SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DREW INDUSTRIES INCORPORATED
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $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 transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
DREW INDUSTRIES INCORPORATED
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 1996
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DREW
INDUSTRIES INCORPORATED (the 'Company') will be held at the Board of Directors
Room of the American Stock Exchange, 86 Trinity Place, New York, New York 10006
on April 18, 1996 at 9:30 A.M., for the following purposes:
(1) To elect a Board of five Directors;
(2) To consider and act upon a proposal to approve the adoption of the
material terms of certain executive compensation performance goals and an
incentive compensation plan established by the Compensation Committee of
the Board of Directors;
(3) To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company for the year ending December 31, 1996; and
(4) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of record of the Company's Common Stock at the close of business on
the 14th day of March, 1996 shall be entitled to vote on all matters to be
considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be
available for inspection for the ten days prior to the meeting at the office of
the Company and at the offices of the Company's transfer agent, Chemical Mellon
Shareholders Services, L.L.C., 450 West 33rd Street, New York, N.Y. 10001, and
will be available for inspection at the time of the meeting, at the place
thereof.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
Dated: March 19, 1996
White Plains, N.Y.
NOTICE TO HOLDERS OF COMMON STOCK
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED
PROXY SO THAT YOU WILL BE REPRESENTED. A POST-PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
DREW INDUSTRIES INCORPORATED
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
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PROXY STATEMENT
------------------------
The accompanying Proxy is solicited by Management of Drew Industries
Incorporated, a Delaware corporation (the 'Company'), for use at the Annual
Meeting of Stockholders to be held at the Board of Directors Room of the
American Stock Exchange, 86 Trinity Place, New York, New York 10006 on April 18,
1996 at 9:30 A.M., or any adjournment or postponement thereof, at which holders
of record of the Company's Common Stock, par value $0.01 per share (the 'Common
Stock'), at the close of business on March 14, 1996 shall be entitled to vote on
all matters considered at the meeting.
The cost of solicitation by Management, including postage, printing and
handling, and the expenses incurred by brokerage firms, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners will be borne by
the Company. The solicitation is to be made primarily by mail, but may be
supplemented by telephone calls, telegrams and personal solicitation. Management
may also use the services of directors and employees of the Company to solicit
Proxies, without additional compensation.
Each Proxy executed and returned by holders of the Common Stock may be
revoked at any time thereafter, except as to matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy. A Proxy may be revoked by giving written notice of revocation to the
Secretary of the Company or to any of the other persons named as proxies, or by
giving a Proxy with a later date. The Proxies will be voted at the meeting for
the Directors set forth herein in the manner indicated (see 'ELECTION OF
DIRECTORS'), and if no contrary instructions are indicated, in favor of the
other matters set forth herein; if specific instructions are indicated, the
Proxies will be voted in accordance therewith. This Statement and the form of
Proxy solicited from holders of the Common Stock are expected to be sent or
given to stockholders on or about March 19, 1996.
The Annual Report to Stockholders of the Company for the year ended
December 31, 1995 is being mailed herewith to each stockholder of record.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE SCHEDULES THERETO) WILL BE FURNISHED
TO ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 200 MAMARONECK
AVENUE, WHITE PLAINS, NEW YORK 10601, TELEPHONE (914) 428-9098.
THE COMPANY
The Company was incorporated under the laws of Delaware on March 20, 1984
and is the successor to Drew National Corporation, which was incorporated under
the laws of Delaware in 1962. The Company's principal executive and
administrative offices are located at 200 Mamaroneck Avenue, White Plains, New
York 10601; telephone number (914) 428-9098.
In connection with the July 29, 1994 spin-off of Leslie Building Products,
Inc. ('Leslie Building Products') by the Company (the 'Spin-off '), the Company
and Leslie Building Products entered into a Shared Services Agreement. Pursuant
to the Shared Services Agreement, for a period of two years following the
Spin-off, the Company and Leslie Building Products agreed to share certain
administrative functions and employee services, such as management overview and
planning, tax preparation, financial reporting, coordination of independent
audit, stockholder relations, and
regulatory matters. The Company is reimbursed by Leslie Building Products for
the fair market value of such services. The agreement may be extended under
certain circumstances. See 'ELECTION OF DIRECTORS--Executive Compensation.'
On March 8, 1995, the Board of Directors authorized the repurchase of up to
500,000 shares of the Company's Common Stock. Purchases were made from time to
time in the open market or in privately negotiated transactions at market prices
prevailing at the time of purchase. The Company had no commitment or obligation
to purchase any minimum number of shares. The Company purchased 29,875 shares,
and the repurchase program terminated on March 7, 1995.
