SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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[ ] 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 Rule 14a-11(c) or Rule 14a-12
STANDEX INTERNATIONAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(logo) STANDEX 6 Manor Parkway
Salem, New Hampshire 03079
September 17, 2003
To the Stockholders of Standex International Corporation:
You are cordially invited to attend the Annual Meeting of
Stockholders of Standex International Corporation which will be held at
FleetBoston, 100 Federal Street, Boston, Massachusetts, on Tuesday, October
28, 2003 at 11:00 a.m.
We hope that you will be able to attend the meeting. However, whether
or not you plan to attend in person, please vote your proxy card promptly,
in accordance with the instructions on the card, in order to ensure that
your shares will be represented. If you do attend the meeting, you may vote
your shares personally.
This booklet includes the Notice of Annual Meeting and the Proxy
Statement, which contain information about the formal business to be acted
on by the stockholders. The meeting will also feature a report on the
operations of your Company, followed by a question and discussion period.
Sincerely,
/s/ Roger L. Fix
Roger L. Fix
President/CEO
(logo) STANDEX 6 Manor Parkway
Salem, New Hampshire 03079
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Standex International
Corporation (the "Company") will be held at FleetBoston, 100 Federal
Street, Boston, Massachusetts, on Tuesday, October 28, 2003, at 11:00 a.m.
local time for the following purposes:
1. To fix the number of directors at thirteen and to elect three
directors to hold office for three-year terms ending on the
date of the Annual Meeting of Stockholders in 2006;
2. To approve the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
June 30, 2004; and
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Stockholders of record at the close of business on September 8, 2003
will be entitled to notice of and to vote at the meeting.
Please vote by proxy using any one of the following methods:
(a) Use the toll free telephone number shown on your proxy card or
voting instructions form (if you receive proxy materials from a
broker or a bank);
(b) Visit the Internet Web site at: www.eproxyvote.com/sxi, or
follow your broker's instructions relative to Internet voting;
or
(c) Mark, date, sign and mail your proxy card in the prepaid
envelope provided.
By Order of the Board of Directors,
/s/ Deborah A. Rosen
Deborah A. Rosen, Secretary
September 17, 2003
Salem, New Hampshire
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL
MEETING. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE OR VOTE YOUR SHARES
BY TELEPHONE OR THE INTERNET. IF YOU SO CHOOSE, YOU MAY VOTE YOUR SHARES IN
PERSON AT THE ANNUAL MEETING.
STANDEX INTERNATIONAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
October 28, 2003
This Proxy Statement is being furnished on or about September 17,
2003, in connection with the solicitation of proxies by the Board of
Directors of Standex International Corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on Tuesday, October 28, 2003.
All proxies will be voted in accordance with the instructions contained
therein and, if no choice is specified, will be voted for the election of
each of the individuals nominated by the Board of Directors and in favor of
the other proposal set forth in the Notice of Meeting.
The election of Directors will require the affirmative vote of a
plurality of the shares of Common Stock voting, in person or by proxy, at
the Annual Meeting. The ratification of the appointment of Deloitte &
Touche LLP as independent auditors will require the affirmative vote of a
majority of the shares of Common Stock of the Company voting on the
proposal, in person or by proxy, at the Annual Meeting. Stockholders may
vote in favor of all nominees for Director, or withhold their votes as to
all nominees or withhold their votes as to specific nominees. With respect
to the other proposal, stockholders should specify their choice on the
enclosed form of proxy.
Shares which abstain from voting as to a particular matter, and
shares held in "street name" by brokers or nominees who indicate on their
proxies that they do not have discretionary authority to vote such shares
as to a particular matter, will not be counted as votes in favor of such
matter, and will also not be counted as shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on a matter that requires the affirmative vote of a certain
percentage of the shares voting on a matter.
Any proxy may be revoked at any time before it is exercised by
delivery of written notice to the Secretary of the Company or by executing
a subsequent proxy.
The Board of Directors has fixed September 8, 2003 as the record date
for the determination of stockholders entitled to vote at the Annual
Meeting. At the record date, there were outstanding and entitled to vote
12,262,991 shares of the Common Stock of the Company. Each share is
entitled to one vote.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors and officers,
without additional remuneration, may solicit proxies in person and by
telecommunications. Brokers, custodians and fiduciaries will be requested
to forward proxy soliciting materials to the owners of stock held in their
names, and the Company will reimburse them for their out-of-pocket expenses
in this regard.
To assure the presence in person or by proxy of the necessary quorum
for holding the meeting, the Company has employed the firm of Morrow & Co.,
Inc. to assist in soliciting proxies by mail, telephone, facsimile and
personal interview for a fee estimated at approximately $5,000 plus
disbursements.
1
PROPOSAL 1 - ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to fix the number
of directors at thirteen and to elect as directors C. Kevin Landry, H.
Nicholas Muller, III., Ph.D. and Edward J. Trainor, identified below as
nominees, for three-year terms expiring in 2006, unless authority to vote
for the election of directors is withheld by marking the proxy to that
effect. No proxy can be voted for a greater number of persons than the
three nominees named below.
There are fewer nominees named below than the number of directors
fixed pursuant to this proposal due to vacancies created in prior fiscal
years as a result of various director retirements and the death of one
director in fiscal 2001. The Corporate Governance/Nominating Committee of
the Board of Directors is currently actively considering various potential
candidates for nomination to the Board of Directors during the course of
the upcoming fiscal year.
In the event that any nominee for election should become unavailable,
the person acting under the proxy may vote for the election of a
substitute. Management has no reason to believe that any nominee will
become unavailable.
Information about each director and nominee for director at July 31,
2003 follows:
Nominee for Directors Principal Occupations During
for Terms Past Five Years and
Expiring In 2006 Certain Other Directorships
--------------------- ----------------------------
C. Kevin Landry** Managing Director and CEO, TA Associates, Inc. (a private
Director Since 1975 equity firm), Boston, MA since January 1994.
Age 59
Director of Ameritrade Holding Corporation and Instinet
Group Incorporated.
H. Nicholas Muller, III, Ph.D.** President and CEO of The Frank Lloyd Wright Foundation
Director Since 1984 from May 1996 through March 2002.
Age 64
Edward J. Trainor* Chairman of the Board of Directors of the Company since
Director Since 1994 December 2001; Chief Executive Officer of the Company
Age 63 from July 1995 to December 2002; President of the Company
from July 1994 to December 2001.
Director of Mestek, Inc.
Directors to Continue Principal Occupations During
in Office for Terms Past Five Years and
Expiring in 2004 Certain Other Directorships
--------------------- ----------------------------
William R. Fenoglio** President and CEO of Augat, Inc. from 1994 through 1996.
Director Since 1997
Age 64 Director of IDG, Inc.
David R. Crichton Executive Vice President/Operations of the Company from
Director Since 1992 June 1989 to December 2002.
Age 64
Walter F. Greeley** Chairman, High Street Associates, Inc. (a management and
Director Since 1989 acquisition group) from 1988 to 2001; Vice President and
Age 72 Counsel of Surface Coatings, Inc.
2
Directors to Continue Principal Occupations During
in Office for Terms Past Five Years and
Expiring in 2004 Certain Other Directorships
--------------------- ----------------------------
Thomas L. King** Vice Chairman of the Board of the Company since December
Director Since 1970 2001; Chairman of the Board of the Company from January
Age 73 1992 to December 2001.
Deborah A. Rosen Chief Legal Officer of the Company since October 2001; Vice
Director Since 2001 President of the Company since July 1999; General Counsel
Age 48 of the Company from January 1998 to October 2001; Secre-
tary of the Company since October 1997.
Directors to Continue Principal Occupations During
in Office for Terms Past Five Years and
Expiring in 2005 Certain Other Directorships
--------------------- ----------------------------
John Bolten, Jr. +** Consultant to the Company.
Director Since 1955
Age 83
Roger L. Fix Chief Executive Officer of the Company since January
Director Since 2001 2003; President of the Company since December 2001; Chief
Age 50 Operating Officer of the Company from December 2001 to
December 2002; Chief Executive Officer, Chief Operating
Officer and President of Outboard Marine Corporation from
August 2000 to February 2001; President and Chief Operat-
ing Officer of Outboard Marine Corporation from June 2000
to August 2000; Chief Executive of John Crane from 1998
through June 2000; President-North America of John Crane
from May 1996 to May 1998; prior thereto President of
Xomox, a division of Emerson Electric.
As President and COO of Outboard Marine Corporation
("OMC") (June-August 2000), Mr. Fix completed a strategic
review and commenced implementation of programs to ad-
dress the financial crisis the company was and had been
experiencing since about 1997. Mr. Fix became CEO of OMC
in August 2000. In December 2000, at the direction of the
investors, a voluntary petition in Bankruptcy pursuant to
Chapter 11 of the U.S. Bankruptcy Code was filed for OMC.
In August 2001, the case converted to a voluntary case under
Chapter 7 of the U.S. Bankruptcy Code.
