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 (S) 240.14a-12
ACTUANT CORPORATION
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[Graphic]
Actuant
ACTUANT CORPORATION
6100 North Baker Road
GLENDALE, WISCONSIN 53209
(414) 352-4160
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
ACTUANT CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of ACTUANT
CORPORATION, a Wisconsin corporation, will be held at the offices of the
Company, 6100 Baker Road, Glendale, Wisconsin, on Friday, January 10, 2003, at
1:00 p.m., Central Time, for the following purposes:
1. To elect a Board of seven directors;
2. To consider and vote upon the Actuant Corporation 2002 Stock Plan;
3. To consider and vote upon a proposal to amend the Company's Outside
Directors' Stock Option Plan to increase the number of shares available
for issuance under the plan;
4. To consider and vote upon a proposal to amend the Company's Restated
Articles of Incorporation to increase the number of authorized shares of
Class A Common Stock; and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof;
all as set forth in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on November 18, 2002
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Meeting or any adjournment thereof.
Whether or not you expect to attend the Meeting, please mark, sign, date and
return the enclosed proxy promptly in the accompanying envelope, which requires
no postage if mailed in the United States. It is important that your shares be
represented at the Meeting, whether your holdings are large or small. If for
any reason you should desire to revoke your proxy, you may do so at any time
before it is voted.
By Order of the Board of Directors,
ROBERT C. ARZBAECHER
Chairman of the Board
Milwaukee, Wisconsin
December 3, 2002
[Graphic]
Actuant
ACTUANT CORPORATION
6100 North Baker Road
GLENDALE, WISCONSIN 53209
(414) 352-4160
PROXY STATEMENT
-----------------
This Proxy Statement and accompanying proxy are being first mailed to
shareholders on or about December 3, 2002
-----------------
This Proxy Statement and accompanying proxy are furnished to the
shareholders of Actuant Corporation (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders on Friday, January 10, 2003, and at any
adjournment thereof. Accompanying this Proxy Statement is a Notice of Annual
Meeting of Shareholders and a form of proxy for such Meeting. The Company's
Annual Report on Form 10-K for the year ended August 31, 2002, which
constitutes the 2002 Annual Report to Shareholders and accompanies this Proxy
Statement, contains financial statements and certain other information
concerning the Company. The financial statements contained in the Annual
Report, as well as the matters under the headings "Item 7--Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Item 7A--Quantitative and Qualitative Disclosures About Market Risk", "Item
8--Financial Statements and Supplementary Data" and "Executive Officers of the
Registrant" are incorporated by reference into this Proxy Statement.
A proxy may be revoked, prior to its exercise, by executing and delivering a
later dated proxy, by delivering written notice of the revocation of the proxy
to the Corporate Secretary prior to the Meeting, or by attending and voting at
the Meeting. Attendance at the Meeting, in and of itself, will not constitute a
revocation of a proxy. Unless previously revoked, the shares represented by all
properly executed proxies received in time for the Meeting will be voted in
accordance with the shareholder's directions. If no directions are specified on
a duly submitted proxy, the shares will be voted, in accordance with the
recommendations of the Board of Directors, FOR the election of the directors
nominated by the Board of Directors, FOR Proposals 2, 3 and 4 and in accordance
with the discretion of the persons appointed as proxies on any other matters
properly brought before the Meeting.
The cost of soliciting proxies, including forwarding expense to beneficial
owners of stock held in the name of another, will be borne by the Company. The
Company has retained Georgeson Shareholder Communications Inc. to aid in the
solicitation of proxies, including the solicitation of proxies from brokerage
firms, banks, nominees, custodians and fiduciaries, for a fee of approximately
$7,500 plus disbursements. In addition, officers and employees of the Company
may solicit the return of proxies from certain shareholders by telephone or
meeting. Such officers and employees will receive no compensation therefor in
addition to their regular compensation. Shares held for the accounts of
participants in the Company's 401(k) Plan ("Savings Plan") will be voted in
accordance with the instructions of the participants or otherwise in accordance
with the terms of such plan.
A majority of the votes entitled to be cast by shares entitled to vote,
represented in person or by proxy, constitutes a quorum for action on a matter
at the Meeting. Abstentions are counted as shares present for purposes of
determining the presence or absence of a quorum. Proxies relating to "street
name" shares that are voted by brokers on some matters, but not on other
matters as to which authority to vote is withheld from the broker ("broker
non-votes"), absent voting instructions from the beneficial owner under the
rules of the New York Stock Exchange, will be treated as shares present for
purposes of determining the presence or absence of a quorum. The voting
requirements and the procedures described below are based upon provisions of
the Wisconsin Business Corporation Law, the Company's articles of incorporation
and by-laws, and any other requirements applicable to the matters to be voted
upon.
Directors are elected by a plurality of the votes cast by the holders of
shares entitled to vote in the election at a meeting at which a quorum is
present. A "plurality" means that the individuals who receive the largest
number of votes are elected as directors up to the maximum number of directors
to be elected at the meeting. Shares for which authority is withheld to vote
for director nominees and broker non-votes have no effect on the election of
directors except to the extent that the failure to vote for a director nominee
results in another nominee receiving a larger number of votes.
On November 18, 2002, the record date for determining shareholders entitled
to receive notice of and to vote at the Annual Meeting of Shareholders, the
Company's outstanding capital stock consisted solely of 11,619,251 shares of
Class A Common Stock. Each share of Class A Common Stock outstanding on the
record date is entitled to one vote on all matters submitted at the Meeting.
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of October 1, 2002, unless otherwise
indicated, certain information with respect to the beneficial ownership of
common stock by persons known by the Company to beneficially own more than 5%
of the outstanding shares of common stock, by the nominees for director, by
each executive officer of the Company named in the Summary Compensation Table
below and by the Company's executive officers and directors as a group. Briefly
stated, shares are deemed to be beneficially owned by any person or group who
has the power to vote or direct the vote or the power to dispose or direct the
disposition of such shares, or who has the right to acquire beneficial
ownership thereof within 60 days.
Amount Percent
Beneficial Owner(1) and Nature of Class
------------------- ---------- --------
FMR Corp(2)........................................... 1,130,670 9.7%
82 Devonshire Street
Boston, Massachusetts 02109
MMI Investments, LP (f/k/a MMI Investments II-A LP)(3) 579,200 5.0%
152 West 57th Street
New York, New York 10019
Oppenheimer Capital, LLC(4)........................... 578,190 5.0%
800 Newport Center Drive
Suite 100
Newport Beach, California 92660
T. Rowe Price Associates, Inc.(5)..................... 1,113,505 9.6%
100 East Pratt Street
Baltimore, Maryland 21202
2
Amount Percent
Beneficial Owner(1) and Nature of Class
- ------------------- ---------- --------
Robert C. Arzbaecher..................................... 363,459(6) 3.0%
President and Chief Executive Officer and Director
Gustav H.P. Boel, European Leader--Gardner Bender and
Director............................................... 5,045(7) *
Bruce S. Chelberg, Director.............................. 14,400(8) *
H. Richard Crowther, Director............................ 40,000(9) *
Mark E. Goldstein, Vice President, Gardner Bender........ 6,800 *
William K. Hall, Director................................ 2,000(10) *
Kathleen J. Hempel, Director............................. 2,000 *
Ralph L. Keller, Vice President, Operations.............. 47,791(11) *
Brian K. Kobylinski, Vice President, Business Development 41,421(12) *
Andrew G. Lampereur, Vice President and Chief Financial *
Officer................................................ 103,285(13)
William P. Sovey, Director............................... 3,500(14) *
All Directors and Executive Officers (17 persons)........ 716,988(15) 6.1%
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* Less than 1%
(1) Unless otherwise noted, the specified person has sole voting power and/or
dispositive power over the shares shown as beneficially owned.
(2) Based on most recently filed Schedule 13G by FMR Corp. ("FMR"), Edward C.
Johnson III and Abigail P. Johnson, Fidelity Management & Research
Company, a registered investment adviser and wholly owned subsidiary of
FMR, is the beneficial owner of 1,097,970 shares over which Mr. Johnson,
FMR and the Fidelity Funds each have sole dispositive power and the
Fidelity Funds' Boards of Trustees have sole voting power. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR, is the
beneficial owner of 32,700 shares over which Mr. Johnson and FMR each have
sole voting and sole dispositive power.
(3) Based on most recently filed Schedule 13D, MMI Investments, L.P. (f/k/a
MMI Investments II-A LP) has sole voting and dispositive power with
respect to all the shares reported. However, by virtue of being the
general partner of MMI Investments, L.P., MCM Management, LLC may also be
deemed to be a beneficial owner and have shared voting and dispositive
power over the reported shares.
(4) Based on most recently filed Schedule 13G, Oppenheimer Capital, LLC has
shared voting and dispositive power with respect to all of the shares
reported.
(5) Based on most recently filed Schedule 13G, T. Rowe Price Associates, Inc.
has sole voting and dispositive power with respect to all of the shares
reported. The reported shares, however, are owned by various individual
and institutional investors to whom T. Rowe Price Associates, Inc. acts as
an investment advisor. T. Rowe Price Associates, Inc. expressly disclaims
beneficial ownership of the reported shares.
(6) Includes 600 shares held by spouse, 550 shares held by his children
through a custodian, 1,701 shares held in the Savings Plan and 800 shares
held in an individual IRA Account. Also includes 237,000 shares issuable
pursuant to options exercisable currently or within 60 days of October 1,
2002.
(7) Includes 389 shares held in the Savings Plan and 3,000 shares issuable
pursuant to options exercisable currently or within 60 days of October 1,
2002. Excludes 1,075 phantom stock units held in the Company's Outside
Directors' Deferred Compensation Plan, of which he does not have any
voting or dispositive power.
3
(8) Includes 3,000 shares issuable pursuant to options exercisable currently
or within 60 days of October 1, 2002.
(9) Includes 600 shares held by a family trust and 39,400 shares issuable
pursuant to options exercisable currently or within 60 days of October 1,
2002. Excludes 13,737 phantom stock units held in the Company's Outside
Directors' Deferred Compensation Plan, of which he does not have any
voting or dispositive power.
(10) Excludes 514 phantom stock units held in the Company's Outside Directors'
Deferred Compensation Plan, of which he does not have any voting or
dispositive power.
(11) Includes 808 shares held in the Savings Plan, 103 shares held by
daughter's Roth IRA and 10,100 shares issuable pursuant to options
exercisable currently or within 60 days of October 1, 2002.
(12) Includes 821 shares held in the Savings Plan and 15,600 shares issuable
pursuant to options exercisable currently or within 60 days of October 1,
2002.
(13) Includes 1,664 shares held in the Savings Plan, 7,000 shares held by a
trustee through a Roth IRA, 181 shares held in the Employee Stock Purchase
Plan and 66,440 shares issuable pursuant to options exercisable currently
or within 60 days of October 1, 2002.
(14) Includes 3,000 shares issuable pursuant to options exercisable currently
or within 60 days of October 1, 2002. Excludes 2,770 phantom stock units
held in the Company's Outside Directors' Deferred Compensation Plan, of
which he does not have any voting or dispositive power.