VOTING SECURITIES
The Company had outstanding on the record date 5,532,518 shares of Common
Stock. Each holder of Common Stock is entitled to one vote for each share of
stock held.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Set forth below is information with respect to each person known to the
Company on March 14, 1996 to be the beneficial owner of more than five percent
of any class of the Company's voting securities, which consists of Common Stock
only (including options):
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------------------------- ---------- -----------
Edward W. Rose, III(1) ............ 1,684,240(2) 29.0%
500 Crescent Court
Dallas, Texas 76102
Lecil V. Thomas(1)................. 523,449(3) 9.0%
FMR Corp.(4) ...................... 364,500 6.3%
82 Devonshire Street
Boston, Massachusetts 02108
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(1) The person named has sole voting and investment power with respect to such
shares.
(2) See 'VOTING SECURITIES--Security Ownership of Management.'
(3) These shares, net of 21,510 shares transferred to a business broker, were
received by Mr. Thomas in connection with the acquisition of Shoals Supply,
Inc. by the Company on February 15, 1996.
(4) As of December 31, 1995.
To the knowledge of the Company, other than persons acting as nominees or
custodians for various stock brokerage firms and banks, which persons do not
have beneficial ownership of the Common Stock, no other person owns of record or
beneficially more than five percent of the voting securities of the Company.
2
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information with respect to beneficial ownership at
March 14, 1996 of the Common Stock (including options) by each Director and
nominee and by all Directors, nominees and Executive Officers of the Company as
a group.
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------------------------- ---------- -----------
Leigh J. Abrams(1) ..................... 110,983(2) 1.9%
200 Mamaroneck Avenue
White Plains, New York 10601
Edward W. Rose, III(1) ................. 1,684,240(3) 29.0%
500 Crescent Court
Dallas, Texas 76102
David L. Webster(1) .................... 123,920(4) 2.1%
4381 Green Oaks Blvd.
Arlington, Texas 76016
James F. Gero(1) ....................... 27,080(5) 0.5%
38F-4 Anna Cade Road
Rockwall, Texas 75087
Gene H. Bishop ......................... 22,300(6) 0.4%
200 Crescent Court, Suite 1650
Dallas, Texas 75201
All Directors and Executive Officers as
a group (7 persons including the
above-named).......................... 2,024,409(7) 34.9%
- ------------------
(1) Pursuant to Rules 13-1 (f)(1)-(2) of Regulation 13-D of the General Rules
and Regulations under the Exchange Act, on February 17, 1995, the persons
indicated, together with certain other persons, jointly filed a single
amendment to the Schedule 13-D Statement, filed on May 31, 1989, with
respect to the securities listed in the foregoing table. Such persons made
the single, joint filing because they may be deemed to constitute a 'group'
within the meaning of Section 13(d)(3) of the Exchange Act, although neither
the fact of the filing nor anything contained therein shall be deemed to be
an admission by such persons that a group exists.
(2) Mr. Abrams has sole voting and investment power with respect to the shares
owned by him. Includes 4,003 shares of Common Stock held by Mr. Abrams as
Custodian under the New York Uniform Gifts to Minors Act for the benefit of
his children. Mr. Abrams disclaims any beneficial interest in the shares
held as Custodian. In January 1994, Mr. Abrams was granted an option
pursuant to the Company's Stock Option Plan to purchase 17,370 shares of
Common Stock at $7.341 per share. Although no part of such option has been
exercised, all shares subject to such option are included in the above table
as beneficially owned.
(3) Mr. Rose has sole voting and investment power with respect to the shares
owned by him. Includes 42,000 shares owned by each of Cardinal Investment
Company, Inc. Pension Plan and Cardinal Investment Company, Inc. Profit
Sharing Plan, of each of which Mr. Rose is Trustee.
(Footnotes continued on next page)
3
(Footnotes continued from previous page)
Excludes 72,200 shares of Common Stock held in trusts for the benefit of Mr.
Rose's children. Mr. Rose disclaims any beneficial interest in such shares.
Mr. Rose's wife has sole voting and investment power with respect to such
shares. As a member of the Stock Option Committee, on December 31, 1995, Mr.
Rose was automatically awarded an option to purchase 2,500 shares of Common
Stock at $14.70 per share. Although no part of such option has been
exercised, all shares subject to such options are included in the above
table as beneficially owned.
(4) Mr. Webster has sole voting and investment power with respect to such
shares. In December 1992, Mr. Webster was granted an option pursuant to the
Company's Stock Option Plan to purchase 2,316 shares of Common Stock at
$6.045 per share, and in March 1994, Mr. Webster was granted an option to
purchase 34,738 shares of Common Stock at $8.528 per share. Although no part
of such option has been exercised, all shares subject to such option are
included in the above table as beneficially owned.
(5) Mr. Gero shares voting and investment power with respect to such shares with
his wife. In December 1993, Mr. Gero was granted an option pursuant to the
Company's Stock Option Plan to purchase 11,580 shares of Common Stock at
$7.233 per share. As a member of the Stock Option Committee, on December 31,
1995, Mr. Gero was automatically awarded an option to purchase 2,500 shares
of Common Stock at $14.70 per share. Although no part of such options has
been exercised, all such shares subject to such options are included in the
above table as beneficially owned.
