme Participant
Enclosed with these voting instructions are The Interlake Corporation's
annual report to shareholders for 1994 and the proxy statement for the
1995 annual meeting of shareholders to be held on April 27, 1995. Please
read both documents before deciding how to vote.
The Dexion UK Share Award Scheme provides that the trustee must vote your
Scheme shares of Interlake stock as you direct; and, if you do not send
your voting instructions to the trustee at least five business days prior
to the shareholders' meeting, your Scheme shares will be voted in
accordance with Management's recommendations which are set forth in the
1995 proxy statement.
Your Scheme shares of Interlake stock is your account balance in the Share
Award Scheme as of December 31, 1994 and is shown above.
VOTING INSTRUCTIONS TO TRUSTEE
To: The Royal Bank of Scotland plc, Trustee under the DEXION UK SHARE AWARD
SCHEME of Dexion Group plc and its subsidiaries:
In accordance with provisions of the Scheme, I hereby direct that at the
Annual Meeting of Shareholders of THE INTERLAKE CORPORATION, a Delaware
corporation, to be held in Lisle, Illinois, on April 27, 1995, and at any
adjournment thereof, my Scheme shares of Interlake stock shall be voted or
caused to be voted as follows, on the following matters set forth in the
1995 proxy statement.
1. FOR / / / / Withhold Vote
Director Proposal
2. FOR / / / / AGAINST
Auditor Proposal
3. FOR / / / / AGAINST
Amendment Proposal
Dated this -----day of ----------------, 1995
- ---------------------------------------
Signature of Participant
These voting instructions will be voted as directed, but will be voted FOR the
above proposals if no direction is given to the contrary by April 20, 1995.
VOTING INSTRUCTIONS TO LASALLE NATIONAL TRUST, N.A. ("LaSalle"),
TRUSTEE UNDER THE INTERLAKE CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Dear Interlake ESOP Participant:
Enclosed with these voting instructions are The Interlake Corporation's
annual report to shareholders for 1994 and the proxy statement for the April
27, 1995 annual meeting of shareholders. Please read both documents before
deciding how to vote.
Management and the Board of Directors have recommended a vote FOR the two
nominees named below, FOR the ratification and approval of the selection of
Price Waterhouse as independent accountants for The Interlake Corporation for
fiscal year 1995, and FOR the approval of the amendment of the Restated
Certificate of Incorporation to reduce from nine to seven the minimum size of
the Board of Directors. To support these matters as recommended by management
and the Board of Directors, you need only sign and date the voting instructions
below and return them to The Wyatt Company in the return envelope provided.
Of the 1,053,342 shares held by the ESOP Trustee at this time, 640,171
have been allocated to participants' accounts. Shares which have not yet been
allocated to participants' accounts are unallocated shares. The ESOP plan
documents provide that participants who provide voting instructions to the
Trustee will at the same time be directing the Trustee on how to vote a
proportional number of the unallocated shares and the allocated shares for
which no participant instructions are received.
Participants who give timely voting instructions determine how both the
allocated and unallocated shares will be voted. On the other hand,
participants who don't give timely voting instructions will have their shares
treated as unallocated shares for voting purposes. If The Wyatt Company does
not receive your signed voting instructions by April 20, 1995, other
participants will effectively be exercising the voting rights which the ESOP
makes available to you. LaSalle encourages all ESOP participants to exercise
their right to vote their allocated ESOP shares by returning their voting
instructions promptly. Your voting instructions are confidential and your
employer will not know how you vote or whether you vote at all.
To be effective, these voting instructions must be signed and mailed to
The Wyatt Company in the accompanying return envelope in time to be received by
the close of business on April 20, 1995.
Sincerely,
LASALLE NATIONAL TRUST, N.A.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW / /
(except as marked to the contrary below)
WITHHOLD AUTHORITY / /
to vote for all nominees listed below
J. E. Jones and W. R. Reum
(INSTRUCTIONS: To direct the Trustee 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 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. Approve the amendment of the Restated Certificate of Incorporation to
reduce from nine ot seven the minimum size of the Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
Dated this ------ day of ------------------, 1995.
------------------------------------
Signature of ESOP Participant
Name:
Social Security Number:
Number of Allocated Shares: