SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
THE LAMSON & SESSIONS CO.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
March 28, 2003
To Our Shareholders:
On behalf of the Board of Directors and management of Lamson & Sessions, I
cordially invite you to attend the 2003 Annual Meeting of Lamson's shareholders
to be held on Wednesday, April 30, 2003, at 9:00 a.m., local time, at the
Wyndham Cleveland Hotel, 1260 Euclid Avenue, Cleveland, Ohio 44115.
At this meeting, shareholders are expected to elect three directors for a
three-year term ending in 2006 and one director for a one-year term ending in
2004.
In addition, there will be a report on current developments in the Company
and an opportunity for questions of general interest to shareholders.
It is extremely important that your shares be represented at the meeting.
Whether or not you plan to attend in person, you are requested to mark, sign,
date and return the enclosed proxy promptly in the envelope provided or give
your proxy by telephone or over the Internet by following the instructions on
the proxy card.
Sincerely,
/s/ John B. Schulze
JOHN B. SCHULZE
Chairman of the Board
and Chief Executive Officer
LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 2003
Notice is hereby given that the Annual Meeting of Shareholders of The
Lamson & Sessions Co. will be held at the Wyndham Cleveland Hotel, 1260 Euclid
Avenue, Cleveland, Ohio 44115 on April 30, 2003, beginning at 9:00 a.m., local
time, for the purpose of considering and acting upon the following:
1. The election of three directors in Class II for three-year terms
expiring in 2006 and the election of one director in Class I for a
one-year term expiring in 2004; and
2. Any other business as may properly come before the Annual Meeting or any
adjournment thereof.
If you were a shareholder of record at the close of business on March 4,
2003, you are entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.
By order of the Board of Directors.
/s/ John B. Schulze
JOHN B. SCHULZE
Chairman of the Board
and Chief Executive Officer
March 28, 2003
---------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND, SO THAT YOUR VOTE WILL BE
COUNTED AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY, USING THE RETURN ENVELOPE ENCLOSED, OR GIVE YOUR PROXY BY
TELEPHONE OR OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD.
LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
(216) 464-3400
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 2003
DATE OF THE PROXY STATEMENT -- MARCH 28, 2003
GENERAL INFORMATION
INFORMATION ABOUT THE ANNUAL MEETING
Our Annual Meeting will be held on Wednesday, April 30, 2003, at 9:00 a.m.,
local time, at the Wyndham Cleveland Hotel, 1260 Euclid Avenue, Cleveland, Ohio
44115.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you this Proxy Statement and the enclosed proxy card because
Lamson's Board of Directors is soliciting your proxy to vote your shares at the
Annual Meeting. If you own Lamson common stock in more than one account, such as
individually and also jointly with your spouse, you may receive more than one
set of these proxy materials. To assist us in saving money and to provide you
with better shareholder services, we encourage you to have all your accounts
registered in the same name and address. You may do this by contacting Lamson's
Shareholder Relations Department at (216) 464-3400. This Proxy Statement
summarizes information that we are required to provide to you under the rules of
the Securities and Exchange Commission and which is designed to assist you in
voting your shares. On or about March 28, 2003, we began mailing these proxy
materials to all shareholders of record at the close of business on March 4,
2003.
WHAT YOU MAY VOTE ON AT THE ANNUAL MEETING
The election of three directors in Class II, with terms expiring in 2006
and the election of one director in Class I, with a term expiring in 2004.
The Board recommends that you vote FOR each of the nominees for director.
1
INFORMATION ABOUT VOTING
Shareholders can vote on matters presented at the Annual Meeting in four
ways:
(a) By Proxy. You can vote by signing, dating and returning the enclosed
proxy card. If you do this, the individuals named on the card (your
"proxies") will vote your shares in the manner you indicate. You may
specify on your proxy card whether your shares should be voted for all,
some or none of the nominees for director. If you do not indicate
instructions on the card, your shares will be voted FOR the election of
the directors.
(b) By Telephone. After reading the proxy materials and with your proxy and
voting instruction form in front of you, you may call the toll-free
number 1-800-542-1160 using a touch-tone telephone. You will be
prompted to enter your Control Number from your proxy and voting
instruction form. This number will identify you and the Company. Then
you can follow the simple instructions that will be given to you to
record your vote.
(c) Over the Internet. After reading the proxy materials and with your
proxy and voting instruction form in front of you, you may use your
computer to access the Web site http://www.proxyvoting.com. You will be
prompted to enter your Control Number from your proxy and voting
instruction form. This number will identify you and the Company. Then
you can follow the simple instructions that will be given to you to
record your vote.
(d) In Person. You may come to the Annual Meeting and cast your vote there.
The Internet and telephone voting procedures have been set up for your
convenience and have been designed to authenticate your identity, allow you to
give voting instructions and confirm that those instructions have been recorded
properly.
You may revoke your proxy at any time before it is exercised by sending a
written notice of revocation to Lamson's Secretary, James J. Abel, prior to the
Annual Meeting.
Each share of Lamson common stock is entitled to one vote. As of March 4,
2003, there were 13,777,608 shares of common stock outstanding.
CUMULATIVE VOTING
Notice that cumulative voting is desired must be given to the President, a
Vice President or the Secretary of Lamson at least forty-eight hours before the
Annual Meeting. At the start of the Annual Meeting, Lamson's Chairman or
Secretary or the shareholder giving such notice must announce notice was given
that cumulative voting is desired. If the notice is properly given, each
shareholder will have the right to cumulate his or her voting power and cast all
of his or her votes for one or more of the nominees. If voting for the election
of directors is cumulative, the persons named in the enclosed proxy will vote
the shares represented thereby and by other proxies held by them so as to elect
as many as possible of the three nominees for Class II and one nominee for Class
I.
INFORMATION REGARDING TABULATION OF THE VOTE
Lamson's policy is that all proxies, ballots and votes tabulated at a
meeting of the shareholders are confidential. Representatives of National City
Bank will tabulate votes and act as Inspectors of Election at the Annual
Meeting.
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QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. Under
Lamson's Amended Code of Regulations, if shareholders holding 75% of the voting
power are present in person or by proxy, a quorum will exist to elect directors
at the meeting. For all other business that may be properly conducted at the
Annual Meeting, the holders of common stock entitled to exercise two-thirds of
the voting power of the Company, present in person or by proxy, shall constitute
a sufficient quorum. Abstentions are counted as present for establishing a
quorum but broker non-votes are not. A broker non-vote occurs when a broker
votes on some matters on the proxy card but not on others because the broker
does not have the authority to do so.
The holders of a majority of the voting power represented at the Annual
Meeting, whether or not a quorum is present, may adjourn the meeting without
notice other than by announcement at the meeting of the date, time and location
at which the meeting will be reconvened.
INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN
Election of Directors
The four nominees for director receiving the greatest number of votes will
be elected at the meeting. Abstentions and broker non-votes will have no effect
on the result of the vote on the election of directors.
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
presented at the Annual Meeting other than the election of directors discussed
in this Proxy Statement. The Proxy Statement for our Annual Meeting of
Shareholders held on April 26, 2002 stated that any shareholder proposal
intended to be presented at the 2003 Annual Meeting must be received by the
Company not later than November 26, 2002 for inclusion in this Proxy Statement.
However, if any other matter properly comes before the Annual Meeting, your
proxies will act on such proposal in their discretion.
REVOCATION OF PROXY
If you give a proxy (either by mailing your proxy card, by telephone or
over the Internet), you may revoke it at any time before it is exercised by
giving notice to Lamson's Secretary in writing prior to the Annual Meeting.
COSTS OF PROXY SOLICITATION
Lamson will pay all the costs of soliciting these proxies. In addition to
solicitation by mail, proxies may be solicited personally, by telegram,
telephone or personal interview by an officer or regular employee of the
Company. Lamson will also ask banks, brokers and other institutions, nominees
and fiduciaries to forward the proxy material to their principals and to obtain
authority to execute proxies, and reimburse them for expenses. In addition,
Lamson has also retained Georgeson Shareholder Communications, Inc. to aid in
the distribution and solicitation of proxies and has agreed to pay Georgeson a
fee of approximately $6,500, plus reasonable expenses.
3
INFORMATION ABOUT LAMSON COMMON STOCK OWNERSHIP
The following table sets forth as of December 31, 2002 (except as otherwise
noted), all persons we know to be "beneficial owners" of more than five percent
of Lamson's common stock. This information is based on Schedules 13G and 13G/A,
Schedule 13F and Form 4 reports filed with the Securities and Exchange
Commission ("SEC") by each of the individuals or firms listed in the table
below. If you wish, you may obtain these reports from the SEC.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ --------
Gabelli Funds, Inc., et al 1,932,900(2) 14.00%
c/o Gabelli Asset Management, Inc.
One Corporate Center
Rye, New York 10580
Farhad Fred Ebrahimi 1,618,500(3) 11.75%
475 Circle Drive
Denver, Colorado 80206
Dimensional Fund Advisors Inc. 1,064,100(4) 7.72%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
The Lamson & Sessions Co. Investment 860,856(5) 6.25%
Trust for Retirement Trusts
25701 Science Park Drive
Cleveland, Ohio 44122
Wellington Management Company, LLP 850,000(6) 6.17%
75 State Street
Boston, Massachusetts 02109
Ironwood Capital Management, LLC 751,400(7) 5.45%
21 Custom House Street
Boston, Massachusetts 02110
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(1) "Beneficial Ownership" is a technical term broadly defined by the SEC to
mean more than ownership in the usual sense. So, for example, you
"beneficially" own Lamson common stock not only if you hold it directly, but
also if you indirectly (through a relationship, a position as a director or
trustee or a contract or understanding), have (or share) the power to vote
the stock, or to sell it, or you have the right to acquire it within 60
days.
(2) Mario J. Gabelli, Marc J. Gabelli and various entities which either one
directly or indirectly controls or for which either one acts as chief
investment officer reported the ownership of such shares on a Schedule 13F,
which was filed with the SEC on February 14, 2003.
(3) Farhad Fred Ebrahimi reported the beneficial ownership of such shares (as of
October 11, 2002) on a Form 4, which was filed with the SEC on November 20,
2002. The reporting person claims beneficial ownership of all such shares.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, reported the beneficial ownership of such shares on a Schedule
13G/A, which was filed with the SEC on February 12, 2003. All of such shares
are held by four investment companies and certain other
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commingled group trusts and separate accounts, as to all of which Dimensional
serves as investment advisor or manager. Dimensional disclaims beneficial
ownership of all such shares.
(5) The Lamson & Sessions Co. Investment Trust for Retirement Trusts reported
the ownership of such shares (as of December 31, 2001) on a Schedule 13 G/A,
which was filed with the SEC on March 19, 2002.
(6) Wellington Management Company, LLP, in its capacity as investment advisor,
reported the ownership of such shares on a Schedule 13G/A, which was filed
with the SEC on February 12, 2003.
(7) Ironwood Capital Management, LLC ("Ironwood") shares beneficial ownership
and voting and dispositive power over such shares with Warren J. Isabelle,
Richard L. Droster and Donald Collins. Ironwood reported the ownership of
such shares on a Schedule 13G, which was filed with the SEC on March 14,
2003.
ELECTION OF DIRECTORS
Nominees for Directors
The Board of Directors has ten members and is divided into three classes.
Class I currently consists of four members, and Classes II and III currently
consist of three members each. A single class of directors is elected by the
shareholders annually for a three-year term. The terms of the following Class II
directors expire at the Annual Meeting: John C. Dannemiller, George R. Hill and
D. Van Skilling. For election as Class II directors at the Annual Meeting, the
Governance, Nominating and Compensation Committee has recommended, and the Board
of Directors has approved, the re-nomination of Mr. Dannemiller and Dr. Hill and
the nomination of William H. Coquillette, who is currently serving as a Class I
director, to serve as directors for the three-year term of office which will
expire at the Annual Meeting of Shareholders in 2006. For election as a Class I
director at the Annual Meeting, the Governance, Nominating and Compensation
Committee has recommended, and the Board of Directors has approved, the
nomination of Mr. Skilling, to serve as a director in Class I for a one-year
term of office which will expire at the Annual Meeting of Shareholders in 2004
along with the terms of the other directors currently serving in Class I. Each
director elected will serve until the term of office of the class to which he is
elected expires and until the election and qualification of his successor.
Mr. Skilling is being nominated as a director in Class I because the terms
of the Class I directors will expire at the Annual Meeting of Shareholders in
2004, when he will have reached the Company's mandatory retirement age. Mr.
Coquillette, who is currently serving on the Board as a Class I director, has
been nominated by the Board to stand for election at the 2003 Annual Meeting as
a Class II director for a term to expire in three years. If Mr. Coquillette is
not elected as a Class II director at the Annual Meeting, he will continue to
serve as a Class I director and his term will expire in 2004.
The directors to be elected will be elected by a plurality of the votes
cast for directors. It is the intention of the persons named in the enclosed
proxy to vote such proxy as specified and, if no specification is made, to vote
such proxy for the election of Messrs. Dannemiller and Coquillette and Dr. Hill
as Class II directors and Mr. Skilling as a Class I director. The Board of
Directors recommends that you vote FOR the four nominees for director.
