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 toss.240.14a-11(c) orss.240.14a-12
LADISH CO, INC.
(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] No fee required.
[ ] 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:
LADISH CO., INC.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Stockholders:
An Annual Meeting of Stockholders of Ladish Co., Inc., a Wisconsin
corporation (the "Company"), will be held in the Creole Meeting Room of the Four
Points Hotel Sheraton Milwaukee Airport located at 4747 South Howell Avenue,
Milwaukee, Wisconsin on Wednesday, May 14, 2003 at 10:00 a.m. Central Daylight
Time, for the following purposes:
(1) To elect seven (7) Directors, to serve for the term of one year or
until their successors have been elected and have duly qualified.
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only Stockholders of record at the close of business on March 28, 2003 will
be entitled to notice of and to vote at the 2003 Annual Meeting or any
adjournment thereof, notwithstanding the transfer of any stock on the books of
the Company after such record date.
A Proxy Statement and proxy card accompany this Notice of Annual Meeting of
Stockholders.
/s/ Wayne E. Larsen
Wayne E. Larsen
Secretary
Cudahy, Wisconsin
March 28, 2003
LADISH CO., INC.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 14, 2003
This Proxy Statement is furnished to the stockholders of Ladish Co., Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Stockholders of
the Company to be held at the Four Points Hotel Sheraton Milwaukee Airport,
Creole Meeting Room, 4747 South Howell Avenue, Milwaukee, Wisconsin on
Wednesday, May 14, 2003 at 10:00 a.m., Central Daylight Time (the "2003 Annual
Meeting"), or at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about April 10, 2003.
RIGHT TO REVOKE PROXY
Any stockholder giving the proxy enclosed with this Proxy Statement has the
power to revoke such proxy at any time prior to the exercise thereof by filing
with the Company a written revocation at or prior to the 2003 Annual Meeting, by
executing a proxy bearing a later date or by attending the 2003 Annual Meeting
and voting in person the shares of stock that such stockholder is entitled to
vote. Unless the persons named in the proxy are prevented from acting by
circumstances beyond their control, the proxy will be voted at the 2003 Annual
Meeting and at any adjournment thereof in the manner specified therein, or if
not specified, the proxy will be voted:
(1) FOR the election of the seven (7) nominees listed under "Election of
Directors" as nominees of the Company for election as directors to hold office
until the next Annual Meeting of Stockholders or until their successors are
elected and qualified;
(2) At the discretion of the persons named in the enclosed form of proxy,
on any other matter that may properly come before the 2003 Annual Meeting or any
adjournment thereof.
BY WHOM AND THE MANNER IN WHICH PROXY IS BEING SOLICITED
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company. The expense of the solicitation of proxies for the 2003 Annual
Meeting, including the cost of mailing, will be borne by the Company. To the
extent necessary to assure sufficient representation at the 2003 Annual Meeting,
officers and regular employees of the Company, at no additional compensation,
may request the return of proxies personally, by telephone, facsimile, mail, or
other method. The extent to which this will be necessary depends entirely upon
how promptly proxies are received. Stockholders are urged to send in their
proxies without delay. The Company will supply brokers, nominees, fiduciaries
and other custodians with proxy materials to forward to beneficial owners of
shares in connection with the request from the beneficial owners of authority to
execute such proxies, and the Company will reimburse such brokers, nominees,
fiduciaries and other custodians for their expenses in making such distribution.
Management has no knowledge or information that any other person will
specifically engage any persons to solicit proxies.
1
VOTING SECURITIES AND STOCKHOLDERS
The outstanding voting securities of the Company consist entirely of shares
of Common Stock, $0.01 par value per share, each share of which entitles the
holder thereof to one vote. The record date for the determination of the
stockholders entitled to notice of and to vote at the 2003 Annual Meeting, or
any adjournment thereof, has been established by the Board of Directors as the
close of business on March 28, 2003. At that date, there were outstanding and
entitled to vote 13,023,393 shares of Common Stock.
The presence, in person or by proxy, of the holders of record of a majority
of the outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum for the transaction of business at the 2003 Annual Meeting,
but if a quorum should not be present, the meeting may be adjourned from time to
time until a quorum is obtained. A holder of Common Stock will be entitled to
one vote per share on each matter properly brought before the meeting.
Cumulative voting is not permitted in the election of directors.
The proxy card provides space for a stockholder to withhold voting for any
nominee for the Board of Directors or to abstain from voting for any other
proposal if the stockholder chooses to do so. Under Wisconsin law, directors are
elected by a plurality of the votes cast at the meeting. Each other matter to be
submitted to the stockholders requires the affirmative vote of a majority of the
votes cast at the meeting. For purposes of determining the number of votes cast
with respect to any voting matter, only those cast "for" or "against" are
included. Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting.
