-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gs5N3D8OHxgPwnlLxtIBaXjw/u+l7GRqWL5mWB2q+11r3fMVNDubC5rrLoQFHght 9kFSdFPkJ817UX3Lab6VCw== 0000038725-95-000003.txt : 19950615 0000038725-95-000003.hdr.sgml : 19950615 ACCESSION NUMBER: 0000038725-95-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950413 FILED AS OF DATE: 19950314 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN ELECTRIC CO INC CENTRAL INDEX KEY: 0000038725 STANDARD INDUSTRIAL CLASSIFICATION: 3621 IRS NUMBER: 350827455 STATE OF INCORPORATION: IN FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00362 FILM NUMBER: 95520587 BUSINESS ADDRESS: STREET 1: 400 E SPRING ST CITY: BLUFFTON STATE: IN ZIP: 46714 BUSINESS PHONE: 2198242900 MAIL ADDRESS: STREET 1: 400 E. SPRING STREET CITY: BLUFFTON STATE: IN ZIP: 46714 DEF 14A 1 PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 FRANKLIN ELECTRIC 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: .............................................................. (2) Aggregate number of securities to which transaction applies: .............................................................. (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): .............................................................. (4) Proposed maximum aggregate value of transaction: .............................................................. (5) Total fee paid: .............................................................. [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: .................................................................... (2) Form, Schedule or Registration Statement No.: .................................................................... (3) Filing Party: .................................................................... (4) Date Filed: FRANKLIN ELECTRIC 400 East Spring Street Bluffton, Indiana 46714 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held April 13, 1995 at 10:00 A.M., E.S.T. To the Holders of Shares of Common Stock of Franklin Electric Co., Inc. THE ANNUAL MEETING OF SHAREHOLDERS (THE "ANNUAL MEETING") OF FRANKLIN ELECTRIC CO., INC. (THE "COMPANY"), AN INDIANA CORPORATION, WILL BE HELD AT THE PRINCIPAL OFFICE OF THE COMPANY, 400 EAST SPRING STREET, BLUFFTON, INDIANA ON APRIL 13, 1995 AT 10:00 A.M., E.S.T., FOR THE FOLLOWING PURPOSES: 1. To elect two directors for terms expiring at the 1998 Annual Meeting of Shareholders; 2. To ratify the appointment of Deloitte & Touche as independent auditors for the 1995 fiscal year; and 3. To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. Only shareholders of record at the close of business on February 24, 1995 will be entitled to vote at the Annual Meeting. You are urged to sign and return the enclosed proxy in the envelope provided, whether or not you plan to attend the Annual Meeting. If you do attend, you may nevertheless vote in person, or if any time before the proxy is voted you desire to revoke the proxy, you may do so by delivering to the Secretary of the Company written notice of such revocation or by executing and delivering a subsequently dated proxy. By order of the Board of Directors. DEAN W. PFISTER Dean W. Pfister, Secretary Bluffton, Indiana March 10, 1995 FRANKLIN ELECTRIC CO., INC. 400 EAST SPRING STREET BLUFFTON, INDIANA 46714 ------------------------------ PROXY STATEMENT ------------------------------ ANNUAL MEETING OF SHAREHOLDERS APRIL 13, 1995 GENERAL INFORMATION This Proxy Statement (the "Proxy Statement") and the enclosed proxy are furnished to shareholders in connection with the solicitation of proxies by the Board of Directors of Franklin Electric Co., Inc. (the "Company"), 400 East Spring Street, Bluffton, Indiana, for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on April 13, 1995 and at any meeting resulting from an adjournment or postponement thereof. This Proxy Statement will be first mailed to shareholders on or about March 10, 1995. The Company's Annual Report to shareholders, including financial statements contained therein, is being mailed to shareholders together with this Proxy Statement. Neither the Annual Report nor the financial statements contained therein are to be considered part of this soliciting material. Shareholders are asked to sign and return the enclosed proxy, whether or not they plan to attend the Annual Meeting. If the enclosed proxy is properly signed and returned, the shares represented thereby will be voted in the manner specified in the proxy. If the shareholder does not specify the manner in which the proxy shall be voted, it will be voted FOR the election of the nominees for director as set forth in this Proxy Statement, FOR the ratification of the appointment of Deloitte & Touche as independent auditors, and in accordance with the recommendations of management with respect to other matters that may properly come before the Annual Meeting. A shareholder who has executed a proxy has the power to revoke it at any time before it is voted, by delivering written notice of such revocation to Mr. Dean W. Pfister, Secretary, 400 East Spring Street, Bluffton, Indiana 46714, by executing and delivering a subsequently dated proxy, or by attending the Annual Meeting and voting in person. The expenses of solicitation, including the cost of printing and mailing, will be paid by the Company. Officers and employees of the Company, without additional compensation, may request the return of the proxies personally, by telephone or by telegram. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of shares held of record by such persons, and the Company will reimburse such entities for reasonable out-of-pocket expenses incurred by them in connection therewith. SHAREHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING The Board of Directors of the Company fixed the close of business on February 24, 1995 as the record date ("Record Date") for determining shareholders entitled to notice of and to vote at the Annual Meeting. As of the Record Date, there were 10,000,000 shares of common stock, $.10 par value (the "Common Stock"), authorized, of which 6,221,522 shares were outstanding. Each share of Common Stock is entitled to one vote on each matter submitted to a vote of the shareholders of the Company. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspectors of election appointed for the Annual Meeting and will be counted as present for purposes of determining whether a quorum is present. A majority of the outstanding shares of Common Stock, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. The inspectors will treat abstentions as shares that are present and entitled to vote for purposes of determining a quorum, but as unvoted for purposes of determining the approval of a matter submitted to the shareholders for a vote. If a broker indicates on a proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be voted and will be disregarded for purposes of determining the approval of a matter. Brokers who hold shares in street name have the discretionary authority to vote on the two matters to be considered at the Annual Meeting. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows the persons known by the Company to be the beneficial owners of more than five percent (5%) of any class of equity securities of the Company as of February 1, 1995. The nature of beneficial ownership is sole voting and investment power, unless otherwise noted.
NAME AND ADDRESS OF TITLE OF AMOUNT AND NATURE OF PERCENT BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP OF CLASS Diane D. Humphrey Common 646,021 10.38 2434 N. Fairway Lane Bluffton, IN 46714 Patricia Schaefer Common 652,021 10.47 405 S. Tara Lane Muncie, IN 47304 William H. Lawson Common 518,483 8.04 7126 Blue Creek Fort Wayne, IN 46804 Fort Wayne National Common 603,523 9.70 Bank 110 W. Berry Street Fort Wayne, IN 46801 NBD Bancorp, Inc. Common 501,784 8.07 611 Woodward Avenue Detroit, MI 48226 Ruane, Cunniff Common 449,166 7.22 & Co., Inc. 1370 Avenue of the Americas New York, NY 10019 Marvin C. Schwartz Common 507,160 8.15 c/o Neuberger & Berman 605 Third Avenue New York, NY 10158 Neuberger & Berman Common 336,969 5.42 605 Third Avenue New York, NY 10158 Includes shares issuable pursuant to stock options exercisable within 60 days as follows: Ms. Schaefer, 6,000 shares; and Mr. Lawson, 224,169 shares. Fort Wayne National Bank holds these shares as Trustee under the Company's Employee Stock Ownership Plan ("ESOP") and Directed Investment Salary Plan ("401(k) Plan"). The 173,362 shares held in the ESOP will be voted pursuant to the direction of the participants to the extent these shares are allocated to participants' accounts. Unallocated shares and shares for which no direction is received from participants will be voted by the Trustee in accordance with the direction of the Employee Benefits Committee of the Company. In the absence of any direction from the Employee Benefits Committee, such shares will be voted by the Trustee in the same proportion that the allocated shares were voted, unless inconsistent with the Trustee's fiduciary obligations. The 430,161 shares held by the 401(k) Plan will be voted in accordance with the direction of the Employee Benefits Committee and, in the absence of any such direction, in the discretion of the Trustee. The Trustee does not have investment power over any of the shares held by the ESOP or the 401(k) Plan. According to a schedule 13G filed with the Securities and Exchange Commission ("SEC") on February 11, 1994, NBD Bancorp, Inc. has sole voting power with respect to all shares shown and sole dispositive power with respect to 2,909 of those shares, shared dispositive power with respect to 360 of those shares and no dispositive power with respect to 498,515 of those shares. According to a Schedule 13G filed with the SEC on February 8, 1995, Ruane Cunniff & Co., Inc. has sole dispositive power with respect to all of the shares shown and has sole voting power with respect to 151,200 of those shares. According to a Schedule 13D filed with the SEC on January 13, 1994, Marvin Schwartz has sole dispositive and sole voting power with respect to 422,570 shares and shared dispositive power and no voting power with respect to 84,590 shares. According to a Schedule 13D filed with the SEC on February 10, 1995, Neuberger & Berman has shared dispositive power with respect to all of the shares shown and has sole voting power with respect to 83,382 of those shares.