5
The Board of Directors has no reason to believe that the persons nominated
will not be available to serve. In the event that a vacancy among such original
nominees occurs prior to the Annual Meeting, shares of common stock of Lamson
(the "Common Shares") represented by the proxies so appointed will be voted for
a substitute nominee or nominees designated by the Board of Directors and for
the remaining nominees.
Listed below are the names of the three nominees for election to the Board
of Directors in Class II, the one nominee for election to the Board of Directors
in Class I, those continuing directors in Classes I and III, who have previously
been elected to terms which will expire in 2004 and 2005, respectively. Also
listed is the year in which each individual first became a director of the
Company, the individual's principal occupation, information relating to the
individual's beneficial ownership of Common Shares of the Company as of March
18, 2003 and certain other information, based in part on data submitted by the
directors. Except for Mr. Schulze and Mr. Abel, who beneficially own 6.01% and
2.88%, respectively, of the Company's Common Shares, no director or nominee
beneficially owns as much as one percent of the Company's Common Shares. All
directors and officers as a group beneficially own 15.36% of the Company's
Common Shares.
NOMINEES FOR ELECTION AT THE MEETING
COMMON
NAME, AGE YEAR FIRST SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) OTHER DIRECTORSHIPS DIRECTOR OWNED(2)
-------------------- ------------------- ------------ ------------
CLASS II: TERM EXPIRES IN 2006 IF ELECTED AT THE ANNUAL MEETING
John C. Dannemiller (64) US Bancorp 1988 68,662(3)
Retired Chairman, Applied
Industrial Technologies
(Distributor of bearings, power
transmission components and
related products)
George R. Hill (61) None 1990 68,863
Senior Vice President, The
Lubrizol Corporation (Full
service supplier of performance
chemicals to worldwide
transportation and industrial
markets)
William H. Coquillette (53) None 1997 33,858
Partner, Jones Day (Law firm)
CLASS I: TERM EXPIRES IN 2004 IF ELECTED AT THE ANNUAL MEETING
D. Van Skilling (69) First American Corporation 1989 79,038
Retired Chairman and Chief American Business Bank
Executive Officer, Experian McDATA Corporation
Information Solutions, Inc.
(Supplier of credit, marketing
and real estate information and
decision support systems)
6
CONTINUING DIRECTORS
COMMON
NAME, AGE YEAR FIRST SHARES
PRINCIPAL OCCUPATION BECAME A BENEFICIALLY
AND BUSINESS(1) OTHER DIRECTORSHIPS DIRECTOR OWNED(2)
-------------------- ------------------- ------------ ------------
CLASS I: TERM EXPIRES IN 2004
James T. Bartlett (65) Keithley Instruments, Inc. 1997 48,630
Managing Director, Primus Venture Oglebay Norton Company
Partners (Private investment
firm)
Francis H. Beam, Jr. (67) Advanced Lighting 1990 33,857
Retired President, Technologies, Inc.
Pepper Capital Corp.
(Venture capital firm)
Martin J. Cleary (67) Guardian Life Insurance 1989 41,000
Retired President and Company of America
Chief Operating Officer, CBL & Associates Properties, Inc.
The Richard E. Jacobs Group (Real
estate developer)
CLASS III: TERM EXPIRES IN 2005
James J. Abel (57) None 2002 454,643
Executive Vice President,
Secretary, Treasurer and Chief
Financial Officer of the Company
A. Malachi Mixon, III (62) Invacare Corporation 1990 100,679
Chairman of the Board The Sherwin Williams Company
and Chief Executive Officer, Cleveland Clinic Foundation
Invacare Corporation
(Manufacturer and distributor of
home healthcare products)
John B. Schulze (65) None 1984 950,026(4)
Chairman of the Board, President
and Chief Executive Officer of
the Company
All present directors and executive 2,429,098
officers as a group (17 persons)
---------------
(1) Each director and nominee either has held the position shown or has had
other executive positions with the same employer or its subsidiary for more
than five years.
(2) Includes the following number of Common Shares which are not owned of record
but which could be acquired by the individual within 60 days after January
17, 2003 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze -- 661,666; Mr. Abel -- 305,667 and all other
directors and executive officers as a group -- 521,583.
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(3) Includes 1,500 Common Shares with shared voting or investment power held by
The Jubilee Foundation, Inc.
(4) Includes shares held jointly or in the name of the director's spouse, minor
children, or relatives sharing his home, reporting of which is required by
applicable rules of the SEC. Unless otherwise indicated, or in the case of
joint ownership, the listed individuals possess sole voting power and sole
investment power with respect to such shares. The figure for Mr. Schulze
includes 30,700 shares owned by his wife, to which he has disclaimed
beneficial ownership. No other director or executive officer has disclaimed
beneficial ownership of any shares.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors oversees the business and affairs of Lamson and
monitors the performance of management. The independent directors meet in
executive session without management on a regular basis. The Board met eight
times during 2002.
The Board has two committees: the Audit Committee and the Governance,
Nominating and Compensation Committee (formerly the Compensation and
Organization Committee). The name and scope of responsibilities of the
Governance, Nominating and Compensation Committee was changed in October 2002.
Each committee reports to the Board at the next meeting of the Board following a
committee meeting. The Audit Committee and the Governance, Nominating and
Compensation Committee held five and two meetings, respectively, in 2002.
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
THE AUDIT COMMITTEE: The Audit Committee consists solely of independent
directors (as currently required by Section 303.01(B)(2)(a) and (3) of the New
York Stock Exchange's listing standards). Messrs. Beam (Chairman) and Cleary and
Dr. Hill currently are the members of the Audit Committee. The functions of the
Audit Committee include (i) recommending to the Board of Directors the
appointment of the Company's independent auditors, both external and internal,
and pre-approving all auditing and non-auditing services to be performed by the
independent auditors, (ii) reviewing the independence of the independent
auditors, (iii) reviewing the proposed audit programs (including both
independent and internal audits) and the results of the independent and internal
audits, (iv) reviewing and evaluating the adequacy of the Company's systems of
internal accounting controls, (v) reviewing the recommendations of the
independent auditors, (vi) reviewing the quarterly and annual financial
statements of the Company prior to the filing of such statements with the SEC
and, (vii) reviewing such other matters in relation to the accounting, auditing
and financial reporting practices and procedures of the Company as the Audit
Committee, in its own discretion, may deem desirable in connection with the
review functions described above. The Audit Committee meets privately with the
independent auditor groups for both internal and external audits and, the
Company's management at each of its meetings.
THE GOVERNANCE, NOMINATING AND COMPENSATION COMMITTEE: The Governance,
Nominating and Compensation Committee consists solely of independent directors.