As of March 28, 2003, no person was known by the Company to own
beneficially more than five percent (5%) of the outstanding shares of Common
Stock of the Company, except as shown in the following table:
Number of Shares
Name and Address Beneficially Owned Percent
Of Beneficial Owner At March 28, 2003 Of Class
------------------- ----------------- --------
Grace Brothers Ltd.(1) 3,858,973 29.6%
1650 Sherman Avenue, Suite 900
Evanston, Illinois 60201
State Street Research & Management Company(1) 1,460,027 11.2%
1 Financial Center, 30th Floor
Boston, Massachusetts 02111
Cannell Capital Management(1) 1,115,900 8.6%
150 California Street, 5th Floor
San Francisco, California 94111
Dimensional Fund Advisors Inc.(1) 1,046,200 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Wellington Management Company, LLP(1) 665,000 5.1%
75 State Street, 19th Floor
Boston, Massachusetts 02109
- ---------------------------------
(1) Information regarding the above stockholders and their beneficial ownership
of the Company's shares was obtained from the Schedule 13D/A of Grace Brothers
Ltd. dated March 21, 2003, the Schedule 13G of Dimensional Fund Advisors Inc.
dated February 3, 2003, the Schedule 13G of State Street Research & Management
Company dated February 19, 2003, the Schedule 13F of Cannell Capital Management
dated February 7, 2002 and the Schedule 13G of Wellington Management Company,
LLP dated February 14, 2003.
2
The following table shows the number of shares of Common Stock beneficially
owned by each director or nominee, by the executive officers named below in the
Summary Compensation Table and by all directors, nominees and executive officers
as a group, based upon information supplied by them:
Number of Shares Beneficially Percent
Name Owned At March 15, 2003 (1) Of Class
- ---- ----------------------- --------
Lawrence W. Bianchi 5,000 *
Margaret Bertelsen Hampton 2,900 *
Leon A. Kranz 0 *
Wayne E. Larsen 97,800 *
William J. Lazzari 15,600 *
Scott D. Roeper 0 *
Robert W. Sullivan 15,083 *
Randy B. Turner 16,500 *
Gary J. Vroman 70,000 *
Kerry L. Woody 178,467 1.4%
Directors and Executive Officers
as a Group (14 persons) 401,350 3.1%
* Less than one percent (1%)
(1) Unless otherwise noted, all shares are owned directly and the owner has the
right to vote the shares, except for shares that officers and directors have the
right to acquire under the Company's stock option plans as of the record date or
within sixty (60) days thereafter, which for Messrs. Woody, Larsen, Lazzari,
Vroman and Turner are 178,167, 95,500, 15,000, 70,000 and 16,500 shares,
respectively.
ITEM 1 - ELECTION OF DIRECTORS
At the 2003 Annual Meeting, seven (7) directors are to be elected who shall
hold office until the next Annual Meeting of Stockholders or until their
respective successors are duly elected and qualified. It is the intention of the
persons named in the Company's proxy to vote for the election of each of the
nominees listed below, unless authority is withheld. All nominees have indicated
a willingness to serve as directors, but if any of them should decline or be
unable to serve as a director, the persons named in the proxy will vote for the
election of another person recommended by the Board of Directors.
The Board of Directors recommends you vote FOR the election of each of the
seven (7) nominees to the Board of Directors set forth below.
Nominees
- --------------------------------------------------------------------------------
Lawrence W. Bianchi, 61. Director since 1998. Mr. Bianchi in 1994 retired as the
Managing Partner of the Milwaukee, Wisconsin office of KPMG LLP. From 1994 to
1998 Mr. Bianchi served as CFO of the law firm of Foley & Lardner. Mr. Bianchi's
principal occupation is investments.
- --------------------------------------------------------------------------------
Margaret Bertelsen Hampton, 44. Director since 2001. Ms. Hampton has been a
Portfolio Manager at Grace Brothers Ltd., an Evanston, Illinois based investment
management firm, since 1997. Previously, Ms. Hampton was a Managing Director for
First Chicago Capital Corporation, a position she held for more than five years.
Ms. Hampton is a Director of Furr's Restaurant Group in Dallas, Texas.
- --------------------------------------------------------------------------------
Leon A. Kranz, 63. Director since 2001. Mr. Kranz is President and Chief
Executive Officer of Weber Metals, Inc., a Paramount, California based metals
processor, a position he has held for ten years.
- --------------------------------------------------------------------------------
Wayne E. Larsen, 48. Director since 1997. Since 1995 Mr. Larsen has been Vice
President Law/Finance and Secretary of the Company. He served as General Counsel
and Secretary from 1989 after joining the Company as corporate counsel in 1981.
Mr. Larsen is a Trustee of the Ladish Co. Foundation and a Director of the
Wisconsin Foundation for Independent Colleges and the South Shore YMCA of
Milwaukee.
