UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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Kewaunee Scientific Corporation
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KEWAUNEE SCIENTIFIC CORPORATION
2700 West Front Street
Statesville, North Carolina 28677-2927
William A. Shumaker
President and
Chief Executive Officer
July 20, 2001
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kewaunee Scientific Corporation (the "Company"), which will be held on the
37th floor at Harris Trust & Savings Bank, 111 West Monroe Street, Chicago,
Illinois, on August 22, 2001, at 10:00 A.M. Central Daylight Time.
At the meeting, management will review with you the Company's past
year's performance and the major developments which occurred during the year.
There will be an opportunity for stockholders to ask questions about the Company
and its operations. We hope you will be able to join us.
To assure that your shares are represented at the meeting, please
vote, sign and return the enclosed proxy card as soon as possible. The proxy is
revocable and will not affect your right to vote in person if you are able to
attend the meeting.
The Company's 2001 Annual Report to Stockholders is enclosed.
Sincerely yours,
/s/ William A. Shumaker
KEWAUNEE SCIENTIFIC CORPORATION
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on
August 22, 2001
The Annual Meeting of Stockholders of Kewaunee Scientific Corporation
will be held on the 37th floor at Harris Trust & Savings Bank, 111 West Monroe
Street, Chicago, Illinois, on August 22, 2001, at 10:00 A.M. Central Daylight
Time, for the purpose of considering and acting upon the following:
(1) To elect two Class III directors; and
(2) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on July 6, 2001 will
be entitled to vote at the meeting. A list of stockholders will be available
for examination by any stockholder for any purpose germane to the meeting,
during normal business hours, at the offices of Bell, Boyd & Lloyd, 70 West
Madison Street, Chicago, Illinois, for a period of 10 days prior to the meeting.
It is important that your shares be represented at the meeting
regardless of the size of your holdings. Whether or not you intend to be
present at the meeting in person, we urge you to vote, date and sign the
enclosed proxy and return it in the envelope provided for that purpose, which
does not require postage if mailed in the United States.
D. MICHAEL PARKER
Secretary
July 20, 2001
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YOUR VOTE IS IMPORTANT
Please vote, date and sign the enclosed proxy and return it
promptly in the enclosed envelope.
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KEWAUNEE SCIENTIFIC CORPORATION
Statesville, North Carolina 28677-2927
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Kewaunee
Scientific Corporation (the "Company") for use at the annual meeting of
stockholders of the Company to be held on the 37th floor of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois, on August 22, 2001, at
10:00 A.M. Central Daylight Time, and at any postponements or adjournments
thereof. Proxies properly executed and returned in a timely manner will be
voted at the meeting in accordance with the directions noted thereon. If no
direction is indicated, proxies will be voted for the election of the nominees
named herein as directors, and on other matters presented for a vote in
accordance with the judgment of the persons acting under the proxies.
The Company's principal executive offices are located at 2700 West
Front Street, Statesville, North Carolina 28677-2927 (telephone 704/873-7202).
The proxy, together with this Proxy Statement and the accompanying
Notice of Annual Meeting of Stockholders, is being mailed to stockholders on, or
about, July 20, 2001.
Election of Directors
Two Class III directors are to be elected at the meeting. The Board
of Directors, at its meeting on June 21, 2001, upon the recommendation of the
Nominating Committee, selected Kingman Douglass and Eli Manchester, Jr. as
nominees for re-election as directors at the annual meeting, each to serve for a
three-year term. Both of the nominees are serving as directors as of the date
of this Proxy Statement. The Class I and II directors named below have terms
which expire in 2002 and 2003, respectively.
The two nominees receiving the greatest number of votes at the annual
meeting will be elected directors. Unless a stockholder indicates otherwise on
the proxy, proxies will be voted for the election of the two nominees named
below. If due to circumstances not now foreseen, either of the nominees becomes
unavailable for election, the proxies will be voted for such other person or
persons as the Board of Directors may select, or the Board will make an
appropriate reduction in the number of directors to be elected.
Nominees to serve until annual meeting of stockholders in 2004 (Class III):
KINGMAN DOUGLASS, 77, was elected a director of the Company in 1986. He has
been engaged as a consultant in corporate counseling since 1986.
ELI MANCHESTER, JR., 70, was elected a director of the Company in November 1990.
He was elected President and Chief Executive Officer of the Company in July
1990. In August 1999 he was elected Chairman of the Board, retaining the
position of Chief Executive Officer. In September 2000, he relinquished
the position of Chief Executive Officer, retaining the position of
Chairman.
Directors to serve until annual meeting of stockholders in 2002 (Class I):
MARGARET BARR BRUEMMER, 49, was elected a director of the Company in February
1995. Ms. Bruemmer has been engaged in the practice of law in Milwaukee,
Wisconsin as a sole practitioner for more than five years and has been
Trustee of the Allis-Chalmers Corporation Product Liability Trust since
June 1996.
