-----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, DNFcuktCl61wSYIcEqn6MOaC3D4/Mo+dxJoHROZfuYIXkJWMw3a1HyfiL4eWFNj2 iYY4Lo8RR+yCUu87C4NTVg== 0000912057-96-004929.txt : 19960325 0000912057-96-004929.hdr.sgml : 19960325 ACCESSION NUMBER: 0000912057-96-004929 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960502 FILED AS OF DATE: 19960322 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNANT CO CENTRAL INDEX KEY: 0000097134 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 410572550 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-04804 FILM NUMBER: 96537224 BUSINESS ADDRESS: STREET 1: 701 N LILAC DR STREET 2: P O BOX 1452 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6125401200 FORMER COMPANY: FORMER CONFORMED NAME: TENNANT G H CO DATE OF NAME CHANGE: 19700515 DEF 14A 1 SCHEDULE 14-A [LOGO] TENNANT COMPANY NOTICE OF ANNUAL MEETING OF SHAREHOLDERS MAY 2, 1996 TO OUR SHAREHOLDERS: The Annual Meeting of Shareholders of Tennant Company will be held at the corporate headquarters of Tennant Company, 701 North Lilac Drive, Minneapolis, Minnesota, on Thursday, May 2, 1996, at 10:30 a.m., Central Daylight Time, for the following purposes: (1) To elect directors for a three-year term; (2) To ratify the appointment of KPMG Peat Marwick LLP as independent auditors of the Company; (3) To act upon any other business that may properly come before the meeting. Only holders of Common Stock of record at the close of business on March 4, 1996, will be entitled to vote at the meeting or any adjournment thereof. You are cordially invited to attend the meeting. Whether or not you plan to come to the meeting, please sign, date and return your Proxy in the reply envelope provided. Your cooperation in promptly signing and returning your Proxy will help avoid further solicitation expense. March 22, 1996 Bruce J. Borgerding, Secretary TENNANT COMPANY ESTBLISHED 1870 701 N. LILAC DRIVE, P.O. BOX 1452, MINNEAPOLIS, MINN. 55440 [LOGO] TENNANT COMPANY PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation by Tennant Company (the "Company"), on behalf of its Board of Directors, of Proxies for the Annual Meeting of Shareholders to be held Thursday, May 2, 1996, and any adjournment thereof. Stock represented by Proxies will be voted. Where specification is made in the Proxy, the stock will be voted in accordance therewith. Where no specification is made in the Proxy, the stock will be voted for all proposals. Proxies may be revoked at any time before being voted by giving written notice of revocation at the mailing address noted or at the meeting, or by a later-dated Proxy delivered to an officer of the Company. Personal attendance and voting in person does not revoke a written Proxy. There were outstanding on March 4, 1996, the record date for shareholders entitled to vote at the meeting, 9,988,450 shares of Common Stock, each share being entitled to one vote. Expenses in connection with the solicitation of Proxies will be paid by the Company. Solicitation of Proxies will be principally by mail. In addition, several of the officers or employees of the Company may solicit Proxies, either personally or by telephone, or by special letter, from some of the shareholders. The Company also will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send Proxies and proxy material to their principals, and will reimburse them for their expenses in so doing. The mailing address of the principal executive office of the Company is 701 North Lilac Drive, P.O. Box 1452, Minneapolis, Minnesota 55440. This Proxy Statement and form of Proxy enclosed are being mailed to shareholders commencing March 22, 1996. 1 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth, as of February 29, 1996, certain information with respect to all shareholders known to the Company to have been beneficial owners of more than 5% of its Common Stock, and information with respect to the Company's Common Stock beneficially owned by directors of the Company, the executive officers of the Company included in the Summary Compensation Table set forth under the caption "Executive Compensation" below and all directors and executive officers of the Company as a group. Except as otherwise indicated, the shareholders listed in the table have sole voting and investment powers with respect to the Common Stock owned by them.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK - ------------------- -------------------- ------------ First Bank System, Inc.(1) 1,088,444 shares(2) 10.9% Minneapolis, MN First Bank System, Inc. has sole investment authority for 18,834 shares, shared investment authority for 1,069,610(2) shares and shared voting authority for 1,087,844(2) shares. George T. Pennock Minneapolis, MN 896,840 shares(3)(4) 9.0% Trimark Financial Corporation, Inc.(1) 600,000 shares 6.0% Toronto, Ontario David L. Babson & Co., Inc.(1). 558,900 shares 5.6% Cambridge, MA David L. Babson & Co., Inc., has sole investment authority for 558,900 shares, sole voting authority for 327,500 shares and shared voting authority for 231,400 shares Putnam Investments, Inc.(1) 539,200 5.4% Boston, MA Certain Putnam investment managers (together with their parent corporations, Putnam Investments, Inc., and Marsh & McLennan Companies, Inc.) are considered "beneficial owners" in the aggregate of 539,200 shares of the Company's Common Stock, which shares were acquired for investment purposes by such investment managers for certain of their advisory clients. Putnam Investments, Inc., has shared investment authority for 539,200 shares and shared voting authority for 162,500 shares. Roger L. Hale 376,419 shares(5)(6) 3.8% Douglas R. Hoelscher 24,572 shares(6)(7) * Richard A. Snyder 23,719 shares(6)(8) * Janet M. Dolan 12,093 shares(6)(9) *