(15) Includes 800 shares held in an individual IRA account, 600 shares held by
a family trust, 600 shares held by spouses, 550 shares held by a custodian
for minor children, 103 shares held by a daughter's Roth IRA, 324 shares
held in the Executive Stock Purchase Plan and 7,721 shares held in the
Savings Plan. Also includes 415,293 shares issuable pursuant to options
exercisable currently or within 60 days of October 1, 2002. Excludes
18,096 phantom stock units held in the Company's Outside Directors'
Deferred Compensation Plan, of which none of the directors has any voting
or dispositive power.
The beneficial ownership information set forth above is based on information
furnished by the specified persons or known to the Company and is determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
required for purposes of this Proxy Statement. It is not necessarily to be
construed as an admission of beneficial ownership for other purposes.
4
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to serve until the next
annual meeting of shareholders and until their successors shall be elected and
qualified. It is the intention of the persons named in the accompanying form of
proxy to nominate as directors and, unless otherwise specified in a proxy by a
shareholder, to vote such proxy for the election of the persons named below. In
the event any of the nominees should become unable to serve as a director, an
eventuality which management has no reason to believe will occur, proxies may
be voted for another nominee. Each person named below is presently serving as a
director of the Company.
Director
Age Since
--- --------
Robert C. Arzbaecher............................................................. 42 2000
President and Chief Executive Officer of Actuant Corporation
Gustav H.P. Boel................................................................. 57 2000
European Leader--Gardner Bender
Bruce S. Chelberg (1)............................................................ 68 2000
Retired Chairman and Chief Executive Officer of Whitman Corporation (a
conglomerate whose principal operating company is an independent Pepsi-Cola
bottler)
H. Richard Crowther (1)(2)....................................................... 70 1995
Retired Vice Chairman, Illinois Tool Works Inc. (manufacturer of engineered
components and systems)
William K. Hall (1)(2)(3)........................................................ 59 2001
Chairman and Chief Executive Officer, Procyon Technologies, Inc. (holding
company focused on the acquisition and growth of suppliers to the global
aerospace and defense industry)
Kathleen J. Hempel (2)(3)........................................................ 52 2001
Former Vice Chairman and Chief Financial Officer of Fort Howard Corp.
(manufacturer, converter and marketer of sanitary tissue products)
William P. Sovey (2)(3).......................................................... 69 2000
Chairman and former Chief Executive Officer of Newell Rubbermaid, Inc. (a multi-
national manufacturer and marketer of branded consumer products)
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(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Nominating and Corporate Governance Committee of the Board of
Directors.
All of the directors have held the positions with the Company or other
organizations shown in the above table during the past five or more years,
except for the following: (a) Robert C. Arzbaecher was Vice President and Chief
Financial Officer of Applied Power Inc. from 1994 and Senior Vice President
from 1998 until August, 2000; (b) Gustav H.P. Boel was Senior Vice President of
APW Ltd. until February, 2001 and an independent business consultant from
February, 2001 until September, 2002; (c) Bruce S. Chelberg was Chairman and
Chief Executive Officer of Whitman Corporation from 1992 to 2000; (d) William
K. Hall was Chairman and Chief Executive Officer of Falcon Building Products,
Inc. from 1997 to 2000; (e) Kathleen J. Hempel was Vice Chairman and Chief
Financial Officer of Fort Howard Corp. from 1992 to 1997 and currently is a
private investor; and (f) William P. Sovey was Vice Chairman and Chief
Executive Officer of Newell Rubbermaid, Inc. from May 1992 until December 1997.
5
Bruce S. Chelberg is a director at First Midwest Bancorp., Inc, Northfield
Laboratories, Inc. and Snap-On Tools. William K. Hall is a director of GenCorp
Inc., A.M. Castle & Co. and Great Plains Energy, Inc. Kathleen J. Hempel is a
director of Whirlpool Corp., Oshkosh Truck Corp., A.O. Smith Corp., Kennametal
Corp. and Visteon Corp. William P. Sovey is a director of Newell Rubbermaid,
Inc. and Teco Energy, Inc.
PROPOSAL 2
APPROVAL OF THE ACTUANT CORPORATION 2002 STOCK PLAN
Shareholders of the Company are also being asked to approve the Actuant
Corporation 2002 Stock Plan. On November 7, 2002, the board of directors
adopted the plan subject to shareholder approval. The plan is intended to
provide certain key employees of the Company an increased identification with
the shareholders of the Company by offering increased stock ownership. A copy
of the plan is attached hereto as Exhibit A. The following summary of the
material features of the plan is qualified in its entirety by reference to the
complete text of the plan.
On November 7, 2002, the Company granted options to acquire shares of common
stock to its executive officers under the plan, subject to shareholder approval
of the plan. The number of shares covered by such option grants is as follows:
Mr. Arzbaecher--37,000 shares, Mr. Goldstein--12,000 shares, Mr. Keller--7,000
shares, Mr. Kobylinski--5,000 shares, Mr. Lampereur--12,000 shares, and all
executive officers as a group--112,500 shares. The exercise price for the
options is equal to the fair market value on the date of grant.
The affirmative vote of holders of a majority of the shares cast at the
Meeting, in person or by proxy, will be required for the approval of the plan.
The board of directors unanimously recommends that you vote FOR approval of
the plan.
Actuant Corporation 2002 Stock Plan
Under the plan, incentive stock options, nonqualified stock options and
restricted stock (each, an "Award") may be granted to any regular salaried
employee of the Company or a subsidiary of the Company. This includes employees
who are members of the board of directors, but excludes directors who are not
employees of the Company or any of its subsidiaries. As of August 31, 2002, the
total number of eligible employees was approximately 2,120.
The total number of shares of common stock available for issuance under the
plan may not exceed five hundred thousand (500,000) shares, and no eligible
employee may be granted an award or awards covering more than one hundred
thousand (100,000) shares of common stock in any calendar year. These stock
thresholds are subject to adjustment in the event of a stock split, stock
distribution or other capital stock event, as described in the plan.
The plan will be administered by the Compensation Committee of the board of
directors, which we refer to as the Committee. The Committee will be
constituted so as to permit the plan to comply with the provisions of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and to
afford plan participants an exemption for plan transactions pursuant to Rule
16b-3 under the Securities Exchange Act of 1934. The Committee will be
empowered to adopt such rules, regulations and procedures and take such other
action as it deems necessary or proper for administration of the plan,
including any modification, extension or renewal of any option granted
thereunder. The Committee will have the authority to interpret the provisions
of the plan, which interpretations shall be final and conclusive. Specifically,
the Committee will be empowered, subject to any contrary provisions of the
plan, to designate the persons to whom awards shall be granted, to grant awards
in such form and amount as the Committee shall determine, to impose such
limitations, restrictions and conditions
6
upon any such award as the Committee shall deem appropriate, and to waive in
whole or in part any limitations, restrictions or conditions imposed upon any
such award as the Committee shall deem appropriate. However, the Committee may
not amend any outstanding option issued under the plan to reduce its exercise
price.
Stock Options
Stock options may be granted to eligible employees at any time as determined
by the Committee (subject to the volume limitation set forth above). Options
granted under the plan may be either incentive stock options under Section 422
of the Code or options that are not intended to qualify as incentive stock
options (referred to as nonqualified stock options). Each option will be
evidenced by an agreement between the Company and the grantee which will
contain the terms and conditions required by the plan and such other terms and
conditions not inconsistent therewith as the Committee may deem appropriate.
The exercise price of an option granted under the plan will be determined by
the Committee. However, the exercise price may not be less than 100% of the
fair market value (as defined in the plan) of the common stock when the option
is granted.
For purposes of the plan, an option will be considered as having been
granted on the date on which the Committee authorizes its grant (unless the
Committee has designated a later grant date). Options granted under the plan
may be exercisable at such times and subject to such restrictions and
conditions as the Committee in each instance approves, but no option may be
exercisable prior to shareholder approval of the plan. Furthermore, the period
of exercisability of an incentive stock option may not exceed 10 years from the
date the option is granted and no option may be treated as an incentive stock
option unless the grantee exercises the option while employed by the Company
(or a subsidiary) or within three months after termination of employment,
unless such termination is caused by death or disability, in which case one
year after such termination.
An option may be exercised in whole or in part from time to time as
specified in the option agreement by the grantee giving a written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. The exercise price may be
paid either (i) in cash, (ii) by check, (iii) with the approval of the
Committee, through delivery of shares of common stock which have been
beneficially owned by the grantee, the grantee's spouse or both of them for a
period of at least six months prior to the exercise, or (iv) through a
combination of cash and shares of common stock. If the exercise price is paid
through delivery of shares of common stock, such shares will be valued at their
fair market value as of the date of the exercise. The holder of an option shall
not have any rights as a shareholder with respect to the shares subject to the
option until certificates evidencing such shares are delivered to him or her.
Special provisions are contained in the plan covering a merger,
consolidation or reorganization of the Company with another corporation in
which the Company is not the surviving corporation. In those circumstances, the
Committee may, subject to the approval of the board of directors of the Company
or the board of directors of any corporation assuming the obligations of the
Company under the plan, take action regarding each outstanding unexercised
option to either (i) substitute on an equitable and economically equivalent
basis an appropriate number of shares of the surviving corporation for the
shares of common stock covered by the option, or (ii) cancel the option and
provide for a payment to the optionee of an amount equal to the cash value of
the option (determined in accordance with the provisions of the plan). In
addition, the plan permits options to be granted to new eligible employees who
become such as a result of the Company's acquisition of property or stock from
an unrelated corporation in substitution for options granted to such eligible
employees by their former employer.
7
Restricted Stock
The Committee, at any time, may grant awards of restricted stock under the
plan. No more than 50,000 shares of restricted stock may be granted in the
aggregate during any calendar year. The Committee may condition the grant of
restricted stock upon the attainment of specified levels of revenue, earnings
per share, net income, return on assets, return on sales, customer
satisfaction, stock price, costs, individual performance measures, continued
employment with the Company or such other factors or criteria as the Committee
shall determine. The provisions of various restricted stock awards need not be
identical. However, all restricted stock awards shall be subject to the
following terms and conditions: (i) restricted stock awards that are
conditioned on the grantee's continued employment may not become fully vested
before the third anniversary of the grant date and restricted stock awards that
are based upon performance factors may not become fully vested before the first
anniversary of the grant date; (ii) until all applicable restrictions lapse,
the grantee shall not be permitted to sell, assign, transfer, pledge, or
otherwise encumber the shares of restricted stock; (iii) the grantee shall have
all other rights of a shareholder of the Company with respect to the shares of
restricted stock (including the right to vote the shares and the right to
receive any cash dividends); (iv) unless otherwise provided in the applicable
restricted stock agreement or pursuant to (v) below, all shares of restricted
stock shall be forfeited by the grantee upon termination of employment; (v) in
the event of a hardship or other special circumstances under which a grantee's
employment is involuntarily terminated (other than for cause), the Committee
may waive in whole or in part any or all remaining restrictions attendant to
shares of restricted stock held by such grantee; (vi) upon the lapse of all
applicable restrictions, unlegended certificates for such shares shall be
delivered to the grantee; and (vii) each award shall be subject to the terms of
a restricted stock agreement. All grantees of restricted stock shall be issued
a certificate in respect of such shares, registered in such grantee's name and
bearing an appropriate legend. In its discretion, the Committee may require
that the certificates evidencing such shares of restricted stock be held in
custody by the Company until the restrictions have lapsed.