WILEY N. CALDWELL, 74, was elected a director of the Company in 1988. From 1984
to 1992, when he retired, he was President of W.W. Grainger, Inc., a
distributor of electrical and mechanical equipment. He is also a director
of Consolidated Papers, Inc.
SILAS KEEHN, 71, was elected a director of the Company in May 2001 to fill the
vacancy on the Board created by the resignation of Thomas F. Pyle in
February 2001. From 1981 to 1994, when he retired, he was President of the
Federal Reserve Bank of Chicago. He is also a director of ABN AMRO Holding
N.V., ABN AMRO Bank N.V., TEPCO Resources, Inc., the Chicago Board Option
Exchange, and the National Futures Association.
Directors to serve until annual meeting of stockholders in 2003 (Class II):
JOHN C. CAMPBELL, JR., 58, was elected a director of the Company in 1973. Since
May 1995, Mr. Campbell has been engaged in private consulting. From May
1992 to May 1995, he was Chief Operating Officer, Executive Vice President
and a director of Grounds For Play, Inc. of Arlington, Texas, a
manufacturer of specialty equipment for children's playgrounds.
JAMES T. RHIND, 79, was elected a director of the Company in 1966. Since
January 1, 1993, he has been engaged in the practice of law as of counsel
to the law firm of Bell, Boyd & Lloyd LLC, Chicago, Illinois, counsel to
the Company. Prior thereto, he was a partner in that firm.
WILLIAM A. SHUMAKER, 53, has served as President of the Company since August
1999 and Chief Executive Officer since September 2000. He was elected a
director of the Company in February 2000. He served as the Company's Chief
Operating Officer from August 1998, when he was also elected Executive Vice
President, until September 2000. He served as General Manager of the
Company's Laboratory Products Group from February 1998 until August 1998.
He joined the Company in December 1993 as Vice President of Sales and
Marketing.
Except as otherwise indicated, each director and nominee has had the
principal occupation mentioned above for more than five years. Mr. Campbell is
the first cousin of Laura Campbell Rhind, wife of Mr. Rhind.
The Board of Directors has set the size of the Board of Directors at
eight members, divided into three classes. The Company's certificate of
incorporation provides that the three classes shall be as nearly equal in number
as possible.
The Board of Directors recommends a vote FOR the election of each
---
of the foregoing nominees for director.
2
Meetings and Committees of the Board
The business and affairs of the Company are managed under the
direction of the Board of Directors. Members of the Board keep informed of the
Company's business and activities by reports and proposals sent to them
periodically and in advance of each Board meeting and reports made to them
during these meetings by the President and other Company officers. The Board is
regularly advised of actions taken by the Executive Committee and other
committees of the Board, as well as significant actions taken by management.
Members of management are available at Board meetings and other times to answer
questions and discuss issues. During the Company's fiscal year ended April 30,
2001, the Board of Directors held five meetings.
The four standing committees of the Board of Directors of the Company
are the Executive Committee, the Audit Committee, the Compensation Committee and
the Financial/Planning Committee, the functions and membership of which are
described below.
The Executive Committee, consisting of Messrs. Rhind (Chairman),
Campbell, Manchester and Shumaker and Ms. Bruemmer, exercises the authority of
the Board between meetings of the full Board, subject to the limitations of the
Delaware General Corporation Law. It also acts as the Nominating Committee of
the Board. The Nominating Committee's function is to make recommendations to
the full Board with respect to candidates for Board membership, officers of the
Company, and Board committee membership. The Nominating Committee will consider
as prospective Board nominees persons brought to its attention by officers,
directors and stockholders. Proposals may be addressed to the Nominating
Committee at the address shown on the cover of this Proxy Statement, attention
of the Corporate Secretary. The Executive Committee met two times during the
Company's last fiscal year.
The Audit Committee, consisting of Messrs. Douglass (Chairman) and
Campbell and Ms. Bruemmer, each a non-employee director, performs the
responsibilities and duties described in the Company's Audit Committee Charter
and is responsible for recommending annually to the Board of Directors a firm of
independent public accountants; reviewing the overall scope of audits and the
annual financial statements of the Company and reporting to the full Board on
the Committee's conclusions; and making inquiries of the independent accountants
and the Company's financial officers and reporting to the full Board concerning
accounting methods, policies and financial and operating controls. The Audit
Committee met once during the Company's last fiscal year.
The Compensation Committee, consisting of Messrs. Caldwell (Chairman),
Douglass, Keehn and Rhind, considers and provides recommendations to the Board
of Directors with respect to the compensation (salaries and bonuses) of officers
of the Company; short- and long-range compensation programs for officers and
other key employees of the Company; benefit programs for all employees of the
Company; and stock option grants to key employees. The Compensation Committee
also acts as the Stock Option Committee, administering and interpreting the
stock option plans for officers and other key employees. Mr. Keehn was elected
a member of the Compensation Committee in May 2001 to fill the vacancy on the
Committee created by the resignation of Thomas F. Pyle in February 2001. The
Compensation Committee met once during the Company's last fiscal year.