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NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK - ------------------- -------------------- ------------ Keith D. Payden 11,921 shares(6)(10) * Andrew P. Czajkowski 3,376 shares * David C. Cox 2,874 shares * William A. Hodder 2,876 shares * Arthur R. Schulze, Jr. 2,876 shares * William I. Miller 2,224 shares * Delbert W. Johnson 1,882 shares * Arthur D. Collins, Jr. 859 shares * All directors and executive 744,579 shares(6)(11) 7.5% officers as a group (16 persons)
* An asterisk in the column listing the percentage of shares beneficially owned indicates the person owns less than 1% of total. (1) The information set forth above as to the Amount and Nature of Beneficial Ownership is based upon a Schedule 13G statement filed with the Securities and Exchange Commission reflecting beneficial ownership as of December 31, 1995. (2) This number includes 741,942 shares held in the "unallocated" account, as of December 31, 1995, of the Tennant Company Profit Sharing and Employee Stock Ownership Plan and Trust, as to which an affiliate of First Bank System, Inc. acts as trustee. The number of "allocated" shares held in such trust (847,569 shares as of December 31, 1995) is not included in this number. The Securities and Exchange Commission has taken the position, with respect to similar plans, that the plan trustee is the beneficial owner of shares held in an unallocated reserve pending allocation to participants' accounts. The plan trustee disclaims that it or the Trust is the beneficial owner of shares held in the unallocated account. (3) Included are 764,800 shares in a trust established by Mr. Pennock's mother for the equal benefit of Mr. Pennock's children and his sister. Mr. Pennock, co-trustee with First Bank, National Association of this trust, has sole voting and investment authority for this trust. (4) Not included are 8,920 shares owned by certain family members of Mr. Pennock, as to which Mr. Pennock disclaims beneficial ownership. (5) Of these shares, Mr. Hale has an interest in 144,074 shares in trusts established under the will of his mother, of which he is a beneficiary. Includes 9,200 shares covered by currently exercisable options granted to Mr. Hale. (6) Includes shares allocated to the individual or group under the Tennant Company Profit Sharing and Employee Stock Ownership Plan. (7) Includes 1,400 shares covered by currently exercisable options granted to Mr. Hoelscher. (8) Includes 1,400 shares covered by currently exercisable options granted to Mr. Snyder. (9) Includes 1,500 shares covered by currently exercisable options granted to Ms. Dolan. 3 (10) Includes 800 shares covered by currently exercisable options granted to Mr. Payden. (11) Includes 17,000 shares covered by currently exercisable options granted to nine executive officers of the Company. ELECTION OF DIRECTORS Pursuant to the Restated Articles of Incorporation of the Company, directors are elected for staggered terms of three years, with approximately one-third of the directors to be elected each year. At the meeting, two directors are to be elected. The Board of Directors has designated Roger L. Hale and Delbert W. Johnson as nominees for election to serve three-year terms ending at the time of the Annual Meeting in 1999 and until their successors are elected and have qualified. Mr. Hale and Mr. Johnson are currently directors of the Company and have previously been elected by the shareholders. The nominees have indicated a willingness to serve, but in case any of the nominees is not a candidate at the Annual Meeting, it is the intention of the persons named in the enclosed form of Proxy to vote in favor of the other nominees named and to vote for a substitute nominee in their discretion. The affirmative vote of a majority of the outstanding shares of Common Stock present and entitled to vote in person or by proxy on the election of directors is necessary to elect each nominee. For this purpose, a shareholder voting through a Proxy who abstains with respect to the election of directors is considered to be present and entitled to vote on the election of directors at the meeting, and is in effect a negative vote; but a shareholder (including a broker) who does not give authority to a Proxy to vote, or withholds authority to vote, on the election of directors shall not be considered present and entitled to vote on the election of directors. The following information is furnished with respect to each nominee for election as a director and for each director whose term of office will continue after the meeting:
NAME, AGE AND YEAR OTHER FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS - ---------------------- -------------------- ------------- Nominees for election for terms expiring in 1999 (Class I Directors): Roger L. Hale (1) Mr. Hale has been President of the Company Dayton Hudson Age: 61 since January 1975 and Chief Executive Corporation Director Since 1969 Officer since May 1976. He previously First Bank System, served as Chief Operating Officer from Inc. January 1975 to May 1976 and as Vice President from April 1969 to December 1974. Delbert W. Johnson Chairman and Chief Executive Officer of Pioneer Ault, Inc. Age: 57 Metal Finishing. Coherenet Director since 1993 Minneapolis, MN. Communications Specialist in metal finishing. Systems Corp. Compucom Mr. Johnson has been an executive officer Systems of Pioneer Metal Finishing, a division First Bank System, of Safeguard Scientifics, Inc., for more Inc. than the past five years. Safeguard Scientifics, Inc.