- --------------------------------------------------------------------------------
Scott D. Roeper, 44. Director since 2001. Mr. Roeper is a Managing Director and
Partner for Facilitator Capital Fund ("FCF"), a Wisconsin-based private equity
fund. Prior to joining FCF in 1999, Mr. Roeper was a senior banker for Firstar
Bank since 1990. Mr. Roeper is a Director of numerous FCF portfolio companies.
- --------------------------------------------------------------------------------
3
Robert W. Sullivan, 44. Director since 1993. Mr. Sullivan is President of The
Plitt Company, a seafood distribution concern. Mr. Sullivan had been President
of The Martec Group, a sales and marketing consulting group for more than
fifteen years. Mr. Sullivan is a Director of Furr's Restaurant Group in Dallas,
Texas.
- --------------------------------------------------------------------------------
Kerry L. Woody, 51. Director since 1997. Mr. Woody has been President since 1995
and was appointed Chief Executive Officer of the Company in 1998. Prior to that
time he was Vice President-Operations, Vice President-Manufacturing Services and
Production Manager. He joined the Company in 1975. Mr. Woody is also a Director
of Vilter Manufacturing Co. and a Director of Wisconsin Lutheran College.
BOARD MEETINGS AND COMMITTEES
The directors hold regular quarterly meetings, in addition to the meeting
immediately following the Annual Meeting of Stockholders, attend special
meetings, as required, and spend such time on the affairs of the Company as
their duties require. During the fiscal year ended December 31, 2002, the Board
of Directors held six (6) meetings. All directors of the Company attended at
least seventy-five percent (75%) of the meetings of the Board of Directors and
the committees on which they served during the fiscal year ended December 31,
2002. During the fiscal year ended December 31, 2002, there were three
committees, those being an Audit Committee, a Compensation and Stock Option
Committee and an Independent Committee. Mr. Charles Finkl retired from the Board
of Directors, the Audit Committee and the Compensation and Stock Option
Committee as of January 31, 2002.
AUDIT COMMITTEE
For the year ending December 31, 2002, the members of the Audit Committee
were Lawrence W. Bianchi, Leon A. Kranz and Scott D. Roeper. Each member of the
Audit Committee is "independent" according to the definition of independence
contained in Rule 4200(a)(15) of the Nasdaq listing standards. Mr. Bianchi, an
independent director, has been designated as the Audit Committee "financial
expert" by the Board of Directors. The Audit Committee is responsible for
annually selecting a firm of independent certified public accountants to serve
as the Company's auditors, to meet with and review reports of the Company's
auditors and approve the fees payable to them. The independence of the public
accountants auditing the Company's financial statements is one of the factors
evaluated by the Audit Committee when recommending auditors. During fiscal year
2002, the Company's auditors were initially changed from Arthur Andersen LLP to
Deloitte & Touche LLP and subsequently switched to KPMG LLP. Audit services
provided in 2002 by KPMG LLP resulted in fees of $331,000. The Company did not
use KPMG LLP for any audit related, tax or non-audit services in fiscal 2002.
The Audit Committee assessed the lack of non-audit services in determining the
Company's auditors, KPMG LLP, to be independent. Following conclusion of the
2002 audit by KPMG LLP, the Audit Committee confirms that:
o the Audit Committee has reviewed and discussed the audited financial
statements with management;
o the Audit Committee has discussed with KPMG LLP the matters required
to be discussed by SAS 61 as amended by SAS 90;
o the Audit Committee has received the written disclosures and the
letter from KPMG LLP required by Independence Standards Board
Statement No. 1; and
o the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual
Report on Form 10-K.
The Audit Committee Charter was amended by unanimous consent of the Audit
Committee in 2002. The amended Charter is attached hereto as Exhibit "A".
In addition, the Audit Committee provides oversight to the total financial
status of the Company as well as assisting the Company with assessments of
pension-asset performance and investment criteria. The Audit Committee met seven
(7) times in 2002 for these purposes.
By the Audit Committee
Lawrence W. Bianchi, Leon A. Kranz and Scott D. Roeper
4
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
The members of the Compensation and Stock Option Committee for the year
ending December 31, 2002 were Lawrence W. Bianchi, Margaret Bertelsen Hampton
and Robert W. Sullivan. The Compensation and Stock Option Committee is
responsible for (i) setting the overall policy of the Company's executive
compensation program; (ii) establishing the base salary level for the executive
officers; (iii) reviewing and approving the annual incentive program for the
Company executives; and (iv) acting as the administrator of the Company's 1996
Long Term Incentive Plan. The Compensation and Stock Option Committee met once
in 2002. The Company's executive compensation program is designed to be closely
linked to corporate performance and returns to stockholders. To this end, the
Company has developed an overall compensation strategy and specific compensation
plan that tie a very significant portion of executive compensation to the
Company's success in meeting specified performance goals. The primary criteria
used by the Compensation and Stock Option Committee in assessing the performance
of the Company's Chief Executive Officer are the results of the Company as
measured by its earnings before interest, taxes, depreciation and amortization
("EBITDA"). By monitoring the EBITDA of the Company, both as an overall result
and as a percentage of net sales, the Compensation and Stock Option Committee
determines whether the Chief Executive Officer is achieving their expectations.