(6) Mr. Bishop has sole voting and investment power with respect to such shares.
(7) Includes 101,690 shares subject to options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the exchange on which
the securities are traded. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during 1995 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
other than Edward W. Rose, III, a director) were complied with.
I. ELECTION OF DIRECTORS
It is proposed to elect a Board of five directors to serve until the next
annual election or until their successors are elected and qualify.
Unless contrary instructions are indicated, the persons named as proxies in
the form of Proxy solicited from holders of the Common Stock will vote for the
election of the nominees indicated below. All such nominees are presently
Directors of the Company. If any such nominees should be unable or unwilling to
serve, the persons named as proxies will vote for such other person or persons
as may be proposed by Management. Management has no reason to believe that any
of the named nominees will be unable or unwilling to serve. Election of
Directors by holders of the Common Stock will be by a plurality of the votes
cast at the meeting, in person or by proxy, by holders of the Common Stock
entitled to vote at the meeting.
The following table lists the current Directors of the Company and the
nominees proposed by Management for election by the holders of the Common Stock,
all other positions and offices with
4
the Company presently held by them and their principal occupations, in each case
as furnished by them to the Company.
NAME AND AGE DIRECTOR
OF NOMINEE POSITION SINCE
- ---------------------- -------------------------------------------- --------
Leigh J. Abrams ...... President, Chief Executive Officer and
(Age 53) Director. 1984
Edward W. Rose, III .. Chairman of the Board of Directors. 1984
(Age 54)
David L. Webster ..... President and Chief Executive Officer of
(Age 60) Kinro, Inc. and Shoals Supply, Inc. and
Director. 1984
James F. Gero ........ Director. 1992
(Age 51)
Gene H. Bishop ....... Director. 1995
(Age 66)
LEIGH J. ABRAMS, since July 1994, has also been President, Chief Executive
Officer and a Director of Leslie Building Products.
EDWARD W. ROSE, III, for more than the past five years, has been President
and sole stockholder of Cardinal Investment Company, Inc., an investment firm.
Mr. Rose also serves as Co-Managing General Partner of the Texas Rangers
Baseball Team and as a director of the following public companies: Osprey
Holding, Inc., previously engaged in selling computer software for hospitals;
ACE Cash Express, Inc. engaged in check cashing services; and as a trustee of
Liberte Investors Inc. engaged in real estate loans and investments. Since, July
1994, Mr. Rose has been Chairman of the Board of Leslie Building Products.
DAVID L. WEBSTER, since November 1980, has been President of Kinro, Inc., a
subsidiary of the Company, and has been Chairman of Kinro, Inc. since November
1984. Mr. Webster has also been President and Chief Executive Officer of Shoals
Supply, Inc., since its acquisition by the Company on February 15, 1996.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies. From July 1987 to October 1989, Mr. Gero was Chairman and Chief
Executive Officer of Varo, Inc., a manufacturer of defense electronics, and from
1985 to 1987, Mr. Gero was President and Chief Executive Officer of Varo, Inc.
Mr. Gero also serves as a director of the following public companies:
Recognition Equipment, Inc., engaged in providing hardware, software and
services to automate work processing systems; American Medical Electronics,
Inc., engaged in manufacturing and distributing orthopedic and neurosurgical
medical devices; and Spar Aerospace Ltd., engaged in space robotics,
communications equipment and aerospace products and services. Since July 1994,
Mr. Gero has been a Director of Leslie Building Products.
GENE H. BISHOP, from March 1975 until July 1990, was Chief Executive
Officer of MCorp, a bank holding company, and from October 1990 to November
1991, was Vice Chairman and Chief Financial Officer of Lomas Financial
Corporation, a financial services company. From November 1991 until his
retirement in October 1994, Mr. Bishop served as Chairman and Chief Executive
Officer of Life Partners Group, Inc., a life insurance holding company, of which
he continues to serve as a director. Mr. Bishop also serves as a director of the
following publicly-owned companies: First USA, Inc., engaged in the credit card
business; Liberte Investors Inc. engaged in real estate loans and investments;
Southwest Airlines Co., a regional airline; and Southwestern Public Service
Company, a public utility.
5
FREDRIC M. ZINN, not a nominee for election as a Director, is Chief
Financial Officer of the Company and has also been Chief Financial Officer of
Leslie Building Products since July 1994. Mr. Zinn is a Certified Public
Accountant.
HARVEY J. KAPLAN, not a nominee for election as a Director, is Secretary
and Treasurer of the Company and has also been Secretary and Treasurer of Leslie
Building Products since July 1994. Mr. Kaplan is a Certified Public Accountant.
Directors of the Company serve until the Company's next annual meeting of
stockholders, and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors. To the knowledge of
the Company, no Executive Officer or Director is related by blood, marriage or
adoption to any other. Each of the nominees named above was elected to his
present term of office at the Annual Meeting of Stockholders held on June 13,
1995. During the year ended December 31, 1995, the Board of Directors held four
meetings. All Directors attended all meetings of the Board of Directors.