Daniel B. Hogan, Ph.D.** President, The Apollo Group (Management Consultants)
Director Since 1983 since March 2003 and from 1991 through 2001; Associate,
Age 60 Stratin Consulting from October 1991 to February 2003;
Associate, Department of Psychology, Harvard University
from 1996 through 2000.
--------------------
+ Founder of the Company.
* Member of the Executive Committee of the Board of Directors.
** "Independent" director as defined by New York Stock Exchange rules.
3
STOCK OWNERSHIP IN THE COMPANY
Stock Ownership by Directors, Nominees for Director and Executive Officers
The following table sets forth information regarding beneficial
ownership of the Company's Common Stock as of July 31, 2003 of each
director, each nominee for director, each executive officer named in the
Summary Compensation Table and all directors and executive officers of the
Company as a group:
Beneficial Ownership (1)
------------------------
Percent of
No. of Outstanding
Name Shares Common Stock
---- ------ ------------
John Bolten, Jr. 323,367(3) 2.6
William R. Fenoglio 2,000 **
Roger L. Fix 30,250(2) **
Walter F. Greeley 2,500 **
Daniel B. Hogan, Ph.D. 66,748(4) **
Robert R. Kettinger 15,507(2)
Thomas L. King 52,716 **
C. Kevin Landry 5,368 **
H. Nicholas Muller, III, Ph.D. 6,130 **
Deborah A. Rosen 23,575(2) **
Christian Storch 4,334(2) **
Edward J. Trainor 228,360(2) 1.8
All Directors and Executive Officers 775,689 6.3
as a Group (14 Persons)
--------------------
** Less than 1% of outstanding Common Stock.
As used herein, "beneficial ownership" means the sole or shared power
to vote, and/or the sole or shared investment power with respect to
shares of Common Stock. The directors have sole voting and investment
power with respect to the shares shown as beneficially owned by them
except for: 2,000 shares for Mr. Fenoglio; 1,300 shares for Mr.
Greeley; 4,000 shares for Mr. Landry; and 25,457 shares for Mr.
Trainor, which are jointly held with their respective spouses. The
shares owned by spouses or minor children of certain directors have
not been included because the respective directors have disclaimed
beneficial interest in the shares. These shareholdings are: Mr.
Hogan's minor children (4,000), and Mrs. Landry and their children
(55,631).
The numbers listed include estimates of the shares held in the
Standex Employees' Stock Ownership ("ESOP") portion of the Standex
Retirement Savings Plan at June 30, 2003, which are vested to the
accounts of Mr. Trainor, Ms. Rosen, and Messrs. Storch and Kettinger.
Mr. Fix's ESOP shares will become vested in calendar year 2004. These
individuals have voting power over the shares allocated to them in
this Plan. In the event of a tender or exchange offer for the Common
Stock of the Company, these individuals (along with all other
participants) will determine, on a confidential basis, whether the
Common Stock held in their accounts should be tendered or exchanged.
The number of ESOP shares included above may differ slightly from the
ESOP shares reported on Form 4s and filed with the Securities and
Exchange Commission, due to the Company's adoption in April 2002 of
unitized accounting for the ESOP, under which each participant is
allocated a number of units (comprised of Company shares plus between
0% and 3% of their ESOP investment in cash), rather than a defined
number of Company ESOP shares.
(footnotes continued on following page)
4
The numbers also include the following shares which are capable of
being purchased by exercise of stock options within 60 days of
July 31, 2003: Mr. Trainor (198,700); Mr. Fix (5,240); Ms. Rosen
(15,400); Mr. Storch (3,280); and Mr. Kettinger (11,180).
The number listed includes 137,738 shares held in three trusts of
which Mr. Bolten , Jr. is a trustee, and 28,710 shares held in a
trust of which Messrs. Bolten, Jr. and Hogan are trustees. To avoid
duplication, all of these shares have only been shown as beneficially
owned by Mr. Bolten, Jr.
The number includes a trust holding 62,188 shares wherein Messrs.
Bolten, Jr. and Hogan are co-trustees and Mr. Hogan is a beneficiary.
In addition, the number listed includes 2,014 shares held in two
trusts as to which Mr. Hogan is a beneficiary. To avoid duplication,
these shares have only been shown as beneficially owned by Mr. Hogan.
--------------------
Stock Ownership of Certain Beneficial Owners
The table below sets forth each stockholder who, based on public
filings, is known to the Company to be the beneficial owner of more than 5%
of the Common Stock of the Company as of July 31, 2003.
Beneficial Ownership
--------------------
Percent of
Name and Address No. of Outstanding
of Beneficial Owner Shares Common Stock
------------------- ------ ------------
American Express Trust Company 1,075,350(1) 8.76%
American Express Financial Corporation as trustee
of the Standex International Corporation Retirement
Savings Plan Trust (formerly the Employees' Stock
Ownership Trust)
1200 Northstar West
Minneapolis, MN 55440-0534
Wedge Capital Management LLP 781,225(2) 6.36%
2920 One First Union Center
301 South College Street
Charlotte, NC 28202-6002
--------------------
This number includes shares allocated to participating employees'
accounts over which such participants have sole voting power.
Beneficial ownership shown is as set forth in American Express Trust
Company's most recently filed statement on Form 13D as of October 7,
2002.
Wedge Capital Management LLP is an investment advisory company
registered under Section 203 of the Investment Advisers Act of 1940.
It manages funds for clients. Its beneficial ownership as set forth
in its most recent statement on Form 13G, filed as of January 28,
2003, consists of 781,225 shares over which it has sole power to vote
or to direct the vote.
5
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
on the Company's Common Stock as of the end of each of the last five fiscal
years, with the cumulative total stockholder return on the Standard &
Poor's Small Cap 600 (Industrial Segment) Index and on the Russell 2000
Index, assuming an investment of $100 in each at their closing prices on
June 30, 1998 and the reinvestment of all dividends.
Cumulative Total Return
--------------------------------------------------------
6/98 6/99 6/00 6/01 6/02 6/03
STANDEX INTERNATIONAL CORPORATION 100.00 95.12 57.43 88.88 98.07 85.27
RUSSELL 2000 100.00 101.50 116.04 116.80 106.67 104.92
S & P SMALLCAP 600 INDUSTRIAL SECTOR 100.00 99.01 88.23 99.29 104.45 90.35
Copyright (C) 2002, Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
6
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's Compensation Committee (the "Committee") of the Board
of Directors, which during the prior fiscal year was composed of three
independent members of the Board, establishes and administers the cash and
non-cash compensation policies and programs as they relate to executive
officers and senior management of the Company.
Policies
The policy of the Company is to provide direct compensation programs
and potential earnings opportunities which reflect the relative size and
performance of the Company in the industry segment of which it is a part
and which accomplish the Company's mission and purpose. Simultaneously, the
policy will support the overall objective of attracting, retaining and
motivating highly qualified individuals for all positions within the
Company. Consistent with this objective, all compensation programs,
including those for executives, adhere to the following policies:
* Compensation is based on the level of job responsibility, the
individual's level of performance and Company or unit
performance.
* Compensation takes into account the value of the job in the
marketplace. The Company strives to be competitive with the pay
of employers of a similar size and stature who compete with the
Company for talent.
* Equity ownership is encouraged at all levels of the Company to
align more closely the interests of employees with those of the
stockholders. In addition to its Employee Stock Purchase Plan
and the Retirement Savings Plan the Company provides key
management employees worldwide the opportunity to build
significant ownership through periodic equity award grants in
the form of stock grants or stock options.
The compensation of executive officers and senior management is
closely related to Company performance and, in addition to base salary, is
comprised of annual incentive awards and long-term equity incentive
opportunities, each of which is discussed below.
The Company utilizes a Balanced Performance Plan process ("BPP")
which provides a tool to track management performance and ties rewards to
results. The BPP is intended to focus the Company and each division on
targets and goals in the financial, technology, employee and customer
sectors. The compensation of divisional management and executive officers
is measured in part by the results of the BPP.
Base Salary
Salaries for the year for division presidents, group vice presidents
and corporate officers were established after a review of market survey
data, prepared by an independent compensation consulting firm, on total
compensation for comparable positions, specific information on pay
practices for similar positions in peer organizations of similar size,
business diversity, complexity and revenue size and generally are intended
to range between the 60th and 75th percentile for senior management and
executive officers.
7
Annual Incentive Program
The Company also has an Annual Incentive Program, which includes an
annual cash incentive. Annual incentive opportunities are based on
achieving financial and non-financial performance goals set under the BPP
that are consistent with the strategic direction of the Company for the
year and which reflect the individual's performance during the year. The
annual incentive compensation paid to senior divisional management and
executive officers named in the Summary Compensation Table on page 12 of
this Proxy Statement (the "Named Executives") takes the form of cash
payments (net of deferrals for the purchase of Company stock as discussed
below).