Messrs. Skilling (Chairman), Bartlett, Beam, Dannemiller and Mixon currently are
the members of the Governance, Nominating and Compensation Committee. The
Governance, Nominating and Compensation Committee considers all material matters
relating to the compensation policies and practices of the Company, and
administers the Company's incentive plans and base salary policies as they
relate to the executive officers of the Company. The Governance, Nominating and
Compensation Committee also (i) reviews and recom-
8
mends candidates for election to the Board of Directors, (ii) recommends whether
incumbent directors should be nominated for re-election to the Board and, (iii)
recommends directors for appointment to any committee of the Board. The
Governance, Nominating and Compensation Committee will consider any nominee
recommended by a shareholder of the Company. A resume of the candidate's
business experience and background should be directed in writing to the
attention of Lamson's Secretary. The Governance, Nominating and Compensation
Committee also is responsible for developing and recommending corporate
governance principles applicable to the Board in compliance with rules and
regulations of the New York Stock Exchange ("NYSE") and the SEC.
COMPENSATION OF LAMSON'S DIRECTORS
Directors who are employees of Lamson do not receive any separate fees or
other remuneration for serving as a director of the Board. For fiscal year 2002,
nonemployee directors were each paid an annual retainer of $15,000 for their
service on the Board of Directors, and received an additional fee of $1,500 for
each Board or Board Committee meeting attended. Each of the Chairmen of the
Audit Committee and the Governance, Nominating and Compensation Committee
received an additional annual fee of $1,500. Lamson has established a Deferred
Compensation Plan for Nonemployee Directors (the "Plan"), under which directors
may elect to defer their annual retainers and meeting fees. Under this Plan,
deferred fees may be invested by the trustee, at a director's option, in either
a money market fund or Common Shares of the Company. If a director elects to
have this deferred compensation invested in Common Shares of the Company, the
director will receive an additional sum, also invested in Common Shares, equal
to 25% of the deferred amount.
Lamson's nonemployee directors are provided with certain retirement and
death benefits under the Company's Outside Directors' Benefit Program (the
"Program"). All nonemployee directors who have completed an aggregate of one
year of continuous service are eligible to participate. The Program generally
provides for normal retirement benefits payable upon attainment of age seventy
and completion of five years of continuous service. The Program also contains
provisions for early retirement benefits, vested deferred retirement benefits,
disability retirement benefits and survivors' benefits upon the death of a
participant. Participants in the Program or their beneficiaries are eligible to
receive benefits in an amount equal to the annual retainer being paid to the
participant for service as a nonemployee director at the time he ceases to be a
nonemployee director, with such adjustments as are necessary based on the date
of retirement or death. Retirement or death benefits under the Program are
payable for a ten-year period on a quarterly basis, commencing upon the date of
retirement or death. Either the participant, the participant's beneficiary or
the Company can elect that such retirement or death benefits be paid in an
actuarially-equivalent, lump-sum payment.
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN: Lamson's Nonemployee Directors
Stock Option Plan (the "Directors Plan"), approved by the Company's shareholders
in 1994, authorizes the grant of options to nonemployee directors for the
purchase of Common Shares. The Directors Plan provides that each year on the
Monday following the Annual Meeting of Shareholders, each individual elected,
re-elected or continuing as a nonemployee director automatically receives a
nonqualified option to purchase 2,000 Common Shares. The exercise price for such
options is the average of the high and low prices at which the Common Shares
traded on the NYSE on the date of grant. Options become exercisable one year
after the date of grant and expire ten years after the date of the grant. The
Board of Directors has reserved 160,000 Common Shares for issuance under the
Directors Plan.
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Options granted to a nonemployee director must be exercised within 36
months of retirement as a director or within 12 months from the date a director
resigns due to disability. Upon the death of a nonemployee director, the
director's legal representative or heirs will have twelve months from the date
of death to exercise his stock options. However, in no event will options be
exercisable after the expiration of the 10-year option period.
If a director resigns, or ceases to serve as a nonemployee director for any
reason other than retirement, disability or death, only those options
exercisable on the date of termination will be exercisable. Such options may be
exercised within ninety days after termination.
In the event of a "change in control" of the Company (as defined in the
Directors Plan), all stock options fully vest and become exercisable.
Pursuant to the Directors Plan, on April 29, 2002 each nonemployee director
was granted a nonqualified stock option to purchase 2,000 Common Shares at an
exercise price of $5.185 per share. These stock options are scheduled to become
exercisable on April 29, 2003.
EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by the Company's
five most highly compensated executive officers (the "Named Executive Officers")
with respect to the fiscal year shown for services rendered to the Company and
its subsidiaries.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------ -----------
---------------------------------- RESTRICTED SECURITIES PERFORMANCE ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING UNIT COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(3) OPTIONS(#) PAYOUTS (1)(2)
------------------ ---- -------- -------- ------------ ---------- ----------- ----------- ------------
John B. Schulze........ 2002 $450,000 $232,280 $ -- $ -- 100,000 $ -- $ 30,652
Chairman of the Board, 2001 450,000 -0- -- -- 80,000 -- 34,630
President and 2000 410,000 630,000 -- -- 90,000 -- 31,060
Chief Executive
Officer
James J. Abel.......... 2002 302,000 97,425 -- 6,495 40,000 -- 46,031(3)
Executive Vice 2001 290,000 -0- -- -0- 35,000 -- 16,938
President, Secretary, 2000 270,000 219,000 -- 29,200 40,000 -- 159,368(3)
Treasurer and Chief
Financial Officer
Donald A.
Gutierrez(4)......... 2002 221,000 67,077 -- 1,491 25,000 -- 23,316(3)
Senior Vice President 2001 210,000 -0- -- -0- 20,000 -- 16,768
2000 180,000 122,850 -- 8,190 25,000 -- 48,600(3)
Norman P.
Sutterer(4).......... 2002 185,000 57,294 -- 1,273 20,000 -- 21,887(3)
Senior Vice President 2001 175,000 -0- -- -0- 15,000 -- 18,814
2000 163,000 130,752 -- 2,906 20,000 -- 29,883(3)
Albert J. Catani,
II(4)................ 2002 173,000 38,205 -- 2,547 12,000 -- 28,675(3)
Vice President 2001 165,000 -0- -- -0- 10,000 -- 20,194
2000 157,000 106,350 -- 7,090 12,000 -- 41,787(3)
---------------
(1) Includes split dollar life insurance premium payments paid for Mr. Schulze,
Mr. Abel, Mr. Gutierrez, Mr. Sutterer and Mr. Catani in 2002 of $22,402,
$5,306, $7,613, $7,560 and $14,653, respectively;
10
in 2001 of $23,410, $5,718, $6,598, $7,594, and $13,001, respectively; and
in 2000 of $23,410, $5,718, $-0-, $7,594 and $-0-, respectively.
(2) Includes matching contributions up to 75% of the first 6% of an employee's
compensation contributed to the Company's 401(k) Deferred Savings Plan with
an additional 25% match based on the Company's profitability, which is
available to all salaried employees. The matching contributions made by the
Company under the Plan to the accounts of: Mr. Schulze, Mr. Abel, Mr.