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Rose, Gero and Bishop. The functions of the Audit Committee are to
review the Company's annual and quarterly reports, review the independence of
and ratify the selection of the independent auditors for the Company, conduct
pre-audit and post-audit reviews with both financial management and the
independent auditors, and assist in the development of the Company's annual
business plan. The Audit Committee held one meeting during the year ended
December 31, 1995.
The Company has a Stock Option Committee, consisting of Messrs. Rose, Gero
and Bishop, to determine and designate employees and Directors of the Company
who are to be granted options, the number of shares subject to options, the
nature and terms of the options to be granted, and to otherwise administer the
Stock Option Plan. See 'ELECTION OF DIRECTORS--Executive Compensation.' The
Stock Option Committee held no meetings during the year ended December 31, 1995.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Rose, Gero and Bishop. The functions of the Compensation
Committee are to develop compensation policies with respect to the Company's
executive officers based, in part, on performance-related criteria, and to make
recommendations to the Board of Directors regarding compensation of executive
officers in accordance with such policies. The Compensation Committee held one
meeting during the year ended December 31, 1995.
6
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth the annual and long-term cash and noncash
compensation for each of the last three calendar years awarded to or earned by
the President and Chief Executive Officer of the Company and the Company's four
other most highly compensated executive officers (such five executive officers
collectively, the 'named executive officers') during the year ended December 31,
1995.
A portion of the cash and noncash compensation set forth in the table paid
to Messrs. Leigh J. Abrams, Edward W. Rose, III, Fredric M. Zinn and Harvey J.
Kaplan during the year ended December 31, 1995 was charged to Leslie Building
Products pursuant to the Shared Services Agreement. See footnote 3 below and
'The Company.'
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ---------------
NAME AND CALENDAR OTHER ANNUAL NUMBER OF STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION OPTIONS AWARDED COMPENSATION
- ------------------------- -------- -------- ---------- ------------ --------------- ------------
Leigh J. Abrams(2) ...... 1995(3) $180,000 $ 330,989 $ 5,340 $2,310
President and Chief 1994(3) 180,000 264,181 5,490 17,370 2,248
Executive Officer 1993 180,000 184,350 4,307 2,248
David L. Webster(4) ..... 1995 $125,000 $1,133,766 $ 2,052 $2,310
President of Kinro, 1994 125,000 777,719 2,581 34,738 2,248
Inc. and Shoals Supply, 1993 125,000 529,351 2,077 2,698
Inc.
Edward W. Rose, III(5) .. 1995 $ 30,000 $ 28,053 2,500
Chairman of the Board 1994 30,000 41,038
of Directors 1993 15,000 49,508
Fredric M. Zinn ......... 1995(3) $125,000 $ 105,300 $ 8,421 $2,310
Chief Financial Officer 1994(3) 125,000 85,300 9,309 17,370 2,248
1993 125,000 59,650 8,659 2,248
Harvey J. Kaplan ........ 1995(3) $100,000 $ 70,296 $ 3,639 $2,310
Secretary and Treasurer 1994(3) 100,000 65,296 2,869 5,790 2,248
1993 100,000 53,648 3,723 2,248
- ------------------
(1) Beginning in 1993, Messrs. Abrams, Webster, Rose, Zinn and Kaplan, received
payments pursuant to a discretionary retirement bonus program. These bonuses
must be used to purchase specified tax deferred annuities and/or cash value
life insurance. For 1995, Mr. Abrams received $30,000, Mr. Webster received
$50,000, Mr. Rose received $30,000, Mr. Zinn received $15,000 and Mr. Kaplan
received $13,296 pursuant to the discretionary retirement program.
(2) Mr. Abrams received incentive compensation for each fiscal year equal to
2 1/2% of each of the Company's and Leslie Building Products' income before
income taxes and extraordinary items, subject to certain adjustments.
(3) Of the aggregate compensation paid to Messrs. Abrams, Zinn and Kaplan for
1995, an aggregate of $334,456 was charged to Leslie Building Products
pursuant to the Shared Services Agreement, of which $184,644 was applicable
to Mr. Abrams, $83,175 was applicable to Mr. Zinn, and $66,637 was
applicable to Mr. Kaplan. Pursuant to the Shared Services Agreement,
(Footnotes continued on next page)
7
(Footnotes continued from previous page)
$15,000 of the discretionary retirement bonus paid to Mr. Rose was charged
to Leslie Building Products. Of the aggregate compensation paid to Messrs.