(1) Roger L. Hale, a director and executive officer of the Company, is a first cousin of Richard M. Adams, a Vice President of the Company. 4
NAME, AGE AND YEAR OTHER FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS - ---------------------- -------------------- ------------- Directors whose terms expire in 1997 (Class II Directors): David C. Cox President and Chief Executive Officer of Cowles National Computer Age: 58 Media Company. Systems, Inc. Director Since 1991 Minneapolis, MN. ReiaStar Financial Publisher of newspapers,magazines and related Corp ancillary products. Mr. Cox has been an executive officer of Cowles Media Company for more than the past five years. William I. Miller Chairman of Irwin Financial Corporation. Cummins Engine Age: 39 Columbus, IN. Company Inc. Director Since 1994 Interrelated group of financial services EuroPacific Growth companies. Fund Irwin Financial Mr. Miller has been Chairman of Irwin Financial Corporation Corporation since 1990. Prior to that time, he New Perspective served as President of Irwin Management Fund Company, Inc., a family investment management firm, for seven years. Arthur R. Schulze, Jr. Retired Vice Chairman of the Board of General Inter-Regional Age: 65 Mills, Inc. Financial Director since 1982 Golden Valley, MN. Group, Inc. A diversified consumer products company. Sealright Co., Inc. Mr. Schulze was an executive officer of General Mills, Inc. for more than five years prior to his retirement in 1993. Directors whose terms expire in 1998 (Class III Directors): Andrew P. Czajkowski President and Chief Executive Officer of Age: 60 Blue Cross Blue Shield of Minnesota. Director since 1992 St. Paul, MN. Minnesota health care company. Mr. Czajkowski has been an executive officer of Blue Cross Blue Shield of Minnesota for more than the past five years. William A. Hodder Chairman and Chief Executive Officer of Donaldson Age: 64 Donaldson Company, Inc. Company, Inc. Director Since 1975 Minneapolis, MN. Norwest Manufacturer of filtration devices for heavy-duty Corporation mobile diesel engines and industrial applications. ReliaStar Financial Corp. Mr. Hodder has been an executive officer of SUPERVALU, Inc. Donaldson Company, Inc. for more than the past five years.
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NAME, AGE AND YEAR OTHER FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS - ---------------------- -------------------- ------------- Arthur D. Collins, Jr. President and Chief Operating Officer of Medtronic, Inc. Age: 48 Medtronic, Inc. Director since 1995 Minneapolis, MN Manufacturer of therapeutic medical devices. Mr. Collins was named Chief Operating Officer in January 1994 after joining Medtronic, Inc. as Executive Vice President and President of Medtronic International in June 1992. For more than five years prior to that, Mr. Collins held various management positions with Abbott Laboratories, a diversified healthcare products and services company.
During 1995, the Board of Directors met on four occasions. The Board of Directors has an Audit Committee composed of Messrs. Czajkowski, Johnson and Schulze, which met on three occasions during 1995. The primary function of the Audit Committee is to assist the Board in fulfilling its fiduciary responsibilities relating to the Company's internal control procedures and accounting, financial and reporting practices. The Board has an Executive Compensation Committee composed of Messrs. Hodder, Collins, Cox, and Miller, which met on two occasions during 1995. The primary function of the Executive Compensation Committee is to review and develop executive compensation plans of the Company and determine the compensation of officers. The Board has designated an Executive Committee composed of Messrs. Hale, Cox, Hodder and Schulze, which met on two occasions during 1995. The primary function of the Executive Committee is to exercise the authority of the Board of Directors and the management of the business of the Company in the intervals between meetings of the Board of Directors. The Board has designated a Board Affairs Committee composed of Messrs. Cox, Hodder, Johnson and Collins, which did not meet in 1995. The primary function of the Board Affairs Committee are to set Board compensation and recommend nominees for election to the Board. Shareholders who wish to suggest qualified candidates to the Committee should write to Bruce J. Borgerding, Secretary of the Company, at 701 North Lilac Drive, P.O. Box 1452, Minneapolis, Minnesota 55440, stating in detail the candidate's qualifications for consideration by the Committee. As noted in the last paragraph of this section of the Proxy Statement, if a shareholder wishes to nominate a director other than a person nominated by or on behalf of the Board of Directors, he or she must comply with certain procedures set out in the Company's Restated Articles of Incorporation. The Board also has designated a Special Litigation Committee composed of Messrs. Czajkowski and Johnson, which did not meet during 1995. All incumbent directors attended more than 75% of the aggregate number of meetings of the Board and committees on which they served during 1995. Non-management directors of the Company received an annual retainer plus $750 for each meeting or committee meeting of the Board of Directors during 1995. Pursuant to the Tennant Company Restricted Stock Plan for Nonemployee Directors (the "Director Plan"), the annual retainer is paid in the form of Restricted Stock. Restricted Stock for this purpose is generally issued once every three Board Years (as defined in the Director Plan), in an amount equal to the anticipated annual retainer for the Board Year then commencing and the next two succeeding Board Years, based on the then Fair Market Value (as defined in the Director