The following table shows the number of equity securities beneficially owned by directors, nominees, each of the executive officers named in the "Summary Compensation Table" below, and all executive officers and directors as a group, as of February 1, 1995. The nature of beneficial ownership is sole voting and investment power, unless otherwise noted.
NAME OF TITLE OF AMOUNT AND NATURE OF PERCENT BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP OF CLASS William W. Keefer Common 19,424 William H. Lawson Common 518,483 8.04 John B. Lindsay Common 172,711 2.76 Robert H. Little Common 8,042 Patricia Schaefer Common 652,021 10.47 Donald J. Schneider Common 30,346 Michael J. Sloan Common 21 Gerard E. Veneman Common 8,548 Juris Vikmanis Common 7,000 Howard B. Witt Common 0 Directors and Common 1,416,596 21.76 executive officers as a group (10 persons) Includes shares issuable pursuant to stock options exercisable within 60 days as follows: Mr. Keefer, 4,000 shares; Mr. Lawson, 224,169 shares; Mr. Lindsay, 37,000 shares; Mr. Little, 6,000 shares; Ms. Schaefer, 6,000 shares; Mr. Schneider, 5,000 shares; Mr. Veneman, 3,000 shares; Mr. Vikmanis, 2,000 shares; and Directors and executive officers as a group, 287,169 shares. Includes 97 shares held by Mr. Schneider's wife. Mr. Schneider disclaims beneficial ownership of these 97 shares. Less than 1% of class
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, officers and greater than 10% shareholders of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock of the Company. Directors, officers and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. Based solely on a review of the copies of these reports furnished to the Company and representations that no other reports were required to be filed, the Company believes that during the past fiscal year its directors, officers and greater than 10% shareholders complied with all applicable Section 16(a) filing requirements applicable to them during 1994, except that Mr. Howard B. Witt inadvertently filed a late Form 5 in March 1995 to report a stock option grant under the Non-Employee Director Stock Option Plan. ELECTION OF DIRECTORS The Company's Board of Directors consists of eight directors divided into three classes of two or three directors each. Each year, the directors of one of the three classes are to be elected to serve terms of three years and until their successors have been elected and qualified. Two directors are to be elected at the Annual Meeting this year. The election of a director requires the affirmative vote of a majority of the shares voted. William H. Lawson and Donald J. Schneider have been nominated to serve as directors of the Company. Each nominee is currently a director of the Company and has indicated his willingness to serve as a director if elected. If, however, any nominee is unwilling or unable to serve as a director, it is the intention of management to nominate such other person as a director as it may in its discretion determine, in which event the shares represented by the proxies will be voted for such other person. INFORMATION CONCERNING NOMINEES AND DIRECTORS The ages, principal occupations during the past five years and certain other affiliations of the director nominees and the continuing directors, and the years in which they first became directors of the Company, are as follows: NOMINEES FOR TERMS EXPIRING IN 1998
DIRECTOR NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE William H. Lawson, 58 Chairman of the Board, President 1985 Chairman of the Board, and Chief Executive Officer of President and Company. Director of Skyline Chief Executive Corporation, Sentry Insurance Officer a Mutual Company and American Electronic Components Inc. Donald J. Schneider, 59 President of Schneider National 1988 Director of the Company Inc., a transportation and distribution company. Director of Green Bay Packers and St. Norbert College.