Term of Plan
The plan will terminate 10 years after its effective date, except as to
awards then outstanding, which awards will remain in effect until they have
been exercised, the restrictions have lapsed or the awards have expired or been
forfeited. The board of directors may also amend, modify, suspend or terminate
the plan from time to time although no such action can be taken without
shareholder approval if required by applicable law.
General Terms
The Company may require, as a condition to the exercise of an option or the
issuance of an unrestricted stock certificate, that the grantee concurrently
pay to the Company any taxes which the Company is required to withhold by
reason of such exercise or lapse of restrictions. Such payment may be made
either in cash, by check or, at the discretion of the Committee, and subject to
all applicable rules and regulations, through shares of common stock held for a
period of at least six months or shares of common stock withheld from the award
having a fair market value equal to the amount of the tax obligation. No award
granted under the plan shall be transferable by a grantee other than by will or
the laws of descent and distribution. However, the Committee, in its discretion
but in accordance with Internal Revenue Service guidance, may grant
nonqualified stock options that are transferable, without payment of
consideration, to family members of the grantee or to trusts or partnerships
for such family members.
Certain Federal Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of awards under the plan based on applicable provisions of the
Code now in effect.
8
An eligible employee realizes no taxable income at the time an option is
granted under the plan. An eligible employee generally realizes no taxable
income at the time of an award of restricted stock, so long as the restricted
stock is not vested. Stock is vested for this purpose if it is either
transferable or is not subject to a substantial risk of forfeiture.
With regard to incentive stock options, no income is recognized by an
eligible employee upon transfer to him of shares pursuant to his exercise of an
incentive stock option. In order to avail himself of this tax benefit, the
eligible employee must make no disposition of the shares so received before he
has held such shares for at least one year and at least two years have passed
since he was granted the option. Assuming compliance with this and other
applicable tax provisions, an eligible employee will realize long-term capital
gain or loss when he disposes of the shares, measured by the difference between
the exercise price and the amount received for the shares at the time of
disposition. If an eligible employee disposes of shares acquired by exercise of
an incentive stock option before the expiration of the above-noted periods, any
amount realized from such disqualifying disposition will be taxable as ordinary
income in the year of disposition to the extent the lesser of (a) the fair
market value of the shares on the date the option was exercised, or (b) the
amount realized upon such disposition, exceeds the exercise price. Any amount
realized in excess of the fair market value on the date of exercise is treated
as long-term or short-term capital gain, depending upon the holding period of
the shares. If the amount realized upon such disposition is less than the
exercise price the loss will be treated as long-term or short-term capital
loss, depending upon the holding period of the shares. For purposes of the
alternative minimum tax, the eligible employee shall recognize income upon the
transfer of shares to him pursuant to the exercise of an incentive stock option
in an amount equal to the difference between the fair market value of the
shares at the time of exercise and the exercise price.
With regard to nonqualified stock options, ordinary income generally is
realized by the eligible employee at the time of the exercise of an option. The
amount of income is generally equal to the difference between the exercise
price and the fair market value of the shares on the date of exercise. When an
eligible employee disposes of shares acquired upon the exercise of a
nonqualified stock option, any amount received in excess of the fair market
value of the shares on the date of exercise will be treated as long-term or
short-term capital gain, depending upon the holding period of the shares, and
if the amount received is less than the fair market value of the shares on the
date of exercise, the loss will be treated as long-term or short-term capital
loss, depending upon on the holding period of the shares.
With regard to restricted stock, ordinary income is generally recognized by
an eligible employee at the time that such restricted stock vests. The amount
of income is generally equal to the excess of the fair market value of the
shares at the time of vesting over the purchase price for such shares, if any.
When an eligible employee disposes of restricted stock, any amount received in
excess of the fair market value of the shares on the date of vesting will be
treated as long-term or short-term capital gain, depending upon the holding
period of the shares, and if the amount received is less than the fair market
value on the date of vesting, the loss will be treated as long-term or short-
term capital loss, depending on the holding period of the shares. Dividends
paid on restricted stock which has not vested and which has not been the
subject of an election under Section 83(b) of the Code are treated as
compensation income. Section 83(b) of the Code permits the eligible employee to
elect, not more than 30 days after the date of grant of the restricted stock,
to include as ordinary income the difference between the fair market value of
the restricted stock on the date of grant and the purchase price of the
restricted stock, if any.
No deduction will be allowed to the Company for federal income tax purposes
at the time of the grant or exercise of any incentive stock option. At the time
of a disqualifying disposition by an eligible employee, the Company will be
entitled to a deduction for the amount taxable to the eligible employee as
ordinary income. The
9
Company will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the eligible employee is considered to have
realized ordinary income in connection with the exercise of a nonqualified
stock option and the grant of restricted stock, assuming compliance with
Section 162(m) of the Code.
PROPOSAL 3
AMENDMENT TO THE 2001 OUTSIDE DIRECTORS' STOCK OPTION PLAN
The board of directors believes that the continued growth and profitability
of the Company depends, in part, upon the ability of the Company to attract and
retain highly qualified non-employee directors. As of October 31, 2002, 37,000
shares of common stock remained available for stock option grants under the
Company's 2001 Outside Directors' Stock Option Plan, which we refer to as the
directors' plan. Accordingly, on November 7, 2002, the board of directors
adopted an amendment to the directors' plan, subject to shareholder approval,
increasing the number of shares available for issuance under the directors'
plan from 70,000 to 110,000.
The affirmative vote of holders of a majority of the shares cast at the
Meeting, in person or by proxy, will be required for the approval of the
amendment to the directors' plan.
The board of directors unanimously recommends that you vote FOR approval of
the amendment to the directors' plan.
Summary of the Directors' Plan
The directors' plan was adopted by the board of directors in August 2000 and
by the shareholders of the Company in January 2001. The purpose of the
directors' plan is to promote the growth and development of the Company by
providing increased incentives to the non-employee directors of the Company.
The directors' plan is administered by the Compensation Committee of the board
of directors. The Committee is constituted so as to permit the directors' plan
to comply with the provisions of Rule 16b-3 under the Securities Exchange Act
of 1934.
The directors' plan provides for the granting of nonqualified stock options
to non-employee directors of the Company. The aggregate number of shares of
common stock which may be issued pursuant to options granted under the
directors' plan currently is 70,000. This number is subject to adjustment in
the event of a stock split, stock distribution or other capital stock event, as
described in the directors' plan.
The directors' plan provides that an option to purchase 3,000 shares of the
Company's common stock will be automatically granted to each person then
serving as a non-employee director at the first meeting of the board of
directors following each Annual Meeting of Shareholders. Each option granted
under the directors' plan is evidenced by a stock option agreement between the
Company and the non-employee director. The agreement contains the terms and
conditions required by the directors' plan, along with any other terms or
conditions that the Committee may deem appropriate.
The exercise price at which shares may be purchased pursuant to an option is
100% of the fair market value (as defined in the directors' plan) of the
Company's common stock on the date the option is granted. The option exercise
price must be paid in full at the time of exercise. Such payment may be made
either in cash, check or by the delivery of shares of common stock which the
non-employee director, or his spouse, has owned for at least six months prior
to the time of exercise, or a combination of cash and such shares.
10
An option granted pursuant to the directors' plan may be exercised, in whole
or in part, any time during the period beginning eleven months after the date
of grant and ending upon the earlier of ten years from the date of grant, or
two years from the date the director ceases to be a director.
Options granted under the directors' plan may not be transferred or assigned
except by will or the laws of descent and distribution and, during the
optionee's lifetime may be exercised only by the optionee; however, the
Committee, in its discretion, may grant options that are transferable to family
members.
The directors' plan provides that options may be granted any time prior to
August 8, 2010. On that date, the directors' plan will expire, except as to
options then outstanding, which will remain in effect until they have been
exercised or they have expired or otherwise terminated. The directors' plan may
be terminated at any time by the board of directors except as to options then
outstanding. The board of directors may also amend the directors' plan from
time to time, but shareholder approval is required in the event of certain
material changes.
Certain Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of the nonqualified stock options under the directors' plan, based
on applicable provisions of the Code now in effect.
An optionee will not recognize taxable income at the time the option is
granted. Ordinary income generally is realized by the optionee at the time of
the exercise of an option. The amount of income is generally equal to the
difference between the exercise price and the fair market value of the shares
on the date of exercise. When an optionee disposes of shares acquired upon the
exercise of a nonqualified stock option, any amount received in excess of the
fair market value of the shares on the date of exercise will be treated as
long-term or short-term capital gain, depending upon the holding period of the
shares, and if the amount received is less than the fair market value of the
shares on the date of exercise, the loss will be treated as long-term or
short-term capital loss, depending upon on the holding period of the shares.
PROPOSAL 4
AMENDMENT TO
THE RESTATED ARTICLES OF INCORPORATION OF THE COMPANY
On August 7, 2002, the board of directors determined that it was necessary
and in the best interests of the Company and its shareholders to amend the
Company's Restated Articles of Incorporation (the "Articles") to increase the
number of authorized shares of Class A Common Stock. Accordingly, the board of
directors has proposed an amendment to the Articles increasing the number of
authorized shares of Class A Common Stock from 16,000,000 to 32,000,000 for
submission to the Company's shareholders at the Meeting.
The affirmative vote of two-thirds of all shares entitled to vote thereon
shall be required for approval of the proposed amendment to the Articles. Since
abstentions and broker non-votes are not affirmative votes, they will have the
effect of votes cast against the proposal.
The board of directors unanimously recommends that you vote FOR approval of
the amendment.
As of the record date, there were 11,619,251 shares of Class A Common Stock
outstanding and 1,086,940 shares were reserved for issuance in connection with
various employee benefit plans. The board of directors
11
believes it is desirable for the Company to have the flexibility to issue
additional shares of Class A Common Stock in excess of the amount which is
currently authorized without further shareholder action (although in certain
situations the rules of the New York Stock Exchange would require shareholder
approval if the issuance involved a number of shares equal to or in excess of
20% of the number of shares then outstanding). While the board of directors
continually considers the Company's capital structure and various financing
alternatives, including possible equity offerings in public and private
transactions, the board has no formal plans or commitments to issue any
additional shares of Class A Common Stock at this time. The availability of
additional shares would enhance the Company's ability to engage in such future
actions as well as expanded employee benefit programs and corporate mergers and
acquisitions. The board of directors will determine whether, when and on what
terms the issuance of shares may be warranted in connection with any of those
purposes. Holders of Class A Common Stock do not have preemptive rights to
subscribe for or purchase any part of any such future issuances. The Company
has no current intention of using additional shares of Class A Common Stock as
an anti-takeover defense, however, such an issuance could be used to create
impediments to or otherwise discourage persons attempting to gain control of
the Company (through dilutive offerings or otherwise).
For the reasons set forth above, the board of directors has proposed that
the following resolution, which embodies an amendment to the Articles effecting
the increased authorization, be submitted to the Company's shareholders for
approval at the Meeting:
RESOLVED, that Section 3.1(a) of Article III of the Company's Restated
Articles of Incorporation be amended to read as follows:
"(a) Class A Common Stock. 32,000,000 shares of Class A Common Stock,
having a par value of $.20 per share."