CASH PORTION: As part of the Annual Incentive Program, cash payments
are made to approximately 800 employees of the Company in order to motivate
them and reward their contribution toward the financial performance of the
Company in the immediately preceding fiscal year. Annual incentive awards
are considered each year for the senior divisional management group as well
as the Named Executives. The maximum amount that may be awarded to top
divisional management is determined by the Committee on the basis of the
Company's overall performance (typically improvements in operating cash
flow, revenues and earnings per share) in the preceding fiscal year.
STOCK UNIT PORTION: As a feature of the Annual Incentive Program,
senior management and the Named Executives are required to defer a minimum
of 20% (but may defer up to a maximum of 50%) of their annual cash
incentive payments to purchase restricted Company stock which vests three
years after the award and is paid in the form of stock and accumulated
dividends. The stock is purchased pursuant to the Management Stock Purchase
Program ("MSPP") discussed under "Long Term Incentive Program" below.
Long Term Incentive Program
The Company believes that significant stock ownership by the Named
Executives and senior divisional management of the Corporation is a major
incentive in building stockholder value. Stock options are intended to
encourage such stock ownership and to align directly the interests of the
Named Executives and other key employees with those of the stockholders.
Awards of restricted stock are also periodically made to key employees to
recognize performance and motivate long-term commitment to the Company.
Under the 1994 Stock Option Plan (the "1994 Plan"), executive
officers are eligible to receive periodic grants of incentive stock options
and/or non-qualified stock options. The 1998 Long Term Incentive Plan also
provides for awards of incentive and/or non-statutory options in addition
to grants of restricted stock, the MSPP shares and performance share units
("PSUs"). Incentive stock options are granted at the fair market value of
the underlying Common Stock at the date of grant and are exercisable either
six months from the date of grant or over a period of years fixed by the
Committee. Non-qualified stock options may be granted either at or below
fair market value under the 1994 Plan. Non-qualified options may only be
granted at fair market value under the 1998 Long Term Incentive Plan.
Options and restricted stock generally vest in installments over a period
of years while MSPP shares and PSUs cliff vest after a period of years. The
vesting features of some of the incentive stock options, all of the non-
qualified options, restricted stock, the MSPP shares and PSUs have the
effect of providing competitive and leveraged long-term incentive
opportunities which will deliver awards for achieving long-term performance
goals of the Company, assuring that key employees have
8
earnings opportunities similar and comparable to their peers employed at
publicly traded companies and helping them build ownership in the Company.
The Committee determines and approves the amounts of all grants to
executive officers and senior management, the terms of the options and the
vesting periods. The size of option grants to executive officers is based
on the individual officer's level of responsibility at the time of grant
and upon market data as provided by an independent compensation consulting
firm.
MANAGEMENT STOCK PURCHASE PROGRAM: The deferral of a portion of cash
awards under the Annual Incentive Program into the purchase of MSPP shares
of restricted stock, described above, is a part of the Long Term Incentive
Program. The MSPP, developed with the assistance of an independent
compensation consulting firm, is intended to increase the incentive for the
Company's senior divisional management, corporate executives and Named
Executives to purchase and hold the Company's stock, thereby more closely
aligning their interests with the interests of the stockholders. Under the
MSPP, divisional management and Named Executives defer at least 20% of
their annual incentive compensation into the purchase of Management Stock
Purchase Shares, which are purchased at 25% below the lower of: (i) the
fair market value on the date of grant, or (ii) the fair market value at
the end of the corresponding fiscal year. The Management Stock Purchase
Shares are subject to a three-year cliff-vesting schedule, and dividends
accrue in the form of cash. Participants in the MSPP may elect to defer up
to a maximum of 50% of their annual incentive compensation for the purchase
of MSPP shares. MSPP shares acquired by the Named Executives in this fiscal
year are reported in the Summary Compensation Table on page 12 of the proxy
statement.
ANNUAL GRANTS OF OPTIONS AND PERFORMANCE SHARE UNITS: The Company
maintains a program pursuant to the 1998 Long Term Incentive Plan under
which certain senior management and executives will be rewarded for the
achievement of long-term corporate strategic goals. Key employees are
awarded, on an annual basis, long-term incentives consisting of two
components: stock options and PSUs (discussed in further detail below).
Awards granted this fiscal year were split 50-50 between these two
components, but the split may vary from year to year based on market
conditions.
The value of the stock option portion of the awards granted this year
was based on 50% of the assigned aggregate individual's long-term incentive
award, was granted at the fair market value as of the date of grant and
vests over 5 years. The balance of the long-term incentive award (50%) to
each individual was in the form of PSUs which are shares set aside and,
after a three-year performance cycle, may be distributed to the extent key
financial targets of the Company (discussed below) are met. One PSU equals
one share of Company Common Stock. For the July 2002-June 2005 performance
cycle, the metrics that will be used to determine whether the PSUs will be
granted at the end of the performance cycle are: specific measured
improvements on return on total capital and growth in operating income. The
metrics for each performance cycle may vary depending on the targets
established by the Committee and approved by the Board. Performance will
vary depending upon results measured by the matrix which could result in
none of the PSUs being distributed. In fact, no PSUs awarded in fiscal 2001
for the July 2000-June 2003 performance cycle were distributed, as the
goals under the performance matrix established by the Committee were not
met. The award of PSUs is intended to focus divisional management,
corporate executives and executive officers on the overall financial
success of the Company. The awards of PSUs to Named Executives are shown on
the chart on page 15 of this proxy statement.
9
RESTRICTED STOCK GRANTS IN FISCAL 2003: No restricted stock grants
were made to any Named Executive in fiscal 2003; however, during the last
fiscal year, the Committee authorized the Company to grant a total of 1,000
shares of restricted stock to one key divisional employee. The grants of
restricted stock are approved by the Committee and provide for a three-year
vesting period. Dividends on restricted stock accrue during the vesting
period, after which they are paid in cash at the date of payout. Grants to
the Named Executives for prior fiscal years are reported in the Summary
Compensation Table on page 12 of this proxy statement. Restricted stock
grants awarded on July 1, 1999 to Mr. Trainor, Ms. Rosen and Mr. Kettinger
vested on July 1, 2002, and that value is reported in the Summary
Compensation Table.
Fiscal 2003 Compensation of the Chief Executive Officer
On December 31, 2002, Mr. Trainor retired as CEO, and on January 1,
2003, Mr. Fix succeeded to the office of Chief Executive Officer.
The Committee reviewed information provided by independent
professional compensation consultants in determining the total compensation
for Messrs. Trainor and Fix for fiscal 2003, and reviewed the financial and
non-financial goals established for Messrs. Trainor and Fix at the end of
the prior fiscal year in determining the amount of the annual incentive to
be paid for fiscal year 2002 performance.
Effective October 1, 2002, the base salary of Mr. Trainor, the Chief
Executive Officer, was increased from $710,000 to $810,000 per year. Mr.
Fix's salary was increased from $500,000 to $550,000 on October 1, 2002,
and was again increased on January 1, 2003 to $600,000 when he assumed the
duties of CEO. These increases reflected the Committee's determination that
the CEO's base salary should be at or near the 75th percentile target for
base salary of other chief executives of companies the size and complexity
of Standex. The Committee believes that this compensation is in line with
Mr. Trainor's and Mr. Fix's peers in CEO positions with diversified
manufacturing companies of similar revenue size and with similar perceived
complexities in the operation of their business. The Board of Directors
approved these recommendations. The Committee also recommended and the
Board approved an annual incentive payment of $175,000 for Mr. Trainor and
$125,000 for Mr. Fix for fiscal 2002 based on acheivement of previously
established BPP goals. Further, the Committee recommended that the Board
approve a two year consulting agreement for Mr. Trainor effective upon his
retirement. The terms of the consulting agreement are discussed on page 18
of this proxy statement.
Special Performance Bonus
In April, 2001, the Board delegated to the Compensation Committee the
authority to establish certain goals to be attained by Mr. Trainor prior to
his retirement. In connection with this process, the Committee engaged
independent compensation consultants to assist in quantifying and of
qualifying the performance goals for Mr. Trainor. The goals included the
development and implementation of a new corporate strategy of focused
diversity; dissemination of this message into the marketplace; and
provision for an orderly transition in the completion of the succession
planning for senior management.
During fiscal 2003, the Committee determined that Mr. Trainor had
satisfied all of the performance goals set. Therefore, in recognition of
Mr. Trainor's diligent efforts and the completion of the performance goals
to the satisfaction of the Committee, the Board approved, on the
10
recommendation of the Committee, a special performance bonus of $1,000,000
to be paid to Mr. Trainor upon his retirement in January, 2003. Mr. Trainor
elected to defer this payment to the KEYSOP (discussed below).
Mr. Trainor is not a participant in the Company's annual incentive
compensation programs with respect to any periods after his retirement.