DIRECTORS WHOSE TERMS EXPIRE IN 1996
DIRECTOR NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE William W. Keefer, 69 Retired; Chairman of Warner 1968 Director of the Company Electric Brake & Clutch Co. from 1985 to 1986, a manufacturer of motion control devices; formerly President and Chief Executive Officer of Warner. Director of Regal Beloit Corporation. Juris Vikmanis, 57 Retired; Vice President, 1988 Director of the Company Aerospace Operations, Amphenol Corporation from 1992 to 1993, an aerospace company; formerly Corporate Senior Vice President, Square D Company until the sale of the company in 1991; prior thereto, Executive Vice President, Industrial Sector, Square D Company from 1989 to 1990. Howard B. Witt, 54 Chairman of the Board Appointed Director of the Company since 1993, President to the and Chief Executive Board Officer, Littelfuse, Inc.; by the a manufacturer of electronic, Directors electrical and automotive in 1994 fuses.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
DIRECTOR NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE Robert H. Little, 59 President, Waddle Manufacturing 1987 Director of the Company Inc., a producer of precision metal fabrications for the electronic and medical device industries. Patricia Schaefer, 64 Director of the Muncie Public 1982 Director of the Company Library; Muncie, Indiana. Gerard E. Veneman, 74 Retired; President, Nekoosa 1969 Director of the Company Papers Inc. and Executive Vice President, Great Northern Nekoosa Corp. from 1970 to 1985, producers of paper and paper products. Director, Sentry Insurance a Mutual Company, and WCN Bank Corp.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES Directors who are not employees of the Company were paid an annual director's fee of $20,000 plus a fee of $750 for each regular Board or Board committee meeting attended. Each committee chairman was paid an additional annual fee of $1,500. Directors who are employees of the Company received no fees. Non-employee directors participate in the Non-Employee Director Stock Option Plan ("Director Plan"). The Director Plan made available 60,000 shares of Common Stock for issuance pursuant to the exercise of non-qualified stock options. Under the Director Plan, the exercise price of shares subject to any option granted is to be equal to the fair market value of the Company's shares on the date the option is granted. All options granted under the Director Plan expire no later than ten (10) years from the date of their grant. Each non-employee director who is elected or re-elected during the term of the Director Plan to serve on the Board of Directors will automatically be granted an option to purchase 3,000 shares. On April 15, 1994, Robert H. Little, Patricia Schaefer and Gerard E. Veneman each received an option to purchase 3,000 shares at an exercise price of $32.50 per share under the Director Plan. In addition, on August 15, 1994 Howard B. Witt received an option to purchase 3,000 shares at an exercise price of $31.00 per share under the Director Plan. The Company has a Consulting Directors' Plan (the "Plan"), for non-employee directors who retire from Board service at age 65 or older. Under the Plan, a retiring director may enter into a consulting agreement with the Company under the terms of which the consulting director agrees to be available for consultation from time to time and is entitled to receive an annual fee equal to the director's fee in effect at retirement, for the same number of years he served as director (or until his death, if sooner). Currently Mentor Kraus and Dr. N. A. Lamberti, who retired in 1985 and 1988 with 29 and 19 years of service, respectively, participate in this Plan. Messrs. Kraus and Lamberti each received an annual fee of $15,000 in 1994. The Board held five (5) regularly scheduled meetings during 1994 and no special meetings. Each director attended 75% or more of the aggregate meetings of the Board and Board committees of which he or she was a member. The committees of the Board are: the Executive Committee, the Audit Committee, and the Personnel and Compensation Committee. EXECUTIVE COMMITTEE. Members of the Executive Committee are Gerard E. Veneman (Chairman), William W. Keefer and William H. Lawson. Between the meetings of the Board of Directors, the Executive Committee handles business which the Board might otherwise handle. The Executive Committee held no meetings in 1994. AUDIT COMMITTEE. Members of the Audit Committee are Robert H. Little (Chairman), William W. Keefer, Patricia Schaefer and Juris Vikmanis. It is the responsibility of the Audit Committee to advise and make recommendations to the Board of Directors in all matters regarding the Company's accounting methods and internal control procedures. Specific duties of the Audit Committee include: (i) the review of the scope of the annual audit by the Company's independent public accountants and the procedures to be employed and estimated compensation to be paid therefor, (ii) the review of the audit results and financial statements with the independent public accountants and the chief financial officer of the Company, (iii) the review of changes in accounting policies having a significant effect on the Company's reports, (iv) the preparation and presentation to the Board of a report summarizing recommendations with respect to retention or discharge of the independent public accountants, (v) the review of letters of recommendation from the independent public accountants and determining that management has adequately considered or implemented, or both, such recommendations, and (vi) meeting periodically with the Company's financial staff to assure that the internal auditing staff is able to express its concerns, either directly to the Audit Committee or through the independent public accountants, and to review the scope of the internal accounting and auditing procedures. The Audit Committee held two (2) meetings in 1994. PERSONNEL AND COMPENSATION COMMITTEE. Members of the Personnel and Compensation Committee (the "Committee") are Gerard E. Veneman (Chairman), William W. Keefer, William H. Lawson and Donald