-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tpy/pALdnH9WQ9mqaySmQdwQGIgn2uTnAf5vJAyJ/4OzOf6f+ZSIE4N3+UcCrJCe W4guw2pFg+0PM+VIrycL8Q== 0000950152-97-001945.txt : 19970319 0000950152-97-001945.hdr.sgml : 19970319 ACCESSION NUMBER: 0000950152-97-001945 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970425 FILED AS OF DATE: 19970318 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN PRECISION INDUSTRIES INC CENTRAL INDEX KEY: 0000005657 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 161284388 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05601 FILM NUMBER: 97558753 BUSINESS ADDRESS: STREET 1: 2777 WALDEN AVE CITY: BUFFALO STATE: NY ZIP: 14225 BUSINESS PHONE: 7166849700 MAIL ADDRESS: STREET 1: 2777 WALDEN AVENUE CITY: BUFFALO STATE: NY ZIP: 14225 DEF 14A 1 AMERICAN PRECISION INDUSTRIES INC. DEFINITIVE 14A 1 ================================================================================ SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN 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
AMERICAN PRECISION INDUSTRIES INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) AMERICAN PRECISION INDUSTRIES INC. (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 wasdetermined):______________ (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:____________________________________________________________ ================================================================================ 2 AMERICAN PRECISION INDUSTRIES INC . 2777 WALDEN AVENUE, BUFFALO, NEW YORK NOTICE OF MEETING OF SHAREHOLDERS March 25, 1997 The Annual Meeting of Shareholders of American Precision Industries Inc. will be held at the Albright-Knox Art Gallery, 1285 Elmwood Avenue, Buffalo, New York on Friday, April 25, 1997 at 3:00 p.m. to consider and take action upon the following matters: 1. Election of two Class III directors for a three-year term and one Class I director for a one-year term. 2. Ratification of the selection of Price Waterhouse LLP, independent public accountants, as auditors for the 1997 fiscal year. 3. Transaction of such other business as may properly come before the meeting. All persons who were holders of record of common shares at the close of business on March 7, 1997, and no others shall be entitled to vote at such meeting. James J. Tanous Secretary SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING, AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. 3 AMERICAN PRECISION INDUSTRIES INC. PROXY STATEMENT This statement is furnished in connection with the solicitation by the Board of Directors of American Precision Industries Inc. (hereinafter referred to as "API" or the "Company") of proxies to be used at the Annual Meeting of Shareholders to be held on April 25, 1997 (the "Meeting"). Every duly signed proxy in the accompanying form which has been received a reasonable time prior to the start of the Meeting will be voted at the Meeting unless revoked by the shareholder. Every shareholder giving a proxy has the power to revoke it at any time before it is exercised. The right to revoke a proxy is not limited and is not subject to compliance with any formal procedure. Each common share outstanding at the close of business on March 7, 1997, will be entitled to one vote. As of March 7, 1997, there were 7,317,427 such shares outstanding. Only shareholders of record at the close of business on March 7, 1997, will be entitled to vote at the Meeting. At the Meeting a quorum will consist of the holders of record of not less than a majority of the outstanding common shares, present either in person or by proxy. Abstentions and broker nonvotes will be considered as being present or represented at the Meeting, but not as votes for or against a nominee or proposal. This proxy statement and the accompanying form of proxy will be sent to the shareholders on or about March 25, 1997. 1. ELECTION OF DIRECTORS The Company's Certificate of Incorporation provides that the number of directors of the Company shall be not less than three and not more than nine and that the directors shall be divided into three classes, designated Class I, Class II, and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. One class stands for election to a three year term each year. The Board of Directors currently consists of nine directors. One Class I director, Robert J. Fierle, who will be 75 years of age on April 14, 1997, will retire from the Board immediately prior to the Meeting. The Board of Directors has set the number of directors at eight, effective at the time of the Meeting, and has nominated a Class III director, John M. Albertine, PhD, whose current term expires in 1997, to fill Mr Fierle's term which expires in 1998. Dr. Albertine will stand for election at the Meeting as a Class I director to serve until the Company's Annual 2 4 Meeting of Shareholders in 1998, and until his successor is elected and shall qualify. In addition, two Class III directors are to stand for election at the Meeting. The Class III Directors so elected will serve until the Company's Annual Meeting of Shareholders in the year 2000 and until their successors are elected and shall qualify. The Company has reached an agreement in principle with Inter Scan Holding Ltd ("Inter Scan"), a Swiss holding company, to acquire from Inter Scan all of Inter Scan's shares of Portescap SA, a European manufacturer of micro-motors which has its principal operations in Switzerland. In connection with this proposed acquisition, the Company may be required to nominate a representative of Inter Scan, who must be acceptable to the Company, to a three-year term on the Board of Directors. Under the preliminary agreement with Inter Scan, the representative of Inter Scan would be entitled to continue to hold that three-year term provided that Inter Scan's holdings of the Company's stock during that three-year period represent at least 10% of the Company's common stock. This proposed acquisition may require the Company to amend its Certificate of Incorporation to increase the number of shares of common stock available for issuance. In that regard the Company will hold a special meeting of shareholders to approve that amendment. At that time, unless the Company has already completed the acquisition and appointed Inter Scan's representative to the Board, the Board of Directors would increase the number of directors from