Policy on Deductibility of Compensation and KEYSOP
The tax deductibility by a corporation of compensation in excess of
$1,000,000 paid to the Chief Executive Officer and any other of its four
most highly compensated executive officers is limited by Section 162(m) of
the United States Internal Revenue Code (the "Code"). "Performance-based"
compensation, as defined in the Code, may be excluded from the $1,000,000
limit, if among other requirements, the compensation is payable only upon
attainment of pre-established, objective performance goals under a plan
approved by shareholders.
In fiscal 2002, the Company created a Key Employee Share Option Plan
(the "KEYSOP"). The purpose of the KEYSOP is to provide alternate forms of
compensation to certain key employees of the Company, commensurate with
their contributions to the success of the Company's business. Under the
KEYSOP, participants may defer a portion of their compensation granted
under the Company's annual incentive programs and long-term incentive
programs for the purchase of share options under the KEYSOP. Under the
KEYSOP, certain employees are granted options by the Compensation
Committee, and designated property is purchased by the Company and placed
in a "Rabbi" trust. The option price is set at the date of the grant as 25%
of the fair value of the underlying assets. Some of the participating
employees might otherwise be subject to the $1,000,000 limit contained in
Section 162(m) of the Code. Consequently, with the opportunity to defer
compensation, the Company believes that the Section 162(m) limitation will
not have a material effect on the Company's income tax expense in the near
future. The Committee will continue to assess the effect of these tax rules
on the Company.
Compensation Committee
Walter F. Greeley, Chairman
Daniel B. Hogan
H. Nicholas Muller, III
11
EXECUTIVE COMPENSATION
The following table shows for fiscal years ending June 30, 2003, 2002
and 2001, the cash compensation as well as certain other compensation, paid
to the Company's chief executive officer and the four other most highly
compensated executive officers, other than the chief executive officer, who
were serving as executive officers ("the named executive officers") at June
30, 2003.
SUMMARY COMPENSATION TABLE
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------- ----------------------- -------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Fiscal Compen- Awards Options / Payouts Compensation
Principal Position Year Salary($) Bonus($) sation(2) ($)(4) SARs(#) ($)(6) (8)(9)
------------------ ------ --------- -------- --------- ---------- ---------- ------- ------------
Edward J. Trainor 2003 $380,000 $1,175,000(1) $176,721(3) $409,088 39,400 $53,878 $1,564,286(10)
Chairman of the 2002 $700,000 $ 132,800 $ 11,069 $ 11,066 32,200 $ -0- $ 12,152
Board 2001 $665,000 $ 177,206 $ 19,670 $ 35,810 39,100 $ 3,300(7) $ 12,023
Roger L. Fix 2003 $562,500 $ 125,000 $ 10,415 $ 12,476 27,800 $ -0- $ 235
President/CEO 2002 $291,667 $ -0- $ -0- $536,250(5) 26,200 $ -0- $ -0-
Deborah A. Rosen 2003 $240,500 $ 41,000 $ 2,731 $ 20,994 9,100 $11,012 $ 5,235
Vice President/CLO 2002 $223,250 $ 32,800 $ 2,734 $ 2,734 7,400 $ -0- $ 6,919
Christian Storch 2003 $230,000 $ 35,000 $ 2,331 $ 2,793 9,300 $ -0- $ 5,089
Vice President/CFO 2002 $187,917 $ 16,800 $ 1,400 $ 1,400 5,400 $ -0- $ 6,436
Robert R. Kettinger 2003 $142,800 $ 25,000 $ 1,666 $ 19,718 3,500 $ 7,348 $ 3,737
Corporate Controller
This amount includes a $1,000,000 special bonus awarded to Mr.
Trainor and discussed in the Compensation Committee report beginning
on page 7.
For 2003 this amount represents the spread between the closing market
price of the stock on September 13, 2002 ($20.01) and the price paid
by each named executive ($15.0075) multiplied by the number of
restriced stock units ("RSUs") acquired pursuant to the Management
Stock Purchase Program ("MSPP") as further discussed in Note 4. For
2002 this amount represents the spread between the closing market
price of the stock on September 17, 2001 ($22.05) and the price paid
by each named executive ($16.5375) multiplied by the number of RSUs
acquired pursuant to the MSPP. For 2001 this amount represents the
spread between the closing market price of the stock on June 30, 2000
($15.875) and the price paid by each named executive ($11.91)
multiplied by the number of MSPP restricted stock units acquired.
This amount represents the distribution of all RSUs acquired pursuant
to the MSPP in fiscal years 2002 and 2001, which became vested to Mr.
Trainor upon his retirement on December 31, 2002. This value
represents the total RSUs purchased by Mr. Trainor (7,112) during
these two fiscal years multiplied by the closing market price on the
date of retirement ($23.84), resulting in a value of $169,550. In
addition, $7,171 in accrued cash dividends were paid on December 31,
2002. Mr. Trainor elected to defer these distributions to the KEYSOP.
Included in this column is the value of restricted stock awards which
were granted to Mr. Trainor, Ms. Rosen and Mr. Kettinger on July 1,
1999 and which vested on July 1, 2002. Dividends accrued as
additional shares for the first two years of the holding period, and
were paid as cash for the final year. The values were calculated by
multiplying the number of shares granted times the closing market
price of the stock on July 1, 2002 ($24.29), the date of vest. On
July 1, 2002, the following shares were received: 16,273 for Mr.
Trainor; and 705 each for Ms. Rosen and Mr. Kettinger. The dollar
value assigned is as follows: $395,271 for Mr. Trainor and $17,124
for both Ms. Rosen and Mr. Kettinger. In addition, cash dividends
were paid as follows: $13,817 to Mr. Trainor and $598 to both Ms.
Rosen and Mr. Kettinger. Mr. Trainor elected to defer the full value
of this payout to the KEYSOP.
All other amounts listed represent the dollar amount (net of any
consideration paid by the named executive) of RSUs received pursuant
to the MSPP. In September 2002, Mr. Fix, Ms. Rosen, and Messrs.
(footnotes continued on following page)
12
Storch and Kettinger each elected to defer a portion of his or her
annual cash incentive compensation into the purchase of restricted
stock under the MSPP. Such election was also made by Mr. Trainor, Ms.
Rosen and Mr. Storch in fiscal year 2002 and by Mr. Trainor in 2001.
The shares were purchased for 25% below the fair market value on
September 13, 2002 (the date of purchase) for fiscal 2003; for 25%
below the fair market value on September 17, 2001 (the date of
purchase) for fiscal 2002; and for 25% below the fair market value on
June 30, 2000 (the last day of the fiscal year) for fiscal 2001. The
RSUs are subject to a three-year cliff vesting period from the
respective dates of purchase. Each share was purchased for $15.0075
in fiscal 2003 (September 13, 2002 closing price of $20.01 less 25%);
$16.5375 in fiscal 2002 (September 17, 2001 closing price of $22.05
less 25%); and for $11.91 in fiscal 2001 (June 30, 2000 closing price
of $15.875 less 25%). There are no performance based restrictions to
vesting. Dividends accrue and are paid in the form of cash. For
fiscal 2003, under the MSPP, the named executives purchased the
following number of RSUs: 2,082 (Mr. Fix); 546 (Ms. Rosen); 466 (Mr.
Storch) and 333 (Mr. Kettinger). For fiscal 2002, under the MSPP, the
named executives purchased the following number of RSUs: 2,008 (Mr.
Trainor); 496 (Ms. Rosen); 254 (Mr. Storch). For fiscal 2001, Mr
Trainor purchased 5,106 shares. The following aggregate values are
calculated by multiplying the market value of the Company's
unrestricted stock at the end of the last completed fiscal year, by
the number of shares purchased, net of consideration paid by the
named executives: for fiscal 2003, using a market value at June 30,
2003 of $21.00 per share, $12,476 (Mr. Fix); $3,272 (Ms. Rosen);
$2,793 (Mr. Storch); $1,996 (Mr. Kettinger); for fiscal 2002, using a
market value at June 30, 2002 of $25.10 per share, $17,194 (Mr.
Trainor); $4,247 (Ms. Rosen); $2,174 (Mr. Storch). For fiscal 2001,
using a market value at June 30, 2001 of $23.60 per share: $59,690
(Mr. Trainor).
This reflects a Restriced Stock Grant ("RSG") made under the 1998
Long Term Incentive Plan of 25,000 shares, with the aggregate value
calculated by multiplying the closing market price of the stock on
December 3, 2001, the date of the grant, ($21.45) by the number of
shares granted. The RSGs vest in annual increments as follows: 40% on
December 3, 2003 and 20% over each of the next three grant
anniversary dates. Dividends will accrue and be paid in the form of
cash on the date of each vesting distribution.
This amount represents the dollar value of restricted stock units
("RSUs") acquired on September 10, 1999 pursuant to the Management
Stock Purchase Program ("MSPP") that vested to the named executive
officers on September 10, 2002. These amounts are calculated by
multiplying the number of units received times the closing market
price of the stock on September 10, 2002 ($20.48), the date of vest.