J. Schneider. The Committee determines and approves the annual salary, bonus and other benefits of the chief executive officer and the other executive officers and directors of the Company; reviews and submits to the Board of Directors recommendations concerning stock plans; and periodically reviews the Company's policies in the area of management benefits. The Committee also oversees the Company's management development and organization structure. The Committee also initiates nominations of directors, submitting recommendations to the Board for approval. Nominations for the election of directors may also be made by any shareholder entitled to vote in the election of directors, provided that written notice of intent to make a nomination is given to the Secretary of the Corporation not later than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of shareholders. Such notice shall set forth: (i) information regarding the proposed nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, and (ii) the consent of such nominee to serve as a director of the Corporation if so elected. The Personnel and Compensation Committee held two (2) meetings in 1994. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION William H. Lawson, the Chief Executive Officer of the Company, is a member of the Personnel and Compensation Committee. Mr. Lawson does not participate in the determination of his compensation or benefits. Mr. Lawson advises in the awarding of grants to officers of the Company under the Company's stock option plans, the 1988 Stock Incentive Award Plan and the 1988 Executive Stock Purchase Plan. COMPENSATION COMMITTEE REPORT It is the philosophy of the Personnel and Compensation Committee of the Board of Directors (the "Committee") of the Company to maintain a compensation program to attract and retain executive officers who can successfully build the Company's long- term strategic capability. The Committee has retained a compensation consulting firm to provide information on compensation packages of firms of similar size and industries to aid in the design of its package for the Company's executive officers. The Committee encourages superior performance through the use of annual performance targets as well as incentive vehicles that more closely align the executive's reward to that of the shareholders. The chief executive officer is a member of the Committee. He does not participate in the Committee's determination of his compensation package. For the chief executive officer, the current compensation package includes a base salary, an annual incentive cash bonus and stock options. The Committee believes the combined value of base salary plus bonus approximates market value of base salary and bonus provided to similarly situated executives as reflected in published market surveys. The Committee believes, however, that a significant portion of executive officer compensation should be dependent upon corporate performance. Accordingly, base salaries have been established somewhat below market levels, while a greater than average variable incentive bonus may be achieved. The Committee has set a benchmark to determine the level, if any, of the annual incentive cash bonus to be paid. The benchmark used is pre-tax return on assets. Considering this ratio and other qualitative measures, a bonus percentage of base salary is determined. The Committee awarded the chief executive officer an incentive cash bonus of 70% of base salary. While it did not do so in 1994, the Committee may cap, modify or eliminate this bonus at its sole discretion. As an additional incentive, the Committee makes grants and awards under the Company's shareholder-approved stock option and restricted stock plans as well as offering officers the opportunity to purchase shares under the shareholder-approved stock purchase plan. The purpose of these plans is to encourage elective stock ownership, offer long-term performance incentive and to more closely align the executive's compensation with the return received by the Company's shareholders. Using information, observations and recommendations on incentive compensation programs provided by an outside consultant, the Committee reviews annually the financial incentives to officers under prior grants and awards and determines whether additional grants or awards are appropriate. In 1994, the Committee made a stock option grant to both the chief executive officer and the executive vice president. In addition, the Committee made an award to the executive vice president under the restricted stock plan. In 1993, the Committee made a stock option grant as part of the compensation package for the new chief financial officer. The annual compensation of the other executive officers includes a base salary and incentive bonus, determined similarly to that described above for the Chief Executive Officer. The Committee is currently studying the possible future application of the limitations on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. Compliance with Section 162(m) was not required in 1994 as the compensation paid to any executive officer did not exceed the $1 million limitation. G. E. Veneman W. W. Keefer W. H. Lawson D. J. Schneider STOCK PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return on an investment in (1) the Company's Common Stock (including reinvestment of dividends in 1993 and 1994 when the Company paid a dividend on its shares), (2) the Standard & Poor's 500 Stock Index (including reinvestment of dividends) and (3) the NASDAQ Non-Financial Stock Index (including reinvestment of dividends) for the period January 1, 1990 through December 31, 1994. In each case, the graph assumes the investment of $100 on January 1, 1990. DOLLARS 500 420 406 400 300 282 212 200 178 170 142 155 150 152 109 126 136 100 97 88 0 1989 1990 1991 1992 1993 1994 YEAR FRANKLIN ELECTRIC NASDAQ NON-FINANCIAL S & P 500 SUMMARY COMPENSATION TABLE The following table sets forth compensation information for the years 1992 through 1994 for the Company's Chief Executive Officer and the Company's two other executive officers who received compensation in excess of $100,000 during 1994.