Plan) of such Restricted Stock. On May 7, 1993 each non-management director was issued 2,070 shares of Restricted Stock, based on a Fair Market Value of $20.289 per share, in payment of the annual retainer for the three Board Years commencing May 7, 1993. (These numbers have been adjusted to reflect a two-for-one stock split effective April 26, 1995.) As a result of the amendment to the Director Plan on January 1, 1995, each non-management director was issued an additional 406 shares of Restricted Stock, based on a Fair Market Value of $23.075 per share, in connection with the annual retainer for the three Board Years commencing May 7, 1993. The Director Plan provides that the restrictions on the Restricted Stock will lapse only upon the first to occur of (a) the death of the director, (b) the disability of the director preventing continued service on the Board, (c) retirement of the director from the Board in accordance with any policy on retirement of Board members then in effect, (d) the termination of service as a director by reason of resignation at the request of the Board, the director's 6 failure to have been nominated for re-election to the Board or to have been re-elected by the shareholders, or the director's removal by the shareholders, or (e) a change in control of the Company (as defined in the Director Plan). In no event will the restrictions lapse prior to six months after the date of issuance. Upon the occurrence of an event causing the restrictions to lapse, Restricted Stock issued to the director in payment for Board Years commencing following the occurrence of the event is forfeited and returned to the Company. Under the Company's Restated Articles of Incorporation, no person (other than a person nominated by or on behalf of the Board of Directors) shall be eligible for election as a director at any annual or special meeting of shareholders unless a written request that his or her name be placed in nomination is received from a shareholder of record by the Secretary of the Company not less than 75 days prior to the date fixed for the meeting, together with the written consent of such person to serve as a director. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW AND PHILOSOPHY. The Executive Compensation Committee of the Board of Directors is composed entirely of outside directors and is responsible for reviewing and developing executive compensation plans of the Company. In addition, the Executive Compensation Committee, pursuant to authority delegated by the Board, determines on an annual basis the compensation to be paid to the Chief Executive Officer and each of the other executive officers of the Company. The Committee also is charged with periodically reviewing the Board of Directors compensation and, when appropriate, recommending to the Board any changes. The objectives of the Company's executive compensation program are to: - Motivate executives to achieve corporate goals by placing a significant portion of pay at risk. - Provide a strong link between the Company's short- and long-term goals and executive compensation. - Provide competitive total compensation in order to attract and retain high-caliber key executives critical to the long-term success of the Company. - Align the executives' interests with those of the shareholders by providing a significant portion of compensation in Company Common Stock. The executive compensation program is intended to provide an overall level of compensation opportunity that is competitive with other U.S. durable goods manufacturing companies. To determine competitiveness, the Committee annually uses sales volume adjusted data from a top-management compensation survey. This data is verified every three to four years through the use of an outside consultant which compares all aspects of the Company's executive compensation with that of other similar companies. Actual compensation levels may be greater or less than average competitive levels depending on annual and long-term Company performance, individual performance against goals set at the beginning of the year, and scope of responsibilities as compared to a similar position within the surveys. The Executive Compensation Committee uses its discretion to set executive compensation at levels warranted in its judgment by external, internal or individual circumstances. The Company does not have a policy with respect to the limit under the Internal Revenue Code Section 162(m) on the deductibility of the qualifying compensation paid to its executives, as it is likely for the near future that all such compensation will be deductible by the Company. EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation program is comprised of base salary, annual cash incentive compensation and long-term incentive compensation in the form of Performance Share grants, Restricted Stock grants and stock options. All of the long-term plans have a significant portion of their payout in Company Common Stock. In addition, executives receive various benefits, including medical and retirement plans, generally available to employees of the Company. 