eight to nine, designate that newly created vacancy as a Class III position with a term expiring in the year 2000, and nominate the representative of Inter Scan as a Class III director for election to the Board of Directors. If the proposed acquisition of Portescap does not occur, the Board position will remain vacant subject to the Board of Directors' right to fill a new or existing vacancy between shareholder meetings. The vote of a plurality of the common shares present or represented by proxy is required for the election of directors. The directors recommend a vote FOR the three nominees standing for election listed below. Unless otherwise instructed, the proxy holders will vote the proxies received by them FOR these nominees. If any nominee becomes unavailable for election, the proxy holders will vote the proxies for such other nominee as the Board may designate to fill the vacancy. Information regarding nominees standing for election and directors whose terms continue beyond the Meeting is set forth below: CLASS III: DIRECTORS STANDING FOR ELECTION FOR A TERM EXPIRING IN 2000 Victor A. Rice, age 56, has been a director since 1994. Mr. Rice is the Chief Executive Officer and a director of LucasVarity plc*, an international manufacturer and supplier of products, - --------------- *Denotes publicly-held company 3 5 systems, and services to the automotive, diesel engine, and aerospace industries. From 1980 until 1996, Mr. Rice was Chairman and Chief Executive Officer of Varity Corporation. Mr. Rice also serves as a director of Louisiana Land & Exploration Co.*, and International Murex Technologies Corp.* Jerre L. Stead, age 54, has been a director since February 27, 1996. On September 1, 1996 Mr. Stead became Chairman and Chief Executive Officer of Ingram Micro Inc., a distributor of technology products and services. On January 1, 1995, Mr. Stead became Chairman and Chief Executive Officer of Legent Corporation, a computer programming software services firm. He resigned from that position on August 15, 1995 after the merger of Legent Corporation with Computer Associates International, Inc. During 1993 and 1994, Mr. Stead was Chairman and Chief Executive Officer of AT&T Global Information Solutions (formerly NCR), a provider of information technology services. He also served as an Executive Vice President of AT&T and a member of AT&T's Management Executive and Global Operations Committees. From 1991 to 1993, he was President and Chief Executive Officer of AT&T Global Business Communications Systems. From 1989 to 1991, Mr. Stead was Chairman, President, and Chief Executive Officer of Square D Co., a manufacturer of industrial control and electrical distribution products. Mr. Stead is a director of Armstrong World Industries Inc.*, TBG Holding NV, and TJ International, Inc. CLASS I: DIRECTOR STANDING FOR ELECTION FOR A TERM EXPIRING IN 1998 John M. Albertine, PhD, age 52, has been a director since 1985. In 1990 Dr. Albertine became Chairman and Chief Executive Officer of Albertine Enterprises, Inc., an economic forecasting and public policy firm based in Washington, D.C. Dr. Albertine is also Chairman of JIAN Group Holdings, a full-service mergers and acquisitions firm. Dr. Albertine was Vice Chairman of Farley, Inc., principally a fabric and garment manufacturer, from 1986 until 1990 and Vice Chairman of Fruit of the Loom, Inc. from 1987 until 1990. Dr. Albertine serves on the Board of Directors of Thermo Electron Corporation*, BBN, Inc.*, and Intermagnetics General Corporation*. CLASS I: DIRECTORS WHOSE TERMS EXPIRE IN 1998 Douglas J. MacMaster, Jr., age 66, has been a director since 1990. Mr. MacMaster was Senior Vice President of Merck & Co., Inc. from 1988 until his retirement in 1992. Merck & Co., Inc. is a worldwide research-intensive health products company that discovers, develops, produces, and markets human and animal health products and specialty chemicals. Mr. MacMaster is a director of Martek Biosciences Corp.,* U.S. Bioscience, Inc.*, Noese Technologies, Inc., OraVax Inc., and Flamel Technologies, S.A. He is also a Trustee of Thomas Jefferson University. - --------------- *Denotes publicly-held company 4 6 Klaus K. Oertel, age 63, has been a director since October 26, 1995. From January 1, 1990 until his retirement on December 31, 1994, Mr. Oertel was a member of the Board of Management of AEG A.G., Frankfurt, Germany, a unit of Daimler-Benz AG, in charge of the world-wide rail systems group. Since his retirement, Mr. Oertel continues to provide consulting services to the Daimler-Benz group. CLASS II: DIRECTORS WHOSE TERMS EXPIRE IN 1999 Bernard J. Kennedy, age 65, has been a director since 1987. Mr. Kennedy has been Chairman, Chief Executive Officer, and President of National Fuel Gas Company* since 1989 and is Chairman of certain of its subsidiaries. National Fuel Gas Company and its subsidiaries are engaged in production, purchase, storage, transportation, and sale of natural gas and in the exploration for and development of oil and natural gas reserves. He is a member of the Board of Directors of Merchants Mutual Insurance Company, Associated Electric & Gas Insurance Services Limited, Marine Midland Banks, Inc., and Marine Midland Bank. William P. Panny, age 68, has been a director since 1981. Until his retirement in 1991, Mr. Panny was Chairman and Chief Executive Officer of MLX Corp., an independent distributor of commercial refrigeration and air conditioning equipment, parts, and supplies, and a global manufacturer of high energy friction products and components used in aircraft brakes and in clutches, brakes, and transmissions for heavy duty trucks and off-highway equipment. He is a director of Amerisure, Inc., Amerisure Insurance Company, and Michigan Mutual Insurance Company. Kurt Wiedenhaupt, age 59, has been a director since 1992. Mr. Wiedenhaupt became President and Chief Executive Officer of the Company on July 1, 1992. From 1986 to June 30, 1992, Mr. Wiedenhaupt was President and Chief Executive Officer of AEG Corporation, a North American unit of Daimler-Benz AG which is engaged in transportation, electronics, industrial equipment and business systems. There are four standing committees of the Board of Directors: Audit, Compensation, Finance, and Nominating. The Audit Committee, which is comprised of Mr. Panny, Chairman, and Mr. Kennedy and