Abrams, Zinn and Kaplan for 1994, pursuant to the Shared Services Agreement,
an aggregate of $201,000 was charged to Leslie Building Products for the
five month period in 1994 subsequent to the Spin-off, of which $114,000 was
applicable to Mr. Abrams, $54,000 was applicable to Mr. Zinn and $33,000 was
applicable to Mr. Kaplan. Pursuant to the Shared Services Agreement, $6,250
of the discretionary retirement bonus paid to Mr. Rose was charged to Leslie
Building Products. For the seven month period in 1994 prior to the Spin-off,
the Company allocated to Leslie-Locke corporate overhead, including
compensation paid to the foregoing officers, based upon a percentage of
combined net sales.
(4) Effective September 1, 1986, Kinro entered into an employment agreement with
Mr. Webster which, as amended, provides for Mr. Webster's employment through
August 31, 1996 at a salary of $125,000 per annum. Mr. Webster also receives
a bonus determined by the Compensation Committee based upon Kinro's
Operating Profit (as defined) for each fiscal year. The Company and Mr.
Webster intend to extend the employment agreement. See 'Adoption of
Incentive Compensation Plan' for a discussion of the proposal to approve and
adopt an incentive compensation plan applicable to Mr. Webster commencing as
of January 1, 1996.
(5) See 'ELECTION OF DIRECTORS -- Compensation of Directors.'
STOCK OPTION PLAN
On June 13, 1995, stockholders approved the amended and restated Drew
Industries Incorporated Stock Option Plan (the 'Plan').
Under the Plan and its predecessor, since 1988 the Stock Option Committee
has granted options to purchase 701,559 shares of Common Stock, and is
authorized to grant options to purchase up to an additional 78,441 shares
(representing an aggregate of 780,000 shares or approximately 13.4% of the
Company's issued and outstanding Common Stock including options). The 78,441
shares available for grant have been allocated 20,000 shares to Non-Employee
Directors and members of the Committee and 58,441 shares to eligible employees.
No grantee, whether or not now a participant in the Plan, can be granted options
to purchase more than an aggregate of 25,000 shares under the Plan.
The Stock Option Committee has sole and complete authority to determine the
individuals eligible to receive stock options under the Plan, and to determine
the number of stock options to be granted to eligible individuals, as well as
the terms and conditions under which grants will be made (including limitations,
restrictions or prohibitions upon the exercise of stock options), except that
Non-Employee Directors are not eligible for incentive stock options ('ISOs').
The Stock Option Committee determines the period for which each stock option may
be exercisable, but in no event may a stock option be exercisable more than 10
years from the date of grant thereof. The number of shares available under the
Plan, and the exercise price of options granted under the Plan, are subject to
adjustments that may be made by the Stock Option Committee to reflect stock
splits, stock dividends, recapitalizations, mergers, or other major corporate
action.
The exercise price for options granted under the Plan are determined by the
Stock Option Committee in its sole discretion, provided that the exercise price
in the case of ISOs is at least equal to 100% of the fair market value of the
Common Stock subject to such option on the date of grant. The exercise price may
be paid in cash or in shares of Common Stock. Options granted under the Plan
become exercisable in annual installments determined by the Stock Option
Committee and may be subject to performance criteria. An ISO may not be granted
to an individual who is treated as a '10% Shareholder' of the Company under
Section 422 of the Internal Revenue Code of 1986, as amended, unless the
exercise price is 110% of fair market value on the date of grant and the ISO is
exercisable for a period not longer than five years from the date of grant.
8
The Board of Directors is authorized to terminate, suspend or amend the
Plan; provided that the amendment or termination cannot affect the validity of
any then outstanding stock option previously granted under the Plan, and
provided further that the Board of Directors cannot without stockholder
approval: (a) increase the maximum number of shares covered by the Plan or
change the class of employees eligible to receive stock options; (b) reduce the
option price for ISO's below the fair market value of the Common Stock on the
date of the grant of such option; or (c) extend beyond l0 years from the date of
the grant the period within which an option may be exercised. The Plan will
terminate on December 31, 2003 and no option may be granted after its
termination date. Options granted prior to the termination date may be exercised
in accordance with their terms beyond the termination date.
Each member of the Stock Option Committee is automatically awarded an
option ('Formula Option') to purchase 2,500 shares of Common Stock on the
December 31st of each year in which such Stock Option Committee member has
served not less than twelve consecutive months as a Director of the Company.
Such Formula Options vest immediately and are exercisable during the five-year
period following the date of grant. The purchase price of the Common Stock
subject to the Formula Options is not less than 100% of the fair market value of
the Common Stock on the date such Formula Option is granted, subject to
adjustment as provided in the Plan.
OPTION GRANTS IN 1995
The following table summarizes stock options granted during 1995 to the named
executive officers.
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------- ----------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED 1995 PRICE DATE 5% 10%
- ---------------------- ---------- ------------ -------- ---------- ------ -------
Edward W. Rose, III... 2,500(1) 100% $14.70 1/2/01 $7,920 $19,618
- ------------------
(1) Represents a Formula Option
OPTION EXERCISES IN 1995 AND YEAR-END VALUES
The following table presents the value of unexercised options held by the
named executive officers at December 31, 1995. No stock options were exercised
by the named executive officers during 1995.