7 BASE SALARY. Base salary levels for the Company's executives are competitively set relative to the average of other U.S. durable goods manufacturing companies of similar size. In determining salaries, the Executive Compensation Committee also takes into account individual experience, performance, and scope of responsibility, although no particular weight is given to any one factor. ANNUAL CASH INCENTIVE COMPENSATION. The purpose of the annual cash incentive program is to provide a direct financial incentive in the form of an annual cash bonus to executives to achieve their business units' and/or the Company's annual goals. Target bonus awards are set at a level consistent with the averages of other U.S. durable goods manufacturers, after adjusting for sales volume. In fiscal 1995, the following performance measures and weightings were generally used: Company sales growth (35%), Company return on average invested capital (35%), Company or Business Unit expense control (10%), and Company or Business Unit asset management (20%). STOCK INCENTIVE PLANS. The stock incentive plans are the Company's long- term incentive plans for executive officers and key managers. The objectives of the program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and shareholder return, and to enable executives to develop and maintain a significant, long- term ownership position in the Company's Common Stock. In order to better define for executives the minimum amount of stock that should be held, the Executive Compensation Committee established in 1993 the following executive stock holding guidelines: CEO - 6 x base salary; Vice Presidents - 4 x base salary; Operating Management - 2 x base salary. Each year the Committee reviews the progress of each executive towards those goals. The Executive Compensation Committee annually grants a variety of stockbased awards under the Company's stock incentive plans. The amounts of the awards increase as a function of higher salary and position in the Company. The award amounts, as a percent of base salary, are reviewed and adjusted, as necessary, every three to four years to ensure their competitiveness. The last review was performed by Hewitt Associates in late 1994. During 1995, the following types of awards were granted. (Note that prior grants were not a factor in determining the size of these grants.) - Performance Shares Payout is based on Company performance measured by return on average invested capital and sales growth during the four-year performance period. Each of these measures is given approximately equal weight. Payout is made in the form of Company stock and cash. - Restricted Stock These grants vest 100% at the end of the restriction period. - Stock Options These options permit executives to purchase Company stock during a ten-year period at the price in effect at the beginning of that period. CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Hale's fiscal 1995 base salary and incentive award were determined by the Committee in accordance with the methodology described above. Base Salary - Mr. Hale's base salary for fiscal 1995 was $327,132 which approximates the market average for durable goods manufacturing companies of similar size. Annual Incentive - Mr. Hale's cash incentive award for fiscal 1995 was $201,681. This amount was based on sales growth of 13% (vs. 17% in 1994), return on average invested capital of 19% (vs. 19% in 1994), inventory turnover of 3.1 (vs. 3.2 in 1994), receivables of 58 days sales outstanding (vs. 51 in 1994), and expense as a percent of sales of 35% (vs. 35% in 1994). 8 Long-Term Performance Grants - Mr. Hale received in 1995 a non-vested Performance Share grant equal to 50% of his base salary, a vested Performance Share grant equal to 42% of his base salary (in lieu of previous salary increases), a Restricted Stock grant equal to 10% of his base salary, and a stock option grant equal to 2.7 times his base salary. William A. Hodder, Chairman David C. Cox William I. Miller Arthur D. Collins Members of the Executive Compensation Committee SUMMARY COMPENSATION TABLE The following table sets forth the cash and noncash compensation for each of the last three fiscal years awarded to or earned by the Chief Executive Officer of the Company and the four other most highly compensated executive officers of the Company (the "named executive officers").
LONG-TERM COMPENSATION ------------------------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS - ---------------------------------------------------------------------------------------------------------------------------- RESTRICTED ALL OTHER NAME AND STOCK LTIP COMPEN- PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(1) OPTIONS PAYOUTS(2) SATION(3) ($) ($) ($) (#) ($) ($) - ---------------------------------------------------------------------------------------------------------------------------- Roger L. Hale 1995 327,132 201,681 31,951 37,000 218,940 21,444 President and 1994 327,132 260,097 53,156 0 101,400 25,426 Chief Executive Officer 1993 315,777 0 31,542 0 72,811 8,344 Douglas R. Hoelscher 1995 182,436 76,513 17,813 5,800 51,504 27,022 Senior Vice President 1994 182,436 84,614 18,818 0 34,394 30,417 1993 161,507 0 16,128 0 25,352 12,281 Janet M. Dolan 1995 182,820 76,089 17,860 6,000 37,551 9,475 Senior Vice President 1994 148,814 71,294 21,728 0 23,204 9,220 and General Counsel 1993 125,155 0 12,516 0 15,008 2,353 Richard A. Snyder 1995 173,880 65,533 16,965 5,800 51,504 26,282 Vice President, 1994 173,880 80,646 24,008 0 33,866 30,381 Treasurer and 1993 163,449 0 16,338 0 24,845 12,743 Chief Financial Officer Keith D. Payden 1995 160,992 59,898 15,881 3,400 27,074 24,179 Vice President 1994 149,148 69,175 22,650 0 12,741 25,932 1993 131,416 0 9,828 0 9,177 10,149