Gutierrez, Mr. Sutterer and Mr. Catani in 2002 totaled $8,250, $8,250,
$8,250, $7,961 and $1,287, respectively; in 2001 totaled $11,220, $11,220,
$10,170, $11,220 and $7,193, respectively; and in 2000 totaled $7,650,
$7,650, $7,650, $7,761, and $6,337, respectively.
(3) Includes deferred compensation pursuant to Stock Ownership Guidelines for
Executive Officers implemented by the Governance, Nominating and
Compensation Committee of the Board of Directors. Pursuant to the Stock
Ownership Guidelines, officers may elect to defer income earned in a fiscal
year. However, the deferral for which the election is made does not occur
until February following the end of the fiscal year specified by the
officer's election, since bonuses for any fiscal year most recently ended
are not approved by the Governance, Nominating and Compensation Committee
until then. Therefore, in 2002, the income amounts deferred by Mr. Abel, Mr.
Gutierrez, Mr. Sutterer and Mr. Catani were $32,475, $7,453, $6,366 and
$12,735, respectively, which were deferred in February 2003, upon approval
of bonuses for fiscal year 2002 by the Governance, Nominating and
Compensation Committee. In 2001 there were no bonuses paid, therefore, no
deferrals were possible. In 2000, the income amounts deferred by Mr. Abel,
Mr. Gutierrez, Mr. Sutterer and Mr. Catani were $146,000, $40,950, $14,528
and $35,450, respectively. In addition, for those officers who elect to
defer a portion of their bonuses, the Company matches 20% of the deferred
amounts in the form of restricted shares to these executives.
(4) Mr. Gutierrez and Mr. Sutterer are responsible for the business segments of
Carlon and Lamson Home Products, respectively. Mr. Catani is responsible for
the manufacturing operations of the Company.
STOCK OPTIONS
The following table sets forth information concerning stock option grants
made to the Named Executive Officers during fiscal year 2002 pursuant to the
1998 Incentive Equity Plan ("1998 Plan").
OPTION GRANTS IN LAST FISCAL YEAR
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------ ----------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- --------------- ------------ -------- ---------- ----------
John B. Schulze................. 100,000 25.03% $4.10 2/20/12 $217,000
James J. Abel................... 40,000 10.01% 4.10 2/20/12 86,800
Donald A. Gutierrez............. 25,000 6.26% 4.10 2/20/12 54,250
Norman P. Sutterer.............. 20,000 5.01% 4.10 2/20/12 43,400
Albert J. Catani, II............ 12,000 3.00% 4.10 2/20/12 26,040
---------------
(1) Options are exercisable after February 20, 2003 and then only as follows:
one-third on each anniversary of the grant date over three years, with the
number of shares vested in each year
11
rounded to the nearest whole share. In the event of a "change in control" of
the Company (as defined in the 1998 Plan, as amended), all stock options
fully vest and become exercisable and all awards of stock may be cashed out
on the basis of the highest price paid or offered for Common Shares during
the preceding 60-day period.
(2) The present value determinations in this column were made pursuant to rules
promulgated by the SEC using a Black-Scholes option pricing model and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's Common Shares. The actual value, if any, an executive
officer may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance that the value realized by an executive officer will be at or near
the value estimated by the Black-Scholes model. The estimated values under
that model are based on arbitrary assumptions as to variables such as
interest rates, stock price volatility, time of exercise and dividend yield.
The Company determined the estimated values using volatility assumptions
based on 96 months of stock prices; interest rate assumptions based on the
five-year Treasury Strip Yield, as reported in The Wall Street Journal; a
dividend yield assumption of zero; and an assumed time of exercise of the
option of five years.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information about stock options exercised
during fiscal year 2002 by the Named Executive Officers and the fiscal year-end
values of unexercised options held by the Named Executive Officers. All of such
options were granted under the Company's 1988 Incentive Equity Performance Plan
and the 1998 Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS HELD AT
SHARES DECEMBER 28, 2002(#) DECEMBER 28, 2002(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
John B. Schulze...... -- $ -- 571,667 183,333 $ -0- $ -0-
James J. Abel........ -- -- 267,334 76,666 -0- -0-
Donald A. Gutierrez.. -- -- 70,334 46,666 -0- -0-
Norman P. Sutterer... -- -- 105,334 36,666 -0- -0-
Albert J. Catani, II. -- -- 61,833 22,667 -0- -0-
---------------
(1) Based on the closing price on the NYSE -- Composite Transactions of the
Company's Common Shares on December 27, 2002 (the last trading day in fiscal
year 2002) of $3.40.
12
PENSION BENEFITS
The following table shows the estimated annual pension benefits under The
Lamson & Sessions Co. Salaried Employees' Retirement Plan ("Lamson & Sessions
Plan"), that would be payable to employees in various compensation
classifications upon retirement at age sixty-five during the year 2002.
ANNUAL NORMAL RETIREMENT BENEFITS
FOR YEARS OF CREDITED SERVICE INDICATED
AVERAGE ANNUAL -----------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS
-------------- -------- -------- -------- --------
$100,000 $ 25,000 $ 33,333 $ 41,667 $ 50,000
150,000 37,500 50,000 62,500 75,000
200,000 50,000 66,667 83,333 100,000
250,000 62,500 83,333 104,167 125,000
300,000 75,000 100,000 125,000 150,000
350,000 87,500 116,667 145,833 175,000
400,000 100,000 133,333 166,667 200,000
450,000 112,500 150,000 187,500 225,000
500,000 125,000 166,668 208,333 250,000
550,000 137,500 183,335 229,166 275,000
600,000 150,000 200,000 250,000 300,000
650,000 162,500 216,668 270,833 325,000
700,000 175,000 233,335 291,666 350,000
750,000 187,500 250,000 312,500 375,000
800,000 200,000 266,668 333,333 400,000
850,000 212,500 283,335 354,166 425,000
900,000 225,000 300,000 375,000 450,000
The amounts listed in the table are computed on a straight-life annuity
basis and are subject to an offset for Social Security benefits. These amounts
have been determined without regard to the maximum benefit limitations for
defined benefit plans and the limitations on compensation imposed by the
Internal Revenue Code of 1986, as amended (the "Code"). The Code places
limitations on the amount of compensation that may be taken into account in
calculating pension benefits and on the amount of pensions that may be paid
under federal income tax qualified plans such as the Lamson & Sessions Plan. For
benefits accruing in plan years beginning after 1999, no more than $200,000
(indexed for inflation) in annual compensation may be taken into account.