If this amendment is approved by the Company's shareholders, the entire
authorized capital stock of the Company will consist of 32,000,000 shares of
Class A Common Stock, 1,500,000 shares of Class B Common Stock and 160,000
shares of Cumulative Preferred Stock. No Class B Common Stock or Cumulative
Preferred Stock is currently outstanding.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
There were five meetings of the board of directors (and two actions by
unanimous consent), three meetings of the Audit Committee, four meetings of the
Compensation Committee (and one action by unanimous consent) and two meetings
of the Nominating Committee during the fiscal year ended August 31, 2002.
During the period in the last fiscal year in which they served, all members of
the board of directors attended at least 75% of the aggregate number of
meetings of the board of directors and all the committees on which they served.
Committees
The Compensation Committee of the board of directors determines the
compensation of the Company's executive officers, administers incentive
compensation plans and equity-based plans maintained by the Company, makes
recommendations to the board of directors with respect to the amendment,
termination or replacement of such plans, recommends to the board of directors
the compensation for board members and conducts an annual evaluation of the
performance of the Committee.
The Nominating and Corporate Governance Committee of the board of directors
is responsible for evaluating and nominating prospective members for the
Company's board of directors. The Committee is also
12
responsible for exercising a leadership role in developing, maintaining and
monitoring the Company's corporate governance policies and procedures.
The Audit Committee of the board of directors: (i) reviews the financial
reports and other financial information provided by the Company to its
constituencies, (ii) monitors the Company's systems of internal financial and
accounting controls, (iii) oversees the Company's auditing, accounting and
financial reporting processes generally, and (iv) confirms the external
auditors' qualifications and independence.
Director Compensation
For fiscal year 2002, directors who were not employees of the Company were
paid an annual retainer of $19,000 for serving on the board of directors and an
attendance fee of $1,000 for each board of directors meeting or committee
meeting attended. In addition, each director who is not an employee of the
Company is automatically granted an option to purchase 3,000 shares of Company
common stock immediately after their election at the Annual Meeting of
Shareholders pursuant to the terms of the 2001 Outside Directors' Stock Option
Plan, at an exercise price equal to the fair market value of the common stock
on the date of grant. For fiscal year 2002, each director was automatically
granted an option to purchase 3,000 shares of Company common stock at an
exercise price of $31.10 per share. Directors who are employees of the Company
do not receive separate remuneration in connection with their service on the
board or board committees.
The board of directors has approved its compensation plan for fiscal year
2003. Directors who are not employees of the Company will receive an annual
retainer for serving on the board of directors and each committee and will no
longer receive a per meeting attendance fee. The amount of the annual retainer
for serving on the board of directors will be $30,000 and the annual retainer
for serving on each committee will be $10,000, $5,000 and $5,000 for the Audit
Committee, Compensation Committee and Nominating Committee, respectively. The
chairperson of each committee will receive an additional annual fee of $5,000.
The Company will continue to grant each director who is not an employee of the
Company an option to purchase 3,000 shares of Company common stock immediately
after their election at the Annual Meeting of Shareholders.
Under the Outside Directors' Deferred Compensation Plan (the "Deferred
Compensation Plan"), each non-employee director may elect to defer all or a
specified portion of his annual retainer and attendance fees for future payment
on a date specified by the participant or upon termination of the participant's
service as a director. The amount deferred is used to purchase shares of
Company common stock on the open market, which shares are then placed in a
rabbi trust. Distributions from the Deferred Compensation Plan are made in
Class A Common Stock. During fiscal year 2002, three directors participated in
the Deferred Compensation Plan.
Report of the Audit Committee
The following report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically
incorporates this report by reference therein.
The Audit Committee of the board of directors oversees and monitors the
participation of the Company's management and independent accountants
throughout the financial reporting process. No member of the Committee is
employed by or has any other material relationship with the Company.
In connection with its function to oversee and monitor the financial
reporting process of the Company, the Committee has done, among other things,
the following:
. reviewed and discussed the audited financial statements for the fiscal
year ended August 31, 2002 with the Company's management and
PricewaterhouseCoopers LLP;
13
. discussed with PricewaterhouseCoopers LLP, the Company's independent
accountants, those matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU 380); and
. received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1 and has discussed with PricewaterhouseCoopers LLP its
independence.
Based upon the foregoing, the Committee recommended to the board of
directors that the audited financial statements be included in the Company's
annual report on Form 10-K for the fiscal year ended August 31, 2002.
The Audit Committee has adopted a written charter to govern its operations
which is attached hereto as Exhibit B. The Audit Committee is comprised of
independent directors as defined and required by Sections 303.01(B) and
303.02(D) of the New York Stock Exchange listing standards.
Kathleen J. Hempel (Chairman)
H. Richard Crowther
William K. Hall
William P. Sovey
EXECUTIVE COMPENSATION
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
Development of Compensation Approach and Objectives. The Compensation
Committee of the board of directors is responsible for establishing all of the
policies under which compensation is paid or awarded to the Company's executive
officers, and also determines the amount of such compensation. No member of the
Committee is employed by the Company. The Committee's objective has been to
develop a total compensation program that is competitive in the marketplace and
provides incentive to increase shareholder value. Each year the Committee has
reviewed its executive compensation policies relative to market
competitiveness, and then determined what changes in the compensation program,
if any, are appropriate for the following year. This review is conducted at the
beginning of each fiscal year. Compensation of the Company's executive officers
currently consists of three key components--salary, bonus and stock options.
As in past years, for fiscal 2002 the Committee retained an independent
outside consultant who provided data regarding the compensation practices of
U.S. manufacturing companies. Competitive pay standards were derived from the
results of compensation surveys, including comparisons with many manufacturing
companies. This data, along with the President and Chief Executive Officer's
recommendations for particular executive officer compensation and information
regarding an executive's experience, expertise and demonstrated performance,
were reviewed by the Committee in connection with setting fiscal 2002 salaries.
In determining compensation for fiscal 2002, the total value of all but one
executive's pay package was less than the competitive median for like positions
in companies of similar size and type as a result of the recent assumption of
positions following the spin-off of APW Ltd.
Stock Incentive Component. To emphasize the Committee's belief that stock
ownership by the Company's executive officers directly focuses those executives
on increasing shareholder value, officer stock ownership guidelines have been
adopted. In general, it is the Company's policy that executive officers should
hold stock or options equal to a minimum of three times their base salary
(recognizing that newer officers may need two or more years to build their
ownership, up to that level), with at least one years' base salary in Actuant
share ownership versus vested stock options.
14
In August 2000, the Company adopted the Actuant Corporation Executive Stock
Purchase Plan. The purpose of this plan was to facilitate the purchase of
Company common stock by executive officers in order to more closely align the
executive's financial rewards with the financial rewards realized by Company
shareholders and to increase the ownership of common stock among executives.
The Compensation Committee designated the amount that could be borrowed by the
executive officers from a financial institution and selected employees eligible
to participate in the program. In connection with this plan, the Company
guaranteed an individual's loan and agreed that the Company would be
responsible for interest expense incurred by the executive in excess of four
percent (4%) per year. During the 2002 fiscal year, the Company subsidized a
total of $48,100 of interest on loans entered into by executive officers. The
Company also agreed to be responsible for 50% of any loss incurred on shares
purchased under this program so long as the participant remains employed by the
Company until July 31, 2004. If the participant terminates employment before
July 31, 2004 or sells the shares purchased under this program prior to July
31, 2004, the officer shall be responsible for the full amount of any loss on
the sale. As of the record date, the fair market value of the stock purchased
under the program exceeded the underlying loan amounts. To date, guarantees by
the Company have been made for all 11 executive officers, totaling
approximately $4.5 million in the aggregate, all of which was used to purchase
approximately 224,150 shares of Company common stock. The total amounts of the
corresponding loans as of October 31, 2002 for our named executive officers
were: Mr. Arzbaecher--$1,237,872, Mr. Goldstein--$209,831, Mr.
Keller--$718,741, Mr. Kobylinski--$487,198 and Mr. Lampereur--$572,443. The
Company has recently suspended the practice of providing new guarantees for the
benefit of its executive officers in connection with such purchases.
Stock options are granted annually to executive officers. Options may also
be granted to other key employees whose present and future contributions are
especially important to the Company. All option grants are priced at 100% of
market value as of the date of grant. Unless earlier terminated, options expire
ten years from the date of grant and generally become exercisable as to half of
the shares granted two years after the date of grant and fully exercisable five
years after the date of grant. During the Company's 2002 fiscal year, a total
of 141,200 stock options were granted to the executive officers.
Key Measurement Criteria for Bonuses. Bonus payments are made to each
executive officer based upon the degree of achievement of the year's financial
objectives. An executive may receive more, or less, than the target bonus based
on actual business results.
Company executives not in charge of business units receive bonus payments
based upon the performance of the Company as a whole. For fiscal 2002, bonuses
were based on a combination of year over year improvement in the Company's
Combined Management Measure ("CMM") and the attainment of debt reduction goals
(the "Debt Reduction Bonus"). CMM is operating profit before amortization less
a 20% charge based upon the net assets employed. The Company achieved
approximately $27.8 million of debt reduction in fiscal 2002 compared to the
$20.0 million debt reduction objective. The Debt Reduction Bonus was intended
to focus the management on this key objective for fiscal 2002. For the fiscal
year ended August 31, 2002, aggregate bonuses for the Company's executive
officers not in charge of a business unit equaled 190% of the executives'
targeted bonuses, including 39% as a Debt Reduction Bonus.
Each executive responsible for a business unit (or a portion of a business
unit) is eligible for a bonus based on attainment of the consolidated debt
reduction goal, the Company's CMM and on the performance of that unit, with the
measuring index utilized being the CMM for the unit. Eighty percent of such an
executive's bonus was based on the applicable unit's CMM, with the other twenty
percent based on the Company's CMM. For executives in the Company's Engineered
Solutions business unit, sixty percent of each executive's bonus was based on
the CMM for Engineered Solutions in the executive's region, twenty percent was
based on the global
15
CMM for Engineered Solutions and the remaining twenty percent was based on the
Company's CMM. Bonuses for the Company's business unit executives who were
employed throughout the 2002 fiscal year ranged from 79% to 179% of their
target bonuses, including 39% as a Debt Reduction Bonus.
Chief Executive Officer Compensation. Mr. Arzbaecher's salary for fiscal
2002 was $425,000 and his bonus target was $280,000. Mr. Arzbaecher's actual
bonus for fiscal 2002 was $532,000 (190% of target) due to favorable
performance as described above. The Company granted Mr. Arzbaecher options to
acquire 50,000 shares during fiscal 2002.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the Company's federal income tax deduction to $1,000,000 per year for
compensation paid to its chief executive officer or any of the other executive
officers named in the summary compensation table of this Proxy Statement.
Performance-based compensation is not, however, subject to the deduction limit,
provided certain requirements of Section 162(m) are satisfied. The Company
believes that its stock plans comply with the final Section 162(m) regulations
adopted by the Internal Revenue Service. In order to preserve the deductibility
of performance-based compensation, the Company will generally seek to comply
with Section 162(m) of the Code to the extent such compliance is practicable
and in the best interests of the Company and its shareholders.