(1) The value of the Restricted Stock awards was determined by multiplying the fair market value of the Company's Common Stock on the date of grant by the number of shares awarded. As of December 31, 1995, and using the fair market value of the Company's Common Stock as of that date, the number and value of aggregate Restricted Stock award holdings were as follows: 1,356 shares ($32,375) by Mr. Hale, 756 shares ($18,050) by Mr. Hoelscher, 758 shares ($18,097) by Ms. Dolan, 720 shares ($17,190) by Mr. Snyder, and 674 shares ($16,092) by Mr. Payden. These shares of Restricted Stock have a two-year vesting period, from respective dates of issuance. Dividends are paid on Restricted Stock awards at the same time and rate as paid to all shareholders. 9 (2) Amounts represent the dollar value of Performance Shares paid out in each fiscal year. Performance Shares were paid in Common Stock on a share-for- share basis with respect to a minimum of 50% of the Performance Shares earned (valued, for this purpose, as of December 31 of the respective years of payment), and the balance was paid in cash. The Tennant Company 1992 Stock Incentive Plan allows participants to defer receipt of payments of Performance Shares. Participants who elect such a deferral are eventually paid entirely in Common Stock and will also receive supplemental shares in amounts that roughly approximate dividends that were not received as a result of the deferral. Payments thus deferred are reported in the table for the year in which they would have been paid but for such deferral election. (3) Amounts represent payments under the Company's Profit Sharing and Employee Stock Ownership Plan and the Company's Excess Benefit Plan as follows: (a) Profit Sharing Contributions (up to 5% of certified earnings, the first 2% of which are contributed to participants' accounts through the allocation of Company Common Stock from the unallocated ESOP reserve, with the remainder (if any) of such contributions paid to the participants in cash) were paid as follows for 1993, 1994 and 1995, respectively: $2,111.48, $12,100.87, and $6,464.78 to Mr. Hale, $1,445.98, $7,138.74 and $4,696.63 to Mr. Hoelscher, $1,120.52, $6,411.24, and $4,696.37 to Ms. Dolan, $1,463.36, $6,944.64, and $4,568.24 to Mr. Snyder, and $1,176.57, $6,383.57 and $4,447.27 to Mr. Payden; (b) employer Matching Contributions relating to employee Individual Shelter Contributions (Internal Revenue Code Section 401(k) contributions) were paid as follows for 1993, 1994 and 1995, respectively, through the allocation of Company Common Stock from the unallocated ESOP reserve: $1,785.96, $3,234.00 and $3,234.00 to Mr. Hale, $983.97, $1,094.62 and $1,386.00 to Mr. Hoelscher, $1,232.19, $1,405.89 and $2,319.90 to Ms. Dolan, $1,799.84, $2,434.32 and $2,741.46 to Mr. Snyder, and $1,445.58, $1,959.84 and $2,454.28 to Mr. Payden; (c) Profit Related Retirement Contributions were paid as follows for 1993, 1994 and 1995, respectively: $8,850.61, $11,145.00 and $10,770.00 to Mr. Hoelscher, $8,957.02, $11,145.00 and $10,770.00 to Mr. Snyder, and $7,201.60, $11,145.00 and $10,770.00 to Mr. Payden; and (d) Excess Benefit Plan payments were made as follows for 1993, 1994 and 1995, respectively: $4,446.60, $10,090.43 and $11,745.63 to Mr. Hale, $0.00, $11,037.80 and $10,169.17 to Mr. Hoelscher, $0.00, $1,402.17 and $2,458.45 to Ms. Dolan, $523.14, $9,856.76 and $8,202.60 to Mr. Snyder, and $325.67, $6,442.85 and $6,507.70 to Mr. Payden. STOCK OPTION AWARDS IN LAST FISCAL YEAR The following table summarizes Stock Option awards made during the last fiscal year under the Tennant Company 1995 Stock Incentive Plan (the "Plan") for the named executive officers.
POTENTIAL REALIZABLE VALUE % OF TOTAL AT ASSUMED ANNUAL RATES OPTIONS OF STOCK PRICE APPRECIATION GRANTED TO FOR THE OPTION TERM ---------------------------- NAME OPTIONS EMPLOYEES EXERCISE GRANTED DURING PRICE EXPIRATION 5%(3) 10%(3) (#)(1) FISCAL YEAR ($/SH)(2) DATE ($) ($) - ----------------------------------------------------------------------------------------------------------------- Roger L. Hale 37,000 36.5 23.6875 2/10/05 551,187 1,396,816 Douglas R. Hoelscher 5,800 5.7 23.6875 2/10/05 86,402 218,960 Janet M. Dolan 6,000 5.9 23.6875 2/10/05 89,382 226,511 Richard A. Snyder 5,800 5.7 23.6875 2/10/05 86,402 218,960 Keith D. Payden 3,400 3.4 23.6875 2/10/05 50,650 128,356
10 (1) All such options granted under the Plan are non-qualified options, and are exercisable 25% per year, on a cumulative basis, beginning one year after the date of the grant. Such options become immediately exercisable, however, upon (a) death, disability, or retirement of the holder, or (b) a change of control (defined as certain changes in the Company's Board of Directors, certain concentrations of voting power, certain mergers, sales of corporate assets, statutory share exchanges or similar transactions, or liquidation or dissolution of the Company). The holder is permitted to pay the exercise price and withholding taxes due upon exercise with either cash, shares of Common Stock, a reduction in the number of shares delivered to the holder, or a combination of these alternatives. (2) The exercise price of such options is not less than the fair market value (as defined in the Plan) of a share of Common Stock at the time of grant. (3) The hypothetical potential appreciation shown in these columns reflects the required calculations at annual rates of 5% and 10% set by the Securities and Exchange Commission, and therefore are not intended to represent either historical appreciation or anticipated future appreciation of the Company's Common Stock price. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT ON EXERCISE REALIZED OPTIONS AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1) ------------------------------- ------------------------------- (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---------------------------------------------------------------------------------------------------------------------------------- Roger L. Hale 0 0 0 37,000 0 6,938 Douglas R. Hoelscher 0 0 0 5,800 0 1,088 Janet M. Dolan 0 0 0 6,000 0 1,125 Richard A. Snyder 0 0 0 5,800 0 1,088 Keith D. Payden 0 0 0 3,400 0 638
(1) Market value of underlying securities at fiscal year-end minus the exercise price. 11 LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR The following table summarizes Performance Share awards made during the last fiscal year under the Tennant Company 1992 Stock Incentive Plan for the named executive officers.