In addition, the Compensation and Stock Option Committee also assess the
accomplishments of the Chief Executive Officer and the other executive officers
with respect to activities such as acquisitions, divestitures and the raising of
capital for the business. In 2002, sales and EBITDA at the Company were 25% and
50% less, respectively, than 2001. The Chief Executive Officer received no
incentive compensation for 2002 due to the decline in sales and EBITDA.
In addition, through the use of stock options, the Company ensures that a
part of the executives' compensation is closely tied to appreciation in the
Company's stock price. The overall objectives of this strategy are to attract
and retain the best possible executive talent, to motivate these executives to
achieve the goals inherent in the Company's business strategy, to link executive
and stockholder interests through equity based plans and, finally, to provide a
compensation package that recognizes individual contributions as well as overall
business results. In 2002, executives at the Company did not receive any stock
options.
The Compensation and Stock Option Committee regularly reports its actions
and recommendations to the full Board of Directors. In 2002, none of the actions
or recommendations of the Compensation and Stock Option Committee were modified
or rejected by the Board of Directors.
By the Compensation and Stock Option Committee
Lawrence W. Bianchi, Margaret Bertelsen Hampton and Robert W. Sullivan
INDEPENDENT COMMITTEE
The Company's Independent Committee was established in 2002 following the
passage of the Sarbanes-Oxley Act in 2002. The Independent Committee is made up
of directors who are not a member of the Company's management nor an employee or
affiliate of any stockholder owning 10% or more of the Company's securities. For
2002, the Independent Committee consisted of Lawrence W. Bianchi, Leon A. Kranz,
Scott D. Roeper and Robert W. Sullivan. Among other duties, the Independent
Committee is responsible for nominating the slate of directors to be considered
for election at the Company's annual meeting of stockholders. Due to the timing
of its organization, the Independent Committee met only once in 2002.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual fee of twenty thousand dollars
($20,000.00) which is payable quarterly. In addition, directors who are not
officers or employees of the Company receive a fee of one thousand dollars
($1,000.00) for each Board meeting personally attended.
5
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information for the Company's fiscal years
ended December 31, 2002, 2001 and 2000, with regard to the compensation for
their services to the Company of the Chief Executive Officer and each of the
other four (4) most highly compensated executive officers serving the Company at
the close of the Company's most recently completed fiscal year.
- ----------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation(1) Compensation
- ---------------------------------------- -------- ----------------------------------- --------------------
Restricted Stock All Other
Other Stock Option Compen-
Name and Year Salary Bonus(2) Annual Awards Awards sation(4)
Principal Position Compensation(3)(Shares) (Shares)
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Kerry L. Woody 2002 $274,601 -- $1,296 -- -- $4,996
President & Chief Executive Officer 2001 $286,102 $156,465 $774 -- -- $5,216
2000 $286,102 $159,350 $774 -- -- $5,020
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Wayne E. Larsen 2002 $173,312 -- $774 -- -- $3,475
Vice President Law/Finance & Secretary 2001 $180,967 $88,020 $774 -- -- $3,695
2000 $180,097 $91,800 $774 -- -- $3,549
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Randy B. Turner 2002 $168,807 -- $786 -- -- --
President - Pacific Cast Technologies, 2001 $154,500 $82,810 -- -- 10,000 --
Inc. 2000 $155,226 $120,680 -- -- 6,500 --
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
Gary J. Vroman 2002 $134,004 -- $468 -- -- $5,247
Vice President - Sales & Marketing 2001 $140,004 $25,200 $468 -- -- $5,029
2000 $140,542 $42,000 $468 -- -- $4,811
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
William J. Lazzari 2002 $125,375 -- -- -- -- $5,976
President - Stowe Machine Co., Inc. 2001 $126,997 $29,625 -- -- 10,000 $5,976
2000 $129,734 $12,500 -- -- -- $5,664
- ---------------------------------------- -------- ---------- ---------- ------------- ---------- --------- -----------
(1)Annual Compensation includes those amounts the executive officers may defer
under the 401(k) Plans of the Company and its subsidiaries as well as amounts
the executive officers may defer under the Company's Elective Deferred
Compensation Plan (the "EDC Plan"). Participants in the EDC Plan may elect to
defer salary and/or bonus on an unsecured basis and may select any of eight
investment options.
(2) An incentive bonus is paid only upon the achievement of a predetermined
financial objective set each year by the Board of Directors' Compensation
Committee at the beginning of the fiscal year.