However, under the Supplemental Executive Retirement Plan agreements ("SERPS"),
described below, participating executives will receive the amounts to which they
otherwise would have been entitled under the Lamson & Sessions Plan provided
they meet the terms of the applicable SERP.
The amounts shown in the column under the heading "Average Annual
Compensation" are based on the highest five consecutive years of compensation
during the last ten years prior to retirement and include salary, overtime and
bonuses, but exclude commissions and stock option awards. Normal retirement
benefits under the Lamson & Sessions Plan are equal to the greater of (a) 50% of
a participant's average annual compensation based on the highest five
consecutive years during the last ten years prior to retirement less 50% of the
participant's primary Social Security benefit or (b) $3,600 times a fraction,
the denominator of which is 30 and the numerator of which is the participant's
number of years of service up to 30.
13
Messrs. Schulze, Abel, Gutierrez, Sutterer and Catani are participants in
the Lamson & Sessions Plan with 15, 12, 6, 14 and 7 years of credited service,
respectively, under the Lamson & Sessions Plan. The Company has entered into
amended and restated SERPS with Messrs. Schulze and Abel. Messrs. Schulze and
Abel will not be able to achieve thirty years of service on their normal
retirement dates.
The SERPS provide that the executive will receive, upon normal retirement,
a supplemental retirement benefit equal to the difference between (i) the amount
that would have been payable to the executive under the Lamson & Sessions Plan,
without regard to any federal statutory limitation on the annual amount of
benefits payable under the Lamson & Sessions Plan and the amount of compensation
taken into account in calculating benefits under the Lamson & Sessions Plan, as
if the executive had completed thirty years of service with the Company, and
(ii) the amount actually payable to the executive under the Lamson & Sessions
Plan or under any other applicable plan for which the executive meets the
eligibility requirements. The SERPS also provide for, among other things,
disability benefits and benefits in the event the executive's employment with
the Company is terminated under certain circumstances prior to retirement and in
the event of the executive's death prior to retirement under certain
circumstances.
AGREEMENTS WITH CERTAIN OFFICERS
Lamson has entered into agreements with Messrs. Abel, Gutierrez, Sutterer
and Catani (the "Executive Change-in-Control Agreements"), which specify certain
financial arrangements that the Company will provide upon the termination of
such individuals' employment with the Company under circumstances involving a
"change in control" (as defined in the Executive Change-in-Control Agreements)
of the Company. The Executive Change-in-Control Agreements are intended to
ensure continuity and stability of senior management of the Company.
Each of the Executive Change-in-Control Agreements provides that, in the
event of a "change in control" of the Company, the individual would continue
employment with the Company in the individual's then current position for a term
of two years following the "change in control." Following a "change in control"
the individual would be entitled during the ensuing period of employment to
receive base compensation and to continue to participate in incentive and
employee benefit plans consistent with past practices. Upon the occurrence of a
"change in control" followed by (i) a significant adverse change in the nature
or scope of the individual's duties or compensation, (ii) the individual's
determination of being unable effectively to carry out the current duties and
responsibilities, (iii) relocation of the individual's principal work location
to a place more than fifty miles from the principal work location immediately
prior to the "change in control," (iv) the liquidation, merger or sale of the
Company (unless the new entity assumes the Executive Change-in-Control
Agreement) or (v) a material breach of the Executive Change-in-Control
Agreement, the individual would be entitled to resign and would be entitled to
receive a lump sum payment equal to the present value of the then current base
compensation and incentive compensation (based on historical experience). The
individual would also be entitled to continue to participate in employee benefit
plans consistent with past practices for the remaining period of employment
provided in his Executive Change-in-Control Agreement. In the case of a "change
in control," the Executive Change-in-Control Agreements also provide for
protection of certain retirement benefits which would have been earned during
the years for which severance was paid and reimbursement for any additional tax
liability incurred as a result of excise taxes imposed or payments deemed to be
attributable to the "change in control."
14
The Executive Change-in-Control Agreements do not create employment
obligations for the Company unless a "change in control" has occurred, prior to
which time the Company and the individual each reserves the right to terminate
the employment relationship. Both before and after the occurrence of a "change
in control" the Company may terminate the employment of any of such individuals
for "cause."
The Company has established trust agreements pursuant to which amounts
payable under the SERPS, the Executive Change-in-Control Agreements and certain
expenses incurred by the officers in enforcing their rights under these
arrangements, must be deposited by the Company in trust and expended by the
trustee for such purposes. Such trusts are revocable, but upon the occurrence of
certain "change in control" events affecting the Company, will become
irrevocable. The trusts are currently nominally funded, but the Company is
obligated to fund them fully upon the occurrence of the "change in control"
events.
The Company has also entered into Indemnification Agreements with each
current member of the Board of Directors as well as each of the Company's
executive officers. These agreements provide that, to the extent permitted by
Ohio law, the Company will indemnify the director or officer against all
expenses, costs, liabilities and losses (including attorneys' fees, judgments,
fines or settlements) incurred or suffered by the director or officer in
connection with any suit in which the director or officer is a party or
otherwise involved as a result of the individual's service as a member of the
Board of Directors or as an officer if the individual's conduct that gave rise
to such liability meets certain prescribed standards.
GOVERNANCE, NOMINATING AND COMPENSATION COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY
The Governance, Nominating and Compensation Committee of the Board of
Directors (the "Committee") is composed entirely of nonemployee directors and
has been delegated the responsibility of approving the cash and non-cash
compensation of all executive officers of the Company and making recommendations
to the Board of Directors with respect to the establishment of the Company's
executive compensation plans. No member of the Committee has interlocking
relationships, reporting of which is required by applicable rules of the SEC.
In administering the various executive compensation plans, the aim of the
Committee is to attract and retain key executives critical to the long-term
success of the Company, to create incentives for executives to achieve long-term
strategic management objectives that enhance shareholder value, to provide a
balance between annual and long-term forms of compensation and, above all, to
ensure that total compensation is performance-oriented and related to Company
goals and objectives, using measurable criteria to the extent possible.
The Committee has considered the impact of Section 162(m) of the Code,
which disallows a deduction to publicly-held companies for compensation paid to
any executive officer whose compensation exceeds $1 million per year. Qualified
performance-based compensation is excluded from this deduction limitation if
certain requirements are met. The Committee believes that Section 162(m) should
not cause the Company to be denied a deduction for compensation paid to any
executive officer in 2002.
15
EXECUTIVE OFFICER BASE COMPENSATION
Each executive officer's base salary is reviewed by the Committee at the
time of the officer's annual performance review. The base salary is recommended
to the Committee by the Chairman of the Board and Chief Executive Officer (the
"Chairman") and falls within a salary range for each officer's job function that
has been established by an independent executive compensation consultant, based,
in part, on information collected by the consultant concerning compensation for
executives with similar responsibilities at companies with comparable size and
geographic location. Typically, salaries fall throughout the range and are not
based on an arbitrary percentage of the highest salary within the range. In each
case, the Committee reviews the recommendation of the Chairman and approves the
salary only after making an independent assessment of the individual executive's
performance.