Mr. Oertel, had three meetings in 1996. It selects auditors (subject to shareholder ratification), reviews their proposed audit plan and fees, reviews their completed audit, and reviews their recommendations and the replies of management thereto. The Audit Committee invites direct access by the auditors for information as to the Company's accounting practices. The Compensation Committee, which is comprised of Mr. MacMaster, Chairman, Dr. Albertine, Mr. Rice, and Mr. Stead, had four meetings in 1996. It submits recommendations to the Board on all matters relating to the compensation of officers and key employees. The Finance Committee, comprised of Mr. Kennedy, Chairman, and Dr. Albertine, Mr. Oertel and - --------------- * Denotes publicly-held company 5 7 Mr. Wiedenhaupt, held five meetings during 1996. It reviews the Company's plans for financing acquisitions and capital expenditures. The Nominating Committee, comprised of Mr. Stead, Chairman, and Dr. Albertine, Mr. Panny, and Mr. Wiedenhaupt was formed in October 1996 and held its first meeting in February 1997. The Board of Directors had seven meetings in 1996. All nominees and incumbent directors whose terms will continue after the Meeting attended at least 75% of the relevant board and committee meetings held during 1996, except for Mr. Rice who attended 45% of such meetings. Directors (except for Mr. Wiedenhaupt) are entitled to an attendance fee of $750 for each board meeting attended in person and are also entitled to an annual retainer of $14,000. Effective January 1, 1997, the annual retainer was increased to $16,000. Members of committees are entitled to $600 for attendance in person at each meeting. In addition, the Chairmen of the Audit, Compensation, Finance and Nominating Committees each is entitled to $1,000 per annum. At the 1995 Annual Meeting, the shareholders approved the 1995 Directors Stock Option Plan (the "1995 Directors Plan") which became effective with respect to fees payable to directors after June 30, 1995. Under the 1995 Directors Plan, a nonemployee director of the Company may elect to receive options instead of his annual director's retainer and meeting and chairmanship fees for that year. The options are granted on the first day of each calendar quarter, which is the date on which the payment of retainer and meeting fees would otherwise be made in cash. The number of shares of common stock subject to an option is equivalent to the amount of director's fees divided by the difference between the fair market value of a share on the date of grant and the exercise price which is 30% of the fair market value of a share on the date of grant. Options become exercisable in full six months after grant and expire ten years after grant, provided that options may expire earlier as a result of the termination of a director's service on the board, as follows: if an option has not expired earlier, it will expire on the fifth anniversary of the director's retirement after age 70, or if the director dies before that fifth anniversary, the first anniversary of the director's death; on the first anniversary of the termination of the director's service on the board by reason of death or disability; or three months after the termination of the director's service on the board for any other reason. The exercise price is payable in cash. All the directors eligible under the 1995 Directors Plan have elected to participate in the 1995 Directors Plan from the respective dates of their eligibility. 6 8 The options which have been granted to directors under the 1995 Directors Plan are set forth in the following table:
TOTAL AVERAGE OPTIONS EXERCISE EXERCISE DIRECTOR GRANTED PRICE PRICE -------------------------------------------------- ------- -------- -------- John M. Albertine................................. 4,212 $ 16,090 $ 3.82 Bernard J. Kennedy................................ 4,564 17,414 $ 3.82 Douglas J. MacMaster, Jr.......................... 4,090 15,545 $ 3.80 Klaus K. Oertel................................... 1,900 8,121 $ 4.27 William P. Panny.................................. 4,145 15,787 $ 3.81 Victor A. Rice.................................... 3,567 13,499 $ 3.78 Jerre L. Stead.................................... 858 3,964 $ 4.62 ------ ------- Total........................................... 23,336 $ 90,420 $ 3.87
On each date that options are granted, the combination of the exercise price of the options granted and the cash fees the director is entitled to receive but forgoes is equivalent to the market value of the shares of Company common stock underlying the option on the date of grant. As of March 7, 1997, none of the options granted under the 1995 Directors Plan had been exercised and 26,664 shares remained available for the grant of options under the 1995 Directors Plan. The options reflected in the table above were granted in lieu of cash retainers and meeting fees aggregating $212,800. Directors with five or more years of continuous service are entitled to a benefit of $10,000 a year payable over ten years upon retirement, death prior to retirement, or nonelection to or removal from the Board following an unfriendly change in control of the Company. In the event of an unfriendly change in control, the director may opt to receive a lump sum payment equal to the present value of the periodic payments discounted at a current annuity discount rate. It is the Board of Directors' belief that it is in the best interest of the Company, absent special circumstances such as directorships that are part of an acquisition like the proposed Portescap acquisition, that incumbent directors not remain on the Company's Board beyond the annual meeting of shareholders following their 70th birthday. However, the Board asked Mr. Fierle, who is the founder of the Company and has served as a director for 49 years, to continue to serve as a director through the annual meeting following his 75th birthday. Mr. Fierle, who will be 75 years old on April 14, 1997, will retire from the Board immediately prior to the annual meeting on April 25, 1997. 7 9 SHARE OWNERSHIP OF MANAGEMENT The following table shows the number of common shares beneficially owned as of February 28, 1997 by (1) each director and each executive officer named in the Summary Compensation Table and (2) all directors and executive officers of API as a group.