Bruce S. Chelberg (Chairman)
H. Richard Crowther
William K. Hall
Summary Compensation Table
The following table sets forth compensation awarded to, earned by or paid to
the Company's Chief Executive Officer and each of the Company's other four most
highly compensated executive officers who were serving as executive officers at
the end of fiscal 2002, for services rendered to the Company and its
subsidiaries ("named executive officers"). Also included in the table is actual
compensation information for those individuals for fiscal years 2001 and 2000.
Prior to July 31, 2000, the Company was known as "Applied Power Inc." and
included the Electronics operations which were spun-off on that date.
Long-Term
Annual Compensation Compensation Awards
----------------------------------------- --------------------
Securities
Underlying All Other
Other Annual Options/ Compensation
Name and Principal Position Year Salary Bonus Compensation(1) SARS(2) ($)(3)(4)(5)
--------------------------- ---- -------- -------- --------------- ---------- ------------
Robert C. Arzbaecher
President and Chief Executive Officer 2002 $425,000 $532,000 -0- 50,000 $57,826
President and Chief Executive Officer 2001 360,000 91,916 -0- -0- 47,149
President and Chief Executive Officer (6) 2000 279,994 242,940(7) 12,181 84,000 17,894
Mark Goldstein
Vice President, Gardner Bender 2002 $230,000 $185,058 -0- 14,000 $34,468(8)
Vice President, Gardner Bender (9) 2001 97,308 16,000 -0- 12,000 20,906
Ralph L. Keller
Vice President, Operations 2002 $195,000 $148,200 -0- 10,000 $15,976
Vice President, Operations 2001 180,000 26,321 -0- -0- 36,403
Vice President, Operations (10) 2000 139,327 52,057 -0- 4,040 12,128
Brian K. Kobylinski
Vice President, Business Development (11) 2002 $155,000 $ 97,000 -0- 7,000 $19,107
Vice President, Gardner Bender Sales and Marketing
Leader 2001 140,000 37,622 -0- -0- 30,172
Vice President, Gardner Bender Sales and Marketing
Leader 2000 125,000 39,915 -0- 13,000 13,156
16
Long-Term
Annual Compensation Compensation Awards
------------------------------------------ -----------------------
Securities
Underlying All Other
Other Annual Options/ Compensation
Name and Principal Position Year Salary Bonus Compensation(1) SARS(2) ($)(3)(4)(5)
--------------------------- ---- -------- -------- --------------- ---------- ------------
Andrew G. Lampereur
Vice President and Chief Financial Officer 2002 $220,000 $167,200 -0- 12,000 $20,465
Vice President and Chief Financial Officer 2001 185,000 27,053 -0- -0- 33,258
Vice President and Chief Financial Officer (12) 2000 148,077 84,715(13) 7,664 26,400 20,326
- --------
(1) Consists entirely of interest paid pursuant to the Employee Deferred
Compensation Plan that was discontinued in 2000.
(2) Consists entirely of stock options.
(3) The 2002 amounts represent the following: (a) the Company's Savings Plan
matching contributions as follows: Mr. Arzbaecher--$2,775, Mr.
Goldstein--$2,775, Mr. Keller--$2,775, Mr. Kobylinski--$2,775 and Mr.
Lampereur--$2,775; (b) the Company's Savings Plan core contributions as
follows: Mr. Arzbaecher--$5,100, Mr. Goldstein--$5,100, Mr.
Keller--$5,100, Mr. Kobylinski--$5,100 and Mr. Lampereur--$5,100; (c)
premiums paid by the Company for split-dollar life insurance for Mr.
Arzbaecher--$4,336; (d) auto payments as follows: Mr. Arzbaecher--$3,781,
Mr. Goldstein--$3,360, Mr. Keller--$2,961, Mr. Kobylinski--$8,033 and Mr.
Lampereur--$8,770; (e) imputed income from term life insurance coverage in
excess of the IRS designated tax-free amounts as follows: Mr.
Arzbaecher--$325; Mr. Goldstein--$90, Mr. Keller--$221, Mr.
Kobylinski--$54 and Mr. Lampereur--$54; (f) interest paid by the Company
on loans in connection with the Executive Stock Purchase Plan as follows:
Mr. Arzbaecher--$6,565, Mr. Goldstein--$901, Mr. Keller--$4,919, Mr.
Kobylinski--$3,145 and Mr. Lampereur--$3,766; and (g) initiation fee for
country club for Mr. Arzbaecher--$35,209.
(4) The 2001 amounts represent the following: (a) the Company's Savings Plan
matching contributions as follows: Mr. Arzbaecher--$2,775, Mr.
Goldstein--$1,924, Mr. Keller--$2,626, Mr. Kobylinski--$2,716 and Mr.
Lampereur--$2,775; (b) the Company's Savings Plan core contributions as
follows: Mr. Arzbaecher--$5,100, Mr. Goldstein--$3,399, Mr.
Keller--$5,100, Mr. Kobylinski--$4,981 and Mr. Lampereur--$5,100; (c)
premiums paid by the Company for split-dollar life insurance for Mr.
Arzbaecher--$4,336; (d) auto payments as follows: Mr. Arzbaecher--$4,887,
Mr. Goldstein--$3,250, Mr. Keller--$1,418, Mr. Kobylinski--$3,406 and Mr.
Lampereur--$7,968; (e) imputed income from term life insurance coverage in
excess of the IRS designated tax-free amounts as follows: Mr.
Arzbaecher--$326, Mr. Goldstein--$42; Mr. Keller--$143, Mr.
Kobylinski--$54, Mr. Lampereur--$54; and (f) interest paid by the Company
on loans in connection with the Executive Stock Purchase Plan as follows:
Mr. Arzbaecher--$29,725, Mr. Keller--$27,116, Mr. Kobylinski--$19,015 and
Mr. Lampereur--$17,361; and (g) relocation costs paid by the Company for
Mr. Goldstein--$12,291.
(5) The 2000 amounts represent the following: (a) the Company's Savings Plan
matching contributions as follows: Mr. Arzbaecher--$2,625, Mr.
Keller--$2,697, Mr. Kobylinski--$2,625 and Mr. Lampereur--$2,625; (b) the
Company's Savings Plan core contributions as follows: Mr.
Arzbaecher--$4,800, Mr. Keller--$5,141, Mr. Kobylinski--$4,800 and Mr.
Lampereur--$4,800; (c) premiums paid by the Company for split-dollar life
insurance as follows: Mr. Arzbaecher--$4,337; (d) auto payments as
follows: Mr. Arzbaecher--$4,896, Mr. Keller--$3,250, Mr.
Kobylinski--$5,001 and Mr. Lampereur--$12,229; (e) imputed income from
term life insurance coverage in excess of the IRS designated tax-free
amounts as follows: Mr. Arzbaecher--$286, Mr. Keller--$90, Mr.
Kobylinski--$17 and Mr. Lampereur--$54; and (f) interest paid by the
Company on loans in connection with the Executive Stock Purchase Plan as
follows: Mr. Arzbaecher--$950, Mr. Keller--$950, Mr. Kobylinski--$713 and
Mr. Lampereur--$618.
17
(6) Effective August 9, 2000, Mr. Arzbaecher was promoted to President and
Chief Executive Officer. Mr. Arzbaecher was Senior Vice President of
Applied Power Inc. from 1998 to August 8, 2000.
(7) Fiscal 2000 amount excludes $26,307 of salary and $7,500 of bonus payments
which were deferred in fiscal 1999 pursuant to the Employee Deferred
Compensation Plan and which were paid in fiscal 2000.
(8) The 2002 amount for Mr. Goldstein includes $22,241.80 of imputed interest
on Mr. Goldstein's relocation loan. See "Certain Relationships and Related
Transactions--Relocation Loan".
(9) Mr. Goldstein joined the Company in fiscal 2001 in his current capacity.
(10) Mr. Keller joined the Company in fiscal 2000 in his current capacity.
(11) Effective June 24, 2002, Mr. Kobylinski was promoted to Vice-President,
Business Development from his prior position as Vice President, Gardner
Bender--Sales and Marketing Leader. The CMM component of Mr. Kobylinski's
bonus for fiscal 2002 primarily relates to his position at Gardner Bender.
(12) Effective August 9, 2000, Mr. Lampereur was promoted to the office of Vice
President and Chief Financial Officer. Prior to that date, he served as
the business development and special projects leader for Applied Power Inc.
(13) Fiscal 2000 amount includes $62,625 in bonus amounts originally deferred
pursuant to the Employee Deferred Compensation Plan which were paid in
fiscal 2000. Fiscal 2000 amount excludes $55,031 of bonus payments which
were deferred in fiscal 1999 pursuant to the Employee Deferred
Compensation Plan and which were paid in fiscal 2000.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning stock option grants
during the last fiscal year to the named executive officers. No stock
appreciation rights ("SARs") were granted in fiscal 2002.
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term(3)
----------------------------------------------- --------------------------
Number of
Securities
Underlying Percent of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year(1) ($/Sh) Date(2) 5% 10%
- ---- ---------- ---------------- -------- ---------- -------- ----------
Robert C. Arzbaecher 50,000 22% 26.275 10/24/11 $826,210 $2,093,779
Mark Goldstein...... 14,000 6% 26.275 10/24/11 231,338 586,258
Ralph L. Keller..... 10,000 4% 26.275 10/24/11 165,242 418,755
Brian K. Kobylinski. 7,000 3% 26.275 10/24/11 115,669 293,129
Andrew G. Lampereur. 12,000 5% 26.275 10/24/11 198,290 502,507
- --------
(1) Based on stock option grants for an aggregate of 228,700 shares made to all
employees during the fiscal year ended August 31, 2002.
(2) Unless earlier terminated, options expire ten years from the date of grant
and generally become exercisable as to half of the shares granted two years
after the date of grant and fully exercisable five years after the date of
grant. In the event of a change in control of the Company, the Compensation
Committee may either provide for equivalent substitute options to be
granted to the optionees or a cash-out of the options based on the highest
fair market value per share of Company common stock during the 60-day
period immediately preceding the change in control. Optionees who earn more
than $100,000 per ear may elect to defer receipt of option shares upon
exercise of an option. Throughout the deferral period, the deferred shares
are credited
18
with "deemed dividends" at the same rate as dividends paid on Company common
stock. At the end of the deferral period, such accumulated cash dividend
equivalent amounts are converted into shares of common stock and distributed
with the shares of common stock issued to settle the optionee's deferred
share account.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation,
if any, of the common stock price.
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information for each of the named executive
officers concerning options exercised during fiscal 2002 and the number and
value of stock options outstanding at the end of the fiscal year. No SARs are
outstanding.
Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options/SARs at Money Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)(2)
------------------------------- ----------------------------
Shares Value
Name Acquired Realized Exercisable Unexercisable(1) Exercisable Unexercisable
---- -------- -------- ----------- ---------------- ----------- -------------
Robert C. Arzbaecher 36,400 $747,890 219,840 148,160 $6,323,866 $2,972,631
Mark Goldstein...... -0- -0- -0- 26,000 -0- 466,900
Ralph L. Keller..... -0- -0- 10,100 20,100 219,160 340,560
Brian K. Kobylinski. -0- -0- 14,300 18,700 353,359 356,218
Andrew G. Lampereur. -0- -0- 63,250 33,650 1,898,465 674,881
- --------
(1) Represents unvested options at the end of fiscal 2002.