(3)Other annual compensation includes supplemental life insurance provided to
the above listed executives.
(4) All other compensation consists principally of automobile allowances.
PENSION BENEFITS
Defined Benefit Plan. The Ladish Co., Inc. Salaried Pension Plan (the
"Pension Plan") is a "defined benefit" pension plan generally covering salaried,
non-union employees of the Company who are not covered by any other defined
benefit plan to which the Company makes contributions pursuant to a collective
bargaining agreement.
Upon reaching normal retirement at or after age 65, a participant is
generally entitled to receive an annual retirement benefit for life. The Pension
Plan provides alternative actuarially equivalent forms of benefit payment.
Vesting under the Pension Plan occurs after five years of continued service.
The monthly retirement benefit at the normal retirement age of at least 65
is determined pursuant to a formula as follows: 1.25% of the average base salary
(exclusive of bonuses or other incentive or special compensation) of the
individual during the consecutive five year period of service within the ten
years preceding termination of employment (or after age 45, if longer) that
his/her earnings were highest is multiplied by the number of years of Benefit
Service (as defined). Monthly normal retirement benefits are payable on a
straight life annuity basis and such amounts are not subject to any deduction
for Social Security or other offset amounts.
The following table sets forth the annual benefits payable to a participant
who qualified for normal retirement in 2002, with the specified highest average
earnings during the consecutive five year period of service within the ten years
prior to retirement and the specified years of Benefit Service:
6
- --------------------------------- -----------------------------------------------------------------------------------
Average Annual Earnings for
Highest 5-Year Period Within
the 10-Years Preceding
Retirement Years of Benefit Service
- --------------------------------- -----------------------------------------------------------------------------------
10 15 20 25 30 40
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$50,000 $6,250 $9,375 $12,500 $15,625 $18,750 $25,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$95,000 $11,875 $17,813 $23,750 $29,688 $35,625 $47,500
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$100,000 $12,500 $18,750 $25,000 $31,250 $37,500 $50,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$150,000 $18,750 $28,125 $37,500 $46,875 $56,250 $75,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$200,000 $25,000 $37,500 $50,000 $62,500 $75,000 $100,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
$250,000 $31,250 $46,875 $62,500 $78,125 $93,750 $125,000
- --------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
The years of Benefit Service for Messrs. Woody, Larsen and Vroman as of
January 1, 2003 were 28, 22, and 21, respectively.
Deferred Compensation Agreements. The Company has entered into deferred
compensation agreements (the "Agreements") with eight current officers of the
Company, including Messrs. Woody, Larsen and Vroman. Each employee covered by
the Agreements (an "Employee"), upon full vesting, is entitled to receive
supplemental disability or retirement benefits; provided that in no event may a
person's total retirement benefits under the Agreements exceed 60% of the
monthly average base salary (inclusive of bonuses or other compensation) during
the five calendar years immediately preceding retirement.
The retirement benefit at the normal retirement age of at least 62 is
determined pursuant to a formula as follows: 60% of the monthly average of the
Employee's base salary plus any incentive compensation which does not exceed
twenty percent of the base salary during the five calendar years of highest
compensation over ten years immediately preceding retirement multiplied by years
of service, up to 15, and divided by 15. If an Employee suffers a disability (as
defined), he is entitled to benefits paid under the same formula as in the
preceding sentence (with his years of service calculated as if he had retired at
age 62), reduced by other disability benefits paid by the Company or through
workers' compensation (unless he is receiving fixed statutory payments for
certain bodily injuries).
Any amount to be paid under the Agreement shall be reduced by any benefit
paid to an Employee or his beneficiary pursuant to the Pension Plan.
Defined Contribution Plan. The Ladish Co., Inc. Savings and Deferral
Investment Plan ("SDIP"), which has been qualified under section 401(k) of the
Internal Revenue Code, provides that salaried, non-union employees with six
months' service may contribute 1% to 20% of their annual base salary to SDIP and
the Company will provide a matching contribution in an amount to be determined
by the Board of Directors of the Company. Employees' contributions of 1% to 20%
can be "before tax" contributions, "after tax" contributions or a combination of
both. The employees' contributions and the matching Company contribution may be
placed by the employee in a fixed income fund, an equity investment fund or
various combinations of each.
Elective Deferred Compensation Plan. The EDC Plan was approved by the Board
of Directors during 2000 and became effective during the Fourth Quarter of 2000.
Participants in the EDC Plan may elect to defer salary and/or bonus on an
unsecured basis and may select any of eight investment options. There is no
Company matching contribution to the EDC Plan and the Company provides no
assurance or guaranty of investment returns under any of the investment options.