In addition, cash dividends for the third year of the vesting
schedule were paid. For the first two years, dividends were
reinvested in the form of additional RSUs. Under the current MSPP,
all dividends accrue in the form of cash. On September 10, 2002, the
following RSUs vested and were received: 2,500 for Mr. Trainor, 511
for Ms. Rosen and 341 for Mr. Kettinger. The dollar value assigned is
as follows: $53,878 for Mr. Trainor ($51,203 in RSU value plus cash
dividends of $2,675); $11,012 for Ms. Rosen ($10,465 in RSU value
plus cash dividends of $547); and $7,348 for Mr. Kettinger ($6,984 in
RSU value plus cash dividends of $365).
This amount reflects a payment received by Mr. Trainor pursuant to
the Company's profit improvement plan. This plan was terminated with
regard to future grants in fiscal year 1996. The outstanding grants
matured over five years from date of grant and vested one-third per
year in the last three years of the five year term. At maturity, the
increase, if any, in the earnings per share of the Company over the
base year was accorded a price/earnings ratio of 10 and was paid to
the participant in cash. There was no maximum payout.
All other compensation includes contributions made by the Company to
the Standex Employees' Stock Ownership Plan ("ESOP"), a defined
contribution plan that was merged along with the Company's 401(k)
Plan into the Standex Retirement Savings Plan in fiscal 2000. No
Company contribution was made to the ESOP in fiscal 2003. However,
forfeiture shares were allocated to each named executive's account
with the approximate following values: $235 for Messrs. Trainor and
Fix, Ms. Rosen and Mr. Storch and $197 for Mr. Kettinger. Estimates
of the aggregate amounts contributed to this Plan during fiscal 2002
were $2,669 for each of the named executive officers (except Mr. Fix,
who did not receive an ESOP allocation in the 2002 fiscal year); and
during fiscal 2001 the contribution was approximately $3,356 for Mr.
Trainor.
This amount includes the dollar value of term life insurance premiums
paid by the Company for Mr. Trainor as follows: $5,710 in 2003,
$5,233 in 2002 and $4,417 in 2001. Also included are contributions to
the Company's 401(k) portion of the Standex Retirement Savings Plan
as follows: for 2003: $3,807 for Mr. Trainor, $5,000 for Ms. Rosen,
$4,854 for Mr. Storch and $3,540 for Mr. Kettinger; for 2002: $4,250
for Mr. Trainor and Ms. Rosen, and $3,767 for Mr. Storch; for 2001,
$4,250 for Mr. Trainor.
This amount includes the following retirement benefits: $1,215,534
pursuant to the Supplemental Executive Retirement Plan; $202,500
pursuant to the Consulting Agreement discussed on page 18 herein (Mr.
Trainor elected to defer both of these items of compensation to the
KEYSOP) and $136,500 pursuant to the Executive Life Insurance
Program.
13
Stock Options
The following table provides information on stock options granted to
the named executives in fiscal 2003. This information is also provided in
the Summary Compensation Table, on page 12 of this proxy statement, in the
column entitled "Securities Underlying Options/SARs."
STOCK OPTION/ SAR GRANTS IN FISCAL 2003
INDIVIDUAL GRANTS
Number of
Securities % of Total Grant Date
Underlying Options Granted Exercise or Present
Options to Employees Base Price Expiration Value
Name Granted(#)(1) in Fiscal Year ($/Sh) Date ($)(2)
---- ------------- --------------- ----------- ---------- ----------
Edward J. Trainor 39,400 20.28% $19.90 12/31/05 $115,249
Roger L. Fix 27,800 14.31% $19.90 9/17/09 $107,372
Deborah A. Rosen 9,100 4.68% $19.90 9/17/09 $ 35,147
Christian Storch 9,300 4.79% $19.90 9/17/09 $ 35,919
Robert R. Kettinger 3,500 1.80% $19.90 9/17/09 $ 13,518
--------------------
Options granted are first exercisable one year from the respective
dates of grant in annual increments of one-fifth of the aggregate
shares subject to grant for all options granted except as follows:
fifty percent of Mr. Trainor's options are first exercisable one year
from the date of grant with the remaining fifty percent exercisable
two years from the date of grant. All options were granted at a
purchase price per share of 100% of the fair market value of the
Company's Common Stock on the date of grant. The options will be
exercisable immediately upon a change in control of the Company as
that term is defined in the 1998 Long Term Incentive Plan of the
Company under which all of the options were respectively granted.
In accordance with Securities and Exchange Commission Rules, the
Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options granted. Assumptions used to
calculate Grant Date Present Value for the options granted to Mr.
Fix, Ms. Rosen, and Messrs. Storch and Kettinger were: expected
volatility, .270; risk free rate of return, 3.49%; dividend yield,
4.2211%; and time of exercise, 7 years. The assumptions used to
calculate the grant date present value for the options granted to Mr.
Trainor were: expected volatility, .270; risk free rate of return,
2.36%; dividend yield, 4.2211%; and time of exercise, 5 years. The
valuation model was not adjusted for non-transferability, risk of
forfeiture or the vesting restrictions in the option. The Company
does not believe that the Black-Scholes model used, or any other
model whether or not modified, can accurately determine the future
value of an option because such values depend on future unpredictable
factors. The future values realized may vary significantly from the
values estimated by the Black-Scholes model or any other model. Any
future values realized will ultimately depend upon the excess of the
market price of the stock over the grant price on the date the option
is exercised.
14
The following table provides information on stock options exercised
during fiscal 2003 and options outstanding on June 30, 2003.
AGGREGATED OPTION/ SAR EXERCISES IN FISCAL 2003
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at
at Fiscal Year End Fiscal Year End($)(2)
------------------ ---------------------
Exercisable/(E) Exercisable/(E)
Shares Acquired Value --------------- ---------------
Name on Exercise (#) Realized ($)(1) Unexercisable/(U) Unexercisable/(U)
---- --------------- --------------- ------------------------------ -----------------------
Edward J. Trainor -0- -0- 198,700(E) $360,183(E)
-0-(U) $ -0-(U)
Roger L. Fix -0- -0- 5,240(E) $ 5,083(E)
48,760(U) $ 90,387(U)
Deborah A. Rosen -0- -0- 15,400(E) $ 11,778(E)
22,360(U) $ 63,550(U)
Christian Storch -0- -0- 3,380(E) $ 6,842(E)
14,820(U) $ 43,337(U)
Robert R. Kettinger -0- -0- 11,180(E) $ 6,550(E)
7,620(U) $ 23,821(U)
--------------------
Value Realized equals the fair market value of underlying securities
at time of exercise, minus the exercise price, multiplied by the
number of shares acquired without deducting for taxes paid by the
employee.
Calculated based on June 30, 2003 market price of $21.00 less the
price to be paid upon exercise.
The following table provides information on Performance Share Units
awarded under the 1998 Long Term Incentive Plan during fiscal 2003.
LONG TERM INCENTIVE PLAN AWARDS IN FISCAL 2003
Estimated
Future Payouts
Under Non-Stock
Performance or Price-Based Plans
Number of Other Period Until (Target Number of
Performance Maturation Performance Share
Name Share Units or Payout Units(1))
---- ----------- ------------------ -----------------
Edward J. Trainor -0- Not Applicable -0-
Roger L. Fix 11,100 July 2002-June 2005 11,100
Deborah A. Rosen 3,600 July 2002-June 2005 3,600
Christian Storch 3,700 July 2002-June 2005 3,700
Robert R. Kettinger 1,400 July 2002-June 2005 1,400
(footnote on following page)
15
In fiscal year 2003, the Compensation Committee (the "Committee")
authorized the award under the 1998 Long Term Incentive Plan of
Performance Share Units ("PSUs"). The PSUs earned by the named
executives at the end of the three-year performance cycle will be
determined by the Board of Directors upon the recommendation of the
Committee. One PSU represents one share of Company Common Stock set
aside and designated as a PSU. At the end of fiscal year 2005, a
Company performance matrix will be examined to determine whether the
Company's long-term financial goals have been met such that PSUs may
be distributed. The financial measures selected for the above
performance period range between 7% and 11% return on total capital
and between 2% and 10% growth in operating income. The Committee has
the discretion to amend the financial performance measures under the
PSU program. Performance will vary depending upon results measured by
the matrix which could result in none of the PSUs being distributed
at the end of the three-year performance cycle. Based on the
foregoing, threshold and maximum amounts cannot be quantified.
Recipients of the PSUs do not receive dividend rights until such time
as the shares underlying the PSUs have been issued. There are no
holding restrictions on the Company stock once the PSUs are
distributed.