AMOUNT AND NATURE OF PERCENT OF NAME OF INDIVIDUAL BENEFICIAL COMMON SHARES OR DESCRIPTION OF GROUP OWNERSHIP(1)(2) OUTSTANDING(3) - --------------------------------------------- -------------------- -------------------- John M. Albertine............................ 18,159 Robert J. Fierle............................. 890,247(4) 12.2% Bernard J. Kennedy........................... 7,817 Douglas J. MacMaster, Jr..................... 7,607 Klaus K. Oertel.............................. 1,891 William P. Panny............................. 13,982 Victor A. Rice............................... 3,206 Jerre L. Stead............................... 5,478 Kurt Wiedenhaupt............................. 194,493 2.6% James W. Bingel.............................. 15,526 John M. Murray............................... 50,578 Richard S. Warzala........................... 50,050 All directors and executive officers as a group, including those named above......... 1,261,134 16.6%
- --------------- (1) Each individual has sole voting and investment power over the shares indicated as owned by that individual unless otherwise noted. 8 10 (2) The total includes 293,105 shares that executive officers and directors of API as a group have the right to acquire pursuant to options that are currently exercisable or become exercisable within the next 60 days, as shown in the following table: Dr. Albertine......................................... 3,703 Mr. Kennedy........................................... 4,036 Mr. MacMaster......................................... 3,607 Mr. Oertel............................................ 1,391 Mr. Panny............................................. 3,662 Mr. Rice.............................................. 3,206 Mr. Stead............................................. 478 Mr. Wiedenhaupt....................................... 180,523 Mr. Bingel............................................ 12,987 Mr. Murray............................................ 49,662 Mr. Warzala........................................... 28,250
(3) Except for Messrs. Fierle and Wiedenhaupt, each of the directors and executive officers named in the table owns less than 1% of the common shares outstanding. (4) Includes 5,000 shares owned by Mr. Fierle's spouse. Mr. Fierle disclaims beneficial ownership of all such shares. 9 11 SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table shows the number of common shares owned by each person or "group" known to API to be the beneficial owner of more than 5% of its common shares.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF COMMON BENEFICIAL OWNER BENEFICIAL OWNERSHIP SHARES OUTSTANDING - --------------------------------------------- --------------------- ------------------ Robert J. Fierle............................. 890,247(1) 12.2% East Aurora, NY 14052 First Carolina Investors, Inc................ 486,500(2) 6.7% 5224 Providence Country Club Drive Charlotte, NC 28277 Dimensional Fund Advisors Inc................ 428,674(3) 5.9% 1299 Ocean Avenue Santa Monica, CA 90401
- --------------- (1) Includes 5,000 shares owned by Mr. Fierle's spouse. Mr. Fierle disclaims beneficial ownership of all such shares. (2) Based on an amended Schedule 13D dated February 6, 1997 filed by Brent D. Baird, members of the Baird family, and entities owned or controlled by the Baird family. The filing persons with respect to this Schedule 13D and the number of shares owned are: (1) First Carolina Investors, Inc., 203,000 shares; (ii) The Cameron Baird Foundation, 215,700 shares; (iii) Aires Hill Corp., 32,300 shares; (iv) Brian D. Baird, as trustee, 11,000 shares; (v) Brent D. Baird, 5,000 shares; (vi) Jane D. Baird, 10,000 shares; (vii) David M. Stark, as successor trustee, 2,000 shares; and (viii) Brian D. Baird, as successor trustee, 7,500 shares. (3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment advisor, is deemed to have beneficial ownership of 428,674 shares of the Company's common stock as of December 31, 1996, all of which shares are held in portfolios of DFA Investment Dimensions Group Inc., a registered open-end investment company, or in a series of DFA Investment Trust Company, a Delaware business trust, or the DFA Group Trust and DFA Participating Group Trust, investment vehicles for qualified employee benefit plans, all of which Dimensional serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. 10 12 COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC") and the New York Stock Exchange. Directors, officers and greater-than-10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of information furnished to the Company, reports filed through the Company, and written representations that no Forms 5 were required, the Company believes that all Section 16(a) filing requirements applicable to its directors, officers and greater-than-10% beneficial owners were complied with during fiscal 1996. EXECUTIVE OFFICERS The following is a list of the executive officers of the Company, each of whom is appointed to serve at the pleasure of the Board.
HAS BEEN AN EXECUTIVE NAME AND AGE OFFICES HELD AT API OFFICER SINCE - -------------------------------- ------------------------------------------ ------------- Kurt Wiedenhaupt, 59............ President 1992 James W. Bingel, 49............. Vice President -President of Electronic 1991 Components Group Bruce McH. Kirchner, 48......... Vice President and Chief Financial Officer 1997 John M. Murray, 63.............. Vice President-Finance and Treasurer 1988 James R. Schwinger, 52.......... Vice President-Human Resources 1996 Richard S. Warzala, 43.......... Vice President- 1986 President of Motion Technology Group
All of the executive officers have been employed by API for more than five years except for Mr. Wiedenhaupt, who was appointed to his position on July 1, 1992, Mr. Schwinger who was appointed May 1, 1996, and Mr. Kirchner, who was appointed on February 3, 1997. Prior to joining the Company, Mr. Wiedenhaupt was employed for 32 years in various positions in several countries with units of AEG A.G., Frankfurt, Germany, a member of the Daimler-Benz Group. AEG is a world-wide manufacturer of electric and electronic products and systems. Mr. Schwinger was a human resources consultant from 1990 until 1996. Mr. Kirchner was employed for 22 years in various financial positions with The Carborundum Company and its successors. From 1989 to 1996 he was Vice President and Chief Financial Officer of BP Chemicals-Advanced Materials and Carborundum Division, a multinational manufacturer of polymer and ceramic based products. 11 13 COMPENSATION OF EXECUTIVE OFFICERS SUMMARY COMPENSATION TABLE The Summary Compensation Table sets forth individual compensation information for the Chief Executive Officer, the Chairman of the Board, and the three other most highly compensated executive officers.