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE-BASED PLANS(1) ------------------------------------- NUMBER OF PERFORMANCE SHARES, UNITS OR OTHER PERIOD OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM NAME RIGHTS(#) OR PAYOUT ($) ($) ($) - ------------------------------------------------------------------------------------------------------------ Roger L. Hale 12,424 4 years 0 296,623 691,133 Douglas R. Hoelscher 4,410 4 years 0 105,289 245,316 Janet M. Dolan 3,518 4 years 0 83,992 195,704 Richard A. Snyder 3,682 4 years 0 87,908 204,824 Keith D. Payden 2,144 4 years 0 51,188 119,255
(1) Payout of Performance Share awards is based on Company performance during a four-year performance period. Payout can range from 0% to 233% of the performance grant, which represents the threshold and maximum payouts, respectively. Payout of 100% of the performance grant represents the target payout. Awards are payable in Common Stock of the Company on a share-for-share basis with respect to 50% of the Performance Shares earned and in cash with respect to 50% of the Performance Shares earned, unless the participant elects in advance to receive a greater portion in stock. The value of the estimated future payouts was determined using the fair market value of the Company's Common Stock on December 31, 1995. The Executive Compensation Committee may provide at the time Performance Share awards are made that all or a portion of the Performance Shares awarded will be "Vested Performance Shares." Such Vested Performance Shares will be earned upon termination of the participant's employment prior to the end of the performance period, whether such termination of employment occurs by reason of retirement, death, disability, or otherwise. Of the total Performance Shares set forth in the table, the following number of Performance Shares are Vested Performance Shares: Mr. Hale, 5,644; Mr. Hoelscher, 2,142; Ms. Dolan, 1,244; Mr. Snyder, 2,024 and Mr. Payden, 610. MANAGEMENT AGREEMENTS The Company is a party to management agreements (the "Agreements") with certain of the executive officers of the Company. The purpose of each of the Agreements is to encourage the executive (a) to continue to carry out his or her duties in the event of the possibility of a change in control of the Company, and (b) to remain in the service of the Company in order to facilitate an orderly transition in the event of an actual change in control of the Company. Under the terms of each of the Agreements, if, between the occurrence of a change in control of the Company and the three-year anniversary date of such occurrence, an executive's employment is involuntarily terminated (for any reason other than death, disability, or for cause), the executive will be entitled to receive severance compensation. If an executive resigns after certain changes in the executive's duties, compensation, benefits or work location, the executive shall be deemed to have been involuntarily terminated. Severance compensation is payable also if the termination occurs before the change of control but after steps to change control have been taken. Severance compensation consists of three times the executive's average annual taxable compensation during the five taxable years preceding the change in control plus the continuation of 12 certain insurance benefits, minus $1.00, subject to reduction for payments under employee benefit plans of the Company contingent upon a change in control of the Company and for the amount of any other severance compensation paid by the Company to the executive under any other agreement of the Company providing compensation in the event of involuntary termination. As of the date of this Proxy Statement, the total severance compensation for Mr. Hale would be $1,583,261; Mr. Hoelscher, $725,723; Ms. Dolan, $526,760; Mr. Snyder, $707,174 and Mr. Payden, $521,492. The Company also will reimburse an executive for legal fees and expenses incurred in resolving disputes under the Agreement. TENNANT COMPANY DEFINED BENEFIT RETIREMENT PLAN The Tennant Company Defined Benefit Retirement Plan provides fixed retirement benefits for certain employees of the Company. Based upon certain assumptions, including continuation of the Retirement Plan as of January 1, 1996, without amendment, the following table shows the annual retirement benefits (including the additional retirement benefits described in the second sentence under "Tennant Company Excess Benefit Plan" below) which would be payable as a straight life annuity to persons at various salary levels after specified years of service.
YEARS OF CREDIT SERVICE ---------------------------------------------------------------------- ANNUAL COMPENSATION 10 15 20 25 30 ------------ ---------- ---------- ---------- ---------- ---------- $ 50,000 $ 5,421 $ 8,132 $ 10,842 $ 13,553 $ 16,263 100,000 12,421 18,632 24,842 31,053 37,263 150,000 19,421 29,132 38,842 48,553 58,263 200,000 26,421 39,632 52,842 66,053 79,263 250,000 33,421 50,132 66,842 83,553 100,263 300,000 40,421 60,632 80,842 101,053 121,263 350,000 47,421 71,132 94,842 118,553 142,263 400,000 54,421 81,632 108,842 136,053 163,263 450,000 61,421 92,132 122,842 153,553 184,263 500,000 68,421 102,632 136,842 171,053 205,263 550,000 75,421 113,132 150,842 188,553 226,263 600,000 82,421 123,632 164,842 206,053 247,263
Under the Retirement Plan, benefits are payable based upon a percentage of a participant's final average pay excluding bonus, overtime or other special forms of remuneration. Currently under ERISA, as amended, the maximum annual amount that can be paid during 1996 to any individual is $120,000. Amounts in excess of that maximum as well as amounts based on compensation that is excluded from the Plan formula by ERISA or the terms of the Plan are covered under the Tennant Company Excess Benefit Plan. The years of credited service under the Retirement Plan for the named executive officers are: Mr. Hale 14 years and Ms. Dolan 10 years. Were Mr. Hale or Ms. Dolan to retire currently, the final average pay used by the Plan to determine benefits payable pursuant to the above table as of December 31, 1995 would be $442,748 for Mr. Hale and $172,071 for Ms. Dolan. The figures above are not subject to deductions for Social Security or other offset amounts. 