3
The Financial/Planning Committee, consisting of Messrs. Manchester
(Chairman), Caldwell, Douglass, Keehn and Shumaker and Ms. Bruemmer, reviews and
provides recommendations to the Board of Directors with respect to the annual
budget for the Company, the Company's strategic plan and certain major
expenditures of the Company. The Financial/Planning Committee also reviews the
investment results of the Company's retirement plans. Mr. Keehn was elected a
member of the Financial/Planning Committee in May 2001 to fill the vacancy on
the Committee created by the resignation of Thomas F. Pyle in February 2001.
The Financial/Planning Committee met three times during the Company's last
fiscal year.
In the Company's last fiscal year, no director attended less than 75%
of the aggregate of all meetings of the Board and all meetings held by
committees of the Board on which such director served. No executive officer of
the Company served as a member of the Compensation Committee or as a director of
any other entity, one of whose executive officers serves on the Compensation
Committee or is a director of the Company.
Director Compensation
Each director who is not an employee of the Company receives for his
services as such an annual retainer of $17,000 plus a fee of $1,000 for each day
of Board and/or committee meetings attended, a multiple-meeting fee of $1,250
and a $500 fee for telephone meetings. In addition, the Chairmen of the Audit
and Compensation Committees receive an annual fee of $1,500. Payment of such
fees may be deferred at the request of a director. All directors are reimbursed
for their expenses for each Board and committee meeting attended. Under the
Company's 1993 Stock Option Plan for Directors, each of the Company's non-
employee directors was granted a one-time option to purchase 5,000 shares of the
Company's common stock. These options became exercisable in 25% increments on
August 1 of each of the next four years after the date of grant, and have since
been exercised in full by each director, with the exception of Mr. Keehn, who
was granted his option in May 2001.
Non-employee directors may also elect to participate in the Company's
health insurance program. During the last fiscal year, Mr. Campbell
participated in this program.
Directors who are employees of the Company receive no compensation for
serving as directors.
4
EXECUTIVE COMPENSATION
Certain Summary Compensation Information
The following table sets forth certain information for each of the
fiscal years ended April 30, 2001, April 30, 2000 and April 30, 1999, with
respect to the compensation of the Chief Executive Officer, Mr. Manchester who
held the position of Chief Executive Officer until September 1, 2000, and the
Company's four other most highly compensated executive officers (the "named
executive officers") in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation Awards
-------------------
Annual Compensation Securities All Other
Name and Fiscal -------------------------------- Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Other ($) Options (#) ($) (1)
- ------------------------------ ------ -------- ---------- ---------- ------------ ------------
William A. Shumaker(2) 2001 216,092 - - 7,500 8,644
President and Chief 2000 192,200 - - 5,000 7,688
Executive Officer 1999 178,750 89,308 - 5,000 10,722
Eli Manchester, Jr. (2) 2001 195,200 - 10,000 7,808
Chairman of the Board 2000 285,600 - - - 11,424
1999 284,666 205,576 - 7,500 19,610
D. Michael Parker- 2001 151,736 - - 5,000 6,069
Senior Vice President- 2000 138,130 - - 4,000 5,525
Finance, Chief Financial 1999 132,166 47,723 - 4,000 7,196
Officer, Treasurer and
Secretary
Kurt P. Rindoks 2001 125,666 - - 3,000 5,027
Vice President-Engineering, 2000 119,864 - - 3,000 4,795
General Manager 1999 116,003 47,152 - 3,000 6,526
Resin Materials Division
James J. Rossi 2001 120,816 - - 3,000 4,832
Vice President- 2000 116,826 - - 3,000 4,673
Human Resources 1999 113,696 41,018 - 3,000 6,189
Kenneth E. Sparks (3) 2001 117,236 28,944 - 2,000 5,847
Vice President, 2000 111,459 47,981 - 2,000 6,378
General Manager 1999 127,519 - 33,425(4) 500 1,960
Technical Furniture Group
___________________________
(1) The amount listed for each named executive officer consists of matching
contributions made by the Company during the year on behalf of that
executive officer to the Company's (i) Incentive Savings Plan and (ii)
Executive Deferred Compensation Plan. The separate amounts paid during
fiscal year 2001 for each named executive officer are, respectively: Mr.
Shumaker - $3,400 and $5,244; Mr. Manchester - $3,400 and $4,408; Mr.
Parker - $2,761 and $3,308; Mr. Rindoks- $2,413 and $2,614; Mr. Rossi-
$2,271 and $2,561; and Mr. Sparks - $2,725 and $3,122.