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995(1)
EXERCISABLE (E) EXERCISABLE (E)
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
- -------------------- ---------------------- --------------------
Leigh J. Abrams..... 8,685(E) $ 57,833(E)
8,685(U) $ 57,833(U)
David L. Webster.... 19,685(E) $113,467(E)
17,369(U) $ 95,043(U)
Edward R. Rose...... 2,500(E) $ --
Frederic M. Zinn.... 13,317(E) $ 94,681(E)
8,685(U) $ 57,833(U)
Harvey J. Kaplan.... 5,789(E) $ 38,863(E)
2,895(U) $ 15,841(U)
- ------------------
(1) Market value of Common Stock at December 31, 1995 ($14.00) minus the
exercise price.
9
COMPENSATION OF DIRECTORS
Edward W. Rose, III, Chairman of the Board of Directors, receives an annual
director's fee of $24,000, payable $2,000 per month, plus $1,000 for attendance
at each meeting of the Board of Directors and $500 for attendance at each
Committee meeting. In 1995, Mr. Rose received a $30,000 payment pursuant to a
discretionary retirement bonus program intended to provide retirement income.
Messrs. James F. Gero and Gene H. Bishop each receive an annual director's fee
of $9,000, payable $750 per month, plus $500 for attendance at each meeting of
the Board of Directors and $500 for attendance at each Committee meeting.
EMPLOYMENT CONTRACTS
See footnote 4 to Summary Compensation Table for a description of the
employment agreement between Kinro, Inc., a subsidiary of the Company, and David
L. Webster, President of Kinro, Inc. and a Director of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves on the Compensation Committee,
and there are no 'interlocks,' as defined by the Securities and Exchange
Commission.
10
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the 'Committee')
consists of three non-employee directors, Edward W. Rose, III, James F. Gero and
Gene H. Bishop. The Committee has the responsibility of developing the policies
which govern compensation for executive officers, and making recommendations to
the Board of Directors regarding compensation of executive officers in
accordance with such policies.
The Company's executive compensation policy is designed to enable the
Company to attract, motivate and retain senior management by providing a
competitive compensation opportunity based significantly on performance. The
objective is to provide fair and equitable compensation to senior management in
a way that rewards management for reaching and exceeding objectives. The
compensation policy links a significant portion of executive compensation to the
Company's performance, recognizes individual contribution as well as overall
business results, and aligns executive and stockholder interest. The primary
components of the Company's executive compensation are base salary,
performance-related incentive compensation, stock options and discretionary
bonuses. While the components of compensation are considered separately in this
report, the Committee takes into account the full compensation package provided
by the Company to each of its executives, including pension benefits, severance
obligations, insurance and other benefits.
Each year the Committee will review the Company's compensation policy
utilizing both internal and external sources of information and analysis
relating to corporate performance, total return to stockholders of comparable
companies, and compensation afforded to executives by competitors of the
Company. If appropriate, changes will be recommended.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER IN 1995
The compensation policy applied by the Company in establishing the
compensation for Leigh J. Abrams, the Company's President and Chief Executive
Officer, is essentially the same as for other senior executives of the Company--
to provide a competitive compensation opportunity that rewards performance and
recognizes individual contribution.
For 1995, Mr. Abrams received base compensation of $180,000, plus incentive
compensation of $300,989, equal to 2 1/2% of each of the Company's and Leslie
Building Products' income before income taxes and extraordinary items, subject
to certain adjustments. Mr. Abrams receives medical and life insurance, and
certain other benefits. In 1995, Mr. Abrams was also awarded an additional
payment of $30,000 pursuant to a discretionary retirement bonus program intended
to provide retirement income. This bonus must be used to purchase specified tax
deferred annuities or cash value life insurance contracts. Mr. Abrams' base
compensation and rate of incentive compensation for 1995 were the same as for
1994.
Pursuant to the Shared Services Agreement entered into between the Company
and Leslie Building Products in connection with the Spin-off, a portion of Mr.
Abrams' compensation for 1995 in the amount of $184,644, representing 35.6% of
his total compensation for that period, was charged to Leslie Building Products
as the fair market value of services rendered by Mr. Abrams to Leslie Building
Products.
COMPENSATION OF EXECUTIVE OFFICERS IN 1995
As with the Chief Executive Officer, compensation of other executive
officers is intended to reward performance and recognize individual
contribution. Accordingly, the chief executive officer of the Company's
subsidiary receives compensation based upon the results of operations of such
subsidiary.
11
For calendar 1995, David L. Webster, President of Kinro, received base
salary of $125,000, and a bonus of $1,083,766 from a formula-based management
bonus pool based on Kinro's results of operations. For 1995, Mr. Webster also
received a payment of $50,000 pursuant to a discretionary retirement bonus
program intended to provide retirement income. This bonus must be used to
purchase specified tax deferred annuities or cash value life insurance
contracts. See 'Adoption of Incentive Compensation Plan' for a discussion of the
proposal to adopt an incentive compensation plan relating to Mr. Webster
commencing as of January 1, 1996.