(2) Based upon the closing price of $38.415 of the common stock on the New York
Stock Exchange, Composite Tape on August 31, 2002, as reported in the Wall
Street Journal.
Equity Compensation Plan Information
The following table provides information as of August 31, 2002 regarding the
number of shares of common stock that may be issued under the Company's equity
compensation plans. The table does not include shares that may be issued under
the 2002 Stock Plan which is being submitted for approval at the Meeting or the
additional shares that may be issued under the 2001 Outside Directors' Stock
Option Plan if the amendment to such plan is approved at the Meeting.
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
Plan Category(1) warrants and rights warrants and rights the first column)
- ---------------- ----------------------- -------------------- -----------------------
Equity compensation plans approved by security
holders..................................... 1,044,875 $16.01 76,100
Equity compensation plans not approved by
security holders............................ -0- N/A -0-
Total......................................... 1,044,875 $16.01 76,100
- --------
(1) The table does not include information regarding the Company's Outside
Directors' Deferred Compensation Plan. The plan permits deferral of
director compensation into phantom stock units which are paid out in
19
shares of common stock. The directors who participate in the plan do not
have any voting or dispositive power over the phantom stock units. As of
August 31, 2002, there were 17,511 phantom stock units held in the plan.
Change in Control Arrangements
Certain of the Company's stock option plans contain provisions that would be
triggered by a change in control of the Company. The 1996 and 2000 Stock Option
Plans permit the Compensation Committee to either provide for equivalent
substitute options to be granted to the optionees upon a change in control or
the cash-out of options previously granted under such plan based on the highest
fair market value per share of Company common stock during the 60-day period
immediately preceding the change in control. The 1990 Stock Option Plan
provides for acceleration of vesting in the event of a change in control.
Finally, the stock option deferral programs which are part of each stock option
plan maintained by the Company require distribution of all deferred shares as
soon as administratively practicable after the date of a change in control.
The Company has entered into change in control agreements with each of
Messrs. Arzbaecher, Blackmore, Goldstein, Kobylinski, Hicks, Keller, Kerk,
Lampereur and Wieczorek, present executive officers of the Company, whereby the
Company will provide the executives with termination benefits upon termination
of employment following a change in control and a triggering event. A
triggering event is generally defined as:
. (a) reducing the total base compensation amount paid by the Company to the
executive or (b) modifying the bonus plan applicable to the executive
which results in the executive earning less than the then existing bonus
plan or (c) reducing the total aggregate value of the fringe benefits
received by the executive from the Company from the levels received by the
executive at the time of a change in control or during the 120-day period
immediately preceding the change in control; or
. a material change in the executive's position or duties, executive's
reporting responsibilities, or persons reporting to the executive from the
levels existing at the time of a change in control or during the 180-day
period immediately preceding the change in control; or
. a change in the location or headquarters where the executive is expected
to provide services of 40 or more miles from the previous location
existing at the time of the change in control or during the 180-day period
immediately preceding the change in control.
A change in control is defined as:
. a sale of over 50% of the stock of the Company measured in terms of voting
power, other than in a public offering or certain acquisitions by the
Company; or
. the sale by the Company of over 50% of its business or assets in one or
more transactions over a consecutive 12-month period; or
. a merger or consolidation of the Company with any other corporation if the
shareholders of the Company prior to the transaction do not own at least
50% of the surviving entity; or
. the acquisition by any means of more than 25% of the voting power or
common stock of the Company by any person or group of persons (with group
defined by the definitions under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); or
. the election of directors constituting a majority of the Company's Board
of Directors pursuant to a proxy solicitation not recommended by the
Company's Board of Directors.
20
The terms of the change in control agreements are not uniform and vary by
executive. The period of time during which a triggering event (and
corresponding termination of employment) must occur in connection with a change
in control vary from 6 months prior to, and 18 to 24 months following, the
change in control. The termination benefits payable range from one to two times
base salary plus one to two times bonus. The Company will also continue to
provide welfare benefits and other perquisites which the executive was
receiving at the time of the change in control for a period ranging from 12 to
24 months after termination.
Certain Relationships and Related Transactions
Relocation Loan
In October 2001, the Company made a $300,000 loan to Mr. Goldstein to cover
relocation expenses and transition costs in connection with Mr. Goldstein's
move from Connecticut to the Milwaukee area. The loan was interest-free and was
secured by a mortgage on Mr. Goldstein's home in Connecticut. The loan was paid
in full in August 2002.
Consulting Services
In fiscal 2002, the Company paid Mr. Gustav H.P. Boel $72,329 for consulting
services rendered by Mr. Boel for due diligence and other acquisition-related
matters in connection with the Company's acquisition of Heinrich Kopp AG, a
leading provider of electrical products to the German and Austrian home center
retail markets. Mr. Boel is a director of the Company. The acquisition closed
on September 3, 2002 and Mr. Boel was appointed to the position of European
Leader--Gardner Bender at that time.
21
Performance Graph
The following graph shows the cumulative total shareholder return on the
common stock during the preceding five fiscal years as compared to the returns
on the Standard & Poor's 500 Stock Index, the Standard & Poor's Diversified
Manufacturing Index and the Dow Jones US Industrial Diversified Index. The
graph assumes that $100 was invested on August 31, 1997 in the common stock and
each index and that all dividends were reinvested. On July 31, 2000 the Company
spun off its Electronics Business as a company named APW Ltd. and this resulted
in the Company's stock price decreasing from approximately $39.8125 (combined
price as of spin off) to $3.062 (both numbers pre-reverse stock split) after
the spin off. For purposes of this performance graph, the distribution of the
APW Ltd. shares in the spin off was treated as a special dividend paid to
shareholders of the Company which dividend, in turn, was reinvested into the
Company.
1997 1998 1999 2000 2001 2002
- -------------------------------------------------------------------------------
ACTUANT CORPORATION $100.00 $ 78.29 $ 96.83 $203.32 $174.66 $314.98
- -------------------------------------------------------------------------------
S&P 500 INDEX 100.00 108.09 151.14 175.81 132.93 108.84
- -------------------------------------------------------------------------------
S&P MANUFACTURING (DIVERSIFIED)
INDEX 100.00 88.29 146.74 148.81 153.05 --
- -------------------------------------------------------------------------------
DOW JONES US INDUSTRIAL
DIVERSIFIED INDEX 100.00 112.50 162.64 213.73 171.63 127.56
- -------------------------------------------------------------------------------
[CHART]
ACTUANT S & P MANUFACTURING DOW JONES US
INDUSTRIAL
CORPORATION S&P 500 (DIVERSIFIED) INDEX DIVERSIFIED INDEX
1997 100.00 100.00 100.00 100.00
1998 78.29 108.09 88.29 112.50
1999 96.83 151.14 146.74 162.64
2000 203.32 175.81 148.81 213.73
2001 174.66 132.93 153.05 171.63
2002 314.98 108.84 127.56
22
OTHER INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, executive officers and persons who beneficially own 10% or
more of the common stock are required to report their initial ownership of
common stock and subsequent changes in that ownership to the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
those reports have been established and the Company is required to disclose in
this Proxy Statement any failure to file by those due dates during fiscal 2002.
Based upon a review of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that all of
those filing requirements were satisfied with respect to fiscal 2002.
Independent Public Accountants
The Company retained PricewaterhouseCoopers LLP as its accountants for the
2003 fiscal year.
The Company expects that representatives of PricewaterhouseCoopers LLP will
be present at the Meeting and available to respond to appropriate questions and
make a statement if desired.
Fees Billed to the Company by PricewaterhouseCoopers LLP During Fiscal Year
2002
Audit Fees--the aggregate fees billed to the Company by
PricewaterhouseCoopers LLP in connection with the audit of the Company's August
31, 2002 financial statements and the review of the financial statements
included in the Company's Form 10-Q quarterly reports for the fiscal year ended
August 31, 2002 were $386,000.
Financial Information Systems Design and Implementation Fees--No fees were
billed by PricewaterhouseCoopers LLP, for financial information systems design
and implementation services rendered during the fiscal year ended August 31,
2002.
All Other Fees--The aggregate fees billed by PricewaterhouseCoopers LLP for
non-audit services, other than information technology services during the
fiscal year ended August 31, 2002 were $856,000, primarily consisting of tax
and acquisition advisory fees, fees in connection with the Company's recent
equity offering and other miscellaneous fees.
The Audit Committee has considered the compatibility of the non-audit
services provided by PricewaterhouseCoopers LLP to PricewaterhouseCoopers LLP's
continued independence and has concluded that the independence of
PricewaterhouseCoopers LLP is not compromised by the performance of such
services.
Shareholder Proposals
Shareholder proposals must be received by the Company no later than August
5, 2003 in order to be considered for inclusion in the Company's annual meeting
proxy statement next year. Shareholders who wish to submit a proposal not
intended to be included in the Company's annual meeting proxy statement but to
be presented at next year's annual meeting, or who propose to nominate a
candidate for election as a director at that meeting, are required by the
Company's bylaws to provide notice of such proposal or nomination to the
principal executive offices of the Company. This notice must be delivered to
the Company by September 12, 2003, but no
23
earlier than August 13, 2003, to be considered for a vote at next year's annual
meeting. The notice must contain the information required by the Company's
bylaws.
Additional Matters
Other than the proposals and matters described herein, management is not
aware of any other matters which will be presented for action at the Meeting.
If other matters do come before the Meeting, including any matter as to which
the Company did not receive notice by October 19, 2002 and any shareholder
proposal omitted from this Proxy Statement pursuant to the applicable rules of
the Securities and Exchange Commission, it is intended that proxies will be
voted in accordance with the judgment of the person or persons exercising the
authority conferred thereby.
By Order of the Board of Directors,
ROBERT C. ARZBAECHER
Chairman of the Board
Milwaukee, Wisconsin
December 3, 2002
It is important that proxies be returned promptly. Therefore, whether or not
you expect to attend the Annual Meeting in person, shareholders are requested
to complete, date, sign and return their proxies as soon as possible.
A copy (without exhibits) of the Company's Annual Report on Form 10-K for
the fiscal year-ended August 31, 2002, as filed with the Securities and
Exchange Commission, has been provided with this Proxy Statement. Additional
copies of the Form 10-K are available, free of charge, upon request directed to
Andrew Lampereur, Vice President and Chief Financial Officer, Actuant
Corporation, P.O. Box 3241, Milwaukee, Wisconsin 53201.
24
EXHIBIT A
ACTUANT CORPORATION
2002 STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Actuant Corporation 2002
Stock Option Plan (the "Plan"). The purpose of the Plan is to provide incentive
for key employees of Actuant Corporation and its Subsidiaries to improve
corporate performance on a long-term basis, and to attract and retain key
employees.