(2) Mr. Shumaker was named Chief Executive Officer, effective September 1,
2000, succeeding Mr. Manchester who continued to serve as Chairman of the
Board. Mr. Shumaker was elected President in August 1999.
(3) Mr. Sparks was elected a Vice President of the Company effective February
27, 2001.
(4) This amount represents amounts paid to, or on behalf of, Mr. Sparks for
moving and relocation expenses.
5
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to
options granted under the Company's 1991 Key Employee Stock Option Plan during
fiscal year 2001 to each named executive officer. No options were granted
during the year under the Company's 2000 Key Employee Stock Option Plan.
OPTION GRANTS IN FISCAL YEAR 2001
Potential Realized Value
# of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options Employees Price Per Expiration -----------------------------
Name Granted (1) in Fiscal Year Share ($) Date 5% ($) 10% ($)
---- ------------ --------------- --------------- --------------- ----------- --------------
William A. Shumaker 7,500 17.1% 10.125 8/23/10 47,758 121,025
Eli Manchester, Jr. 10,000 22.9% 10.125 8/23/10 63,678 161,366
D. Michael Parker 5,000 11.4% 10.125 8/23/10 31,839 80,683
Kurt P. Rindoks 3,000 6.9% 10.125 8/23/10 19,103 48,410
James J. Rossi 3,000 6.9% 10.125 8/23/10 19,103 48,410
Kenneth E. Sparks 2,000 4.6% 10.125 8/23/10 12,736 32,273
___________________
(1) All options were granted at fair market value on the grant date. Options
become exercisable in 25% increments on the first through fourth
anniversaries of the grant date. Exercisability of options is accelerated
in the event of a "change of control" of the Company as defined in the
Plan.
(2) These amounts represent hypothetical gains that could be achieved for
options if they are exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the options are granted to the end of the
option term. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Company's common stock and the optionee's
continued employment through the vesting period. There can be no assurance
that the amounts reflected in this table will be achieved.
Option Exercises and Holdings
The following table sets forth certain information with respect to
options exercised during fiscal year 2001 by the named executive officers and
with respect to options held at the end of the year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT FISCAL YEAR-END
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at April 30, 2001 at April 30, 2001 ($) (2)
Acquired on Value -------------------------- ---------------------------
Name Exercise Realized ($) (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------------------- ----------- ------------- ----------- --------------
William A. Shumaker 7,501 36,334 15,999 14,500 45,177 394
Eli Manchester, Jr. - - 7,500 15,000 12,594 656
D. Michael Parker - - 12,375 10,625 40,703 328
Kurt P. Rindoks - - 4,500 7,250 4,369 263
James J. Rossi - - 12,000 7,250 38,588 263
Kenneth E. Sparks - - 750 3,750 - -
___________________
(1) Based on the difference between the exercise price and the fair market
value of the Company's stock at the date of exercise.
(2) Based on the difference between the closing price of the Company's stock on
April 30, 2001 and the exercise price of the options for each optionee.
6
Retirement Plan
The named executive officers of the Company participate in the
Company's Retirement Plan. The Retirement Plan provides retirement benefits for
participating employees which are calculated with reference to years of service
and final average monthly compensation (salary and bonus). The benefit amount
is calculated as 40% of the 10-year final average annual compensation minus 50%
of the Primary Social Security Benefit, all multiplied by a fraction, the
numerator of which is the number of years of credited service up to 30 years,
and the denominator of which is 30. Participants in the Retirement Plan may
elect among several payment alternatives. The following table shows estimated
annual benefits payable to employees with the indicated years of service and
final average annual compensation. The estimated annual benefits are based upon
the assumption that the Retirement Plan will continue in effect, without change,
that the participant retires at age 65, and that the participant does not elect
any alternate payment option under the Retirement Plan. To the extent ERISA
rules restrict the amount otherwise payable under the Plan, the amount in excess
of the restrictions will be paid by the Company under the provisions of the
Company's Pension Equalization Plan. At April 30, 2001, the credited years of
service under the Retirement Plan for Messrs. Shumaker, Manchester, Parker,
Rindoks, Rossi, and Sparks were 7.6, 10.6, 10.7, 16.5, 17.5, and 3.6,
respectively.
Years of Service
Final Average -------------------------------------------------------
Compensation 10 15 20 25 30 35
- ------------ ------- ------- -------- -------- -------- -------
$500,000 $63,590 $95,390 $127,190 $158,990 $190,780 190,780
400,000 50,260 75,390 100,520 125,650 150,780 150,780
300,000 36,930 55,390 73,860 92,320 110,780 110,780
200,000 23,590 35,390 47,190 58,990 70,780 70,780
100,000 10,260 15,390 20,520 25,650 30,780 30,780
--------------------
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Compensation Committee
Report on Executive Compensation", "Audit Committee Report" and "Performance
Graph" will not be deemed to be filed or to be proxy soliciting material or
incorporated by reference in any prior or future filings by the Company under
the Securities Act of 1933 or the Securities Exchange Act of 1934.