LONG-TERM ANNUAL COMPENSATION COMPENSATION ------------------------- ----------------------------------- SECURITIES OTHER RESTRICTED UNDERLYING NAME AND ANNUAL STOCK OPTIONS/ ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(3) AWARD(S)($) SARs(#) COMPENSATION(4) - -------------------------- ----- -------- -------- --------------- ----------- ------------ --------------- Kurt Wiedenhaupt President and CEO(1).... 1996 $300,003 $346,441 30,000 $ 115,357 1995 293,335 252,165 $36,000 30,000 76,308 1994 273,338 73,640 $54,230 25,000 65,425 Robert J. Fierle Chairman (2)............ 1996 117,750 70,997 46,763 1995 117,750 64,992 49,343 1994 117,750 69,942 51,702 James W. Bingel Vice President.......... 1996 111,334 56,195 8,000 2,375 1995 108,001 44,534 8,000 1,894 1994 101,335 45,853 5,000 1,013 John M. Murray Vice President-Finance and Treasurer........... 1996 136,802 90,273 8,000 34,445 1995 133,201 56,350 8,000 33,273 1994 126,400 17,042 8,000 28,947 Richard S. Warzala Vice President.......... 1996 136,801 94,466 15,000 9,322 1995 127,001 68,193 12,000 9,432 1994 110,667 30,000 5,000 12,742
- --------------- (1) In addition to the bonus earned under the EVA Incentive Compensation Plan described elsewhere herein for his performance in 1995, the 1995 bonus for Mr. Wiedenhaupt shown in the table above includes a special bonus of $35,000 awarded by the Board of Directors in April 1995 for his performance in 1994. (2) Salary for Mr. Fierle includes director fees of $17,750 in each of the years 1996, 1995, and 1994. (3) Other Annual Compensation for Messrs. Wiedenhaupt (except 1994), Bingel, Murray, and Warzala does not exceed the lesser of $50,000 or 10% of total salary and bonus. 12 14 (4) All Other Compensation for 1996 includes (i) accruals for the Company's supplemental benefit program which will not be offset by benefits under the split-dollar life insurance program (both of which are described below), (ii) amounts paid to and on behalf of Mr. Wiedenhaupt under the Pension Benefit Restoration Plan adopted by the Company in 1994 and described under Salaried Employee Retirement Income Plan below, (iii) the actuarial value of premium payments made by the Company allocable to the executive officer's death benefit under the split-dollar life insurance program, combined with compensation paid in connection with premium payments made by the executive officer, and the value of Mr. Fierle's term insurance coverage under split-dollar insurance policies determined under relevant Internal Revenue Service regulations, and (iv) Company contributions to the 401(k) Retirement Savings Plan for Salaried Employees (which equal 25% of that portion of the employee's contribution which does not exceed 6% of such employee's total pay for the year). The amounts for each individual were as follows:
PENSION SUPPLEMENTAL BENEFIT 401(K) BENEFIT RESTORATION SPLIT-DOLLAR COMPANY PROGRAM PLAN PROGRAMS CONTRIBUTION TOTAL ------------ ----------- ------------ ------------ -------- Kurt Wiedenhaupt........... $ 0 $11,113 $101,869 $2,375 $115,357 Robert J. Fierle........... 37,002 0 9,761 0 46,763 James W. Bingel............ 0 0 0 2,375 2,375 John M. Murray............. 11,911 0 20,159 2,375 34,445 Richard S. Warzala......... 0 0 6,947 2,375 9,322
OPTION/SAR GRANTS IN LAST FISCAL YEAR The following table provides information on grants of stock options made during the 1996 fiscal year to the executive officers named in the Summary Compensation Table.
INDIVIDUAL GRANTS ------------------------------------------------------ % OF POTENTIAL REALIZABLE NUMBER OF TOTAL SECURITIES OPTIONS/ VALUE AT ASSUMED UNDERLYING SARS EXERCISE ANNUAL RATES OF STOCK OPTIONS/ GRANTED TO OR PRICE APPRECIATION SARS EMPLOYEES BASE FOR OPTION TERM (2) GRANTED IN FISCAL PRICE EXPIRATION --------------------- NAME (#) (1) YEAR ($/SH) DATE 5% ($) 10% ($) - ------------------------------- ---------- ----------- -------- ---------- -------- -------- Kurt Wiedenhaupt............... 30,000 14.2% $12.375 4-25-06 $233,550 $591,750 James W. Bingel................ 8,000 3.8 $12.375 4-25-06 62,280 157,800 John M. Murray................. 8,000 3.8 $12.375 4-25-06 62,280 157,800 Richard S. Warzala............. 15,000 7.1 $12.375 4-26-06 116,775 295,875
13 15 - --------------- (1) All of the options reflected in the table are ten year options and become exercisable at the rate of 20% per year beginning on the first anniversary of the date of grant. (2) These amounts represent certain assumed rates of appreciation only. At an assumed annual rate of appreciation of 5%, $12.375 would increase to $20.16 and at 10% would increase to $32.10. Actual gains, if any, on stock option exercises are dependent on the future performance of the Company's common stock and overall market conditions. There can be no assurance that the amounts reflected in this table will be achieved. FISCAL YEAR-END OPTION/SAR VALUES The following table summarizes information with respect to option exercises and unexercised stock options and stock appreciation rights ("SARs") held by the executive officers named in the Summary Compensation Table at the end of the 1996 fiscal year.