7
TOTAL SHAREHOLDER RETURN
The following graph compares the period percentage change in Ladish's
cumulative total shareholder return on its common stock, assuming dividend
reinvestment, with the cumulative total return of (i) the Russell 2000 Small Cap
Index, and (ii) a peer group from the Company's industry, for the period of
March 9, 1998 to December 31, 2002. Ladish's use of less than a five-year period
reflects the effective date of the registration of its common stock under
Section 12 of the Exchange Act.
[GRAPH OMITTED]
-------------------- ------------ ------------- ------------- ------------ ------------- -------------
Mar-9-98 Dec-31-98 Dec-31-99 Dec-31-00 Dec-31-01 Dec-31-02
-------------------- ------------ ------------- ------------- ------------ ------------- -------------
Ladish 100 58.8 47.2 74.1 75.3 55.6
-------------------- ------------ ------------- ------------- ------------ ------------- -------------
Russell 2000 100 91.5 109.5 104.9 100.8 88.1
-------------------- ------------ ------------- ------------- ------------ ------------- -------------
Industry Peers 100 55.8 28.6 66.6 46.6 35.9
-------------------- ------------ ------------- ------------- ------------ ------------- -------------
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Woody,
Larsen and Vroman which are substantially similar in all respects. The basic
employment agreement provides for a number of benefits, all of which vest after
ten years of employment, including group term life insurance, health and dental
coverage and long-term disability coverage.
The agreements provide that, upon the involuntary termination of the
employee other than for cause, the Company is required to pay the employee 24
months of severance pay, determined by the employee's base monthly salary at the
time of termination. In the case of Messrs. Woody and Larsen they are entitled
to 30 months of severance pay. Upon retirement at age 62, the employee will
receive his normal retirement benefits. Such benefits include a monthly payment
equal to 60% of the employee's average compensation (i.e., monthly average of
compensation for the five years of highest compensation over the ten years prior
to retirement) multiplied by a fraction, the numerator of which is the length of
service of the employee up to 15 and the denominator of which is 15. There are
also provisions adjusting this calculation in the event of early retirement.
Disabled employees can also be eligible for certain retirement benefits. All
retirement benefits are tolled during any period of re-employment. Each
agreement further provides that any compensation paid by the Company shall be
reduced by any benefit paid under the Company's salaried employees' retirement
plan. In addition to the foregoing, grants of stock options and SARs under the
Incentive Plan become immediately exercisable upon a change in control of the
Company. Mr. Turner has a separate agreement with the Company which provides for
six months of severance pay in the event of involuntary separation other than
for cause.
8
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During the year ending December 31, 2002, Kerry L. Woody, President and
Chief Executive Officer of the Company, served on the Compensation and Stock
Option Committee of the Company. While serving on the Compensation and Stock
Option Committee, Mr. Woody did not vote on any matter in which Mr. Woody had a
personal financial interest. Mr. Woody resigned from the Compensation and Stock
Option Committee on January 31, 2002. No other insider at the Company
participated on the Compensation and Stock Option Committee in 2002.
CERTAIN RELATIONSHIPS
The Company participates in a joint venture with Weber Metals, Inc., of
which Leon A. Kranz, a director of the Company, is chief executive officer. The
Company paid $1,073,000 to Weber Metals, Inc. under the joint venture in 2002.
THE STOCK OPTION PLAN
The Plan has been established by the Company to promote the long-term
financial interest of the Company by providing for the award of equity-based
incentives to key employees and other persons providing material services to the
Company, approximately 35 persons as of February 28, 2003. The Plan provides a
means whereby such individuals may acquire shares of Common Stock through the
grant of stock options and stock appreciation rights.