13 TENNANT COMPANY EXCESS BENEFIT PLAN An Excess Benefit Plan provides additional retirement benefits for highly compensated employees participating in the Tennant Company Profit Sharing and Employee Stock Ownership Plan or the Retirement Plan. Employees participating in the Excess Benefit Plan will receive a retirement benefit equal to the additional benefits which would have been provided under the Retirement Plan if (a) the limitations imposed by Sections 401(a)(17) and 415 of the Internal Revenue Code were not applicable, and (b) management bonuses were included in certified earnings for the year in which they were earned, and (c) deferred salary increases were included in certified earnings for the plan year in which such amounts would have been paid in the absence of the deferral. Employees participating in the Excess Benefit Plan also receive cash payments of amounts which would have been contributed by the Company to the Tennant Company Profit Sharing and Employee Stock Ownership Plan as Profit Related Retirement Contributions or Matching Contributions if various limitations imposed by the Internal Revenue Code were not applicable. COMPARATIVE STOCK PERFORMANCE The graph below compares the cumulative total shareholder return on the Common Stock of the Company for the last five fiscal years with the cumulative total return over the same period on the following indexes: - Overall Stock Market Performance (Media General Composite Index) - Industry Index (CRSP Index for NASDAQ Stocks - Manufacturing Machinery, Non-electrical, SIC Codes 3500 through 3599 provided by Center for Research in Security Prices, University of Chicago Graduate School of Business) - Industry Index (Media General Industry Group Index 28 - Heavy Machinery) This assumes an investment of $100 in the Company's Common Stock, the Media General Composite Index, the CRSP Industry Index and the Media General Industry Index on December 31, 1990, with reinvestment of all dividends. Media General Industry Group Index 28 - Heavy Machinery has been included in this year's graph, and will be used in future graphs, because the Company believes that it provides a better long-term comparison for cumulative total shareholder return performance than the CRSP Industry Index used in previous years. The Media General Industry Index includes only manufacturers of capital goods, which is the Company's core business. The CRSP Index includes a significant and expanding number of "technology" companies that have cumulative total shareholder return performance characteristics quite different from those of the Company. 14 COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN [PERFORMANCE GRAPH] ASSUMES $100 INVESTED ON DECEMBER 31, 1990, WITH DIVIDENDS REINVESTED.
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 --------------------------------------------------------------- Tennant Company 100.00 106.36 130.23 146.88 155.31 157.90 Overall Stock Market 100.00 129.09 134.25 154.11 152.83 198.15 Performance Index (Media General) Industry Index (CRSP) 100.00 139.10 183.40 187.70 200.40 302.40 Industry Index (Media General) 100.00 116.49 119.61 163.73 169.76 196.88
SECTION 16(a) REPORTING Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Directors and executive officers are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company's directors and executive officers, a trust for which Mr. Hale's spouse acts as a trustee filed one late Form 4 relating to a sale of shares by the Trust; all other Section 16(a) filing requirements were met for the year ended December 31, 1995. 15 APPOINTMENT OF AUDITORS At the meeting, a vote will be taken on a proposal to ratify the appointment of KPMG Peat Marwick LLP as independent auditors of the Company for the year ending December 31, 1996. KPMG Peat Marwick LLP are independent accountants and auditors who have audited the accounts of the Company annually since 1954. The Company has been advised that a representative of the firm will attend the shareholders' meeting. The representative will be available to respond to appropriate questions and will be given the opportunity to make a statement if the firm desires to do so. SHAREHOLDER PROPOSALS Any shareholder proposal intended to be presented at the next Annual Meeting should be sent to the Secretary of the Company at 701 North Lilac Drive, P.O. Box 1452, Minneapolis, Minnesota 55440, and must be received on or before November 25, 1996, to be eligible for inclusion in the Company's Proxy Statement and form of Proxy relating to that meeting. OTHER MATTERS So far as the management is aware, no matters other than those described in this Proxy Statement will be acted upon at the meeting. If, however, any other matters properly come before the meeting, it is the intention of the persons named in the enclosed Proxy to vote the same in accordance with their judgment on such other matters. March 22, 1996 By Order of the Board of Directors Bruce J. Borgerding, Secretary 16 THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. ____________________________________ Signature Dated: _______________________, 1996 PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. [LOGO - TENNANT PROXY] TENNANT COMPANY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF 701 NORTH LILAC DRIVE DIRECTORS P.O. BOX 1452 MINNEAPOLIS, MN 55440 The undersigned hereby appoints Roger L. Hale,William A. Hodder and Arthur R. Schulze, Jr., and each of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes them or any of them to represent and to vote, as designated below, all the shares of Common Stock of Tennant Company held of record by the undersigned on March 4, 1996, at the Annual Meeting of Shareholders to be held on May 2, 1996, or any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY (EXCEPT AS MARKED TO THE CONTRARY BELOW) / / To vote for all nominees listed below / / (INSTRUCTION: IF YOU DO NOT WISH TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE FOR BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Roger L. Hale Delbert W. Johnson If elected, the nominees will serve for a term of three years. 2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the independent public accountants of the corporation. / / FOR / / AGAINST / / ABSTAIN 3. IN THEIR DISCRETION, the PROXIES are authorized to vote upon such other business as may properly come before the meeting.
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