Mr. Schulze's compensation is based upon the same factors considered with
regard to executive officer compensation generally. The components making up his
2002 compensation included base salary, short-term incentive compensation and
stock options. Under the Short-Term Incentive Plan for 2002, sixty percent of
Mr. Schulze's base salary represents his target award, the achievement of which
was contingent upon the attainment of specific financial performance goals. The
Committee's award of stock options to Mr. Schulze under the 1998 Plan was based
on the same methodology used to calculate the awards of options to other
executive officers under the 1998 Plan and designed to further align Mr.
Schulze's interests with those of other shareholders of the Company.
In determining Mr. Schulze's compensation, the Committee considered the
Company's performance. The Committee discusses and determines priorities with
Mr. Schulze at the beginning of the year and discusses his performance with
respect to these priorities periodically during the year and at the end of the
year.
Mr. Schulze is not present when the Committee reviews his performance and
determines his compensation.
SHORT-TERM INCENTIVE COMPENSATION
Under the Company's Short-Term Incentive Plan, target award levels are
established annually by the Committee for each executive officer of the Company.
In 2002, Mr. Schulze's award is based solely on the financial performance of the
Company expressed in terms of earnings before interest, taxes, depreciation and
amortization (EBITDA). Other executive officers' achievement of target awards is
based 80 percent on the financial performance of the Company and 20 percent on
the achievement of specific personal goals and objectives. In 2002, the
Company's Short-Term Incentive Plan provided target award opportunities for
executive officers that ranged from 35 to 60 percent of base salary, although
amounts could vary above and below that range depending upon Company performance
and individual accomplishment.
STOCK OPTIONS AND LONG-TERM INCENTIVE COMPENSATION
The Committee also is charged with the responsibility of administering the
1998 Plan, under which stock options are granted to executive officers and other
employees of the Company. The Committee believes that stock options align the
interests of the executive officers with those of the shareholders, providing a
way in which the executive officers can build a meaningful stake in the Company.
Accordingly, the Committee has approved the implementation of stock ownership
guidelines for the executive officers that are to be achieved over a fixed
period of time. The guidelines are based on each
16
executive officer's respective salary compensation level and they will be
reviewed by the Committee at appropriate intervals.
The Committee fixes the terms, vesting requirements and the size of the
grants of stock options awarded to the executive officers without regard to the
amount of options or the expiration dates of options already held by executive
officers. The size of each grant is based on the duties, responsibilities,
performance and experience of the executive officer and his anticipated
contribution to the Company. Options granted to executive officers vest
one-third on each anniversary over three years, with the number of shares vested
in each year rounded to the nearest whole share.
Because stock options under the 1998 Plan and grants under the Company's
Long-Term Incentive Plan are both forms of long-term executive compensation,
grants under both plans are generally considered at the same time. Awards under
the Long-Term Incentive Plan are made in the form of performance units payable
upon the achievement of three-year corporate goals, currently expressed in terms
of financial performance. The Committee determines the goals under which these
awards are made from year to year. The Committee did not approve the grant of
performance units to executive officers for 2002.
GOVERNANCE, NOMINATING AND COMPENSATION COMMITTEE
D. Van Skilling, Chairman John C. Dannemiller
James T. Bartlett A. Malachi Mixon, III
Francis H. Beam, Jr.
17
COMPANY STOCK PERFORMANCE
The following performance graph compares the five year cumulative return,
including reinvestment of dividends, from investing $100 on December 31, 1997 in
each of the Company's Common Shares, the Russell 2000 Index and Standard &
Poor's Small Industrials Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
------------------------------------------------------------------------------------------------------------------
12/97 12/98 12/99 12/00 12/01 12/02
------------------------------------------------------------------------------------------------------------------
Lamson & Sessions 100.00 88.17 83.87 180.65 90.32 55.40
------------------------------------------------------------------------------------------------------------------
Russell 2000 100.00 97.45 118.17 114.60 117.45 93.30
------------------------------------------------------------------------------------------------------------------
Standard & Poor's Small Cap 600
Industrials 100.00 101.40 101.81 108.36 109.40 96.72
------------------------------------------------------------------------------------------------------------------
There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
performance graph above. The Company does not make or endorse any predictions as
to future stock performance.
18
SECURITY OWNERSHIP OF MANAGEMENT
Each of the Named Executive Officers beneficially owned the number of
Common Shares indicated opposite his name as of January 17, 2003. Except for Mr.
Schulze who beneficially owns 6.01% and Mr. Abel who beneficially owns 2.88% of
the Company's Common Shares, none of the other Named Executive Officers
beneficially owns as much as one percent of the Company's Common Shares.
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP(1)(2)
---- -----------------
John B. Schulze........................... 950,026
James J. Abel............................. 454,643
Donald A. Gutierrez....................... 113,407
Norman P. Sutterer........................ 147,843
Albert J. Catani, II...................... 96,183
---------------
(1) Includes the following number of Common Shares which are not owned of record
but which could be acquired by the individual within 60 days after January
17, 2003 upon the exercise of outstanding options under the Company's stock
option plans: Mr. Schulze -- 661,666; Mr. Abel -- 305,667; Mr.
Gutierrez -- 93,666; Mr. Sutterer -- 123,667 and Mr. Catani -- 73,167.
(2) Includes shares held jointly or in the name of the officer's spouse, minor
children, or relatives sharing his home, reporting of which is required by
applicable rules of the SEC. Unless otherwise indicated, or in the case of
joint ownership, the listed individuals possess sole voting power and sole
investment power with respect to such shares. The figure for Mr. Schulze
includes 30,700 shares owned by his wife, as to which he has disclaimed
beneficial ownership. No other Named Executive Officer has disclaimed
beneficial ownership of any shares.
CERTAIN BUSINESS RELATIONSHIPS
During the past fiscal year, the Company, in the normal course of business,
utilized the services of the law firm of Jones Day in which Mr. Coquillette is a
partner. The Company plans to continue using the services of the firm in 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Lamson's executive officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC, the NYSE and the Pacific Stock Exchange, and to provide
Lamson with copies of such reports.
Based solely on review of the copies of such reports furnished to the
Company, or written representation that no forms were required to be filed, the
Company believes that during the year ended December 28, 2002, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than ten percent beneficial owners were complied with.