LONG-TERM COMPENSATION ---------------------- AWARDS ------ SECURITIES RESTRICTED UNDER- ALL OTHER ANNUAL COMPENSATION STOCK LYING COMPEN- ------------------- NAME AND SALARY BONUS AWARD OPTIONS SATION PRINCIPAL POSITION YEAR $ $ $ # $ - - ------------------ ---- ------- ------- ------- ----- ------ William H. Lawson, 1994 300,000 210,000 80,000 14,465 Chairman of the 1993 300,000 210,000 13,209 Board, President 1992 275,000 192,500 11,586 and Chief Executive Officer John B. Lindsay, 1994 160,000 112,000 530,000 50,000 5,250 Executive Vice 1993 151,180 105,826 5,676 President 1992 130,000 91,000 5,437 Michael J. Sloan, 1994 125,000 87,500 5,250 Vice President, 1993 36,458 25,000 50,000 731 Chief Financial Officer Mr. Lindsay received an award of 20,000 shares under the 1988 Stock Incentive Award Plan, with a market value of $530,000 on May 26, 1994 (the date of grant). One-half of these shares will vest in 1998 if Mr. Lindsay remains an employee with the Company through that date. The remaining shares will vest in 1999 if the net income for the 1998 fiscal year exceeds 1993 net income by 50%. During the restriction period, dividends on these shares are paid to Mr. Lindsay. The value of these shares was $680,000 at December 31, 1994. All Other Compensation reflects Company matching contributions to defined contribution plans for each executive officer, except that the amounts shown for Mr. Lawson also include premiums incurred by the Company in connection with executive split-dollar insurance arrangements. Accordingly, the matching contributions and split-dollar insurance premium payments for Mr. Lawson were as follows: $5,250 and $9,215 in 1994; $5,676 and $7,533 in 1993; $5,508 and $6,078 in 1992. Mr. Sloan joined the Company in September, 1993.
OPTION GRANTS IN 1994 FISCAL YEAR
PERCENT OF TOTAL OPTIONS POTENTIAL NUMBER OF GRANTED REALIZABLE VALUE SECURITIES TO EXERCISE AT ASSUMED ANNUAL UNDERLYING EMPLOYEES OR RATES OF STOCK PRICE OPTIONS IN BASE APPRECIATION FOR GRANTED FISCAL PRICE EXPIRATION OPTION TERM --------------------- NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($) - - ---- ------ ---- ------ ------- --------- --------- William H. Lawson 80,000 33 26.50 5/25/04 1,333,257 3,378,734 John B. Lindsay 50,000 20 26.50 5/25/04 833,285 2,111,709 Michael J. Sloan - - - - - - Options were granted on May 26, 1994 and vest at a rate of 20%/year beginning in 1994.
1994 FISCAL YEAR-END OPTION VALUES NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS AT FY-END (#) FY-END ($) EXERCISABLE/ EXERCISABLE/ NAME UNEXERCISABLE UNEXERCISABLE - - ---- ------------- ---------------- William H. Lawson 224,169/64,000 5,860,268/480,000 John B. Lindsay 37,000/40,000 766,875/300,000 Michael J. Sloan 0/50,000 0/237,500 No options were exercised in 1994. Based on fair market value of the Common Stock of $34.00 on December 31, 1994.