7
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board, which consists of four non-
employee directors of the Company, considers and provides recommendations to the
full Board of Directors with respect to salaries and other compensation programs
for executive officers of the Company.
The objective of the Company's executive compensation program is to
attract, motivate, reward and retain management talent critical to the Company's
achievement of its objectives. Salaries and other compensation for the
Company's executive officers are based on each executive officer's
responsibilities, level of experience, and performance over time, as well as on
the recommendation of the Chief Executive Officer. In order to assure that
salaries and compensation remain competitive, the Company subscribes to and
consults various published surveys on executive compensation.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the deduction for federal income tax purposes of certain compensation
paid by any publicly-held corporation to its chief executive officer and its
four other most highly compensated officers to $1 million per year for each such
executive. These deductibility levels are not relevant to the Company at the
current levels of compensation of its executive officers.
Executive Officer Compensation
The Company's compensation program for executive officers has four
principal components which are discussed below.
Base Salary
The base salary of each of the executive officers, other than the
Chief Executive Officer, is determined after considering the compensation levels
of management personnel with similar responsibilities at other companies,
utilizing compensation surveys for manufacturing and service companies with
generally similar annual sales volume. As these surveys are broad-based, they
include companies other than those comprising the Similar Market Capitalization
Index used in the Performance Graph below. Using the compensation surveys, a
salary range consisting of minimum, mid-point and maximum reference points is
established for each executive officer. The base salary for each executive
officer is then determined by considering the particular qualifications of the
executive holding the position, his level of experience, and his sustained
performance over time.
Annual Incentive Compensation
All of the Company's executive officers are eligible to participate in
an annual incentive bonus plan, pursuant to which each executive officer is
eligible to earn a cash bonus for each fiscal year of the Company, based
primarily on the attainment of earnings goals established in the incentive bonus
plan and, to a lesser extent, on the executive officer's achievement of
established personal goals to the degree determined by the Board of Directors
upon the recommendation of the Chief Executive Officer.
At the beginning of each fiscal year, the Board of Directors approves
earnings goals for the Company for such year and, upon recommendation of the
Compensation Committee, establishes specified percentages of the executive
officers' beginning-of-the-year
8
base salaries that will be available for bonuses if the Company and/or its
operating segments achieves specified earnings goals and the executive officers
achieve their personal goals. The percentages increase as the earnings reach
various established levels. The only executive officer who earned a cash bonus
under the incentive bonus plan for fiscal year 2001 was Mr. Sparks due to the
level of earnings achieved by the Company's Technical Furniture Group.
Stock Option Plans
The Company uses stock options as its primary long-term incentive plan
for executive officers. Stock options provide executive officers with an
incentive to improve the operations and increase profits of the Company, along
with the opportunity to acquire and build an ownership interest in the Company.
The exercise price of stock options may not be less than the fair market value
of the Company's common stock on the date of the grant of such option.
Individual awards are based on an individual's performance, his or her
comparative base salary level and the number of stock option grants previously
made. Stock option awards are normally made annually in August by the Board of
Directors, based on the recommendations of the Chief Executive Officer and the
Compensation Committee.
Other Compensation Plans
Each of the Company's executive officers is entitled to receive
additional compensation in the form of payments, allocations, or accruals under
various group compensation and benefit plans. Benefits under these plans are
not directly, or indirectly, tied to employee or Company performance.
Chief Executive Officer Compensation
The Chief Executive Officer's compensation includes base salary,
incentive compensation, stock options, and benefits under various group plans.
The Compensation Committee considers Mr. Shumaker's leadership an important
factor in the future success of the Company. In establishing his base salary
and stock option grant, the Compensation Committee considers operating results
for the prior year and the current year, development of the Company's business
through a strong management team, operational improvements, compensation of
chief executive officers of other companies with comparable sales, and the price
of the Company's common stock. The CEO's annual incentive compensation is
determined pursuant to the Company's incentive bonus plan. As the Company did
not meet its established earnings goals under the incentive bonus plan, no cash
bonus was paid to Mr. Shumaker for fiscal year 2001.
Compensation Committee Members
Wiley N. Caldwell, Chairman
Kingman Douglass
Silas Keehn
James T. Rhind
9
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended April 30, 2001 with management
and the Company's independent auditors, PricewaterhouseCoopers LLP. The Audit
Committee has discussed with PricewaterhouseCoopers LLP the matters required to
be discussed by Statement on Auditing Standards No. 61 relating to the conduct
of the audit. The Audit Committee has received the written disclosures and the
letter for PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, and has
discussed with PricewaterhouseCoopers LLP their independence. Based on the
Audit Committee's review of the audited financial statements and the review and
discussions described in the foregoing paragraph, the Audit Committee
recommended to the Board of Directors that the audited financial statements for
the fiscal year ended April 30, 2001 be included in the Company's Annual Report
on Form 10-K for the fiscal year ended April 30, 2001 for filing with the
Securities and Exchange Commission. All members of the Audit Committee meet the
independence standards established by the National Association of Securities
Dealers.