1.02 Effective Date. The effective date of the Plan shall be November 7,
2002, subject to approval of the Plan by the Company's shareholders. Any Award
granted prior to such shareholder approval shall be expressly conditioned upon
such shareholder approval of the Plan.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Award" shall mean the grant of any form of stock option or
restricted stock.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" shall mean the Compensation Committee of the Board, as
described in Section 4.01.
(e) "Company" shall mean Actuant Corporation, or any entity that is a
successor to the Company.
(f) "Company Stock" shall mean common stock of the Company and such
other stock and securities as may be substituted therefor pursuant to
Section 3.02.
(g) "Eligible Employee" shall mean any regular salaried employee of the
Company or a Subsidiary who satisfies all of the requirements of Section
5.01.
(h) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered national
securities exchange, or is quoted in the NASDAQ National Market System, the
mean of the high and low sale prices recorded in composite transactions. In
the absence of reported sales on such date, or if the stock is not so listed
or quoted, but is traded in the over-the-counter market, "Fair Market Value"
shall be the mean of the closing bid and asked prices for such shares on
such date or, if not so reported as obtained from a bona fide market maker
in such shares.
(i) "Grantee" shall mean any person who has been granted an Award, under
the Plan.
(j) "Option Period" shall mean the period of time provided pursuant to
Section 6.04 within which a stock option may be exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly, a voting stock
interest of more than fifty percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock that may
be issued under the Plan shall in the aggregate not exceed five hundred
thousand (500,000) shares. Shares subject to and not issued under an option
which expires, terminates, is canceled or forfeited for any reason under the
Plan and shares of restricted Company Stock which have been forfeited before
the Grantee has received any benefits of ownership, such as dividends from the
forfeited shares, shall again become available for the granting of Awards.
3.02 Changes in the Number of Available Shares. If any stock dividend is
declared upon the Company Stock, or if there is any stock split, stock
distribution, or other recapitalization of the Company with respect to the
Company Stock, resulting in a split or combination or exchange of shares, the
aggregate number and kind of shares which may thereafter be offered under the
Plan shall be proportionately and approximately adjusted and the number and
kind of shares then subject to options granted to employees under the Plan and
the per share option price therefor shall be proportionately and appropriately
adjusted, without any change in the aggregate purchase prices to be paid
therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered by the
Compensation Committee of the Board, or such other committee of the Board as
the Board may from time to time determine. The Committee shall be constituted
so as to permit the Plan to comply with the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor rule) and Section 162(m) of
the Code.
4.02 Committee Powers. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend or renew any option theretofore granted; provided, however
that the Committee may not amend any such option to reduce the exercise price.
The Committee shall also have authority to interpret the Plan, and the decision
of the Committee on any questions concerning the interpretation of the Plan
shall be final and conclusive. The Committee may consult with counsel, who may
be counsel for the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel. The Committee may
adopt such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Eligible Employees who are foreign nationals or
employed outside of the United States.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Committee shall deem
appropriate.
V. PARTICIPATION
5.01 Eligibility. Key employees of the Company and its Subsidiaries
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, contribute significantly to the
A-2
growth and success of the Company or a Subsidiary shall be eligible for Awards
under the Plan. From among all such Eligible Employees, the Committee shall
determine from time to time those Eligible Employees to whom Awards shall be
granted. No Eligible Employee may be granted an Award or Awards covering more
than one hundred thousand (100,000) shares of Company Stock in any calendar
year. No Eligible Employee shall have any right whatsoever to receive an Award
unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Company or any Subsidiary to terminate the
employment of any person or to take any other action affecting such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in the form of
incentive stock options (within the meaning of the Code) or nonqualified stock
options. Each option granted under the Plan shall be evidenced by a stock
option agreement between the Company and the Grantee which shall contain the
terms and conditions required by this Article VI, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem appropriate in
each case.
6.02 Option Price. The price at which each share of Company Stock covered
by an option may be purchased shall be determined in each case by the Committee
and set forth in each stock option agreement. In no event shall such price be
less than one hundred percent (100%) of the Fair Market Value of the Company
Stock when the option is granted. Employees who own, directly or indirectly,
within the meaning of Code 425(d), more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary corporation shall
not be eligible to receive an incentive stock option hereunder unless the
purchase price per share under such option is at least 110% of the Fair Market
Value of the stock subject to the option and such option by its terms is not
exercisable after the expiration of 5 years from the date such option is
granted.
6.03 Date Option Granted. For purposes of the Plan, a stock option shall be
considered as having been granted on the date on which the Committee authorized
the grant of the option, except where the Committee has designated a later
date, in which event the later date shall constitute the date of grant of the
option; provided, however, that in either case notice of the grant of the
option shall be given to the employee within a reasonable time.
6.04 Period for Exercise. Each stock option agreement shall state the
period or periods of time within which the option may be exercised by the
Grantee, in whole or in part, which shall be the period or periods of time as
may be determined by the Committee, provided that:
(a) No option granted under this Plan may be exercised prior to shareholder
approval of the Plan,
(b) No Option Period for an incentive stock option may exceed ten (10)
years from the date the option is granted, and
(c) No option may be treated as an incentive stock option unless the
Grantee exercises the option while employed by the Company or a Subsidiary or
within three months after termination of employment, or if termination is
caused by death or disability, within one year after such termination.
6.05 Special Rule for Incentive Stock Options. For so long as Section 422
(or any successor provision) of the Code so provides, the aggregate Fair Market
Value (determined as of the date the incentive stock option is
A-3
granted) of the number of shares with respect to which incentive stock options
are exercisable for the first time by a Grantee during any calendar year shall
not exceed One Hundred Thousand Dollars ($100,000) or such other limit as may
be required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written notice
of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor. The
purchase price may be paid in cash, by check, or, with the approval of the
Committee, by delivering shares of Company Stock which have been beneficially
owned by the Grantee, the Grantee's spouse, or both of them for a period of at
least six months prior to the time of exercise ("Delivered Stock") or a
combination of cash and Delivered Stock. Delivered Stock shall be valued at its
Fair Market Value determined as of the date of exercise of the option. No
Grantee shall be under any obligation to exercise any option hereunder. The
holder of an option shall not have any rights of a stockholder with respect to
the shares subject to the option until such shares shall have been delivered to
him or her.
6.07 Merger, Consolidation or Reorganization. In the event of a merger,
consolidation or reorganization with another corporation in which the Company
is not the surviving corporation, the Committee may, subject to the approval of
the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, take action
regarding each outstanding and unexercised option pursuant to either clause (a)
or (b) below:
(a) Appropriate provision may be made for the protection of such option
by the substitution on an equitable basis of appropriate shares of the
surviving corporation, provided that the excess of the aggregate Fair Market
Value of the shares subject to such option immediately before such
substitution over the exercise price thereof is not more than the excess of
the aggregate fair market value of the substituted shares made subject to
option immediately after such substitution over the exercise price thereof;
or
(b) The Committee may cancel such option. In such event, the Company, or
the corporation assuming the obligations of the Company hereunder, shall pay
the employee an amount of cash (less normal withholding taxes) equal to the
excess of the highest Fair Market Value per share of the Company Stock
during the 60-day period immediately preceding the merger, consolidation or
reorganization over the option exercise price, multiplied by the number of
shares subject to such option.
6.08 Substitute Options. Notwithstanding the provisions of Sections 6.02
and 6.03 above, in the event that the Company or a Subsidiary consummates a
transaction described in Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who become Eligible
Employees on account of such transaction may be granted options in substitution
for options granted by their former employer. If such substitute options are
granted, the Committee, in its sole discretion and consistent with Section
424(a) of the Code, may determine that such substitute options shall have an
exercise price less than one hundred (100%) of the Fair Market Value of the
shares on the grant date.
6.09 Deferral of Stock Option Gain. The Committee may permit, in its
discretion, an optionee who exercises a stock option to defer the taxable
income attributable to such exercise. In the event the Committee elects to
permit such deferrals, the Committee shall identify the optionees to whom such
deferral elections shall be made available and establish procedures for
implementing such deferrals. An optionee who defers a stock option gain under
this Plan or any other Company stock option plan shall be credited with deemed
dividends under this Plan on such terms as the Committee shall prescribe. All
deferrals which are permitted under this section and all deemed dividends shall
be distributed in Actuant Corporation common stock.
A-4
VII. RESTRICTED STOCK
7.01 Administration. Shares of restricted stock may be issued either alone
or in addition to other Awards granted under the Plan; provided that a maximum
of 50,000 shares of restricted stock may be granted in any calendar year. The
Committee shall determine the Eligible Employees to whom and the time or times
at which grants of restricted stock will be made, the number of shares to be
awarded, the time or times within which such Awards may be subject to
forfeiture and any other terms and conditions of the Awards. The Committee may
condition the grant of restricted stock upon the attainment of specified levels
of revenue, earnings per share, net income, return on assets, return on sales,
customer satisfaction, stock price, costs, individual performance measures or
such other factors or criteria as the Committee shall determine. The provisions
of restricted stock Awards need not be the same with respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a restricted stock
Award shall be issued a certificate in respect of such shares of restricted
stock. Such certificate shall be registered in the name of such individual and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of the
Actuant Corporation Stock Plan and a Restricted Stock Agreement. Copies of
such Plan and Agreement are on file at the offices of Actuant Corporation."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any restricted stock Award, the Grantee shall have
delivered a stock power, endorsed in blank, relating to the Company Stock
covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall be subject to
the following terms and conditions:
(a) Restricted stock Awards that are conditioned upon the Grantee's
continued employment with the Company may not become fully vested earlier
than three years from the date of grant and restricted stock Awards that are
based upon performance factors may not become fully vested prior to one year
from the date of grant.
(b) Until the applicable restrictions lapse, the Grantee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
restricted stock.
(c) The Grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of the Company, including the
right to vote the shares and the right to receive any cash dividends. Unless
otherwise determined by the Committee, cash dividends shall be automatically
paid in cash and dividends payable in Company Stock shall be paid in the
form of additional restricted stock.
(d) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement and (e) below, all shares still subject to restriction shall
be forfeited by the Grantee upon termination of a Grantee's employment for
any reason.
(e) In the event of hardship or other special circumstances of a Grantee
whose employment is involuntarily terminated (other than for cause), the
Committee may waive in whole or in part any or all remaining restrictions
with respect to such Grantee's shares of restricted stock.
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(f) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Grantee.
(g) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
VIII. WITHHOLDING TAXES.
8.01 General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise of
an option or the lapse of stock restrictions. The Company may require, as a
condition to the exercise of an option or the issuance of a stock certificate,
that the Grantee concurrently pay to the Company (either in cash or, at the
request of Grantee but in the discretion of the Committee and subject to such
rules and regulations as the Committee may adopt from time to time, in shares
of Delivered Stock) the entire amount or a portion of any taxes which the
Company is required to withhold by reason of such exercise or lapse of
restrictions, in such amount as the Committee or the Company in its discretion
may determine.
8.02 Withholding from Shares to be Issued. In lieu of part or all of any
such payment, the Grantee may elect, subject to such rules and regulations as
the Committee may adopt from time to time, or the Company may
require that the Company withhold from the shares to be issued that number
of shares having a Fair Market Value equal to the amount which the Company is
required to withhold.