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS/SARs OPTIONS/SARs SHARES 1/3/97 (#) 1/3/97 ($) ACQUIRED VALUE ON REALIZED EXERCISABLE/ EXERCISABLE/ NAME EXERCISE ($) UNEXERCISABLE UNEXERCISABLE -------------------------------- -------- -------- ------------- -------------- Kurt Wiedenhaupt................ 8,870 $ 99,643 203,523 $2,539,634 119,000 1,324,375 James W. Bingel................. 2,069 15,130 7,387 92,144 19,600 202,875 John. M. Murray................. 0 0 41,363 491,091 24,200 262,800 Richard S. Warzala.............. 14,704 81,707 29,958 336,426 29,800 294,000
SALARIED EMPLOYEE RETIREMENT INCOME PLAN Executive officers of the Company are covered by the Salaried Employee Retirement Income Plan (the "Plan"). Normal retirement age under the Plan is 65. The normal monthly retirement benefit is equal to 1% of average monthly base earnings multiplied by the years of credited service. Average monthly base earnings is determined from the highest continuous five years out of the last ten years worked prior to retirement. The normal monthly retirement benefit is reduced by 1/2 of 1% for each month between the date benefits begin and the participant's normal 14 16 retirement date in the case of early retirement. Benefits are not subject to any reduction for Social Security payments or other offset amounts. The table set forth below illustrates representative annual retirement benefits for various levels of compensation and periods of service under the Plan.
AVERAGE ANNUAL EARNINGS (HIGHEST CONTINUOUS 5 OF ESTIMATED ANNUAL RETIREMENT BENEFITS LAST BASED ON CREDITED YEARS OF SERVICE INDICATED 10 YEARS PRIOR TO ------------------------------------------------------- RETIREMENT) 10 15 20 25 30 - ----------------- ------- ------- ------- ------- ------- $ 50,000 $ 5,000 $ 7,500 $10,000 $12,500 $15,000 100,000 10,000 15,000 20,000 25,000 30,000 160,000 16,000 24,000 32,000 40,000 45,000 or more
Under the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), the amount of annual earnings which can be utilized in determining benefits under the Plan was reduced from $235,840 to $150,000 and increased to $160,000 for 1997. This change significantly reduces the retirement benefits under the Plan for Mr. Wiedenhaupt. In 1994, the Company adopted a Pension Benefit Restoration Plan pursuant to which the Company will make annual payments under a flexible deposit annuity contract for Mr. Wiedenhaupt and reimburse him for his income taxes on the annuity payments. Upon retirement, the annuity contract will provide benefits equal to the benefits lost due to the enactment of OBRA. By way of illustration, an employee covered by the Pension Benefit Restoration Plan retiring with 30 years of credited service and Average Annual Earnings of $200,000 would be entitled to an annual retirement benefit of $60,000, $48,000 of which would be provided by the Plan and $12,000 of which would be provided through an annuity contract under the Pension Benefit Restoration Plan. The credited years of service on December 30, 1996 for the persons named in the Summary Compensation Table are as follows: Mr. Wiedenhaupt -- 4 years; Mr. Bingel -- 5 years; Mr. Murray -- 8 years; and Mr. Warzala -- 20 years. The current compensation covered by the Plan, which excludes bonus earnings, is reflected in the "Salary" column of the Summary Compensation Table, subject to the aforementioned limit under OBRA. Mr. Fierle retired from full-time employment on July 1, 1992 with 30 years of credited service under the Plan and began receiving retirement benefits thereunder. EMPLOYMENT CONTRACTS; SUPPLEMENTAL BENEFIT PROGRAMS; AND CHANGE-OF-CONTROL ARRANGEMENTS Mr. Wiedenhaupt was employed as President and Chief Executive Officer effective July 1, 1992 and entered into an employment agreement (the "Employment Agreement") for the five- 15 17 year period ending June 30, 1997 (the "Employment Period"). The Employment Agreement provides for an annual salary of not less than $300,000 and entitles Mr. Wiedenhaupt to participate in the Company's bonus and other benefit plans. Upon retirement at age 65, Mr. Wiedenhaupt will be entitled to a supplemental retirement benefit of $1,500,000 adjusted for changes in the Consumer Price Index from July 1, 1992 and payable over 15 years. The benefit vests at the rate of 10% per year. This benefit is secured by a life insurance policy with a death benefit currently of $1,679,000 payable to Mr. Wiedenhaupt's beneficiary. If the Employment Agreement is terminated by the Company (other than for cause or by reason of Mr. Wiedenhaupt's death or disability), he will be entitled to receive all unpaid salary and bonuses for the balance of the Employment Period, his supplemental retirement benefit, his vested benefits under other plans and one-half of his average annual bonus, subject to certain limitations. These amounts will be paid on the dates they would have been paid if his employment had not been terminated unless the Company elects for them to be paid in a discounted lump sum. To provide a smooth transition from the leadership of Mr. Fierle to Mr. Wiedenhaupt and to retain Mr. Fierle's services, the Company entered into an agreement with Mr. Fierle effective upon his retirement as Chief Executive Officer and President through the date of the Company's annual shareholders' meeting in 1998. Under that agreement he serves as a part-time employee, at an annual salary of $100,000 plus the benefits he had been receiving prior to retirement. The Company pays him $6,500 per month over ten years under his supplemental benefit program as a former officer and will pay him an additional $833 per month over ten years, beginning in May 1997, as a former director. Messrs. Warzala and Murray are participants in a supplemental benefit program that provides an annual amount equal to 20% of current salary payable over a 15 year period upon retirement at age 65, death or total disability prior to retirement, or involuntary termination following an unfriendly change in control of the Company. In the event of an unfriendly change in control, the participant becomes fully-vested and may opt to receive a lump sum payment equal to the present value of the periodic payments discounted at a current annuity discount rate. Participants are also eligible to receive benefits in the event of involuntary termination without an unfriendly change in control according to a vesting schedule that provides 50% vesting after ten years of service, increasing 5% for each year of service thereafter. The benefits payable under this program are subject to offset by the amount of the cash surrender value of split-dollar life insurance policies purchased by the Company under a separate program. Under this program, the Company will recover all premiums paid by it upon the earlier to occur of the policy's maturity or the participant's death. If a participant's employment is terminated, the Company will recover most or all of the prior cash premiums, depending on the number of years the split-dollar contract was in effect. 