Audit Fees
Fees payable to PricewaterhouseCoopers LLP for professional services
rendered in connection with the audit of the Company's financial statements for
the year ended April 30, 2001 and for reviews of the financial statements
included in the Company's Forms 10-Q for that year are estimated to total
$51,500.
Financial Information Systems Design and Implementation Fees
For the year ended April 30, 2001, PricewaterhouseCoopers LLP did not
provide the Company with any professional services in connection with financial
information systems design and implementation.
All Other Fees
For the year ended April 30, 2001, PricewaterhouseCoopers LLP billed
the Company an aggregate of approximately $32,750 for professional services and
expenses primarily related to tax compliance and consulting services.
Audit Committee Members
Kingman Douglass, Chairman
John C. Campbell, Jr.
Margaret Barr Bruemmer
10
PERFORMANCE GRAPH
The graph below sets forth a comparison of the Company's annual
stockholder return with the annual stockholder return of (i) the Nasdaq Market
Index, and (ii) an index of Nasdaq, non-financial companies with similar market
capitalizations to the Company/1/. The graph is based on an investment of $100
on April 30, 1996 (the last trading day prior to the end of the Company's 1996
fiscal year) in the Company's common stock, assuming dividend reinvestment. The
graph is not an indicator of the future performance of the Company. Thus, it
should not be used to predict the future performance of the Company's stock.
The graph and related data were furnished by Media General Financial Services,
Richmond, Virginia.
Comparison of 5-Year Cumulative Total Return
Kewaunee Scientific Corporation, Nasdaq Market Index
and Similar Market Capitalization Index
[GRAPH]
4/30/96 4/30/97 4/30/98 4/30/99 4/28/00 4/30/01
------- ------- ------- ------- ------- -------
Kewaunee Scientific Corporation 100.00 143.16 359.39 294.16 400.53 264.52
Peer Group 100.00 102.97 78.45 84.85 68.33 74.47
Nasdaq Market Index 100.00 106.59 158.32 209.07 324.85 181.39
/1/ In addition to the Company, the Similar Market Capitalization Index is
comprised of the following companies: Amcor Limited; Canterbury Park Holding
Corporation; Enterprise Oil PLC; HMG/Courtland Properties Inc.; Huntway Refining
Company; London Pacific Group, Limited; North Coast Energy, Inc.; P & F
Industries, Inc.; Research, Incorporated; TAT Technologies Ltd.; TBA
Entertainment Corporation; and Uniview Technologies Corporation. Consistent
with the prior year, the Company used for an index Nasdaq, non-financial
companies with a market capitalization similar to that of the Company. This
index was used because there exists no applicable published industry index or
line-of-business index, and the Company does not believe it can reasonably
identify a peer group of companies in its industry because the Company's primary
competitors are either divisions of larger corporations or are privately owned.
11
AGREEMENTS WITH CERTAIN EXECUTIVES
During fiscal year 2000, the Company entered into agreements with
Messrs. Shumaker, Parker, Rossi and Rindoks that provide for the payment of
compensation and benefits in the event of termination of their employment within
three years following a Change of Control of the Company, as defined in the
agreements. Each executive whose employment is so terminated will receive
compensation if the termination of his employment was by the Company or its
successor without cause, or by the executive for good reason, as defined in the
agreements. Upon such a termination of employment within one year following a
Change of Control, the Company or its successor will be required to make, in
addition to unpaid ordinary compensation and a lump-sum cash payment for certain
benefits, a lump-sum cash payment equal to the executive's annual compensation
with respect to Messrs. Rossi and Rindoks and two (2) times the executive's
annual compensation with respect to Messrs. Shumaker and Parker. Upon a
termination of employment occurring after the first anniversary of the date of
the Change of Control, in addition to unpaid ordinary compensation and a lump-
sum cash payment for certain benefits, Messrs. Rossi and Rindoks will be
entitled to a lump-sum payment equal to one-half (1/2) of their annual
compensation and Messrs. Shumaker and Parker will be entitled to a lump-sum
payment equal to their annual compensation.
In August 1997, the Company entered into a letter agreement with Roger
L. Eggena, currently Vice President of Manufacturing, which provides that if he
is terminated without cause, the Company will be obligated to pay him separation
pay equal to his current base salary for ten (10) months, reduced by any income
earned by him during the payment period.