--------------------
Pension Plan Table
The following table shows the estimated annual benefits payable upon
retirement for the named executive officers in the Summary Compensation
Table and years of service classifications indicated under the Company's
retirement plans:
Years of Service
----------------------------------------
Average Compensation 10 20 25 30
-------------------- -- -- -- --
200,000 27,000 54,000 67,500 81,000
300,000 40,500 81,000 101,250 121,500
400,000 54,000 108,000 135,000 162,000
500,000 67,500 135,000 168,750 202,500
600,000 81,000 162,000 202,500 243,000
700,000 94,500 189,000 236,250 283,500
800,000 108,000 216,000 270,000 324,000
900,000 121,500 243,000 303,750 364,500
1,000,000 135,000 270,000 337,500 405,000
1,100,000 148,500 297,000 371,250 445,500
Pensions are computed on a straight-life annuity basis and are not
reduced for Social Security or other offset amounts. Participants receive a
pension based upon average compensation in the three highest consecutive
calendar years multiplied by the number of years of service, times 1.35%.
Effective July 1, 2002, accrual rates under the Company's qualified
retirement plan for certain named executives in the Summary Compensation
Table are as follows: Messrs. Trainor and Fix: 3.85%; Ms. Rosen and Messrs.
Storch and Kettinger: 1.35%. In addition, participants who were ever
employed by the Company in the position of Corporate Vice President, Senior
Vice President, Executive Vice President, General Counsel, Group Vice
President or Division Presidents receive an accrual rate of 1.35%. Average
annual compensation is determined by adding the three highest consecutive
years' earnings and dividing by three. From December 31, 1997 through June
30, 2002, the accrual rates were as follows: Mr. Trainor: 3.85%; Ms. Rosen
and Mr. Storch: 2.35%; Mr. Kettinger: 1.35%; any participant ever employed
by the Company in the capacity of Corporate Vice President, Senior Vice
President, Executive Vice President, General Counsel or Group Vice
President: 2.35%; any participant ever employed by the Company in the
capacity of Division President: 1.60%.
16
The Internal Revenue Code of 1986, as amended, limits the benefits
which may be paid from a tax-qualified retirement plan. As permitted by the
Employee Retirement Income Security Act of 1974, the Company has a non-
qualified Supplemental Retirement Plan to provide for the full payment of
the above pensions to the extent the pension amounts exceed tax-qualified
limits. The pension amounts that exceed tax-qualified limits are accounted
for by the Company as an operating expense and are accrued over the
expected working career of the employee.
As a mechanism for funding the pension amounts that exceed the tax-
qualified limits, in fiscal year 2000 the Company issued restricted stock
to salaried employees who are projected to have an unfunded Supplemental
Retirement Plan benefit greater than 20% of his/her total retirement
benefit. The restricted stock was issued pursuant to the 1998 Long Term
Incentive Plan ("LTIP"). The number of shares of restricted stock issued to
each such employee was dependent upon his/her age in fiscal year 2000. For
each such employee between ages 55 and 60, 50% of the Supplemental
Retirement Plan benefit is funded with restricted stock. For each such
employee between ages 60 and 63, 75% of the obligation is funded with
restricted stock, and for each such employee age 63 and older, 85% of the
obligation is funded with restricted stock. Each such employee made an
election to participate in this restricted stock award. At the employee's
respective retirement, if the value of the restricted stock equals or
exceeds the value of the supplemental benefit, the restricted stock only
shall be issued. If the value of the stock is less than the calculated
supplemental benefit, cash shall be used to satisfy the remaining unfunded
supplemental pension benefit. Because of the LTIP limitations on issuance
of RSUs the balance of Mr. Trainor's election to receive RSUs was completed
in fiscal 2001. In satisfaction of this election Mr. Trainor received a
grant of 10,651 shares. These shares are reported on the Stock Ownership
Table on page 4 of this proxy statement.
The compensation covered by the pension benefit is based on the
combined amounts set forth under the headings "Salary" (on a calendar year
basis), "Bonus" and "LTIP Payouts" of the Summary Compensation Table. The
years of credited service as of June 30, 2003 for the executive officers
named on the Summary Compensation Table are as follows: Edward J. Trainor,
19 years; Roger L. Fix, 2 years; Deborah A. Rosen, 17 years; Christian
Storch, 4 years; and Robert R. Kettinger, 34 years.
Employment and Consulting Agreements and Change in Control Arrangements
Employment Agreements
Mr. Fix, Ms. Rosen and Messrs. Storch and Kettinger each have
employment agreements with the Company, which provide for full-time
employment for Mr. Fix through December 31, 2006, for Ms. Rosen through
December 31, 2005, for Mr. Storch through December 31, 2004, and for Mr.
Kettinger through June 30, 2004. Ms. Rosen's agreement is currently in the
first automatic renewal period; the initial term of her agreement expired
on December 31, 2002. The agreements of Mr. Fix, Ms. Rosen and Mr. Storch
provide for automatic renewal for two consecutive three-year terms unless,
under Ms. Rosen and Mr. Storch's agreements, notice of termination is given
one year prior to the end of the then current term. Messrs. Fix and
Kettinger's agreements provide for a 30 day termination notice during any
initial or renewal term. The agreement of Mr. Kettinger provides for
successive automatic one-year renewal terms unless notice of termination is
given upon thirty days prior written notice. The agreements provide for the
payment of minimum annual compensation to the executives along with
participation in benefit programs available to all executives. Their
respective agreements prohibit Mr. Fix, Ms. Rosen and Mr. Storch from
competing with the present
17
or future business of the Company for two years subsequent to the
termination of their respective employments. The period of Mr. Kettinger's
non-compete covenant is one year. Mr. Fix presently receives base
compensation under his agreement at an annual rate of $600,000, Ms. Rosen
receives $245,000, Mr. Storch receives $240,000 and Mr. Kettinger receives
$142,800.
The respective employment agreements of Mr. Fix, Ms. Rosen and
Messrs. Storch and Kettinger contain provisions that protect the executives
from termination of employment in the event of a hostile change in control
as defined in their employment agreements. These provisions require, in the
event of termination, subsequent to such a change in control, payment of
three times (one time for Mr. Kettinger) the respective executive's then
current, annual base salary and bonus, 100% vesting in all benefit plans in
which the executive participates and three additional years (one year for
Mr. Kettinger) of benefit service credited to the executive under the
Company's retirement plans. Additionally, all life and medical insurance
plans would be continued for three years (one year for Mr. Kettinger) for
each terminated executive.
Further, the employment agreements of Mr. Fix, Ms. Rosen and Mr.
Storch contain provisions providing that, in the event of a hostile change
in control as defined in their employment agreements, and if in such event
the Internal Revenue Service (the "IRS") imposes an excise tax on the
payments received under the respective employment agreements, then the
Company will fully fund any excise tax assessed against the named
executive, such that the payments received by the named executive will not
be reduced by any IRS-imposed tax penalty.
Consulting Agreement
Effective January 1, 2003, the Company entered into a Consulting
Agreement with Edward J. Trainor, who retired from active employment with
the Company on December 31, 2002. The agreement provides that Mr. Trainor
will continue to provide services as the Company may request through
December 31, 2004. Annual compensation under the agreement is set at
$405,000 (one-half the base annual compensation rate being paid to Mr.
Trainor immediately prior to his retirement), paid semi-annually, plus
reasonable Company related expenses approved by a Company executive
officer. All payments under the agreement are paid in the form of KEYSOP
options pursuant to the KEYSOP described on page 11 herein. The agreement
prohibits Mr. Trainor from competing with the present or future business of
the Company for two years subsequent to the termination of the agreement.
The agreement may be terminated by either Mr. Trainor or the Company in the
event that either party breaches the agreement, which breach is not cured
within 30 days after notice of such breach.
OTHER INFORMATION CONCERNING THE COMPANY
BOARD OF DIRECTORS AND ITS COMMITTEES
Six meetings of the Board of Directors were held during the fiscal
year ended June 30, 2003. Each director of the Company attended at least
75% of the meetings held during the year by the Board and all committees on
which the director served with the exception of Mr. Bolten, Jr. who
attended 50% of the meetings.
Compensation Committee
The Board has a Compensation Committee consisting of Messrs. Greeley
(Chairman), Hogan and Muller. During fiscal 2003, the Committee held three
meetings. The Committee makes
18
recommendations to the Board on the compensation of the top management of
the Company and reviews the compensation of top divisional management of
the Company. Between meetings of the Board of Directors, the Committee
exercises the powers of the Board pertaining to the Employee Stock Purchase
Plan, the 1994 Stock Option Plan and the 1998 Long Term Incentive Plan.
Audit Committee
Messrs. Landry (Chairman), Fenoglio and Greeley serve on the
Company's Audit Committee. All of these directors are independent as
defined by the New York Stock Exchange rules. The Board of Directors has
designated Messrs. Landry and Fenoglio as "audit committee financial
experts" as defined by the New York Stock Exchange rules. During fiscal
2003, the Committee met on eight occasions. The Audit Committee reviews,
both prior to and after the audit, the Company's financial reporting
function, the scope and results of the audit performed (or to be performed)
by the independent auditors of the Company and the adequacy of the
Company's internal controls and reports thereon to the Board of Directors.