Other Executive Officers of the Company and its subsidiaries receive
bonuses based upon their respective levels of organizational responsibility and
the performance of the Company or the subsidiary by which they are employed.
STOCK OPTIONS
The Company's Stock Option Plan provides for the grant of options to
employees of the Company and its subsidiaries, and to Directors of the Company,
to purchase the Company's Common Stock. See 'Election of Directors--Stock Option
Plan.' A Stock Option Committee consisting of Edward W. Rose, III, James F.
Gero, and Gene H. Bishop administers the Stock Option Plan and determines and
designates employees and Directors who are to be granted options. The Stock
Option Plan provides for automatic awards of options to members of the Stock
Option Committee under certain circumstances.
Because all options which have been granted under the Stock Option Plan
have been granted at fair market value, any value which is ultimately realized
by Executive Officers through stock options is based entirely on the Company's
performance, as perceived by investors in the Company's Common Stock who
establish the price for the Common Stock on the open market.
BENEFITS
The Company maintains certain broad-based employee benefit plans in which
Executive Officers participate, including an employee retirement savings plan
(401(k) Plan) and other retirement, life and health insurance plans. The Company
also provides an automobile or automobile allowance to its Executive Officers.
The incremental cost to the Company of these benefits is less than 10% of the
Executive Officers' 1995 base salaries.
CONCLUSION
A significant portion of the Company's executive compensation is linked
directly to individual performance and Company earnings. The Committee intends
to continue to determine compensation based upon these factors.
COMPENSATION COMMITTEE
Edward W. Rose, III
James F. Gero
Gene H. Bishop
12
EMPLOYEE STOCK PURCHASE PLAN
A total of 250,000 shares of Common Stock of the Company are available for
purchase by regular full-time employees of the Company under the 1995 Employee
Stock Purchase Plan. During 1995, no shares were made available for purchase
under the Stock Purchase Plan.
COMPARATIVE STOCK PERFORMANCE
The following graph compares, for the last five calendar years, the
cumulative stockholder return on the Common Stock of the Company with the
cumulative return on the common stocks of the companies included in the Russell
2000 Index and on the common stocks of the companies included in the AMEX
Housing Construction and Land Development Index.
The graph assumes investment of $100 on December 31, 1990 in the Company's
Common Stock, the Russell 2000 Index, the AMEX Housing Construction and Land
Development Index, and assumes that any dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG DREW INDUSTRIES INCORPORATED, THE RUSSELL 2000 INDEX
AND THE AMEX HOUSING, CONSTRUCTION & LAND DEVELOPMENT INDEX
[GRAPH]
December 31,
---------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Drew Industries Incorporated.. $100 $282 $871 $788 $892 $1,491
Russell 2000 Index............ 100 146 173 206 202 260
AMEX Housing, Construction
& Land Development Index..... 100 121 149 219 225 242
* $100 invested on 12/31/90 in stock or index -- including
reinvestment of dividends. Fiscal year ending December 31.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law empowers a domestic
corporation to indemnify any of its officers, directors, employees or agents
against expenses, including reasonable attorney's fees, judgments, fines and
amounts paid in settlement which were actually and reasonably incurred by such
person in connection with any action, suit or similar proceeding brought against
them because of their status as officers, directors, employees or agents of the
Company if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company. If the claim was brought against any such person by or in the right of
the Company, the Company may indemnify such person for such expenses if such
person acted in good faith and in a manner reasonably believed by such person to
be in or not opposed to the best interests of the Company, except no indemnity
shall be paid if such person shall be adjudged to be liable for negligence or
misconduct unless a court of competent
13
jurisdiction, upon application, nevertheless permits such indemnity (to all or
part of such expenses) in view of all the circumstances.
The Company's Restated Certificate of Incorporation provides that the
Company may indemnify its officers, directors, employees or agents to the full
extent permitted by Section 145 of the Delaware General Corporation Law.
Accordingly, no director of the Company is liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
II. ADOPTION OF INCENTIVE COMPENSATION PLAN
INTRODUCTION
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
'Code'), restrictions apply to the deductibility of executive compensation paid
by public companies. Under these restrictions, the Company is not able to deduct
compensation paid to any of its five most highly compensated executive officers
in excess of $1,000,000 unless the compensation meets the definition of
'performance-based compensation' set forth in the Code. Non-deductibility would
result in additional tax costs to the Company and its stockholders. The
stockholder approval requested by this proposal will assist in enabling
incentive compensation awards to meet the requirements to qualify as
'performance-based compensation,' thereby enabling the Company to achieve
maximum tax deductibility for such compensation costs.