- ----------------------------------------------------------------------------------------------------------------------
Option Grants In 2002
- ----------------------------------------------------------------------------------------------------------------------
Percentage of
Shares Total Options
Underlying Granted to All
Options Employees in Exercise Price Grant Date Present
Name Granted 2002 (per share) Expiration Date Value
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Kerry L. Woody 0 0% -- -- --
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Wayne E. Larsen 0 0% -- -- --
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Gary J. Vroman 0 0% -- -- --
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
William J. Lazzari 0 0% -- -- --
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
Randy B. Turner 0 0% -- -- --
- --------------------------- ------------ ----------------- ---------------- --------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises in 2002 and Fiscal Year-End Option Values
- ---------------------------------------------------------------------------------------------------------------------
Number of
Shares Number of Shares Underlying Value of Unexercised
Acquired on Value Unexercised Options at In-the-Money
Name Exercise Realized Fiscal Year-End Options at Fiscal Year-End
- ----------------------------- ------------- ----------- ------------------------------ ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Kerry L. Woody -- -- 178,167 0 $161,024 $0
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Wayne E. Larsen -- -- 95,500 0 $73,130 $0
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Gary J. Vroman -- -- 70,000 0 $61,800 $0
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
William J. Lazzari -- -- 15,000 0 $5,150 $0
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
Randy B. Turner -- -- 16,500 0 $0 $0
- ----------------------------- ------------- ----------- -------------- --------------- ------------- ----------------
9
- ----------------------------------------------------------------------------------------------------------------------
Ten-Year Option/SAR Repricings
- ----------------------------------------------------------------------------------------------------------------------
Market Length of
Securities price of original
underlying stock at Exercise New option term
Name Date number of time of price at exercise remaining
options/SARs repricing time of price at date of
repriced or or repricing or ($) repricing or
amended (#) amendment amendment ($) amendment
($)
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
Kerry L. Woody May 21, 1999 100,000 $8.31 $14.50 $8.25 106 months
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
Wayne E. Larsen May 21, 1999 60,000 $8.31 $14.50 $8.25 106 months
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
Gary J. Vroman May 21, 1999 40,000 $8.31 $14.50 $8.25 115 months
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
William J. Lazzari -- -- -- -- -- --
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
Randy B. Turner -- -- -- -- -- --
- ---------------------------- ----------------- --------------- ------------- -------------- ---------- ---------------
- ----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plan Information
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- -------------------------------------------- ------------------------ ------------------------ -----------------------
Number of securities
remaining available
for future issuance
Number of securities Weighted-average under equity
to be issued upon exercise price of compensation plans
exercise of outstanding (excluding securities
outstanding options, options, warrants reflected in
Plan Category warrants and rights and rights column (a))
- -------------------------------------------- ------------------------ ------------------------ -----------------------
Equity compensation plans 1,211,522 $11.26 10,500
approved by security holders
- -------------------------------------------- ------------------------ ------------------------ -----------------------
Equity compensation plans
not approved by security holders -- -- --
- -------------------------------------------- ------------------------ ------------------------ -----------------------
Total 1,211,522 $11.26 10,500
- -------------------------------------------- ------------------------ ------------------------ -----------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than ten percent (10%) of
the Company's Common Stock to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). These reports are
also filed with Nasdaq and a copy of each report is furnished to the Company.
Additionally, SEC regulations require that the Company identify any
individuals for whom one of the referenced reports was not filed on a timely
basis during the most recent fiscal year. To the Company's knowledge, based on
review of reports furnished to it, each individual who was required to file such
a report for the calendar year ending December 31, 2002 did so in a timely
manner.
RELATIONSHIP WITH INDEPENDENT AUDITORS
On June 13, 2002 the Company appointed Deloitte & Touche LLP ("D&T") as its
independent auditors due to the demise of the Company's former independent
auditors, Arthur Andersen, LLP. On August 19, 2002 D&T resigned as the
independent auditors of the Company. D&T attributed the resignation to a
disagreement with the Company over the Company's prior accounting for net
operating losses and a valuation reserve. The Company's Audit Committee did not
discuss this disagreement with D&T. D&T did not issue a report on the Company's
financial statements. The Company authorized D&T to respond fully to the
inquiries of any successor auditor concerning the subject matter of the
disagreement. On September 9, 2003 the Company appointed KPMG LLP as its
independent auditors.
10
KPMG LLP have been the auditors of the accounts of the Company for the
fiscal year ended December 31, 2002. It is anticipated that representatives of
KPMG LLP will be present at the 2003 Annual Meeting, will have the opportunity
to make a statement if they so desire and will be available to respond to
appropriate questions raised at the 2003 Annual Meeting or submitted to them in
writing before the 2003 Annual Meeting.
KPMG LLP has informed the Company that it does not have any direct
financial interest in the Company and that it has not had any direct connection
with the Company in the capacity of promoter, underwriter, director, officer or
employee.
As is customary, auditors for the current fiscal year will be appointed by
the Audit Committee and ratified by the Board of Directors at their meeting
immediately following the 2003 Annual Meeting.
OTHER MATTERS
Management of the Company is not aware of other matters to be presented for
action at the 2003 Annual Meeting; however, if other matters are presented for
action, it is the intention of the persons named in the accompanying form of
proxy to vote in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
Stockholders who wish to include a proposal in the proxy statement for the
Company's Annual Meeting of Stockholders for 2004 pursuant to Rule 14a-8 under
the Securities Exchange Act of 1934, must forward the proposal to the Secretary
of the Company no later than December 10, 2003. Stockholder proposals other than
pursuant to Rule 14a-8 will be considered untimely under the Company's By-laws
if received less than 45 days in advance of the Annual Meeting of Stockholders
in 2004 and the Company will not be required to present such proposals at the
meeting. If the Board of Directors of the Company chooses to present such a
proposal despite its untimeliness, the people named in the proxies solicited by
the Board of Directors for the 2004 Annual Meeting of Stockholders will have the
right to exercise discretionary voting power with respect to such proposal.
REPORT ON FORM 10-K
Upon the written request of any stockholder, addressed to the Secretary of
the Company, the Company will provide to such stockholder, without charge, a
copy of the Company's 2002 Annual Report on Form 10-K (without exhibits), as
filed with the Securities and Exchange Commission.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, stockholders are urged, regardless of the number of shares
owned, to date, sign and return the enclosed proxy.