During fiscal year 2000, the Committee recommended the adoption by the
Board of an Audit Committee Charter which sets forth the responsibilities
and duties of the Committee. The Board approved and adopted the original
Committee Charter on October 26, 1999. At the recommendation of the
Committee, on July 30, 2003 the Board of Directors adopted an amended
version of the Charter, which appears as Appendix A hereto. The report of
the Committee for the past fiscal year appears below.
Audit Committee Report
The Audit Committee of the Board of Directors (the "Committee") is
entirely made up of independent directors as defined in the New York Stork
Exchange listing standards. It operates pursuant to a written charter,
which appears below.
The Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility
for internal controls, the financial statements and the reporting process.
The independent auditors are responsible for expressing an opinion on the
conformity of the Company's audited financial statements with U.S.
generally accepted accounting principles. The Audit Committee's
responsibility is to monitor and oversee these processes on behalf on the
Board of Directors.
The Audit Committee pre-approves all audit and non-audit services
performed by the independent auditor, as well as respective fees. The Audit
Committee will periodically grant general pre-approval of certain audit and
non-audit services. Any other services must be specifically approved by the
Audit Committee. In periods between Audit Committee meetings, the Audit
Committee may delegate authority to one member to pre-approve additional
services, and such pre-approvals are then communicated to the full Audit
Committee.
In this context, the Committee has reviewed and discussed with
management and the independent auditors the audited financial statements.
The Committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended by Statements on Auditing
Standards Nos. 89 and 90. In addition, the Committee has received from the
independent auditors the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and discussed with them their independence from the Company and
its management. And, the Committee has considered whether the independent
auditors' provision of non-audit services to the Company is compatible with
maintaining the auditors' independence.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors, that the audited financial
statements be included in the Company's Annual Report on SEC Form 10-K for
the year ended June 30, 2003, for filing with the Securities and Exchange
Commission.
Audit Committee
C. Kevin Landry, Chairman
William R. Fenoglio, Member
Walter F. Greeley, Member
Corporate Governance/Nominating Committee
During the fiscal year, the name of the Nominating Committee was
changed, upon Board approval, to the Corporate Governance/Nominating
Committee. Membership of the Committee consists of Messrs. Muller
(Chairman), King and Greeley. During the fiscal year, the Committee met on
two occasions. The function of the Committee is to consider and recommend
to the Board nominees for election as directors of the Company. The
Committee will consider nominees recommended by stockholders. Although no
formal procedure has been established, stockholders may submit
recommendations to the Secretary of the Company, 6 Manor Parkway, Salem,
New Hampshire 03079 at the time set forth for submitting shareholder
proposals generally.
Directors' Fees
During fiscal 2003, the Company paid certain non-employee directors
$22,000 as a retainer plus $1,000 for each live Board meeting attended;
$500 for meetings conducted telephonically. Each director also received
$750 for each Committee meeting attended. Additionally, non-employee
directors serving as Committee chairmen were paid $1,000 for serving in
that capacity for the fiscal year.
Indebtedness of Management
During the past fiscal year, the Company prohibited executive
officers and directors from participating in its Stock Option Loan Plan.
Pursuant to the Sarbanes-Oxley Act of 2002, public companies (including the
Company) are prohibited from making loans or otherwise extending or
arranging for credit for executive officers or directors.
All loans previously extended by the Company to executive officers or
directors under its Stock Option Loan Plan have been repaid in full at
market interest rates.
PROPOSAL 2-APPROVAL OF AUDITORS
Subject to approval by the stockholders, the Board of Directors has
appointed the firm of Deloitte & Touche LLP, independent public
accountants, as auditors of the Company for the year ending June 30, 2004.
This firm and two of its predecessor firms have been auditors of the
Company since 1955.
It is expected that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting of Stockholders where they will have the
opportunity to make a statement, if they desire to do so, and to respond to
appropriate questions.
20
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees
The aggregate fees billed for professional services rendered by
Deloitte & Touche LLP for the audit of the Company's annual financial
statements for fiscal 2003 and the reviews of the financial statements
included in the Company's Forms 10-Q for fiscal 2003 were $699,000. The
aggregate audit fees billed to the Company by Deloitte & Touche LLP in
fiscal 2002 were $898,583.
Audit-Related Fees
The aggregate fees billed for audit-related services (including
audits of the Company's employee benefit plans; due diligence related to
acquisitions; accounting consultations; and consultation concerning
financial accounting and reporting standards) in fiscal 2003 were $2,400.
In fiscal 2002 the fees billed for audit-related services totaled $14,000.
Tax Fees
The aggregate fees billed for tax compliance (including preparation
of original and amended tax returns, claims for refunds and tax payment-
planning services); tax planning; and other tax advice (including
assistance with tax audits and appeals, tax advice related to acquisitions,
dispositions and employee benefit plans, and requests for rulings or
technical advice from taxing authorities) in fiscal 2003 were $721,426. In
fiscal 2002 the fees billed for tax-related services were $610,963.
All Other Fees
Deloitte & Touche LLP billed the Company $26,093 in fiscal 2003 for
other services that were not categorized as Audit, Audit-Related or Tax
Services. In fiscal 2002, the Company paid $59,235 for such other services.
A copy of the Company's Annual Report on Form 10-K has been mailed
along with this Notice of Annual Meeting and Proxy Statement to
shareholders. Additional copies of the Company's Annual Report on Form 10-K
may be obtained, without charge, by writing to Standex International
Corporation, Investor Relations Department, 6 Manor Parkway, Salem, NH
03079. Alternatively, Form 10-K may be reviewed on line at:
www.standex.com.
OTHER PROPOSALS
Management does not know of any other matters which may come before
the meeting. However, if any other matters are properly presented at the
meeting, it is the intention of the persons named in the accompanying proxy
to vote, or otherwise act, in accordance with their judgment on such
matters.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to the Securities Exchange Act of 1934, the Company's
executive officers, directors and persons who own more than 10% of the
Company's Common Stock are required to file reports of ownership and
changes in ownership in the Common Stock of the Company under
21
Section 16(a) with the Securities and Exchange Commission and the New York
Stock Exchange with copies of those reports filed with the Company.
Based solely upon a review of the copies of the reports furnished to
the Company, the Company believes that during fiscal 2003 all executive
officers, directors and persons holding more than 10% of the Company's
Common Stock have complied with such filing requirements.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for consideration at
the 2004 Annual Meeting of Stockholders must submit such proposal to the
Company, in writing, on or before May 20, 2004.
In order for a shareholder to bring other business before a
shareholder meeting, timely notice must be received by the Company on or
before August 2, 2004.
By the Board of Directors
/s/ Deborah A. Rosen
Deborah A. Rosen, Secretary
September 17, 2003
22
APPENDIX A
STANDEX INTERNATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
STATUS
The Audit Committee is a standing committee of the Board of Directors
of Standex International Corporation (the "Company").
MEMBERSHIP
The Audit Committee shall be comprised of not less than three nor
more than five directors as determined by the Board of Directors, each of
whom shall be independent directors in accordance with the rules and
regulations of the Securities and Exchange Commission (the "SEC") and the
New York Stock Exchange listing standards (the "NYSE"). No member of the
Audit Committee shall be an affiliated person of either the Corporation or
any subsidiary in accordance with the rules and regulations of the SEC and
the NYSE. All members shall have a working familiarity with basic finance
and accounting practices. At least one member of the Committee shall in the
judgment of the Board of Directors, be a financial expert in accordance
with the rules and regulations of the SEC and the NYSE, including but not
limited to having accounting or related financial management expertise.
The members of the Audit Committee shall serve one-year terms. The
Directors and the Corporate Governance Committee shall recommend, and the
Board of Directors shall designate, one member of the Audit Committee to
serve as Chairperson. The members of the Audit Committee shall serve until
their resignation, retirement or removal by the Board of Directors and
until their successors shall be appointed. No member of the Audit Committee
shall be removed except by the majority vote of the independent directors
of the full Board of Directors then in office.
PURPOSE
The primary function of the Audit Committee is to assist, and report
to, the Board of Directors in fulfilling its oversight responsibilities by
reviewing the integrity of the financial reports provided by the
Corporation to its stockholders and the general public; the Corporation's
systems of internal controls regarding finance and accounting; the
Corporation's auditing, accounting and financial reporting and internal
control processes; the independent auditors qualifications, performance and
independence, the Corporation's compliance with legal and regulatory
requirements, and to prepare the report required by the SEC's proxy rules
to be included in the Corporation's annual proxy statement.
A-1
RESPONSIBILITIES AND DUTIES
1. Appoint, retain, oversee and terminate, in its sole authority,
the independent auditors for the purpose of preparing or
issuing an audit report or to perform related work and set the
scope of work, terms of each engagement and their compensation.
2. Approve in advance all permitted non-audit services to be
performed by the independent auditor and assure that such
approval is disclosed in the Corporation's periodic reports as
required by law.