8.03 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 shall be made
in accordance with the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
IX. GENERAL
9.01 Nontransferability. No Award shall be transferable by a Grantee
otherwise than by will or the laws of descent and distribution, provided that
in accordance with Internal Revenue Service guidance, the Committee, in its
discretion, may grant nonqualified stock options that are transferable, without
payment of consideration, to family members of the Grantee or to trusts or
partnerships for such family members. The Committee may also amend outstanding
stock options to provide for such transferability.
9.02 General Restriction. Each Award shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities upon
any securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issue or
purchase of securities thereunder, such Award may not be exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board or the Committee.
9.03 Expiration and Termination of the Plan. The Plan will terminate ten
(10) years after the effective date of the Plan, except as to Awards then
outstanding under the Plan, which Awards shall remain in effect until they have
been exercised, the restrictions have lapsed or the Awards have expired or been
forfeited. The Plan may be abandoned or terminated at any time by the Board of
Directors of the Company, except with respect to any Awards then outstanding
under the Plan.
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9.04 Amendments. The Board may from time to time amend, modify, suspend or
terminate the Plan; provided, however, that no such action shall be made
without shareholder approval where such change would be required in order to
comply with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) or the Code, increase the number of shares available for
issuance (other than as provided in Section 3.02), or decrease the minimum
option price under Section 6.02. Subject to the terms and conditions and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding Awards granted under the Plan, accept the surrender of outstanding
options (to the extent not theretofore exercised), or authorize the granting of
new options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an Award (either directly or
through modification of the Plan) shall, without the consent of the Grantee,
alter or impair any rights of the Grantee under the Award.
9.05 Construction. Except as otherwise required by applicable federal laws,
the Plan shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin.
A-7
EXHIBIT B
ACTUANT CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The main function of the Audit Committee is to assist the Company's Board of
Directors ("Board") in fulfilling its oversight responsibilities by: (i)
reviewing the financial reports and other financial information provided by the
Company to its constituencies, (ii) monitoring the Company's systems of
internal financial and accounting controls, (iii) overseeing the Company's
auditing, accounting and financial reporting processes generally, and (iv)
confirming the external auditors' qualifications and independence. Consistent
with this function, the Audit Committee should encourage continuous improvement
in, and should strive to foster adherence to, the Company's policies,
procedures and practices at all levels.
While the Committee has the responsibilities set forth in this charter, it
is not the duty of the Committee to plan or conduct audits or to determine that
the Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles.
II. COMPOSITION AND GOVERNANCE ISSUES
The Committee shall be composed of three or more Directors appointed by the
Board. Committee members shall not be officers or employees of the Company or
one of its affiliates and shall, in the opinion of the Board, meet the
independence and financial literacy requirements of the listing requirements of
the New York Stock Exchange and applicable law and regulations. Under these
requirements, each member of the Committee shall be free from any relationship
that would interfere with the exercise of independent judgment as a Committee
member. All members of the Committee shall have a familiarity with basic
financial and accounting practices, and at least one member of the Committee
shall have accounting or related financial management experience, as required
by the listing requirements of the New York Stock Exchange, and at least one
member shall be a financial expert, as defined by regulations issued by the
Securities and Exchange Commission within a reasonable time after the issuance
of such regulations.
The members of the Committee shall be annually elected by the Board at a
meeting of the Board and shall maintain such positions until their successors
shall be duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the Committee may designate a Chair by majority vote of
the full Committee membership.
III. MEETINGS
The Committee shall meet at least quarterly and more frequently as the
Committee determines. To the extent not prohibited by law, regulation or
listing standards, the Committee may designate any member thereof for purposes
of receiving reports, performing review and pre-approving non-audit services,
provided that a report on such activities shall be presented to the full
Committee at its next meeting and may delegate its activities and authority as
deemed appropriate.
B-1
IV. RESPONSIBILITIES
The following principal responsibilities of the Committee are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
A. Internal Control
. Review internal audit plans and results;
. Oversee the Company's internal audit function;
. Evaluate whether management is properly and adequately emphasizing the
importance of internal control measures throughout the organization;
. Inquire of the external auditors about fraud, illegal acts, deficiencies
in internal controls, and other matters affecting internal controls within
the Company and the integrity of the Company's financial information;
. Focus on the extent to which the Company and its external auditors or
other designees review the effectiveness and security of the Company's
computer systems and applications, and the need for and adequacy of
contingency plans for processing financial information in the event of a
systems failure;
. Review whether internal control recommendations made by the Company's
financial management and external auditors have been implemented by
management; and
. Review a report of management's assessment of the effectiveness of
internal controls as of the end of the fiscal year and the external
auditors' report on management's assessment.
B. Financial Reporting
1. General
. Review significant accounting and reporting issues, including issued and
pending professional and regulatory pronouncements and understand their
impact, or potential impact, on the Company's financial statements and
operations;
. Receive reports of the external auditors on the critical policies and
practices of the Company and all alternative treatments of financial
information within generally accepted accounting principles discussed
with management;
. Inquire of management and the external auditors as to the existence of
any significant financial, accounting or reporting risks or exposures
and the Company's plans to address such risks. Seek the auditor's
judgment about the quality of the Company's accounting and reporting
practices, including the clarity and accuracy of the Company's financial
disclosures and the degree of aggressiveness or conservatism of the
Company's accounting policies and underlying estimates; and
. Review annual and quarterly Management's Discussion and Analysis of
Financial Condition and Results of Operation with management and the
external auditors.
2. Annual Financial Reports
. Review the annual financial statements and determine whether they are
complete and consistent with the information known to Committee members,
and assess through inquiry whether the financial statements reflect
appropriate accounting principles;
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. Review all complex and/or unusual transactions such as restructuring
charges and derivative disclosures which are material to the Company's
financial statements;
. Understand the basis for the Company's accounting in material,
judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and disclosure
of obsolete or slow-moving inventory; warranty, product, and
environmental liabilities; litigation reserves; and other commitments
and contingencies;
. Meet with management and the external auditors to review the financial
statements and the results of the audit and other matters required to be
communicated to the Committee by the external auditors under generally
accepted auditing standards; and
. Review management's handling of proposed audit adjustments identified by
the external auditors.
3. Interim Financial Statements
. Gain an understanding as to how management develops and summarizes
quarterly financial information and the extent to which the external
auditors review quarterly financial information; and
. Review with management and the external auditors the quarterly financial
results of the Company before such results are released.
4. Earnings Guidance
. Discuss earnings press releases, as well as financial information and
earnings guidance provided to analysts and rating agencies (this may be
a discussion of types of information and presentations, rather than
specific releases, information and guidance).
C. Review of Compliance
. Review financial code of conduct and activities designed to ensure
compliance, if applicable.
. Review management reports on employee compliance, including compliance
with the Foreign Corrupt Practices Act, to guard against significant
conflicts of interest and dishonest, unethical or illegal activities;
. If applicable, review the results of management's investigation and
follow-up (including disciplinary action) on any fraudulent acts,
unethical conduct, criminal conduct or accounting irregularities;
. Be satisfied that compliance matters have been considered in the
preparation of the financial statements; and
. Review the findings of any examinations or reviews by regulatory agencies
such as the Securities and Exchange Commission.
D. External Audit
. Review the qualifications, performance, independence and quality controls
of the external auditors, including the lead audit partner, and approve
the appointment or discharge of the external auditors;
. Develop procedures to prevent the engagement of external auditors to
perform non-audit services proscribed by law or regulation;
. Approve all engagements for non-audit services to be provided by external
auditors;
B-3
. Review the external auditors' proposed audit scope and approach;
. Review and approve all audit fees of the external auditors;
. Review and resolve any disagreements between management and the external
auditors;
. Set policies for hiring employees and former employees of the external
auditors that comply with law, regulations and listing standards;
. Review any "management letter" received from the external auditors and
management's response; and
. At least annually, obtain and review a report by the external auditors
describing:
--The external auditors' internal quality control procedures;
--Any material issues raised by the most recent internal quality control
review, or peer review, of the external auditors, or by any inquiry or
investigation by governmental or professional authorities within the
preceding five years, respecting one or more independent audits carried
out by the external auditors' firm and any steps taken to deal with any
such issues; and
--All relationships between the external auditor and the Company (to assess
the auditors' independence).
E. Other Responsibilities
. Create an honest, fact-based avenue of communication among the independent
auditors, financial and senior management, and the Board.
. Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis;
. Review, with the Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements;
. If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist;
. Perform other oversight functions as requested by the full Board;
. Review and reassess the adequacy of this charter on an annual basis and
receive approval of changes from the Board;
. Establish procedures for the receipt and treatment of complaints regarding
accounting, internal controls or auditing matters, and the confidential
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters;
. Discuss policies with respect to risk assessment and risk management; and
. Evaluate the performance of the Audit Committee.
F. Reporting Responsibilities
. Regularly update the Company's Board about Committee activities and make
appropriate recommendations; and
. Prepare its report for inclusion in the Company's annual proxy statement,
as required by Securities and Exchange Commission regulations.
G. Authority
. The Audit Committee shall have the authority to retain and obtain advice
from legal, accounting or other advisors, as appropriate.
B-4
PROXY
CLASS A COMMON STOCK
ACTUANT CORPORATION
ANNUAL MEETING OF SHAREHOLDERS--JANUARY 10, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ROBERT C. ARZBAECHER and ANDREW G. LAMPEREUR, and each of them, are hereby
authorized as Proxies, with full power of substitution, to represent and vote
the Class A Common Stock of the undersigned at the Annual Meeting of
Shareholders of Actuant Corporation, a Wisconsin corporation, to be held on
Friday, January 10, 2003, or any adjournment thereof, with like effect as if the
undersigned were personally present and voting, upon the matters indicated on
the reverse side of this card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NAMES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
(Continued on Reverse Side)
- --------------------------------------------------------------------------------
ACTUANT CORPORATION
PLEASE MARK VOTES AS IN THIS EXAMPLE USING DARK INK ONLY. / /
The Board of Directors recommends a vote FOR each of the proposals below:
1.Election of Directors: For Withhold For All
Robert C. Arzbaecher, Gustav H.P. Boel, All All Except
Bruce S. Chelberg, H. Richard Crowther, // // //
William K. Hall, Kathleen J. Hempel,
William P. Sovey
________________________________________
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write the name(s) of such nominee(s)
above.)
2.To approve the Actuant Corporation 2002 For Against Abstain
Stock Plan: // // //
3.To approve the amendment to the Company's For Against Abstain
Outside Directors' Stock Option Plan: // // //
4.To approve the amendment to the Company's For Against Abstain
Restated Articles of Incorporation: // // //
5.In their discretion, upon such other business as may properly come before the
Meeting or any adjournment thereof; all as set out in the Notice and Proxy
Statement relating to the Meeting, receipt of which is hereby acknowledged.
Indicate changes below:
Address Change? // Name Change? //
Check appropriate box
Date_______________________________________________
Signature(s)___________________________________________________________________
_______________________________________________________________________________
PLEASE SIGN PERSONALLY AS NAME APPEARS AT LEFT. When signing as attorney,
executor, administrator, personal representative, trustee or guardian, give full
title as such. If signer is a corporation, sign full corporate name by duly
authorized officer. If stock is held in the name of two or more persons, all
should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.