By Order of the Board of Directors
/s/ WAYNE E. LARSEN
---------------------------------------
Wayne E. Larsen
March 28, 2003 Secretary
11
Exhibit A
---------
AUDIT COMMITTEE CHARTER
-----------------------
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the compliance
by the Company with legal and regulatory requirements and (3) the independence
and performance of the Company's auditors.
The Audit Committee shall have the authority and the financial resources to
retain special legal, accounting or other consultants to advise the Committee.
The Audit Committee may request any officer or employee of the Company or the
Company's outside counsel or independent auditor to attend a meeting of the
Committee or to meet with any members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and submit it to
the Board for approval.
2. Review the quarterly and the annual audited financial statements with
management and the independent auditor, including major issues regarding
accounting and auditing principles and practices as well as the adequacy of
internal controls that could significantly affect the Company's financial
statements. In the case of quarterly reviews, the Chairman of the Audit
Committee may represent the entire Audit Committee in meeting with
management and the independent auditor.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
5. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor or management.
6. Be directly responsible for the appointment, compensation and oversight of
the independent auditor. The independent auditor reports directly to the
Audit Committee.
7. Approve the fees to be paid to the independent auditor for outside auditing
services. The Audit Committee must pre-approve the use of the independent
auditor for any other services.
8. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if so
determined by the Audit Committee, recommend that the Board take
appropriate action to insure the independence of the auditor.
9. Evaluate the performance of the independent auditor and, if so determined
by the Audit Committee, replace the independent auditor.
10. Obtain reports from management and the independent auditor that the
Company's subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's Conflict of Interest
Policy.
11. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
1
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the audit.
12. Prepare the report required by the rules of the Securities and Exchange
Commission (the "SEC") to be included in the Company's annual proxy
statement.
13. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Conflict of Interest Policy.
14. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators or
governmental agencies.
15. Meet at least annually with the Chief Financial Officer and the independent
auditor.
16. Consist of at least three members. The members of the Audit Committee must
be (i) a Director of the Company; (ii) financially sophisticated; and (iii)
independent from being an employee or an affiliated person of the Company.
17. Designate at least one member of the Audit Committee be a Financial Expert
as that term is defined by the SEC.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's Conflict of Interest.
2
ANNUAL MEETING OF SHAREHOLDERS OF
LADISH CO., INC.
MAY 14, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
* Please detach and mail in the envelope provided. *
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal (1): To elect (7) seven Directors, to serve for the This Proxy may be revoked at any time before the
term of one year or until their successors have been hereby authority granted is exercised by (i) delivering a
elected and have duly qualified. written statement of revocation to the secretary of
the Company, (ii) submitting a later dated Proxy or
(iii) attending the Annual Meeting and voting in
person.
NOMINEES
[ ] FOR ALL NOMINEES o Lawrence W. Bianchi
o Margaret B. Hampton
[ ] Withhold authority o Leon A. Kranz
FOR ALL NOMINEES o Wayne E. Larsen
o Scott D. Roeper
[ ] for all except o Robert W. Sullivan
(See instructions below) o Kerry L. Woody
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
----------- mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold, as shown here: o
----------------------------------------------------------------------------
----------------------------------------------------------------------------
To change the address on your account, please check o the box at right
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method. [ ]
----------------------------------------------------------------------------
Signature of Shareholder ____________________ Date:_________ Signature of Shareholder ________________________ Date:_________
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
PROXY
This Proxy is being solicited by the Board of Directors of Ladish Co.,
Inc. (the "Company"). The undersigned hereby appoints Wayne E. Larsen and Kerry
L. Woody with full power to act alone and with full power of substitution, as
proxy of the undersigned, to attend the Annual Meeting of the Company to be held
on Wednesday, May 14, 2003, in the Creole Meeting Room of the Four Points Hotel
Sheraton Milwaukee Airport, 4747 South Howell Avenue, Milwaukee, Wisconsin, at
10:00 a.m. Central Daylight Time, and any adjournment or postponement thereof
(the "Annual Meeting"), and to vote all shares of Common Stock of the Company
held of record by the undersigned on March 28, 2003, upon any and all matters
that may properly come before the Annual Meeting. This Proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS LISTED ON THE REVERSE SIDE. This Proxy, when properly executed, may be
voted in the discretion of the proxy upon any and all other matters that may
properly come before the Annual Meeting and the proxy is hereby authorized to
vote the shares of Common Stock represented by the proxy on matters incident to
the conduct of the Annual Meeting, including any motion to adjourn or postpone
the Annual Meeting (although the proxy does not intend, and is not aware at this
time of any intention of any other person, to make such a motion).
(Continued and to be signed on the reverse side)