16 18 In 1996 the Company entered into agreements with Mr. Wiedenhaupt, Mr. Bingel, Mr. Murray, and Mr. Warzala which provide severance payments to each of them if they are either terminated or resign for "good reason," as defined in the agreements, within three years after there has been a "change of control," as defined, of the Company. In that event, Mr. Wiedenhaupt would receive a severance payment equal to three times his then annual base salary plus the highest bonus accrued for him in any of the three preceding years ("Total Compensation") plus a benefit replacement amount equal to 50% of his Total Compensation. These payments would be in lieu of any severance payments under Mr. Wiedenhaupt's employment agreement. Messrs. Bingel, Murray and Warzala would each receive a severance payment equal to one times their Total Compensation and a benefit replacement equal to 35% of their Total Compensation. 17 19 PERFORMANCE GRAPH The following performance line graph compares the cumulative total shareholder return on an investment in the Company's common stock over the past five years with the total return on the stocks comprising the Media General Composite Index ("Composite Index"), the Media General Multi-Industry Index ("Multi-Industry Index"), and the Dow Jones diversified industrial manufacturing company index ("Industrials Index"). The data for the graph was furnished by Media General Financial Services and Dow Jones & Company, Inc. The line graph assumes an investment of $100 in API stock on the last day of the 1991 fiscal year and the reinvestment of quarterly cash dividends at the closing price of API stock on the ex-dividend date. Calculations for the Composite, Multi-Industry, and Industrials Indexes are made in a similar fashion. The Company is replacing the Industrials Index used in prior years with the Multi-Industry Index in order to secure all index data from a single source.
Measurement Period COMPOSITE INDUSTRIALS MUTLI-IN- (Fiscal Year Covered) API INDEX INDEX DUSTRY INDEX 1991 100 100 100 100 1992 96.7 104.0 116.3 111.7 1993 84.0 119.4 142.1 136.5 1994 103.6 118.4 130.3 130.5 1995 152.4 153.5 170.7 175.1 1996 279.2 185.4 221.1 216.4
18 20 BOARD COMPENSATION COMMITTEE REPORT* The Compensation Committee of the Board of Directors (the "Committee") is composed entirely of independent outside directors. The Committee is responsible for setting and administering the policies which govern annual compensation, bonus plans, and stock ownership programs. The Committee annually evaluates API's corporate performance and compensation and share ownership programs as compared with industrial companies reasonably similar in size, product content, profitability, return on equity, and sound financial condition. Such data are gathered from consultant surveys and, where available, published statistics and surveys. The Company's annual compensation programs are designed to strike a reasonable balance between competitive base salaries and a performance-oriented incentive system which does not reward employees unless targeted goals are reached, and pay is increasingly better as profit pools are created. The Committee approved salary increases for the executive officers of the Company for the year beginning May 1, 1996 based on the Committee's evaluation of each officer's performance, the performance of the officer's operating divisions, and the overall performance of the Company. Mr. Wiedenhaupt's base annual salary is determined by his Employment Agreement with the Company. The Committee, with the approval of the Board of Directors, can determine, in its discretion, to increase Mr. Wiedenhaupt's salary. At its meeting in April 1996, the Committee reviewed Mr. Wiedenhaupt's performance for the prior year, with particular attention given to the progress made by the Company in the development and execution of its growth strategy, the Company's earnings, return on equity, and economic value added ("EVA"). In view of the incentive compensation Mr. Wiedenhaupt was awarded under the Company's EVA Incentive Compensation Plan (the "EVA Plan") in recognition of his achievements in 1995, the Committee did not change his base salary. It is the Committee's intent that any future increase in Mr. Wiedenhaupt's salary will be based on the Company's earnings and EVA criteria, as well as his role in the continued development and successful execution of the Company's growth strategy. The Committee granted Mr. Wiedenhaupt options to purchase 30,000 shares of the Company's common stock at the closing price of the Company's common stock on the New York Stock Exchange on the date of grant. - --------------- *The Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (together, the "Acts"), except to the extent that the Company specifically incorporates such report by reference; and further, such report shall not otherwise be deemed filed under the Acts. 19 21 In April 1996, the Committee also granted stock options to other executive officers and other selected key employees. In determining the size of the grants for the executive officers, the Committee assessed their individual performance, contributions to the business and relative levels of responsibility. Beginning with 1995, the Company adopted the EVA Plan to replace bonus plans which were previously in effect. One purpose of the EVA Plan is to provide incentives for plan participants to strive for the enhancement of shareholder value through the achievement of the Company's strategic plan objectives. The EVA Plan is also a critical feature of the Company's program to shift a portion of employee compensation from fixed to variable so that, over time, the variable component (i.e. EVA incentive compensation) of employee compensation will become more significant in relation to the fixed component (i.e. base salary or wages). All employees are eligible to participate in the EVA Plan, except employees subject to certain collective bargaining agreements and employees compensated under separate sales incentive or commission programs. For 1996, approximately 930 employees out of a total of approximately 1,300 employees in the Company participated in the EVA Plan. EVA is the amount by which the net operating profit after tax of a business unit exceeds the weighted average cost of capital relative to the average capital employed by that business unit. Each EVA Plan participant has a Target Bonus based on a percentage of the participant's base compensation during the Plan Year. Percentages are established in the EVA Plan for various levels of