12
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 2001, by (i) each director
and director nominee, (ii) each of the named executive officers and (iii) all
directors and executive officers as a group. Except as otherwise indicated by
footnote, the shares shown are held directly with sole voting and investment
power.
Shares Percent
beneficially of
Name owned (1) class
- ---- ------------- --------
Margaret Barr Bruemmer (2)................................ 93,544 3.8%
Wiley N. Caldwell......................................... 5,500 *
John C. Campbell, Jr. (3)................................. 41,667 1.7%
Kingman Douglass.......................................... 15,000 *
Silas Keehn............................................... 3,250 *
Eli Manchester, Jr........................................ 116,625 4.7%
James T. Rhind (4)........................................ 388,351 15.7%
William A. Shumaker....................................... 40,204 1.6%
D. Michael Parker (5)..................................... 26,250 1.1%
Kurt P. Rindoks........................................... 12,285 *
James J. Rossi (6)........................................ 18,577 *
Kenneth E. Sparks......................................... 1,875 *
Directors and executive officers as a group (13 persons).. 766,128 30.1%
- -------------------
* Percentage of class is less than 1%.
(1) Includes shares which may be acquired within sixty (60) days from June 30,
2001 upon exercise of options by: Mr. Keehn - 1,250; Mr. Manchester -
13,125; Mr. Shumaker - 21,124; Mr. Parker - 16,250; Mr. Rindoks - 7,250;
Mr. Rossi - 14,750; Mr. Sparks - 1,875; and all officers and directors as a
group - 78,624.
(2) Includes 88,544 shares held by Ms. Bruemmer's husband.
(3) Includes 13,826 shares held by Mr. Campbell's wife, as to which shares he
disclaims beneficial ownership.
(4) Includes 243,079 shares held by Mr. Rhind's wife, Laura Campbell Rhind,
44,080 shares held by a trust under the will of Ruth Haney Campbell, as to
which Mrs. Rhind is a trustee and beneficiary, 44,910 shares held by two
trusts of which Mr. Rhind is sole trustee, and 12,000 shares owned by a
charitable foundation of which Mr. and Mrs. Rhind are two of three
directors. Mr. Rhind disclaims beneficial ownership of all of such shares.
(5) Includes 10,000 shares in which Mr. Parker shares voting and investment
power.
(6) Includes 3,750 shares in which Mr. Rossi shares voting and investment
power.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 2001, by each person who is
known by management of the Company to have been the "beneficial owner" of more
than five percent of such stock as of such date. Except as otherwise indicated
by footnote, the shares shown are held with sole voting and investment power.
Shares Percent
beneficially of
Name owned class
- ---- --------------- --------
Elizabeth B. Gardner............. 212,069(1) 8.6%
Laura Campbell Rhind............. 388,351(2) 15.7%
Dimensional Fund Advisors, Inc... 153,300(3) 6.2%
Ernest and Patricia R. Ohnell.... 166,700(4) 6.7%
- -------------------
(1) Includes 64,093 shares held by Mrs. Gardner as a trustee of certain
irrevocable trusts for the benefit of her children, as to which shares she
disclaims beneficial ownership, and 12,925 shares held by Mrs. Gardner's
husband, as to which shares she disclaims beneficial ownership. Mrs.
Gardner's address is 42 Logan Terrace, Golf, Illinois 60029.
(2) Includes 44,080 shares held as trustee and beneficiary of a trust under the
will of Ruth Haney Campbell, 89,192 shares held by Mr. Rhind personally or
as trustee and 12,000 shares held by a charitable foundation of which Mr.
and Mrs. Rhind are two of three directors. Mr. and Mrs. Rhind and a third
director share voting and investment power over the shares held by the
charitable foundation, but disclaim beneficial ownership of them. Mrs.
Rhind's address is 830 Normandy Lane, Glenview, Illinois 60025.
(3) The shares owned by Dimensional Fund Advisors listed in the table are shown
as being owned as of December 31, 2000 according to a Schedule 13G filed
with the Securities and Exchange Commission in February 2001. Dimensional
Fund Advisors' address is 1299 Ocean Avenue, Santa Monica, California
90401.
(4) The shares owned by Ernest and Patricia R. Ohnell listed in the table are
shown as being owned as of February 29, 2000 according to a Schedule 13D
filed with the Securities and Exchange Commission in March 2000. Ernest
Ohnell directly owns 127,700 shares and his wife, Patricia Ohnell, directly
owns 39,000 shares.
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 10% stockholders to file reports of
ownership with the Securities and Exchange Commission. Such persons also are
required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of copies of such forms received by it and
inquiries of such persons, the Company believes that all such filing
requirements applicable to its executive officers, directors and 10%
stockholders were complied with.