COMPENSATION PURSUANT TO PLANS PENSIONS The Company has three pension plans: the Franklin Electric Co., Inc. Basic Retirement Plan ("Basic Pension Plan"), the Franklin Electric Co., Inc. Contributory Retirement Plan ("Contributory Pension Plan"), and the Franklin Electric Co., Inc. Pension Restoration Plan ("Restoration Pension Plan"), (collectively referred to herein as the "Pension Plans"). The following table illustrates the approximate combined monthly pension benefit payable upon retirement at age 65 under the Pension Plans, after integration with social security. In the table, Annual Compensation is based on the highest thirty-six consecutive months' compensation which includes salary and bonus. Messrs. Lindsay and Sloan are not currently covered by the Restoration Pension Plan. Thus, their pension benefit accruals under the Basic Pension Plan and the contributory Pension Plan are limited by provisions of the Internal Revenue Code that restrict to $150,000 the amount of any employee's compensation that may be counted for pension benefit accrual purposes. (The $150,000 limit is to be indexed according to cost-of-living.) Additionally, the Contributory Pension Plan was amended to provide reduced benefit accruals for individuals hired after 1988. Because Mr. Sloan was hired after 1988, he is covered only by the lesser benefit accrual formula under the Contributory Pension Plan. COMBINED ANNUAL PENSION AMOUNT, INCLUDING SOCIAL SECURITY
ANNUAL COMPEN- YEARS OF SERVICE SATION 10 15 20 25 30 35 - - --------------------------------------------------------------------------- $150,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000 $ 76,300 $ 86,600 200,000 70,000 80,000 90,000 100,000 100,000 108,500 250,000 87,500 100,000 112,500 125,000 125,000 130,400 300,000 105,000 120,000 135,000 150,000 150,000 152,300 350,000 122,500 140,000 157,500 175,000 175,000 175,000 400,000 140,000 160,000 180,000 200,000 200,000 200,000 450,000 157,500 180,000 202,500 225,000 225,000 225,000 500,000 175,000 200,000 225,000 250,000 250,000 250,000 550,000 192,500 220,000 247,500 275,000 275,000 275,000 Estimated years of service for the named executive officers eligible to receive the foregoing pension amounts are as follows: Mr. Lawson, 9 years; Mr. Lindsay, 17 years; Mr. Sloan, 1 year.
AGREEMENTS The Company has an employment agreement with William H. Lawson, Chairman, President and Chief Executive Officer. The agreement may be terminated by either the Company or Mr. Lawson upon 90 days advance written notice. Under the agreement, the Company, depending on the reason for termination of employment, may be required to pay Mr. Lawson his annual compensation, including bonus, for a period of one year after termination and all stock options and stock appreciation rights held by Mr. Lawson may become immediately exercisable. If termination is effected in connection with a change in control of the Company, the Company may be required to pay Mr. Lawson his annual compensation for up to three years from the date of termination or change in control, whichever is earlier, and to continue to provide him with certain benefits under the Company's benefit plans in which he was a participant at the time of his termination of employment. Mr. Lawson owes the Company $812,500 as of February 1, 1995 for amounts borrowed in connection with a stock purchase under the Company's 1988 Executive Stock Purchase Plan. The borrowing is evidenced by a non-recourse promissory note bearing no interest, and the related shares are pledged to secure repayment. The maximum amount outstanding at any time during the last fiscal year was $812,500. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS The Board of Directors has appointed, subject to ratification by the shareholders, the firm of Deloitte & Touche as auditors for the 1995 fiscal year. Although shareholder ratification is not legally required, the Board of Directors believes it advisable to submit its decision to the shareholders. Deloitte & Touche has acted as auditors for the Company since 1988. Representatives of Deloitte & Touche are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so, and to be available to respond to questions relating to their examinations of the Company's financial statements. SHAREHOLDER PROPOSALS November 13, 1995 is the date by which proposals of shareholders intended to be presented at the next annual meeting must be received by the Company to be considered for the inclusion in the Company's proxy statement for the 1996 Annual Meeting. OTHER BUSINESS Management has no knowledge of any other matters to be presented for action by the shareholders at the Annual Meeting. The enclosed proxy gives discretionary authority to the persons designated as proxies therein to vote on any additional matters that should properly and lawfully be presented. By order of the Board of Directors Dated: March 10, 1995 Dean W. Pfister, Secretary -----END PRIVACY-ENHANCED MESSAGE-----