19
AUDIT COMMITTEE REPORT
The Board of Directors of the Company adopted a written Audit Committee
Charter. All members of the Audit Committee are independent as defined in
Section 303.01(B)(2)(a) and (3) of the NYSE's current listing standards. The
Audit Committee has implemented procedures through which it devotes the
attention that it deems necessary and appropriate to carry out its
responsibilities, during a fiscal year, in each of the matters assigned to it
under the Audit Committee Charter. The Audit Committee is currently in the
process of reviewing and revising its Charter in order to conform with the
applicable rules with respect to audit committees adopted or proposed pursuant
to the Sarbanes-Oxley Act, the SEC and by the NYSE. The Audit Committee will
approve its revised Charter after all such rules have been adopted.
The Audit Committee has reviewed and discussed with the Company's
management and Ernst & Young LLP, ("Ernst & Young") the Company's independent
auditors, the audited financial statements of the Company contained in the
Company's Annual Report to Shareholders for the year ended December 28, 2002.
The Audit Committee has also discussed with the Company's independent auditors
the matters required to be discussed pursuant to SAS No. 61 (Codification of
Statements on Auditing Standards, Communication with Audit Committees) and SAS
No. 90 (Audit Committee Communications).
The Audit Committee has received and reviewed the written disclosures and
the letter from Ernst & Young required by Independence Standards Board Standard
No. 1 (titled, "Independence Discussions with Audit Committees"), and has
discussed with Ernst & Young their independence. The Audit Committee has also
considered whether the provision of non-audit services to the Company by Ernst &
Young is compatible with maintaining their independence and has pre-approved all
non-audit services.
Based on the review and discussions referred to above, the Audit 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
December 28, 2002, filed with the U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
Francis H. Beam, Jr., Chairman
Martin J. Cleary
George R. Hill
INDEPENDENT AUDITORS
For many years the firm of Ernst & Young in Cleveland, Ohio, has served as
independent auditors to the Company. In February 2002, Ernst & Young was
reappointed by the Board of Directors of the Company, on the recommendation of
the Audit Committee, as the Company's independent auditors for the fiscal year
ended December 28, 2002. Representatives of Ernst & Young are expected to be
present at the meeting and will have the opportunity to make a statement if they
so desire. They are expected to be available to respond to proper questions
regarding the independent auditors' responsibilities.
20
AUDIT FEES
Ernst & Young has billed the Company $320,000, in the aggregate, for
professional services rendered by them for the audit of the Company's annual
financial statements for the fiscal year ended December 28, 2002 and the reviews
of the interim financial statements included in the Company's Forms 10-Q filed
during the fiscal year ended December 28, 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young provided no professional services to the Company of the
nature described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X during
the fiscal year ended December 28, 2002.
ALL OTHER FEES
Ernst & Young has billed the Company $240,000, in the aggregate, for all
other services rendered by them (other than those covered above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees") during
the fiscal year ended December 28, 2002. This amount includes audit-related
services of $196,000 and non-audit services of $44,000. Audit-related services
generally include fees for accounting consultations, internal audit and computer
security controls review. Non-audit services generally include fees for tax
consulting and tax compliance. All fees paid to our external auditors are
pre-approved by the Audit Committee prior to the initiation of any work.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the Annual Meeting of
Shareholders to be held in 2004, must be received by the Company's Secretary at
its principal office in Cleveland, Ohio, not later than November 28, 2003 for
inclusion in the Company's Proxy Statement and Form of Proxy relating to the
Annual Meeting of Shareholders in 2004. Each proposal submitted should be
accompanied by the name and address of the shareholder submitting the proposal
and the number of Common Shares owned. If the proponent is not a shareholder of
record, proof of beneficial ownership should also be submitted. All proposals
must be a proper subject for consideration and comply with the proxy rules of
the SEC.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the Annual Meeting other than as herein presented. However, if any other
matter is properly brought before the Annual Meeting, the persons appointed as
proxies in the accompanying proxy will have discretion to vote or act hereon
according to their best judgment.
The Company's 2002 Annual Report, including financial statements, has been
mailed contemporaneously with this Proxy Statement.
By Order of the Board of Directors.
/s/ James J. Abel
JAMES J. ABEL
Executive Vice President, Secretary,
Treasurer and Chief Financial
Officer
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VOTE BY TELEPHONE
Have your proxy card available when you call the TOLL-FREE NUMBER 1-800-542-1160
using a touch-tone telephone. You will be prompted to enter your Control Number.
Please follow the simple prompts that will be presented to you to record your
vote.
VOTE BY INTERNET
Have your proxy card available when you access the Web site
http://www.votefast.com. You will be prompted to enter your Control Number.
Please follow the simple prompts that will be presented to you to record your
vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the POSTAGE-PAID
ENVELOPE provided or return it to: Stock Transfer Dept. (LS) National City Bank,
P.O. Box 92301, Cleveland, OH 44193-0900.
VOTE BY TELEPHONE
Call TOLL-FREE using a
Touch-Tone phone:
1-800-542-1160
VOTE BY INTERNET
Access the WEB SITE and
Cast your vote:
http://www.votefast.com
VOTE BY MAIL
Return your Proxy
in the POSTAGE-PAID
envelope provided
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
YOUR TELEPHONE OR INTERNET VOTE MUST BE RECEIVED BY 11:59 P.M. EASTERN TIME
ON APRIL 29, 2003 TO BE COUNTED IN THE FINAL TABULATION.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT SEND YOUR PROXY BY MAIL.
YOUR CONTROL NUMBER IS:
PROXY MUST BE SIGNED AND DATED BELOW.
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.
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LAMSON & SESSIONS
25701 Science Park Drive
Cleveland, Ohio 44122
The undersigned hereby appoints James J. Abel and Lori L. Spencer, and each of
them, as proxies, each with the power to appoint a substitute. The undersigned
hereby authorizes the proxies to represent and to vote, as designated on the
reverse side, all the Common Shares of The Lamson & Sessions Co. held of record
by the undersigned on March 4, 2003, at the Annual Meeting of Shareholders to be
held on April 30, 2003 or any adjournment(s) thereof. THIS PROXY IS SOLICITED ON
BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
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Signature(s)
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Signature(s)
Date: ______________________________, 2003
Please sign exactly as name appears. When
signing as attorney, executor, administrator,
trustee, guardian, etc., give full title as
such. If a corporation, please sign in
corporate name by authorized officer and
give title. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.
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LAMSON & SESSIONS PROXY
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES FOR THE ELECTION OF DIRECTORS, WITH DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY BE BROUGHT BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
1. ELECTION OF CLASS II DIRECTORS
Nominees:
(01) John C. Dannemiller (02) George R. Hill (03) William H. Coquillette
ELECTION OF CLASS I DIRECTOR
Nominee:
(04) D. Van Skilling
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as listed to the for all nominees listed above
contrary below)
To withhold authority to vote for any individual nominee listed above, write
that nominee's name on the space provided below:
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[ ] PLEASE CHECK THIS BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING
OF SHAREHOLDERS.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)