14
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has been selected by the Board of
Directors, upon the recommendation of its Audit Committee, to act as the
Company's independent public accountants for the fiscal year ending April 30,
2002. PricewaterhouseCoopers LLP served as independent public accountants for
the Company for the fiscal year ended April 30, 2001. A representative of
PricewaterhouseCoopers LLP is expected to attend the annual meeting and will be
afforded an opportunity to make a statement if he desires to do so and to
respond to questions by stockholders.
PROXIES AND VOTING AT THE MEETING
The expense of solicitation of proxies is to be paid by the Company.
The Company will also reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in sending proxies and proxy
material to the beneficial owners of the Company's common stock.
At the close of business on July 6, 2001, the record date for
determination of stockholders entitled to vote at the annual meeting, there were
2,470,246 shares of common stock of the Company outstanding and entitled to
vote.
Each share of common stock is entitled to one vote. Any stockholder
giving a proxy has the power to revoke it at any time before it is voted, by
written notice to the Secretary, by delivery of a later-dated proxy or in person
at the meeting.
The holders of a majority of the total shares of common stock issued
and outstanding, whether present in person or represented by proxy, will
constitute a quorum for the transaction of business at the meeting. The vote of
a plurality of the shares represented at the meeting, in person or by proxy, is
required to elect the two nominees for director. Approval of any other matter
submitted to the stockholders for their consideration at the meeting, requires
the affirmative vote of the holders of a majority of the shares of common stock
represented at the meeting, in person or by proxy, and entitled to vote.
Abstentions, directions to withhold authority, and broker non-votes are counted
as shares present in the determination of whether the shares of stock
represented at the meeting constitute a quorum. Abstentions, directions to
withhold authority, and broker non-votes are not counted in tabulations of the
votes cast on proposals presented to stockholders. Thus, an abstention,
direction to withhold authority, or broker non-vote with respect to a matter
other than the election of directors, may have the same legal effect as a vote
against the matter. With respect to the election of directors, an abstention,
direction to withhold authority or broker non-vote will have no effect. An
automated system administered by the Company's transfer agent will be used to
tabulate votes.
A stockholder entitled to vote for the election of directors can
withhold authority to vote for either of the nominees for Class III directors.
15
STOCKHOLDER PROPOSALS
The deadline for receipt of stockholder proposals for inclusion in the
Company's 2002 proxy material is March 22, 2002. Any stockholder proposal
should be submitted in writing to the Secretary of the Company at its principal
executive offices. The stockholder proposal must include the stockholder's name
and address as it appears on the Company's records and the number of shares of
the Company's common stock beneficially owned by such stockholder. In addition,
(i) for proposals other than nominations for the election of directors, such
notice must include a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and any
material interest of the stockholder in such business, and (ii) for proposals
relating to stockholder nominations for the election of directors, such notice
must also include, with respect to each person nominated, the information
required by Regulation 14A under the Exchange Act.
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report to Stockholders for the
fiscal year ended April 30, 2001 with this Proxy Statement. Stockholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated in this Proxy Statement and is not a part of
the proxy soliciting material.
OTHER MATTERS
Management of the Company knows of no other matters which are likely
to be brought before the annual meeting. If any such matters are brought before
the meeting, the persons named in the enclosed proxy will vote thereon according
to their judgment.
By Order of the Board of Directors
/s/ D. MICHAEL PARKER
D. MICHAEL PARKER
Secretary
July 20, 2001
16
PROXY
KEWAUNEE SCIENTIFIC CORPORATION
2700 West Front Street
Statesville, North Carolina 28677-2927
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John C. Campbell, Jr.; James T. Rhind;
and William A. Shumaker as Proxies, each with power of substitution, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of common stock of Kewaunee Scientific Corporation held
of record by the undersigned on July 6, 2001, at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Daylight Time, on August 22, 2001
and at any adjournment thereof.
Your vote for two directors may be indicated on the reverse side.
Kingman Douglass and Eli Manchester, Jr. have been nominated for election as
Class III Directors.
(Continued and to be signed on the reverse side)
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the election of the nominees named in Item 1 below. Please mark your vote inside
one box below.
1. Election of Class III Directors:
Kingman Douglass and Eli Manchester, Jr.
FOR the nominees listed WITHHOLD AUTHORITY
above (except as to vote for the nominee
marked to the contrary) listed above
[_] [_]
If you wish to withhold authority for either of the
nominees, write such nominee's name in this space
- ----------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
You are urged to date, sign and return
promptly this proxy in the envelope
provided. It is important for you to be
represented at the Meeting. The execution
of this proxy will not affect your right to
vote in person if you are present at the
Meeting and wish to so vote.
Date: , 2001
-------------------------------
--------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
IMPORTANT: Please sign exactly as your name
or names appear hereon. If signing as an
attorney, executor, administrator, trustee,
guardian, or in some other representative
capacity, or as an officer of a corporation,
please indicate your capacity or full title.
If stock is held jointly, each joint owner
should sign.