responsibility within the business units. Each operating unit and the Company as a whole ("Units") had an EVA Target for 1996 approved by the Compensation Committee of the Board. Actual 1996 EVA results compared to the EVA Target establishes the percentage of the Target Bonus earned by the EVA Plan participants. If EVA for a Unit exceeds the EVA Target for the Plan Year, the Target Bonus for the participants in that Unit will be increased by the same percentage that EVA exceeds the EVA Target. If EVA for a Unit falls short of the EVA Target for the Plan Year, the Target Bonus will be reduced by 1.5% for each percentage point that the EVA shortfall bears to the EVA target. The bonuses earned by EVA Plan participants whose Target Bonus percentage is 15% or more (hereinafter referred to as "Bank Employees") are subject to discretionary adjustment not to exceed plus or minus 15% of the formula bonus. The bonus awards for Bank Employees in operating Units will be determined by subjecting 80% of their Target Bonus to EVA performance of their Unit and 20% of their Target Bonus to total Company EVA performance. The bonuses earned by EVA Plan participants who are not Bank Employees are subject to discretionary adjustments determined by the Unit's general manager, subject to review by the 20 22 Compensation Committee. The bonus award allocations made to participants who are not Bank Employees will be paid in full on or about March 15 following the end of the Plan Year. Bonus awards to Bank Employees are added to the amount, if any, held in an account maintained on the Company's books for each Bank Employee ("Bank Account"). If the amount in the Bank Account after adding the current bonus award is equal to or less than the employee's Target Bonus, then the entire "Bank Account" balance will be paid to the employee on or about March 15 in the year following the Plan Year. If the Bank Account balance exceeds the Target Bonus, the employee will be paid the Target Bonus plus one-half such excess. An employee can have a negative bonus which will reduce the employee's Bank Account or create a negative balance in this Bank Account which must be offset by positive bonuses in the future before any bonus payment will be made from the bank. The Committee intends that, whenever reasonably possible, compensation paid to its managers, including its executive officers, should be deductible for federal income tax purposes. All compensation paid to or earned by the executive officers in fiscal 1996 was deductible for federal income tax purposes. Submitted by the Compensation Committee of the Company's Board of Directors: Douglas J. MacMaster, Jr., Chairman John M. Albertine Victor A. Rice Jerre L. Stead COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION There are no "Compensation Committee interlocks" or "insider participation" which the SEC regulations would require to be disclosed in this proxy statement. 2. RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS At the Meeting a vote of the shareholders will be taken for the ratification of the selection of the firm of Price Waterhouse LLP, independent public accountants, as auditors for the fiscal year ending January 2, 1998. Representatives of the firm are expected to be present at the Meeting, be available to respond to appropriate questions, and have the opportunity to make a statement if they so desire. 21 23 SHAREHOLDER PROPOSALS Proposals of shareholders to be presented to the 1998 annual meeting must be received by API on or before November 26, 1997, for possible inclusion in the proxy statement and form of proxy relating to that meeting. OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING Management is not aware that any other matters will be presented for action at the Meeting. If, however, other matters do properly come before the Meeting, it is the intention of the persons named in the proxy to vote the proxy in accordance with their best judgment on such matters. COST OF PROXY SOLICITATION The cost of preparing, assembling and mailing proxy statements and other material furnished to shareholders in connection with the solicitation of proxies will be borne by API. API has retained Regan & Associates, Inc., a proxy soliciting firm, to assist in the solicitation of proxies. The fee for these services will be approximately $5,250, plus expenses. Arrangements will be made with brokerage houses, nominees, fiduciaries, and other custodians to send proxies and proxy material to beneficial owners of API's common shares, and API will reimburse them for their expenses in so doing. Proxies may be solicited personally or by telephone, fax, or mail by directors, officers, and regular employees of API without additional compensation for such services. By order of the Board of Directors JAMES J. TANOUS Secretary March 25, 1997 22 24 AMERICAN PRECISION INDUSTRIES INC. P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF R THE COMPANY FOR THE ANNUAL MEETING APRIL 25, 1997. O X The undersigned hereby constitutes and appoints John M. Murray and Richard Y S. Warzala, and each of them, proxies with full power of substitution to vote for the undersigned all shares of common stock of American Precision Industries Inc. which the undersigned would be entitled to vote if personally present at the annual meeting of shareholders to be held on April 25, 1997, and at any adjournment thereof, upon the matters described in the accompanying Proxy Statement and upon any other business that may properly come before the meeting or any adjournment thereof. Said proxies are directed to vote or refrain from voting as indicated in this proxy, and otherwise in their discretion. Election of Directors, Nominees: (change of address) CLASS III (THREE YEAR TERM) VICTOR A. RICE, JERRE L. STEAD -------------------------------------- CLASS I (ONE YEAR TERM) -------------------------------------- JOHN M. ALBERTINE -------------------------------------- -------------------------------------- (If you have written in the above space, please mark the corresponding box on the reverse side of this card.) YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. SEE REVERSE SIDE 25 [X] PLEASE MARK YOUR SHARES IN YOUR NAME VOTES AS IN THIS EXAMPLE. FOR WITHHELD FOR AGAINST ABSTAIN 1. Election of [ ] [ ] 2. Ratification [ ] [ ] [ ] Directors of the selection (see reverse) of Price Waterhouse as Independent Auditors for the 1997 Fiscal Year. For, except vote withheld from the following nominee(s): - -------------------------------------------------------- Change [ ] of Address SIGNATURE(S) __________________________________________ DATE _________ SIGNATURE(S) __________________________________________ DATE _________ NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.I,2 -----END PRIVACY-ENHANCED MESSAGE-----