INCENTIVE COMPENSATION PLAN
The incentive compensation plan relates to David L. Webster (the
'Designated Executive'), President of Kinro, Inc., and Shoals Supply, Inc.
subsidiaries of the Company. The purpose of the incentive compensation plan is
to promote the success of the Company by providing an incentive to the
Designated Executive that links his compensation to the financial success of the
Company and to growth in stockholder value. For 1995, Mr. Webster received a
base salary of $125,000 and an incentive compensation award of $1,083,000.
The incentive compensation plan was recommended by the Compensation
Committee of the Board of Directors and adopted by the Board of Directors on
February 8, 1996, to be effective as of January 1, 1996, subject to stockholder
approval. In considering the plan, the Compensation Committee utilized
information relating to corporate performance, total return to stockholders of
comparable companies, and compensation afforded to executives by comparable
companies. The Compensation Committee used this information in determining the
range of minimum to maximum compensation which the Designated Executive should
receive.
To qualify as 'performance-based compensation,' the tax rules require, for
performance plans involving cash awards, that the performance goals under which
the incentive compensation is to be paid be disclosed to, and approved by, the
Company's stockholders. Accordingly, approval of the following performance goals
for incentive compensation to be awarded to the Designated Executive is
requested.
The incentive compensation plan provides that, commencing January 1, 1996,
in addition to annual base salary of $400,000, the Designated Executive will
receive annually 7.3% of the amount by which the aggregate earnings before
interest and taxes (without deduction for costs of corporate administration or
amortization of goodwill) of Kinro, Inc. and Shoals Supply, Inc. exceeds
$10,000,000.
VOTE
The favorable vote of a majority of the votes cast at the Annual Meeting is
required to approve the adoption of the performance goals and incentive
compensation plan.
Management recommends that you vote FOR approval of the adoption of the
performance goals and incentive compensation plan.
14
III. APPOINTMENT OF AUDITORS
It is proposed that the stockholders ratify the appointment by the Board of
Directors of KPMG Peat Marwick LLP as independent auditors for the purpose of
auditing and reporting upon the consolidated financial statements of the Company
for the year ending December 31, 1996. It is expected that a representative of
that firm will be present at the Annual Meeting of Stockholders to be held on
April 18, 1996 and will be afforded the opportunity to make a statement and
respond to appropriate questions from stockholders present at the meeting.
Management recommends that you vote FOR ratification of the appointment of
KPMG Peat Marwick LLP, as independent auditors for the year ending December 31,
1996.
IV. TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the only business which Management
intends to present or knows that others will present at the meeting is that set
forth herein. If any other matter or matters are properly brought before the
meeting, or any adjournment or postponement thereof, it is the intention of the
persons named in the form of Proxy solicited from holders of the Common Stock to
vote the Proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
All proposals which stockholders of the Company desire to have presented at
the Annual Meeting of Stockholders to be held in April 1997 must be received by
the Company at its principal executive offices on or before January 1, 1997.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
March 19, 1996
15
DREW INDUSTRIES INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--APRIL 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned, revoking any proxy heretofore given, hereby appoints
LEIGH J. ABRAMS and HARVEY J. KAPLAN, or either of them, proxies of the
undersigned, with full power of substitution, with respect to all the shares of
the Common Stock which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Drew Industries Incorporated, to be held at the Board of
Directors Room of the American Stock Exchange, 86 Trinity Place, New York, New
York 10006 on April 18, 1996 at 9:30 A.M. and at any adjournment or postponement
thereof, upon the following items as set forth in the Notice of Annual Meeting
and Proxy Statement, and in their discretion on any other matter that may
properly come before the meeting or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AUTHORITY TO PLEASE MARK
VOTE FOR DIRECTORS AND FOR PROPOSITIONS '2' AND '3.' YOUR VOTE AS
INDICATED IN
THE EXAMPLE /x/
1. ELECTION OF DIRECTORS FOR all named nominees WITHHOLD
NOMINEES: EDWARD W. ROSE, III, (except as indicated AUTHORITY
LEIGH J. ABRAMS, DAVID L. WEBSTER, to the contrary below) from nominees
JAMES F. GERO, GENE H. BISHOP. / / / /
2. TO APPROVE THE INCENTIVE COMPENSATION PLAN. FOR AGAINST ABSTAIN
/ / / / / /
3. TO RATIFY THE APPOINTMENT OF KPMG PEAT FOR AGAINST ABSTAIN
MARWICK LLP AS INDEPENDENT AUDITORS. / / / / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
[INDICIA]
Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons each should sign. Executors, Administrators,
Trustees, Guardians, Attorneys, and corporate officers should add their titles.
Please check if you plan to attend the meeting / /
__________________________ __________________________ Dated: ___________, 1996
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please mark boxes /x/ in blue or black ink. This Proxy should be returned to:
Chemical Mellon Shareholder Services, L.L.C., 85 Challenger Rd., Overpeck
Center, Ridgefield Park, New Jersey 07660