3. Evaluate the independent auditor's qualifications, performance
and independence, including review and evaluation of the lead
partner of the independent auditor, after receiving input from
management and the Internal Audit Department. Assure the
rotation of the lead audit partner, the reviewing audit partner
and other audit personnel as required by law.
4. Receive and review at least annually:
(a) a report by the independent auditor describing (i) the
independent auditor's internal quality-control
procedures; (ii) any material issues raised by the most
recent internal quality-control review, or peer review,
of the independent auditor, 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
independent auditor, and any steps taken to deal with any
such issues; and (iii) in an effort to assess the
auditors' independence, all relationships between the
auditors and the Corporation.
(b) all other reports from the independent auditors,
including the annual comments from the independent
auditors on accounting procedures, critical accounting
policies and practices, systems of control, all material
alternative treatments of financial information within
generally accepted accounting procedures ("GAAP") that
have been discussed with management, the effects of using
such alternative treatments and the treatment preferred
by the independent auditors and any other material
communications between the independent auditor and
management.
5. Review and consider whether the provision by the independent
auditors of any permitted non-audit service is compatible with
maintaining their independence; review and approve the non-
audit fees of the independent auditors; and review with them
any questions, comments or suggestions they may have relating
to the internal controls, accounting practices or procedures of
the Corporation and any audit problems or difficulties and
management's response.
6. Present to the Board of Directors the Audit Committee's
conclusions in connection with the independent auditor.
7. Review, at least annually, the then current and future programs
of the Corporation's Internal Audit Department, including the
procedure for assuring implementation of accepted
recommendations made by the independent auditors; and review
any issues that arise regarding the performance of the
Corporation's internal audit function and the significant
matters contained in these Internal Audit Department reports.
A-2
8. Make or cause to be made, from time to time, such other
examinations or reviews as the Audit Committee may deem
advisable with respect to the adequacy of the systems of
internal controls and accounting practices and procedures of
the Corporation, the results of activities and responsibilities
and with respect to current accounting trends and developments,
and take such action regarding such trends and developments as
may be deemed appropriate.
9. Review significant accounting principles and financial
statement presentations, including any material changes in the
Corporation's selection or application of accounting
principles. Review significant judgments made in connection
with the preparation of the financial statements, including any
material exposures and related reserves and any off-balance
sheet structures.
10. Review and discuss with management and the independent auditors
the annual and quarterly financial statements of the
Corporation, including the Corporation's disclosures under
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and any material changes in
accounting principles or practices used in preparing the
statements prior to the filing of a report on Form 10-K or 10-Q
with the SEC. Such review and discussion shall include the
items required by SAS 61 as in effect at that time in the case
of the annual statements and SAS 71 as in effect at that time
in the case of the quarterly statements. During such review, or
otherwise, the Audit Committee shall work to resolve any
disagreements between management and the independent auditors
regarding financial reporting. Based upon such review and
discussion, recommend to the Board that the audited financial
statements be included in the Annual Report on Form 10-K.
11. Review earnings press releases, as well as financial
information and earnings guidance provided to analysts; discuss
the Corporation's policies with respect to risk assessment and
risk management; and discuss the steps taken by management to
monitor exposures.
12. Receive from the independent auditors the report required by
Independence Standards Board Standard No. 1 as in effect at
that time and discuss it with the independent auditors.
13. Review the status of compliance with laws, regulations and
internal procedures, contingent liabilities and risks that may
be material to the Corporation, the scope and status of systems
designed to assure Corporate compliance with laws, regulations
and internal procedures, through receiving reports from
management, legal counsel and other third parties as determined
by the Audit Committee on such matters, as well as major
legislative and regulatory developments which could materially
impact the Corporation's contingent liabilities and risks.
14. Meet separately, periodically, with management, with internal
auditors (or other personnel responsible for the internal audit
function) and with independent auditors.
15. Set clear hiring policies for employees or former employees of
the independent auditors.
16. Establish and maintain procedures for the receipt, retention
and treatment of complaints regarding the Corporation's
accounting, internal controls or auditing matters and establish
clear hiring policies for employees or former employees of the
Corporation's independent auditor.
A-3
17. Establish and maintain procedures for the confidential,
anonymous submission by employees of the Corporation of
concerns regarding accounting or auditing matters.
18. Obtain the advice and assistance, as appropriate, of
independent counsel and other advisors as necessary to fulfill
the responsibilities of the Audit Committee.
19. Receive appropriate funding, as determined by the Audit
Committee from the Corporation for payment of compensation to
the outside legal, accounting, or other advisors employed by
the Audit Committee.
20. Report regularly to the Board of Directors as to the Audit
Committee's accomplishments of its purpose and
responsibilities.
21. Assess compliance of the Corporation's CEO, CFO and Corporate
Controller with the Code of Ethics for Senior Financial
Officers, report material violations to the Board and recommend
to the Board appropriate action.
22. Monitor the establishment, maintenance and evaluation of the
disclosure controls and procedures and internal controls
required by the SEC.
23. Conduct an annual performance evaluation of the Audit
Committee.
MEETINGS
The Audit Committee shall meet at least four times during the year
and at such other times as it deems necessary to fulfill its
responsibilities. The Audit Committee shall meet regularly in executive
session without management present. In addition, the Audit Committee shall
periodically meet with management, internal auditors and independent
auditors to oversee and review their respective performance.
REPORT
The Audit Committee shall prepare a report each year concerning its
compliance with this charter, charter amendments and activities for
inclusion in the Corporation's proxy statement relating to the annual
meeting of stockholders as required by the SEC and NYSE.
A-4
STANDEX INTERNATIONAL CORPORATION
Annual Meeting of Stockholders
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
ACCORDINGLY, YOU ARE URGED TO PROMPTLY VOTE YOUR PROXY IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE REVERSE SIDE. IF YOU SO CHOOSE, YOU MAY VOTE YOUR SHARES
IN PERSON AT THE ANNUAL MEETING.
DETACH HERE ZSDX12
PROXY
STANDEX INTERNATIONAL CORPORATION
Annual Meeting of Stockholders
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoint(s) Roger L. Fix and Deborah A. Rosen as
proxies, will full power of substitution, and hereby authorizes them or any
of them to vote the stock of the undersigned at the Annual Meeting of
Stockholders of Standex International Corporation (the "Company") to be held
at FleetBoston, 100 Federal Street, Boston, Massachusetts, on Tuesday,
October 28, 2003 at 11:00 a.m., and at any adjournments thereof, as indicated
below on the proposals described in the Notice and Proxy Statement for such
meeting and in their discretion on other matters which may properly come
before the meeting.
In connection with those shares (if any) held by me as a participant in the
Standex Retirement Savings Plan (the "Plan"), I hereby direct the trustee of
the Plan in which I participate to vote all vested shares allocated to my
account under such Plan on September 8, 2003 in accordance with the
instructions on the reverse side of this proxy card or, if no instructions
are given, in accordance with the Board of Directors' recommendations, on
all items of business to come before the Annual Meeting of Stockholders to be
held on October 28, 2003 or any adjournment thereof. Under the Plan, the
shares for which no signed proxy card is returned or for which voting
instructions are not timely received or are improperly executed shall be
voted by the trustee in the same proportions on each proposal for which
properly executed instructions were timely received.
Unless otherwise instructed, this proxy will be vote FOR all nominees listed
in Proposal 1 and FOR Proposal 2.
(Important - To be Signed and Dated on Reverse Side) SEE REVERSE
SIDE
(LOGO) Standex
International Corporation
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
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Your vote is important. Please vote immediately.
------------------------------------ ------------------------------------
| Vote by Internet | | Vote by Telephone |
| | | |
|1. Log on to the Internet and go to | |1. Call toll-free |
| http://www.eproxyvote.com/sxi |OR| 1-877-PRX-VOTE (1-877-779-8683 |
| | | |
|2. Enter the number listed above and| |2. Enter the number listed above and|
| follow the easy steps outlined on| | follow the easy recorded |
| the secure website. | | instructions. |
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If you vote over the Internet or by telephone, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
DETACH HERE ZSDX11
[X] Please mark
votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE PROPOSALS.
1. Election of Directors.
For three year terms expiring in 2006:
Nominees: (01) C. Kevin Landry, (02) H. Nicholas Muller, III, Ph.D.,
(03) Edward J. Trainor
FOR WITHHELD
ALL [ ] FROM ALL [ ]
NOMINEES NOMINEES
[ ] ____________________________________________
For all nominees except as written above
2. To approve the selection of Deloitte and FOR AGAINST ABSTAIN
Touche LLP as independent auditors. [ ] [ ] [ ]
To transact such other business as may come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Sign exactly as name appears on this Proxy. If the
shares are registered in the names of two or more
persons, each should sign. Executors, administrators,
trustees, partners, custodians, guardians, attorneys,
and corporate officers should add their full titles.
Signature: ____________ Date: ________ Signature: _____________ Date: ________